JHB 
Directors are responsible for the financial statements, notwithstanding an independent audit of those statements, or outsourcing their preparation to an independent service provider. An audit does not shift responsibility from directors, it enhances it.
While auditors provide independent assurance, directors remain the custodians of truthful, complete and compliant financial reporting. Upholding these duties is not only a legal requirement under the Companies Act, but a cornerstone of sound governance, stakeholder trust and long‑term organizational stability. As custodians of the company’s financial integrity, directors must actively engage in the audit process, ensure timely preparation of records, address risks and findings promptly, and lead with transparency, diligence and accountability.
In this article, we explore these responsibilities in more detail, to clarify what is expected of the directors.
Prepare and approve accurate financial statements
The Companies Act requires directors to ensure that annual financial statements are true, accurate and comply with the required reporting standards. Section 29 requires directors to ensure financial statements present the company’s affairs fairly and comply with applicable reporting standard(s).
During an audit, this means:
Preparing the AFS (or outsourcing this function)
Ensuring accuracy and completeness of the information
Ensuring all adjustments and disclosures are correct
Maintain proper accounting records
Directors must ensure that the company maintains accurate, complete and accessible accounting records as required by Section 24 of the Companies Act.
During an audit, this means:
Ensuring records are up to date and reliable
Providing auditors with full access to financial records
Ensuring documents requested by auditors are available
Provide auditors with full access and truthful information
Directors have a legal obligation to give auditors unrestricted access to all information they request. They must also answer any queries truthfully. Giving false information or withholding information may expose directors to personal liability. This ties into the Companies Act provisions on director’s conduct, including the duty to act with care, skill and diligence (Section 76).
Ensure internal controls are effective
Directors must ensure that the company has effective internal financial controls. This is part of their broader fiduciary duties and statutory duties noted in corporate governance guidance and in the Companies Act.
During an audit, this means:
Ensuring auditors can test internal controls
Addressing control deficiencies raised in prior audits
Ensuring risk‑management processes are effective
Act with care, skill and diligence
Section 76(3) requires directors to act with the degree of care, skill and diligence expected of someone in their position after properly informing themselves.
During an audit, this means:
Reviewing draft AFS carefully
Understanding the financial risks
Ensuring queries raised by auditors are addressed promptly
Monitoring management’s responses to audit findings
Manage financial distress disclosures responsibly
If the audit reveals signs of financial distress, directors have additional responsibilities for considering business rescue and must ensure that the company does not trade recklessly.
During an audit, directors must:
Disclose solvency concerns
Provide auditors with accurate going‑concern information
Not conceal liabilities, unpaid taxes, or any other irregularities
Disclose conflicts of interest
Under Section 75, directors must disclose personal financial interests in transactions.
During an audit, this means:
Being transparent about related‑party transactions
Ensuring documentation is complete for auditor review
Ensure compliance with laws and regulations
Directors are responsible for ensuring the company complies with the Companies Act, Tax legislation, any other statutory or regulatory reporting, and other obligations and requirements.
During an audit, this means:
Ensuring SARS filings are up to date
Ensuring CIPC annual returns and AFS filings are compliant
Ensuring auditors are furnished with proof of compliance
Final thoughts
The call to action is clear: invest the time, attention and leadership required to strengthen financial oversight, because the quality of the audit, and the confidence of all who rely on the financial statements, ultimately begins with you.
Louis Meyer CA(SA) M.Com
6 May 2026