LEGAL c o n t .
While acting as Avante's auditor, the First Respondent was
appointed as the sole auditor of ten companies that supplied
squid to Avante for export on consignment ("the suppliers").
The First Respondent should not have accepted such
engagement, which carried foreseeable conflicts of interest,
and should not have continued with it after a legal dispute
developed between Avante and the suppliers over non-
payment. The First Respondent assisted Avante in this
dispute, and furnished Avante with certain of the suppliers'
confidential information.
By operating her practice through the CC, the First
Respondent breached several safeguards of corporate
transparency and accountability, as well as the prohibition on
sharing profits with a person who is not a registered auditor.
In these respects, the First Respondent dishonestly failed to
observe the required standards of independence, integrity,
objectivity and confidentiality.
The First Respondent was guilty of contravening Old
Disciplinary Rules 2.1.1, 2.1.2, 2.1.8 and 2.1.20.
Charges Five and Six
In auditing Avante's suppliers, the First Respondent's work
was deficient in material respects, in comparison with ISA and
IFRS. She failed to demonstrate a reasonable degree of
professional competence and care.
The First Respondent was guilty of contravening Old
Disciplinary Rules 2.1.5 and 2.1.20.
Charge Seven
In the events surrounding the eventual liquidation of Avante,
the First Respondent was complicit in concealing information
and property from the liquidators and was untruthful in her
testimony at a subsequent inquiry in terms of section 417 of
the Companies Act, 1973. Finally, the First Respondent was
untruthful in her response to the Regulatory Board about the
facts giving rise to the charges. In each case, the First
Respondent's conduct was dishonest and disreputable.
The First Respondent was guilty of contravening Rules
Regarding Improper Conduct 2.1.1, 2.1.2, 2.1.4 and 2.1.17.
SEPARATE CHARGE AGAINST THE SECOND
RESPONDENT
SENTENCE
Charge Eight
By "fronting" for the First Respondent, the Second
Respondent dishonestly held himself out to be Avante's
auditor and to have audited Avante, when in fact he had not
done so. Moreover, the Second Respondent failed to
supervise the First Respondent's work, recklessly
disregarding the risk that she lacked sufficient independence
and competence to auditAvante properly.
The Second Respondent was guilty of contravening Old
Disciplinary Rules 2.1.1, 2.1.4, 2.1.20 and 2.1.21.
Pursuant to the pleas of guilty, joint representations regarding
sentence were recommended by the
pro forma
complainant,
which were accepted by the Committee, as follows:
?
Charges One and Two (combined):
Each Respondent
was fined R100 000, of which R50 000 was suspended for
three years on conditions.
?
Charge Three:
Each Respondent was fined R100 000, of
which R50 000 was suspended for three years on
conditions.
?
Charge Four:
The First Respondent was fined R100 000.
?
Charges Five and Six (combined):
The First Respondent
was fined R100 000, of which R50 000 was suspended for
three years on conditions.
?
Charge Seven:
The First Respondent was fined R100 000.
?
Charge Eight:
Removal of the Second Respondent's name
from the register was suspended for five years on
conditions.
The Committee ordered the First Respondent to pay R285 000
and the Second Respondent to pay R140 000 towards the
reasonable costs of the Regulatory Board.
At the time of the hearing, the First Respondent was no longer
registered as an auditor with the Regulatory Board, having
requested removal of her name from the register on
11 March 2013. The First Respondent unconditionally
undertook not to apply for re-registration for five years.
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Issue 29 March - April 2015
