IRBA Newsletter Issue 53

Issue 53 | January-March 2021 11 of improper conduct relating to work done during the period of suspension; R100 000 for charge 4, 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; R200 000 for charge 5; no cost order; and publication by the IRBA in general terms. Matter 10 The respondent failed to obtain sufficient appropriate audit evidence on other income, investments, long-term liabilities, opening balances, cash and cash equivalents and property, plant and equipment. Furthermore, the respondent failed to identify that the annual financial statements of the entity were materially misstated, as revenue included in the annual financial statements did not meet the recognition criteria, investments were misstated, a material liability was omitted and opening balances did not agree to the prior year financial statements. The respondent was sentenced to a fine of R200 000, of which R100 000 has been suspended for five 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, as well as on the International Financial Reporting Standards for Small and Medium-Sized Entities, is attended by the respondent and their audit staff within 60 days of the imposition of the sentence, and must provide evidence of compliance to the IRBA. Furthermore, the Inspections Department of the IRBA has been requested to conduct an inspection of the respondent’s engagement files within the next year; and the respondent is required to share the outcome of this inspection with all audit clients within 60 days of receiving the outcome. Matter 11 The respondent’s firm was engaged to perform an independent review of the annual financial statements of a company. The respondent, in the capacity of a director of a financing company, entered into a loan agreement with the aforementioned company, creating a self-interest threat that is so significant that no safeguards can reduce the threat to an acceptable level. Accordingly, the respondent contravened the Code of Professional Conduct. 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 12 The matter was a referral from the Inspections Committee. The respondent failed to establish and maintain a system of quality control to provide the firm with reasonable assurance that the firm and its personnel comply with professional standards and applicable legal and regulatory requirements, and issue reports that are appropriate in the circumstances. The respondent was sentenced to a fine of R200 000; no cost order; and publication by the IRBA in general terms. Matter 13 The matter was a referral from the Inspections Committee. The financial statements of the respondent’s client did not comply with the International Financial Reporting Standard for Small and Medium-sized Entities regarding goodwill. The respondent failed to appropriately evaluate whether the financial statements had been prepared in accordance with the applicable financial reporting framework. The respondent was sentenced to a fine of R50 000, of which R25 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 14 The matter was a referral from the Inspections Committee. The respondent failed to obtain sufficient appropriate audit evidence on the majority of balances and transactions in the financial statements. In addition, the respondent failed to perform appropriate procedures regarding the acceptance of the client. The respondent was sentenced to a fine of R200 000; no cost order; and publication by the IRBA in general terms. Matter 15 The matter was a referral from the Inspections Committee. The respondent failed to obtain sufficient appropriate audit evidence on revenue and leases. Furthermore, the audit documentation indicated that there were individual material misstatements in the financial statements relating to the disclosure of leases. The respondent failed to evaluate the impact of the individual misstatements on the audit opinion. 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 16 Mr Brian John Botes, the respondent, failed to identify that there was non-compliance with the Collective Investment Schemes Control Act by the audit client, as loans were issued in contravention of Section 95(1)(b) of the Act. The respondent was sentenced to a fine of R60 000, of which R30 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 of the respondent’s name, the findings of the investigation and the sanction imposed. INVESTIGATIONS cont.