IRBA NEWSLETTER ISSUE 47

Issue 47 | July - September 2019 9 INVESTIGATIONS INVESTIGATING COMMITTEE The Investigating Committee met once during this period and referred 19 matters to the Disciplinary Advisory Committee. DISCIPLINARY ADVISORY COMMITTEE The Disciplinary Advisory Committee met once during this period and concluded on 26 matters. Decisions not to charge One matter in terms of Disciplinary Rule 3.5.1.1 – the respondent was not guilty of improper conduct. One matter in terms of Disciplinary Rule 3.5.1.2 – there is a reasonable explanation for the respondent’s conduct. Decisions to charge and matters finalised by consent order Thirteen matters were finalised by consent order. Matter 1 The respondent issued a modified audit opinion on the client, but failed to communicate the deficiency in internal control to those charged with governance in writing, thus contravening the requirements of the International Standards on Auditing. 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. Matter 2 The matter was a referral from the Inspections Committee. The Company did not prepare consolidated financial statements and did not have adequate disclosures in this regard, as required by International Accounting Standards. The respondent failed to identify this non-disclosure. Furthermore, the respondent failed to document the procedures, as per the International Standards on Auditing, regarding the retraction and re-issuing of the financial statements. 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 3 The respondent was the engagement partner responsible for the tax affairs of the client. The respondent failed to timeously inform the client of penalties raised by the South African Revenue Service. 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 4 The matter was a referral from the Inspections Committee. The respondent failed to obtain sufficient appropriate evidence, as required by the International Standards on Auditing, on numerous balances and transactions, and also on risk assessment, reliance on a management expert, use of service organisations, comparative information and subsequent events. The respondent was sentenced to a fine of R200 000, of which R100 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 practical application of auditing standards 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 5 The matter was a referral from the Inspections Committee. The Company did not prepare consolidated financial statements. The respondent failed to document evidence to verify that the Company could apply the exemption criteria as set out in the International Financial Reporting Standards for Small and Medium-sized Entities. 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 6 The respondent was made aware of accounting irregularities on several occasions pertaining to related parties, expenditure and journal entries, but failed to appropriately address these risks as required by the International Standards on Auditing. As a result, the audit opinion issued by the respondent was inappropriate. In addition, the respondent failed to report reportable irregularities to the IRBA, as required by the Auditing Profession Act, in respect of the accounting irregularities by the director and the late preparation of the financial statements by the Company. The respondent was sentenced to a fine of R200 000, of which R100 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 practical application of auditing standards is attended by the respondent and