Finance Minister Enoch Godongwana on Friday gazetted a notice of withdrawal of the notice of maximum fines for improper conduct of registered auditors issued on June 15, 2023, and issued a new maximum fine notice for a comment period of 30 days.
The Independent Regulatory Board for Auditors (IRBA) said in a statement on Friday it wished to clarify that this did not reverse the notice of maximum fines for improper conduct as promulgated by the Minister and these would remain applicable for improper conduct committed from June 15, 2023, until the adoption of the new notice for maximum fines after the comment period.
In terms of the notice in June, an individual auditor may be fined up to R5 million per charge and an audit firm may be fined a maximum amount of R15 million per charge. This applies to registered auditors and audit firms that admit guilt as contemplated in section 49(4)(a) of this act.
Furthermore, individual auditors and auditing firms may also be fined up to R10 million and R25 million respectively for charges brought under a disciplinary hearing process.
Imre Nagy, IRBA CEO, said: “I reiterate that these prescribed maximum fines are a maximum limit and not fixed. The IRBA will in all cases apply proportionality and scalability when sanctioning in matters of improper conduct, as we have always done. There are varying degrees of improper conduct and not every matter is sanctioned by way of maximum fines.
“The IRBA also has non-monetary sanctions at its disposable for improper conduct, which although it remains improper conduct does not have massive public impact. These non-monetary sanctions are generally remedial in nature, encouraging continual professional development.”
Per the Government Gazette Notice 49968 of January 5, 2024, it indicated that: The purpose of the proposed withdrawal of the Notice and a new determination of maximum amounts, is to provide for the maximum amounts for both sections 51(2) and 51B(3)(b) of the Act to apply per charge.
“From the inception of the IRBA in 2006 by the enactment of the Auditing Profession Act, the maximum fines – which were then governed by the Adjustment of Fines Act – were set at a maximum of R200 000 per charge. This concept is therefore consistent with historical practice.
“Furthermore, the IRBA has always applied proportionality and scalability in the determination of monetary sanction for improper conduct, and maximum fine limits are reserved for the most serious charges of improper conduct,” it said.