South Africa

Member Organizations

Member Organization Associate

  South African Institute of Chartered Accountants
  South African Institute of Professional Accountants

Legal and Regulatory Environment

  • Regulation of Accountancy Profession

    The accountancy profession in South Africa is largely regulated at the professional level, with the exception of Registered Auditors (RAs). The Independent Regulatory Board for Auditors (IRBA) is responsible for regulating all RAs in the country in accordance with the Auditing Profession Act 2005.

    The responsibilities of the IRBA are to: (i) investigate alleged improper conduct by RAs; (ii) establish an investigative and disciplinary system for RAs; (iii) conduct quality assurance reviews; (iv) set auditing standards; (v) maintain a registry of RAs; (vi) set additional initial professional development requirements to become an RA; and (vii) take steps it considers necessary to protect the public in their dealings with RAs.

    In order to practice publicly and offer audit services as a RA, individuals must be hold the designation of Chartered Accountant (CA(SA)) by being a member of South African Institute of Chartered Accountants (SAICA) in accordance with the Chartered Accountants Designation Act No. 67 of 1993 and must pass IRBA’s additional requirements. This includes completing an Audit Development Program (ADP) before being able to register with the IRBA. As part of the ADP, individuals are required to complete practical experience requirements that consist of a minimum of 18 months in an audit and assurance environment and 1,500 productive hours in audit and assurance, and submit a portfolio of evidence upon completing the ADP demonstrating competencies in the area of audit and assurance.

    Financial statements of listed companies must be audited in accordance with ISA by a Johannesburg Stock Exchange (JSE)-approved auditor. In order to qualify as an accredited auditor, the firm must (i) be registered with IRBA, (ii) have demonstrated experience in auditing listed companies, and (iii) have a minimum of three partners. One partner must have demonstrated knowledge of the JSE, and one must be a specialist in IFRS. Audit partners are required to undergo mandatory training in JSE listing requirements.

    In addition, the JSE and the Companies Intellectual and Property Commission (CIPC) also have quality assurance arrangements for RAs of listed companies and independent reviewers, respectively. The JSE monitors audits of listed companies and its process is linked to the IRBA’s QA review system while professional accountancy organizations (PAOs) whose members can perform independent reviews of financial statements must annually submit a report to the CIPC demonstrating that it has proper mechanisms in place.

    Finally, according to the Banks Act, the Registrar must approve the appointment of a bank’s external auditor.

    As mentioned above, there is no overall national supervision for professional accountants as the profession is mostly self-regulated and rather fragmented. Professional accountants may be subject to education, training, and examination requirements by voluntarily joining one of the twelve PAOs in South Africa.

    In accordance with the Close Corporations Act 1984, the Association of Chartered Certified Accountants—South Africa, Chartered Institute of Business Management, Chartered Institute of Management Accountants—South Africa, Institute of Accounting and Commerce, South African Institute of Business Accountants, South African Institute of Chartered Accountants, South African Institute of Government Auditors, South African Institute of Professional Accountants, Southern African Institute of Chartered Secretaries and Administrators are recognized by the CIPC as professional bodies whose members are authorized to serve as accounting officers for close corporations. The abovementioned institutes in addition to the Association of Accounting Technicians, the Institute of Certified Bookkeepers, and the Institute of Internal Auditors are recognized by the South African Qualifications Authority (SAQA), an entity established under the National Qualifications Framework Act 67 of 2008. SAQA is responsible for overseeing the quality assurance, standardization, and maintaining a registry of all accredited training providers that wish to have national qualifications registered and monitored as well as a records database of qualified practitioners. The SAQA only focuses on an organization’s professional qualifications and not on other elements that may define a PAO.

    Each organization offers its own qualification which, according to the World Bank, generally encompass the principles laid out in the IES. Only two South Africa-based PAOs are members of IFAC and subject to IFAC’s Statements of Membership Obligations (SMOs). These are: the South African Institute of Chartered Accountants (SAICA) and the South African Institute of Professional Accountants (SAIPA). The branches of the Association of Chartered Certified Accountants (ACCA) and the Chartered Institute of Management Accountants (CIMA) are also subject to their respective UK-based organizations’ requirements. ACCA-UK and CIMA-UK are IFAC members and their education, training, and examination requirements are in line with the IES.

    Candidates for the designation of Chartered Accountant (CA(SA)) and membership in the South African Institute of Chartered Accountants (SAICA) must have a bachelor’s degree and complete a Certificate in Theory of Accounting (CTA) (a one-year post graduate course focused on in accounting, auditing, tax, and financial management) from a SAICA-accredited university, complete a three-year training contract with a registered training office, pass SAICA’s qualifying examinations, and then register with the SAICA. SAICA is responsible for setting ethical as well as initial and continuing professional development requirements for its members and establishing an investigative and disciplinary system for its members.

    Candidates for the qualification of Professional Accountant (PA (SA)) and membership in the South African Institute of Professional Accountants (SAIPA) must have a bachelor’s degree that includes core accountancy subjects from a SAIPA-accredited tertiary education provider, complete a three year training contract with a SAIPA-approved training office or have six years of relevant, verifiable work experience or complete a training program from an accredited professional accountancy body, pass SAIPA’s qualifying examinations, and register with SAIPA. Under the revised Companies Act 2008, SAIPA members are permitted to conduct independent reviews of companies with a public interest score less than 100. SAIPA’s responsibilities are similar to those of SAICA.

  • Audit Oversight Arrangements

    Auditors in South Africa are regulated by the Independent Regulatory Board for Auditors (IRBA) in accordance with the Auditing Profession Act of 2005 and by the South African Institute of Chartered Accountants (SAICA). Only individuals that are recognized as Chartered Accountant (CA(SA)) by being a member of SAICA in accordance with the Chartered Accountants Designation Act No. 67 of 1993 are eligible to register as Registered Auditors (RAs) with the IRBA, subject to the IRBA’s additional requirements, including the completion of an Audit Development Program (ADP) and provisions for continuing professional development (CPD).

    The responsibilities of the IRBA are to: (i) investigate alleged improper conduct by Registered Auditors (RAs); (ii) establish an investigative and disciplinary system for RAs; (iii) conduct quality assurance reviews; (iv) set auditing standards; (v) maintain a registry of RAs; (vi) set additional initial professional development requirements to become an RA; and (vii) take steps it considers necessary to protect the public in their dealings with RAs.

    Additionally, SAICA is responsible for setting ethical as well as initial and continuing professional development requirements for its members and establishing an investigative and disciplinary system for its members.

    IRBA is a member of the International Forum of Independent Audit Regulators (IFIAR).

  • Projects or Other Information

    In 2013, the World Bank conducted an assessment of accounting and auditing practices in South Africa. The resulting Report on Observance of Standards and Codes (ROSC) concluded that there was no overall national supervision and regulation of the professional accountancy profession to ensure that it serves the public interest. The ROSC recommended that while each PAO would continue to support and regulate its members, the proposed regulatory body should ensure that the education and training offered by PAOs is appropriate to the types of services being offered by the PAO membership. The regulatory body would accredit, register, monitor, and sanction the PAOs, as well as monitor compliance in accordance with the accreditation criteria on an ongoing basis. It was further recommended that the regulatory body would assume the existing IRBA functions, thereby providing for the comprehensive regulation of the whole accountancy profession.

    The South African Institute of Professional Accountants and the South African Institute of Chartered Accountants indicate that the South African National Treasury is working to address this issue and as of October 2016, is still finalizing an approved model for the regulation of the PAOs. The process has been temporarily delayed during 2016 owing to various factors, including the appointment of a new Accountant-General (at present there is an Acting Accountant-General), the appointment of a new Finance Minister and the effect of the municipal elections in South Africa. Further developments in this regard are expected in 2017.

Adoption of International Standards

  • Quality Assurance

    Under the Auditing Profession Act of 2005, the Independent Regulatory Board for Auditors (IRBA) is responsible for establishing a mandatory quality assurance (QA) review system for auditors and firms for all statutory audits. South African Institute of Chartered Accountants (SAICA) indicates that the IRBA has established a QA review system in line with the requirements of SMO 1.

    The Companies Act 71 of 2008, effective in 2011, introduced a new form of assurance reviews—the independent review—for organizations with a low public interest score. Only CA(SA)s and RAs can perform independent reviews of qualifying companies with a public interest score of 100 or more, whereas the members of eight other PAOs are also allowed to perform independent reviews where the public interest score of a company is less than 100.

    SAICA indicates that its members who are not subject to QA reviews by the IRBA are required by SAICA to use and comply with ISQC 1 and the relevant engagement standards issued by the IAASB and issues of non-compliance with professional standards are addressed by its investigation and discipline system.

    SAIPA reports that it conducts QA reviews for its members performing independent reviews and has an operational system that is in line with SMO 1 requirements.

    ISQC 1 and International Standard on Review Engagement (ISREs) have been adopted.

    Current Status: Adopted

  • International Education Standards

    Each professional accountancy organization in South Africa offers its own qualification and establishes its own initial professional development (IPD) and continuing professional development (CPD) requirements. In turn, these bodies must be recognized by the Companies Intellectual and Property Commission (CIPC) for members to serve as accounting officers for close corporations and their respective qualifications must be recognized by the South African Qualifications Authority (SAQA), an entity established under the National Qualifications Framework Act 67 of 2008. SAQA is responsible for overseeing the quality assurance, standardization, and maintaining a registry of all accredited training providers that wish to have national qualifications registered and monitored as well as a records database of qualified practitioners.

    Candidates for the designation of Chartered Accountant (CA(SA)) and membership in the South African Institute of Chartered Accountants (SAICA) must fulfill SAICA’s academic, practical experience, and examinations requirements and complete mandatory CPD as part of maintaining their membership. SAICA reports its IPD and CPD requirements are in line with the latest (2019) IES.

    Only CA(SA) are authorized to provide audit services after fulfilling the additional IPD requirements set by the Independent Regulatory Board for Auditors (IRBA) and registering as Registered Auditors (RA). SAIPA states that its IPD and CPD requirements are aligned with the latest (2019) IES and the principles established by SAQA.

    Candidates for the qualification of Professional Accountant (PA (SA)) and membership in the South African Institute of Professional Accountants (SAIPA) must complete SAIPA’s academic, practical experience, and examinations and also complete CPD. SAIPA states that its IPD and CPD requirements are aligned with the IES and the principles established by SAQA.

    ACCA-South Africa’s members are required to meet high-level membership requirements, which are adopted at the global level by the UK-based headquarters. The ACCA’s IPD and CPD requirements are in line with the 2019 IES and its qualification is accredited under the South African National Qualification Framework (NQF).

    Similarly, CIMA-South Africa’s members are required to meet the requirements established by its UK-based headquarters. CIMA’s IPD and CPD requirements incorporate the IES and its qualification is accredited under the South African NQF.

    There is limited information regarding the eight other PAOs’ IPD and CPD requirements and their incorporation of the IES requirements.

    Current Status: Partially Adopted

  • International Standards on Auditing

    Under the Auditing Profession Act of 2005, the Independent Regulatory Board for Auditors (IRBA) is responsible for the adoption of auditing standards in South Africa. The IRBA has adopted ISA as issued by the IAASB without modifications and including effective date for all mandatory audits. The South African Institute of Chartered Accountants (SAICA) additionally reports that the IRBA has adopted without modification, the entire suite of International Standards issued by the IAASB, namely ISQC 1, ISA, ISRE, ISAE, and ISRS.

    International Standard on Review Engagement (ISREs) have also been adopted for application in independent reviews of companies with a public interest score between 100 and 349 whose financial statements are independently compiled and reported as well as companies with a score of less than 100.

    Current Status: Adopted

  • Code of Ethics for Professional Accountants

    Ethical requirements for Registered Auditors (RAs) are set by the Independent Regulatory Board for Auditors (IRBA) in accordance with the Auditing Profession Act of 2005. The South African Institute of Chartered Accountants (SAICA) reports that in 2010, the IRBA adopted the IESBA Code of Ethics as the IRBA Code of Professional Conduct for Auditors (the IRBA Code) with additional requirements for auditors in South Africa. IRBA has adopted the revisions and restructuring issued in the 2018 International Code of Ethics. SAICA notes that modifications are made to the IESBA Code only to address local issues not specified in the IESBA Code.

    Other professional accountants may be subject to ethical requirements established by professional accountancy organizations (PAOs). The South African Institute of Chartered Accountants (SAICA) is responsible for setting ethical requirements for its members. SAICA adopts the IESBA Code of Ethics as issued as the SAICA Code of Ethics. SAICA states that it may modify its Code for local contexts but does not change any of the requirements of the IESBA Code. SAICA also reported that its Code is consistent with the IRBA Code. SAICA members who are RAs must comply with both Codes.

    The South African Institute of Professional Accountants (SAIPA) is responsible for setting ethical requirements for its members as a recognized professional body by the South African Qualifications Authority (SAQA). The SAQA requires registered entities to establish a Code of Ethics in line with the IESBA Code of Ethics. SAIPA states that its Code of Ethics is aligned with the 2018 IESBA Code of Ethics.

    There is limited information regarding the ethical requirements, if any, of the remaining PAOs in South Africa.

    Current Status: Partially Adopted

  • International Public Sector Accounting Standards

    The Accounting Standards Board (ASB) is the entity responsible for adopting public sector accounting standards in South Africa. The ASB has adopted the Generally Recognized Accounting Practice (GRAP), which mostly align with accrual-basis IPSAS; however in practice most government departments are applying a modified cash basis of accounting while the National Treasury is developing a roadmap to implement accrual accounting across all departments (IFAC, CIPFA 2018).

    Current Status: Partially Adopted

  • Investigation and Discipline

    The investigation and discipline (I&D) of Registered Auditors (RAs) is carried out by the Independent Regulatory Board for Auditors (IRBA) in accordance with the Auditing Profession Act of 2005. IRBA’s Inspections Department refers cases to its Investigations Department. Subsequently, the Investigations Department can refer the case to IRBA’s Legal Department. If the case warrants sanctions, the case is also referred to the South African Institute of Chartered Accountants (SAICA). SAICA indicates that the IRBA’s I&D system for Registered Auditors (RAs) is in line with the SMO 6 requirements.

    I&D procedures for other professional accountants in South Africa are carried out by their respective professional accountancy organizations (PAOs). SAICA is responsible for establishing an I&D system for its members. It has established a Professional Conduct Committee and Disciplinary Committee, both chaired by members of the legal profession. SAICA indicates its disciplinary procedures are only concerned with the professional behavior of SAICA members to avoid an overlap of responsibilities with the IRBA. SAICA refers complaints of RAs to the IRBA and reports on any findings and sanctions issued by the IRBA regarding its members. SAICA reports that its I&D system is in line with the revised SMO 6 requirements.

    The South African Institute of Professional Accountants (SAIPA) is responsible for maintaining an I&D system for its members as a recognized professional body of the South African Qualifications Authority (SAQA). SAIPA reports it has established an Investigation Committee and a Disciplinary Committee as well as an Appeals Tribunal. An attorney is responsible for reviewing and updating the disciplinary policies every three years to ensure they incorporate the SMO 6 requirements. In 2016, SAIPA reviewed its I&D system against the components of SMO 6 and confirmed that its system is in line with the requirements.

    There is insufficient information regarding the I&D systems of other PAOs in South Africa to determine if they are in line with SMO 6 requirements.

    Current Status: Partially Adopted

  • International Financial Reporting Standards

    The Companies Act 2008, effective as of 2011, codifies the application of IFRS as issued by the IASB and approved by the Financial Reporting Standards Council (FRSC) by listed companies, and prescribes either IFRS or IFRS for Small- and Medium-sized Entities (SMEs) for different types of companies based on a public interest scoring system.

    A company’s public interest score is determined by the total number of points it receives based on the number of employees, third party liabilities, turnover, and shareholders. State-owned companies and certain non-profit companies are also required to use IFRS. Public companies that are not listed on an exchange as well as private companies, and certain non-profit companies that have a public interest score of at least 100 points may choose to apply full IFRS or IFRS for SMEs. SMEs with a public interest score under 100 points whose financial statements are internally compiled can use their own accounting policies if they are not required to comply with any other financial reporting standards.

    There is also application guidance specifically designed to assist micro entities to apply IFRS for SMEs.

    Current Status: Adopted

Disclaimer

IFAC bears no responsibility for the information provided in the SMO Action Plans prepared by IFAC member organizations. Please see our full Disclaimer for additional information.

 

Methodology

Methodology
Last updated: 12/2020
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