By the time this article is published, 2010 will be history and it will no doubt be remembered for the Soccer World Cup. It is, however, necessary to look back on the progress and milestones made by the Joint Attorneys' and Accountants Committee (JAAC) during 2010 and to keep members fully informed of the not too distant future.
The new guideline
The single most important project that the accountant members were involved in during the year was the drafting of the new guidelines to be followed when performing the audit of attorneys' trust accounts. The finalisation of the guidelines is in process and is being driven by IRBA. It is anticipated that they will be issued by IRBA for comment during the early part of 2011.
Audit reports
One of the problems experienced by all the provincial Law Societies was the failure on the part of auditors to submit properly completed audit reports. I am pleased to report that all the provincial Law Societies have indicated an improvement in the quality of the audit reports. Auditors are encouraged to report fully on any irregularities that come to their attention in such a manner to enable the Law Societies to decide on the appropriate action, disciplinary or otherwise, to be taken, without resorting to lengthy correspondence between the auditor and the legal practitioner.
It should be noted that the Law Societies have been encouraged to report auditors to IRBA if, in their opinion, an auditor has failed to perform the duties expected of him or her.
Attorneys Fidelity Fund matters
The Attorneys Fidelity Fund (AFF) reported a substantial increase in the claims arising mainly in conveyancing, bridging finance and related matters. This is symptomatic of the depressed state of the economy and auditors are advised to be more alert in planning and executing their audit procedures in this regard.
Cellphone and internet banking
The audit procedures and audit trails relating to cell phone and internet banking transactions on the trust banking account have caused concern to both professions. The AFF is engaged in high level discussions with the banking industry after which the matter will be considered by the appropriate specialist divisions of IRBA and SAICA. It should be noted that the Law Societies have prohibited the use of cell phone banking on a trust account. Appropriate communication will be issued to members of both professions in due course.
Joint seminars
Members of SAICA will be aware of the past presentations of seminars dealing with a variety of aspects relating to the appointment, trust and business audit procedures, risks, etc. of attorney engagements. These seminars have been welcomed by the legal profession as a contribution to the risk management strategy of the AFF It has accordingly been decided to present a series of joint seminars with the legal profession in all the major centres in 2011.
The morning session will deal with fraud detection, internal controls and compliance with the Attorneys Act and the Law Societies rules and will be of interest to members of both professions. It is anticipated that officials of the Law Societies will also address the delegates on general matters relating to the submission of the audit reports.
The afternoon session will be devoted to a detailed discussion on the new guidelines. This will be presented by IRBA. Although this session will be of particular interest to auditors, attorneys will be welcome to attend.
Composition of the JAAC
The JAAC met twice during the year, in May 2010 and in October 2010. For the information of members, the accountant members are nominated by SAICA, and an attempt is made to have provincial representation and to recognise the transformation process and objectives. The vacancy caused by the resignation of our member in the Western Cape was filled by a new nomination and a further appointment for next year has been made to represent Gauteng. Both of the new appointments are women that are well versed in the affairs of attorneys' matters.
In addition to the nominated Attorneys, our meetings are attended by representatives of the secretariats of the provincial Law Societies, the AFF, IRBA and SAICA.
Accreditation
Given the increasing incidence of fraud, theft and related schemes, and recognising the risks associated with the audit of attorneys' trust accounts, it has been accepted that such audits require a greater degree of skill and specialism. This being the case, a strong argument could be made out for the implementation of a form of accreditation as is done for the banking, pension funds, mining and other industries. This is under discussion by both professions.
Other matters
Other matters being addressed by both professions are:
* accounting for foreign currency trust transactions;
* revenue recognition;
* reportable irregularities;
* contraventions of legislation and the auditor's duties;
* accounting for trust account interest and bank charges; and
* investment practice activities.
As before, members of both professions are encouraged to make contact with their representatives should the need arise. The contact details of the members can be obtained from SAICA or the Law Society of South Africa.
[Author Affiliation]
Vincent Fan's CA(SA) is Chairman of the SAICA Joint Attorneys' and Accountants' Committee.
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