Auditing Profession Act, 2005 (Act No. 26 of 2005)Board NoticesIndependent Regulatory Board for AuditorsNew Rules Regarding Improper Conduct and Code of Professional Conduct for Registered AuditorsCode of Professional Conduct for Registered AuditorsDefinitions |
For the purpose of this Code the terms below have the meanings assigned to them and any reference to any section in this Code is a reference to the corresponding section in the Act.
In this Code, the following expressions or terms have the meanings assigned to them.
A level at which a reasonable and informed third party would be likely to conclude, weighing all the specific facts and circumstances available to the registered auditor at that time, that compliance with the fundamental principles is not compromised.
The Auditing Profession Act, 2005 (Act No. 26 of 2005).
The communication to the public of information as to the services or skills provided by registered auditors with a view to procuring professional business.
The responsible party that is the person (or persons) who:
| (a) | In a direct reporting engagement, is responsible for the subject matter; or |
| (b) | In an assertion-based engagement, is responsible for the subject matter information and may be responsible for the subject matter. |
An engagement in which a registered auditor in public practice expresses a conclusion designed to enhance the degree of confidence of the intended users other than the responsible party about the outcome of the evaluation or measurement of a subject matter against criteria.
(For guidance on assurance engagements see the International Framework for Assurance Engagements issued by the International Auditing and Assurance Standards Board which describes the elements and objectives of an assurance engagement and identifies engagements to which International Standards on Auditing (ISAs), International Standards on Review Engagements (ISREs) and International Standards on Assurance Engagements (ISAEs) apply.)
| (a) | All members of the engagement team for the assurance engagement; |
| (b) | All others within a firm who can directly influence the outcome of the assurance engagement, including: |
| (i) | those who recommend the compensation of, or who provide direct supervisory, management or other oversight of the assurance engagement partner in connection with the performance of the assurance engagement; |
| (ii) | those who provide consultation regarding technical or industry specific issues, transactions or events for the assurance engagement; and |
| (iii) | those who provide quality control for the assurance engagement, including those who perform the engagement quality control review for the assurance engagement. |
An entity in respect of which a firm conducts an audit engagement. When the client is a listed entity, audit client will always include its related entities. When the audit client is not a listed entity, audit client includes those related entities over which the client has direct or indirect control.
A reasonable assurance engagement in which a registered auditor in public practice expresses an opinion whether financial statements are prepared, in all material respects (or give a true and fair view or are presented fairly, in all material respects,) in accordance with an applicable financial reporting framework, such as an engagement conducted in accordance with International Standards on Auditing. This includes a Statutory Audit, which is an audit required by legislation or other regulation.
| (a) | All members of the engagement team for the audit engagement; |
| (b) | All others within a firm who can directly influence the outcome of the audit engagement, including: |
| (i) | Those who recommend the compensation of, or who provide direct supervisory, management or other oversight of the engagement partner in connection with the performance of the audit engagement including those at all successively senior levels above the engagement partner through to the individual who is the firm's Senior or Managing Partner (Chief Executive or equivalent); |
| (ii) | Those who provide consultation regarding technical or industry-specific issues, transactions or events for the engagement; and |
| (iii) | Those who provide quality control for the engagement, including those who perform the engagement quality control review for the engagement; and |
| (c) | All those within a network firm who can directly influence the outcome of the audit engagement. |
The Independent Regulatory Board for Auditors established by section 36
A bank account which is used solely for the banking of clients' monies.
Any monies, including documents of title to money such as bills of exchange and promissory notes, as well as documents of title which can be converted into money such as bearer bonds, received by a registered auditor to be held or paid out on the instruction of the person from whom or on whose behalf they are received.
A parent, child or sibling who is not an immediate family member.
A fee calculated on a predetermined basis relating to the outcome of a transaction or the result of the services performed by the firm. A fee that is established by a court or other public authority is not a contingent fee.
A financial interest:
| (a) | Owned directly by and under the control of an individual or entity (including those managed on a discretionary basis by others); or |
| (b) | Beneficially owned through a collective investment vehicle, estate, trust or other intermediary over which the individual or entity has control, or the ability to influence investment decisions. |
Those charged with the governance of an entity, or acting in an equivalent capacity, regardless of their title, which may vary from jurisdiction to jurisdiction.
The partner or other person in the firm who is responsible for the engagement and its performance, and for the report that is issued on behalf of the firm, and who, where required, has the appropriate authority from a professional, legal or regulatory body.
A process designed to provide an objective evaluation, on or before the report is issued, of the significant judgments the engagement team made and the conclusions it reached in formulating the report.
All partners and staff performing the engagement, and any individuals engaged by the firm or a network firm who perform assurance procedures on the engagement. This excludes external experts engaged by the firm or a network firm.
A registered auditor in public practice currently holding an audit appointment or carrying out accounting, taxation, consulting or similar professional services for a client.
An individual (who is not a partner or a member of the professional staff, including temporary staff, of the firm or a network firm) or organisation possessing skills, knowledge and experience in a field other than accounting or auditing, whose work in that field is used to assist the registered auditor in obtaining sufficient appropriate evidence.
An interest in equity, or other security, debenture, loan or other debt instrument of an entity, including rights and obligations to acquire such an interest and derivatives directly related to such interest.
A structured representation of historical financial information, including related notes, intended to communicate an entity's economic resources or obligations at a point in time or the changes therein for a period of time in accordance with a financial reporting framework. The related notes ordinarily comprise a summary of significant accounting policies and other explanatory information. The term can relate to a complete set of financial statements, but it can also refer to a single financial statement, for example, a balance sheet, or a statement of revenues and expenses, and related explanatory notes.
In the case of a single entity, the financial statements of that entity. In the case of consolidated financial statements, also referred to as group financial statements, the consolidated financial statements.
| (d) | A partnership, company or sole proprietor referred to in section 387 ; |
| (e) | An entity that controls the parties in (a), through ownership, management or other means; and |
| (c) | An entity controlled by the parties in (a), through ownership, management or other means. |
[Numbering as published in the original Gazette]
Information expressed in financial terms in relation to a particular entity, derived primarily from that entity's accounting system, about economic events occurring in past time periods or about economic conditions or circumstances at points in time in the past.
A spouse (or equivalent) or dependent.
Independence is:
| (a) | Independence of mind - the state of mind that permits the expression of a conclusion without being affected by influences that compromise professional judgment, thereby allowing an individual to act with integrity, and exercise objectivity and professional scepticism; |
| (b) | Independence in appearance - the avoidance of facts and circumstances that are so significant that a reasonable and informed third party would be likely to conclude, weighing all the specific facts and circumstances, that a firm's, or a member of the audit or assurance team's, integrity, objectivity or professional scepticism has been compromised. |
A financial interest beneficially owned through a collective investment vehicle, estate, trust or other intermediary over which the individual or entity has no control or ability to influence investment decisions.
The engagement partner, the individual responsible for the engagement quality control review, and other audit partners, if any, on the engagement team who make key decisions or judgments on significant matters with respect to the audit of the financial statements on which the firm will express an opinion. Depending upon the circumstances and the role of the individuals on the audit, "other audit partners" may include, for example, audit partners responsible for significant subsidiaries or divisions.
An entity whose shares, stock or debt are quoted or listed on a recognized stock exchange, or are marketed under the regulations of a recognised stock exchange or other equivalent body.
A larger structure:
| (a) | That is aimed at co-operation; and |
| (b) | That is clearly aimed at profit or cost sharing or shares common ownership, control or management, common quality control policies and procedures, common business strategy, the use of a common brand-name, or a significant part of professional resources. |
A firm or entity that belongs to a network.
A distinct sub-group, whether organized on geographical or practice lines.
Services requiring accountancy or related skills performed by a registered auditor including accounting, auditing, review, other assurance and related services, taxation, management consulting and financial management services. These include but are not limited to:
| (d) | Audit, review, other assurance and related services: |
| (i) | Financial statement audits and reviews, other assurance and related services such as regulatory reporting, sustainability, compliance and performance reporting; |
| (ii) | Company accounting advisory services such as preparation of accounting records and financial statements in accordance with recognised financial reporting standards and applicable statutes; and |
| (iii) | Company statutory services; |
| (e) | Taxation services: |
| (i) | Tax return preparation and submission, |
| (ii) | Tax calculations for the purpose of preparing accounting entries, |
| (iii) | Tax planning and other tax advisory services, and |
| (iv) | Assistance in the resolution of tax disputes; |
| (f) | Advisory services: |
| (i) | Accounting advisory and financial management advisory services: |
accounting support, conversion services for new and revised accounting standards, financial modeling and project management;
| (ii) | Business performance services: business effectiveness, people and change management, operational and business finance; |
| (iii) | Internal audit: risk and compliance services, review and monitoring of internal controls, risk management, compliance services, corporate governance and audit committee advisory services; |
| (iv) | Corporate finance services: mergers and acquisitions, valuations, infrastructure financing, debt and capital markets, due diligence reviews, transaction services and designated advisor services to listed companies; |
| (v) | Corporate recovery services: liquidation and insolvency administration, curator bonis, administration of deceased estates, judicial management and trusteeships; |
| (vi) | Financial risk management services: actuarial services, banking and risk advisory, regulatory and compliance services, technical accounting; |
| (vii) | Information technology (IT) Advisory: security, privacy and continuity, enterprise resource planning: information system audit services, IT project advisory, governance and performance; |
| (viii) | Forensic services: dispute advisory and resolution, ethics and integrity monitoring, fraud risk management, intellectual property and other investigations and regulatory compliance. |
[Numbering as published in the original Gazette]
Public practice
The practice of a registered auditor who places professional services at the disposal of the public for reward, and "practice" has a similar meaning8.
| (a) | A listed entity; and |
| (b) | An entity |
| (i) | defined by regulation or legislation as a public interest entity; or |
| (ii) | for which the audit is required by regulation or legislation to be conducted in compliance with the same independence requirements that apply to the audit of listed entities. Such regulation may be promulgated by any relevant regulator, including an audit regulator. |
An individual or firm registered as an auditor with the Regulatory Board.
A registered auditor that provides professional services.
An entity that has any of the following relationships with the client:
| (a) | An entity that has direct or indirect control over the client if the client is material to such entity; |
| (b) | An entity with a direct financial interest in the client if that entity has significant influence over the client and the interest in the client is material to such entity; |
| (c) | An entity over which the client has direct or indirect control; |
| (d) | An entity in which the client, or an entity related to the client under (c) above, has a direct financial interest that gives it significant influence over such entity and the interest is material to the client and its related entity in (c); and |
| (e) | An entity which is under common control with the client (a "sister entity") if the sister entity and the client are both material to the entity that controls both the client and sister entity. |
An entity in respect of which a firm conducts a review engagement.
An assurance engagement, conducted in accordance with International Standards on Review Engagements or equivalent, in which a registered auditor in public practice expresses a conclusion on whether, on the basis of the procedures which do not provide all the evidence that would be required in an audit anything has come to the registered auditor's attention that causes the registered auditor to believe that the financial statements are not prepared, in all material respects, in accordance with an applicable financial reporting framework.
| (a) | All members of the engagement team for the review engagement; and |
| (b) | All others within a firm who can directly influence the outcome of the review engagement, including: |
| (i) | Those who recommend the compensation of, or who provide direct supervisory, management or other oversight of the engagement partner in connection with the performance of the review engagement including those at all successively senior levels above the engagement partner through to the individual who is the firm's Senior or Managing Partner (Chief Executive or equivalent); |
| (ii) | Those who provide consultation regarding technical or industry specific issues, transactions or events for the engagement; and |
| (iii) | Those who provide quality control for the engagement, including those who perform the engagement quality control review for the engagement; and |
| (c) | All those within a network firm who can directly influence the outcome of the review engagement. |
Financial statements prepared in accordance with a financial reporting framework designed to meet the financial information needs of specified users.
The persons with responsibility for overseeing the strategic direction of the entity and obligations related to the accountability of the entity. This includes overseeing the financial reporting process.
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6 Section 1 v. "Regulatory Board"
7 Section 1 v. "firm"
8 Section 1 v. "public practice"