Minister of Finance increases maximum monetary fines for auditors

On 15 June 2023, the Minister of Finance, Enoch Godongwana, issued a discover within the Authorities Gazette to extend the utmost financial fines that the Unbiased Regulatory Board for Auditors (IRBA) can impose on auditors and auditing companies, who’ve been charged with improper conduct and who admit guilt or who’re discovered responsible following a disciplinary listening to. The brand new fines are considerably larger than the earlier most of ZAR 200 000.

In respect of the IRBA imposing financial fines, the Auditing Professions Act, 26 of 2005 (the APA) distinguishes between auditors and auditing companies who admit guilt and those that are discovered responsible following a disciplinary listening to. Consequent to the Minister’s discover, the utmost financial fines which the IRBA might impose are the next:

Request for forgiveness:

ZAR 5 million per cost for a person auditor.

ZAR 15 million per cost for a agency of auditors.

Discovered responsible following a disciplinary listening to:

ZAR 10 million per cost for a person auditor.

ZAR 25 million per cost for a agency of auditors.

On 16 September 2022, the Minister revealed the proposed improve to the utmost financial fines for public remark, in compliance with the necessities of the APA. The will increase have been applied as per the proposed improve revealed in September 2022, begging the query of the effectiveness of any public feedback.

Contemplating that financial fines are penal in nature, the appliance of the rise should accord with the precept of prison legislation {that a} penalty can’t be elevated in opposition to a wrongdoer after the fee of the offence, absence of categorical wording or clear implication on the contrary. Webber Wentzel’s’ view is that there is no such thing as a categorical wording or clear implication within the APA which means that the elevated most financial fines ought to apply to alleged improper conduct dedicated earlier than the publication of the Minister’s discover on 15 June 2023.

The elevated most fines are a serious change that may probably have a major influence on the auditing career in South Africa. It stays to be seen how the IRBA’s new powers will have an effect on auditors who have interaction in improper conduct.