Ethics S1

Question 1

what are the functions of the committee for Auditing standards under S22?

Answer 1

Section 22: Committee for Auditing Standards
Appointed by Regulatory Board.
Functions:
Develop, maintain, issue auditing pronouncements.
Consider international changes.
Promote relevance.
Influence international standards.

Question 2

What are the requirements to register as an individual RA under S37?

Answer 2

Requirements for Registration:

Prescribed education, training, competence.
CPD arrangements.
Resident in South Africa.
Fit and proper person.
Pay fee → included on register and receive certificate.

Question 3

When may the board refuse the registration of an RA under S37?

Answer 3

Board May Refuse If:

Removed from trust position due to misconduct.
Convicted of theft, fraud, corruption, etc.
Unsound mind.
Disqualified under the Act.
Insolvent, compromise with creditors, sequestration.

Question 4

What firms can register as an RA firm according to S38?

Answer 4

Eligible Firms:

Partnerships where all partners are RAs.
Sole proprietors (proprietor is RA).
Companies where:
All shareholders = RAs.
All directors = shareholders.
Memorandum states joint/several liability of directors.

Question 5

what are the cancellation triggers under S39 for termination?

Answer 5

Cancellation Triggers:

Later found disqualified per s37.
Registration made in error or false info.
Misconduct prior to registration.
Insolvency or compromise with creditors.
Ceasing to be member of accredited body.

Question 6

What is the procedure of termination under S39?

Answer 6

Procedure:

21–30 days’ notice.
Lapses if RA fails to pay prescribed fee.
RA can request removal from register.
Still liable for disciplinary actions.
Board must publish cancellation notice.

Question 7

According to S41, what may RA’s do?

Answer 7

Only RAs May:

Engage in public practice.
Call themselves RAs.

Question 8

According to S41, what are Non-RA’s prohibited from doing and what are the exceptions to these rules?

Answer 8

Prohibited for Non-RAs:
Performing audits.
Pretending to be an RA.
Using the RA title.

Exceptions:
Internal Auditor title.
Club audits with no fees (honorary auditor).
Auditor General appointments under Public Audit Act 2004.

Question 9

What are restrictions for RA’s according to S41?

Answer 9

RA Restrictions:

May not employ:
Suspended individuals.
Previously denied registration.
Firm names must show:
RA’s full name or initials/surname.
Managing partners’ names in partnerships.
Directors’ names (companies – s171 Companies Act).
Sign only reports supervised by self or partners.
Must have adequate risk management.
May not share audit profits or partner with non-RAs.

Question 10

What duties are there in relation to audit according to S44?

Answer 10

Firms:

Must assign accountable RA.
Name must be available to client & IRBA.
RA must not express an opinion unless:

1. Audit free of restrictions.
2. Verified assets & liabilities.
3. Proper accounting records exist in official language.
4. All necessary documentation accessed.
5. Disclosed/report any
6. Reportable Irregularity.
7. Complied with any relevant law.
8. Satisfied with fairness of financial statements.

Additional:
Must disclose if RA/bookkeeper.
Audit not allowed with conflict of interest.

Question 11

What is an irregularity according to S45?

Answer 11

Definition:
Any unlawful act/omission by management that:

Causes or may cause financial loss.
Is fraudulent or theft.
Breaches financial duty by law.
→ Must be reported to IRBA.

Question 12

What types of liability can auditors face?

Answer 12

Civil: APA s46 – client or third party
Criminal: Companies Act transgressions
Disciplinary: IRBA – improper conduct

Question 13

When does an auditor face liability according to S46?

Answer 13

No liability unless:

Third party relied on auditor’s opinion/report.
Suffered financial loss.
RA was negligent.
RA knew (or should’ve known) reliance would happen.

Important:
Can’t limit liability via agreements.
Liable if Reportable Irregularity not disclosed (s45).

Question 14

What are the rules of Improper conduct?

Answer 14

Applies to:

All IRBA-registered members, including trainees.

Misconduct Includes:

Breach of laws (APA, other relevant acts).
Dishonesty in duties.
Found guilty by court.
Contravening:
Audit pronouncements.
Code of Professional Conduct (CPC).
Lacking professional competence, care, skill.
Tax evasion (self/client).
Preparing false records/statements.
Failing to:
Respond to IRBA requests.
Comply with IRBA orders.
Resign from client if requested.
Transfer records upon resignation.
Unreported Reportable Irregularity.
Non-payment of IRBA dues.
Abandoning practice.
Making knowingly/recklessly false declarations.
Any behaviour discrediting the auditing profession.