IoDSA Guidance: Audit Committee Oversight of Risk [abb465]

Posted 24 June 2025 Written by Acts Online
Category Financial and Accounting

Brought to you by SA Accounting Academy: The Institute of Directors South Africa (IoDSA) has issued updated guidance regarding the specific oversight responsibilities of the Audit Committee in relation to risk management.

In terms of Section 94(7) of the Companies Act, No. 71 of 2008, the Audit Committee is mandated to oversee the internal financial controls of a company. This statutory requirement is further elaborated by the King IV Report on Corporate Governance, which distinguishes between the general risk governance duties of the Board and the specialized oversight duties of the Audit Committee.

The IoDSA guidance clarifies that the Audit Committee’s primary risk focus should remain on the integrity of financial reporting and the effectiveness of the internal control environment. Key focus areas include:

  • The assessment of financial reporting risks and the adequacy of responses to those risks;
  • Oversight of fraud and IT risks as they pertain to financial reporting;
  • Reviewing the effectiveness of the internal audit function in providing risk-based assurance; and
  • Ensuring the independence and objectivity of the external audit process.

Under Principle 11 of King IV, the governing body may delegate the oversight of risk to a dedicated Risk Committee. However, the Audit Committee retains responsibility for risks that may affect the integrity of the financial statements. The guidance recommends that where separate committees exist, they should hold joint meetings or have overlapping memberships to ensure a cohesive approach to risk oversight.

What this means for you, your business, or your clients

  • For yourself: No direct individual obligations; impact is channelled through your professional role in advising boards or serving on committees.
  • For your business: Review and update the Audit Committee charter to ensure it explicitly defines the committee’s role in risk oversight relative to the Board and the Risk Committee.
  • For your clients: Advise clients to align their internal audit plans with the corporate risk register to ensure the Audit Committee receives sufficient assurance on high-priority financial risks.

Originally published at https://accountingacademy.co.za/news/read/iod-the-role-of-the-audit-committee-in-respect-of-risk

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