IRBA Newsletter Issue 48

Issue 48 | October - December 2019 10 INVESTIGATIONS INVESTIGATING COMMITTEE The Investigating Committee met once during this period and referred 17 matters to the Disciplinary Advisory Committee. DISCIPLINARY ADVISORY COMMITTEE The Disciplinary Advisory Committee met once during this period and concluded on 14 matters. Decisions Not to Charge One matter in terms of Disciplinary Rule 3.5.1.1 – the respondent was not guilty of improper conduct. One matter in terms of Disciplinary Rule 3.5.1.2 – there is a reasonable explanation for the respondent’s conduct. Five matters in terms of Disciplinary Rule 3.5.1.4 – there are no reasonable prospects of success to succeed with a charge of improper conduct against the respondent. Decisions to Charge and Matters Finalised by Consent Order Six matters were finalised by consent order. Matter 1 The respondent, as CEO of the firm, failed to ensure that the firm complied with the training requirements of the Guide for Registered Auditors: Combating Money Laundering and Financing of Terrorism issued by the IRBA in 2010. Furthermore, the respondent, as CEO of the firm, failed to ensure that the firm implemented effective quality control procedures on engagement performance for a particular group of companies over a number of engagement years. The respondent was sentenced to a fine of R200 000 for charge 1 and R200 000 for charge 2; no cost order; and publication by the IRBA in general terms. Matter 2 The respondent, as CEO of the firm, failed to ensure that the firm complied with the training requirements of the Guide for Registered Auditors: Combating Money Laundering and Financing of Terrorism issued by the IRBA in 2010. Furthermore, the respondent, as CEO of the firm, failed to ensure that the firm implemented effective quality control procedures on engagement performance for a particular group of companies over a number of engagement years. In addition, the respondent, as CEO of the firm, failed to ensure that the firm terminated the relationship with the particular group of companies timeously. The respondent was sentenced to a fine of R200 000 for charge 1, R200 000 for charge 2 and R200 000 for charge 3; no cost order; and publication by the IRBA in general terms. Matter 3 The matter was a referral from the Inspections Committee. The respondent failed to obtain sufficient appropriate evidence, as required by the International Standards on Auditing, on numerous balances and transactions as well as on risk assessment and compliance with laws and regulations. In addition, the respondent failed to respond to communication from the IRBA. The respondent was sentenced to a fine of R120 000, of which R60 000 has been suspended for three years on condition that the respondent is not found guilty of improper conduct relating to work done during the period of suspension; no cost order; and publication by the IRBA in general terms. In addition, the respondent must arrange and ensure that external training on the practical application of auditing standards is attended by the respondent and the firm’s audit staff within 60 days of the imposition of the sentence, and must provide evidence of compliance to the IRBA. Matter 4 The respondent failed to comply with the requirements of the Code of Professional Conduct pertaining to independence. The respondent was sentenced to a fine of R100 000, of which R50 000 has been suspended for three years on condition that the respondent is not found guilty of improper conduct relating to work done during the period of suspension; no cost order; and publication by the IRBA in general terms. Matter 5 The matter was a referral from the Inspections Committee. The respondent failed to obtain sufficient appropriate evidence, as required by the International Standards on Auditing, on numerous balances and transactions as well as on risk assessment. In addition, the audit report format used was outdated. The respondent was sentenced to a fine of R100 000, of which R50 000 has been suspended for three years on condition that the respondent is not found guilty of improper conduct relating to work done during the period of suspension; no cost order; and publication by the IRBA in general terms. In addition, the respondent must arrange and ensure that external training on the practical application of auditing standards is attended by the respondent and the firm’s audit staff within 60 days of the imposition of the sentence, and must provide evidence of compliance to the IRBA. Matter 6 KPMG Incorporated failed to comply with the training requirements of the Guide for Registered Auditors: Combating Money Laundering and Financing of Terrorism issued by the IRBA in 2010. Furthermore, the respondent failed to implement effective quality control procedures on engagement performance for a particular group of companies over a number of engagement years. In addition, the respondent failed to terminate the relationship with the particular group of companies timeously. Finally, the respondent, through the