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DISCIPLINARY COMMITTEE
The Disciplinary Committe did not sit during this period. Below is a
report on a matter that was recently finalised on judicial review.
In April 2015 the IRBA commenced with the disciplinary hearing of
Ms Francine-Ann du Plessis, who was charged with eight charges
of improper conduct. Charges one to five related to assurance work
provided on the financial statements of a company that owned
a guest house in Plettenberg Bay and received a Department of
Trade and Industry (DTI) tourism grant. The remaining three charges
relate to a group of private individuals and family trusts to which the
practitioner provided tax services and facilitated their provisional tax
payments to SARS.
During one of the hearing adjournments Ms du Plessis resigned as
a registered auditor with the IRBA; however, the IRBA still retained
jurisdiction over conduct while the practitioner was registered with
the IRBA. At the end of the disciplinary proceedings in March 2016,
the practitioner was found guilty on the second and fifth charges
and was sanctioned. The practitioner was acquitted on all of the
remaining charges.
In respect of the
second charge
, Ms du Plessis was found guilty
of improper conduct within the meaning of Rule 2.1.3 of the old
Disciplinary Rules in that she committed an offence involving
dishonesty and, in particular, the offence of fraud. She was found
guilty of improper conduct within the meaning of Rule 2.1.4 of the
old Disciplinary Rules in that she was dishonest in the performance
of work and duties devolving upon her in relation to work of a type
commonly performed by a practitioner.
The essence of the
second charge
was that Ms du Plessis had
allowed a set of financial statements of the company-owned
guest house to be amended in respect of turnover and directors’
emoluments in order for the company to fraudulently be entitled to a
DTI grant. The practitioner had signed an unqualified audit opinion in
September 2006 in respect of the original set of financial statements.
In December 2006, a company assisting the client with securing
the DTI grant requested the practitioner to amend the financial
statements in respect of turnover and directors’ emoluments. The
changes were manifestly aimed at meeting targets in order to qualify
for a grant from the DTI and were not reflective of the true operations
and cash flow of the guest house.
The Disciplinary Committee found that Ms du Plessis had
misrepresented in the documentation forming part of the DTI claim,
inter alia
, that the information in the claim, based on the amended
financial statements,
“is true and fair”; “the financial statements [are]
final and correct”
; and no discrepancies were found in turnover. The
committee found that the prejudice to the DTI was patent and it did
not matter that the practitioner had not obtained any direct personal
financial gain from the fraudulent claim. The committee found that
both fraud and dishonesty had been established.
In relation to the
fifth charge
the committee found Ms du Plessis
guilty of improper conduct within the meaning of Rule 2.1.1 of the
old Disciplinary Rules in that she failed to comply with S45(1) of the
Auditing Profession Act 26 of 2005 (APA). She was also found guilty
of improper conduct within the meaning of Rule 2.1.21 of the old
Disciplinary Rules in that she conducted herself in a manner which
was improper, discreditable, unprofessional, dishonourable and
unworthy on the part of a practitioner and which tended to bring the
profession of accounting into disrepute. The Disciplinary Committee
found that through the practitioner’s involvement in the amended
financial statements of the guest house for the submission of the
DTI claim, she had reason to believe that a reportable irregularity
had taken place in respect of the company. Accordingly, in those
circumstances, she was obliged by S45(1) of the APA to report the
reportable irregularity but had failed to do so.
The Disciplinary Committee fined the practitioner the maximum
fine, at the time, of R100 000 in respect of the
second charge
and R50 000 in respect of the
fifth charge
. In terms of sanction,
the practitioner’s voluntary resignation from the IRBA had left the
committee with a limited spectrum within which to work since the
practitioner had placed herself outside the reach of suspension or
cancellation as a form of sanction.
The committee ruled that the practitioner’s name, the charges
against her, a summary of the material facts, the findings in respect
of the charges and the finding in respect of the sanctions imposed
on her, be published in the IRBA News. In addition, the practitioner
was ordered to pay a contribution of R320 000 towards the IRBA’s
costs.
In May 2016, Ms du Plessis took the decision and sanction of the
Disciplinary Committee in relation to
charges two and five
on
judicial review to the Western Cape High Court. The decision of the
Disciplinary Committee to convict the practitioner of having acted in
breach of the duty imposed in terms of S45(1) of the APA, in relation
to
charge five
, was set aside on review. The application for the
review and the setting aside of the Disciplinary Committee’s decision
in respect of the
second charge
was dismissed. Subsequently, the
practitioner took the decision of the High Court on appeal to the
Supreme Court of Appeal (SCA) and ultimately to the Constitutional
Court. Both superior courts dismissed her application for leave to
appeal, with the Constitutional Court handing down its order on 2
May 2018.
In conclusion, Ms du Plessis was sentenced to a fine of R100 000
in relation to
charge two
, a contribution to costs incurred in the
disciplinary proceedings in the sum of R320 000, and payment of
the legal costs incurred in the High Court, SCA and Constitutional
Court proceedings.
REPORTABLE IRREGULARITIES
Reportable irregularities (RIs) for the quarter January to March 2018
(Note that RIs are reported on quarterly in arrears)
181 second reports were received, of which:
-RIs were continuing
103
-RIs were not continuing
72
-RIs did not exist
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LEGAL
Issue 42 | April - June 2018
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