Technical Updates

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Accounting and Assurance

Accounting and AssuranceTechnical Updates 11 May 2022

New IAASB fact sheet addresses audit engagement team definition

Notice
The International Auditing and Assurance Standards Board (IAASB) issued a new fact sheet on 2 May 2022 that provides guidance on the updated definition of an ‘engagement team’ in respect of audit engagements.

Note, however, that the definition of ‘engagement team’ specifically excludes an auditor’s external expert and internal auditors who provide direct assistance on the engagement.

Information
The definition of ‘engagement team’ as contained in the International Standards of Auditing (ISA 220 (Revised)) has been updated.

The new definition of ‘engagement team’ is:
“All partners and staff performing the audit engagement, and any other individuals who perform audit procedures on the engagement, excluding an auditor’s external expert and internal auditors who provide direct assistance on an engagement.”

An important change made to the definition was to clarify the previous reference to the inclusion of ‘any individuals engaged by the firm or a network firm who perform audit procedures on the engagement’ to ‘any other individuals who perform audit procedures on the engagement”.

The ‘engagement team’ definition is wider than just the partners and staff performing the audit engagement. The engagement team could include any other individual who perform audit procedures on the engagement. The new definition recongises that the engagement team could include:

Implication
The revised engagement team definition therefore recognises that any individual that is involved in the audit engagement is part of the engagement team regardless of the person’s location or employment status and therefore ensures that the same independence requirements would apply to members of the engagement team, regardless on whether the individuals come from within or outside the firm or its network.

Context for the beginner
The ISA 220 (Revised) fact sheet has a useful decision tree that provides guidance on who is included or excluded from the engagement team. The fact sheet can be downloaded here.

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Email enquiries and questions to technical@saiba.org.za for further assistance.

Non-authoritative guidance on Fraud in an Audit of Financial Statements

Notice
On 5 May 2022 the IAASB published non-authoritative guidance called “The Fraud Lens – Interactions Between ISA 240 and Other ISAs”.

 

Information
ISA 240 both expands on certain ISAs as well as provides fraud-specific audit procedures that complement the other ISAs. In doing so, ISA 240 broadly focuses on the auditor’s fraud lens when planning and performing an audit of financial statements, and reporting on the financial statements. While other key standards address the core requirements for identifying and assessing and responding to the risks of material misstatement, ISA 240 expands on how these standards are applied with a fraud lens. The emphasis in ISA 240 is on risk identification and assessment and responding to the risks of material misstatement through modifying the nature, timing and extent of the work effort when there is a risk of material misstatement due to fraud. This highlights the importance of obtaining an understanding of the entity and its environment, the applicable financial reporting framework and the entity’s system of internal control with a fraud lens. The non-authoritative guidance illustrates the relationship and linkages between ISA 240 (The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements) and other ISAs when planning and performing an audit engagement and reporting thereon. Implication A clear understanding of the relationship between, and linkage of, ISA 240 and the other ISAs will assist the auditor to enhance audit execution when applying a fraud lens. This will in turn fulfil the auditor’s responsibilities under ISA 240 and other ISAs that contain the broader requirements for an audit. Included in the Guidance provided is a diagram that depicts the key areas that ISA 240 addresses and highlights the explicit references from ISA 240 to other ISAs that further strengthen the interrelationships between the auditing standards.
Context for the beginner
 The “Fraud Lens” guidance publication can be downloaded here.

Need assistance

Email enquiries and questions to technical@saiba.org.za for further assistance.

Revised Illustrative Section 15 Retirement Fund Agreed-upon Procedures Reports

Notice

The Independent Regulatory Board for Auditors’ (IRBA) Committee for Auditing Standards,
at its meeting on 1 March 2022, approved the following revised Illustrative Section 15 Retirement Fund Agreed-upon Procedures Reports:

Information
The revised illustrative regulatory reports have been updated for the following:

The changes include the following:

 

Implications
ISRS 4400 (Revised) is effective for agreed-upon procedures engagements for which the terms of engagement are agreed on or after 1 January 2022. Accordingly, engagement teams should consider updating previously signed engagement letters.

Context for the beginner

For more information, click here.

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Ethics

Report on IESBA Accomplishments for 2020 and 2021 released

Notice
The International Ethics Standards Board for Accountants (IESBA) released on 4 May 2022 the report, Elevating Ethics and Independence Standards for a Complex World, which summarises the Board’s accomplishments for 2020 and 2021.

Information
The IESBA is an independent global standard-setting board. The IESBA’s mission is to serve the public interest by setting ethics standards, including auditor independence requirements, which seek to raise the bar for ethical conduct and practice for all professional accountants through a robust, globally operable International Code of Ethics for Professional Accountants (including International Independence Standards) (the Code).

The report on IESBA Accomplishments (2020 – 2021) showcases the significant progress that the IESBA has made on behalf of the public interest. This includes the critical work that has been completed to strengthen the International Independence Standards, especially in relation to non-assurance services, fees, and the definition of a public interest entity. The report also discusses the timely and important milestones achieved on projects related to Tax planning, Technology, and Independence in Group Audits. The report furthermore addresses the extensive work that has been done jointly with certain National Standards Setters to highlight the applicability of the Code and also mentions the unique challenges posed by the COVID-19 Pandemic.

Implications
SAIBA prescribes that all members should abide by the IESBA’s Code of Ethics for Professional Accountants. Members should stay abreast of latest developments with regards to the Code of Ethics for Professional Accountants to remain compliant and it is therefore important to understand the impact of the code on behalf of the public interest.

Context for the beginner

The 2020-2021 Report on IESBA Accomplishments can be accessed at the following link:
www.ifac.org/system/files/publications/files/IESBA-Report-on-Accomplishments-2020-2021.pdf

Need assistance

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Fourth and Final Publication in Series Exploring Ethics in an Era of Complexity and Digital Change Released

Notice
On 27 April 2022 the final publication in a four part series discussing ethical leadership in an era of complexity and digital change was released after a global roundtable event held jointly with Chartered Professional Accountants of Canada (CPA Canada) and the Institute of Chartered Accountants of Scotland (ICAS). Paper 4 is entitled: “Mindset and enabling skills of professional accountants – a competence paradigm shift”.

Information
Professional accountants have a wide range of skills and competencies, which are underpinned by ethics, trust, integrity and recognition of their public interest responsibility. Complexity in the professional environment, brought on by rapidly evolving technology, digital disruption, and mis/disinformation is directly impacting all organisations and professional accountants.

Implications
IFAC has teamed up with the CPA Canada and ICAS to examine the ever-changing technology landscape and its implications for ethical leadership, including the challenges and opportunities ahead for the accountancy profession.

To download the Paper 4: Mindset and enabling skills of professional accountants, click on the following link

Context for the beginner

The 2020-2021 Report on IESBA Accomplishments can be accessed at the following link:
www.ifac.org/system/files/publications/files/IESBA-Report-on-Accomplishments-2020-2021.pdf

Need assistance

Email enquiries and questions to technical@saiba.org.za for further assistance.

Taxation

SARS released trade statistics for March 2022

Notice

The South African Revenue Service (SARS) released trade statistics for March 2022 recording a preliminary trade balance surplus of R45.86 billion.

Information

These statistics include trade data with Botswana, Eswatini, Lesotho and Namibia (BELN). The year-to-date (01 January to 31 March 2022) preliminary trade balance surplus of R62.10 billion is a deterioration from the R99.06 billion trade balance surplus for the comparable period in 2021. Exports increased by 9.8% year-on-year whilst imports increased by 21.3% over the same period.
The R45.86 billion preliminary trade balance surplus for March 2022 is attributable to exports of R185.82 billion and imports of R139.96 billion. Exports increased by R43.88 billion (30.9%) between February and March 2022 and imports increased by R9.51 billion (7.3%) over the same period. Read more about the trade statistics for March 2022 here.

 

SARS is the legislatively empowered controlling entity for statistics on the importation and exportation of goods. Exercising this control entails record-keeping, verification, publication and analysis of trade data. Read more here.

Need assistance

Should you have any technical queries send an email to taxtech@saiba.org.za

Pay-As-You-Earn (PAYE) disputes and penalty remission requests manually submitted no longer accepted from 25 Apr 2022

Notice

From 25 April 2022 the PAYE request for remission or dispute process for Administrative penalties is available only on SARS eFiling.

Information and Implications

SARS will no longer accept manually filed PAYE disputes and penalty remission requests. The PAYE request for remission or dispute process for Administrative penalties is now available on the existing eFiling platform. Employers can now dispute late payment penalties and administrative penalties online.

Context for beginners

For the SARS guide on how to submit a dispute via eFiling, click here.

Need assistance

Should you have any technical queries send an email to taxtech@saiba.org.za

Tax Directives legislative changes implemented from 25 April 2022

Notice

The guide to Complete Tax Directive Application Forms was updated with certain legislation changes.

Information and Implications

Legislative changes to the Tax Directives process have been implemented by SARS. The following information is important for Fund Administrators, Insurers, Tax Practitioners, Advisors and taxpayers:
1.) Taxpayers who are members of a pension preservation or provident preservation fund, who have reached retirement age and are 55 years and older are now allowed to transfer the retirement benefit to another preservation fund or a retirement annuity fund tax neutral on a Form A&D – reason Transfer before Retirement [par 2(1)(c)];
2.) Taxpayers can now, on retirement, elect to use two thirds (⅔) or more of the total value of the retirement interest in the fund to provide a pension and / or annuity or purchase a living annuity and / or a guaranteed annuity from an Insurer. Alternatively, they can elect to keep a portion of the retirement interest in the fund which will provide a pension and / or annuity and use a portion to purchase a living annuity and / or a guaranteed annuity from an Insurer. However, it is important to note that the condition placed on a purchase of an annuity is that the value of each annuity (living and / or guaranteed and / or remaining in the fund) must be R165 000 or above, respectively;
3.) A new reason has been added on the IRP3a to cater for foreign companies that are not registered for PAYE to make severance payments to South African tax residents who have performed work within the Republic for the said company. When the employer pays the employee, the tax practitioner or SARS will select reason <Severance benefit – Paid by a non-resident Employer>

The purpose of the SARS Guide to Complete Tax Directive Application forms is to assist Fund Administrators / Long-term Insurers and / or employers on how to complete all of the various tax directive application forms in order to obtain a tax directive (IRP3) before a lump sum benefit can be paid to a member.

 

The SARS Guide to Complete Tax Directive Applications forms can accessed at the following link

Need assistance

Should you have any technical queries send an email to taxtech@saiba.org.za

Law

The Minister of Health published Regulations relating to the Surveillance and Control of Notifiable Medical Conditions

Notice

On 4 May 2022, the Minister of Health, Dr MJ Phaahla published the Regulations Relating to the Surveillance and Control of Notifiable Medical Conditions: Amendment (Regulations) in terms of sections 90(1)(j), (k) and (w) of the National Health Act 61 of 2003 (NHA). The Regulations came into effect upon publication.

Information and Implications

Regulation 16 of the regulations published on 15 December 2017 (2017 Regulations) in terms of the NHA, was amended by inserting Regulations 16A to 16C, focusing in particular on mask mandates, gatherings and the regulation of persons entering the country.

Notably the definition for gatherings now does not exclude the workplace, and the inclusion of a meeting for economic purposes may well indicate an explicit inclusion thereof.

The regulation regulates indoor and outdoor gatherings as follows:
• where those in attendance are vaccinated or in possession of a negative COVID-19 test not older than 72 hours: the venue may not exceed 50% capacity; and
• where those in attendance are unvaccinated or not in possession of a negative COVID-19 test not older than 72 hours: the gatherings are restricted to 1,000 people or less for indoor venues or 50% of the maximum capacity (whichever is smaller) and 2,000 people or less for outdoor venues or 50% of maximum capacity (once again, whichever is smaller).

The regulation allows accommodation establishments to reach full capacity of the rooms available for accommodation, provided that patrons wear face masks in common areas. The regulation only excludes basic education institutions from the total reach of its provisions.

Regulation 16C provides that any person entering the country must produce proof of vaccination, a negative PCR COVID-19 test not older than 72 hours at the time of departure, a negative antigen COVID-19 test not older than 48 hours at the time of departure, or a positive PCR test not older than 90 days and at least 10 days old at the date of arrival, accompanied by a signed letter from a registered health official stating that the person has fully recovered from COVID-19.

If a traveler fails to comply with the above, they will need to take an antigen test upon arrival. If the test result is positive, the person may still be admitted, on the further condition that they will isolate if symptomatic.

This regulation excludes children under 12 years old and daily commuters from neighboring countries. It also confers powers on the Minister similar to those conferred by 16A and 16B.

Need assistance

Email enquiries and questions to technical@saiba.org.za for further assistance.

Compensation for Occupational Injuries and Disease Act notices

Notice

Notice 1
Compensation for Occupational Injuries and Diseases Act: Assessment of employers notice gazetted stating maximum earnings on actual earnings is R506 473 (1 March 2021 to 28 February 2022); maximum earnings on provisional statement is R529 264 (1 March 2022 to 28 February 2023); minimum assessment for commercial employers is R1 342; and minimum assessment for private domestic employers is R463.

Notice 2
Notice given that employers must notify the compensation fund on CF-1C forms where they have ceased to operate a business or no longer have employees to be covered by the fund; and if an employer fails to notify the fund on the status of their business, the fund will assume an employer is still operating and estimate assessments for all outstanding return of earnings.

Need assistance

Email enquiries and questions to technical@saiba.org.za for further assistance

Technology

Understanding the power of integrating social media marketing into marketing strategies

Notice

With an average of over 900,000 new social media users every day, social medial is increasingly becoming the channel of choice in terms of use as a marketing tool.

Information and Implications

Social media facilitates interaction between businesses and consumers, and consequently, has seen rapid growth as a communication channel in South Africa.

The report published on the website https://datareportal.com reveals that social media is one of the biggest platforms amongst internet users in South Africa for people to discover new brands and products.

The statistics shows social media is an exceptionally powerful platform for advertisers. With massive numbers, social media can provide advertisers with extensive reach.

The 5 most important social media platforms for business are:

Facebook:
Facebook’s paid advertising is the cheapest among all social media networks while it offers the most advanced targeting capabilities.

Instagram:
An ideal platform for brands to showcase their products. Content that works best on Instagram is photos, unique designs and engaging videos. You should prioritize Instagram if your target audience is under the age of 40 and you run a business that heavily relies on visual marketing such as a clothing, lifestyle, photography or hospitality.

LinkedIn: LinkedIn is the world’s number one networking social media platform for professionals. In recent years the platform has become more than just about recruiting and hiring top talent. LinkedIn has become a forum where experts and businesses share industry related content to establish their thought leadership and authority in their industry. If you consider using LinkedIn for business, you’re going to need a different approach.

Twitter:Twitter is used by businesses of all sizes, journalists and celebrities. What makes twitter stand out from all other social media networks is that it has a strong emphasis on real-time information. This makes it an ideal platform for sharing company updates, news, entertainment, sports, and even politics. If you’re going to be using Twitter as part of your social media marketing strategy, make sure to be concise, interesting and informative in your tweets. Twitter is best for companies that frequently share daily or hourly updates and want to build industry authority.

YouTube: Since YouTube is owned by Google, it has access to Google’s advertising platform. So, if you rely on video content to market your business, you definitely should be running Ads on YouTube. Besides running Ads on the platform, publishing consistent valuable content will enhance your business’s reach. YouTube has gone from being the 3rd most visited website in South Africa to being second only to Google.

Context for the beginner

Read more about the numbers here.

WhatsApp’s Doubling the Size of Group Chats in the App

Notice

WhatsApp has launched the first stage of its new Communities roll out. The new features were rolled out to users from 5 May 2022.

Information and Implications

ccording to WhatsApp, communities will encompass a collection of separate groups. They will allow organizations like schools, local clubs, and non-profits work together more efficiently.
Group chats can now add up to 512 people, which has doubled from 256 people per WhatsApp group chat in the past.
People can receive updates sent to the entire community and easily organize smaller discussion groups on what matters to them.
The file-sharing limit will be increased to 2G, up from its previous 100MB limit.
One-tap voice calls will now allow up to 32 people to talk to each other.

Context for the beginner

Read more on WhatsApp’s community roll out here.

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