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IMPLEMENTATION OF SOUTH AFRICA’S NEW AUDITING PROFESSION ACT

Source: Independent Regulatory Board for Auditors
Country: South Africa
Date: 24/04/2006
Contributor: Dieter Gloeck
Web: http://www.paab.co.za
The Auditing Profession Act, 2005 (Act 26 of 2005) was signed into legislation by the President on 12 January 2006. The effective date of the Act has been now determined by the Minister of Finance as 1 April 2006. This date was published in the Government Gazette no. 28698, on 31 March 2006.

The Public Accountants’ and Auditors’ Board (PAAB) will become the Independent Regulatory Board for Auditors (IRBA) with immediate effect. However, the implementation of the Act will follow a 9-month phased-in approach in terms of the implementation plan that PAAB submitted to the National Treasury. This plan sets out the dates when the various sections of the legislation will be phased in, as well as a budget in which the PAAB detailed the funding requirements to effectively implement the new legislation.

The more pressing areas that require immediate attention are:

Nominations for new committees

S 20(2)(a) of the new Act requires the establishment of a Committee for Auditor Ethics. Such a committee is currently not in place under the PAAB and will have to be established in accordance with S21 of the new Act, following a nominations process.

The new Act also requires, in terms of S 20(2) (b), the establishment of a Committee for Auditing Standards (CFAS). The Audit and Assurance Standards Board (AASB) of the PAAB currently performs functions in line with the functions of the CFAS and it is envisaged that the AASB will transform into the CFAS as required by the new Act. However, the composition of the AASB is somewhat different to what is required in terms of S21 (1) of the new Act and the committee will have to be reconstituted accordingly, again following the nominations process.

Reportable irregularities

The new Act replaces the Material Irregularities (MI’s) with a new definition of Reportable Irregularities (RI’s). S45 of the new Act sets out the requirements on how RI’s are to be dealt with, and a guide from the IRBA in this regard will be available by the effective date of 1 July 2006.

Disciplinary process

Section 24 (2) sets out the requirements regarding the composition of the Disciplinary Committee of the IRBA. The composition of the existing PAAB-appointed committee is not in line with the requirements of the new Act. Furthermore, sections 50 and 51 of the Act set out a new disciplinary process, which is different to the one used by the PAAB. A new Committee will have to be constituted following a nominations process, and the disciplinary process reviewed and changed to conform to the requirements of the new Act.

The next few months will be a very busy and challenging period for the Secretariat and the Board. The IRBA will implement the legislation with enthusiasm and in the best interests of the profession and the public.

The Chief Executive Officer, Kariem Hoosain, looks forward to working together with the profession and all other stakeholders to ensure that the reputation of the profession is upheld and that the services of practitioners remain of the highest quality. At the same time the IRBA will strive to carry forward and to uphold the already entrenched core values of the PAAB.
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