IRBA Newsletter Issue 53

Issue 53 | January-March 2021 9 INVESTIGATIONS The matters reported in this issue took place over the four-month period from December 2020 to March 2021. INVESTIGATING COMMITTEE The Investigating Committee met twice during this period and referred 28 matters to the Disciplinary Advisory Committee. DISCIPLINARY ADVISORY COMMITTEE The Disciplinary Advisory Committee met three times during this period and concluded on 51 matters. Decisions Not to Charge • One matter in terms of Disciplinary Rule 3.5.1.1 – the respondent is not guilty of improper conduct. • One other matter in terms of Rule 3.5.1.4 – there are no reasonable prospects to succeed with a charge of improper conduct against the respondent. Decisions to Charge and Matters Finalised by Consent Order A total of 44 matters were finalised by consent order. Matter 1 The respondent failed to report reportable irregularities relating to breaches of the Companies Act. The respondent also contravened the Code of Professional Conduct and Section 275 of the Companies Act, due to independence breaches. Furthermore, in seven instances the respondent failed to obtain sufficient appropriate audit evidence to support the audit opinions expressed. The respondent was sentenced to a fine of R75 000 for charge 1, R25 000 for charge 2, R20 000 for charge 3, R40 000 for charges 4 and 5, R40 000 for charges 6 and 7, R40 000 for charges 8 and 9, R40 000 for charges 10 and 11, R40 000 for charges 12 and 13, R40 000 for charges 14 and 15, and R40 000 for charges 16 and 17; no cost order; and publication by the IRBA in general terms. Matter 2 The respondents failed to respond appropriately to significant risks that were present in the audit of the company. In addition, the annual financial statements compiled by the respondents did not disclose a contingent liability or provision where claims had been lodged against the company. Accordingly, it was inappropriate to issue an unqualified audit opinion. The respondents further failed to recognise that the compilation of the company’s financial statements presented a threat to independence. In addition, the respondents failed to respond appropriately to significant risks that were present in the assurance engagement of the attorney’s trust accounts. Sufficient appropriate audit evidence was not obtained during the course of the engagement. Furthermore, the respondents failed to report reportable irregularities. The respondents were each sentenced to a fine of R50 000 for charge 1, R50 000 for charge 2, R50 000 for charge 3, R50 000 for charge 4, R50 000 for charge 5, R50 000 for charge 6 and R50 000 for charge 7; no cost order; and publication by the IRBA in general terms. Matter 3 The respondent was aware of a trust shortfall in an attorney trust audit engagement, as it was denoted as such in the audit file. Notwithstanding the aforementioned, the respondent inappropriately issued an unqualified assurance report regarding the attorney’s trust accounts. 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 4 The respondent failed to perform audit procedures to address risks arising from common control transactions entered into by the company. In addition, the respondent failed to modify the audit opinion with regard to the company’s departure from the International Financial Reporting Standard 3: Business Combinations. The respondent was sentenced to a fine of R150 000, of which R75 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. Matter 5 Mr Manish Harischandra Nicha, the respondent, failed to assemble audit documentation in an audit file and retain it for the required period. In addition, non-compliance identified on an attorney trust audit engagement was not reported in the audit report. As a result, the unmodified audit opinion expressed was inappropriate. The respondent did not ensure that an engagement team with appropriate competence and capabilities performed the audits of a large number of attorney trust audit engagements, in accordance with professional standards and applicable legal and regulatory requirements, to enable audit reports that are appropriate. The respondent failed to establish and maintain a system of quality control that provides the audit firm with reasonable assurance that it complies with professional standards and applicable legal and regulatory requirements, to enable audit reports that are appropriate. In addition, the respondent submitted a false annual assurance declaration to the IRBA, as audit engagements performed were not included in the declaration. The respondent was sentenced to a fine of R200 000 for charge 1, R200 000 for charge 2, R200 000 for charge 3, R200 000 for charge