Audit Hazard and Legal Regimes: Analysis of the Reform Issues in South Africa
Staff Working Paper Series, School of Accountancy, University of the Witwatersrand
Posted: 16 Jun 2008
Abstract
This paper is a by product of two research projects that were carried out by the School of Accountancy of the University of the Witwatersrand to support the works of (a) the Ministerial Panel for the Review of the Draft Accountancy Professions Bill and (b) the Audit and Assurances Standards Board (AASB) of the Public Accountants and Auditors Board (PAAB). The two research projects were separate. The paper contributes to the South African and by extension to the African audit literature by examining the issues that drive the current reform debate. Rotation of auditors, separation of consulting and statutory audit, audit committees, robust liability and criminal clauses and new international audit quality control standards are being considered to overcome audit failure, auditor independence and integrity problems. After an extensive review of the archival and empirical literature, the paper suggests a policy alternative in two areas of the reform debate: audit firm rotation and restriction of non-audit services.
Keywords: audit failure, auditor regulation, detection risk, South Africa
JEL Classification: M49, M41, M47
Suggested Citation: Suggested Citation