Audit Profession Amendment Bill: public hearings & National Treasury response

Meeting report

The Select Committee on Finance was joined by the following officials:
● Ms Karen Maree (Acting Accountant-General, National Treasury)
● Adv Empie van Schoor (Chief Director: Legislation, National Treasury)
● Adv Ailwei Mulaudzi (Director: Fiscal and Inter-governmental Legislation, National Treasury)
● Ms Jillian Bailey (Director: Investigations, IRBA)
● Mr Matthew Parks (Deputy Parliamentary Coordinator, Cosatu)
● Adv Frank Jenkins (Senior Parliamentary Legal Advisor)

The Chairperson welcomed all attendees. 

The Chairperson said that there was only one public presentation to be considered by Cosatu. He noted that the Committee had the day’s programme before it which had been sent the previous evening. He asked for any comments. 

Mr D Ryder (DA, Gauteng) thanked the Chairperson for getting the programme out quickly and noted that the ATC list had been updated extensively and in good time. He said he was “quite happy”.

The Chairperson agreed and said it was a standard programme. The Committee could only proceed with bills if it came to the Committee through the National Assembly (NA). 

He asked for a mover and seconder for the programme. Ms D Mahlangu (ANC, Mpumalanga) moved to adopt the programme, Mr M Moletsane (EFF, Free State) seconded the motion. The programme was adopted.  

He then recognised Mr Parks for his submission. 

COSATU’s Presentation and Submissions: 
Mr Parks thanked the Chairperson and greeted members of the Committee. 

He said he wanted to give some context. The Bill is a critical tool in the fight against corruption and state capture. Everyone has seen the devastating effect of state capture and even corporate capture has had on the economy, society and workers. Auditors have not been held sufficiently accountable in their contribution to state capture. Various companies and organisations, even those on the JSE have auditors and have at times facilitated, and participated in, state capture and corruption. 

He said his presentation would try to address some of the gaps in existing legislation and in oversight of auditors by the Independent Regulatory Board for Auditors (IRBA), which has a “critical role to play”. Cosatu “supports the Bill” and its “progressive provisions”. There are two weaknesses in the Bill which should be addressed, however. Cosatu therefore has two proposed amendments. After the amendments Cosatu generally supports the Bill and hopes that it would be passed quickly. 

He wanted to emphasise the legacy of auditors which have “betrayed” the country by, among other things, abusing their fiduciary duties. The Auditor-General (AG) has told us that there is a loss of about 10% or R150 billion per year to corruption and wasteful expenditure. The consequence of this is the collapse of good governance in many State-Owned Enterprises (SOEs). This has a devastating impact on the economy. This has also impacted municipalities and departments which are now unable to pay workers. The collapse in departments can be seen at the provincial level. The effects of this can be seen on service delivery, the fiscus and of course public and private sector workers. In parastatals, workers have been retrenched; in the private sector workers have lost their jobs. Often private-sector companies are financed by workers’ pension funds. There is a need to look at the complicity of auditors and the consequences for them. 

Cosatu supports key progressive provisions in the Bill. One of which involves the criteria to serve on the IRBA and its investigative and disciplinary committees. Other provisions include the following. Previously registered auditors are allowed. Practicing or registered are auditors excluded to avoid conflicts of interest. There is a prohibition against holding shares in and receiving payments from auditing companies. This is important for providing stricter separations. 

He said that the progressive provisions also empower oversight and to conduct search and seizure of suspected auditors complicit in corruption. There has been resistance from some in the auditing profession against the provision for search and seizure. Cosatu's position is that these are in line with the normal legal norms. IRBA needs to be capacitated and those who have nothing to hide should not be afraid of opening their books. That is the very essence of being an auditor, namely to be open and transparent. The consequence of not doing this can be devastating. Those who are completed need not to be handled with “kid gloves” but we need to be “firm and rough” with them. 

The provisions for disciplinary procedures are useful. They will help to reduce the lengthy delays in disciplinary proceedings. They may help open disciplinary hearings to public scrutiny. There is a need for regulation to tighten timeframes in regulations to prevent inordinate delays.

The sanctions provided for are also useful. However, there is a need for the Minister of Finance and the Treasury to increase fines to prevent repetition of recent “slaps on the wrists,” especially when comparing the size of the fine to the profits auditors have made and the losses resulting from corruption to the public and the fiscus. These fines should be significantly increased and additional sanctions should be imposed. 

Cosatu wishes to propose two amendments, the first of which can be located on page four of the submission document, which pertains to clause 5(5) (page 3 of the Bill): the “Reduction in Mandatory IRBA Meetings.” He proposed to delete Clause 5(5) which reduces the required number of meetings of the IRBA and its committees from a minimum of four to two per year. The Act requires four meetings, the previous version of the present Bill reduced it to two, and the current version has deleted that amendment completely. The suggestion to reduce the number of meetings to two is a mistake. If one sets the bar low, we cannot be surprised when nothing is done. “How would you hold someone accountable if there’s no guideline to hold them to account?” Given the role of IRBA against corruption, the minimum of four annual meetings should be retained. We have learnt in the last decade not to assume anything in the government, hence the need to state things “very, very clearly.” If the requirement of four meetings is deleted, that would be “reckless in the era of state capture.” Since we live in a “virtual world” the logistics of holding four annual meetings is “quite easy.” 

The second proposed amendment, which can be found on page 4 of Cosatu’s submission, is to delete clause 5(5) in its entirety from the Bill and insert a new clause to compel the mandatory rotation of auditing firms every 10 years. This rule would be correct and progressive. He said the “incestuous and profit-driven” relationship between auditing firms and companies needed to be prevented. Auditors should not be fearful of rocking the boat because it might jeapodise a lucrative contract it has with a given company. It is important that this provision be made a law, since it may be ignored if it is merely a rule. It may be ignored, for example, in instances where its implementation faces resistance from compromised auditors. This had been raised in public hearings in 2019 and 2020. 

On related matters, Cosatu appreciates the fiscal pressures faced by the country at present. At the same time, there is a need to ensure IRBA is adequately resourced in the midst of austerity cuts given the potential effects of incapacitating it at the cost of uprooting corruption. There is a need to look at expanding legislative oversight mechanisms to include auditing committees in the public and private sector.

He concluded by reiterating Cosatu’s support for the Bill, and thanked the Chairperson and the Committee. 

The Chairperson recognised Adv van Schoor to reply to Cosatu’s submission. 

National Treasury’s Response
Adv van Schoor said she would first address the question of the annual meetings of IRBA. She wished to explain the amendment that was introduced in the National Assembly (NA). The amendment to reduce the number of meetings from four to two pertained to the section that dealt with committee meetings. It was not a change to the number of board meetings but rather to the number of times the board met with the committee. Treasury supports Cosatu’s proposal and the provision has since been removed. It was a mistake in the original Act because it repeated provisions which were already contained in it. “It’s now clear that both the board and [the] committees must meet at least four times a year,” she said. But the only proposal that was made to the NA was that the committee meetings be reduced to two times per year. 

On the mandatory rotation rule, she had read Cosatu’s submission but when they reintroduced the bill they did not make any changes because they wanted to expedite the bill “through Cabinet, et cetera”. This submission would be part of future amendments which, she said, she had already indicated. It would be added to a list of other amendments which still needed to be introduced, including those involving accountants and auditing committees in the private and public sector. It is important to note that the mandatory rotation rule is more than just an internal rule. It is a rule that is issued by IRBA and that is published in a gazette which must be preceded by public comment when any rules are amended or added. She said that before she introduces the rule of mandatory rotation (from 10 to five years) to subject it to a public consultation process before taking it to Parliament. 

Ms Bailey said that she did not have much to add from the point of view of IRBA. IRBA was not ready to introduce the mandatory rotation rule, since it would “delay the Act” and reiterated that the number of committee meetings were to be retained at four per year at least. 

The Chairperson then opened the Committee up for discussion.

Discussion
Mr Ryder said that as long as the Committee had clarity that IRBA and its committees had at least four meetings per year, he was “fine with that.” 

On the question of the mandatory rotation rule, it was a provision which the Committee was moving towards formalising in the next version of the Act. This leaves him with a “certain degree of comfort.” He agreed that rotation was necessary. He acknowledged its introduction would take a bit of time and that its implementation would have to be more gradual. 

He agreed that everyone wanted to push the bill through as quickly as possible without compromising quality.  Auditors have always been the gold standard for transparency and dependability, but as of late this was not the case. The auditing profession has brought itself into disrepute. For IRBA to oversee this is a “massively important role”. However, if one looks at media reports it is evident that there are changes happening there with the change of the “old guard”. The Minister has disbanded the board and would be re-constituting it. The Minister has extensive powers in this regard. There is little oversight over his appointments to that board. He wanted Adv Jenkins to comment on the oversight on the Minister’s powers to appoint new board members given IRBA’s critical role, like the legislative oversight Parliament has over appointments on other boards. When does Parliament have a role to play with regards to the appointment of IRBA board members?

The Chairperson thought all attendees now agreed that the committee should meet [at least] four times per year. This is important especially in light of the events that have occurred in the last year. What happened in terms of the IRBA board reinforces the need for this. “So all we want from [the] Treasury is clarity that the board can meet at least four times per year”. So that matter is a policy matter that all parties agree on. 

The second matter is the mandatory rotation of firms. This was brought to Parliament as I recall it. There were even public hearings (see here and here) . It is therefore more than an internal rule. He asked Adv Jenkins for his guidance in this regard. He knows that IRBA gazetted it and that they were vigorous public hearings. Most auditors (including the Auditing Association) were opposed to it. He was not sure whether this was a normal internal rule which could be dispensed with, without going back to the public. “Can IRBA just dispense with it?”, he asked the advocates present in the meeting. It takes an auditor several years to adjust to a new firm and five years may not be sufficient time and may be disruptive. It was important to find a balance between avoiding disruptive changes with the need to ensure rotation to prevent corruption. He was not convinced about five years but he did not see a problem in the provision being added to the bill. He asked Adv Jenkins if this addition would be of the magnitude which required public hearings, since the present Committee “is a public hearing.” If the Committee agreed with Cosatu, he asked if it would be “legally tenable.” There were various interpretations on how far a committee can go: “Can it introduce a totally new amendment which has not been canvassed in the public domain?” He personally did not see a problem, but wanted the advice of the advocates in the Committee. If IRBA wanted to change the time of a meeting from, say, 10 a.m. to 9 a.m., that would not be a problem, but that the rule under consideration might be of a different magnitude. “In short my own view is that it should be in the law...tentatively...unless I’m convinced otherwise by the majority.” 

He then turned to the issue of the Committee having oversight over public and private auditing firms. He asked members for their opinions about this. The Committee did not have auditing and forensic capacity to have detailed oversight. It should be done but it should be a separate committee. He said that “none of our staff is an auditor, as far as I know.” There is no use performing the oversight role unless Parliament is capacitated to do so. Otherwise it all “becomes a rationalisation for wrongdoing” since people could say “we appeared before Parliament, they saw nothing wrong, and so what’s the big deal?” 

He asked attendees for their input. 

Mr Parks said it helps that Treasury has cleared up the issue about the four board meetings. 

The Chairperson interjected and asked if it was finally “clear enough” for Cosatu. 

Mr Parks’ replied that “we’ll go through it again just to be 110% sure.” 

The Chairperson asked Mr Parks to send the Committee an amendment. It could be easily negotiated with the NA. 

Mr Parks said he would “definitely” send through the amendment. He expressed satisfaction that everyone seemed to be on the same page. He was aware that small amendments like changing a typographical error could delay a bill, but would discuss this with Adv van Schoor.

On Mr Ryder's question, he said it was about rebuilding the trust between the auditing sector and the workers in the public. For Cosatu, this activity was about “cleansing the sector and rebuilding that trust.” It is also a question of what the consequences were for auditors, specifically whether they were being held accountable. They were not, and this has been a “huge failure on us as a society.” Everyone knows about the looting at parastatals and private companies. He did not know of any auditor sitting prison right now, let alone their assets being attached. 

On the matter of the mandatory rotation, the rule was an internal rule, and was therefore doubtful as to what the resistance was to elevating it from an internal rule to a matter of law. This would help to ensure it is retained. Cosatu’s fear was that bills take at least five years to process and some of them can be “completely forgotten.” There are many examples of this delay. He wanted to therefore use the opportunity that presented itself now: “If there’s agreement, do it...it can always be tweaked down the road.” This was to be separated from the “five years versus 10 years.” First prize would be to get the mandatory rotation into law and if 10 years is more realistic then “fine--no problem.” He reminded the Chairperson that this issue had not only been raised by Cosatu, but also by others in 2019 public hearings. The understanding at that point was that the Bill was removed from the Financial Matters Amendment Bill for further consultation and the elections. “So it’s a bit disappointing that now despite that additional year/year-and-a-half, colleagues from [the] government [and] from IRBA are still sitting on the fence.”  

Lastly, he said, Parliament has supreme authority when it comes to drafting, amending and passing legislation and the only thing which can limit Parliament is violations to the Constitution. This would not be a violation of the Constitution; it’s simply elevating an existing rule into an Act, for which there are “plenty of precedents.” Cosatu therefore “urged the Committee to do it” and that it would not be an “insurmountable” issue to send to the NA for agreement. 

The Chairperson said he was “amused” to hear that because of a typographical error, it took three years to sort out; “My God,” he exclaimed. That was “outrageous.” He did not find it compelling that because the Treasury wanted to expedite the Bill it therefore did not want to introduce the 10-year mandatory provision. He could see why it would prevent the bill from being fast-tracked, but that given the weight and importance of the provision, it is even more important now than when it was considered as an internal rule. He repeated that he did not find it very convincing. 

On the mandatory rotation rule, Adv van Schoor said that section 10 indicated that any new rule must be published “in notice”. It is a requirement that when rules are made or amended, that it must be published for public comment for a 30-day period and only thereafter the rule may be changed and published in the Gazette. This is in the Act. If the Committee decides to adopt the amendment “I do believe it’s outside the scope of the current amendments.” She reiterated that she understood that if Treasury decided to include the amendment in the Bill which was tabled in February 2020, then it would have been a requirement to go through the executive and through a public comment process and “go through all the structures… which is quite extensive.” This is the reason why it was decided not to include the amendment. “The aim of the amendments was clearly set out to strengthen the powers of IRBA in dealing with improper conduct by auditors” in addition to dealing with the independence of the board itself. If amendments are made now—and it is entirely up to Parliament—it may delay these important amendments. “It will take longer before it becomes law.” This is in the context of IRBA facing a number of cases with which they are dealing. 

The Chairperson asked Treasury: “How does the slight delay in promulgating this Bill relate to the cases IRBA’s got before it...in relation to the mandatory rotation of auditors?” 

Adv van Schoor said the Bill allows for a different way of organising the committees to deal with discipline more effectively. 

The Chairperson told Adv Jenkins that there was the same situation in the preceding term of Parliament where the same issue was raised by the NA concerning “how far amendments could go”. There was a bill that was challenged by an individual member of Parliament because of the extent to which it was completely revamped. It took up some policy issues in which it was said “were not considered when Parliament had the public hearings.” It was then referred to Adv Jenkins’ unit, the feedback for which was that a lack of public hearings was not an issue in that instance, and there was some discussion. He had never been convinced by that. In that specific case, the provision was “ideologically unacceptable” and was derived from one individual. He did not want to name the individual member of Parliament in question but told Adv Jenkins that the latter knew who he was talking about. It became “a bit boring” and that it was like a “silly trick”. “For example, now, if we were to go ahead and do this, could any of these auditing firms challenge us and say ‘well, it was not part of the original bill’?” It is not about this Bill alone. “If we went ahead and did what Cosatu was asking, which I personally think is correct... would we be challenged by the auditing companies?” He wanted to know from Adv Jenkins if auditing companies could challenge the Committee on the grounds that there were no public hearings.  

Adv Jenkins said that as far as he could remember it had been raised in public hearings, but it might not have been part of the Bill. There are two ways to view the question, and therefore is not clear cut. “There’s a rule that needs interpretation and that’s applied some precedent and you referred to the precedent—that’s the Parliamentary rule—that says ‘if a Committee goes beyond the scope of what is in the Bill it needs to get permission from the House’.” “On the matter of the public hearings the clear example that was discussed in legal services--which was a court case on the application of legislation that regulates substances… Suddenly that became applicable to the Veterinary Practices Act and there was (sic) no specific public hearings on that part of the bill because it was a new matter, so that’s the second part”. So the two parts are: the Parliamentary rule and the public hearings. He would look at the record to formulate a more informed opinion since it was better to err on the side of caution when it came to new issues concerning a bill and to have proper public hearings or just to ask people if they do want to have more input on the matter of a five-year rotation. The question is whether one can simply elevate it and whether that results in better oversight “over IRBA” if it is in the legislation rather than in the rules of IRBA. The Chairperson had already answered this question: “for sure”. At the moment in terms of section 10, “they” can change it as a thirty-day public consultation process--there’s no Committee process. He did not know how that process was implemented, but it is not a parliamentary process that the Treasury is used to. 

The Chairperson said “We don’t have a say” and as he recalled it, “we cannot stop IRBA from going ahead...we can at best plead with IRBA to negotiate further but we can’t stop it. I think you’re right.” 

On Mr Ryder’s question about the appointment process, Adv Jenkins said that that was a policy matter. “As a principle of legality, if Parliament must oversee an appointment process by the Minister, then we must, and the Minister must comply.” Conversely, if there is nothing which says so in the Act, then Parliament does not have a say. So it is a policy matter. “One can put it in there, but there is no specific right or wrong [answer].” There is an appointment process in Parliament to make it multiparty; not to make it unpolitical—it’s always political—but it is a multiparty process and not an executive process, that is why there is oversight over certain appointment processes like with the Chapter 9 bodies. But this is a “separate thing” from smaller or other institutions which also perform oversight, like regulatory bodies such as IRBA. 

The Chairperson said he was not convinced that there would be any legal challenge. He recalled what Adv Jenkins had just been saying about the court case, but “it’s like the boy cried wolf.” He thought Adv Jenkins was right.  It was “not outlandish” since the Committee was not telling IRBA to be “having a board that has got five Cosatu representatives, and five Communist Party representatives… that’s outlandish” in terms of the rules of Parliament. He was using a facetious example in case he gets misquoted. The point to take into account is that on the present Bill, the Committee “very reluctantly agreed to forego their provisions in the Financial Matters Amendment Bill… because the temperature was very high at the time, with major problems with the auditing firms… the Gupta leaks were out at the time, there was the VBS crisis, and so on.” The NCOP said that they would not do it because they felt as though they were being “pushed,” and “they negotiated with us and we had to give in.” On the bill under consideration at that time, the legally contested issue… was over the search and seizure—which I fully supported. There were huge legal arguments; and I’m pleased that’s fallen away now. What do you have to hide if you’re doing nothing wrong? It’s come to a situation where many auditing firms: you have to just take it that if they are accused they probably are guilty. I’m not saying in all cases. But they probably are guilty, given what’s going on in this country with the levels of corruption and all the auditing firms in that regard.” 

He asked members of the Committee to mull over this since no policy decisions were to be taken in the present session. 

He then asked Adv van Schoor to go through the Bill clause-by-clause. 

Mr Ryder wanted to know exactly which document the Committee was going to be looking at. 

This is because there had been some general administrative confusion and/or miscommunication as to exactly which document would be under consideration. It was unclear whether the Committee was to be briefed on the clauses of the Bill itself, whether it was to be briefed on the prepared text of the Act as proposed by the National Assembly, or whether it was going to be briefed on the “programme”. 

He asked the Committee Secretary to resend all members “the [correct] Bill.” 

The Chairperson confirmed he had received “the Bill” and that that would be under consideration. 

Adv Mulaudzi would take the Committee through that Bill, clause-by-clause.

Treasury Presentation on Amendments: 
Adv Mulaudzi thanked the Chairperson and commenced with the clause read-out. 

Amendment of section 1 the Act: the insertion of the definition of “Constitution”. In the current Act, there is reference to the Constitution but there was no definition of what that word meant. Any reference to the Constitution in the Act means “the Constitution of South Africa, 1996.” 

Amendment of section 4: the proposed amendment “requires IRBA to determine their regulatory strategy [with the approval] of the Minister.” At the time the Bill was introduced in 2020, there was reference to IRBA determining a policy with the approval of the Minister. That has now been changed through the NA process, so it is no longer determined by the regulation of a policy but rather it is now a regulation to determine a regulatory strategy with the approval of the Minister. The clause also provides a process that must be followed by the Minister when that regulatory strategy is determined and also requires that it be published in the gazette once it is made. 

Amendment of section 11: the proposed amendment is to prohibit registered auditors from being appointed as members of IRBA. It also proposes to prohibit members of IRBA from sharing directly or indirectly in any of the profits, or from receiving payments or pension benefits from a registered auditor. It also provides for the increase in the board of representation of formerly registered auditors and other qualified persons from one to two. 

Amendment of section 12: the proposed amendment is to provide for IRBA members to hold office for a period not exceeding three years. 

The Chairperson asked what the rationale was for this amendment.

Adv Mulaudzi said it was felt that two years was too short for anyone to come in and make a meaningful contribution. 

Amendment of section 14: the proposed amendment is to increase the term of office of the chairperson and deputy chairperson of the disciplinary committee from two to three years. 

Amendment of section 19: this is a technical amendment to correct the cross-referencing and to insert references to the enforcement committee where it is appropriate. 

Amendment of section 20: this is a technical amendment which deletes unnecessary references to the number of times the committees should meet. 

Amendment of section 24: the amendment provides for IRBA to establish an investigating committee and also the appointment of its members. It also regulates the conduct of members of the investigating committee, and is the same as applies to members of the board, that is, the prohibition against sharing of profits with an auditor. 

Amendment of section 24A: the amendment deals with the establishment of the disciplinary committee. It provides powers to IRBA to appoint as many members of the disciplinary committee as it deems necessary. It regulates the conduct of that committee by prohibiting a member from improperly benefiting him or herself and from impeding the work of the disciplinary committee. The same principle in terms of sharing profits applies here. It also allows IRBA to establish subcommittees, which may include an enforcement committee that would have the power to deal with certain categories of matters relating to improper conduct by a registered auditor. The issues with which the enforcement committee may deal will become clearer when other amendments are reached later on in the presentation. 

Mr M Moletsane (EFF, Free State) asked whether if 10 years’ experience to qualify as a member [of IRBA] was required in “that field” [presumably the auditing field]. 

Adv Mulaudzi said that 10 years’ experience was required, but not necessarily in the auditing field. Prospective members may have experience in related fields, such as the legal profession.

Amendment of section 36: the amendment deletes a paragraph which has become obsolete. 

Amendment of section 37: the amendment prohibits the registration of an individual as an auditor or candidate auditor if that person has been convicted of an offense. 

Amendment of section 39: the amendment deletes part of a paragraph which has become obsolete. 

Amendment of section 41: the amendment deletes a paragraph which has become obsolete. 

Mr W Aucamp (DA, Northern Cape), addressing the suspension duration addressed in the amendment, said that it could also happen that one could be suspended for a period of, say, three or six months but remain registered. He said the purpose of the amendments appears to be that people cannot qualify for registration anymore, instead of people who are registered but who are on some sort of penalty for a certain period. 

Amendment of section 45: the amendment seeks to prohibit the removal of an auditor before that auditor completes the process of reporting irregularities to IRBA, as envisaged in the section. It also proposes that where an individual registered auditor has reported an irregularity and he/she resigns from the firm, where he/she is employed, before completing the reporting process, that the auditor in question is required to do the necessary handover to the incoming auditor, regardless of when the resignation takes effect. When an auditor is conducting his/her work, they might come across certain irregularities for which they have an obligation to report to IRBA. The amendment seeks to prohibit a firm from removing that specific auditor before he/she completes the reporting process. In the event that the auditor decides to resign from the firm in which the irregularity has been discovered, there is an obligation placed on the auditor to ensure that the necessary handover takes place with the succeeding auditor, so that the reporting process is not “left hanging.” 

Mr Ryder said that the Bill does not place any responsibility on the incoming auditor and how they should deal with the irregularity. An amendment to this effect would have been desirable although it is not “life-changing.” 

Advocates Mulaudzi and van Schoor deferred to Ms Bailey to address this point. 

Ms Bailey said that this was covered in IRBA’s code of professional conduct: As an incoming auditor, your responsibility is to specifically request from the outgoing auditor whether there are any reportable irregularities currently in progress. 

Amendment of section 48: Adv Mulaudzi explained that this amendment allows the enforcement committee to refer a non-audit matter brought to IRBA against a registered auditor to a professional body for investigation and disciplinary proceedings. It also empowers the investigating committee to subpoena a registered auditor (or other person) who has been charged with improper conduct to produce to the committee any object or information including, but not limited to, any working papers, statements, correspondence, books, or other documents which is in the possession, or under the control, of that registered auditor (or other person), whose subject matter relates to the charge. 

The Chairperson said that he had just browsed the Bill and would like to go over it in more detail, but that members could raise more detailed questions at a later point. 

Amendment of section 48A and B: Adv Mulaudzi explained that these amendments deal with the powers to enter and search premises for purposes of investigation. There were amendments that were made following engagements with stakeholders and there were also amendments that the NA adopted following those engagements. The Treasury is of the view that the provisions on search and seizure “do pass Constitutional muster and they take into account all the Constitutional provisions in the event that there is a challenge on those provisions.” 

Amendment of section 48: the amendment also inserts section 48B, which deals with warrants. It says that where there is no consent to enter and search premises, then a warrant may be issued, allowing for the entering and searching of premises. 

The Chairperson asked Adv Jenkins to review both this amendment and the preceding one.

Adv Jenkins agreed.

Amendment of section 49: Adv Mulaudzi said that this amendment provides for a process to be followed after an investigation, in order to charge a registered auditor for improper conduct if there are sufficient grounds to do so, and also following an admission of guilt process, or referring the matter to the disciplinary committee for a disciplinary hearing. Once an investigation has concluded, there are two processes that may be followed. Either there is an admission of guilt process, where the affected auditor pleads guilty, or is referred to a disciplinary hearing. Where the latter process is followed, the disciplinary committee appoints a panel for each case instead of the disciplinary committee having to deal with all cases. This is one of the changes made in terms of the disciplinary process. This should assist with expediting how IRBA deals with disciplinary cases. 

Amendment of section 50: the amendment provides for a disciplinary hearing where if a matter is referred to such a hearing, then the disciplinary committee would appoint a panel to deal with each disciplinary case that IRBA has to deal with, which would bring about speedy resolutions with which IRBA is involved. 

The Chairperson asked Adv Jenkins to review the last three amendments also.

Adv Jenkins agreed. 

Amendment of section 51: Adv Mulaudzi said that this amendment provides for sanctions which may be imposed following an admission of guilt process. This includes the imposition of a fine based on the maximum amount determined by the Minister, who is now given the power to determine the maximum fine value. There is a process proposed in the section as to how the Minister should go about making this determination. 

The Chairperson asked members of the Committee to look at this more carefully and come back with their responses. 

Amendment of section 51A: Adv Mulaudzi continued and said that this amendment includes a cross-reference to the inserted section 51B. 

Amendment of section 50: the amendment inserts section 51B which provides for sanctions to be imposed following a disciplinary hearing. This would include the imposition of a fine, the maximum value for which would be determined by the Minister along with the aforesaid proposed process regulating that determination. However, the amendment also allows for a registered auditor found guilty to address the panel and for the auditor to call witnesses to give evidence on his/her behalf, for the mitigation of the sentence. 

The Chairperson said that this was an important area politically. The Committee previously thought that the sanctions were “too mild.” Even these amendments may, according to some, be deemed insufficient given the gravity of the potential offenses and their consequences. He asked members to think about this. 

Amendment of section 53: Adv Mulaudzi explained that this amendment is a substitution which makes it an offense to fail to comply with a subpoena or interfere with or hinder the conduct of an investigation. A person who is found guilty of this offense may be “liable on conviction with a fine, or imprisonment period not exceeding five years, [or both].” 

Amendment of section 57: the amendment inserts section 57A, which deals with the protection of information. This amendment requires IRBA to comply with the Protection of Information Act when dealing with personal information under its control. It also regulates for the sharing of such information. 

Adv van Schoor said that “transitional matters” in the presentation was part of the “Amendment Bill” and “doesn’t come in here.” She said it would not become “part of the principal act.” 

The Chairperson asked for clarification as this matter was somewhat confusing. 

Adv van Schoor clarified that she only wanted to “explain that the transition of provisions that [Adv Mulaudzi] was referring to [is] only part of the Amendment Bill; it won’t become part of the principal Act. It’s just to make arrangements for people…” 

Before she completed her point, the Chairperson exclaimed, “Oh yes! I see what you’re saying,” and then asked Adv Jenkins if this was “okay.”

Adv Jenkins said “yes… that is how it is.” 

Adv Mulaudzi thanked the Chairperson and said this concluded his presentation of the amendments. 

Discussion 
The Chairperson said he wanted to raise a procedural matter, with which he was not certain how it should be handled. He asked which version of the Bill should the Committee look at or track changes. “Do we want the Bill as adopted by the NA without any of the tracked changes reflecting what the NA did in regard to when we process the Bill? Or, do we want to look at the Bill as it came to [the Committee]? And, as a supplement for [all of us] just to check what the NA did? But we don’t use that version: the one with the tracked changes as we have now when we’re processing the Bill. Just think about that, I’m not sure which is the better option.” 

He also asked for suggestions on how to make notes and track changes on a digital copy of the Bill. The software he had been using was not convenient for purposes of processing. He had raised this before and because it was difficult to track changes, he had “lost some of [his] thoughts” which he had had earlier. This could be discussed offline with the National Treasury, namely what is the most efficient way of processing Bills in a situation where some people may not have access to a printer or paper, and the like. He wanted members to discuss a more efficient process where they could share their thoughts. The Chairperson asked if members agreed and if he was clear on the matter. 

Mr Ryder said the Chairperson’s comments were “crystal clear.” He found a process that worked for him. He said one document could be put on one tab, and the second document can be added to another, and then change between them since you do need to compare documents. It was “extremely useful” to work on the programme which tracks changes, but you had to have the Bill in its entirety and in the proper format at the same time. What would work best is a page that was split in two with tracked changes to the left and the actual Bill on the right. 

The Chairperson thanked Mr Ryder for his suggestion and then told the delegates from the Treasury and IRBA that they could exit the meeting, since he wanted to raise an internal issue with Committee members. 

Committee Matters

He explained to members that it might be more convenient for the Committee to meet later, because meeting virtually due to Covid has resulted in the quantity of emails and other social media queries with which members have to deal with. More time would allow members to sort through these various communications. The duration of the Committee would not be decreased, but rather the start time could be set later to allow for members to deal with these constituency issues. He would prefer 10 a.m., but that he would compromise for 9.30 a.m., depending on how members felt. He wanted clarity as to what members thought and said the Committee would decide this question next week. He asked members for their views.

Mr Ryder said 10 a.m. suited him, and that he had checked with Mr Aucamp, and it also suited him. He was, however, “reasonably flexible.”

On the matter of soaring emails, he suggested that all emails sent to Committee meetings, along with documents, be attached to the diary invitation, or else send one email with all required documents on the night before--or the morning of--the relevant meeting to which they pertained. This would help manage the documents for the meeting a little better. 

Mr Moletsane said he was a bit confused as to the documents which were sent out for the current meeting and that he would agree to a better system. On the matter of times, he was agreeable for any change in time, so long as it was still in the morning. 

The Chairperson said that since no-one was objecting, the Committee should start at 10 a.m. to 1 p.m. “But obviously when we meet jointly with the NA committee, they would want to meet at 9 [a.m.] presumably. So we meet at 9 or 9:30 [a.m.], whatever the case may be.” He said that another advantage of starting later would be that members could go through the particular bill with which the Committee would be concerned that day. At present, members can only browse through bills; starting later would give members more time to prepare for the day's meeting.

The Chairperson thanked all attendees and adjourned the meeting.