IRBA Newsletter Issue 54

Issue 54 | April-June 2021 9 LEGAL cont. In light of the respondent’s admission of guilt, a sanction hearing was convened on 20 May 2021, for the parties to present evidence in mitigation and aggravation of the sanction in relation to the charges. At the sanction hearing, the respondent tendered his resignation as an RA and then abandoned the proceedings, electing not to lead evidence in mitigation of the sanction. Notwithstanding this, the IRBA proceeded to lead the evidence of four witnesses in aggravation of the sentence and also submitted closing arguments in support. Having considered the evidence presented, the committee issued a ruling on sanction, wherein it found that the respondent’s breach of the Auditing Standards in conducting the audits amounted to gross negligence and dishonesty on his part. In determining the appropriate sanction, the committee took the following into account: a) The respondent failed to exercise professional competence and scepticism when conducting his audit on the attorneys trust accounts, thus placing the public in harm’s way. b) The public holds auditors in high regard and thus great trust is placed on the opinions they express. Specifically, the Legal Practice Council and the Fidelity Fund rely on the reports to identify attorneys who fail to comply with the Legal Practice Act, and then accordingly remove such attorneys from handling public funds. c) The respondent was aware that the relevant attorney was defrauding the public and the legal profession, but he submitted audit reports that concealed the fraud committed by the attorney, which aggravated the misconduct committed by the respondent. In view of the above, the committee imposed the following sanction: a) Permanent removal of the respondent’s name from the register. While the committee noted the respondent’s resignation, it held that such removal should be permanent and that the respondent cannot at a later stage apply to be reinstated; b) A total fine of R800 000, being the maximum R200 000 fine in respect of each charge; c) Payment of R400 000 towards the costs incurred by the IRBA; and d) Publication in IRBA News and the media of the respondent’s full names, the name of his firm, the charges levelled against him, as well as the decision of the committee and the sanction imposed. REPORTABLE IRREGULARITIES The IRBA received 196 first reports on Reportable Irregularities (RIs) during the period from 1 April 2021 to 18 June 2021 (1 st quarter reporting period). On the other hand, 118 second reports were received and processed, and their nature is highlighted below. Note : The difference of 78 reports between the first reports and second reports received is due to timing differences in reporting these reports. The chart below reflects the 69 continuing RIs received, categorised by nature. Note: As depicted above, the top three types of reported contraventions related to the Unemployment Insurance Fund Act, the Income Tax Act and the Companies Act. There were also several RIs highlighting contraventions of, among others, the Sectional Titles Schemes Management Act and Regulations, the Skills Development Levies Act as well as the Prevention and Combatting of Corrupt Activities Act.