The Independent Regulatory Board for Auditors (IRBA) has gazetted the new disciplinary rules for registered auditors. This brings the rules and procedures to be followed during investigation and disciplinary processes into alignment with the Auditing Profession Act 26 of 2005, as amended by Act 2 of 2015 and Act 5 of 2021.
These rules repeal the disciplinary rules adopted in June 2007 and came into effect from April 1, 2022. The final rules as approved by the board followed a consultation process which began in November 2021 when the draft rules were published for public comment. Public comments were received from stakeholders, considered by the board and, where practical, adopted and incorporated into the final rules.
The disciplinary rules support the IRBA’s mandate to promote the integrity of the auditing profession by investigating allegations of improper conduct; conducting disciplinary hearings; and imposing sanctions for improper conduct.
An area which raised some concern during the public hearings on the Auditing Profession Act Amendment was the inclusion of search and seizure provisions to align with the legislation of other financial bodies reporting to National Treasury.
Says Imre Nagy, Acting CEO of IRBA: “The way in which the rules articulate how and when these powers will be implemented will allay many of the concerns expressed by stakeholders during the promulgation of the amendments. Importantly, following public comments, we have incorporated the insertion of sub-rule (4) under rule 30, which provides persons from whom search and seizure consent is required, to elect to have their legal representative present prior to consenting to the search and seizure.”
Given the changes to Sections 48 to 51 of the Act, as well as the introduction of section 24A, 48A, 48B, 51A and 51B, which deal with the investigation process; charges of improper conduct; disciplinary hearings; sanctions to be imposed for improper conduct; the constitution of the disciplinary committee and the hearing panel; as well as the powers to enter, search and seize information relevant to investigations; it was necessary to revise the disciplinary rules to ensure compliance with the new legislative provisions.
Says Nagy: “These new rules implement the amendments to the Act, which strengthened the powers of the IRBA and will improve both the efficiency and effectiveness of the IRBA investigation and disciplinary processes. This will ensure that the IRBA effectively delivers on its public interest mandate to hold auditors charged with improper conduct to account and will contribute to restoring confidence and rebuilding trust in the profession and the regulator.”
The investigation and disciplinary processes were re-written to achieve efficiency, align with the IRBA’s comparative benchmarking research, as well as the amendments to the Act.
Furthermore, the rules now set out procedures for the referral of non-audit related complaints to an IRBA accredited professional body for investigation.
Regarding comments received on the definition of non-audit matters, the IRBA expanded the definition of non-audit complaints to include examples such as: the administration of deceased estates; administration of trusts; insolvency and liquidation services; taxation and accounting services, for the purpose of greater clarity.