When I studied at Howard College, UKZN, in one of the Rag magazines there appeared a list of the top ten titles from the Thin Book Press. I think Italian War Heroes came out tops, but a close second was The Thrill of Auditing.

Of course, the joke is on (the rest of) us. Auditors and accountants are the professionals who know just how money works; how it is to be made, saved and – most importantly – not spent. In fact, it is reported1 that at least two of South Africa’s ten richest people, in 2013 (who made their own wealth – and didn’t inherit it, as did at least four on the list) had qualified as chartered accountants. Indeed, over 80% of CAs are not in practice at all – they are business consultants, tax advisers, entrepreneurs, financial managers, and as much as 30% of them are in the financial services industries.

If that’s not impressive, 32% of the chief executives of the top 194 companies on the Johannesburg Stock Exchange are CAs.2 In 2011 the World Economic Forum’s Global Competitiveness Report ranked South Africa as number 1 in the world for the ‘strength of its auditing and reporting standards’.3

The Auditing Profession Act 2005 governs the profession of auditing. It falls under the authority of the Minister of Finance, but there is the Independent Regulatory Board which effectively administers the Act and its aims, purposes and functions. (In addition there is the Chartered Accountants Designation (Private) Act 1993).

A. Registration

  1. It is a crime to practise as an auditor unless you are registered with the Regulatory Board.4

  2. A person who is not registered as an auditor may not:
    • perform any audit, unless he does so in the service and under the control and supervision of a registered auditor (or it is a free service for a club or association);5 nor
    • pretend to be, or do anything likely to lead people to think that he is a registered auditor;6 nor
    • use the name of any registered auditor7 and commits an offence if he does.8
  3. Except with the consent of the Regulatory Board, a registered auditor may not employ:
    • any person suspended from public practice;9
    • any person whose registration as an auditor was terminated or cancelled;10
    • any person whose application for registration was declined,11 and commits an offence if he does.12
  4. Any person whose registration has been cancelled must return his registration certificate to the Regulatory Board (within 30 days of being directed to do so). If you fail to comply with this provision, you commit a criminal offence.13

  5. A registered auditor who is not in public practice as an individual practitioner may practise as a member of a firm only if the firm is itself a registered auditor.14

  6. It is a crime to engage in public practice whilst suspended from public practice.15

  7. Any registered auditor who shares any profit, derived from performing an audit, with a person who is not a registered auditor commits an offence.16

B. Practice requirements

  1. Only a registered auditor may use the description ‘public accountant’ or ‘certified public accountant’, or any other designation or description indicating that he is a registered auditor in public practice,17 and it is an offence to do otherwise.18

  2. Only members of the South African Institute of Chartered Accountants may use the designation ‘Chartered Accountant’, or ‘CA’ or ‘FCA’ (or the Afrikaans equivalents). Any person who contravenes this prohibition, or who allows a corporate entity to use any of the designations when not all of its directors or shareholders are members of the Institute, is guilty of an offence.

  3. Where a firm is appointed to perform an audit, that firm must immediately take a decision as to the registered auditor (or auditors) within the firm to be responsible and accountable for that audit. It is an offence not to do this.19

  4. A registered auditor commits an offence if he practises under a name (or title) unless on every letterhead bearing the firm’s name (or title) there appears:20
    • the registered auditor’s name; or
    • in the case of a partnership, at least the name of the managing partners; or
    • in the case of a company, the full names (or initials and surnames) of the directors.
  5. A registered auditor commits an offence if he:
    • performs any audit where adequate risk management practices and procedures are not in place;21 or
    • signs any document which purports to represent an audit performed by him unless it was performed by him or under his personal supervision.22
  6. As a registered auditor, you may not conduct the audit of any financial statements of an entity if you have a conflict of interest.23 You are guilty of an offence if you contravene this prohibition.24

C. Opinions and reporting

  1. A registered auditor may not express an opinion to the effect that any financial statement:
    • fairly presents the financial position of the entity and the results of its operations and cash flow;25 and
    • is properly prepared in all material aspects in accordance with the basis of the accounting and financial reporting framework as disclosed in the relevant financial statements,26 unless he has qualifications appropriate to the circumstances,27 and is satisfied:
      • that the audit was free from any restrictions whatsoever and in compliance with auditing pronouncements;28
      • of the existence of all assets and liabilities shown on the financial statements;29
      • that proper accounting records have been kept in connection with the entity;30
      • that all information, vouchers and other documents which were necessary for the proper performance of his duties were obtained;31
      • he has complied with all laws relating to the audit of that entity;32 and
      • as to the fairness or the correctness of the financial statements.33

    He commits an offence if these provisions are contravened.34

  2. If a registered auditor is responsible for keeping the books of a corporation he must, in reporting on anything in connection with its business or financial affairs, indicate that he was responsible for keeping those accounting records.35 He commits an offence if he fails to do so.36

  3. A registered auditor must submit such information or returns as may be requested by the Regulatory Board. He commits a crime if he fails to do so.37

  4. It is a crime for a registered auditor not to report (to the Regulatory Board) a ‘reportable irregularity’. This means any act or omission committed by any person responsible for the management of an entity, which:38
    • has caused or is likely to cause material financial loss to the entity or to any partner, member, shareholder, creditor or investor of the entity in respect of his, her or its dealings with that entity; or
    • is fraudulent or amounts to theft; or
    • represents a material breach of any fiduciary duty owned by such person to the entity or any partner, member, shareholder, creditor or investor of the entity under any law applying to the entity or the conduct or management thereof.
  5. If, for the purposes of, or in connection with, the audit of any financial statement, a registered auditor knowingly or recklessly expresses an opinion or makes a report or other statement which is false in a material respect, he shall be guilty of an offence.39

D. Names and addresses

  1. Every registered firm must, within 30 days, notify the Regulatory Board of any change in its name, composition or address. It is a crime not to do this.40

  2. Any registered auditor who gets a written request from a client (or prospective client) for the following information must provide it within two weeks, or else he commits an offence:41
    • the name or title of every firm under which the registered auditor practises.
    • their places of business;
    • the full names of all (if any) of the partners, co-directors or co-members; and
    • the registered auditor’s first names or initials, surname, ordinary business address and ordinary residential address.
  3. Where a firm is appointed to perform an audit, the first name and surname of the individual registered auditor who is responsible for the audit must, if requested, be made available to the client and to the Regulatory Board. It is an offence to fail to do this.42

E. Regulatory board inspections and disciplinary hearings

  1. The Regulatory Board can inspect and review the practice of a registered auditor. At its request, the auditor must produce all information, working papers, documents, books, etc. and commits an offence if he fails or refuses to do so.43

  2. It is also a crime to obstruct or hinder any person in the performance of official functions relating to this kind of inspection or review.44

  3. The Regulatory Board can appoint a disciplinary committee to hear and determine charges of improper conduct against any registered person.45 The tribunal has a wide variety of powers relative to such a hearing,46 and it is an offence for a witness who has been subpoenaed:
    • to fail to attend the hearing at the time and place specified in the subpoena;47
    • to refuse to be sworn in (or to be affirmed) as a witness;48
    • to fail to answer, fully and satisfactorily, all questions lawfully put to him;49
    • to fail to produce any book, document or object in his possession, custody or under his control which he has been required to produce.50
  4. A witness who has been subpoenaed must remain in attendance until excused by the chairperson of the disciplinary tribunal, and commits an offence by not doing so.51

  5. A witness commits an offence if he knowingly gives a false statement on any matter.52

  6. It is a crime to prevent another person from complying with a subpoena, or from giving evidence, or from producing a book, document or object which he is required to produce, at a committee hearing.53

  7. Any person concerned with such an inspection or review who discloses any information obtained in the process, commits an offence.54 55
  1. See s.v. ‘South Africa’s Top 10 Richest People of 2013’. 

  2. – ‘Chartered accountants dominate boards of JSE’s biggest listings’; see also – ‘Why CA’s Are Good For SA.’ Some famous examples of CA-turned-entrepreneur are Brian Joffe (Bidvest), Laurie Dippenaar (First Rand Bank), Stephen Saad (Pharmacare) and Stephen Koseff (Investec). 

  3. Loc cit, ‘Why CA’s Are Good For SA.’ 

  4. Section 41(1) read with section 54(1). 

  5. Section 41(2)(a)(i) read with section 41(2)(b). 

  6. Section 41(2)(a)(ii) and 41(2)(a)(iv). 

  7. Section 41(2)(a)(iii). 

  8. Section 54(1). 

  9. Section 41(4)(a). 

  10. Section 41(4)(b). 

  11. Section 41(4)(c). 

  12. Section 54(1). 

  13. The same applies to a voluntary association whose recognition by the Regulatory Board has lapsed. 

  14. Section 41(5) read with section 54(1). 

  15. Section 41(6)(d) read with section 54(1). 

  16. Section 41(6)(e) read with section 54(1). 

  17. Section 41(1). 

  18. Section 54(1). 

  19. Section 44(1)(a) read with section 54(1). 

  20. Section 41(6)(a) read with section 54(1). 

  21. Section 41(6)(c). 

  22. Section 41(6)(b). 

  23. Section 44(6). 

  24. Section 54(1). 

  25. Section 44(2)(a). 

  26. Section 44(2)(b). 

  27. Section 44(2). 

  28. Section 44(3)(a). 

  29. Section 44(3)(b). 

  30. Section 44(3)(c). 

  31. Section 44(3)(d). 

  32. Section 44(3)(f). 

  33. Section 44(3)(g). 

  34. Section 54(1). 

  35. Section 44(4). 

  36. Section 54(1). 

  37. Section 47(6) read with section 54(1). 

  38. Section 52(1)(a). 

  39. Section 52(1)(b). 

  40. Section 43(1) read with section 54(1). 

  41. Section 43(3) read with section 54(1). 

  42. Section 44(1)(b) read with section 54(1). 

  43. Section 47(3) read with section 54(2)(a). 

  44. Section 54(2)(b). 

  45. Section 20(2)(f). 

  46. Section 50(5), (6), (7) and (9). 

  47. Section 53(1)(a) read with section 50. 

  48. Section 53(1)(b) read with section 50. 

  49. Section 53(1)(b) read with section 50. 

  50. Section 53(1)(c) read with section 51. 

  51. Section 53(1)(a). 

  52. Section 53(2). 

  53. Section 53(3). 

  54. Except if required by a court, or for the purposes of an investigation, prosecution, or further inspection (and then with the auditor’s consent). 

  55. Section 47(5) read with section 54(1).