The JSE has now circulated the final amendments regarding auditor accreditation including the removal of the whole of Section 22 (as well as Forms E1-E4), which will be effective as of 4 December 2023.
The definitions have been amended to remove accreditation and the requirement for IFRS advisors and reporting accountants. While the concept of a reporting accountant specialist has been maintained, all references to “reporting accountant” have either been removed or replaced with “auditor” throughout the JSE Listings Requirements.
Other changes include that in addition to the JSE having to be notified of any auditor changes (including terminations and non-reappointment) within two business days following the event, in the case of terminations, non-reappointments and resignations, a letter from the auditor must also be provided, setting out not only the reasons therefore but also the details of any reportable irregularities that were reported by the auditor to its regulator in the past 12 months.
The requirement to include a statement regarding auditor termination or resignation in the financial statements has been maintained. We believe that this should also refer to non-reappointment for completeness.
The audit committee corporate governance requirements in Section 3.84(g)(iii) have been expanded upon to cater for the removal of Section 22 i.e., the audit committee must:
“(iii) consider the following information provided by the audit firm and individual auditor in the assessment of the suitability of appointment or reappointment of the auditor:
(aa) the latest inspection results (including related remedial action plan) of an inspection performed by its regulator;
(bb) any new inspection result of an inspection performed by its regulator between the date of appointment of the auditor and the date of signature of the audit report on the annual financial statements;
(cc) a summary of the ongoing communication related to monitoring and remediation referred to in paragraph 46 of International Standard on Quality Management 1 (ISQM 1); and
(dd) a summary of any legal or disciplinary proceedings completed or pending, as determined by the audit firm’s head of risk … within the past five years. Legal or disciplinary proceedings include those instituted through any legislation or by any regulatory/professional body…”
The procedure for the appointment of auditors and reporting accountant specialists is now detailed within Sections 3.86 to 3.91. In particular, the individual auditor appointed to sign assurance engagement report/s must have relevant experience (i.e., completed an assurance engagement within the last 12 months, or attended the JSE approved training for reporting accountant specialists within the last 12 months) or a reporting accountant specialist must also be appointed and must have such experience.
How can we help?
Tamela is an approved JSE Equity Sponsor and can assist listed companies and those looking to list in complying with the JSE Listings Requirements and understanding the content and impact of proposed amendments to the Listings Requirements.
For more information, please contact Amanda Markman, on +27 82 499 2911 or Amanda@tamela.co.za