This blog site was co-authored by Felix Le Roux, Prospect Lawyer.
On 31 Might 2023, the Supreme Court of Appeal reserved the Compulsory Audit Company Rotations Guideline (MAFR), which entered into result on 1 April 2023.
The MAFR looked for to restrict the period of any audit company acting as the designated auditor of a public interest entity to 10 successive fiscal years (a public interest entity is any noted entity, in addition to a non-listed entity that undergoes the very same independent audit requirements that use to noted entities). Afterwards, the audit company might just be reappointed by that entity after the expiration of a minimum of 5 fiscal years.
The MAFR was released by the Independent Regulatory Board for Auditors (IRBA) on 5 June 2017. The appellant, a voluntary association of chartered accounting professionals and auditors, asked for factors for the publication of the MAFR from IRBA on 22 September 2017 and got IRBA’s action on 1 December 2017. The voluntary association set up evaluation procedures versus IRBA on 29 Might 2018– 179 days after invoice of IRBA’s factors. Although the evaluation was brought within 180 days after invoice of IRBA’s factors, as needed by area 7( 1) of the Promo of Administrative Justice Act, 2000 (PAJA), the High Court dismissed the application on the basis that the evaluation was set up after an unreasonable hold-up brought on by the dilatory conduct of the voluntary association.
The court overthrew the High Court and discovered that there was no unreasonable hold-up in the organization of the evaluation procedures, particularly considered that the reliable date of the MAFR was almost 5 years after the evaluation was brought.
The court was then needed to identify whether IRBA acted outside the scope of its powers in regards to areas 4( 1) and 10( 1 )( a) of the Auditing Professions Act, 2005 when it released the MAFR. The court held that these arrangements restricted IRBA’s powers to recommending expert requirements in regard of specified practical locations. The MAFR is not an expert requirement and enforces a broad constraint on the capability of business to select audit companies of their option.
Appropriately, the court ruled that IRBA acted outside the scope of its powers, and the publication of the MAFR was reserved.