IRBA Newsletter Issue 48

Issue 48 | October - December 2019 12 LEGAL DISCIPLINARY COMMITTEE Currently, there are 16 open cases that have been referred to the Legal Department for disciplinary hearings; and six of these were referred during the period under review. The charts below outline the nature and status of all matters referred for hearings. 32% 16% 4% 4% 4% 4% 4% 4% 8% 20% NATURE OF CHARGES Negligence: Audit services Failure to declare assurance work Dishonesty Tax breach Failure to retain documents ISQC 1 failures Failure to conduct acceptance procedures ModificaFon of audit papers Inappropriate audit opinion Other STATUS OF DISCIPLINARY MATTERS Hearing Hearing preparaFon Analysis by the prosecuFon team Review of charge sheet 32% 16% 4% 4% 4% 4% 4% 4% 8% 20% NATURE OF CHARGES Negligence: Audit services Failure to declare assurance work Dishonesty Tax breach Failure to retain documents ISQC 1 failures Failure to conduct acceptance procedures ModificaFon of audit papers Inappropriate audit opinion Other STATUS OF DISCIPLINARY MATTERS Hearing Hearing preparaFon Analysi y the prosecuFon team Review of charge sheet Matters Before the Committee During the period under review, the committee convened for 29 days in continuation of the part-heard disciplinary hearing pertaining to African Bank. The matter adjourned on the 6th of December 2019 and will once again reconvene from the 4th to 5th of May 2020 for parties to present their heads of arguments. Upcoming Hearings The Disciplinary Committee will convene between the 16th of March 2020 and the 4th of April 2020 to consider charges preferred against the then three partners of ACT Audit Solutions Incorporated, in relation to services rendered to Sharemax. Sharemax was an irregular property syndication scheme that collapsed during 2010/2011. The respondents are facing numerous charges of improper conduct in relation to the audit of Sharemax financial statements and their assurance reports on various prospectuses issued by Sharemax between 2007 and 2010 – and these were utilised to raise funding from the public. REPORTABLE IRREGULARITIES The IRBA received 238 reports on reportable irregularities (RIs) for the period under review. At the end of the reporting quarter, 163 second reports were received and their nature is highlighted below. 89 70 4 163 0 20 40 60 80 100 120 140 160 180 RI conFnuing RI not conFnuing RI did not exist Total RI second reports REPORTABLE IRREGULARITIES (Q3) Q2 Second Reports Tax contravenFons 31% Suspected fraud and PRECCA contravenFon 4% SecFonal Title Schemes Management Act contravenFons 3% Estate Agency Affairs Act contravenFons 3% ContravenFons related to financial statements 37% Companies Act contravenFons 11% Other contravensions 11% NATURE OF CONTINUING RIs Note: The above graph depicts a difference of 75 reports between the first reports and second reports received. The difference recorded herein is due to a reporting time difference, which means that some of the second reports fell outside the current reporting period. There were no areas of non-compliance detected in as far as the submission of second reports was concerned. Of the 89 continuing RIs received, the top six types of RIs most frequently reported, categorised by nature, are reflected in the chart below. 89 70 4 163 0 20 40 60 80 100 120 140 160 180 RIconFnuing RInotconFnuing RIdidnotexist TotalRIsecondreports REPORTABLE IRREGULARITIES (Q3) Q2 Second Reports TaxcontravenFons 31% Suspectedfraudand PRECCAcontravenFons 4% SecFonalTitleSchemes ManagementAct contravenFons 3% EstateAgencyAffairsAct contravenFons 3% ContravenFonsrelated tofinancialstatements 37% CompaniesAct contravenFons 11% Othercontravensions 11% NATURE OF CONTINUING RIs Note: As depicted above, the top two reported contraventions related to financial statements requirements as well as tax requirements. There were also several RI contraventions of the Companies Act, the Estate Agency Affairs Act, the Sectional Title Schemes Management Act and PRECCA. All reports received were sent to the relevant regulators and/or authorities, in line with the provisions of the Auditing Profession Act 26 of 2005 (APA), for action.