Once again we take a look at the legal and regulatory changes over the last month as they apply to auditors and accountants. This report was compiled with the assistance of technical advisor Lettie Janse van Vuuren.
Book your seat for the 30 October webinar when Lettie will guide you through the key changes for the last month.
Here’s a snapshot:
The Big 5 changes:
Other Acts and articles:
IRBA adopts new ISA 540 standard for the audit of accounting estimates
The International Auditing and Assurance Standards Board (IAASB) issued the International Standard on Auditing (ISA) 540 (Revised), Auditing Accounting Estimates and Related Disclosures, on 3 October 2018.
The Independent Regulatory Board for Auditors (IRBA) has approved ISA 540 (Revised) for adoption, which sets new standards for the audit of accounting estimates.
Banks, insurers and other financial service providers have seen revolutionary changes in their accounting practices as they have moved to new accounting standards that transformed the way they deal with loan provisions (International Financial Reporting Standard (IFRS) 9, Financial Instruments) and insurance contracts (IFRS 17, Insurance Contracts). ISA 540 (Revised) reflects this rapidly evolving business environment and ensures that the standard continues to keep pace with the changing market.
Some of the significant revisions include:
• An enhanced risk assessment that requires auditors to consider complexity, subjectivity and other inherent risk factors in addition to estimation uncertainty. This will drive auditors to think more deeply about the risks inherent to accounting estimates.
• A closer link between the enhanced risk assessment and the methods, data and assumptions used in making accounting estimates, including the use of complex models.
• A requirement for a separate assessment of inherent risk and control risk.
• Specific material to show how the standard is scalable to all types of accounting estimates.
• Emphasis on the importance of applying appropriate professional scepticism when auditing accounting estimates to foster a more independent and challenging sceptical mind-set in auditors. An example is the introduction of a ‘stand-back’ requirement or ‘overall evaluation based on audit evidence obtained’ that requires auditors to take into account all relevant audit evidence obtained, whether corroborative or contradictory.
SARS issues Employer Reconciliation guide
SARS has issued an Employer Reconciliation guide to assist employers with their reconciliation submission to fulfil their tax responsibilities and to ensure a smooth Employer Reconciliation period (interim and annual).
The Income Tax Act requires employers to:
Employment Equity online reporting portal now open
In terms of the Employment Equity Act, designated employers must their annual employment equity report by 1 October. The electronic submission of the employment equity report is open until 15 January 2020 and can be accessed here.
A designated employer means:
Joburg High Court lays out path for exiting debt review
A September judgment by a full bench of the Johannesburg High Court paves the way for thousands of consumers under debt review to rehabilitate themselves. The judgment is good news for those who went under debt review without magistrates making it an order of court. Provided they have settled their short-term debt obligations, but not their mortgage or other long-term debts, they can ask their debt counsellors to issue a so-called clearance certificate and have their credit records sanitised at the credit bureaus. This means they can once again access the credit markets.
The applicants in the case were Hermanus Janse van Vuuren and Fabrian Nel, both of them consumers who ended up under debt review but whose circumstances had changed and they were now able to service their original credit agreements. Their debt counsellor, however, refused to issue them clearance certificates so they decided to seek clarity from the court.