Failure to prepare accounts behind SA Express audit delay

The audit review, which has been much anticipated by SA Express's shareholder, the Department of Public Enterprises, is widely expected to be completed within two weeks.

One of the major issues with the accounts involves an error in the treatment of an amount of R32m for VAT that the company would not have been able to claim from the South African Revenue Service (SARS).

IRBA, the body that oversees auditing professionals, received two separate reports from SA Express's external auditor, Nkonki Incorporated, IRBA CEO Bernard Agulhas said recently. The first report issued by Nkonki to IRBA was in November last year and the second was on May 16 this year, Mr Agulhas said.

In terms of section 45 of the Auditing Profession Act, auditors were obliged to write reports of "reportable irregularities", Mr Agulhas said.

Section 45 also obliged auditors to notify IRBA of any unlawful act of omission by the management of a company that might be discovered by the auditors when conducting a review, Ashley Vandiar, the South African Institute of Chartered Accountants' project director for assurance and members' advice, said yesterday.

Nkonki had acted "correctly and properly" by reporting the failure to prepare financial statements to IRBA as it was a reportable irregularity as well as being in contravention of the Companies Act, Mr Vandiar said.

IRBA has also written to the Companies and Intellectual Property Commission and to SARS to notify these bodies of the breaches by SA Express, Mr Agulhas said.

"The Companies Act requires that companies keep records and present financial statements for audits; contravening the Companies Act is very serious," Mr Agulhas said.

Source: Business Day