IRBA Newsletter Issue 50

Issue 50 | April - June 2020 4 STANDARDS LIST OF TOPICS COVERED IN THIS ISSUE • Standards: o COVID-19 and Auditing Standards. o Guide for Registered Auditors: Engagements on Legal Practitioners’ Trust Accounts (Revised March 2020). o IRBA Staff Audit Practice Alert 4: A South African Perspective on the Auditor’s Considerations Relating to Fraud. o IRBA Staff Audit Practice Alert 5: The Auditor’s Considerations with respect to Transactions that are not at Arm’s Length. o Retirement Fund Auditor Reports. o The IRBA Issues the Updated South African Assurance Engagements Practice Statement (SAAEPS) 1, Sustainability Assurance Engagements: Rational Purpose, Appropriateness of Underlying Subject Matter and Suitability of Criteria. o IAASB Publications Relating to COVID-19. o IAASB’s New Strategy and Work Plan Focus on an Increased Agility, Enhanced Coordination and a Priority on Responding to Emerging Challenges. o IAASB Exposure Draft: Proposed International Standard on Auditing 600 (Revised): Special Considerations – Audits of Group Financial Statements (Including the Work of Component Auditors). o IAASB Projects in Progress. • Ethics: o IESBA Staff Questions & Answers – COVID-19: Ethics and Independence Considerations. o IESBA Projects in Progress. COVID-19 AND AUDITING STANDARDS Auditors are referred to the IRBA dedicated COVID-19 webpage where a repository of local and international guidance on the implications of COVID-19 in relation to audits of financial statements has been created. During this quarter, the IRBA released several publications, including the following: • The Impact of COVID-19 on the Auditor’s Report: Going Concern ; • COVID-19: High-Quality Audits and Its Implications for Reporting Deadlines ; • COVID-19 and Its Impact on File Assembly (Archiving) ; and • IRBA draws attention to the Key Audit Matters in auditor’s reports as it relates to COVID-19 . COMMITTEE FOR AUDITING STANDARDS (CFAS) Guide for Registered Auditors: Engagements on Legal Practitioners’ Trust Accounts (Revised March 2020) The CFAS, at its meeting held on 4 March 2020, approved the issue of the Guide for Registered Auditors: Engagements on Legal Practitioners’ Trust Accounts (Revised March 2020) (this Revised Guide) for use by auditors. This Revised Guide replaces the previous IRBA Revised Guide for Registered Auditors: Engagements on Attorneys’ Trust Accounts, which has been withdrawn. This Revised Guide provides guidance to auditors in the special circumstances applicable to engagements on legal practitioners’ trust accounts, as required by the Legal Practice Act, No. 28 of 2014 (the Act) and the South African Legal Practice Council Rules made under the authority of Sections 95(1), 95(3) and 109(2) of the Act (the Rules), including an auditor’s responsibility to report a reportable irregularity. This Revised Guide is also relevant for legal practitioners in understanding the nature of the engagement and describing the respective responsibilities of the parties. Effective Date This Revised Guide is effective for financial periods commencing on or after 1 March 2019 . IRBA Staff Audit Practice Alert 4: A South African Perspective on the Auditor’s Considerations Relating to Fraud The IRBA has issued the IRBA Staff Audit Practice Alert 4: A South African Perspective on the Auditor’s Considerations Relating to Fraud (IRBA Staff Audit Practice Alert) for use by registered auditors. The perpetration of fraud, causing material misstatements in the financial statements and/or non-compliance with laws and regulations, has become more prevalent at entities in South Africa over the past few years. Registered auditors are required to be alert to the possibility of fraud, thereby enabling them to respond appropriately. Due to this prevalence, auditors have called for additional guidance relating to fraud. This IRBA Staff Audit Practice Alert serves to provide auditors with implementation guidance in responding to the risks of material misstatements due to fraud and/or non-compliance with laws and regulations. It includes the following key themes: • The primary responsibility for the prevention and detection of fraud rests with those charged with governance of the entity and management; • The importance of applying professional scepticism and exercising professional judgment; • The auditor’s responsibilities to identify, assess and respond to the risks of material misstatement due to fraud; • The auditor’s considerations to respond to identified risks of material misstatement due to fraud, when there is a fraud investigation in progress; • The use of forensic experts during fraud discussions, fraud inquiries and the execution of the audit, when specific factors are identified; and • Guidance and examples to assist auditors in the application of the auditing standards and related guidance.