AUDIT PROFESSION BILL

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AUDIT PROFESSION BILL

• PRESENTATION BY THE
• PUBLIC ACCOUNTANTS AND
• AUDITORS BOARD
• OCTOBER 2005

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Audit Profession Bill Presentation by the PAAB

• Introduction
• R Benjamin-Swales Chairperson of the PAAB
• K Hoosain CEO
• Prof J Rowlands Chairperson of Education
  Committee
• B Agulhas Director - Auditing Standards
• C Garbutt Manager - Legal

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Audit Profession Bill Presentation by the PAAB

• Opening remarks
• Education and training
• Disciplinary process
• Reportable irregularities
• Erosion of the attest (audit) function
• Some other issues

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Audit Profession Bill Presentation by the PAAB

• Opening remarks
• Thank you for the opportunity to give input to
  the Committee
• PAAB supports the Bill and the move to
  independent regulation of the auditing profession
• Comments are to enhance the practical
  implementation and improve the wording to better
  achieve the intention of the various sections
  that we have commented on

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Audit Profession Bill Presentation by the PAAB

• Education and Training
• Partial accreditation should be allowed by the
  RBA Request S7(1)(a) to be amended
• The RBA is charged with the responsibility of
  protecting the public through the regulation of
  audit services, therefore it should determine
  whether or not a person meets the competence
  requirements Request that S37(2)(a) be amended
• RBA should be allowed to recognise education and
  training programmes of an educational
  institution, in part or in full Request
  introduction of a new S 7(2)(b)
• Other recommendations include the appropriate use
  of the words qualification and may versus
  must
• Add definitions of accreditation and
  recognition
• Included a proposed redraft of the relevant
  sections

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Audit Profession Bill Presentation by the PAAB

• Education and Training
• Reasons for partial accreditation and recognition
  in whole or in part
• Currently there is only one accredited body -
  SAICA
• All or nothing process will be a barrier to new
  entrants
• Need flexibility to improve access and promote
  transformation
• Outright refusal of accreditation is punitive,
  not constructive
• Parliament and Government have oversight over RBA
  If national objectives are not being achieved,
  they can call the RBA to account or intervene

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Audit Profession Bill Presentation by the PAAB

• Disciplinary Process
• Accountability of firms in disciplinary process
  definitions of a registered auditor and firm
• No specific provision for complaint to be
  discharged
• No provision to settle a complaint by consent
  order
• Lack of provisions against self incrimination
• Competent sanctions suspension provisions to be
  revised, provision for disqualification from
  registration

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Audit Profession Bill Presentation by the PAAB

• Reportable Irregularities
• Definitions management board, nominated
  registered auditor, reportable irregularity
  lack of consistency and clarity
• Reporting without delay no opportunity to
  discuss with client
• Materiality in relation to third parties
• Inappropriate sanction fine or imprisonment or
  both
• any unlawful act many laws that may not
  impact on the financial statements
• otherwise dishonest need clarity on what this
  means

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Audit Profession Bill Presentation by the PAAB

• Erosion of Audit Function
• Registered auditors are subject to stringent
  regulation, which is needed to protect the public
  interest and the integrity of the profession.
• Necessary to protect the identity of the
  designation and all variations thereof that are
  commonly used and understood locally and
  internationally.
• Those wanting to be known as such and do the work
  as auditors must meet the requirements and
  register with RBA.
• Need to repeal or amend sections of other
  legislation that allow persons not registered
  with RBA to do audits

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Audit Profession Bill Presentation by the PAAB

• Some Other Issues
• Improvements to some definitions
• Add S2 (f) co-operative relationships with other
  international regulators
• Add under S4 to conduct inspection required
• Add under S9(b) and remuneration payable
• S11 S28 clarify or avoid the word executive
  in its context
• S12(1) Consider 3 year term as opposed to 2 years
• Add under S20 - (2)(f) an Inspection Committee
• Add under S43 - submit an annual return of
  information
• Amend S47(1)(b) from annually to once every three
  years
• S50(3)(a)(ii) Penalties to be clarified, may not
  be enough, RBA should annually determine