Auditing Profession Amendment Bill: National Treasury briefing; SARS on ratification of Annexure E to Southern African Custom Union Agreement on Mutual Administrative Assistance

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Finance Standing Committee

12 November 2014
Chairperson: Mr Y Carrim (ANC)
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Meeting Summary

National Treasury made a presentation on the Bill amending the Auditing Profession Act, 2005, focussing on the rationale behind the Amendment Bill, its principal objects and the main features of the amended sections. Fundamentally, the Amendment Bill introduced the registration and definition of candidate auditors. Its purpose was to assist in consolidating and redefining auditing capabilities through a training programme for the candidates to obtain professional competence. The Amendment Bill provided for a period of special training before an individual could be admitted as a registered auditor. An individual should first qualify as a Chartered Accountant.

Members of the Committee expressed their concern about the differences between candidate auditors and fully-fledged auditors in terms of remuneration and work assigned to them. They sought clarity on the period to be served by a candidate auditor prior to being registered as an auditor, on whether a candidate auditor would write an examination, and what criteria would be taken into consideration. The Committee resolved that the Amendment Bill would be published for public comment for a period of two weeks.

The South African Revenue Service made a presentation on Annexure E to the Southern African Customs Union Agreement on Mutual Administrative Assistance, focussing on the purpose of the Annexure and its key articles. The purpose was to provide an enabling legal basis for customs cooperation between members of the SACU that would give effect to the obligation to ensure the effective and harmonious application of the 2002 SACU agreement.  The Committee voted in favour of the Amendment Bill.

Meeting report

Briefing by the National Treasury on Auditing Profession Amendment Bill
Adv Empie van Schoor, Chief Director: Legislation: National Treasury took the Committee through presentation, focussing on the objects of the Amendment Bill and the main features of the proposed amendments. She described the purpose of the Auditing Profession Act, 2005, and the rationale behind the amendment. The principal object of the Amendment Bill was twofold: to provide for the regulation of candidate auditors by the Independent Regulatory Board for Auditors (IRBA) and to update references to the Companies Act, 2008 in the Act. The Amendment Bill introduced a candidate auditor.

Adv. Van Schoor noted that in future, first time candidates intending to write the final assessment for qualification as a chartered accountant would have to write the assessment of professional competence of the South Africa Institute of Chartered Accountants. The IRBA had replaced the private practice examination with the Audit Development Programme (ADP). The latter entailed a phase whereby an aspiring auditor would become a candidate auditor before registration as a fully-fledged auditor. The ADP was to commence in 2015, and would register its first candidates in March 2015. The Amendment Bill authorised the IRBA to register candidate auditors and required them to undergo specialist training before they became registered auditors.

Adv. Van Schoor explained the sections that were affected by the amendments regarding candidate auditors and the Companies Act.

Discussion
Mr D Ross (DA) sought clarity on the level of professional competence, and how this would be measured.

Mr D van Rooyen (ANC) sought clarity on whether the amendments regarding candidate auditors did not place aspiring auditors at a disadvantage.

The Chairperson asked how candidate auditors would be paid, and whether consultation included all those who might be affected. Did candidate auditors work the same way as candidate attorneys?

Mr Michael Sass, Accountant General: National Treasury, replied that the purpose of the Amendment Bill was to assist in consolidating and redefining auditing capabilities through a training programme for the candidates to obtain professional competence. The Amendment Bill provided for a period of special training before an individual could be admitted as a registered auditor. An individual should first qualify as a Chartered Accountant.

Candidate auditors would receive a certain salary, and they would not do work done by those with experience. They would learn from them. The ADP was aimed to ensure South African auditing was the best in the world.

Mr Sass acknowledged that candidate attorneys had to write an exam after completion of their articled clerkship, for an assessment of their professional competence. On the other hand, candidate auditors would not have to write an examination. It was not only South Africa that had introduced a candidate auditors’ programme. There were a number of countries that had taken that route.

With regards to consultation, Mr Sass replied that the South African Revenue Service (SARS) consulted all stakeholders that might be affected by the Amendment Bill.

The Chairperson sought clarity on how long a period of specialisation in auditing was, if a candidate held a degree in accountancy. How many years should an individual work as a candidate auditor prior to being registered as fully-fledged auditor? What were the criteria to be used to assess professional competence, to determine whether an individual could be admitted as an auditor? The Chairperson remarked that the Law Society required candidate attorneys to undergo two years of clerkship.

Ms Sass replied that the period was three years. There would be certain criteria to be taken into consideration for the registration of a candidate auditor as an auditor. He would consult with his colleagues and revert to the Committee in writing regarding criteria.

Mr Ross sought clarity on whether candidate auditors would write an assessment paper, or whether they were subjected to meeting certain criteria. He asked about their remuneration and whether the candidate auditor programme was not intending to limit a number of those who aspired to become auditors.

Ms Sass explained that candidate auditors would only write general assessment to become chartered accountants. Only chartered accountants could become candidate auditors. With regard to a limitation of the opportunities in auditing, he replied that the candidate programme was just to ensure professional competence, and to protect the public with the work they would do.

Dr B Khoza (ANC) sought clarity on what the problem was that the National Treasurer wanted to solve. She remarked that the public held the perception that the auditing sector was not yet transformed to include aspiring black people.

The Chairperson, referring to the problem statement, replied that the issue was covered. The Chairperson seconded Dr Khoza on the issue of transformation, and sought clarity on the extent of racial representation.

Mr Sass acknowledged that the issue of transformation was a challenge, given that the previously disadvantaged groups were not free to study most of subjects that would qualify them as accountants. Black people were now graduating as accountants. There were about 5 000 chartered accountants, but the number of blacks was few. Transformation in the accounting sector was a critical issue that concerned all stakeholders.

The Chairperson asked Mr Sass to furnish with the Committee with the statistics on chartered accountant.  He also asked whether the Amendment Bill should be published for public comment before it was adopted by the Committee.

Members of the Committee resolved that the Amendment Bill should be published for public comments.

The Chairperson stated that the Amendment Bill would be published for public comment for a period of two weeks. 

Briefing by South African Service (SARS) on ratification of Annexure E to the Southern African Customs Union (SACU) Agreement on Mutual Administrative Assistance
Mr Roedolf Mostert, Senior Manager, SARS, took the Committee through presentation, focussing on the purpose of the annexure and an overview of the key articles in it. He explained that the purpose of the Annexure E was to provide an enabling legal basis for customs cooperation between members of the SACU that would give effect to the obligation to ensure the effective and harmonious application of the 2002 SACU agreement.

Mr Mostert noted that Annexure E on Mutual Administrative Assistance had been developed to give effect to the obligation deriving from the 2002 SACU agreement, and was based on international standards and best practices. Annexure E had been adopted in September 2011. It was an agreement falling under section 231(2) of the Constitution, and it was being presented to the Committee for ratification.

Mr Mostert took the Committee through the key articles in Annexure E, specifically articles 2-4, 7-8, 10-13, 17-20, 22-25, and 30.

Mr Mostert concluded by requesting the Committee to consider Annexure E and ratify it.

Discussion
Mr Van Rooyen commented that there had been no mention of revenue. When was the last time an analysis of the objectives of SACU had been done to determine whether these objectives were being achieved? Was the SACU on course? Had the SACU objectives been reviewed?

Dr Khosa appreciated the fact that Annexure E contained a clause on the settlement of disputes, and asked whether there was a clause dealing with cross-border transactions. What could be done in circumstances where animals with foot and mouth disease would be transacted?

Mr Mostert replied that he was not in a position to answer any questions which were not related to the presentation.  Some questions should be answered by the National Treasury, while others should be answered by the Minister of Finance.

The Chairperson agreed. He asked the Committee to proceed to consideration of Annexure E and to vote for or against.

Dr Khoza stated that she was voting in favour of the Amendment Bill.

Mr Ross seconded her.

The Chairperson declared that the Amendment Bill was approved.

The meeting was adjourned.
 

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