LEGAL c o n t .
?
Copy of share registers for both entities.
The respondent claims that he acted in good faith on the
basis of the information provided. But the respondent
seems to have unwittingly placed undue reliance on the
share registers presented to him as proof of the
shareholding, which registers were clearly reconstructed.
The respondent was therefore not properly appointed as the
new auditor of the two entities and should not have made the
requested changes to the CIPC records of the two
companies.
The respondent was fined R30 000, of which R15 000 was
suspended on conditions and R5 000 contribution towards
costs and publication in general terms only.
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One matter
related to furnishing incorrect assurance
reports to the Law Society and not detecting theft in
the attorney’s trust account. The matter was investigated by
the Law Society as well. The committee found that the
respondent was negligent in the conduct of his audit in that:
the respondent was aware that there was an accounting
breakdown in the attorney's firm resulting in a scope
limitation;
The Law Society was conducting an investigation into the
accounts of the attorneys prior to the date of the report
produced by the respondent to the Law Society, but there
is no evidence to show that the respondent took these risk
factors into account, or applied the necessary
professional scepticism when conducting the
engagement.
It is clear from his work papers that the respondent failed
to reduce engagement risk to an acceptable level.
The respondent was fined R100 000, of which R50 000 was
suspended on conditions, and a R5 000 contribution to
costs and publication in general terms only.
?
One matter
related to not detecting theft; audit negligence
(no bank confirmation letter). The complainant's company
suffered losses due to fraudulent activity and theft by the
administrative director (who subsequently committed
suicide), including the manipulation of electronic bank
statements.
The allegation is that the practitioner failed to detect these
irregularities by accepting bank statements / documents
directly from the administrative director, and failed to do
third-party verification with the bank (or to obtain electronic
copies himself, if electronic copies were used). The
respondent's own work papers indicate that the balances
will be agreed-to bank statements. This failure is a
contravention of the auditing standards.
The respondent was fined R50 000, of which R20 000 was
suspended on conditions, and a R5 000 contribution to
costs and publication in general terms only.
One matter
was
referred back
to the Investigating
Committee for reconsideration.
Decision to charge and matter referred to the Disciplinary
Committee
Two matters
were referred to the Disciplinary Committee for
disciplinary hearings.
The Committee sat twice during this period (26 November
2014 and 9 December 2014) to hear threematters.
FIRSTMATTER
On 26 November 2014, the Committee considered the matter
of Mr Johan Nel. The Respondent was present and
represented. The Respondent pleaded guilty to, and was
found guilty of, three charges levelled against him, one of
which involved an element of dishonesty.
Charge One
The Respondent pleaded guilty to contravening the rules
regarding improper conduct, 2.4.2, 2.6, and 2.17.
In respect of the first charge, the respondent unlawfully
misappropriated certain funds held by himon behalf of a client.
At all material times, he was not able to fully account to his
client regarding the funds held on its behalf and was not able to
make payment of the funds, interest earned and receipts in
favour of the client on demand.
Charge Two
The Respondent pleaded guilty to contravening the rules
regarding improper conduct 2.2, 2.6, 2.17 and the old
Disciplinary Committee
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Issue 28 October 2014 - March 2015
