Home Articles Disciplinary Committee Rulings in terms of SAICA By-law – January to May...

Disciplinary Committee Rulings in terms of SAICA By-law – January to May 2019

Only matters where the Disciplinary Committee has ordered either general or specific publication or alternatively where the Disciplinary Committee has made a Ruling in terms of By-law 30.2

1. Matter One
1.1 The Disciplinary Committee found the member guilty of:
1.1.1 An offence in terms of By-law 34.12 , comprising: “conducting himself….in a manner which, in the opinion of the Professional Conduct Committee or Disciplinary Committee is discreditable, dishonourable, dishonest, irregular or unworthy, or which is derogatory to the Institute (SAICA), or tends to bring the profession of accountancy into disrepute.”; and

1.1.2 An offence in terms of By-law 34.10, for committing a breach of the SAICA Code of Professional Conduct, considered together with section 100.5(a) read with section 110.1 relating to the fundamental principle of integrity and being straightforward and honest in all professional and business relationships, as well as section 100.5(e) and section 150.1 relating to the fundamental principle of professional behaviour and to comply with relevant laws and regulations and to avoid any action that the member knows or should know may discredit the profession.

1.2 The Disciplinary Committee held that it was an undisputed fact that the member altered or caused to be altered, on numerous occasions, a letter bearing a letterhead and electronic signature, which was granted to the member for a specific purpose, without the consent or knowledge of the signatory to the letter and that the member used the amended letter.

The Disciplinary Committee held that the said conduct constituted a clear breach of the SAICA By-laws considered together with its Code and the principles of integrity and professional behaviour. The Disciplinary Committee held that it is contrary to these principles to amend a letter received from an Institution and an individual for a particular purpose, without their consent and for a different and unsanctioned purpose and particularly where this carries a risk of creating a false association between the said institution and individual and the unsanctioned used to which the letter is put.

1.3 In determining the sanction to be imposed, the Disciplinary Committee was cognisant of the fact that the member did not obtain or seek to obtain any personal gain by the conduct and that rather the sole motivation for acting in the manner the member did, appeared to have been an earnest and committed desire to assist a broad range of disadvantaged students.

The Disciplinary Committee stated that this motivation however did not excuse the conduct of the member or render it permissible to alter a letter provided for a specific purpose and to continue to use that letter (bearing the letterhead and electronic signature of someone else) for an unauthorised purpose. The Committee stated that however the motivation did support the assertion advanced in the member’s head of argument that through the member’s level of dedication and sacrifices, the member in fact did many things that are honourable in the advancement of the profession of accountancy and the Disciplinary Committee held that this was a relevant factor in the context of the appropriate sanction to be imposed.

1.4 The Disciplinary Committee imposed the following sanctions on the member:
1.4.1 that the member be suspended from membership of SAICA for a period of 6 (six) months and thereafter for a period of 8 (eight) months – the latter 8 (eight) month period of suspension being suspended on the condition that the member attended an ethics workshop administered or approved by SAICA;

1.4.2 a fine in the amount of R50 000 (fifty thousand rand) which was wholly suspended on the condition that the member did not conduct him- or herself in conflict with By-laws 34.12 and 34.10 for a period of 12 (twelve) months from date of the Ruling;

1.4.3 that the member pay an amount of R20 000 (twenty thousand rand) as a contribution towards the costs of the hearing; and

1.4.4 that the outcome of the matter be published in Accountancy SA but that the name of the member be omitted.

2. Matter Two – Tshifhiwa Matodzi
2.1 SAICA sought the cancellation of Mr. Matodzi’s membership on the basis that he was provisionally sequestrated by the High Court of South Africa on 31 July 2018 and the sequestration order was made final on 26 November 2018.

2.2 By-law 30.2 provides that the Disciplinary Committee may in its discretion order the cancellation of the membership of any member whose estate is provisionally or finally sequestrated or who enters into an arrangement with his or her creditors subsequent to his or her admission to membership. The member will be called upon to satisfy the Disciplinary Committee that there were exceptional circumstances relating to the sequestration or arrangement which would justify the Disciplinary Committee’s not exercising its discretion to order the cancellation of his or her membership.

2.3 The Disciplinary Committee considered the documents which set out the basis upon which the sequestration of Mr. Matodzi was sought. The Disciplinary Committee was of the view that there were no facts placed before the Committee which would permit the exercising of the Committee’s discretion to not cancel the membership of Mr. Matodzi. The Disciplinary Committee accordingly ordered the cancellation of Mr. Matodzi’s membership in terms of By-law 30.2.

2.4 By-law 30.4 provides that a person whose membership has been cancelled in terms of By-law 30.1 or 30.2 may apply for his or her re-admission as a member after the expiry of a period of 10 (ten) years reckoned from the date of such cancellation, provided however that the Board may, on the recommendation of the Disciplinary Committee, reduce this period in any particular case where it considers it would be just and equitable to do so. The Disciplinary Committee held that while there were no facts before the Committee at that time upon which to premise a recommendation that the 10 (ten) year period should be reduced, the Committee did not wish to pre-judge what may happen in the future and the Disciplinary Committee made no determination as to whether any future facts or circumstances might warrant another Disciplinary Committee of SAICA from making such a recommendation in the event that an application is made at some future date.

3. Matter Three – Ms. Barbara Whitfield (084/16)
3.1 The Disciplinary Committee found Ms. Whitfield guilty of:
3.1.1 By-Law 34.10 in that she committed a breach of a Rule or Code of Professional Conduct;
3.1.2 By-Law 34.11 in that she unlawfully failed to account for, or unreasonably delaying an accounting of any money or property received for or on behalf of a client or any other person when called upon to do so;
3.1.3 By-Law 34.12 in that she conducted herself in a manner which, in the opinion of the Professional Conduct Committee or the Disciplinary Committee is discreditable or dishonourable.
3.1.4 By-Law 34.17 in that she failed to answer or deal with appropriately within a reasonable time any correspondence or other communication from the Institute or any other person, which requires a reply or other response.

3.2 The Disciplinary Committee held that the charges stemmed from the accused’s failure to execute her duties as an Accountant and the Manager of the Complainant’s affairs as well as the affair of the Complainant’s company. As per the facts, it was apparent that the charges could be illustrated in 3 (three) different categories: failure to attend to the accounting affairs of both the Complainant and his company over an extended period of time; failure to timeously respond to requests for information and documentations from the Complainant and his duly appointed attorney and failure to communicate to SAICA during the course of the proceedings commencing from the date of the complaint through to the Professional Conduct Committee hearings and ultimately to the Disciplinary Committee.

3.3 In the Disciplinary Committee’s view the charges demonstrate the accused’s failure to prepare necessary accounting records as well as her failure to correspond with either her client or SAICA. The Complainant’s company was deregistered in 2009 due to the Accused’s failure to submit the company’s annual returns, and pay for tax returns since 2010. The Accused’s failure to keep the company active and the tax affairs up to date increased the challenges in transferring the Complainant’s assets to the United Kingdom where he was living as he had emigrated.

3.4 Based on the prejudice suffered by the Complainant, the Disciplinary Committee imposed the following sanctions on the member:
3.4.1 that Ms. Whitfield be excluded from membership with immediate effect;
3.4.2 a fine in the amount of R62 000 (sixty two thousand rand) be imposed;
3.4.3 that Ms. Whitfield pay 50% of the costs of the hearing; and
3.4.4 that publication of the Findings and including her name be made in Accountancy SA.

4. Matter Four – Ms. Barbara Whitfield (22/17)
4.1 The Disciplinary Committee found Ms. Whitfield guilty of:
4.1.1 By-Law 34.10 in that she committed a breach of a Rule or Code of Professional Conduct;
4.1.2 By-Law 34.11 in that she unlawfully failed to account for, or unreasonably delaying an accounting of any money or property received for or on behalf of a client or any other person when called upon to do so;
4.1.3 By-Law 34.12 in that she conducted herself in a manner which, in the opinion of the Professional Conduct Committee or the Disciplinary Committee is discreditable or dishonourable.
4.1.4 By-Law 34.17 in that she failed to answer or deal with appropriately within a reasonable time any correspondence or other communication from the Institute or any other person, which requires a reply or other response.

4.2 The Disciplinary Committee held that the charges stemmed from the Respondent’s failure to execute her duties as an Accountant for the Complainant’s family trust as well as for an investment company. She failed to submit tax returns in relation to the abovementioned entities from 2005 and she failed to pay provisional tax for 2 (two) years preceding 2016. She further ignored correspondence in relation to the mentioned entities; from other trustees of the Complainant’s family trust and failed to attend to payments timeously, resulting in enormous demands by creditors.

4.3 Due to the member’s failure to respond, the Complainant was left with no other option but to terminate the member’s services as she was not communicating nor performing her duties as per her employment contract. Subsequent to that, the Complainant appointed new accountants to clean up the entities’ books and tax affairs, amongst other things. The Complainant requested that the member hand over the entities’ documents to the new accountants, however Ms. Whitfield failed to honour the request. In addition, Ms. Whitfield was requested to tender her resignation as an accountant trustee of the trust, and likewise she failed to honour the request.

4.4. Ms. Whitfield’s failure to perform and abide by the request to resign gave rise to the entities’ documentation being traced in order to file for tax returns since 2005 from the Family Trust and Investment company. The new accountants have been unable to access the trust’s account or attend to payments on behalf of the trust as Ms. Whitfield was a co-signatory on the bank account of the trust. The member’s failure to tender her resignation has let rise to difficulties for the Complainant to access internet banking. This has led to a possibility of instituting legal proceeding to remove Ms. Whitfield as a trustee, however the costs associated with the process have been a deterrent.

4.5 Based on the prejudice suffered by the Complainant, the Disciplinary Committee imposed the following sanctions on the member:
4.5.1 that Ms. Whitfield be excluded from membership with immediate effect;
4.5.2 a fine of R25 000 (twenty five thousand rand);
4.5.3 that Ms. Whitfield pay 50% of the costs of the hearing; and
4.5.4 that publication of the findings and including the name of Ms. Barbara Whitfield be made in Accountancy SA.

5. Matter Five – Mr. Jacques Wessels
5.1 Mr. Jacques Wessels held membership of the South African Institute of Chartered Accountants (“the Institute”) and was also an auditor who was registered in terms of section 27 of the Auditing Professions Act, No. 26 of 2005 and was thus subject to the rules prescribed by the Independent Regulatory Board for auditors (“IRBA”).

5.2 Mr. Wessels was charged by the IRBA for contravening its rules arising out of his involvement in the audit of Linkway Trading (Pty) Limited (“Linkway”) for the financial year ending 28 February 2014 while he was a partner at KPMG. Six charges were proffered against Mr. Wessels, two of which involved allegations of dishonesty. Mr. Wessels pleaded guilty to all six of the charges but denied that there had been any dishonesty on his part.

5.3 The IRBA’s disciplinary committee found Mr. Wessels guilty on all six of the charges that had been proffered against him including the two charges relating to dishonesty. It found in particular in relation to the third charge and based on the documentary evidence and admissions made by Mr. Wessels that the most reasonable and plausible inference to be drawn was that he was dishonest and that he had acted with the intention of assisting Linkway to evade tax and, in relation to the fourth charge, that there had been a misrepresentation by Mr. Wessels in his written response to the IRBA on 28 July 2017 and that he had accordingly acted dishonestly. The IRBA imposed sanctions on Mr. Wessels including that his registration at the IRBA as a registered auditor be cancelled; a cost contribution in the amount of R300 000 (three hundred thousand rand); publication in the IRBA News including his name and the name of the firm.

5.4 In terms of the Institute’s by-laws, where the conduct of a respondent has been investigated or dealt with by the IRBA and has been found guilty of one or more charges of misconduct and a sentence has been imposed upon him and the matter referred to the SAICA’s disciplinary committee, that committee is obliged to accept the findings and sentence for purposes of SAICA’s By-laws. The SAICA Disciplinary Committee noted that Mr. Wessels is moreover deemed to have been found guilty by the SAICA disciplinary committee of an offence contemplated by SAICA’s By- laws.

5.5 Where the IRBA has suspended a registered auditor from practice or removed his name from the register of auditors and disqualified him from registration, the SAICA Disciplinary Committee would be obliged to accept the IRBA’s finding but is also obliged further to impose its own punishment on the member and for this purpose affords the respondent an opportunity of making representations on the issue orally or in writing to the Disciplinary Committee.

5.6 The SAICA Disciplinary Committee held that it was not only in the interests of the profession but also in the public interest to address appropriately and fairly conduct that is unbecoming of a chartered accountant and that Mr. Wessels had regrettably failed in his duties towards the profession and accepted that he was responsible for causing harm to the profession.

5.7 While Mr. Wessels claimed to be remorseful, the Disciplinary Committee noted that there were two disconcerting features to his testimony:
5.7.1 that he maintains the view that he had never intended to be dishonest. Thus whilst he claimed to accept the IRBA’s findings and the conclusions reached by it, he does not agree with them. The Disciplinary Committee suggested that he had not yet fully understood that his conduct was not only inappropriate (an aspect which he readily accepts and agrees with) but also dishonest; and
5.7.2 his attempt to mislead the IRBA in his communications with the IRBA in order to cover up his dishonesty. This occurred almost three years after the audit of Linkway and although linked to that audit, it cannot be described as a singular lapse in judgement.

5.8 The Disciplinary Committee imposed the following sanctions on Mr. Wessels:
5.8.1 The Disciplinary committee was of the view that an appropriate and fair sanction would be for Mr. Wessels to be excluded from membership in terms of SAICA By- law 20.8.4. In these circumstances, the Disciplinary Committee had exercised its discretion in excluding the respondent from membership. The Disciplinary Committee noted that although the effect of the sanction is that Mr. Wessels is barred from applying for membership of SAICA for the next ten (10) years, SAICA’s Board may reduce this period by up to five (5) years as contemplated by By-law 20.13; and
5.8.2 Publication in Accountancy SA of the name of Mr. Wessels; the name of his erstwhile firm; the nature of the offences and the sanction imposed.