Auditing Profession Act, 2005 (Act No. 26 of 2005)

Board Notices

Independent Regulatory Board for Auditors

New Rules Regarding Improper Conduct and Code of Professional Conduct for Registered Auditors

Code of Professional Conduct for Registered Auditors

Part B : Registered Auditors in Public Practice

Section 291 : Independence - Other Assurance Engagements

Employment with Assurance Clients

Purchase

A former partner or member of the assurance team joins an assurance client

291.128

Familiarity or intimidation threats may be created if a director or officer of the assurance client, or an employee who is in a position to exert significant influence over the subject matter information of the assurance engagement, has been a member of the assurance team or partner of the firm.

291.129

If a former member of the assurance team or partner of the firm has joined the assurance client in such a position, the existence and significance of any familiarity or intimidation threats will depend on factors such as:

•	The position the individual has taken at the client;

•	Any involvement the individual will have with the assurance team;

•	The length of time since the individual was a member of the assurance team or partner of the firm; and

•	The former position of the individual within the assurance team or firm, for example, whether the individual was responsible for maintaining regular contact with the client's management or those charged with governance.

In all cases the individual shall not continue to participate in the firm's business or professional activities.

The significance of any threats created shall be evaluated and safeguards applied when necessary to eliminate the threats or reduce them to an acceptable level. Examples of such safeguards include:

•	Making arrangements such that the individual is not entitled to any benefits or payments from the firm, unless made in accordance with fixed pre-determined arrangements.

•	Making arrangements such that any amount owed to the individual is not material to the firm;

•	Modifying the plan for the assurance engagement;

•	Assigning individuals to the assurance team who have sufficient experience in relation to the individual who has joined the client; or

•	Having a registered auditor review the work of the former member of the assurance team.

A former partner joins an entity that subsequently becomes an assurance client

291.130

If a former partner of the firm has previously joined an entity in such a position and the entity subsequently becomes an assurance client of the firm, the significance of any threats to independence shall be evaluated and safeguards applied when necessary, to eliminate the threat or reduce it to an acceptable level.

Assurance team members entering into employment negotiations with an assurance client

291.131

A self-interest threat is created when a member of the assurance team participates in the assurance engagement while knowing that the member of the assurance team will, or may, join the client sometime in the future. Firm policies and procedures shall require members of an assurance team to notify the firm when entering employment negotiations with the client. On receiving such notification, the significance of the threat shall be evaluated and safeguards applied when necessary to eliminate the threat or reduce it to an acceptable level. Examples of such safeguards include:

•	Removing the individual from the assurance team; or

•	A review of any significant judgments made by that individual while on the team.