IRBA: Maximum Fines for Auditors – Notice of withdrawal and reissue

---

IRBA: Maximum Fines for Auditors – Notice of withdrawal and reissue

• 24 January 2024
• Auditing and Assurance
• South African Accounting Academy

Per the Government Gazette Notice 49968 of 5 January 2024, it indicates in paragraph 4 that: The purpose of the proposed withdrawal of the Notice and a new determination of maximum amounts, is to provide for the maximum amounts for both sections 51(2) and 51B(3)(b) of the Act to apply per charge.

These prescribed maximum fines are a maximum limit and not fixed. The IRBA will in all cases apply proportionality and scalability when sanctioning matters of improper conduct, as the IRBA has always done. There are varying degrees of improper conduct and not every matter is sanctioned by way of maximum fines. 

The IRBA also has non-monetary sanctions at its disposal for improper conduct, which although it remains improper conduct does not have massive public impact. These non-monetary sanctions are generally remedial, encouraging continual professional development.

From the inception of the IRBA in 2006 by the enactment of the Auditing Profession Act, the maximum fines – which were then governed by the Adjustment of Fines Act – were set at a maximum of R200 000 per charge. This concept is therefore consistent with historical practice. Furthermore, the IRBA has always applied proportionality and scalability in the determination of monetary sanctions for improper conduct, and maximum fine limits are reserved for the most serious charges of improper conduct.

The maximum amounts for different categories are as follows (these have not changed since the previous notice in June 2023):

1. A maximum amount of—

1. R5 million per charge, as the amount envisaged in section 51(2) of the Act, which may be imposed on an individual registered auditor who admits guilt as contemplated in section 49(4)(a) of the Act; and

2. R15 million per charge, as the amount envisaged in section 51(2) of the Act, which may be imposed on a firm of auditors that admits guilt as contemplated in section 49(4)(a) of the Act; and

2. A maximum amount of—

1. R10 million per charge, as the amount envisaged in section 51B(3)(b) of the Act, which may be imposed on an individual registered auditor who is charged and found guilty or if the registered auditor admits guilt to the charges; and

2. R25 million per charge, as the amount envisaged in section 51B(3)(b) of the Act, which may be imposed on a firm of auditors that is charged and found guilty or if the firm admits guilt to the charges.

The comment period is open until Sunday 4 February 2024.

Explanation of the sanction periods vis a vis the versions of the Act amendments:

The effective periods of sanction will therefore be:

1. The period of transgressions that occurred before 15 June 2023, where the previous Act monetary fine of R200 000 per charge applies.

2. The period of 15 June 2023 to the date on which the final monetary sanctions are gazetted (March 2024*) where transgressions that occur are subject to the maximum fines set out in the Gazette published on 15 June 2023.

3. The period from when the final monetary sanctions are gazetted (March 2024 – which will be the anticipated date of publication of final monetary sanctions) onwards where transgressions that occur are subject to the maximum fines set out in the Gazette published on that date (March 2024 – which will be the anticipated date of publication of final monetary sanctions).

Click here to download the gazetted Notice 4234:

https://www.gov.za/sites/default/files/gcis_document/202401/49968gon4234.pdf

Relevance to Auditors, Independent Reviewers & Accountants:

• The Auditing Profession Amendment Act, Act 5 of 2021 was signed into law by the President and gazetted on 26 April 2021. The effect was to give the Independent Regulatory Board for Auditors (IRBA) the necessary powers to deliver more effectively on its mandate and remove some of the limitations of the Auditing Profession Act 26 of 2005 (the Act) before this amendment.

• As a registered auditor and member of IRBA, you need to be aware of the penalties that apply to you in terms of IRBA’s Disciplinary Process.

Relevance to Your Clients:

• None

0 COMMENTS

LEAVE A COMMENT