IRBA Newsletter Issue 54

Issue 54 | April-June 2021 10 All second reports indicating continuing reportable irregularities were sent to the relevant regulators and/or authorities, in line with the provisions of the Auditing Profession Act 26 of 2005 (APA) for action. Amendment of the 2015 Revised Guide for Registered Auditors on Reportable Irregularities in terms of the Auditing Profession Act (the RI Guide) We wish to draw attention to the notice issued to RAs on 17 May 2021 wherein the IRBA communicated that it has embarked on a project to amend the RI Guide. This is to give effect to the amendments made to the APA by the Auditing Profession Amendment Act 5 of 2021 (the Amendment Act), which came into effect on 26 April 2021. In addition, a warning has been added on the IRBA website, alerting readers to the fact that the RI Guide has not been updated for alignment to the Amendment Act, specifically relating to Section 45(7) and Section (8) thereof. A copy of the RI Guide can be found on the IRBA website. HIGHLIGHTS OF THE AUDITING PROFESSION AMENDMENT ACT 5 OF 2021 On 26 April 2021, the Auditing Profession Amendment Act was gazetted. Its amendments are aimed at strengthening the governance of the IRBA; enhancing its investigating powers; ensuring the efficiency and effectiveness of the disciplinary processes; increasing monetary sanctions that can be imposed for improper conduct; and ensuring the protection and sharing of information under the control of the IRBA. THE AMENDMENTS AT A GLANCE IRBA Board and Committees The Board, the Investigating Committee and the Disciplinary Committee must be independent from the profession, this means: • No RAs in these structures; and • Members may not share in the profits of RAs or any persons related to RAs, or receive payments from RAs, excluding pension benefits. Membership of the above structures must include persons who were previously RAs and have at least 10 years’ experience in signing audit opinions, and legal practitioners with at least 10 years’ experience practising law. Registration Requirements All RAs, or those desiring to be registered as such, must belong to a professional body that is accredited by the IRBA. Currently, SAICA is the only IRBA-accredited professional body. Persons convicted for offences related to theft, fraud, forgery, uttering a forged document, perjury, an offence under the Prevention and Combating of Corrupt Activities Act, or any offence involving dishonesty, will not be eligible for registration as auditors or candidate auditors, irrespective of the sentence imposed for such an offence. Reportable Irregularities An RA who has sent a first report to the IRBA, reporting any irregularity, may not be removed from the engagement by either his/ her firm or the client, until a second report is transmitted to the IRBA. In the event that such an auditor resigns from the firm, he/she must first do the necessary handover to the incoming auditor. Admission of Guilt Process The amendments introduce an admission of guilt process, which allows the IRBA, in respect of low-risk matters and subject to the respondent’s admission of guilt, to settle such matters without a referral for a disciplinary hearing. Sanctions Non-monetary sanctions may be imposed for charges of improper conduct. These may include an order to undertake certain training or an order to implement certain controls in the audit practice, among others. In addition to the above, the Minister of Finance is now empowered to determine and gazette the maximum fine that can be imposed by the IRBA. This will see the introduction of higher monetary sanctions for improper conduct. Investigation Processes The IRBA has the power to: • Subpoena an RA under investigation, or any person with knowledge of the matter, to produce information that relates to the investigation. • With consent, enter and search premises for information that is relevant to the investigation and seize any such information. • In the absence of consent, approach the court for a warrant to conduct a search and seizure process, to obtain information that relates to the investigation. LEGAL cont.