LATEST UPDATE
Revised Illustrative Reports and Applicability of the EAR Rule
The Independent Regulatory Board for Auditors’ (IRBA) Committee for Auditing Standards (CFAS) has approved the issuing of the revised illustrative reports for use by registered auditors when reporting on regulatory returns for banks, mutual banks, insurers and medical schemes, available on:
The narrow-scope amendments to ISA 700 (Revised) operationalise the changes to the IESBA Code related to PIEs. These changes, adopted into the IRBA Code, require firms to publicly disclose when the independence requirements for PIEs have been applied in an audit of financial statements.
In terms of the recently published South African Auditing Practice Statement 3 (Revised September 2025), Illustrative Reports, including Appendix III, available on: https://www.irba.co.za/upload/SAAPS%203%20(Revised%20September%202025).pdf, audit reports on regulatory returns of PIEs require the inclusion of the independence statements, where such returns meet the definition of financial statements, in terms of the IRBA Code. CFAS concluded that:
- Parts 4 to 10 of the Medical Scheme Annual Statutory Returns meet the definition of financial statements and require the inclusion of the independence statement in the audit report.
- For Part A Regulatory Returns/QRTs for Banks, Mutual Banks and Insurers, no position was taken on whether these returns constitute financial statements. However, the independence statement is included in the illustrative audit reports to align with existing audit practices, as the auditors of these returns already apply the relevant independence requirements.
The communiqué, IRBA Prescribes the Rule on Enhanced Auditor Reporting for the Audit of Financial Statements of Public Interest Entities, available on: https://www.irba.co.za/upload/report_files/61.-Communique---EAR-1.pdf, outlines the publication of the EAR Rule, which applies to audits of annual financial statements of PIEs. Where disclosures required by the EAR Rule have been appropriately included in the audit report on the annual financial statements, it is not necessary to repeat the disclosures in the audit report on regulatory annual returns of the same entity, if those returns are considered financial statements under the IRBA Code.
For queries, email standards@irba.co.za
