Auditor liability

Question 1

Which companies need to be audited?

Answer 1

Public companies and private companies who choose too, are required to by regulation or its MOI

Question 2

What are the components of the public interest score and how is it calculated?

Answer 2

Turnover, shareholders, employees and third party liability. One point per shareholder and employee and one point per million turnover/third party liability. A score of 350 requires a company to be audited

Question 3

When is the auditor appointed and what are the requirements?

Answer 3

Appointed annually at the AGM, the auditor needs to be qualified/independent/has not served 5 years

Question 4

Who can not be an auditor?

Answer 4

Any director/PO, anyone who has already served 5 years, anyone who habitually performs bookkeeping or accounting jobs or an employee or consultant who has worked on financial statements

Question 5

When will the appointment of an auditor not occur?

Answer 5

When the auditing committee objects, where the candidate is no longer interested/qualified/has already served max time

Question 6

What are the rights of an auditor?

Answer 6

Access to company’s financial statements, access to info from the director and access to subsidiaries financial statements. Also entitled to attend and vote at AGM

Question 7

What are the audit committee requirements and exceptions

Answer 7

A committee must consist of a minimum of 3 members unless it is a subsidiary of a company which has an audit company and that company will carry on duties for them

Question 8

What are the duties of an audit committee

Answer 8

Nominate independent, qualified persons, to determine fees, to prepare a report for the financial statements, ensure appointment follows regulations etc

Question 9

What are the aims of the auditing profession act?

Answer 9

To ensure candidates are qualified and act with integrity. To promote standards

Question 10

What can auditors be guilty of and what is the sentencing

Answer 10

Failure to disclose irregularities and issuing false statements

Question 11

What is the apportionment of damages ?

Answer 11

South Africa deals with dividing damages when multiple parties are liable for the same harm, including cases involving auditors. It applies when the damages are partly caused by the fault of one party and partly by the fault of others, allowing the court to apportion liability based on the degree of each party’s contribution.