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Auditing firms that admit to wrongdoing or are found guilty of improper conduct will, starting this week, risk fines of up to R25 million per charge, according to National Treasury.
Individual auditors, if found guilty, risk fines of up to R10 million per charge.
New schedule
The new schedule of maximum finesis part of a push to increase penalties for auditors as a deterrent against misconduct.
Prior to June 2023, the Independent Regulatory Board for Auditors (IRBA), which regulates the profession, could only impose fines of up to R200 000 per charge of improper conduct.
Finance Minister Enoch Godongwana aimed to introduce a new schedule of higher fines last year. However, while a notice was gazetted in June 2023, the ministry mistakenly omitted the words “per charge” for two of the sanctions.
The ministry was forced to backtrack and go through the laborious process of withdrawing that notice and conducting a new 30-day comment period before it could again gazette the schedule.
This time, it included the words “per charge” for all sanctions.
No retrospective fines
Treasury said on Thursday that the new fines would apply to improper conduct committed from 6 June onward. They will not apply retrospectively.
Treasury added that the IRBA would, in due course, publish a new framework to “guide the implementation of the maximum fines” in a “proportional and scalable manner”.
