Your Content Goes Here Difference between body corporates and homeowners’ associations While both body corporates and homeowners’ associations fall under Community Schemes Ombud Service (CSOS) regulations, homeowners’ associations are not established under the Sectional Title Schemes Management Act (STSMA), but rather under the Companies Act (as non-profit companies) or under their own Constitution and Memorandum of Incorporation (MOI), in accordance with Common Law. Therefore, homeowners’ associations are required to be audited in terms of the Companies Act, and body corporates are required to be audited in terms of the Sectional Title Management Schemes Act. [...]

Proactive Audit Quality: A Continuous Improvement Approach Under ISQM 1 Audit quality is crucial for the financial integrity of financial information relied upon by stakeholders. Yet, many firms take a reactive stance – waiting for firm-wide monitoring reports before addressing deficiencies. This delayed approach leads to recurring issues, last-minute fixes, and a compliance-driven, rather than an improvement-driven culture. ISQM 1 and ISA 220 (Revised) require firms to shift towards a proactive, risk-based, and continuous evaluation of audit quality to ensure that deficiencies are remediated in a timely and effective manner. Instead of relying mainly [...]

Bending the Rules Auditors often find themselves in a delicate situation where an audit client wants a certain outcome, while the rules do not allow it. The correct treatment is usually not popular, and auditors then often try to find a way around it, on the instruction of their client. When confronted with such situations, auditors should ask themselves whether they can still comfortably say that they are acting in the public interest, or whether their objectivity may be called into question in the circumstances. There is a fine line between right and wrong, and this [...]

Changes in SAICA Training Regulations SAICA recently issued their updated SAICA 2025 Training Regulations, effective from 1 January 2025. Training officers must ensure that the current version of the training regulations is communicated to all role-players in the training programme, so that it may be applied, in relation to their responsibilities. An overview of the most significant changes from the previous version of the training regulations is provided below. Definitions The following amendments were made to the definitions: ‘Academic remission’ has been added to the definitions. All references to ‘accredited’ academic qualifications have been changed [...]

Audit Implications of IFRS 18 In the constantly evolving field of financial reporting, auditors must stay abreast of significant changes in accounting standards to ensure accurate and compliant financial statements. One such important standard is IFRS 18, which governs the presentation and disclosure requirements in financial statements. This standard introduces several modifications that have practical audit implications, and auditors must carefully navigate these changes to provide assurance on compliance. Key Changes Under IFRS 18 IFRS 18 becomes effective from 1 January 2027, which may seem far into the future. Auditors and their clients need to [...]

IRBA EAR Rule The IRBA Rule on Enhanced Auditor Reporting for the audit of financial statements of public interest entities (EAR Rule) was published in the Government Gazette on 15 September 2023. This rule will finally become effective from 15 December 2024, and auditors must ensure that they are fully prepared to implement its requirements. The EAR Rule For audits of annual financial statements of public interest entities (PIEs), the audit firm must disclose the following in the independent auditor’s report: a) The final materiality amount determined by the auditor for the financial statements, as [...]

Providing Accounting Services to Audit Clients Many audit firms provide financial statement preparation services to voluntary audit clients through accounting staff and engagement partners that do not form part of the audit engagement team. However, practical problems arise when these audits are required by the Companies Act and, therefore, fall within the ambit of the enhanced independence requirements of this Act. Companies Act requirements To be appointed as an auditor of a company, in terms of Section 90(2)(b) of the Companies Act, a person or firm should not be: (i) A director or prescribed officer [...]

Providing Accounting Services to Audit Clients Many audit firms provide financial statement preparation services to voluntary audit clients through accounting staff and engagement partners that do not form part of the audit engagement team. However, practical problems arise when these audits are required by the Companies Act and, therefore, fall within the ambit of the enhanced independence requirements of this Act. Companies Act requirements To be appointed as an auditor of a company, in terms of Section 90(2)(b) of the Companies Act, a person or firm should not be: (i) A director or prescribed officer [...]

The Motivations and Intentions of Management When performing an audit, it is important to determine the motivations and intentions of management, as this will greatly assist with identifying potential fraud risks and ensuring the integrity of financial reporting. This can only be determined through a thorough understanding of the entity, and its management and compensation structures, business model, controls and related business plans. Once determined, appropriate audit procedures shall be designed to respond to the fraud risks. Key audit areas to consider The intentions of management should be evaluated by applying professional scepticism and appropriate [...]

The Impact of Ethics on Acceptance and Continuance Decisions When looking at the topics addressed in investigation matters referred to the IRBA Enforcement Committee and matters referred to the IRBA Legal Department for disciplinary hearings, there is a concerning trend: in many cases, auditors and audit firms do not pay heed to the relevant ethical requirements and their impact on acceptance and continuance decisions. Clients that are not public interest entities It is often the case that auditors and audit firms provide various non-assurance services to clients prior to acting as their auditor, such as [...]