All auditors for JSE listed companies now have to be accredited

The JSE has updated its listing requirements, adding a rule that all auditors for listed companies now need to be accredited by the exchange itself.

The changes come amid a volatile time for auditing firms in South Africa, with KPMG coming under intense scrutiny for its involvement with Gupta-linked companies accused of corruption and money laundering.

Legal firm, Norton Rose Fulbright has provided a summary of the new section of the JSE’s listing requirements, showing the eligibility, process and responsibilities auditors need to take into account when signing on for the role.

The new section 22 of the JSE Listings Requirements explains the requirements relating to the accreditation mechanism for audit firms and individual auditors, reporting accountant specialists and International financial reporting standards (IFRS) advisers.

These requirements enable the JSE to effectively fulfill its duties in respect of the regulation of companies listed on the JSE.

The five sections to Section 22 deal with accreditation, eligibility criteria, application process, roles and responsibilities and status and termination of accreditation.


In terms of this section, only an audit firm or a reporting accountant accredited by the JSE may act in that capacity for any listed company. IFRS advisers may only act as an adviser for an audit firm if they meet the applicable requirements and have not been disqualified from fulfilling such duties.

Eligibility criteria

The general eligibility criteria is that audit firms, reporting accountants and reporting accountant specialists must, to the satisfaction of the JSE:

  • Comply with the specific criteria which relates the area in which it is applying to be accredited;
  • Agree to be bound by, and discharge its responsibilities in terms of the JSE Listings Requirements; and
  • Be suitable and be able to fulfill the responsibilities that it wishes to undertake.

In addition, audit firms and the individual auditors who will sign the assurance report of a listed company must be registered with the IRBA. The audit firm must also meet certain eligibility criteria, including that:

  • It has at least three individual auditors who are registered as assurance individual auditors, and who are not disqualified as auditors by the JSE;
  • It has at least one IFRS adviser;
  • IRBA has completed an independent quality control inspection on the firm, and that the firm has provided the JSE with information in respect of the inspection;
  • The firm must make certain information available to the JSE, including whether it has been involved in creating accounts that were later found to contravene IFRS or the Listings Requirements, and whether any disciplinary proceedings have ever been instituted against it by any professional body; and
  • The firm must not allow any individual auditor to perform an engagement for a listed company if such individual is disqualified from acting as an auditor.

Application process

When an accounting specialist submits an application to the JSE, it must also provide:

  • Completed prescribed forms, including various undertakings to the JSE;
  • Supporting documentation;
  • In respect of an audit firm, a list of the individual auditors per applicant issuer; and
  • Proof of payment of the relevant fee.

These applications must be submitted annually, failing which that person of firm will be removed from the JSE list of Auditors and Accounting Specialists.

Roles and responsibilities

The responsibilities of an accounting specialist includes:

  • Fulfilling its specific responsibilities as set out in the JSE Listings Requirements;
  • Providing the JSE with information or an explanation that the JSE may require in order to verify that the accounting specialist has complied with the JSE Listings Requirements;
  • Discharging its obligations with due care and skill;
  • Providing the JSE, on request, with any information pertaining to the outcome of an audit inspection performed by IRBA or a similar regulatory body, whether it was a party to an investigation, the commencement of legal or disciplinary proceedings against the audit firm, the outcome of any legal or disciplinary process instituted against an individual auditor and any other matter that may be of relevance to the ongoing obligations of the accounting specialists;
  • Notifying the JSE when an accounting specialist has received a notice of termination or appointment, has given notice of resignation or hen an audit firm has appointed a new auditor but the firm has remained unchanged within 48 hours of such notice.

In addition, further responsibilities for audit firms include:

  • Monitoring compliance with the disclosure requirements of the JSE Listings Requirements in respect of interim, preliminary, provisional, abridged and annual reports in instances where an auditors audit report includes such financial reports; and
  • Advising the JSE when an applicant issuer misrepresents the content of the auditor’s report.

Status and termination of accreditation

An accounting specialist accredited with the JSE will be entitled to state on its business documentation that it has been accredited by the JSE.

If an accounting specialist does not comply with the eligibility criteria to the satisfaction of the JSE, or fulfil the responsibilities as set out above, then the JSE may withdraw its accreditation.

If the JSE finds that an accounting specialist has contravened or failed to comply with the responsibilities set out in Section 22, been found guilty or has agreed to a consent order in terms of any legal, regulatory review or disciplinary finding by an industry body which it a member or a regulator it is accountable to, been found guilty and/or paid a fine in any manner for a breach of the FMA, been convicted of theft, fraud, an offence under the Prevention and Combating of Corrupt Activities Act, 2004 or any offence involving dishonesty then the JSE may refer the matter to IRBA, advise the audit committee of the listed company, and/or terminate the accreditation.

Accounting specialists have a duty to make a full disclosure to the JSE of any issues that may impact on its suitability to perform its duties and responsibilities and discharge its obligations as set out in the JSE Listings Requirements.

Read: How much it costs to list a company on the JSE

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All auditors for JSE listed companies now have to be accredited