Registered Auditors: New Maximum Fines for Improper Conduct gazetted

Registered Auditors: New Maximum Fines for Improper Conduct gazetted

• 13 June 2024
• Auditing and Assurance
• South African Accounting Academy

This followed the publication of a notice for public comment, in January 2024, proposing the withdrawal of the notice of maximum fines previously gazetted on 15 June 2023 and the publication of new maximum fines.

The purpose of Government Notice No. 4933 of 6 June 2024, withdrawing Government Notice No. 3549 of 15 June 2023 and determining new maximum amounts, is to provide for the maximum amounts for both sections 51(2) and 51B(3)(b) of the Auditing Profession Act, 2005,1 as amended, to apply per charge.

The addition of the words per charge in respect of fines imposed following a disciplinary hearing (which was the main amendment) was intended to align with the imposition of fines in respect of matters finalised through admission of guilt processes. This, having been the intention prior to publication of the 15 June 2023 notice.

Following a 30-day comment period (to the notice issued in January 2024) and having reviewed the written comments received by National Treasury, the Minister determined the following maximum amounts as maximum fines that may be imposed on registered auditors found guilty of improper conduct:

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
3. 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 charge; and
4. 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 charge.

These maximum fines will be applicable to improper conduct committed from 6 June 2024, being the date of publication of gazette notice 4933. Therefore, the notice does not apply retrospectively, and the maximum fines promulgated by the Minister on 15 June 2023 will remain applicable for improper conduct committed between 15 June 2023 and before 6 June 2024.

A framework which will guide the implementation of the maximum fines in a proportional and scalable manner will be issued by the Independent Regulatory Board for Auditors (IRBA) in due course, for public comment, before adoption by the Board.

Access the Media Statement issued by National Treasury at:

https://www.treasury.gov.za/comm_media/press/2024/2024060601%20Media%20statement%20-%20Notice%20of%20maximum%20fines%20for%20registered%20auditors%20guilty%20of%20improper%20conduct.pdf

Click here to download the Gazetted Notice:

https://www.gov.za/sites/default/files/gcis_document/202406/50765gon4933.pdf

Relevance to Auditors, Independent Reviewers & Accountants:

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

0 COMMENTS

LEAVE A COMMENT