Fees Questionnaire

FEES QUESTIONNAIRE

IESBASeeks YourViewabouttheLevelofFees ChargedbyAuditFirms

Theleveloffeeschargedbyaudit firms is consideredbysomestakeholders asanelementthatmayaffectauditorindependenceandaprofessionalaccountant’sability tocomplywiththefundamentalprinciplesintheIESBACodeofEthicsforProfessionalAccountants(theIESBACode),particularlyprofessionalcompetenceandduecare.Auditorindependenceandcompliance withthefundamentalprinciplesofethicsinstillconfidencein,andincreasethecredibilityof,financialinformation,therebycontributingtoauditquality.

TheIESBAiskeenonfurtherunderstandingwhetherand,ifso,how theleveloffeeschargedbyauditfirmsaffectcompliancewiththe fundamentalprinciplesandauditorindependence.TheIESBAseekstounderstandthesemattersinordertodeterminewhetherandhowtheIESBACodeshouldbefurtherenhancedtoaddressissuesrelatingtotheleveloffeeschargedbyauditfirms.Inthisregard,theIESBAestablishedaFeesWorkingGroupin2016toundertakethisworkandmakerecommendationsby2018.TheWorkingGroupcommenceditsworkwithcommissioningasummaryofresearchonthetopicoffees.

This FeesQuestionnaireisthefinalphaseoftheWorkingGroup’sfact-finding. TheWorkingGroup invitesyoutoshareyourviewsandperspectivesonthetopicbyrespondingtothequestionsinSectionA,RespondentClassification,andonesetofthequestionsinSectionB,SurveyQuestions,pertainingtoyourclassification.YourresponseswillhelpshapeIESBA’sunderstandingoffee-relatedissuesandmayalsoinformanappropriateresponse.TheAppendixtothisQuestionnaireincludescontextualinformationabouttheIESBA’sFeesInitiativeandalistofdefinedtermsthatmightbeuseful inrespondingtothequestionsinSectionB.

IESBAFeeSurvey

Section A:RespondentClassification

1.Inwhichcountryorjurisdictiondoyouworkorserve?(Ifinternational,pleaseindicateso;if aregionoftheworld,pleaseindicatewhichregion.)

SouthAfrica

2.Pleaseindicatewhichofthefollowingbestdescribesyourrole:

3.Wouldyoubewillingtobecontactedforaninterviewonthetopicoffees?

YesNo

4.Pleaseprovidethefollowingcontactinformation(optional):

Yournameandjobtitle/role:BernardPeterAgulhas(ChiefExecutiveOfficer)Youremailaddress:

Yourorganization'sname:IndependentRegulatoryBoardforAuditors(IRBA)

B.4.RegulatorsandAudit OversightAuthorities

General

1.Doyoubelieve thatthe level offeescharged byan audit firm givesrise toethicsand/orindependenceissues?Pleaseexplainyourresponse.

2.Hasyourorganizationidentifiedfrominspections,disciplinaryinvestigationsorothermeans,anyfee-relatedissuesthatmighthavecreatedthreatstocompliancewiththefundamentalprinciplesortoindependence?Ifso,pleasedescribethefinding.Forexample:

• What was the nature ofthe issue?
• Howfrequentlydid itoccurand whatwas the severity?
• Didthefirmappropriatelydealwiththeissue?Ifnot,doyoubelievethatthereareimpedimentsthatmighthaveaffectedthefirm’sresponse,andifso,whatwerethey?

3.Doesyourorganizationhaveanyotherconcernsabouttheleveloffeeschargedforauditornon-auditservices?Ifyes,pleasedescribethemandtheirbasis.Doesyourorganizationhave anycurrentorproposedinitiatives todeal with thoseconcerns?

Thereisaconcernthatauditfeesaresometimesnothighenough,whichmayresultin a numberof undesirablepracticesthataffect audit quality.

Furtherconsiderationshould begiven to auditsperformedfor free,orsubsidised,andwhetherafree, orsubsidisedservice,iscompatiblewith theresponsibilitiesoftheauditorinterms oftheCode,and when such servicesshould be prohibited.

Theconcernhereisthatan auditor whoisworkingfor free:

-Maynotprioritisetheengagement(intermsofquality),yetprovidethesameassuranceasfee earningwork;

-Mayhave aquid proquo,which has a bearingonrelatedfee earningwork;

-Maybelinkedtofavoursduetoaprominentperson,andforexample,thecharitytheyareassociated;or

-Maynotbeabletoassessauditcomplicationsappropriatelyasthereisnomeanstorecoveroverruns.

Additionally,thereisathreattothefundamentalprinciplesasthefollowingitemsareoftendependent onfees:

• Partners’promotion/remuneration;
• Cashflowimpactofslow collections; and
• Recruitmentofnewstaff resources, beforeworkisavailable.

Thethreatisfurtherescalated bythefirm’sinternal budgetprocesswhich mayincludemulti-yearbudgets,whichmakecertainassumptions,(likeclientretentions)thathavea bearingonindependence andquality.

Whilethereneedstobeacommercialandprofessionalbalance,guidanceontheleveloffeesisnecessary.

4.DoyoubelievethattheIESBACodeestablishessufficientandappropriateprovisionstohelpprofessionalaccountantsandfirmsdealwiththreatstocompliancewiththefundamentalprinciplesandindependencethatmightbecreatedbytheleveloffeescharged?

5.Doyoubelievethattherearecertainregulatoryrequirementsinyour jurisdictionrelatingtotheleveloffeeschargedbyauditfirmsaremorestringentthantheprovisionsin theIESBACode?Ifso,pleaseexplainwhy.

TherearenorequirementsintheIRBACodeofProfessionalConductorinSouthAfricanlegislationfor registeredauditorsrelatingto thelevel offees.

InSouthAfrica,listedentitiesandstate-ownedcompaniesarerequiredtoestablishauditcommittees,whilesomeothercompanieshavevoluntarilyelectedtodoso.TheSouthAfricanCompaniesAct,2008(ActNo.71of2008)hasspecificrequirementsforauditcommittees.Section94(7)(b)and(d)specificallyhasthefollowingrequirements:

“(7) Anauditcommitteeofacompanyhasthefollowingduties:

(b)todeterminethefeestobepaidtotheauditorandtheauditor’stermsofengagement;

(d)todetermine,subjecttotheprovisionsofthisChapter,thenatureandextentofanynon-auditservicesthattheauditormayprovidetothecompany,orthattheauditor mustnotprovidetothe company,orarelated company.”

TheAuditorGeneralofSouthAfrica(AGSA)hasissuedguidelinesonFeesforAuditsPerformed on Behalf of the AGSA. Below is a link to the relevant guidance: reporting/Circular_01_2017_Guideline_on_AGSA_Fees_March_2017.pdf

TheIRBACodeofProfessionalConductincludesaprohibitiononchargingcontingentfeesforassuranceservicesprovidedtoclients,orforthepreparationofanoriginaloramendedtaxreturn,astheseservicesareregardedascreatingaself-interestthreattoobjectivityforwhichappropriatesafeguardscannotbeappliedtoeliminatethethreatsor reducethem to anacceptablelevel.

6.Whatdoyoubelieveshouldbedonetorespondappropriatelytoconcernsabouttheleveloffeeschargedbyauditfirms?WhatshouldbeIESBA’srole?Whoelseshouldplaya role and whatshould that rolebe?

Non-AuditServices

7.Inyourjurisdiction,aretherespecificregulatoryprovisionsthatapplytotheleveloffeeschargedfor(a)auditandassuranceengagements;and(b)non-auditservicesprovided to audit andassuranceclients?

8.Inyouropinion,wouldahighratioofnon-auditfeestoauditfeeschargedtoanauditorassuranceclientcreatethreatstoanauditor’scompliancewith(Pleaseselectoneormoreanswers):

XProfessional competenceand duecare asdefined bytheIESBACode?

XTheotherfundamentalprinciplesthatareincludedintheIESBACode–integrity,objectivity,professionalbehaviorandconfidentiality?

XIndependenceasdefined bytheIESBACode?

Noneoftheabove.

9.Inyouropinion,wouldaprofessionalaccountant’sorthefirm’scompliancewithoneofthefollowingbeimpactedifahighpercentageofthatfirm’srevenueisgeneratedfromprovidingnon-auditservices tothefirm’sclients(Pleaseselectoneormoreanswers):

XProfessional competence and duecare asdefined bytheIESBACode?

X TheotherfundamentalprinciplesthatareincludedintheIESBACode–integrity,objectivity,professionalbehaviorandconfidentiality?

Noneoftheabove.