South African Reserve Bank proposes common audit basis and adjustment reporting for banks’ regulatory returns

The South African Reserve Bank has published a proposed Prudential Authority (PA) directive to standardize which versions of Banks Act (BA) returns underpin banks’ regulatory audits. Initial audit work would use the first submission, while the final assurance opinion would cover the latest returns submitted within 120 days of the bank’s financial year-end. Auditors would also report adjustments between those versions, giving the PA visibility into errors corrected before the final opinion. The proposal addresses inconsistent industry practices, with some auditors using initial returns and others using revised submissions. Reliance on revised returns alone can obscure corrected errors and adjustments, affecting the findings and assurance opinions reported to the PA. Under the proposed approach, banks would reflect adjustments needed to align returns with audited annual financial statements, or correct reporting errors, in the second submission due within 90 calendar days of year-end. The latest returns would accompany the auditor’s assurance opinion. Auditors would use a prescribed template to detail all adjustments between the initial submission and the version supporting the final opinion. Reports would distinguish adjustments aligning returns with audited financial statements from other findings or error corrections, and separate issues identified by management from those identified by auditors. Auditors would apply materiality thresholds and professional judgment when reporting findings, and reports to the PA would need to be consistent with those provided to the bank’s governance bodies. The proposed requirements would apply to regulatory audit or review engagements for financial years ending on or after Feb. 28, 2027.