IRBA NEWS LETTER

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Issue 35 | July-September 2016 16
auditors on 5 September 2016, providing guidance on the process
to be followed for all SVDP-related RIs identified. We encourage
all of our registered auditors to familiarise themselves with the
contents of this communique, a copy of which can be found on
our website
under the heading “Legal”.
Holding Outs
On 9 September 2016 Michaelangelo Andile Jordan pleaded
guilty to, and was found guilty of, contravening Section 41 of the
Auditing Profession Act No. 26 of 2006 in the Durban Specialised
Commercial Crime Court. The accused was cautioned and
discharged.
Practice Related Matters
Occasionally, practice related matters find their way to the Legal
Department. We share the body of our response to an enquiry
that has arisen in this way, for your information and guidance. The
situation concerned a sole practitioner who had been hospitalised.
The enquiry came from a practitioner who was offering to “care-
take” the practice.
We urge all practitioners, particularly sole practitioners, to consider
this scenario in their own practices, and ideally to commence
succession planning sooner rather than later.
“I draw your attention to paragraph 150.5 of the Code of
Conduct, which reads as follows:
‘A registered auditor shall not delegate to any person who is
not a partner, or fellow director, the power to sign audit, review
or other assurance reports or certificates that are required, in
terms of any law or regulation, to be signed by the registered
auditor responsible for the engagement. In specific cases where
emergencies of sufficient gravity arise, however, this prohibition
may be relaxed, provided the full circumstances giving rise to
the need for delegation are reported both to the client of the
registered auditor concerned and to the Regulatory Board.’
It appears to me that the situation you outline would fall within
the “emergencies of sufficient gravity” proviso of this paragraph.
I assume that the family member with the Power of Attorney
would be able to make the delegation, on behalf of the critically
ill and incoherent RA.
You would then be able to accept this delegation provided the
circumstances are reported to both the Regulatory Board (and I
am prepared to accept your email of 21 July 2016 as this report)
and to the clients concerned.
TheCodeapplies toa specificsituation. Should thecircumstances
change, and should your responsibilities change such that you
become the engagement partner on any engagement, this
provision in the Code will not apply, and you will have to assume
full responsibilities in terms of the ISAs and the IRBA Code for
the engagement.
It would probably be prudent to inform both your and the other
RA’s insurers.
I would accordingly await your confirmation that the clients have
been informed of this situation.
I must also inform you that any such delegation will be
communicated to the Inspections Department so that they are
aware of the circumstances, and can act appropriately should
the firm in question be selected for inspection. It follows that you
would need to inform us of the name of the practitioner.
I trust that this answers your query and I await your further
communication in due course.”
In addition, SAICA has published an article, which remains relevant,
in ASA of October 2014, which can be accessed on the SAICA
website.
Subsequent to this matter being drawn to our attention, we
received a call from a most distressed trainee accountant, from a
different firm, informing us that the sole proprietor of the firm had
passed away – unexpectedly – that morning, and asking what to
do.
I hope that sole practitioners will take heed of these scenarios and
ensure that they do not land in a similar situation. The situation is
exacerbated when the practice is the major asset in the deceased
estate, and there is a widow to support. Clients who are not in a
position to wait for legal formalities to take place will leave to find
new auditors, and the value of the practice, and the ability to sell it
as a going concern, will diminish rapidly.
Jane O’Connor
Director Legal
Telephone: (087) 940-8804
Fax: (087) 940-8873
E-mail:
LEGAL c o n t .