Huge fines for dodgy auditors in South Africa

 ·7 Jun 2024

National Treasury has gazetted the maximum fines that can be imposed on auditors in South Africa found guilty of misconduct.

The maximum fines were first increased in June 2023, but have since been updated.

In the initial determination, the maximum fines for misconduct in terms of section 51(2) of the Auditing Profession Act (registered auditor found guilty of improper conduct) applied to each charge, but for 51B(3)(b) (fines imposed following a disciplinary hearing) they did not.

The regulations have now been updated so that the fines apply to each charge across the board.

“The addition of the words ‘per charge’ in respect of fines imposed following a disciplinary hearing
(which was the main amendment) was intended to align with the imposition of fines in respect of
matters finalised through admission of guilt processes,” Treasury said.

The fines are as follows (changes in bold):

  • R5 million per charge, as the amount envisaged in section 51(2) of the Act, which may be imposed on an individual registered auditor who admits guilt as contemplated in section 49(4)(a) of the Act;

  • R15 million per charge, as the amount envisaged in section 51(2) of the Act, which may be imposed on a firm of auditors that admits guilt as contemplated in section 49(4)(a) of the Act;

  • R10 million per charge, as the amount envisaged in section 51B(3)(b) of the Act, which may be imposed on an individual registered auditor who is charged and found guilty or if the registered auditor admits guilt to the charge;

  • R25 million per charge, as the amount envisaged in section 51B(3)(b) of the Act, which may be imposed on a firm of auditors that is charged and found guilty or if the firm admits guilt to the charge.

National Treasury noted that these maximum fines will be applicable to improper conduct committed from 6 June 2024, being the date of publication of gazette notice 4933.

“Therefore, the notice does not apply retrospectively, and the maximum fines promulgated by the Minister on 15 June 2023 will remain applicable for improper conduct committed between 15 June 2023 and before 6 June 2024.

“A framework which will guide the implementation of the maximum fines in a proportional and scalable manner will be issued by the Independent Regulatory Board for Auditors (IRBA) in due course, for public comment, before adoption by the Board,” it said.


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