IoDSA Guidelines: Audit Committee Obligations for Reportable Irregularities

Posted 10 June 2025 Written by Acts Online
Category Regulatory Compliance and Legislation

Brought to you by SA Accounting Academy: The Institute of Directors South Africa (IoDSA) has issued a position paper providing guidance to audit committees on their responsibilities and the procedural requirements following the identification of a reportable irregularity.

In terms of Section 45 of the Auditing Profession Act, No. 26 of 2005 (APA), a registered auditor who is satisfied or has reason to believe that a reportable irregularity has taken place or is taking place must, without delay, send a written report to the Independent Regulatory Board for Auditors (IRBA). The IoDSA guidance clarifies that there is no statutory requirement for the auditor to discuss the reportable irregularity with the audit committee prior to submitting this initial report to the IRBA.

The guidance emphasizes the distinct roles of the various parties involved in the reporting process:

  • Registered Auditor: Holds the primary responsibility for identifying and reporting the irregularity to the IRBA.
  • Board of Directors: Maintains ultimate responsibility for making representations to the auditor and implementing corrective actions.
  • Audit Committee: Responsible for assisting the board in understanding the reporting process and ensuring appropriate responses are formulated.

Failure to resolve a reportable irregularity within the 30-day period prescribed by Section 45(3) of the Auditing Profession Act, No. 26 of 2005 results in the auditor being required to report the matter to “any appropriate regulator”. Furthermore, the existence of an unresolved reportable irregularity will lead to a modification of the audit report.

Click here to download the IoDSA Position Paper on Reportable Irregularities.

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

  • For yourself: Ensure you understand the strict 30-day timeline in Section 45(3) of the APA to advise boards on the extreme urgency of corrective measures once an auditor issues a notification.
  • For your business: Review internal control frameworks and reporting lines to ensure that potential reportable irregularities are identified and escalated to the audit committee before they reach the level of a formal Section 45 report.
  • For your clients: Advise clients that auditors are legally mandated to report to the IRBA first, and that the board must act immediately upon notification to avoid a modified audit report or referral to other regulators.

Originally published at https://accountingacademy.co.za/news/read/iod-guidelines-to-audit-committees-on-reportable-irregularities

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