Audit firms, individual auditors, IFRS advisors, reporting
accountants and reporting account specialists play a fundamental
role in the regulation of the JSE and its listings requirements.
Their work enables the JSE to maintain the integrity of the market
which it administers. The JSE has, however, identified the need to
enhance those requirements to ensure fairness, transparency, and
objectivity of the current listings criteria.
That is why several amendments to the JSE listings requirements
have recently been proposed and published for comment.
Auditors, reporting accountants and IFRS will be required to be
accredited with the JSE in order to audit or report accounts of
listed and applicant issuer companies.
At present, the listings requirements do not make a clear
distinction between registration with the IRBA and registration
with the JSE. The proposal to remedy this ambiguity is to remove
the requirement that auditors "register" with the JSE.
Instead, auditors will be required to be "accredited" on
the JSE List of auditors and advisors.
The proposed requirements for accreditation do not, by and
large, differ from the present requirements for registration. In
order to be accredited by the JSE, applicants will have to complete
the prescribed application form, including the necessary supporting
annexures; pay the prescribed fees; meet the eligibility criteria
set out in Schedule 15 to the listing requirements (which includes
being IRBA registered) and satisfy the JSE as to the
applicant's competency to discharge its responsibilities.
These responsibilities include the obvious requirement that the
registered auditor should act with due care and skill. Further
responsibilities include monitoring compliance with the disclosure
requirements of the JSE regarding interim, preliminary,
provisional, abridged and annual reports, and reporting matters of
non-compliance directly to the JSE.
It is not unusual for certain regulated industries to impose
specific requirements to ensure that auditors who provide services
in their sector have the necessary resources, knowledge and
understanding of the industry they audit. JSE accreditation
requires, in addition to knowledge of the business of the listed
company, a working knowledge of the listings requirements. This is
purely to protect investors who rely on the services of the
Under the proposed amendments, the JSE will no longer give an
auditor a private sanction, public sanction or a fine for
non-compliance with the listings requirements. Rather, the JSE will
be allowed to withdraw the accreditation of the auditor, and the
contravention will more appropriately be referred to the IRBA for
further enquiries and necessary discipline.
A further notable proposed amendment is the deletion of the
requirement that auditors of 'major subsidiaries' be
accredited by the JSE. A 'major subsidiary' is defined as a
subsidiary that represents 25% or more of gross assets or revenue
of the consolidated group, on its most recent published financial
This amendment would bring relief, particularly to smaller
company groups, who would no longer be compelled to appoint a JSE
accredited auditor to perform the statutory audit or a review of a
major unlisted subsidiary of a listed holding company. Auditors of
overseas based major subsidiaries of South African JSE listed
holding companies would therefore not require accreditation by the
JSE. Foreign auditors would thus be able to perform their functions
without falling foul of legislation in their own countries.
Auditors of foreign entities will only have to be accredited if the
foreign entity has a primary listing on the JSE.
Interested parties have until 23 October 2009 to comment on the
proposed amendments, which are accessible on the JSE website at http://www.jse.co.za.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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