Professional Service Industries: Facilitating Malfeasance For A Fee II - Constraints On Professional Conduct

This brief series looks at four professional services industries - law, auditing, accounting, and management consulting - and the role that they play in facilitating corruption and malfeasance.

This brief is the second of four considering the role of lawyers, auditors, accountants, and management consultants in facilitating corruption. It explores constraints, or lack of them, on professional behaviour. Some of the institutional mechanisms currently in place to ensure that professionals conduct themselves appropriately will be discussed. The first brief considered what it means to be a “professional” in a formal sense, while the third brief discusses instances of malfeasance by members of these professions. The fourth brief considers what can be done to curb further misconduct by professionals.

Calling professionals to account

The previous brief considered whether management consultants fall within the definition of “professional” as formally understood. It concluded that they do not, partly because there is no body that exercises oversight over management consultants and can call them to account for unethical conduct.

The situation is somewhat different in the case of other professions, such as law, auditing, and accounting. If a member of the public suspects wrongdoing by one of these professionals, what can be done? Here, we discuss the regulatory regimes that apply to these three professions – the laws, codes of conduct, and other ethical guidelines that bind them, as well who is responsible for enforcing those rules.


Lawyers play an invaluable role in mitigating liability for their clients – but that role is not boundless. It is circumscribed by the law, including the Legal Practice Act[i] and the regulations issued in terms of that Act. Further, attorneys and advocates are subject to rules and codes of conduct promulgated by the regulatory body that governs them, which, from 1 November 2018, is the Legal Practice Council (Council).[ii]

The Council has jurisdiction over attorneys, advocates who take referral instructions, advocates who take instructions from the public, and candidate legal practitioners. There is also an extra layer of protection for the public in the form of the Legal Services Ombud, to whom the public can turn if they are dissatisfied with a decision of the Council.

The Council published the new code of conduct applicable to legal practitioners on 29 March 2019.[iii] It applies to attorneys, advocates, candidate legal practitioners, and legal practitioners not actively in practice. The public can lodge complaints against legal practitioners by contacting the relevant provincial office of the Council.[iv] Complaints are referred to the investigating committee who conducts an investigation to determine whether or not a prima facie case of misconduct exists. If so, it can refer the complaint to the Council (or a committee of the Council) for the purpose of adjudication by disciplinary committee. This process allows the legal practitioner to respond to the complaint made against him or her, and can involve calling witnesses.

Given its fairly recent assumption of the role of regulator, it remains to be seen how the Council will fare in maintaining discipline in the profession after taking over the reins of responsibility from the respective Law Societies and Bar Councils.


The auditing profession in South Africa is regulated by statute, namely, the Auditing Professions Act.[v] This Act seeks to protect the public by regulating audits performed by registered auditors. It also establishes the Independent Regulatory Board for Auditors (IRBA) which is tasked with overseeing the conduct of members of the profession. This is done by its ability to confer accreditation on registered auditors and “professional bodies” (i.e. auditing firms) – and to terminate such accreditation. It is also empowered to investigate charges of improper conduct against registered auditors and to initiate disciplinary proceedings against them. IRBA prescribes “standards of professional competence, ethics and conduct of registered auditors”. Auditors seeking guidance as to how they should conduct themselves can refer to the Act, the “New Disciplinary Rules”[vi], and the Rules Regarding Improper Conduct.[vii]

In its most-recently published annual report (2018)[viii], the CEO of IRBA, Mr Bernard Agulhas, identified the restoration of the auditing profession’s reputation as a focus area for the regulator. In line with this, IRBA undertook to roll out several initiatives to restore the public’s confidence in auditors over a period of two years. While this is a reactive measure, it is encouraging to see a concerted effort being applied to the issue. One hopes that the next report will provide detail on whether the measures are proving successful or not.


The accounting profession is complex and can be accessed through a range of qualifications, each relating to a different type of accounting. Probably the most well-known accounting professional is the chartered accountant, bearer of the designation CA(SA).[ix] The path to becoming a chartered accountant will usually involve obtaining an undergraduate degree approved by the South African Institute of Chartered Accountants (SAICA) and the post-graduate Certificate in Theory of Accounting, or obtaining a four year Bachelor of Accounting degree, the completion of a learnership programme, and passing two qualifying examinations administered by SAICA. The final step is to register with SAICA and be subject to its code of conduct.

Professional accountants, on the other hand, are required to have a Bachelor of Commerce degree, complete a period of training, and successfully complete the Professional Evaluation examination which is administered by the South African Institute of Professional Accountants (SAIPA). SAIPA also registers Accounting Technicians (SA), who perform support functions to the Professional Accountant. The entry level requirements for accounting technicians are lower, but this designation can be used as a path to qualification as a professional accountant.

These are just two examples of ways to enter the accounting profession. Despite the many types of accountant and myriad qualifications that can be obtained, SAIPA recently pointed out a concerning fact: there is no magic in the term “accountant” on its own.[x] That means that anyone, regardless of qualification, can undertake the work of keeping financial records, as long as they do not style themselves using defined titles such as “chartered accountant” or “professional accountant”, and as long as they do not deal in matters of taxation (which is discussed further below). Such persons would not have to be registered with any professional association. SAIPA has highlighted the need for a statute that compels all accountants to register with a professional association. This is clearly a necessity, particularly as it is vulnerable consumers who are more likely to interact with unregulated accountants and, as a result, be at risk of detriment to their financial affairs.

SAIPA recently joined five other regulatory bodies in signing a memorandum of understanding to “pool their resources and institutional knowledge to foster a culture of accountability and restore credibility to the country’s private and public sector”.[xi] This move was made in response to various complaints levelled against professionals in the context of corruption and state capture. This is a promising development, particularly as professionals may hold memberships to a number of professional associations, which increases the need for coordination.

It is clear, then, that there is no overarching statute regulating the accounting profession. However, one law that can offer protection to consumers is the Tax Administration Act[xii], which recognises a number of accounting professional associations. This Act provides for “controlling bodies”, defined as “a body established, whether voluntarily or under a law, with power to take disciplinary action against a person who, in carrying on a profession, contravenes the applicable rules or code of conduct for the profession”. A “recognised controlling body” is one that is recognised by SARS. Section 240 provides that any natural person who provides tax advice or assists other persons with completing tax returns must be subject to the jurisdiction of a recognised controlling body and register as a tax practitioner.

Currently, the following controlling bodies are recognised by SARS[xiii]:

  • Chartered Institute of Management Accountants (CIMA)
  • Chartered Secretaries Southern Africa (CSSA)
  • Financial Planning Institute (FPI)
  • Institute of Accounting and Commerce (IAC)
  • SA Institute of Tax Practitioners (SAIT)
  • The Association of Chartered Certified Accountants (ACCA)
  • Association of Accounting Technicians Southern Africa (AAT(SA))

Each of these bodies must have its own code of conduct and ethics that is enforceable against its members.

It is important to note, however, that recognition in terms of the Tax Administration Act applies in relation to tax matters only. If an accountant does not provide tax advice or assist with returns, membership to any of these organisations is not mandatory. This leads to the potential lacuna in regulation over certain self-styled “accountants”, as highlighted by SAIPA.

The Companies and Intellectual Properties Commission (CIPC)

While the bulk of enforcement rests with professional associations, there is another body with regulatory powers that is lately showing its teeth. In 2018, CIPC laid criminal complaints against KPMG, McKinsey and software company SAP, alleging contraventions of the Companies Act[xiv]. This was alleged to have occurred in the context of emails revealing how the Gupta family used their contacts within government to profit from state business.

This action by CIPC is certainly welcome, particularly as criminal sanctions are usually far more punitive than those that can be applied by other regulators, such as disbarment or prohibition from practice. A person who has found to have contravened section 214(1) of the Companies Act, for example, is liable to a fine or period of imprisonment not exceeding 10 years (or both).

While it is encouraging that CIPC is enforcing the Companies Act, it is fair to ask why the institution only began doing so in 2018, when these powers could have been invoked at any time in the decade or so when the project of “state capture” was being carried out. Others have criticised CIPC for being “selective and opportunistic” in making use of its enforcement powers.[xv] These concerns may well deserve further scrutiny, but for present purposes, it is good that there is another line of attack in place against corruption. Even if convictions are not eventually obtained, the real possibility of facing criminal proceedings might act as a deterrent against future malfeasance.

Watching the watchmen

Regulatory bodies and professional associations are vital in ensuring that professionals adhere to ethical standards. They are, in effect, custodians of the integrity of their respective professions. It is important that they are well-resourced and capacitated to handle complaints effectively. Moreover, a degree of transparency is needed so that the public at large, and not only professionals in the respective industries, are aware of what is being done to ensure that professionals conduct themselves ethically and in line with prescribed standards.

Cherese Thakur
Legal Researcher

[i] 28 of 2014.

[ii] The Law Society of South Africa still exists, but focuses now on developing the profession rather than providing oversight of attorneys’ activities. See

[iii] See Government Gazette 42337 issued on 19 March 2019.

[iv] The details are available online at

[v] 26 of 2005.

[vi] Board Notice 69 of 2007 issued in Government Gazette 30 004 on 29 June 2007.

[ix] The Chartered Accountant Designation Act 67 of 1993 restricts the usage of the designation “chartered accountant” to members of SAICA.

[x] See SAIPA press release: “Industry bodies combine powers to counter misconduct and foster accountability”, accessed at

[xi] See press release: “Professional bodies unite as corruption and state capture complaints against members escalate”, accessed at

[xii] 28 of 2011.

[xiv] 71 of 2008.

[xv] L Steyn “CIPC’s net should catch other big fish” Mail & Guardian accessed at