ASL se 19de Verjaarsdagviering
September 1, 2017
Ouditeure, rekenmeesters en hulle verhoogde verantwoordelikhede in terme van Nienakoming van Wette en Regulasies (“NOCLAR”)
September 1, 2017

Auditors, accountants and their enhanced responsibilities in terms of Non-Compliance with Laws and Regulations (NOCLAR)

The international ethics standard, Responding to Non-Compliance with Laws and Regulations (“NOCLAR”), came into effect on 15 July 2017.  This standard, which was the result of a consultation process stretching over 6 years, aims to set out a framework to guide professional accountants in what actions to take in the public interest when they become aware of potential illegal acts (i.e. non-compliance with laws and regulations).  Furthermore, it places renewed emphasis on the role of accountants in creating a culture of sound corporate governance.

As auditors, we are fully aware of our comprehensive reporting duties regarding identified Reportable Irregularities as part of client engagements. However, there has been very little guidance or regulation in terms of the responsibilities of accountants where they become aware of non-compliance.

The code refers to “professional accountants” which would practically include CA(SA)’s, ACCA’s, AGA’s and members of the South African Institute of Professional Accountants (SAIPA).

The standard differentiate between three categories of professional accountants:

  • Auditors;
  • Other professional accountants in public practice;
  • Professional accountants in business that are in senior positions;
  • Other professional accountants in business.

It is thus of vital importance to note that this amended code applies not only to auditors but to ALL professional accountants either in or outside of public practice.

The ultimate responsibility for compliance with laws and regulations still lies with management

and those charged with governance. That principal hasn’t changed. According to the standard, professional accountants now also have a responsibility to the public interest and the code requires such an accountant to determine what further action is required. This means that the accountant should assess the adequacy of the response of management after reporting the suspected non-compliance[1] to them and determine if further action is required. This may include:

  • Disclosing the matter to an appropriate authority;
  • Resigning or otherwise withdrawing from the relationship;
  • Informing a successor accountant accordingly.

It is important to note that all Reportable Irregularities are NOCLAR’s but not all NOCLAR’s are Reportable Irregularities.

With the new proactive role of NOCLAR and an earlier response by management, one needs to remain hopeful that we will see a decrease in non-compliance through this initiative.

Kindly contact Christa Swart via email ( should you require additional information regarding the above. 

[1] The expectation to identify NOCLAR will be limited to relevant laws and regulations i.e. those that directly relates to the professional accountant’s fields of training and expertise and have a direct effect on the financial statements and/or might lead to significant penalties.

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