Deloitte Audit

Constraints on first appointments of auditors

• New auditors cannot be expected to be free of a “conflict of interest” for two years prior to appointment
• Further, this provision constrains the ability of companies and shareholders selecting the appropriate auditors and is contrary to the workings of an efficient capital market
• We recommend that this provision be deleted and the Committee for Ethics be left to issue standards in this regard

Accountability and responsibilities of others in the audit process

• Auditors are dependent on open, transparent and honest disclosure by management of entities being audited
• Such parties should be accountable in law for their actions and the impact they have on the audit process

We recommend that:

• The Auditing Profession Bill, or other suitable legislation, establish a legal onus on persons in management and those charged with the governance of audited entities to make proactive and comprehensive disclosure to the entity’s auditor of matters material to the audit.
• The Auditing Profession Bill, or other suitable legislation, provide for civil sanctions on individuals and entities misleading an auditor be provided for in legislation.
• Appropriate criminal sanction on persons and parties misleading an auditor be provided for in legislation.

Liability and registration of auditors

• The ability of auditors to operate within limited liability partnerships has been excluded from the Auditing Profession Bill, while this form of protection can be achieved if operating in the form of a Company incorporated in terms of the Bill and Companies Act.
• The Bill prohibits an auditor from limiting liability for any opinion expressed or report or statement issued – while this may be appropriate in respect of audits conducted under statute - it is inappropriate to prevent such a limitation of liability in respect of engagements conducted in terms of a contract