Proposed fines for errant auditors and firms more severe
Finance minister Enoch Godongwana has proposed amendments to the fines that can be imposed on individual auditors and auditing firms, which were gazetted in June.
The proposed amendments, which make the fines slapped on auditors and auditing firms more onerous, have been published for public comment. They are based on the recommendations of the Independent Regulatory Board for Auditors (Irba).
While the latest gazette does not change the maximum amounts of the fines stipulated in the June gazette, it clarifies that the maximum fines that can be imposed after a disciplinary hearing relate to each charge faced by an auditor or auditing firm and not to all the charges.
It is proposed that a maximum fine of R10m per charge can be imposed on an individual registered auditor who is charged and found guilty after a disciplinary hearing or if the registered auditor admits guilt.
It is also proposed that a maximum fine of R25m per charge may be imposed on a firm of auditors that is charged and found guilty after a disciplinary hearing or if the firm admits guilt to the charge.
What remains unchanged is that an individual registered auditor will be fined a maximum of R5m per charge when they admit guilt of improper conduct, and that a firm of auditors found guilty of improper conduct will be fined a maximum of R25m per charge.
The latest gazette proposes that the withdrawal of the previous notice and the introduction of the new maximum fines will take effect on the same date and apply retrospectively.
The changes to the maximum fines gazetted in June were welcomed as rectifying what was regarded as a slap on the wrist of the previous penalties, which were capped at R200,000 per charge of misconduct. This was seen as being insufficient to discourage improper conduct.