IRBA Newsletter Issue 53

Issue 53 | January-March 2021 12 Matter 17 The respondent failed to obtain sufficient appropriate audit evidence on property, plant and equipment, revenue and related parties. The comparative figures in the financial statements were not yet audited; however, the respondent did not consider the impact of the unaudited comparative figures on the audit report prior to signing the audit report. Furthermore, the respondent failed to declare the audit engagement performed in the annual assurance declaration to the IRBA. The respondent was sentenced to a fine of R200 000 for charge 1 and R40 000 for charge 2, 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. 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. Furthermore, the Inspections Department of the IRBA has been requested to conduct an inspection of the respondent’s engagement files within the next year; and the respondent is required to share the outcome of this inspection with all audit clients within 60 days of receiving the outcome. Matter 18 The matter was a referral from the Inspections Committee. The respondent failed to obtain sufficient appropriate audit evidence on the intergroup loan receivable, revenue, cost of sales and work in progress. In addition, the respondent was responsible for the separate and consolidated financial statements of the company; however, the audit report issued by the respondent did not identify which sets of financial statements were covered. The respondent was sentenced to a fine of R100 000, of which R60 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 19 The respondent failed to obtain sufficient appropriate audit evidence on interest expenditure and accounts payable. The respondent did not identify inconsistent references in the financial statements relating to the accounting standards used to prepare the financial statements. The respondent was sentenced to a fine of R80 000, of which R40 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 20 The respondent failed to obtain sufficient appropriate audit evidence on investments and services provided by a service organisation. 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 21 The respondent failed to obtain sufficient appropriate audit evidence on revenue and intercompany balances, and also failed to identify incorrect and incomplete disclosures in 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 22 The respondent failed to obtain sufficient appropriate audit evidence on biological assets, as the risk was incorrectly assessed. The respondent did not perform tests on the relevance and reliability of key data and assumptions used by an expert relating to biological assets. Furthermore, the respondent did not appropriately address the risk regarding management override of controls. 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 23 The respondent failed to obtain sufficient appropriate audit evidence on revenue, inventories, impairment of significant risk areas and going concern. In addition, the respondent failed to obtain an understanding of the entity’s controls relevant to significant risk areas. The respondent was sentenced to a fine of R120 000, of which R60 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 24 The respondent failed to obtain sufficient appropriate audit evidence on investments. Furthermore, the respondent did not appropriately address incomplete and outdated assurance reports on controls at a service organisation. INVESTIGATIONS cont.