LEGAL
QUARTERLY REPORT FROM THE DIRECTOR: LEGAL
FORTHEPERIOD 1 JANUARY2015 TO31MARCH 2015
The Investigating Committee met twice during this period (12
February and 26 March 2015) and referred 20 individual
matters to the Disciplinary Advisory Committee with
recommendations.
The Disciplinary Advisory Committee met once during this
period (27 February 2015) and disposed of 17 matters, as
follows.
Decisions not to charge
?
One
matter in terms of Disciplinary Rule 3.5.1.1 (the
respondent is not guilty of unprofessional conduct; this
includes the situation where the conduct in question might
be proved but even if proved does not constitute
unprofessional conduct);
?
Four
matters in terms of Disciplinary Rule 3.5.1.2 (the
respondent having given a reasonable explanation for the
conduct);
?
Five
matters in terms of Disciplinary Rule 3.5.1.4 (being that
there are no reasonable prospects of succeeding with a
charge of improper conduct against the respondent);
?
One
matter in terms of Disciplinary Rule 3.5.1.5 (being that
in all the circumstances, it is not appropriate to charge the
respondent with improper conduct).
Decision to charge andmatter finalised by consent order
Five
matters were finalised with fines.
Four
of these matters
were referred from the Inspections Department and their
particulars are as follows
?
In one
matter, the inspection revealed that the respondent
had issued an unqualified audit opinion in relation to the
annual financial statements of his client, notwithstanding
that those annual financial statements departed from the
IFRS for SMEs (which was the financial reporting framework
applied in preparing the said annual financial statements) in
two material respects. Firstly, the annual financial
InvestigatingCommittee
DisciplinaryAdvisory Committee
statements included an intangible asset that had not been
amortised. Secondly, the client had not prepared
consolidated annual financial statements although this was
compulsory in the circumstances. The respondent was
sentenced to a fine of R40 000, of which R20 000
suspended on conditions, and publication in general terms
only.
?
One
matter related to the audit of an attorney's trust
account. The inspection revealed instances of insufficient
audit evidence having been documented in the
respondent's audit documentation, to support his report, in a
number of material areas. Subsequent to the on-site portion
of the inspection, the respondent provided audit
documentation to address the inspections findings and
explained that these had not been properly filed and were
therefore not provided during the on-site inspection. The
conduct of the respondent amounted to a contravention of
file assembly and firm level quality control requirements with
which registered auditors are required to comply. The
respondent was sentenced to a fine of R80 000, of which
R40 000 was suspended on conditions, and publication in
general terms only.
?
In one
matter, the inspection revealed that the respondent
had insufficient documentation of audit evidence on file to
support the opinion expressed in that he had failed to
document his considerations and conclusions regarding
whether his client was acting as an agent or a principal and
what the impact of the election was on the revenue
recognition in the annual financial statements of the client.
The respondent was sentenced to a fine of R20 000, of
which R10 000 was suspended on conditions, and
publication in general terms only.
?
In one
matter, the inspection revealed that the respondent
had not detected the following: that his client had recognised
an asset flowing from straight-lining of lease revenue but
had not adjusted the valuation of the leased property
accordingly, which resulted in a double counting of assets.
The respondent had not modified his auditor's report in
relation to the material overstatement of assets. The
respondent was sentenced to a fine of R50 000, of which
R25 000 was suspended on conditions, and publication in
general terms only.
?
One
matter involved a respondent preparing annual
financial statements for a number of pre-schools for the
purpose of obtaining funding from the National Lotteries
8
Issue 29 March - April 2015
