Independent Regulatory Board for Auditors and Others v East Rand Member District of Chartered Accountants and Others

The Independent Regulatory Board for Auditors (IRBA), established under the Auditing Profession Act 26 of 2005, prescribed various fees for the 2020 and 2021 financial years. These included: (a) a percentage fee model for Category C (low risk) assurance work; (b) tax practitioner fees; (c) penalty fees for late submission of documents; and (d) above-inflation increases in annual renewal and administration fees. The Board also withdrew a 50% fee concession previously granted to registered auditors over 65 years old, without giving them an opportunity to make representations. The East Rand Member District of Chartered Accountants, a voluntary association of auditors, challenged these decisions on grounds including ultra vires, procedural unfairness, and irrationality. Two applications were launched in 2019 and 2020 respectively. The High Court reviewed and set aside the impugned fees, finding various procedural and substantive defects. The Board appealed.

• Whether the Board's decisions constituted executive or administrative action
• Whether the review applications were time-barred under s 7(1) of PAJA
• Whether the Board had power under the Act to prescribe Category C assurance fees based on a percentage of audit fees
• Whether the Board had power to prescribe tax practitioner fees
• Whether the Board was required to consult with auditors before prescribing fees
• Whether the Board's failure to gazette fees in the 2021 financial year resulted in cessation of the obligation to pay them
• Whether the Board acted procedurally unfairly in removing the fee concession without allowing representations
• What remedy was appropriate in the circumstances

The appeal succeeded partially. Paragraphs 117 (save 117.3), 118, 119 and 120 of the High Court order were set aside and replaced. The decisions to prescribe Category C assurance fees, tax practitioner fees, above-inflation increases in annual fees, and to remove the fee concession were remitted to the Board to decide afresh by 31 March 2025, after affording procedurally fair administrative action as contemplated in PAJA. The Board was directed to repay or credit members for Category C assurance fees for 2020-2021, calculated on the difference between fees charged and amounts recoverable based on actual inspection costs under s 47(2). The appeal was otherwise dismissed with costs including two counsel.

The binding legal principles are: (1) Decisions by regulatory bodies established by statute, exercising powers conferred by legislation, constitute administrative action subject to PAJA review where they affect rights and have direct external legal effect. (2) For administrative decisions required to be published in the Government Gazette, the 180-day limitation period under s 7(1) of PAJA begins from the date of publication, not from earlier internal decisions or communications. (3) Section 8(2)(b) of the Auditing Profession Act, read with s 47(2), only authorizes the Board to prescribe fees for actual inspections or reviews undertaken and to recover the costs thereof from the specific registered auditor inspected. It does not permit a general percentage-based levy on assurance work unconnected to actual inspection costs. (4) Section 8(2)(c) authorizes the Board to prescribe fees for services rendered, including services as a recognized controlling body for tax practitioners. (5) While the Auditing Profession Act does not mandate consultation before prescribing fees (applying expressio unius principles from s 10), the Board must comply with procedural fairness requirements under PAJA ss 3 and 4 when its decisions materially and adversely affect rights. (6) Annual fees prescribed under the Act relate only to the year specified and must be republished annually in the Gazette. (7) In administrative law reviews involving policy decisions requiring technical expertise, remittal is ordinarily the appropriate remedy rather than substitution by the court.

The Court made several non-binding observations: (1) That there is no universal test to distinguish executive from administrative action, and courts must consider factors including source of power, level of discretion, and appropriateness of administrative law scrutiny on a case-by-case basis. (2) That consultation, when required, must be meaningful: undertaken when proposals are formative, with sufficient reasons given, adequate time allowed, and conscientious consideration of responses. (3) That the word "may" in s 47(2) should be interpreted as "must" in context, otherwise the provision would be rendered meaningless. (4) That legitimate expectations are procedural, not substantive, and do not give rise to substantive benefits. (5) The Court noted the financial pressures facing IRBA, including Treasury budget cuts and increased regulatory responsibilities, though these could not justify unlawful fee prescriptions. (6) The Court commented that it would be "absurd" to expect IRBA to provide services as a recognized controlling body for tax practitioners free of charge when other bodies like SAICA charged fees for equivalent services. (7) The Court noted that sections 3 and 4 of PAJA are not mutually exclusive in their application.

This case significantly clarifies the scope of IRBA's fee-prescribing powers under the Auditing Profession Act. It establishes that: (1) The Board's regulatory functions constitute administrative action subject to PAJA review, not executive action immune from such scrutiny. (2) The Board cannot use percentage-based assurance fees as a general revenue-raising mechanism disconnected from actual inspection costs; s 8(2)(b) only permits cost recovery for actual inspections conducted. (3) While the Act does not mandate prior consultation before prescribing fees, the Board must comply with procedural fairness requirements under PAJA, particularly ss 3 and 4, when decisions materially and adversely affect auditors' rights. (4) The case reinforces that remittal is ordinarily the appropriate remedy in administrative law rather than substitution, especially where policy issues and technical expertise are involved. (5) It clarifies when the limitation period for PAJA reviews begins for decisions that must be published in the Gazette. The judgment has important implications for all regulatory bodies that prescribe fees, establishing clear limits on their revenue-raising powers and procedural obligations.