IODSA Guidelines: Audit Committee Fraud Risk Assessment

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

Brought to you by SA Accounting Academy: The Institute of Directors in South Africa (IoDSA) has issued updated guidance for Audit Committees to enhance their oversight of fraud risk management and assessment protocols.

In accordance with the governance principles set out in the King IV Report on Corporate Governance for South Africa, 2016, the Audit Committee Forum (ACF) has refined its position paper titled “Guidelines for the Audit Committee’s assessment and response to the risk of fraud.” This document updates the original framework established in March 2005 to address contemporary risk environments.

The guidelines focus on the three primary conditions found to increase the likelihood of fraud, often referred to as the “fraud triangle”:

  • Incentives and/or pressure: Financial or emotional factors that motivate an individual to commit fraud.
  • Opportunities: Weaknesses in internal controls or oversight that allow fraud to be committed and concealed.
  • Attitudes: Behavioral traits such as a lack of integrity, transparency, or arrogance that justify or rationalize fraudulent actions.

The position paper emphasizes that these conditions may be triggered by various internal and external factors. Audit Committees are directed to utilize the specific examples of fraud risk factors provided in Appendix A of the document to evaluate the effectiveness of existing controls and the potential for management override.

Click here to download the ACF Position Paper 10: Guidelines for the Audit Committee’s assessment and response to the risk of fraud.

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

  • For yourself: Professionals serving as independent directors or committee members must apply these guidelines to fulfill their fiduciary duties and oversight responsibilities under the Companies Act, No. 71 of 2008.
  • For your business: Audit and accounting firms should update their internal review checklists and risk assessment templates to incorporate the specific fraud risk factors and behavioral indicators highlighted in the IoDSA/ACF guidelines.
  • For your clients: Advise client Audit Committees to formally review their existing fraud risk assessment protocols against the factors listed in Appendix A of the position paper to ensure compliance with King IV governance standards.

Originally published at https://accountingacademy.co.za/news/read/iod-guidelines-for-the-audit-committee-s-assessment-and-response-to-the-risk-of-fraud

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