AUDITING: Auditing Profession Act 26 of 2005

Auditing Profession Act (Act 26 of 2005)

The new Auditing Profession Act was signed into legislation by the President on 12 January 2006 and has an effective date of 1 April 2006. The new legislation, the Auditing Profession Act, (Act 26 of 2005), establishes a new juristic person to be known as the Independent Regulatory Board for Auditors (IRBA) which will regulate the auditing profession. In terms of the new legislation, the IRBA is the successor body to the PAAB and all property, rights and obligations of the PAAB will become vested in the IRBA. 

The designation conferred by the board is Registered Auditor (RA). It is important to stress that all entrants to the public accountancy profession are subject to consistent requirements. Following qualification, accountants entering into public practice are required to register with the IRBA and are governed by its regulations. Qualified accountants entering other disciplines who are members of a provincial society of chartered accountants, are not subject to the jurisdiction of the IRBA but are subject to the jurisdiction of the South African Institute of Chartered Accountants.

The IRBA functions in terms of the Auditing Profession Act, 2005 (Act 26 of 2005). Its members are appointed by the Minister of Finance, who must appoint competent persons, including registered auditors, to effectively manage and guide the activities of the Regulatory Board, based on their knowledge and experience.

The Board consists of not less than six but not more than 10 members and, disregarding any vacancy in its membership, not more than 40% of the members of the Board may be registered auditors.

• In what sense the Independent Regulatory Board for Auditors (IRBA) is independent.
  
• The new requirements for an individual to register as a registered auditor (IRBA member) (section 37).
  
• The requirements for a firm to register with IRBA (section 38).
  
• The actions that are prohibited in order to protect the registered auditor from uninhibited competition (section 41).
  
• The requirements that have to be met before the auditor can issue an unqualified report (a report stating that the financial statements are fine, essentially) (section 44).