Auditors sat up and took notice last week when the Financial Matters Amendment Act (FMA) came into force.
National Treasury announced the commencement of the Act in Government Gazette 48962 of 14 July.
According to a National Treasury media statement, the proposed legislation was published for comment in February 2022. It proposed amendments to a raft of Acts, including the Auditing Profession Act, the Associated Institutions Pension Fund Act, the Military Pensions Act, the Government Employees Pension Law, and the Land and Agricultural Development Bank Act.
First tabled in Parliament in September 2022, the Act was given the green light in June this year. President Cyril Ramaphosa assented to the Act on 7 July.
Auditing profession
According to Treasury, the Act amends the Auditing Profession Act to enable the enforcement committee (EC) of the Independent Regulatory Board for Auditors, upon admissions of guilt, to refer instances of serious improper conduct to the disciplinary committee for sanctioning.
Commenting on the Act’s commencement, Legalbrief said the amended Act has significant implications for the auditing profession, specifically in relation to issues where an auditor admits guilt to a misdemeanour.
According to a report by the National Council of Provinces’ Select Committee on Finance, the purpose of the amendment is to strengthen sanctions for auditors admitting guilt of “seriously improper conduct”.
Summarising the proposed amendments explained in the memorandum on the objectives of the Financial Matters Amendment Bill and Treasury’s presentation made to the committee on 14 June, the report said the amendment adjusted the powers of the EC where the auditor admits guilt.
National Treasury explained that “if the EC’s view was that conduct did not warrant the sanction of deregistration or disqualification from registration as an auditor, it had to follow the admission of guilt process and refer the matter to a disciplinary committee for sanctioning”.
Pension funds
As stated by Treasury, the commencement of the Act also includes amendments to the Associated Institutions Pension Fund Act, the Temporary Employees Pension Fund Act, as well as the Military Pensions Act and the Government Employees Pension Law.
According to the Select Committee’s report, the amendments to the Associated Institutions Act and the Temporary Employees Pension Fund Act “seek to align provisions with their administration by the Minister of Finance and make consequential amendments such as reflecting the responsible department and its head and removing the requirement to consult the Minister of Finance and updating references to other ministers”.
At the heart of the amendment to the Military Pensions Act is the aim to address discrimination against life partners of military pensioners, retrospectively. The amendment provides benefits to members’ life partners retrospectively from 27 April 1994 when the interim 1993 Constitution took effect. Twelve months is allowed for the registration and submission of claims.
The amended Government Employees Pension Law now allows for the Associated Institutions Pension Fund to amalgamate with the Government Employees Pension Fund (GEPF).
The Government Employees Pension Law provides for a “clean break” for GEPF members.
“The ‘clean break’ principle means that the spouse of a member may claim pension interest immediately upon divorce or dissolution of customary marriage, and not wait for the member to become entitled to a portion of the pension,” the report states.
Land Bank
When it comes to the Land and Agricultural Development Bank Act, the aim of the amendment is to substitute the definition of Minister and replace the provision for judicial management with business rescue in terms of the Companies Act.
Treasury explained that the amendment might “assist the Land Bank with its liability solution and enable the bank to fulfil its mandate of supporting the agricultural sector”.
