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LEGAL
DISCIPLINARY COMMITTEE
The Disciplinary Committee sat four times during the period to hear
three separate matters. One of these was a new matter, while the
remaining three were part-heard matters that had commenced
previously.
All three part-heard cases have not yet been finalised and are
continuing.
REPORTABLE IRREGULARITIES
Reportable Irregularities (RIs) for the quarter April to June 2018:
(Note that RIs are reported on quarterly in arrears):
114 second reports were received, of which:
RIs were continuing
57
RIs were not continuing
54
RIs did not exist
3
Of the 57 continuing RIs received, the top six types of RIs most
frequently reported, categorised by nature, were:
(Note that in many cases a second report received would identify
more than one RI)
Unlawful Act or Ommission
Reporting Frequency Regulator(s) Informed
-
Tax and VAT-related contraventions (e.g. non-submission of tax
returns, failure to register for tax, non-payment of PAYE, etc.).
40.78%
The South African Revenue Service
(SARS).
-
Financial statements not prepared/not approved within the
alloted timeframe.
25.24%
SARS, the Financial Sector Conduct
Authority (FSCA) and the Companies and
Intellectual Property Commission (CIPC).
-
Various Companies Act Contraventions, e.g. reckless trading,
breach of directors’ fiduciary duties, irregular financial assistance
to directors, AGM-related irregularities, etc.
17.48%
CIPC
-
Contravention of the Pension Funds Act, e.g. contributions not
paid over to provident funds.
2.91%
FSCA
-
Suspected fraud and/or theft, and contravention of the
Prevention and Combatting of Corrupt Activities Act (PRECCA).
2.91%
The Directorate for Priority Crime
Investigation, the Financial Intelligence
Centre (FIC), etc.
-
Other (e.g. contraventions of the Housing Development
Schemes for Retired Persons Act, the Johannesburg Stock
Exchange Listing Requirements, the Competition Act, etc.).
10.68%
The Community Schemes Ombud
Service, the Department of Trade and
Industry, the Johannesburg Stock
Exchange, the Competition Commission
of South Africa, etc.
Reporting of Persons and/or Entities Suspected
of Non-Compliance with Laws and Regulations
(NOCLAR)
The IRBA has received a number of enquiries from registered
auditors on whether any suspected NOCLARs that are identified
during audits should be reported to the IRBA – and if so, whether
any such reporting should be done outside the current reporting
mechanism available for RIs. Taking into account the particular set
of facts that are present in any given scenario, it is unlikely that the
IRBA will fit the description of an appropriate authority as envisioned
by the IESBA’s pronouncement on NOCLAR.
To best illustrate this viewpoint, we highlight one such scenario
where we were contacted by a registered auditor whose client – an
Accountable Institution – failed to submit a cash threshold report
(CTR) to the FIC. The client in question had previously submitted
multiple CTR reports to the FIC without incident, and in this particular
case there was strong evidence to suggest that this omission
was in fact an isolated incident rather than a systemic issue. This
consideration together with other factors that were taken into
account by the registered auditor all resulted in him being doubtful
as to whether this omission committed by his client warranted the
reporting of an RI to the IRBA.
The registered auditor was, however, of the opinion that the incident
qualifies as a NOCLAR and that his client’s continued failure to
report this unreported CTR to the FIC might potentially cause
substantial harm to the public in the event of the unreported cash
deposit possibly representing the proceeds of criminal activities.
Should the registered auditor in question now be of the opinion that
further action is required with regards to reporting this matter directly
to an appropriate authority, then the IRBA will, in all probability, not
Issue 43 | July-September 2018
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