Revised disciplinary rules for auditors gazetted for the South African market
07 April 2022
South Africa’s regulator for the auditing profession, the Independent Regulatory Board for Auditors (IRBA), has introduced revised disciplinary rules for registered auditors (the Revised Rules), aligning the rules and process to be followed in disciplinary proceedings with the Auditing Profession Act, 2005 (as amended).
The Revised Rules came into effect on 1 April 2022 and repeal the Disciplinary Rules adopted on 7 June 2007. The Revised Rules were approved by the board following a public consultation process that began in November 2021.
Concerns were raised during the public hearings on the Auditing Profession Act Amendment relating to the inclusion of search and seizure provisions. The IRBA’s Acting CEO, Imre Nagy, has expressed the view that the manner in which the Rules provide for implementation of search and seizure powers “will allay many of the concerns expressed by stakeholders”1.
The IRBA’s power to conduct search and seizure operations is dealt with under Part D of the Revised Rules and generally aligns with the search and seizure powers afforded to other financial sector regulators in South Africa. A search and seizure operation may only be carried out in order to seize information that is relevant to an investigation where the Chairperson of the Investigating Committee has, following a decision by the Investigating Committee, issued a certificate authorising entry into the premises; and either a person in control of the premises consents to the entry for the purpose of the search and seizure, or a warrant is issued by a Judge or Magistrate in a court with competent jurisdiction2.
Rule 30 of the Revised Rules deals with consent to a search and seizure operation. It provides that where a search and seizure operation is conducted at a private residence from which a business is reasonably believed to be conducted, “a person apparently in control”3 of that business “and the occupant of the private residence” may consent to the search and seizure. In the case of any other premises, “a person who is or appears to be in control” of the premises and who is aged 16 or older may consent. A certificate of authority and explanation by the IRBA’s “authorised person” of the purpose of the search and seizure must be presented prior to consent being validly given. In terms of sub-rule (3), persons from whom consent is requested are not obliged to consent to the search and seizure. Sub-rule (4) provides further that persons from whom consent is required may elect to have their legal representative present prior to consent being given.
Typically, it is advisable to have a legal representative present, or at the very least to obtain legal advice prior to consenting to search and seizure by any regulatory authority. Legal advice may be helpful and necessary in respect of both the substantive elements of the intended search (including the purpose of the intended search and seizure operation and the validity of the certificate of authority) and procedural aspects, including the manner in which the operation is conducted, and the safe custody and return of seized documents.
The Revised Rules also set out the procedures for referral by IRBA’s Director of Investigations or CEO of non-audit related complaints brought against registered auditors to IRBA-accredited professional bodies for investigation in Part E. A “non-audit complaint” is defined to mean a complaint brought against a registered auditor for conduct that does not meet the definition of audit in the Auditing Professions Act. The definition provides the examples of the administration of deceased estates; administration of trusts; insolvency and liquidation services and taxation or accounting services.
2Revised Rules – Rule 28
3Defined under Rule 1(1)