IRBA Newsletter Issue 52

Issue 52 | October-December 2020 11 LEGAL DISCIPLINARY COMMITTEE Matters Referred for Disciplinary Hearings Following the finalisation of one matter, there are currently 19 open cases that have been referred to the Legal Department for disciplinary hearings, and these matters are at different stages of the process. Matters Heard by the Committee During the period under review, four matters were heard by the Disciplinary Committee. Two of these matters are pending sanction hearings, which are scheduled for the first quarter of 2021. The other two matters have been finalised and the details that pertain to them are captured herein below. C vs IRBA The respondent, a registered auditor, was charged with one charge of improper conduct, following an investigation by the IRBA. The charge against the respondent emanated from a complaint received from the Office of the Director of Public Prosecutions, following a guilty plea by the respondent in criminal proceedings relating to non-compliance with tax legislation, specifically, failure to pay. The nature of the charges against the respondent can be summarised as follows: 1. Failure to pay the South African Revenue Service (SARS) an amount of R21 485.55 for tax deducted from his employees during 2002 and 2006. 2. Failure to submit five EMP/PAYE 201 returns to SARS between 2010 and 2011. 3. Notwithstanding registration as a VAT vendor, failure to pay SARS VAT amounting to R473 846.26 between 2005 and 2011, and to submit VAT returns for the fourth VAT period of 2005 and the sixth VAT period of 2008. 4. Failure to submit his entities’ income tax returns between 2005 and 2012. The IRBA submitted that the respondent’s conduct, as outlined above, contravened Rule 2.2, in as far as it constituted legislative contravention; Rule 2.6, in so far as it was at odds with the relevant provisions of the Code of Conduct; and Rule 2.17, in so far as it brought the profession into disrepute. The respondent pleaded guilty to all the charges; and in light of the guilty plea, the matter was referred for a sanction hearing before the Disciplinary Committee (committee), in terms of Section 51 of the Auditing Profession Act (APA), read together with Rule 7 of the Disciplinary Rules. The hearing convened on the 3rd and 4th of September 2020, wherein the parties were given an opportunity to submit evidence in mitigation and aggravation of the sanction. During the sanction hearing, the respondent raised a special plea arguing that the IRBA does not have the jurisdiction to discipline him, as the conduct for which he was charged related to conduct in his personal capacity and not his professional capacity, as contemplated in the Rules Regarding Improper Conduct and/ or the IRBA Code of Conduct. After hearing the arguments, the committee dismissed the special plea on the grounds that the respondent, by virtue of his plea of guilt and participation in the proceedings, acquiesced to the jurisdiction of the IRBA to discipline him. Furthermore, the committee could not consider a special plea at a sanction hearing. In considering what constituted the appropriate sanction for the charge preferred against the respondent, the committee took into account the following: 1. The serious nature of the charge preferred against the respondent, in respect of which he had pleaded guilty. 2. The fact that there was no actual evidence before the committee in support of the contention that the respondent’s conduct had in fact brought the profession into disrepute. To the contrary, evidence tendered on behalf of the respondent indicated that even after disclosure to his clients, the respondent only lost two clients and gained more afterwards. 3. The respondent had already been punished for contravention of tax legislation by the National Prosecuting Authority and paid the relevant fine. In the premise of the above, the committee then ordered the following sanction to be imposed on the respondent: 1. Cancellation of the respondent’s registration with the IRBA, which cancellation is suspended for a period of five years on condition that the respondent is not found guilty of similar improper conduct within that period; 2. Payment of R150 000, as contribution to the IRBA’s costs; and 3. Publication in general terms. IRBA vs M Jordan & Crowthe Two respondents, Mgcinisihlalo Jordan and Daniel Crowther, who are registered auditors from Deloitte, were charged with improper conduct. Jordan was the engagement partner for African Bank, and Crowther was to support Jordan in the audit. Jordan faced 10 charges of improper conduct, while Crowther faced only one charge. The merits hearing took place over 67 days between 2018 and 2020, with arguments being heard on 8 and 9 June 2020. The merits decision was issued on 5 October 2020, with the ruling finding Jordan guilty of five charges and acquitting him of the other five. Crowther was acquitted of the one charge he faced. Subsequent to this, a sanction hearing for Jordan was convened on 21-23 November 2020, wherein the committee heard evidence in mitigation and aggravation of the sanction. It then issued its decision on 9 December 2020, imposing various sanctions. Copies of both the merits ruling and sanction ruling, together with summaries thereof, are available on the IRBA website through the following links: • Merits Ruling . • Sanction Ruling .