The Independent Regulatory Board for Auditors (Irba) said on Monday that Finance Minister Enoch Godongwana last week gazetted the maximum monetary fines for improper conduct of auditor, which could go as high as R25 million.
This as South African corporates with the likes of Steinhoff, and Tongaat Hulett have been implicated in accounting scandals with the role of their auditors questioned.
The maximum fine that might be imposed by the enforcement committee on an individual auditor, who concludes an admission of guilt process was now set at R5 million and in the case of an auditing firm the maximum fine is set at R15m.
Where the enforcement committee referred a matter to the disciplinary committee for a hearing, the maximum fine the disciplinary committee may impose following a disciplinary hearing process was R10m for an individual auditor or R25m for an auditing firm, where on conclusion of the hearing process the auditor or firm was found guilty.
Previously, the act was linked to the Adjustment of Fines Act 101 of 1991 which limited Irba to imposing maximum fines of R200 000 per charge of improper conduct.
“Irba is empowered by the act to investigate complaints of improper conduct where registered auditors are alleged to have acted contrary to the Irba code of professional conduct or failed to correctly apply auditing standards.
“The 2021 amendment to the act was intended to introduce more effective monetary sanctions which are consummate with improper conduct. This was in response to the public criticism that monetary sanctions for improper conduct were too low to effectively deal with improper conduct,” it said.
These monetary sanctions are now applicable to all improper conduct after the date of promulgation of the act (as amended), therefore after April 26, 2021.
Imre Nagy, Irba’s CEO, said: “While Irba welcomes the publication of the new maximum fines, it is crucial to note that these are maximum fine limits and not fixed.
“As in the past, the enforcement committee and the disciplinary committee continue to have within their respective scopes, a variety of other sanctions which may be imposed for improper conduct, including 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 would attract the maximum fine.
“In addition, Irba will now finalise the implementation framework, which will ensure that relevant considerations (including proportionality) are considered prior to determining an appropriate fine,” Nagy said.
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