This article was prepared with the assistance of Lettie Janse van Vuuren, technical specialist at the SA Accounting Academy.
It’s been another busy month with regulatory and statutory changes stacking up in accountants’ in-trays. Here’s a brief rundown of some of the major changes. These will be covered in detail in the Monthly Compliance and Legislation Update webinar, hosted by Lettie Janse van Vuuren, on 22 May.
To book the webinar and claim your CPD hours, click here.
The Financial Matters Amendment Bill
The Financial Matters Amendment Bill was introduced in February, resulting in key changes to the Auditing Profession Act (APA) intended to strengthen independence and increase penalties for non-compliance. These are some of the key changes:
1. No auditors in public practice can serve on the governing structure (ie. the Independent Regulatory Board for Auditors, or IRBA), thus strengthening independent regulation in the public interest.
2. Clients cannot dismiss their auditor while the auditor is in the process of reporting a reportable irregularity, thereby strengthening the independence of the auditor and facilitating reporting of irregularities.
3. The Investigating Committee has the power of subpoena, search and seizure to facilitate speedier investigations.
4. The limitation on maximum fines have been removed.
5. The disciplinary process has been adapted to facilitate a speedier response to auditors who have been referred to a hearing.
Fines imposed by the Financial Sector Conduct Authority
The Financial Sector Conduct Authority (FSCA) imposed an administrative penalty of R350,000 on 36ONE Asset Management for contravening section 65 (3) of the Collective Investment Schemes Act.
The FSCA found that from August 2015 to 1 March 2018, 36ONE promoted investment into two unapproved funds: the 36ONE Hedge Portfolio and the 36ONE Offshore Portfolio. During the period of the contraventions, both these funds were registered in the Cayman Islands and were not approved by the FSCA to be marketed to the South African public.
The FSCA also imposed an administrative penalty of R487,000 on Global Credit Rating for contravening the Credit Rating Agency Rules when it was found to have issued a favourable rating to a prospective client in a clear conflict of interest. Global subsequently won a tender from the client, which the FSCA demanded be disgorged to the tune of R487,000.
An administrative penalty of R300,000 was also imposed on NKC African Economics for issuing a credit rating when it was not authorised to do so. NKC submitted to the FSCA that the contravention of the Credit Rating Services Act was unintentional and was rectified when brought to its attention.
Yes, Sars can make you pay for your audit
In Purlish Holdings versus SA Revenue Services (Sars), the Supreme Court of Appeal found that Purlish had earned revenue between 2011 and 2014 but had not at that time registered as a VAT vendor. The company submitted “nil returns”, but Sars conducted an audit and found that the company owned substantial VAT. The company argued that Sars had not been prejudiced as it had paid provisional tax due to SARS in excess of its assessed tax liability by about R1.3 million, which could simply have been set off against the outstanding VAT amount. Penalties were also imposed by Sars for negligence.
In its ruling, the SCA confirmed that taxpayers may be held to account for the additional time and human capital employed by SARS when it conducts an audit. To view the source article click here.
South Africans expected to answer emails and calls outside of work hours
ENSAfrica reports that South African employees earning above roughly R17,000 a month (those earning below this threshold are considered “vulnerable workers”) may be required to answer emails and phone calls outside of work hours. The Basic Conditions of Employment Act (BCEA) – which regulates working hours and overtime – provides certain protections for vulnerable workers. Many companies spell this out in their employment contracts, though the law may need amendment to clarify this going forward. To view the source article click here.
CCMA receives over 6 000 wage disputes in four months
Moneyweb reports that the Commission for Conciliation, Mediation and Arbitration (CCMA), which is responsible for dispute resolution between employees and employers, received over 6 000 referrals related to wage disputes in the first four months of 2019.
The bulk – 5 314 of the total of 6 066 – were from workers earning below R204,430 per annum complaining about statutory non-payment from their employers. Following amendments to certain provisions in the Basic Conditions of Employment Act, as of January 2019 workers falling in this category who experience underpayment and non-payment of salaries from their employers can refer their disputes to the CCMA.
The remaining 752 of the referred disputes were specifically related to the National Minimum Wage Act, which also came into effect at the start of the year and stipulates that workers should get paid a rate of R20 an hour. To view the source article click here.
Competition Commission puts high data costs under the spotlight
South African mobile giants MTN and Vodacom closed yesterday's trading session in the red after they took flak from the Competition Commission, which accused them of charging higher data prices in South Africa than they do in the other territories in which they do business. The commission also called for sweeping changes that would see the companies forced to reduce their data prices. The mobile operators have argued that they are justified in charging higher prices for data in SA than elsewhere due to the higher investment in their local networks. To view the source article click here.
Consumer goods ombud names and shames companies
The Consumer Goods and Services Ombudsman Office (CGSO) has decided to name and shame companies that have failed to cooperate with its office in relation to monies being paid and goods or services not being delivered or provided. The CGSO warned that consumers should be cautious when dealing with these companies.
The wall of shame: the companies named include AF-FSL Glass Distributors, Benna Bok, 4 Cities Removers, Milo Design, Appliance House. To view the source article click here.
Money laundering, terror financing under spotlight with South Africa review
FA News reports that a panel of experts from the International Monetary Fund (IMF), the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) and the Financial Action Task Force (FATF) is due to test the effectiveness of South Africa’s legislative and institutional capability to detect and combat money laundering and terrorist financing.
Regular peer reviews of their member jurisdictions will be undertaken to evaluate the extent to which countries meet international standards for anti-money laundering, combating of terrorist financing and proliferation of weapons of mass destruction. The FATF is an inter-governmental body for developing and monitoring implementation of the global standards.
South Africa is one of many countries including Benin, Cyprus, Gabon, Madagascar, Mauritius, Mozambique, Tanzania, the Russian Federation, Turkey and others, that will undergo this type of assessment this year.
The National Treasury and the Financial Intelligence Centre (FIC) are co-ordinating South Africa’s inputs for the assessment.
Draft Chartered Accountancy Profession Sector Code released for comment
The revised Chartered Accountancy Profession Sector Code (CA Charter) has been released for public comment. According to transformation commentators, the CA Charter will significantly increase the pace of transformation in the sector. One of its goals is to transform skills development in the economy by addressing the CA profession in a united manner. The CA sector seeks to achieve its stated objective of growing the number of Black people in the profession to reflect the country’s population demographics.
The SA Institute of Business Accountants (Saiba) says it will oppose the charter “as it benefits the dominant player in the sector (Saica). There is no other sector that has a charter that benefits a privately controlled entity. There are supposed to be sector charters for mining, banking and other sectors, but there is no charter for De Beers or Absa – which are private sector companies. So we will be objecting to this charter on the basis of anti-competitiveness and the fact that it is not in line with the BBBEE principles of broad empowerment. We will ask that that it be replaced with a Accountancy Profession Charter.” To view the source article click here.
Comments should be addressed to: write to [email protected].
Other legislation on its way
The Draft Central Application Service Bill
The Bill seeks to:
The Co-operatives Act (Regulations and Principles)
This Act provides for the formation and registration of co-operatives, the establishment of a Co-operatives Advisory Board, the winding up of co-operatives and matters connected therewith.
The National Heritage Resources Agency lists objects for which permits required for export
The South African Heritage Resources Agency (SAHRA) has issued a list of items that are protected in terms of the National Heritage Resources Act and for which an application to obtain a permit from SAHRA must be made to determine whether they may be temporarily or permanently exported, or not.
These include zoological, paleontological and botanical specimens, rare geological specimens, and items of cultural, historical or aesthetic significance whether originating in SA or elsewhere. To view the gazette click here.
The Tourism Act (Draft Tourism Amendment Bill)
Tourism Act of 2014 has been amended to provide thresholds for short -term home sharing (such as Airbnb); to rename of the South African Tourism Board as South African Tourism; to provide for additional competence requirements of tourists guides; to provide for the regulation of safety in relation to tourist guiding and the improvement of the tourist guiding experience. To view the gazette click here.
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