Auditing Profession Amendment Bill [B 15B-2014]

Transcription

1 Auditing Profession Amendment Bill [B 15B-2014] Briefing of Select Committee on Finance National Council of Provinces 6 May 2015 Delegation: Ms Laine Katzin, Director & Mr Robert Zwane, Manager, Education Training and Professional Development Department, Independent Regulatory Board for Auditors Adv Empie van Schoor, Chief Director: Legislation, National Treasury

2 Outline of presentation Background Objects of Amendment Bill Reasons for proposed regulation of candidate auditors Proposed amendments Public submission to SCOF, NA 2

3 Background (1) Auditing Profession Act of 2005 (AP Act) established Independent Regulatory Board for Auditors IRBA IRBA s primary objective is to protect public through regulation of auditing profession Regulation aims to advance development & maintenance of internationally comparable standards of competence & good ethics Objectives seek to advance SA s economic well-being by promoting investment & employment 3

4 Background (2) Investment enhanced by confidence in financial markets Confidence created if financial information & assurance expressed on such information are reliable AP Act enables IRBA to fulfil objectives through functions regarding standards of professional competence, ethics & conduct accreditation of professional bodies education, training & professional development for auditing profession auditing standards registration of auditors 4

5 Background (3) Reputation, relevance, value & confidence in auditing profession depends on ability of its members to continually respond to needs of stakeholders provide services appropriate for SA economy in global context IRBA therefore must ensure that registered auditors have required professional competence further develop & maintain professional competence are subject to ethical requirements & are disciplined, when appropriate 5

6 Objects of Amendment Bill To provide for regulation of candidate auditors To update references to Companies Act (1973 Act replaced by 2008 Act) 6

7 Reason for proposed regulation of candidate auditors (1) Current steps to become registered auditor Obtain professional accountant qualification (degree), serve as articled clerk ito training contract, complete Public Practice Examination & register as auditor Candidates who wanted to become chartered accountants could choose audit or financial management route Candidates who choose audit route and pass Public Practice Examination could become chartered accountants (CAs) and register as auditors 7

8 Reason for proposed regulation of candidate auditors (2) This has changed because of the termination of the Public Practice Examination SA Institute of Chartered Accountants (SAICA) changed its education & training model CAs will no longer qualify through specialist route, i.e. audit or financial management All will follow similar qualification path & write only one final assessment of professional competence 8

9 Reason for proposed regulation of candidate auditors (3) New SAICA assessment does not assess audit competency to same level as previously IRBA must ensure that profession skills & competence are responsive to needs of public in a manner that protects the public To address this, IRBA developed the Audit Development Programme (ADP) entailing a period of specialisation Candidates must demonstrate audit competence on job and not through additional written examination perform roles more senior to those undertaken in training contract as articled clerk submit portfolio of evidence of work undertaken for ADP 9

10 Reason for proposed regulation of candidate auditors (4) Audit firm to provide candidate auditor with required skills & competencies to register as auditor give practical exposure to wide range of matters faced by registered auditors this requires closer relationship between the candidate, the oversight auditor & IRBA to ensure more mature auditor 10

11 Reason for proposed regulation of candidate auditors (5) Registration with IRBA of persons performing audit work on more senior level than articled clerks under Audit Development Programme, desirable to protect the public Place them under IRBA s jurisdiction regarding ethical standards & disciplining Public will have recourse through IRBA if their interests are not be served or services are not at a required standard Audit Development Programme commenced in

12 Reason for proposed regulation of candidate auditors (6) Proposed steps to become a registered auditor obtain professional accountant designation from a professional body accredited by IRBA complete articles register as a candidate auditor with IRBA successfully complete the Audit Development Programme register as auditor 12

13 Proposed amendments candidate auditors clauses 1-5, 7, 8, 10, 12 & 13 of Bill Amendment Bill proposes to authorise IRBA to register and regulate candidate auditors Define registered candidate auditor as individual who (i) has obtained professional accountant designation from accredited professional body, (ii) is registered with IRBA as candidate auditor and (iii) is serving under supervision of registered auditor Include candidate auditors in requirements for registration & provide for termination of registration Place them under IRBA s jurisdiction in matters of discipline 13

14 Proposed amendments Companies Act clauses 6, 9 & 11 of Bill Amendments in Bill regarding Companies Act Definition of Companies Act in section 1 of AP Act References to provisions of Companies Act in section 38(3) & (4) of AP Act - registration of firms as registered auditors section 41(6) of AP Act requirements for letterhead when practicing under name of firm which is company section 47(1)(b) of AP Act IRBA s inspection/review of practice of registered auditor that audits public company 14

15 Public submission to SCOF, NA (1) One submission to SCOF, NA, by SA Institute of Professional Accountants (SAIPA), raised following: Possible confusion as to use of term of professional accountant in definition of registered candidate auditor since SAIPA members are designated Professional Accountants (SA) Response: Professional accountants are target group for candidate auditors and term is recognised by the International Federation of Accountants (IFAC). Term used in definition is professional accountant designation 15

16 Public submission to SCOF, NA (2) Abbreviation CA should not be used for candidate auditor to avoid confusion with chartered accountant - Response: IRBA using RCA - registered candidate auditor Section 36(4) should include reference to candidate auditor - Response: SCOF adopted this amendment 16

17 Public submission to SCOF, NA (3) Disqualifications must be in line with other legislation, e.g. Companies Act - Response: Outside scope of amendments in Bill but current Act does cater for non-compliance with other Acts as ground for disqualification for registration, and it can be dealt with in IRBA s rules of improper conduct. This will also be considered during review of whole Act Questions about Audit Development Programme itself - Response: IRBA met with SAIPA and referred SAIPA to Audit Development Programme booklet 17

18 Public submission to SCOF, NA (4) Queried why provision for auditors performing independent review services as recognised by Companies Act was not in included in Bill Response: Outside scope of Bill and since already regulated in another Act, no necessity to deal with in Auditing Profession Act. Matter will however be considered during review of whole Act 18

19 Ri a livhuwa/enkosi/siyabonga/ Re a leboga/dankie/thank you