IRBA NEWSLETTER ISSUE 47

Issue 47 | July - September 2019 2 FROM THE CEO’S DESK In August, and to coincide with Women’s Month, the IRBA hosted its first outreach to young female Audit Development Programme (ADP) prospects, registered candidate auditors (RCAs) and registered auditors (RAs). The event, hosted at the IRBA offices, gave directors and staff the opportunity to interact with females in the auditing profession and hear their views on the ADP. Recent events have highlighted the importance of diversity when we seek alternative views, opinions and recommendations – and this must apply equally to the profile of registered auditors (RAs) in South Africa. The profession remains white male dominated; and while racial transformation is governed by black economic empowerment targets, I strongly believe that transformation is about gender too. Duringourengagement,we identifiedanumberofmisunderstandings among prospective auditors with regard to: what the ADP entails; when newly qualified professional accountants should commence on the programme; and what should be achieved once they have completed the ADP. The first misconception that arose in our discussions at the event was around when to register for the ADP. We were surprised to hear that many of the young professionals believe that you should only register when you are going to be appointed as a or promoted to partner. However, while qualifying as a professional accountant means one can perform the associated tasks and roles, this does not imply that they have the appropriate expertise and experience to undertake a statutory audit and assume all the professional responsibilities of an RA. As from 2014, chartered accountants who have completed their training contracts, both at an auditing firm and in commerce, write the same Assessment of Professional Competence (APC) exam. While this exam includes topics on the assessment of assurance, it is different from the Public Practice Examination (PPE) that was a specialised auditing exam. This is why the requirement of 18 months on-the-job specialised training forms the core of the ADP for audit specialisation, and should take place as early as possible in the career of a prospective auditor. This period of relevant audit development is necessary to develop the competence of a professional accountant to a point that is appropriate to be an RA. During this period, the capabilities already consolidated during the professional body training contract are further refined and developed, as the prospective RA hones audit skills while overseeing trainees at supervisory and managerial levels. The IRBA recommends that RCAs should register for the ADP soon after obtaining their professional accountant qualification. This should be after the successful completion of a training contract and the APC. Without completing theADP requirements, aprofessional accountant cannot register as an RA. Through following the structured ADP Framework, the prospective auditor takes on more responsibilities and is exposed to the full cycle of the audit, with the support of the oversight registered auditor (ORA). During this time, both technical and non-technical competencies are developed under the guidance of the ORA and documented as part of the Portfolio of Evidence. The second misconception was that the ADP is not required when one has completed their professional body training contract at an auditing firm. On the contrary, the training contract is designed for one to attain only the competencies needed to achieve the professional accountant status. The ADP, on the other hand, is a step beyond the training contract. It is a period of specialisation undertaken by professional accountants who want to become RAs. It provides a context wherein the consolidated capabilities developed during the training contract can be refined in a more complex learning environment and in performing roles more senior to those undertaken during the training contract. Therefore, tasks must increase in complexity and level of responsibility as the RCA progresses through the ADP. The RCA will undertake more responsibility for those aspects of the audit engagement that pose a greater risk to the firm, the client and other stakeholders. By the end of the ADP, RCAs are expected to have acquired and demonstrated competence to a level expected of an RA. A further misconception is that the additional requirements to complete the ADP and register as an RA are a “burden”. However, for those professional accountants who want to further their career and remain in the auditing profession, completing the ADP would equip them with structured and formalised means to obtain the required skills and competencies to be an RA. That brings us to the last misconception, which is that the competencies required to be a registered auditor are the same as those needed to be a chartered accountant. This, however, is not true as without the necessary audit experience and specialisation, it is not possible to be eligible to register as an RA. The unfortunate consequence of the combined effect of these misconceptions is that certain professionals we talked to were already doing work and gaining relevant experience that could have contributed to their 18-month programme. Also, these professionals were taking on responsibilities and tasks that would otherwise have been considered as forming part of a structured programme of audit development, had they been registered on the ADP. For the benefit of those recently qualified professional accountants who express an interest in audit specialisation, it is imperative that audit firms offering the ADP get those prospective candidates registered on the ADP as soon as possible. That way, the firms will ensure that all specialised training is properly and adequately structured and recorded. The profession has been under scrutiny and pressure with regard to matters of audit quality. So, it is imperative that firms apply the ADP properly, take responsibility for developing audit skills and ensure