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SA regulators clash over review regulation

South Africa’s accounting and auditing regulators are at odds over draft changes to the Companies Act that would see small businesses exempt from audit.

The proposed Companies Act, due to be implemented in the fourth quarter of this year, will abolish the mandatory audit requirement for SMEs and replace it with the less onerous independent review.

Audits must be conducted by registered auditors, while any independent professional accountant will be able to conduct a review.

The South African Institute of Chartered Accountants (SAICA) and the Independent Regulatory Board for Auditors (IRBA) disagree about how independent reviews should be regulated.

The IRBA is responsible for regulating auditors, while professional accountants are self-regulated through SAICA.

IRBA chief executive Bernard Agulhas said that if the IRBA were appointed to regulate the reviews, the board would apply a different level of regulation than it does for auditors, without compromising standards.

SAICA senior executive of standards Ewald Müller argued the objective of the new Companies Act is to reduce the costs of compliance and that regulation will push costs up.

 

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