IRBA NEWSLETTER ISSUE 47

Issue 47 | July - September 2019 10 INVESTIGATIONS cont. their audit staff within 60 days of the imposition of the sentence, and must provide evidence of compliance to the IRBA. Matter 7 The respondent accepted the audit engagement of the client while the network firms were appointed as the managing agents and insurance brokers of the client, which resulted in a significant independence threat in terms of the Code of Professional Conduct. The respondent was sentenced to a fine of R100 000, of which R50 000 has been suspended for five years on condition that the respondent is not found guilty of improper conduct relating to work done during the period of suspension; no cost order; and publication by the IRBA in general terms. Matter 8 The respondent failed in numerous instances and over multiple years to comply with the documentation requirements of the International Standards on Auditing. In addition, the audit report format issued by the respondent was outdated. Furthermore, the respondent failed to comply with the standards in respect of the re-issued audit opinion on the revised financial statements. The respondent was sentenced to a fine of R150 000, of which R100 000 has been suspended for three years on condition that the respondent is not found guilty of improper conduct relating to work done during the period of suspension; no cost order; and publication by the IRBA in general terms. Matter 9 The matter was a referral from the Inspections Committee. The respondent failed to obtain sufficient appropriate evidence to support the opinions expressed, as required by the International Standards on Auditing. Furthermore, the respondent onward invoiced the Company for the preparation of the financial statements in contravention of the Section 90 Guide. The respondent was sentenced to a fine of R100 000, of which R50 000 has been suspended for three years on condition that the respondent is not found guilty of improper conduct relating to work done during the period of suspension; no cost order; and publication by the IRBA in general terms. Matter 10 The respondent failed to document sufficient appropriate audit evidence, as required by the International Standards on Auditing, in respect of tax compliance, liabilities, assets and journal entries. Furthermore, the respondent expressed an incorrect audit opinion as they did not comply with South African Auditing Practice Statement 3 and the guidance issued by SAICA on Sectional Title Schemes. In addition, there was an independence threat not evaluated on the audit file relating to a director of the audit firm being the son-in-law of a trustee of the Body Corporate. The respondent was sentenced to a fine of R140 000, of which R70 000 has been suspended for five years on condition that the respondent is not found guilty of improper conduct relating to work done during the period of suspension; no cost order; and publication by the IRBA in general terms. In addition, the respondent must arrange and ensure that external training on the auditing of body corporates is attended by the respondent and their audit staff within 60 days of the imposition of the sentence, and must provide evidence of compliance to the IRBA. Matter 11 The respondent issued audit opinions before the financial statements were approved by the directors. These financial statements contained several material errors and were subsequently withdrawn. The respondent did not review the steps taken by management to ensure that anyone in possession of the previously issued financial statements was informed of the situation and therefore did not comply with International Standards on Auditing. Furthermore, the respondent failed to report a reportable irregularity to the IRBA, as required by the Auditing Profession Act, regarding the late preparation of the financial statements by the Company. The respondent was sentenced to a fine of R150 000, of which R75 000 has been suspended for five years on condition that the respondent is not found guilty of improper conduct relating to work done during the period of suspension; no cost order; and publication by the IRBA in general terms. Matter 12 The matter was a referral from the Inspections Committee. The Company declared dividends of R3m during the year which were paid to shareholders subsequent to year-end. These dividends were erroneously disclosed as paid in the cash flow statement. The respondent thus issued an inappropriate audit opinion as this amount exceeded materiality of R1.2m. The respondent was sentenced to a fine of R40 000, of which R20 000 has been suspended for three years on condition that the respondent is not found guilty of improper conduct relating to work done during the period of suspension; no cost order; and publication by the IRBA in general terms. Matter 13 The respondent submitted a first reportable irregularity report to the Companies and Intellectual Properties Commission, but subsequently failed to submit the second report to the commission within the required time. The respondent was sentenced to a fine of R20 000, of which R10 000 has been suspended for three years on condition that the respondent is not found guilty of improper conduct relating to work done during the period of suspension; no cost order; and publication by the IRBA in general terms.