Action Plan Developed by South African Institute of Chartered Accountants (SAICA) BACKGROUND NOTE ON ACTION PLANS

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1 BACKGROUND NOTE ON ACTION PLANS Action Plans are developed by The International Federation of Accountants (IFAC) members and associates to address policy matters identified through their responses to the IFAC Compliance Self-Assessment Questionnaires. They form part of a continuous process within the IFAC Member Body Compliance Program to support the ongoing development and improvement of the accountancy profession around the world. Action Plans are prepared by members and associates for their own use based on the national frameworks, priorities, processes and challenges specific to each jurisdiction. As such, they will vary in their objectives, content and level of detail, consistent with their differing national environments and stages of development, and will be subject to periodic review and update. Refer to responses to the Part 1 Assessment of the Regulatory and Standard-Setting Framework Questionnaire and Part 2 SMO Self-Assessment Questionnaire for background information on each member and associate their environment and existing processes. These responses may be viewed at: Use of Information Please refer to the Disclaimer published on the Compliance Program website. ACTION PLAN IFAC Member/Associate: Original Publish : September 2009 Last Updated: September 2014 Next Update: September 2016 Status as of of Publication Page 1 of 28

2 GLOSSARY AGC Assurance Guidance Committee APA Auditing Profession Act APB Accounting Practices Board APC Accounting Practices Committee ASB Accounting Standards Board CA(SA) Chartered Accountant (South Africa) CFAS Committee for Auditing Standards CICA Canadian Institute of Chartered Accountants CPC Code of Professional Conduct CPD Continuing Professional Development DTI Department of Trade and Industry FRIP Financial Investigation Panel FRS Financial Standards FRSC Financial Standards Council GAAP Generally Accepted Accounting Practice GRAP Generally Recognised Accounting Practice IAASB International Auditing and Assurance Standards Board IAESB International Accounting Education Standards Board IAPS International Accounting Practice Statements IAS International Accounting Standard IASB International Accounting Standards Board IES International Education Standards IESBA International Ethics Standards Board of Accountants IFAC International Federation of Accountants IFRS International Financial Standards IPSAS International Public Sector Accounting Standards IPSASB International Public Sector Accounting Standards Board IRBA Independent Regulatory Board for Auditors ISA International Standard on Auditing ISAE International Standard on Assurance Engagements ISQC International Standard on Quality Control ISRE International Standard on Review Engagements ISRS International Standard on Related Services JSE Johannesburg Stock Exchange Limited MFMA Municipal Finance Management Act, 2003 (Act No. 56 of 2003) NT National Treasury NSMP National Small Medium Practices Committee PFMA Public Finance Management Act, 1999 (Act No. 1 of 1999) Status as of of Publication Page 2 of 28

3 RA SA SAICA SARB SME SMO SMP SPF TQMS Registered Auditor South Africa / South African South African Institute of Chartered Accountants South African Reserve Bank Small-and-Medium-sized Entities Statement of Membership Obligations Small and Medium-sized Practitioners Senior Partners Forum Technical Query Management System Status as of of Publication Page 3 of 28

4 New Developments During May to October 2013 the World Bank conducted the second Report on the Observance of Standards and Codes Accounting and Auditing (ROSC A&A) review in South Africa at the request of the Minister of Finance. The ROSC A&A, published in June 2013, recommended inter alia that accountancy profession legislation should be enacted to encompass the regulation of both professional accountancy organisations (PAOs) and an audit regulator. Regulation exists currently for auditors but none exists for PAOs. The Independent Regulatory Board for Auditors (IRBA) regulates auditors in South Africa. At the date of publication of this report, such legislation has not yet been enacted. The regulation of PAOs, if legislated may change SAICA s responsibilities and/or its relationship with regulator(s) or new stakeholders. Such future change may consequently have an impact on SAICA s SMO Action Plan. Status as of of Publication Page 4 of 28

5 Action Plan Subject: Action Plan Objective: SMO 1 Quality Assurance Continue to enhance compliance with Quality Assurance requirements Background: The IRBA is the audit regulator in South Africa and is therefore responsible for the regulation of auditors known as Registered Auditors (RAs) and setting auditing Standards. The IRBA s auditing Standards include a full adoption of the International Auditing and Assurance Standards Board (IAASB) Standards and an adaption of the International Accounting Education Standards Board (IESBA) Standards. No changes are made to the IAASB s Standards, but the IRBA issues South African specific guidance documents and practice statements with regard to the IAASB s Standards. The IRBA has also adapted the IESBA s Code of Professional Conduct (CPC) in the IRBA s Code of Professional Conduct for Registered Auditors which is published in terms of the powers granted to the IRBA by the Auditing Profession Act (APA). The local amendments are to address local issues not adequately addressed in the IESBA s CPC, to provide better local context to RAs and to enable the IRBA to effectively perform their functions within South African legislation. The IRBA performs quality assurance reviews on individual RAs and RA firms (registrants at the IRBA). All RAs in South Africa are members of SAICA (CAs (SA)), but not all CAs (SA) are RAs. Quality reviews done by the IRBA are in compliance with International Standard on Quality Control (ISQC) 1. The IRBA categorises different types of assurance engagements for purpose of inspections: Category A: High risk audits and related assurance work: This refers to audits performed by RAs and firms that are required in terms of legislation or regulation. Currently, these audits include: Audits required in terms of the Companies Act, 2008 (Act No. 71 of 2008) (Companies Act), of: o public companies o state-owned enterprises including section 4(3) entities per the Public Audit Act, 2004 (Act No. 25 of 2004) o private companies with a public interest score of above 350 (per the Companies Act) Audits of banks and regulatory returns to the South African Reserve Bank (SARB) in terms of the Regulations to the Banks Act, 1990 (Act No. 94 of 1990) Audits required by legislation under the Financial Services Board (FSB), of: o insurance companies o collective investment schemes o pension and retirement funds o provident funds Any other audits required by the Financial Advisory and Intermediary Services Act, 2002 (Act No. 37 of 2002) (FAIS) Audits of Medical Schemes Audits on behalf of the Auditor-General Audits of subsidiaries of listed companies as required by the Johannesburg Stock Exchange Limited (JSE) Audits of Attorneys' and Estate Agents' trust accounts Assurance work related to other regulatory returns in respect of any of the above audit clients Co-operatives Status as of of Publication Page 5 of 28

6 Non-profit organisations where the turnover is more than R50 million All tertiary educational institutions B. Special risk assurance work: Broad-Based Black Economic Empowerment (B-BBEE) verification assurance services (where services are provided as a B-BBEE approved Registered Auditor) C. Low risk assurance work (being all assurance work not already stated above and including): Voluntary audits Independent reviews required in terms of the Companies Act Other assurance work. Where no assurance work is performed by any of the RAs in a firm, such firms will be classified as non-assurance firms and will therefore not be included in the inspection process. SAICA is not involved with the IRBA s inspection process but engages with the IRBA regularly to compliment the process by offering support to its members who are RAs mainly through offering relevant and appropriate Continuing Professional Development (CPD) activities in support of the IRBA s independent mandate and disseminating IRBA related information to our members. The IRBA communicates to SAICA where RAs are being disciplined in certain cases. In the case of RAs who are SAICA members, the link between quality assurance (SMO 1) and investigations and discipline (SMO 6) is made by the IRBA. The Inspections Department of the IRBA may refer RAs, when necessary, to the Legal Department of the IRBA. If the Director: Legal of the IRBA has reason to believe that the RA is to be disciplined, the case is then also referred to SAICA s investigation and discipline department. SAICA may discipline the same person (RA) as a member of SAICA in terms of SAICA s Standards (e.g. SAICA s Code of Professional Conduct). With regard to independent reviews of companies in South Africa, SAICA s members who are not RAs may also perform such independent reviews. Any non-conformances of companies are directly reported to the South African Department of Trade and Industry (DTI) (in lieu of RAs reporting Reportable Irregularities identified during audits to the IRBA in terms of the APA). SAICA members who are not RAs may also perform other assurance engagements and related services, provided that they do not hold themselves out to be RAs. The Financial Investigation Panel (FRIP) provides public oversight on the financial reporting of JSE listed companies, and investigates instances of non-compliance with International Financial Standards (IFRS) by JSE listed companies. FRIP is a joint SAICA and JSE initiative which used to react on a complaints basis. The JSE pro-actively monitors IFRS compliance of JSE listed companies and refers investigations to FRIP. Degree of responsibility Shared responsibility Quality assurance of members is a shared responsibility between the following parties: FRIP is a joint initiative between the JSE and SAICA which pro-actively monitors IFRS compliance of companies listed on the JSE and investigates non-compliance Status as of of Publication Page 6 of 28

7 Companies and Intellectual Property Commission (CIPC) receives reports of reportable irregularities, as defined in the Companies Act Regulations, 2011 from independent reviewers The IRBA inspects RA firms Elements of direct responsibility SAICA sets minimum CPD requirements and makes relevant CPD opportunities available to all members. These would include members who are not RAs and engaged to: o o o o o Provide independent reviews of companies Provide other assurance engagements Prepare financial statements in the public sector in terms of Generally Recognised Accounting Practice (GRAP) Prepare financial statements in the private sector (IFRS or IFRS for Small-and-Medium-sized Entities (SMEs)) Perform any form of related public service in his/her capacity as a CA(SA) Elements of no responsibility support provided to other parties SAICA supports the IRBA in its responsibility of quality assurance of its members who are RAs through offering relevant and appropriate CPD activities to RAs, liaising with the IRBA on committees and forums (IRBA s Committee for Auditing Standards (CFAS), SAICA s Assurance Guidance Committee (AGC), SAICA s National Small Medium Practices Committee (NSMP) and SAICA s Senior Partners Forum (SPF)) and providing SAICA members with direct communications from the IRBA Inspections and Legal Departments. SAICA supports FRIP in its responsibility of public oversight on the financial reporting of JSE listed companies by investigating alleged improper conduct by its members when referred by FRIP. SAICA supports the CIPC by commenting on legislation and any system changes, and reacts against members, if necessary, with regard to any reports of non-compliance by the CIPC to SAICA. Status as of of Publication Page 7 of 28

8 # Start Actions Maintaining Processes 1. Continue to offer and facilitate relevant and appropriate CPD activities on International Standards on Auditing (ISAs) and other accountancy profession developments. Due to the diverse professional roles SAICA members are in, SAICA allows its members to identify and record learning activities that fall outside the scope of courses and seminars, such as preparation for and attendance at Board meetings, provided such activities contribute towards the learning and development of the member in his or her specific role. SAICA hosts many CPD activities (seminars, workshops and plenary sessions): besides knowledge updates and information sharing, they also enable SAICA to promote the importance of quality reviews. Senior Executive Standards and Senior Executive Member Services SAICA staff 2. improvement to the Technical Query Management System (TQMS) and raising awareness of the TQMS amongst members. The TQMS enables the extraction of business intelligence from the system to assist SAICA with the identification of member needs and the development of training interventions to address those needs. The TQMS continues to provide members with assistance in order to keep them abreast of changes in legislation and technical Standards. Senior Executive Standards Relevant Project Director and Project Manager within the Standards division responsible for Members Advice TQMS Status as of of Publication Page 8 of 28

9 # Start Actions 3. engagement with the IRBA to support them (where applicable) on any aspects relating to quality review. SAICA also uses this as an opportunity to provide feedback to the IRBA on comments received from members relating to quality reviews and vice versa. SAICA s web-based CPD systems enable regular monitoring of members CPD records. The IRBA has CPD requirements that are specific to RAs which require that CPD be performed in learning areas of professional skills, professional knowledge and ethical values relevant to RAs. This encourages SAICA members who are RAs to participate in relevant and appropriate CPD. Senior Executive Standards All Project Directors: Standards IRBA and SAICA staff 4. Publish all applicable Standards or links to Standards on the SAICA website. Publish articles in monthly SAICA accountancy journal (Accountancy South Africa). Weekly Standards and legislation watch alerts. Senior Executive Standards Senior Executive Standards Electronic Communication Coordinator 5. Annually update the SAICA online Members Handbook on SAICA s secure members website. Senior Executive Standards Senior Executive Member Services Senior Executive Standards Electronic Communication Coordinator Status as of of Publication Page 9 of 28

10 # Start Actions SAICA Standards department staff 6. Continue to partner with IRBA to develop and issue guidelines to members relating to auditing, assurance and ethics. Senior Executive Standards Project Directors: Standards IRBA Standards department staff SAICA s AGC IRBA s CFAS SAICA s Ethics Committee (EC) IRBA s Committee for Auditor Ethics (CFAE) Review of SAICA s Compliance Information 7. Biennially There is a need to review the SMO 1 information biennially as there may have been changes to the legislative and or administrative landscape. Carry out periodic reviews of SAICA s responses to the IFAC self-assessment questionnaires and update sections relevant to SMO 1 as necessary. Once updated, SAICA informs IFAC compliance staff about the updates in order for them to republish the updated information. Biennially Senior Executive Standards Senior Executive Legal and Governance SAICA staff Status as of of Publication Page 10 of 28

11 Action Plan Subject: Action Plan Objective: SMO 2 International Education Standards for Professional Accountants and Other Pronouncements issued by the IAESB Continue to use best endeavors to ensure SAICA s Chartered Accountants education and training continues to comply with International Education Standards (IES) requirements Overview of the SAICA qualification process: Formal competency-based academic education (= academic programme) A standard setting examination - Initial Test of Competence (ITC) Formal competency-based professional education (= professional programme) A professional examination (Assessment of Professional Competence (APC)) Practical experience (= training programme) Acquired through accredited academic education programmes delivered by universities (an undergraduate degree followed by a postgraduate programme known by SAICA as the Certificate in the Theory of Accountancy (CTA)) This ensures that all candidates have the requisite level of core competence before embarking on the professional programme Acquired through accredited professional programmes delivered by universities and other providers This assesses professional competence before entry to the profession This is acquired through a training contract of at least three years with a registered training office Background: Refer above for the overview of the qualification process to become a SAICA member CA(SA). SAICA is fully responsible for setting the qualification framework (process) and curriculum for its members (i.e. CAs(SA) only). In order to register as an auditor, further requirements that are set by the IRBA, need to be met once qualified as a CA(SA). SAICA is currently the only professional body in SA accredited by the regulator, the IRBA to provide education, training and assessment requirements for entry level CAs(SA), who after a further professional development period can register with the IRBA to be a RA. The IRBA is responsible for education and training of RAs only, which occurs post that of the CA(SA) qualification. SAICA offers training activities for RAs (and non-ra members of SAICA) in support of the IRBA s mandate. SAICA reviews and updates the content and delivery of its qualification programme on a regular basis in order to ensure it has an efficient and relevant process. Any revisions are done with reference to the IESs although SAICA often goes above and beyond the actual requirements of these IESs. SAICA is also responsible for providing and monitoring its members CPD in order to comply with SMO 2. Status as of of Publication Page 11 of 28

12 Detailed information about SAICA s professional education, training and CPD requirements can be found in the relevant sections on the SAICA s website Degree of responsibility SAICA does not have direct responsibility for all aspects and requirements of the IESs. Some aspects are shared with the IRBA, some aspects SAICA has direct responsibility for and other areas SAICA has no jurisdiction or control as the IRBA is mandated to perform those functions in terms of the APA. Shared responsibility Academic programme (primary responsibility for this lies with the universities whose programmes are accredited by SAICA) Elements of direct responsibility Training programme Assessment (professional assessments) CPD Elements of no responsibility support provided to the IRBA RA registration Accrediting and monitoring professional bodies New developments: Following are new SAICA developments in 2014 / 2015: Implementation of our new APC for the first time in 2014 Electronic writing will be piloted in 2015 with a view to fully rolling out to candidates over a 3 year period Review of the competency framework (first rolled out in 2010) to include among other changes the inclusion of integrated reporting Reviews of all our education and training processes are reviewed regularly for improvement A new development at the IRBA for 2014 / 2015 is the implementation of the post CA Professional Development Period for Auditors. Status as of of Publication Page 12 of 28

13 # Start Actions Maintaining Processes 8. For all IESs: continue to ensure new developments to Chartered Accountant pre and post qualification education and training are consistent with IESs. (Senior Executive: Professional Development was a technical advisor to a member on the IAESB (up to end of 2013) and remains close to developments with the revision and redrafting of IESs.) Professional Development Unit SAICA appropriate Committees and Boards, staff of the Professional Development Unit of SAICA, consultants Review of SAICA s Compliance Information There is a need to review the SMO 2 information biennially as there may have been changes to the legislative and or administrative landscape. 9. Biennially There is a need to review the SMO 2 information biennially as there may have been changes to the legislative and or administrative landscape. Carry out periodic review of SAICA s responses to the IFAC self-assessment questionnaires and update sections relevant to SMO 2 as necessary. Once updated, SAICA informs IFAC compliance staff about the updates in order for them to republish the updated information. Biennially Professional Development Unit SAICA appropriate Committees and Boards, staff of the Professional Development Unit of SAICA, consultants Status as of of Publication Page 13 of 28

14 Action Plan Subject: Action Plan Objective: SMO 3 International Standards and Other Pronouncements Issued by the IAASB To continue using best endeavors to maintain an ongoing process to adopt ISAs and assist in the implementation of the adopted Standards Background: One of SAICA s primary membership obligations as a member of IFAC is to achieve international convergence with International Standards issued by the independent standard-setting boards supported by IFAC. SAICA seeks to influence the regulatory environment and development of auditing Standards by commenting actively on exposure drafts and redrafting proposals issued by the IAASB. SAICA also seeks to maintain and enhance practicing members competence in audit and assurance by offering a variety of seminars, workshops and other events. One of SAICA s committees includes the AGC which focuses on the auditing and assurance practitioner constituency of SAICA s membership, in the context of issues that concern members within the assurance profession and in the auditing standard-setting processes. The committee assists SAICA in influencing Regulations and Standards and also informing the public as to the role and scope of audit and assurance engagements. Because the IRBA is the audit regulator (and therefore the standard-setter) in South Africa, all of their Standards, including implementation guidance, are considered authoritative according to its powers granted by the APA. SAICA does not issue any guidance (even implementation or practical guidance) for RAs, but engages with the IRBA (IRBA s CFAS and SAICA s AGC) with regard to the setting of those Standards and guidance. The AGC is a SAICA committee that the IRBA attends as an observer, and CFAS is a committee of the IRBA board that SAICA attends as an observer. Roundtable discussions between SAICA, SAICA s members and the IRBA are also held outside the committees with regard to individual projects. The IRBA is responsible for communicating new Standards to RAs (dissemination of Standards), but SAICA also communicates the issuance of those Standards to their members (raising awareness), and provides, in consultation with the IRBA, relevant and appropriate CPD activities on those Standards. Degree of responsibility No responsibility (adoption) support provided to IRBA Adoption of ISAs, ISAEs, ISREs, ISRSs and ISQC1 by the IRBA South Africa s audit regulator. Issuance of local guides and practice statements by the IRBA with regard to the IAASB s Standards. Support is provided by: Commenting on local and international exposure drafts Participating in the IRBA s CFAS as an observer Inviting the IRBA s Standards Department to participate on the AGC Providing CPD activities to members who are RAs Communicating new Standards to members who are RAs. No responsibility (adoption) support provided to others Similar support to the above will be provided to the relevant regulator when the recommendations of the ROSC report is implemented (i.e. regulation of independent reviews). Status as of of Publication Page 14 of 28

15 Shared responsibility (implementation) - Elements of no responsibility support provided to the IRBA o Implementation guidance to RAs o Dissemination of Standards to RAs o Comment on proposed Standards to RAs to influence international standard-setting o Adoption of Standards to RAs o Raising awareness to RAs o Providing CPD opportunities to RAs Support is provided (to IRBA and members who are RAs) by: o Commenting on local and international exposure drafts o Participating in the IRBA s CFAS as an observer o Inviting the IRBA s Standards Department to participate on the AGC o Providing relevant CPD activities to members o Communicating new Standards to members. - Elements of direct responsibility o Implementation guidance to members who are not RAs o Dissemination of Standards to members who are not RAs o Comment on all proposed Standards to influence international standard-setting o Raising awareness to members who are not RAs o Providing relevant CPD activities to all members # Start Actions Maintaining Processes 10. Provide training to members on specialised areas of assurance (e.g. on the effects of independence requirements in the new Companies Act and Regulations, and on assurance engagements on B- BBEE verification certificates). SAICA s Project Director: Assurance SAICA s Project Manager: Assurance SAICA s AGC 11. Hold national road show to communicate to members information around independent reviews and other assurance engagements. SAICA s Project Director: Assurance SAICA s Project Manager: Assurance SAICA s AGC Status as of of Publication Page 15 of 28

16 # Start Actions 12. Notify members and other interested parties of all IAASB consultation papers and exposure drafts as they are released. Prepare a submission to the IAASB on all consultation papers and exposure drafts within the specified comment periods. Numerous communiqués have been circulated to members to inform them of important IAASB activities to date. SAICA s AGC Project Director: Assurance Project Manager: Assurance SAICA s AGC Review of SAICA s Compliance Information There is a need to review the SMO 3 information biennially as there may have been changes to the legislative and or administrative landscape. 13. Biennially Carry out periodic reviews of SAICA s responses to the IFAC self-assessment questionnaires and update sections relevant to SMO 3 as necessary. Once updated, SAICA informs IFAC compliance staff about the updates in order for them to republish the updated information. Biennially Project Director: Assurance Project Director: Assurance Project Manager: Assurance Status as of of Publication Page 16 of 28

17 Action Plan Subject: Action Plan Objective: SMO 4 IESBA Code of Ethics for Professional Accountants To continue to use best endeavours to maintain SAICA s Code of Professional Conduct s consistency in all material respects with the IESBA Code Background: Currently, the SAICA Code of Professional Conduct is consistent in all material respects with the Code of Ethics of IESBA. The previous Part D of the SAICA code which covered certain ethical matters relating to local conditions has been removed in its entirety and relevant guidance from this section has been incorporated in Part A. Developments of the IESBA Code are always commented upon when released as exposure drafts, and once approved by the IESBA and the IFAC Board, incorporated into the SAICA Code of Professional Conduct. Degree of responsibility Direct responsibility Maintain SAICA s Code of Professional Conduct s through consistency in all material respects with the IESBA Code Direct responsibility elements Implementation guidance to all members Dissemination of Standards to all members Comment on all proposed Standards to influence international standard-setting Raising awareness to all members Provide relevant and appropriate CPD activities for all members # Start Actions Maintaining Processes 14. Continue to monitor developments as issued by IESBA, and amend SAICA s Code as appropriate. Project Director: Governance and Non-IFRS Project Director: Governance and Non-IFRS Project Manager: Governance, SAICA s Ethics Committee IFAC website (IESBA) Status as of of Publication Page 17 of 28

18 # Start Actions Review of SAICA s Compliance Information There is a need to review the SMO 4 information biennially as there may have been changes to the legislative and or administrative landscape. 15. Biennially There is a need to review the SMO 4 information biennially as there may have been changes to the legislative and or administrative landscape. Carry out periodic reviews of SAICA s responses to the IFAC self-assessment questionnaires and update sections relevant to SMO 4 as necessary. Once updated, SAICA informs IFAC compliance staff about the updates in order for them to republish the updated information. Biennially Project Director: Governance and Non-IFRS Project Manager: Governance Status as of of Publication Page 18 of 28

19 Action Plan Subject: Action Plan Objective: SMO 5 International Public Sector Accounting Standards and Other Pronouncements Issued by the IPSASB To maintain the equivalent South African Public Sector standards in line with International Public Sector Accounting Standards (IPSAS) Background: The South African equivalent of the IPSASs is a local suite of standards, GRAP. Standards of GRAP are mainly an adaption of IPSASs. The Public Finance Management Act, 1999 (Act No. 1 of 1999) (PFMA) requires the Accounting Standards Board (ASB) to develop standards of generally recognized accounting practice based on best practice nationally and internationally and in developing those standards consider the capacity of entities to implement those standards. National Treasury (NT) collaborates with the ASB in setting Treasury Regulations consistent with the ASB s Directives, and also publishes Practice Notes, Circulars and other implementation guidance from the Office of the Accountant-General. Degree of responsibility No responsibility support to others: ASB s responsibility is to maintain the equivalent South African Public Sector standards in line with IPSASs: Setting of Standards of GRAP, based on IPSAS Comment on proposed Standards to influence international standard-setting Raising awareness of Standards NT s responsibilities are: Implementation guidance Dissemination of Standards Raising awareness Training SAICA supports the ASB and NT by: Raising awareness for members Provide relevant and appropriate CPD activities for members Commenting on proposed Standards to influence local and international standard-setting Status as of of Publication Page 19 of 28

20 # Start Actions Maintaining Processes 16. Comment on IPSASB discussion documents/exposure drafts issued by the ASB within the timeframes set by the ASB and participate in the roundtable discussions held to formulate a South African response to the IPSASB documents. Project Director: Public Sector Project Director and Project Manager: Public Sector 17. Support the ASB by providing technical assistance when necessary. The technical assistance process is established and working well. It is measured regularly as well in an effort to maintain effectiveness and efficiency. Project Director: Public Sector Project Director and Project Manager: Public Sector 18. Provide training on the GRAP Standards. This takes the form of an update seminar and a more detailed Basics Seminar once a year. Project Director: Public Sector Project Director and Project Manager: Public Sector Review of SAICA s Compliance Information 19. Biennially There is a need to review the SMO 5 information periodically as there may have been changes to the legislative and or administrative landscape. Carry out periodic reviews of SAICA s responses to the IFAC self-assessment questionnaires and update sections relevant to SMO 5 as necessary. Once updated, SAICA informs IFAC compliance staff about the updates in order for them to republish the updated information. Biennially Project Director: Public Sector Project Director and Project Manager: Public Sector Status as of of Publication Page 20 of 28

21 Action Plan Subject: Action Plan Objective: SMO 6 Investigation and Discipline To continue to use best endeavours to maintain the operation of a fair and effective investigative and disciplinary regime that is line with the requirements of SMO 6 Background: SAICA s disciplinary process is governed by the provisions of SAICA s Constitution and By-laws. To ensure fairness in the process, the Professional Conduct Committee and Disciplinary Committees are chaired by members of the legal profession. The disciplinary process is only concerned with the professional behaviour of SAICA members, associates and trainee accountants, and it does not have the power to award compensation or damages to complainants. Degree of responsibility No responsibility support to others The IRBA s responsibility is to investigate and discipline RAs: Investigate complaints received from the public Investigate complaints originating from engagement reviews or firm reviews Link between quality assurance (SMO 1) and investigation and discipline (SMO 6) (IRBA) SAICA supports the IRBA by: Participating in IRBA committees and vice versa Reacting on and initiating disciplinary procedures against members when alerted by the IRBA Direct responsibility Investigate and discipline all members: Investigate complaints received from the public (all members) Investigate complaints originating from the IRBA (members who are also RAs) # Start Actions Maintaining Processes 20. Continue to monitor developments and trends in the nature of complaints, report appropriately to SAICA s Board and provide guidance to members. Senior Executive: Legal and Governance Project Manager: Training Regulations Status as of of Publication Page 21 of 28

22 # Start Actions Review of SAICA s Compliance Information 21. Biennially There is a need to review the SMO 6 information biennially as there may have been changes to the legislative and or administrative landscape. Carry out periodic reviews of SAICA s responses to the IFAC self-assessment questionnaires and update sections relevant to SMO 6 as necessary. Once updated, SAICA informs IFAC compliance staff about the updates in order for them to republish the updated information. Biennially Senior Executive: Legal and Governance Project Manager: Training Regulations Status as of of Publication Page 22 of 28

23 Action Plan Subject: Action Plan Objective: SMO 7 International Financial Standards and Other Pronouncements Issued by the IASB Continue to use best endeavors to ensure adoption and implementation of IFRS Background: The Companies Act brought about changes to the standard-setting process that has required the continued existence of South African Generally Accepted Accounting Practice (SA GAAP) to be re-evaluated. The Companies Act imposed an obligation on the Minister of Trade & Industry (Minister) to establish a body known as the Financial Standards Council (FRSC). The FRSC is the legally constituted standard-setter and its function is to advise the Minister on matters relating to financial reporting Standards. The FRSC was formed in late As a consequence of the establishment of the FRSC, the fundamental motivation for the Accounting Practices Board (APB) existence has fallen away. The APB was formed in 1973 to consider what should be Generally Accepted Accounting Practices (GAAP) and issue SA GAAP. In 2003, the APB decided to harmonise SA GAAP with IFRS. Since then, after due process, the APB has issued the IFRS Standards as SA GAAP without amendment. The Companies Regulations, 2011 (the Regulations), prescribe the reporting frameworks based on each individual company s public interest score. The Regulations permit the use of either IFRS, IFRS for SMEs or SA GAAP in specific instances. However, in order to reduce the burden of issuing each IFRS as SA GAAP, it was decided to withdraw SA GAAP. Accordingly, SA GAAP will no longer apply in respect of financial years commencing on or after 1 December In 2012, the APB and the FRSC decided to work closely together to ensure smooth transition of the standard-setting function and financial reporting Standards. As a result, the following was decided: That SA GAAP will be withdrawn and will cease to apply in respect of financial years commencing on or after 1 December 2012; The FRSC, in consultation with the APB, will propose changes to the Regulations to this effect, including a provision to give the FRSC the power to issue financial reporting pronouncements (FRPs) to take account of local circumstances or issues not specifically covered by IFRS or IFRS for SMEs, provided such FRPs are not in conflict with IFRS or IFRS for SMEs. The first FRPs are intended to cover current South African interpretations of SA GAAP, i.e. the AC-500 series; and The APB will commence the process of its voluntary winding-up. As at September 2014, the changes to the Regulations have not been made and consequently SA GAAP still exists in law, although hardly used, if at all, in practice. The APB therefore has not been finally wound up. The Accounting Practices Committee (APC) is the technical accounting committee of SAICA.The purpose of the APC is to be the leading African financial reporting technical body for stakeholders in the areas that affect financial reporting, with a view to improving the financial reporting in South Africa, Africa and globally. In order to fulfil its purpose, the APC intends to play a leadership and influential role by keeping informed of developing trends, developing guidance where necessary, making proactive and reactive submissions on all relevant pronouncements and legislation that affect financial reporting, communicating to and educating SAICA members and business leaders and working with relevant stakeholders to address financial reporting issues in South Africa, Africa and globally. With the uncertainty regarding the publication of the amendments to the Regulations, which would allow the FRSC to publish local guidance in South Africa as FRPs, the FRSC has acknowledged the role that the SAICA APC has fulfilled in standard-setting in the South Africa in its role as the Status as of of Publication Page 23 of 28

24 technical advisor to the Accounting Practices Board (former accounting standard-setter) and believes that strengthening its relationship with the APC (which the FRSC has identified as one of its key stakeholders), particularly during the transition phase, is much needed for the benefit of the South African business community. Therefore the APC and the FRSC have in principle agreed to a Memorandum of Understanding, the objectives of which are: To promote collaboration between the FRSC and APC in relation to providing comments on the IASB discussion papers, request for information documents, exposure drafts, draft interpretations and other proposed pronouncements which the FRSC deems necessary to collaborate on. Where the FRSC believes that financial reporting guidance should be issued, prior to the Regulations that provide the FRSC with the ability to issue Financial Pronouncements being effected, the FRSC will approach SAICA to determine how they can work together to provide the guidance, subject to the legal framework in which the FRSC operates. Any such guidance or changes to the guidance should be subject to an adequate due process agreed upon by the FRSC and the APC. In addition to facilitating the above financial reporting guidance on behalf of the FRSC, it is important to note that SAICA will continue to have the APC issue financial reporting guidance it considers necessary for the benefit of SAICA members and the business community at large to fulfil its mandate. The JSE listing requirements require listed companies to use IFRS with effect from 1 January The Companies Act of 2008 requires the Commission in the DTI to monitor patterns of compliance with IFRS. There have been no developments to date in this regard. The JSE and SAICA established a FRIP, previously known as the GAAP Monitoring Panel (GMP) to review compliance with IFRS for JSE listed companies. FRIP provides public oversight on the financial reporting of JSE listed companies, and investigates instances of non-compliance with IFRS by JSE listed companies. Previously, this was on a complaints basis, since 2011, the JSE has a proactive monitoring process and refers only necessary cases to the FRIP. The JSE penalises the Companies depending on nature of non-compliance and at the same time reports the auditors and professional members involved to the respective professional bodies i.e. SAICA and IRBA. Degrees of responsibility No responsibility The Companies Act makes direct reference to IFRS and IFRS for SMEs. It is anticipated that in time the Companies Act and Regulations will allow the FRSC to publish local interpretations with regard to IFRSs. SAICA supports the FRSC by: Raising awareness Providing relevant CPD opportunities for members Commenting on proposed Standards to influence local and international standard-setting Shared Monitoring of compliance with IFRS: FRIP is a joint initiative between the JSE and SAICA which pro-actively monitors IFRS compliance of companies listed on the JSE. The JSE investigates non-compliance and determines the necessary sanction for the company and if needed refers cases to the IRBA and or SAICA. # Start Actions Status as of of Publication Page 24 of 28

25 Influence in the Standard-Setting process Continue to be involved in standard-setting processes locally and internationally. Specifically: SAICA and its members serve on the FRSC 2. Continue to offer interim secretariat support to the FRSC 3. Run an APC that issues comments on all IASB and IFRS Foundation related documents and outreach requests and will also comment on any FRSC pronouncements when issued. Members of APC are technical partners of auditing firms, preparers from different industries, academics, users, etc. 4. Participate in all IFRS Foundation structures by nominating SAICA members or supporting the FRSC nomination of SAICA members to serve. SAICA members are currently represented on the Trustees of the IFRS Foundation, IASB, IFRS Interpretations Committee, IFRS Advisory Council, the ASAF (Accounting Standards Advisory Forum), the SME Implementation Group, the Emerging Economies Group (EEG) and various other working groups. 5. Participate in IASB World Standard-setters meetings 6. Membership in the International Forum of Accounting Standard Setters (IFASS). Collaborate with the FRSC on all matters of financial reporting. Senior Executive: Standards Project Directors: Financi al SAICA s APC and the FRSC SAICA members Chairman of the APC Project Directors: Financial 23. Solicit views of SAICA members on all accounting documents being issued locally and internationally (mainly IASB and IFRS Interpretations Committee documents). Project Directors: Financial SAICA members SAICA s APC FRSC Status as of of Publication Page 25 of 28

26 # Start Actions 24. Continue to work closely with JSE to obtain feedback on IFRS implementation challenges and determine initiatives to address the challenges. Senior Executive Standards Project Directors: Financial Project Directors: Financial Implementation of IFRS 25. Continue to offer CPD activities on IFRS and IFRS for SMEs. SAICA hosts a variety of CPD activities (seminars, workshops, roadshows, physical products, on-line products/guides, elearning, IFRS certificate courses) on different accounting topics. Senior Executive Standards Senior Executive Member Services and Project Directors: Financial and Member Services Presenters that SAICA identifies to deliver training Project Directors: Financial Offer technical query service to members. 26. Repetitive IFRS and IFRS for SMEs queries from members have been identified and made into Frequently Asked Questions (FAQs) that have been placed on the SAICA website and revised quarterly. SAICA continues to receive accounting related queries which it strives to answer within a 48 hour turnaround period. Project Directors: Financial Project Directors: Financial Project Managers: Financial Status as of of Publication Page 26 of 28

27 # Start Actions 27. Develop accounting guidance, templates and circulars to assist members in understanding and applying the requirements of IFRS and IFRS for SMEs. Prepared by the APC and relevant sub-committees. Project Directors: Financial Project Manager: Financial SAICA s APC and subcommittees, including those of the NSMP. Chairman of the APC Project Directors: Financial Project Manager: Financial 28. Annually a SAICA handbook that contains IFRS, SAICA circulars, the auditing and ethics Standards is printed. While this is mainly used by students, this is also purchased by SAICA members and the general public. Annually Senior Executives from Standards, Education and Member Services Project Directors: Financial, Education and Member Services IFRS Foundation and IFAC Staff from Financial, Education and Member Services 29. Communicate regularly to members on IFRS and IFRS for SMEs developments and issue media releases to the public on these developments and the impact for SA entities. Project Directors: Financial Project Manager: Financial Project Directors: Financial Project Manager: Financial Senior Executive: Standards Senior Executive: Standards 30. Continue to partner with JSE in maintaining the FRIP that reviews non-compliance with IFRS for JSE listed entities. JSE Project Directors: Financial Project Director: Financial JSE Status as of of Publication Page 27 of 28

28 # Start Actions Review of SAICA s Compliance Information 31. Biennially There is a need to review the SMO 7 information biennially as there may have been changes to the legislative and or administrative landscape. Carry out periodic reviews of SAICA s responses to the IFAC self-assessment questionnaires and update sections relevant to SMO 7 as necessary. Once updated, SAICA informs IFAC compliance staff about the updates in order for them to republish the updated information. Biennially Senior Executive Standards Project Directors: Financial Project Directors: Financial Status as of of Publication Page 28 of 28