Proposed Revised IRBA Code with SA enhancements to the Ethics and Independence Standards for Sustainability Assurance

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Proposed Revised IRBA Code with SA enhancements to the Ethics and Independence Standards for Sustainability Assurance

• 12 June 2025
• Auditing and Assurance
• South African Accounting Academy

Summary:

The Independent Regulatory Board for Auditors’ (IRBA) Committee for Auditor Ethics (CFAE) has approved and issued the Proposed Revised IRBA Code of Professional Conduct for Registered Auditors, Incorporating Ethics Standards for Sustainability Assurance, including Independence Standards and the Standard on Using the Work of an External Expert, with the Necessary South African Enhancements (Exposure Draft) for public comment by 8 August 2025.

Article:

These amendments provide a clear framework of expected behaviours and ethics provisions for use by all sustainability assurance practitioners, regardless of their professional backgrounds, as well as professional accountants involved in sustainability reporting. Also, the IESSA have been designed to be equivalent to the independence and ethical behaviour standards found in Part 4A of the IESBA Code. This means the IESSA mirror the same high standards that apply to financial statement audits. The goal of these standards is to mitigate greenwashing and misleading reporting, and to elevate the quality of sustainability information, thereby fostering greater public and institutional trust in sustainability reporting and assurance.

This Exposure Draft forms part of the IRBA’s due process to adopt and prescribe, for use by registered auditors in South Africa, the International Ethics Standards Board of Accountants’ (IESBA) International Ethics Standards for Sustainability Assurance (including International Independence Standards) and other related revisions to the Code of Ethics for Professional Accountants (including International Independence Standards) (IESSA) and the Using the Work of an External Expert Standard (which includes the proposed new sections 390 and 5390 establish an ethical framework to guide professional accountants or sustainability assurance practitioners, as applicable, in evaluating whether an external expert has the necessary competence, capabilities and objectivity for their work to be used for the intended purposes). The proposals also include provisions to aid in applying the IESBA Code’s conceptual framework when using the work of an external expert.

This Exposure Draft proposes South African enhancements to the IESBA’s IESSA only.

The proposed South African Enhancements are aimed at improving clarity, implementability and the consistent application of these ethics and independence standards, similar to those for financial statement audits.

Scope of the Independence Standards in Part 5

Paragraph 5400.3(b) of the Exposure Draft prescribes that the independence standards in Part 5 apply only to sustainability assurance engagements where the sustainability information:

• Is reported in accordance with a general-purpose framework; and
• Is either:
  • Required by law or regulation; or
  • Publicly disclosed to support decision-making by investors or other users.

The proposed local enhancement confirms that a combination of general-purpose frameworks satisfies the objective of meeting the common information needs of a wide range of users through the inclusion of a South African application paragraph, 5400.3b A1 SA, to clarify that if any part of the framework is general-purpose, the scoping criterion is met.

Implementation of Independence Provisions in Sections 5405 and 5406:

• Sections 5405 and 5406 introduce independence provisions specific to Group Sustainability Assurance Engagements and engagements involving another practitioner.
• This proposed South African enhancement found value in referring to the diagrammatic illustrations in the IESSA Basis for Conclusions.
• The proposal includes these Appendices into the IRBA Code, suggesting they be added to the Appendix to the Independence Standards for Sustainability Assurance Engagements.

Fee Disclosure Requirements When Performing Both Audit and Sustainability Assurance Engagements:

• two new South African-specific requirements in paragraphs R410.31a SA and R5410.31a SA

Other Enhancements:

• introduces consequential amendments to extant localisations in Section 321, Second Opinions, and Section 400, Applying the Conceptual Framework to Independence for Audit and Review Engagements

Effective Date:

Except for sections 5405 and 5406, these revisions to the IRBA Code will impact sustainability assurance engagements on sustainability information for periods beginning on or after 15 December 2026, or as at a specific date on or after 15 December 2026, and sustainability reporting-related engagements as of 15 December 2026.

The provisions in sections 5405 and 5406 applicable when assurance work is performed at a value chain component will be effective for sustainability assurance engagements on sustainability information for periods beginning on or after 1 July 2028, or as at a specific date on or after 1 July 2028

Click here to download the full 432-page document:

https://www.irba.co.za/upload/Exposure%20Draft_Revised%20IRBA%20Code%20with%20IESSA%20and%20Experts%20SA%20Enhancements.pdf

Relevance to Auditors, Independent Reviewers & Accountants:

• Adherence with our Code of Conduct is crucial in the performance of our duties.
• Auditors, Independent Reviewers and Accountants should be aware of the latest pronouncements and revisions, publications and guidance issued by regulators and standard-setting boards, such as the IRBA and IESBA – especially as it relates to IESSA and Sustainability Assurance.
• A contravention of, or failure to comply with, any requirements in the IRBA Code may be regarded as improper conduct. This may lead to an investigation and, if appropriate, the registered auditor might be charged in terms of Section 48 of the APA.

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