30 Mar 2026
Johannesburg – Monday, 30 March 2026 – The Independent Regulatory Board for Auditors (IRBA) has released its 2025 Public Inspections Report on Audit Quality, presenting the themes and outcomes of inspections conducted during the 2024/25 cycle and offering insight into audit quality, highlighting areas of progress, deficiency themes, and priorities for strengthening confidence in financial reporting and protecting the public interest.
The report underscores the critical role of high-quality audits in promoting transparency, accountability, and trust, particularly in an environment marked by economic uncertainty, rapid technological change, and increased stakeholder expectations. Inspections are deliberately targeted at higher risk audits, complex engagements, public interest entities, and recurring or emerging risk areas, rather than a representative sample of all audits performed in South Africa. As a result, the findings reflect audit quality in selected higher risk environments and are not intended to be extrapolated across the profession.
Says Imre Nagy, IRBA CEO: “High-quality audits are fundamental to trust in financial reporting, particularly during times of economic pressure and uncertainty. This report reinforces the need for continuous improvement and strong leadership commitment to audit quality across the profession.”
Nagy emphasised that understanding how inspections are selected is essential to interpreting the report responsibly. “Because our inspections are intentionally risk focused, the outcomes show where pressure points exist and where sustained attention is required. They do not describe the average audit. They are designed to direct attention to the areas where governance, judgement and oversight are most critical.”
The inspections cycle reflected in the report comprised firm wide inspections of systems of quality management, engagement level inspections of completed audits, and targeted theme-based inspections that assessed how specific risk areas are addressed across multiple engagements and firms. Together, these activities provide insight into both audit execution at engagement level and the effectiveness of firm wide systems of quality management intended to support consistently high levels of audit quality.
The findings indicate that audit quality challenges continue to concentrate in high risk, judgement intensive areas of the audit. These include complex financial reporting matters such as revenue recognition, significant accounting estimates and judgements, going concern assessments, journal entries, and the presentation and disclosure of financial information. In these areas, inspections frequently identified weaknesses in the sufficiency and appropriateness of audit evidence, the robustness of challenge applied to management assumptions, and the clarity with which key judgements were documented and supported.
Says Ntlambi Gulwa, IRBA Director: Inspections: “What we consistently observe in high-risk audits is that challenges arise where professional judgement and scepticism are most heavily relied upon. In many cases, judgements may have been made, but the audit documentation does not clearly demonstrate how alternatives were considered, how contradictory evidence was evaluated, or how conclusions were reached.”
Gulwa noted that professional scepticism remains a recurring underlying factor in inspection findings, particularly in complex and judgemental areas. “Professional scepticism is not a statement of intent. It must be demonstrated through the audit approach, the nature and extent of procedures performed, and the documentation that supports the auditor’s conclusions. In high-risk audits, this is fundamental to support the audit opinion.”
The report also highlights the increasing and growing use of advanced technologies, including data analytics and artificial intelligence, in audit engagements. The report further notes the role of information technology in audits and the risks that arise where reliance on systems, data and automated tools is not matched by appropriate governance, skills and oversight. Inspection findings in this area commonly related to auditors’ understanding of IT environments, the testing of system generated information, and the integration of IT considerations into audit planning and execution.
“While these tools offer opportunities to enhance audit quality and efficiency, IRBA cautions that they also introduce new risks, reinforcing the need for strong governance, adequate skills and continued reliance on professional judgement.” says Gulwa.
At a firm-wide level, inspections revealed ongoing challenges in the design, implementation and operation of systems of quality management under ISQM 1 and ISQM 2. Most firms have made meaningful progress in strengthening their systems of quality management, investing in training, enhancing leadership accountability for audit quality, and embedding more effective monitoring and remediation processes. These improvements demonstrate that sustained focus and leadership engagement can translate into better outcomes over time.
However, the report also identifies deficiencies in some firms’ systems of quality management and highlights concerns in the risk assessment processes, and design and implementation of responses to quality risks. In some cases, firms had not implemented effective systems of quality management, raising concerns about the audit quality at engagement level.
Recurring deficiencies on engagement-level were reported in critical audit areas, including revenue recognition, journal entries, financial statement presentation and disclosures, audits of significant accounting estimates, going concern assessments and reliance on information technology controls. Engagement level findings that indicated potential systemic issues were escalated to firm level, reinforcing the link between firm wide quality management and the quality of audits engagements performed.
Says Nagy: “Audit quality is a shared responsibility. Audit committees play a critical role in setting expectations, interrogating significant judgements and holding firms accountable, particularly in high-risk engagements. Both the public inspections report and the report on Audit Quality Indicators are intended to encourage positive engagement between audit committees and the auditors, as well as with other stakeholders.”
For audit committees, the report surfaces important considerations, including whether audit firms’ systems of quality management are operating effectively in complex audits, how professional judgement and scepticism are applied and evidenced, how independence risks are identified and managed, how reliance on technology is governed, and whether remediation efforts are addressing underlying causes rather than isolated symptoms.
In releasing the 2025 Public Inspections Report on Audit Quality, the IRBA reaffirms its commitment to transparency, education and constructive engagement with auditors, audit committees and other stakeholders in the financial reporting ecosystem. The report is positioned as a tool to inform dialogue, sharpen oversight and drive improvement where it matters most to the public interest.
The 2025 Public Inspections Report on Audit Quality and the Audit Quality Indicators Survey Report are available on the IRBA website:
Ends
About IRBA:
The Independent Regulatory Board for Auditors (IRBA) is the statutory body mandated to regulate the auditing profession in South Africa. Established by the Auditing Profession Act 26 of 2005, the IRBA’s mission is to protect the public interest by ensuring the highest standards of audit quality and ethical conduct among registered auditors.
The report underscores the critical role of high-quality audits in promoting transparency, accountability, and trust, particularly in an environment marked by economic uncertainty, rapid technological change, and increased stakeholder expectations. Inspections are deliberately targeted at higher risk audits, complex engagements, public interest entities, and recurring or emerging risk areas, rather than a representative sample of all audits performed in South Africa. As a result, the findings reflect audit quality in selected higher risk environments and are not intended to be extrapolated across the profession.
Says Imre Nagy, IRBA CEO: “High-quality audits are fundamental to trust in financial reporting, particularly during times of economic pressure and uncertainty. This report reinforces the need for continuous improvement and strong leadership commitment to audit quality across the profession.”
Nagy emphasised that understanding how inspections are selected is essential to interpreting the report responsibly. “Because our inspections are intentionally risk focused, the outcomes show where pressure points exist and where sustained attention is required. They do not describe the average audit. They are designed to direct attention to the areas where governance, judgement and oversight are most critical.”
The inspections cycle reflected in the report comprised firm wide inspections of systems of quality management, engagement level inspections of completed audits, and targeted theme-based inspections that assessed how specific risk areas are addressed across multiple engagements and firms. Together, these activities provide insight into both audit execution at engagement level and the effectiveness of firm wide systems of quality management intended to support consistently high levels of audit quality.
The findings indicate that audit quality challenges continue to concentrate in high risk, judgement intensive areas of the audit. These include complex financial reporting matters such as revenue recognition, significant accounting estimates and judgements, going concern assessments, journal entries, and the presentation and disclosure of financial information. In these areas, inspections frequently identified weaknesses in the sufficiency and appropriateness of audit evidence, the robustness of challenge applied to management assumptions, and the clarity with which key judgements were documented and supported.
Says Ntlambi Gulwa, IRBA Director: Inspections: “What we consistently observe in high-risk audits is that challenges arise where professional judgement and scepticism are most heavily relied upon. In many cases, judgements may have been made, but the audit documentation does not clearly demonstrate how alternatives were considered, how contradictory evidence was evaluated, or how conclusions were reached.”
Gulwa noted that professional scepticism remains a recurring underlying factor in inspection findings, particularly in complex and judgemental areas. “Professional scepticism is not a statement of intent. It must be demonstrated through the audit approach, the nature and extent of procedures performed, and the documentation that supports the auditor’s conclusions. In high-risk audits, this is fundamental to support the audit opinion.”
The report also highlights the increasing and growing use of advanced technologies, including data analytics and artificial intelligence, in audit engagements. The report further notes the role of information technology in audits and the risks that arise where reliance on systems, data and automated tools is not matched by appropriate governance, skills and oversight. Inspection findings in this area commonly related to auditors’ understanding of IT environments, the testing of system generated information, and the integration of IT considerations into audit planning and execution.
“While these tools offer opportunities to enhance audit quality and efficiency, IRBA cautions that they also introduce new risks, reinforcing the need for strong governance, adequate skills and continued reliance on professional judgement.” says Gulwa.
At a firm-wide level, inspections revealed ongoing challenges in the design, implementation and operation of systems of quality management under ISQM 1 and ISQM 2. Most firms have made meaningful progress in strengthening their systems of quality management, investing in training, enhancing leadership accountability for audit quality, and embedding more effective monitoring and remediation processes. These improvements demonstrate that sustained focus and leadership engagement can translate into better outcomes over time.
However, the report also identifies deficiencies in some firms’ systems of quality management and highlights concerns in the risk assessment processes, and design and implementation of responses to quality risks. In some cases, firms had not implemented effective systems of quality management, raising concerns about the audit quality at engagement level.
Recurring deficiencies on engagement-level were reported in critical audit areas, including revenue recognition, journal entries, financial statement presentation and disclosures, audits of significant accounting estimates, going concern assessments and reliance on information technology controls. Engagement level findings that indicated potential systemic issues were escalated to firm level, reinforcing the link between firm wide quality management and the quality of audits engagements performed.
Says Nagy: “Audit quality is a shared responsibility. Audit committees play a critical role in setting expectations, interrogating significant judgements and holding firms accountable, particularly in high-risk engagements. Both the public inspections report and the report on Audit Quality Indicators are intended to encourage positive engagement between audit committees and the auditors, as well as with other stakeholders.”
For audit committees, the report surfaces important considerations, including whether audit firms’ systems of quality management are operating effectively in complex audits, how professional judgement and scepticism are applied and evidenced, how independence risks are identified and managed, how reliance on technology is governed, and whether remediation efforts are addressing underlying causes rather than isolated symptoms.
In releasing the 2025 Public Inspections Report on Audit Quality, the IRBA reaffirms its commitment to transparency, education and constructive engagement with auditors, audit committees and other stakeholders in the financial reporting ecosystem. The report is positioned as a tool to inform dialogue, sharpen oversight and drive improvement where it matters most to the public interest.
The 2025 Public Inspections Report on Audit Quality and the Audit Quality Indicators Survey Report are available on the IRBA website:
Ends
About IRBA:
The Independent Regulatory Board for Auditors (IRBA) is the statutory body mandated to regulate the auditing profession in South Africa. Established by the Auditing Profession Act 26 of 2005, the IRBA’s mission is to protect the public interest by ensuring the highest standards of audit quality and ethical conduct among registered auditors.
| Issued by: | Lorraine van Schalkwyk APR Manager: Brand, Marketing and Media Relations The Independent Regulatory Board for Auditors (IRBA) Contact: +27 87 759 2693 WhatsApp: 083 626 3762 Mobile: 076 544 8705 |
| On behalf of: | Imre Nagy Chief Executive Officer |