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Prohibition of the Company Secretary from being

Appointed as the Company Auditor and/or for the

Auditor to Perform Prohibited Related Secretarial Work

The IRBA Inspections Department continues to identify auditors

(including individual auditors, audit firms and network firms) who

are also the appointed Company Secretary for companies that they

audit. In many instances, though, the company is not required by

the Companies Act, Act 71 of 2008 (Companies Act), to appoint a

Company Secretary. Auditors are reminded that Section 90(2)(b)(iii)

of the Companies Act prohibits the Company Secretary from being

appointed as the company’s auditor, making it illegal for the auditor

to accept such an appointment.

Therefore, auditors are strongly advised to scrutinise their company

client base, and immediately address any independence and

legal breach by either formally lodging their resignation notice as

Company Secretary with the Companies and Intellectual Property

Commission (CIPC), or resigning from the audit without delay.

Company auditors are also reminded to refrain from providing

prohibited related secretarial work to their audit clients (even if they

have not been appointed as the Company Secretary) in terms of

Section 90(2)(b)(iv).

Where allowable secretarial work of an administrative nature is

provided to clients, auditors are further reminded to consider threats

to their independence in terms of the IRBA Code of Professional

Conduct for Registered Auditors.

Auditors are also required to comply with all the provisions of

Section 90(2) of the Companies Act and the


on the provision of non-audit services by the auditor of a company


which is available at .

Any transgression of these requirements that is detected during

inspections will be seen in a very serious light and result in a referral

for investigation, with substantial sanctions likely to be imposed.



The Inspections Department hosted the abovementioned

information session on 21 June 2018. The session was attended

by 475 individuals and it covered areas such as the IRBA’s 2017

Public Inspections Report outcomes, expected changes to the

IRBA’s Seventh Cycle Strategy and Process, key standards, as well

as a number of common inspection themes related to a lack of

documented evidence on an audit file.

The majority of inspection findings can be linked to a lack of

documented audit evidence on an audit file. The IRBA Inspectors

cannot accept verbal representations as audit evidence if it was not

documented as such on the archived audit file at the time when the

opinion was formed.

The session also emphasised an increased focus by the IRBA on

firm leadership who are ultimately responsible to drive consistent

sustainable high audit quality within their firms as part of an effective

quality control system.

Some of the inspection findings relating to documented evidence

can easily be fixed as they are mostly basic in nature and not

complex at all. Therefore, auditors are encouraged to ensure that

sufficient attention is given to documented evidence when reviewing

their files and applying appropriate levels of professional scepticism.

In doing so, they will ensure that an appropriate audit opinion that

is supported by sufficient appropriate audit evidence on the audit

file is issued.

The presentation can be accessed on


Guidance for RAs/Inspections.



In May the IRBA released its 2017 Public Inspections Report,

which reflects on key inspection findings and themes recorded

during the year. The report is aimed at registered auditors, including

those responsible for quality control within the firms, and other

stakeholders, such as audit committees, investors, company

directors and financial accountants, who are collectively responsible

for the integrity of reported financial information.

The objective of the report is to promote improvement in audit

quality at a broader level by providing a thematic analysis of key

inspection themes arising from firm and assurance engagement

(audit) inspections performed by the IRBA.

During the year, 23 (2016: 20) firm inspections and 197 (2016: 237)

file inspections were performed and reported on to the Inspections

Committee, with the majority showing one or more significant

deficiencies that require improvement. The Inspections Department

follows a risk-based approach, selecting audits with a higher public

interest exposure, such as audits of public interest entities (PIE),

listed entities and state-owned companies. It also selects any

statutory audits where risks could potentially expose the public and

the profession.

The nature and extent of the findings reported do not significantly

differ from what was reported in the prior two years, and this

highlights a pressing need for audit firms to analyse, remediate and

monitor reported deficiencies more effectively.

Inspections is a crucial regulatory function that gives effect to

the IRBA’s mandate and strategy to protect the public interest

by influencing auditors in pursuing consistent, sustainable high-

quality audits that adhere to the highest standards. Further to this,

all relevant stakeholders are encouraged to read the report and to

focus on the principles behind the findings to help identify areas

where the integrity of financial information and the quality of audits

require improvement.

Issue 42 | April - June 2018