Reporting irregularities under section 45
What a South African registered auditor must do on finding a reportable irregularity at a client, using the IRBA guide, and how to keep the record.
By Achekam · · 4 min read · For Accountants & audit firms in South Africa
An audit senior testing creditors notices payments to a supplier that does not seem to exist. The address is a residential flat, the bank account belongs to a relative of the financial manager, and the invoices are numbered in a neat sequence that no real supplier would produce. The senior takes it to the manager, the manager takes it to the partner, and the partner faces a question that registered auditors in South Africa cannot treat as a matter of discretion: is this a reportable irregularity?
Section 45 of the Auditing Profession Act puts a statutory reporting duty on registered auditors. Here the law itself, not only the auditing standards, tells the auditor what to do and in what order, and a misstep is the auditor's problem as well as the client's.
Section 45(1) of the Auditing Profession Act
The IRBA says it requires all registered auditors to comply with section 45(1) of the Auditing Profession Act 26 of 2005 on reportable irregularities. The Act came into operation on 1 April 2006, and the IRBA publishes a consolidated version incorporating amendments up to 14 July 2023.
Two practical points follow. First, the duty sits in the Act, so the definition of a reportable irregularity and the steps the auditor must take come from its text. Read section 45 and the definition it relies on in the consolidated version, not in a summary or an old printout. Second, the duty applies to every registered auditor. It does not depend on the size of the client, the size of the amount, or whether the partner believes management will put things right.
The IRBA's revised guide and illustrative reports
The IRBA's current guidance is the Revised Guide for Registered Auditors on reportable irregularities, issued in May 2015 and effective from 1 July 2015. It is supported by illustrative first and second reports to the IRBA and an illustrative letter to the entity's management board.
The IRBA's reportable irregularities guidance page holds the guide and the illustrative documents. A firm should keep the current versions to hand rather than drafting each report from scratch under pressure. The illustrative documents show the structure the IRBA expects, and using them reduces the chance that a report omits something the Act requires.
The sequence of reports
The guide and its illustrations reflect a sequence of communications:
| Document | Who it goes to | What the illustration helps with |
|---|---|---|
| First report | The IRBA | Reporting the suspected irregularity |
| Letter | The entity's management board | Informing those charged with governance |
| Second report | The IRBA | Reporting the auditor's further conclusion |
The Act and the guide set the time limits for each step and the conditions that decide what the second report must say. Diarise each limit as soon as the partner concludes that the duty may have arisen, and take the time limits and the content from the Act and the guide, not from memory.
Consulting within the firm
A suspected irregularity is exactly the kind of matter on which a partner should not decide alone. The facts may be incomplete, the definition must be applied carefully, and the consequences for the client relationship are serious. But consultation must not delay a statutory report beyond its time limit.
In Achekam, staff can take a technical consultation on an engagement from question to conclusion and closure. Where partners disagree, for example about whether the facts amount to a reportable irregularity, the difference of opinion is recorded with each party's position, the escalation and how it was resolved. That record shows the firm took the matter seriously and how it reached its decision.
During fieldwork, the issue usually surfaces first in a working paper. A reviewer can raise review notes on that paper, the preparer answers, and the reviewer clears them, with each note's history kept. A note that asks "consider section 45" and records the answer links the audit evidence to the consultation that followed.
The wider professional framework also applies. The IRBA says its Code of Professional Conduct applies to all registered auditors, firms and individuals, whatever their status in the IRBA register; the current version is the IRBA Code (Revised 2024). How the auditing standards approach non-compliance with laws and regulations more generally is covered in laws and regulations under ISA 250, and the code itself in the IRBA Code (Revised 2024).
Keeping the record in the firm's quality registers
Reportable irregularities belong in the firm's quality records as well as the engagement file. Achekam keeps the firm's quality registers on the server, including professional judgements, quality incidents, complaints and inspection progress, with every version and the person who changed it. One limit: sign-off roles on professional judgements are checked by the screen, not the server, so the reviewing partner should confirm the sign-off is theirs.
For each suspected irregularity, the register entry should capture:
- The date the matter came to the engagement team's attention.
- The date the partner formed the view that triggered the duty, and why.
- Each report and letter, with the date sent and to whom.
- The consultation reference and its conclusion.
- The outcome, including the second report's conclusion.
An inspector reviewing the firm will want to see that every suspected irregularity was considered, reported where required, and reported on time. The register makes that visible across all engagements.
Download the IRBA's revised guide and its illustrative reports, save them where every audit partner can find them, and walk the audit team through one fictional case using the documents. Then confirm that the quality register has a category for reportable irregularities, ready before it is needed.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
