Fines of up to R25m for delinquent audit firms – Godongwana

Auditors can now be slapped with fines of up to R25 million if found to be in breach of South Africa’s Auditing Profession Act – a significant increase from historically low levels previously thought of as ineffective in addressing misconduct in the industry.

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Maximum fines for auditors, firms gazetted

Finance Minister Enoch Godongwana increased the maximum monetary penalties for both individual auditors and audit firms, which will allow the Independent Regulatory Board for Auditors (Irba) to impose bigger monetary fines than the R200 000 per charge it was previously limited to.

Godongwana gazetted the new limits on 15 June, empowering Irba to impose penalties of R5 million on an individual auditor and R15 million on auditor firms that admit guilt.

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Violations: Maximum limits not fixed

Although previous monetary sanctions were viewed as too low to deal with misconduct in the country’s auditing industry, Irba, tasked with regulating the accountancy profession in South Africa, highlighted that the fines are not fixed and that violations will not always attract the maximum charge.

“While the Irba welcomes the publication of the new maximum fines, it is important to note that these are maximum fine limits and not fixed,” Irba CEO Imre Nagy said on Monday.

Nagy said that, as in the past, under Irba’s enforcement disciplinary committee rules, a variety of other sanctions may be imposed on delinquent firms and individual auditors. These include non-monetary sanctions.

“The committees also continue to have the power to scale monetary sanctions in line with the seriousness of the charges, therefore not every charge of improper conduct will attract the maximum fine,” said Nagy.

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Irba to finalise new sanction limits

Following the gazetting of the fines, Nagy said Irba will finalise the implementation framework for the new sanction limits.

He said this “will ensure that relevant considerations” – including proportionality – are considered prior to determining an appropriate fine.

This article originally appeared on Moneyweb and was republished with permission.
Read the original article here.

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