1. PUBLIC ACCOUNTANTS’ AND
AUDIT PROFESSION BILL
PRESENTATION BY THE
PUBLIC ACCOUNTANTS’ AND
AUDITORS’ BOARD
OCTOBER 2005

2. 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

3. 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

4. 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

5. 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

6. 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

7. 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

8. 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

9. 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

10. 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 it’s 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