Auditor Opinions: Management Rule of the Sectional Titles Schemes Management Regulations

Auditor Opinions: Management Rule of the Sectional Titles Schemes Management Regulations

• 17 September 2024
• Auditing and Assurance
• South African Accounting Academy

Summary:

The South African Institute of Chartered Accountants (SAICA) has published an updated version of their communication on opinions required of the auditor in terms of Management Rule 26(5)(c) of the Sectional Titles Schemes Management Regulations (STSMR), 2016.

Article:

Rule 26 addresses the financial records, budgets, reports and audit of a body corporate.

Rule 26(5)(c) requires that the audit of a body corporate’s annual financial statements must include opinions as to whether or not:

1. the annual financial statements accurately reflect the financial position of the body corporate for the financial year under review, with such qualifications and reservations as the auditor considers necessary;
2. the body corporate has complied with the accounting requirements set out in rules 21, 24 and this rule 26, with a specific description of any failure to comply with such requirements;
3. the books of account of the body corporate have been kept and its funds have been managed so as to provide a reasonable level of protection against theft or fraud; and (iv) the financial affairs of the body corporate appear to be effectively managed.

Representatives from the Independent Regulatory Board for Auditors (IRBA) and SAICA engaged with representatives from the Community Schemes Ombud Service (CSOS) to explore related challenges and the interpretation of what is required from the registered auditor in the interest of the members of body corporates. The Chief Ombud agreed to the approach that is outlined in this communication.

The document was previously revised in September 2022 and again in August 2024.

Contents:

1. Introduction – Management Rule 26(5)©
2. The body corporate’s audited annual financial statements as contemplated in Rule 26(5)(c)(i)
   • Financial Reporting Frameworks
   • Going Concern
   • Other Information
3. Compliance by the body corporate with certain accounting requirements in terms of Rule 26(5)(c)(ii)
   • The consideration of laws and regulations in an audit of financial statements
4. Auditor opinions as contemplated in terms of Rule 26(5)(c)(iii) and (iv) (in accordance with the latest SAAPS3 Revised March 2024)
5. Illustration of separate section in the auditor’s report: Report on other legal and regulatory requirements
6. Appendix 1 & 2: Illustrative Auditor’s Reports

This document was revised in August 2024 to reflect the guidance contained in the non-authoritative publication of the International Auditing and Assurance Standards Board (IAASB)’s International Accounting Standards Board (IASB) Liaison Working Group: Implications for IAASB Standards of the IFRS Foundation's recent updates to its trademark guidelines relating to standards issued by the IASB.

Click here to download the 18-page Guidance document:

https://saicawebprstorage.blob.core.windows.net/uploads/resources/Sectional_Titles_SAICACommunication_Revised_2024_Final.pdf

Relevance to Auditors, Independent Reviewers & Accountants:

• Members of IRBA should stay up-to-date with the latest developments and guides that affect registered auditors.
• As an auditor, you need to consider whether your audit opinion is in line with Management Rule 26(5)(c) of the Sectional Titles Schemes Management Regulations.
• As a practitioner, you should be aware of the latest publications and guidance document issued by regulators, e.g. SAICA.
• When expressing an opinion on the financial statements of bodies corporate, auditors should comply with ISAE3000 (Revised), ISA 720 (Revised) and SAAPS 3 (Revised March 2024)

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