CMS Imposes Mandatory Audit Firm Rotation for Public Interest Medical Schemes

Brought to you by SA Accounting Academy: The Council for Medical Schemes (CMS) has published mandatory auditor rotation rules under section 36(2) of the Medical Schemes Act, No. 131 of 1998, introducing a 10-year audit firm tenure limit for large schemes.

In terms of section 36(2) of the Medical Schemes Act, No. 131 of 1998, the appointment of an auditor does not take effect unless approved by the Registrar of Medical Schemes, subject to conditions imposed by the Registrar. Exercising this statutory authority, the CMS has established rotation directives for statutory assurance engagements for financial years ending on or after 31 December 2028.

The directives differentiate between Public Interest Entity (PIE) medical schemes and non-PIE schemes:

• PIE medical schemes: Defined in accordance with paragraph R400.23 SA (l) of the Independent Regulatory Board for Auditors (IRBA) Code of Professional Conduct for Registered Auditors (Revised) as schemes with more than 89 000 beneficiaries at financial year-end. PIE schemes must ensure that an audit firm, including any network firm, does not serve as the appointed auditor for more than 10 consecutive financial years. Following the 10-year term, an audit firm may only be reappointed after a cooling-off period of at least five financial years.
• Non-PIE medical schemes: Schemes with 89 000 or fewer beneficiaries remain exempt from mandatory audit firm rotation, but remain subject to existing audit partner rotation requirements.

The Registrar confirmed that these appointment conditions will be incorporated directly into the CMS Audit Quality Indicators (AQIs) framework used to assess scheme governance and audit quality oversight.

Click here to download CMS Circular 27 of 2026 on Mandatory Auditor Rotation.

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

• For yourself: Audit engagement partners and registered auditors handling medical scheme audits must monitor tenure clocks across their firm networks to avoid regulatory invalidation under section 36(2) when planning appointments for 2028 and beyond.
• For your business: Audit firms must evaluate their medical scheme client portfolios against the 89 000 beneficiary threshold, align succession and independence rotation schedules with the 10-year tenure ceiling, and budget for the 5-year cooling-off period.
• For your clients: Audit committees of medical schemes with over 89 000 beneficiaries must review audit tenure histories, initiate procurement and rotation plans well before the 31 December 2028 deadline, and factor the 10-year firm limit into regulatory approval filings submitted to the Registrar.

Originally published at https://accountingacademy.co.za/news/read/cms-mandatory-auditor-rotation