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

See all articles by Minga Negash

Minga Negash

Metropolitan State University of Denver; University of the Witwatersrand

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

Negash, Minga, Audit Hazard and Legal Regimes: Analysis of the Reform Issues in South Africa. Staff Working Paper Series, School of Accountancy, University of the Witwatersrand, Available at SSRN: https://ssrn.com/abstract=1146545

Minga Negash (Contact Author)

Metropolitan State University of Denver ( email )

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South Africa

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