IRBA: Final SAAPS 7 - Transparency Reports

IRBA: Final SAAPS 7 - Transparency Reports

• 04 December 2024
• Auditing and Assurance
• South African Accounting Academy

Summary:

The Independent Regulatory Board for Auditors’ (IRBA) Committee for Auditing Standards (CFAS) has approved the South African Auditing Practice Statement (SAAPS) 7, Transparency Reports of Firms that Audit Financial Statements of Publicly Traded Entities Audit Engagements (SAAPS 7) for publication.

Article:

The aim of SAAPS 7 is to assist firms that audit financial statements of publicly traded entities to achieve compliance with paragraphs 33(d)(ii) and A114 of the International Standard on Quality Management (ISQM) 1, Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements, and to conform with the regulatory requirement applicable to firms in South Africa, relating to the content and format of a firm’s transparency report.

ISQM 1 and IRBA Rule 2 require firms to communicate information about their quality management systems. This can be achieved through a transparency report that addresses the eight components of a system of quality management (SoQM), which are risk assessment; governance; ethics; client acceptance; engagement performance; resources; information and communication; as well as monitoring and remediation.

SAAPS 7 will guide a firm that is considering the eight components of its SoQM, in its preparation of a transparency report. This approach was followed because it is principles-based. Therefore, related aspects in ISQM 1 have been incorporated into this SAAPS, with references where appropriate.

To address relevance and usefulness, firms should consider the level of detail and the materiality of disclosures under SAAPS 7. Furthermore, transparency reports should be published annually and are to be accessible to external parties.

SAAPS 7 is effective for transparency reports prepared and published on or after 15 December 2025, with early adoption permitted. This aligns with the effective date of the IRBA’s Quality Management (QM) Rule 2 on Transparency Reports.

Proposed SAAPS 7 was issued in March 2024.

Click here to download the 11-page SAAPS document:

https://www.irba.co.za/upload/SAAPS%207%202024.pdf

Relevance to Auditors, Independent Reviewers & Accountants:

• Members of IRBA should stay up-to-date with the latest developments and pronouncements that affect registered auditors.
• Transparency reports will apply to all firms with Publicly Traded Entities clients.
• Practitioners must be aware of the content of any guidance issued by IRBA in this regard.
• All Registered Auditors, Independent Reviewers and other Independent Assurance Practitioners must comply with the IRBA Pronouncements (including SAAPSs) that affect their relevant engagements.
• As an Auditor, you need to comply with the relevant reporting requirements, and must therefore refer to the latest requirements in respect of Transparency reports published in the pronouncements for your relevant client engagements.

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