Clarification on the Audit Requirements relating to the Business Accounts of Legal Practitioners

Clarification on the Audit Requirements relating to the Business Accounts of Legal Practitioners

• 27 May 2020
• Accounting
• South African Accounting Academy

In October 2019, CIPC issued a notice of the withdrawal of the non-binding opinion pertaining to Regulation 28(2)(a) of the Companies Regulations, 2011 to the Companies Act, 2008. This opinion applied to legal practitioners who are registered as companies in terms of the Companies Act. This opinion considered whether the holding of assets in the legal practitioners’ trust accounts is regarded as part of the ordinary course of the legal practitioner’s primary business.

As a result of the withdrawal of the opinion, the business accounts of legal practitioners who are subject to the Companies Act i.e. are registered companies, and who hold assets in trust in excess of R5 million at any time during the financial year are now required to be audited.

Legal practitioners who have interpreted the legislation differently in the past are now faced with complying with the requirements from the date of withdrawal of the opinion. Legal practitioners and their auditors will have to evaluate and agree on the way forward. This will include evaluating the independence of the auditors in terms of the IRBA Code of Professional Conduct as well as identifying other sections of the Companies Act that may be applicable to the legal practitioner who are subject to the Companies Act.

Click here to download the SAICA Media release.

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