THE COMPULSORY ROTATION OF AUDITORS

Every public and state-owned company has to appoint an auditor and a company secretary.  However, in terms of section 92 of the Companies Act, 2008, the same individual is not allowed to serve as the auditor or designated auditor of a company for more than 5 consecutive financial years.

What does this mean for my company?

  • If an individual has served as the auditor or designated auditor of your company for 2 or more consecutive financial years, and then ceases the position, the individual may not be appointed again as the auditor or designated auditor of the company until after the expiry of at least two further financial years.
  • If your company has appointed 2 or more persons as joint auditors, you must manage the required rotation in a way that all of the joint auditors do not relinquish office in the same year.

Despite the strict requirements for public and state-owned companies, it is not compulsory for private or personal liability companies to appoint an auditor, unless the company is required to produce audited financial statements.

Is this for the better?

It is understood that the external audit function is an activity of public protection and provides credibility to financial statements and assurance to investors. However, auditor rotation could lead to additional costs to companies, as the new auditor would be required to perform additional procedures on the opening balances of their new client.

In some areas, it could also impact negatively on the availability of auditors, as some towns only have a limited number of registered auditors. Auditors practicing as sole practitioners will also be affected, and could lose long-term clients unless they bring in another registered auditor and expand their practice.

References:

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

PUBLIC NUISANCES: LEGAL RIGHTS IN TERMS OF LEGISLATION

Persons who commit disruptive acts of unacceptable behaviour in public places may be warned, arrested and subsequently prosecuted by the authorities. The offender shall be liable for a fine, imprisonment or both upon conviction. How is this enforcement of our rights achieved by an ordinary citizen?

A public nuisance is a criminal wrong; it is an act or omission that obstructs, damages, or inconveniences the rights of the community. The term public nuisance covers a wide variety of minor crimes that threaten the health, morals, safety, comfort, convenience or welfare of a community.[1]

Legislation offers relief in this respect, in specific by-laws of local Municipalities. A by-law is a law that is passed by the Council of a municipality to regulate the affairs and the services it provides within its area of jurisdiction[2]. A municipality derives the powers to pass a by-law from the Constitution of the Republic of South Africa.

With regards to Public Nuisances one would look to By-law Relating to Streets, Public Places and the Prevention of Noise Nuisances, 2007[3]. The main body of this by-law lists certain acts that are deemed prohibited behaviour and are therewith criminalised. Various acts including begging, using abusive or threatening language, being under the influence of drugs or alcohol and causing a disturbance by shouting, screaming or making any other loud or persistent noise or sound, including amplified noise or sound are listed therein.[4]

Should anyone and his conduct fall within this definition and perform any or multiple prohibited acts of public nuisance, the authorities are to be alerted immediately. The authorities have the power to instruct the offender to immediately cease the offending behaviour, failing which he will be guilty of an offence.

Section 23 states that any person who contravenes or fails to comply with any provision of this by-law or disobeys any instruction by the authorities enforcing this by-law, shall be guilty of an offence. This offender shall be liable to a fine or imprisonment for a period not exceeding six months, or to both a fine and such imprisonment.

It is therefore evident that by identifying certain acts of unacceptable, aggressive, threatening, abusive or obstructive behaviour of persons in public the offender may be ordered to immediately cease such offending conduct or be arrested for not complying with any order to do so.

Reference List:

  1. http://openbylaws.org.za/za/by-law/cape-town/2007/streets-public-places-noise-nuisances/
  1. http://legal-dictionary.thefreedictionary.com/Public Nuisance
  1. http://openbylaws.org.za/
  1. https://www.capetown.gov.za/en/bylaws/Pages/Home.aspx

[1] http://legal-dictionary.thefreedictionary.com/Public Nuisance

[2] https://www.capetown.gov.za/en/bylaws/Pages/Home.aspx

[3] http://openbylaws.org.za/za/by-law/cape-town/2007/streets-public-places-noise-nuisances/

[4] Section 2 By-law Relating to Streets, Public Places and the Prevention of Noise Nuisances, 2007

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)