Legal Practitioners: Agreed-upon Procedures
The legislative landscape for legal practitioners’ trust accounts is continuously changing, and it remains crucial for auditors to remain up to date to ensure full compliance with the requirements. During 2023, the Legal Practitioners Fidelity Fund (LPFF) and SAICA issued several communications regarding the Application for a Refund of Bank Charges and Audit Fees form and the subsequent procedures that auditors need to perform. It is important to understand and apply these requirements correctly.
Application for a Refund of Bank Charges and Audit Fees form
In terms of section 57(2) of the Legal Practice Act, the LPFF may be utilised for the following purposes:
a. Refunding the bank charges or any portion thereof paid by any attorney, on an advocate referred to in section 34(2)(b), in relation to the keeping of a trust account referred to in section 86(2) and (3)
b. Paying the audit and inspection costs or a portion thereof incurred by an attorney or advocate, in relation to the obtaining of a Fidelity Fund certificate.
The Application for a Refund of Bank Charges and Audit Fees form, issued by the LPFF, must be used to claim refundable bank charges and audit fees.
• The refund form, as well as a list of refundable bank charges, may be downloaded from the LPFF website: https://www.fidfund.co.za/trust-accounts/
• The revised form must be used for claims, in respect of financial periods ending after 1 March 2021.
• The form may be completed digitally, but electronic signatures are NOT permitted.
Agreed-upon Procedures
An auditor appointed for purposes of a reasonable assurance engagement on trust banking accounts, must conduct an Agreed-upon Procedures (AUP) engagement per ISRS 4400 (Revised) on the Application for a Refund of Bank Charges and Audit Fees form.
An AUP engagement is not an audit, review or other assurance engagement; therefore, any fee charged by the auditors to conduct this engagement is not recoverable from the LPFF.
Auditors are required to use the AUP Report issued by SAICA on 3 Nov 2023, which is effective for AUP engagements on the Application for a Refund of Bank Charges and Audit Fees form, beginning on or after 1 Nov 2023. Early application is permitted.
The LPFF accepted AUP reports developed by each audit firm, in terms of ISRS 4400 (Revised) requirements until 15 Nov 2023. After 15 Nov 2023, the LPFF only accepts AUP reports based on the AUP report developed by SAICA, which may be downloaded from the SAICA website: https://www.saica.org.za/resources/197550
The completed Application for a Refund of Bank Charges and Audit Fees form must be submitted to the relevant Provincial Legal Practice Council, together with the AUP Report.
In summary
Auditors need to understand the nature and purpose of the required AUPs and ensure that the correct report format is used.
References
1. LPFF communication, 2 May 2023: Revised application for refund of bank charges and audit fees form
2. LPFF communication, 2 May 2023: Registered auditors may submit an Agreed-upon Procedures Report on work conducted on the application for refund of bank charges and audit fees
3. LPFF Directive, 19 Oct 2023: Requirement for registered auditors to conduct Agreed-upon Procedure on the application for a refund of bank charges and audit fees form
4. LPFF communication, 1 Nov 2023: Registered auditors are now required to submit an Agreed-upon Procedure Report on work conducted on the application for refund of bank charges and audit fees
5. SAICA, 3 Nov 2023: Agreed-upon Procedures engagement performed, in respect of an application by a legal practitioner firm for a refund of bank charges and audit fees.
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