The South African Institute of Chartered Accountants (SAICA) is reminding auditors that it’s their duty to report any reportable irregularities that they might encounter when conducting the audits.
The Estate Agents Act
Ashley Vandiar, project director: Assurance at SAICA warns that an estate agent’s failure to have both trust and business accounts audited, would result in a contravention of Sec 29 of the Estate Agents Act.
“The Act simply states that both the business and trust accounts of an estate agent need to be audited. Yet, for an unknown reason, this is not being practiced. Estate agents only submit their trust accounts to be audited and not their business accounts. The Estate Agency Affairs Board is now enforcing this legislative requirement.”
Not new legislation
It is important to note that this is not new and the legislation did not change. The requirement has always been there but it has unknowingly been overlooked by both Estate Agents and their respective auditors. This wrongdoing would constitute to a malpractice which could mean a reportable irregularity has taken place.
An irregularity is clearly defined
Auditors are regulated by the Auditing Professions Act which defines reportable irregularities as “any unlawful act or omission committed by any person responsible for the management of an entity, which has caused or is likely to cause material financial loss to the entity or to any partner, member, shareholder, creditor or investor of the entity in respect of his, her or its dealings with that entity; or is fraudulent or amounts to theft; or represents a material breach of any fiduciary duty owed by such person to the entity or any partner, member, shareholder, creditor or investor of the entity under any law applying to the entity or the conduct or management thereof”.
Vandiar confirms that the decision not to have the business account audited would mean that it is an unlawful act committed by management. The auditor must apply professional judgement and evaluate if a reportable irregularity needs to be reported.
Estate Agents have until 30 September 2012 to file their audit reports.