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Godongwana Issues New Maximum Fines for Improper Conduct by Registered Auditors

by Central News Reporter
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Minister Enoch Godongwana has concluded the Medium Term Budget Policy Statement Speech.

Minister Enoch Godongwana

Finance Minister Enoch Godongwana has announced the latest maximum fines for registered auditors found guilty of improper conduct. This announcement follows a call in January 2024 for public comments on proposals to modify previously set maximum fines.

The updated guidelines, detailed in Government Notice No. 4933 of 6 June 2024, replace the regulations initially set on 15 June 2023. The key change involves the application of fines, now clearly stated as “per charge,” intended to maintain consistency in disciplinary proceedings, whether resolved through a hearing or an admission of guilt.

Updated Fine Structure

According to the latest directives, the maximum fines for improper conduct committed from 6 June 2024 are outlined as follows:

  1. Individual Registered Auditors:
  • R5 million per charge for individuals who admit guilt, as per section 51(2) of the Auditing Profession Act.
  • R10 million per charge for individuals who are found guilty following a charge, as stipulated in section 51B(3)(b) of the Act.
  1. Firms of Auditors:
  • R15 million per charge for firms admitting guilt under section 51(2).
  • R25 million per charge for firms found guilty or admitting guilt under section 51B(3)(b).

Implementation and Legal Framework

The new penalties are not retroactive and will only apply to misconduct occurring from the date of publication, 6 June 2024. Misconduct that took place between 15 June 2023 and before 6 June 2024 will still be governed by the previous fines published on 15 June 2023.

“The fresh fines framework is designed to ensure fair and proportionate disciplinary proceedings within the auditing profession,” stated National Treasury.

To further support the implementation of these fines, the Independent Regulatory Board for Auditors (IRBA) will develop and open for public comment a comprehensive framework for proportional and scalable fine application.

Ensuring Professional Accountability

The changes aim to reinforce trust and accountability within the auditing sector, ensuring that both individual auditors and firms adhere to the highest standards of conduct. As financial gatekeepers, auditors play a critical role in maintaining the transparency and integrity of financial reporting, and these stringent penalties underscore the serious consequences of improper behaviour.

National Treasury emphasized that the additional clarity and structure provided by the “per charge” fine system reflect a commitment to effective and consistent enforcement.

Public Engagement and Final Adoption

The incorporation of public feedback and forthcoming guidelines from the IRBA highlights the inclusive approach taken in formulating these important regulatory measures. Interested parties are encouraged to engage in the upcoming public comment processes to shape the final adoption of these critical frameworks.

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