IoDSA Guidance: Audit Committee Oversight of Risk

Posted 24 June 2025 Written by Acts Online
Category Regulatory Compliance and Legislation

Brought to you by SA Accounting Academy: The Audit Committee Forum (ACF) has issued guidance to clarify the oversight responsibilities of audit committees regarding risk management, particularly concerning sustainability and external environmental factors.

In terms of the governance principles set out in the King IV Report on Corporate Governance and the statutory requirements of the Companies Act, No. 71 of 2008, the Audit Committee’s role extends beyond financial reporting to the oversight of the risk management process. The IoDSA notes that risk governance is frequently limited to internal operational activities, often neglecting broader sustainability issues and external factors at industry, regional, national, and global levels.

The guidance, which builds upon the original Position Paper 6 issued in December 2009, seeks to ensure that boards and management are equipped to address risk in all forms. This includes ensuring that the risk management process is effective and that the information provided to the board is reliable for decision-making purposes.

Key Focus Areas for Risk Oversight

  • Sustainability Integration: Moving risk oversight beyond financial metrics to include environmental, social, and governance (ESG) factors.
  • External Risk Factors: Monitoring regional and global trends that may impact the entity’s viability.
  • Process Oversight: Evaluating the design and implementation of risk management frameworks rather than just reviewing risk registers.
  • Board Support: Ensuring the board receives a comprehensive view of the risk landscape to fulfill their fiduciary duties under Section 76 of the Companies Act, No. 71 of 2008.

Click here to download the ACF Position Paper 6: The role of the Audit Committee in respect of risk.

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

  • For yourself: You must ensure your professional knowledge of King IV is current, specifically regarding the intersection of risk and the Audit Committee’s statutory duties under Section 94 of the Companies Act, No. 71 of 2008.
  • For your business: Your firm must update its internal risk assessment methodologies to include external and sustainability-related factors to align with the IoDSA’s recommended practices.
  • For your clients: You should advise clients to review and potentially amend their Audit Committee terms of reference to explicitly include the oversight of non-financial and external risks.

Originally published at https://accountingacademy.co.za/news/read/iod-the-role-of-the-audit-committee-in-respect-of-risk-4

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