IRBA Newsletter Issue 50

Issue 50 | April - June 2020 5 STANDARDS cont. A dedicated IRBA Fraud web page contains a list of links to relevant audit-related guidance on fraud developed internationally and locally. The list references information that was known to the Fraud Task Group at the time of issuing this IRBA Staff Audit Practice Alert and it is not meant to be exhaustive. This IRBA Staff Audit Practice Alert does not constitute an authoritative pronouncement from the IRBA; nor does it amend or override the International Standards on Auditing, South African Auditing Practice Statements or South African Guides (collectively called pronouncements). Also, this IRBA Staff Audit Practice Alert is not meant to be exhaustive. Reading this IRBA Staff Audit Practice Alert is not a substitute for reading the abovementioned pronouncements, as they are the authoritative texts. IRBA Staff Audit Practice Alert 5: The Auditor’s Considerations with respect to Transactions that are not at Arm’s Length The IRBA has issued the IRBA Staff Audit Practice Alert 5: The Auditor’s Considerations with respect to Transactions that are not at Arm’s Length (IRBA Staff Audit Practice Alert) for use by registered auditors. Transactions that are not at arm’s length may pose risks in an audit of the financial statements. The reason is, if such transactions are not identified by management and/or the auditor, that could give rise to risks that are not addressed in the audit, ultimately leading to misstatements in the financial statements. Therefore, auditors have called for guidance regarding the auditor’s considerations with respect to transactions that are not at arm’s length. Consequently, the IRBA has responded to the call. As such, this IRBA Staff Audit Practice Alert serves to provide auditors with guidance and considerations to be made with respect to transactions that are not at arm’s length, and the possible auditor’s responses to the resulting audit risks. This IRBA Staff Audit Practice Alert does not constitute an authoritative pronouncement from the IRBA, nor does it amend or override the International Standards on Auditing, South African Auditing Practice Statements or South African Guides (collectively called pronouncements). Further, this IRBA Staff Audit Practice Alert is not meant to be exhaustive. Reading it is not a substitute for reading the abovementioned pronouncements, as they are the authoritative texts. REGULATED INDUSTRIESANDREPORTSSTANDING COMMITTEE (RIRSC) Retirement Fund Auditor Reports The CFAS, subject to the Financial Sector Conduct Authority (Authority) issuing the appropriate exemption notice, approved the following retirement fund reports to be used by registered auditors: • March 2018: Auditors’ report template: Audit of the financial statements of a Large Retirement Fund (Schedule D); and • March 2019: Assurance Report on Compliance with Regulation 28 of the Pension Funds Act. At its meeting in November 2019, the committee noted the Schedule D and Regulation 28 retirement funds reports, which are aligned to the IRBA Code of Professional Conduct for Registered Auditors (Revised November 2018). In the reports, the committee also noted the references to the Financial Sector Conduct Authority (FSCA) as the “Authority”. The retirement fund auditor reports are available on the IRBA website in Word format. On 5 March 2020, the Authority published the appropriate exemption notice as follows: • FSCA RF Notice 5 of 2020 – Exemption of large funds from certain prescribed formats for preparing financial statements under Section 15 of the Pension Funds Act, 1956; and • FSCA Communication 6 of 2020 (RF) – Exemption from using certain prescribed formats for preparing financial statements under Section 15 of the Pension Funds Act, 1956. The documents are available on the Authority’s website ( www. fsca.co.za ) under Home > Regulatory Frameworks > Notices > Retirement Fund > 2020 or by clicking on the following link: List of all Notices. The FSCA Communication is also available under Home > Regulatory Frameworks > Industry Communication > Retirement Fund > FSCA Communication or by clicking on the following link: Industry Communication. For further information regarding the abovementioned notice and communication, please contact the FSCA directly by emailing Ms Wilma Mokupo at Wilma.Mokupo@fsca.co.za. Refer to its website ( www.fsca.co.za ) for the complete set of prescribed financial statements, legislation and other information related to retirement funds. Effective Date of the Retirement Fund Auditor Reports Registered auditors are referred to the FSCA RF Notice 5 of 2020 and the FSCA Communication 6 of 2020 for the Authority’s exemption notice allowing for the use and early adoption of the IRBA-approved retirement fund Schedule D and Regulation 28 Reports. SUSTAINABILITY STANDING COMMITTEE (SSC) The IRBA Issues the Updated South African Assurance Engagements Practice Statement 1, Sustainability Assurance Engagements: Rational Purpose, Appropriateness of Underlying Subject Matter and Suitability of Criteria The CFAS has approved for issue the updated South African Assurance Engagements Practice Statement (SAAEPS) 1, Sustainability Assurance Engagements: Rational Purpose,