DISCLOSURE OF AUDIT TENURE

The Regulatory Board (IRBA), in terms of Section 9 and 10 read with sections 1, 2 and 3 of the Auditing Profession Act, Act 26 of 2005, published a Rule in the Government Gazette Nr 39475 of 04 December 2015 which makes it mandatory that all auditor′s reports on Annual Financial Statements shall disclose the number of years which the audit firm / sole practitioner has been the auditor of the entity (audit tenure). A predecessor audit firm in this context refers to an audit firm where there has been mergers/de-mergers or other combinations in the audit firm and an audit firm shall therefore include a predecessor audit firm

Audit tenure refers to the length of the auditor-client relationship. Thus tenure includes the period that the predecessor audit firms (where there has been mergers/de-mergers or other combinations in the audit firm) issued audit reports on the entity.

This rule applies to audit reports issued on the Annual Financial Statements of all public interest entities, as defined in the Companies Act of 2008 and prescribed by the Regulatory Board from time to time, for periods ending on or after 31 December 2015.

The objective of the above Rule is to disclose the length of time which the audit firm had been involved with the client. The term ‘involved’ is limited to the format through which the firm traded. Meaning, if it was a partnership before and then incorporated under a different name. It is still considered the same firm as far as disclosure of audit tenure is concerned. This is about an auditor who prepares and signs an audit opinion and not any other firm who may assist the signee in the conduct of his or her duties.

This rule does not apply if the signee contracts another audit firm to assist him or her to conduct the audit. It applies to the registered auditor whose name is on the CoR44 (CIPC form - Notice of Change of Auditor or Company Secretary). In other words that registered auditor is legally permitted to sign the audit report.