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I NVEST I GAT I ONS
Fifteenmatters were finalised by consent order.
Matter 1
– The respondent was aware, prior to signing the
modified audit opinions for two companies in the same group,
of significant subsequent events in both companies which
management had failed to disclose in the respective financial
statements. In addition, the respondent failed to document
considerations for concluding on the classification of a current
loan as a non-current loan in both companies. Accordingly, the
financial statements did not provide the classifications
necessary to achieve fair presentation.
With respect to another company in the group, the respondent
was aware, prior to signing the unmodified audit opinion, of
significant subsequent events which management had failed
to disclose in the financial statements. In addition, the financial
statements did not in all material respects comply with the
requirements of IAS 24. Accordingly, the respondent's audit
opinion was inappropriate.
The respondent was sentenced to a fine of R150,000, of which
R37,500 has been suspended for three years on condition that
the respondent is not found guilty of unprofessional conduct
committed during the period of suspension, costs order of
R5,000 and publication will not include the respondent's
name.
Matter 2
– The respondent issued an unmodified limited
assurance report on the pro forma financial information in a
client's prospectus without performing adequate procedures
and obtaining sufficient appropriate evidence to substantiate
the conclusion in the report.
The respondent issued an unmodified reporting accountant's
report on the profit forecast and capital growth in a client's
prospectus without performing adequate procedures and
obtaining sufficient appropriate evidence to substantiate the
conclusion in the report.
In the audit of a client, there was a significant fair value
adjustment of a loan book and the respondent did not
document sufficient appropriate evidence to conclude
thereon. In addition, the respondent did not detect a material
error in the calculation of the client's deferred tax. There were
also a number of disclosure issues that the respondent had not
identified.
With effect from November 2015, the Legal Department was
split into two separate departments – Legal and
Investigations. As a result, the Investigating Committee and
Disciplinary Advisory Committee reports now reside with the
Investigations Department.
As stated in the December 2015
IRBA News
, due to the early
publication of that issue the matters considered by the
committees between October 2015 and December 2015 will
appear together with matters from the first quarter of 2016.
This report therefore covers the period October 2015 to March
2016.
The Investigating Committee met four times during this period
and referred 71 matters to the Disciplinary Advisory
Committee with recommendations.
The Disciplinary Advisory Committee met three times during
this period and concluded on 48matters as follows:
Decisions not to charge
Fifteen matters in terms of Disciplinary Rule 3.5.1.1 – the
respondents were not guilty of improper conduct.
Two matters in terms of Disciplinary Rule 3.5.1.2 – there were
reasonable explanations for the respondents' conduct.
Four matters in terms of Disciplinary Rule 3.5.1.3 – the
conduct of which respondents may be guilty were of negligible
nature or consequence.
Six matters in terms of Disciplinary Rule 3.5.1.4 – there were
no reasonable prospects of succeeding with charges of
improper conduct against the respondents.
Three matters in terms of Disciplinary Rule 3.5.1.5 – in all the
circumstances it was not appropriate to charge the
respondents with improper conduct.
Decisions to charge and matters finalised by consent
order
InvestigatingCommittee
DisciplinaryAdvisory Committee
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Issue 33 January - March 2016