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IRBA Adopts ISA 240 (Revised 2025) Auditors Responsibilities re Fraud
- 23 January 2026
- Audit
- South African Accounting Academy
Summary:
The Independent Regulatory Board for Auditors’ (IRBA) has adopted ISA 240 (Revised 2025) regarding the auditors’ responsibilities relating to fraud in an audit of financial statements, for adoption, issue and prescription for use by auditors in South Africa.
Article:
This follows the International Auditing and Assurance Standards Board’s (IAASB) release of ISA 240 (Revised) in July 2025 to strengthen auditors’ responsibilities regarding fraud. Refer to our previous Alert dated 14 July 2025
The revision clarifies roles, reinforces professional scepticism, and introduces key changes such as fraud-focused risk assessment, stronger governance communication, robust procedures for suspected fraud, enhanced transparency on Key Audit Matters, and stricter documentation requirements. It also addresses technology’s impact and scalability for smaller entities.
Key Enhancements in ISA 240 (Revised) in the standard incorporates the following elements:
- Clearer Auditor Responsibilities – Strengthens and clarifies what auditors are expected to do when addressing risks relating to fraud.
- Reinforced Professional Skepticism – Introduces new requirements to elevate the consistency and effective practice of professional skepticism across all stages of the audit.
- Sharper Fraud Risk Assessment – Requires a focused “fraud lens” when identifying and addressing risks, with stronger links to related standards.
- More Effective Fraud Responses – Establishes a new section with clearer, enhanced requirements to guide how auditors respond to identified or suspected fraud.
- Improved Transparency and Communication – Emphasizes timely communication with management and those charged with governance, with clearer disclosures in the auditor’s report.
The revisions also align with ISA 570 (Revised 2024), Going Concern, recognizing that fraud and financial distress are often interrelated risks that must be addressed together to bolster corporate transparency and resilience. Refer to our previous Alert dated 23 April 2025
The standard is effective for audits beginning on or after 15 December 2026, with early adoption permitted.
Access the Revised ISA 240 at https://ifacweb.blob.core.windows.net/publicfiles/2025-07/IAASB-ISA-240-Revised-Fraud.pdf
Click here to download the 6-page IRBA Communiqué:
https://www.irba.co.za/upload/report_files/60.-Communique_ISA240_Revised.pdf
Relevance to Auditors, Independent Reviewers & Accountants:
- As an auditor and independent reviewer, you need to comply with International Standards on Auditing and other Assurance Services, and thus you need knowledge of newly revised standards that are approved as well as when they become effective.
- Failure to adhere to ISAs may be interpreted as negligence and you could be held liable.
- Auditors, Independent Reviewers and Accountants should be aware of the latest standards that have been approved by standard-setting boards like the IAASB, when these are published, and when these standards are adopted by IRBA and become effective in South Africa.