CAPE TOWN – Finance Minister Enoch Godongwana has introduced new maximum penalties for registered auditors found guilty of improper conduct, as detailed in a recently gazetted notice. This action revises the fines previously established in June 2023.

According to South African Government News Agency, Government Notice No. 4933, issued on June 6, 2024, replaces Government Notice No. 3549 from June 15, 2023. This revision specifically addresses the fines for violations under sections 51(2) and 51B(3)(b) of the Auditing Profession Act of 2005. The update, which includes the phrase "per charge" in the calculation of fines, aims to standardize the penalties imposed across different disciplinary scenarios, including those resolved through admissions of guilt.

Following a 30-day public comment period and a review of feedback, Minister Godongwana determined the new maximum fines. These are set at R5 million per charge for an individual auditor admitting guilt under section 49(4)(a) of the Act, and R15 million per charge for an auditing firm under the same circumstances. If an auditor is charged and found guilty or admits guilt, the fine could reach R10 million per charge. For auditing firms in similar scenarios, the fine could be as high as R25 million per charge.

These fines are applicable to misconduct committed from June 6, 2024, onwards, the date the new notice was published. The National Treasury clarified that the revised fines do not apply retrospectively. Therefore, any misconduct occurring between June 15, 2023, and June 5, 2024, will be subject to the fines established in the previous gazette.

In the coming months, the Independent Regulatory Board for Auditors (IRBA) will issue a framework to guide the implementation of these fines in a proportional and scalable manner. This framework will be available for public comment before its final adoption by the Board, ensuring transparency and regulatory compliance in the auditing profession.