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Global Public Perceptions on Audit & Contrasting Regulator Concerns

Despite global and increasing local concerns over audit quality and market competition; less than 20% of South Africans support the idea of an audit-only firm.  A new public survey of 1,000 members of the public by the Association of Chartered Certified Accountants (ACCA) shows that 35% of all respondents do not believe that restrictions should be exercised on audit firms preventing them providing non-audit services.  Moreover, nearly 60% of respondents would like auditors’ roles to evolve to prevent corporate collapses, while about 40% want auditors to address more societal and environmental needs.  The survey results signal an important watershed moment in the profession, as a new energy incumbent in technology is REIMAGINING audit, and opening up new options to deliver what people are looking for in terms of confidence and reliable insights in a range of areas.

At present, audits focus on financial reporting while demand for additional assurance, over new risks faced by investors and the public face, is steadily increasing on issues ranging from business viability to cybersecurity, climate change, and even organisational culture.  The survey results stand in contrast to a similar February study, revealing developments in the UK audit market, which is currently facing recommendations that the “big four” undergo an operational split, to ensure that the audit arms are under separate management from the rest of the firms’ business.  The UK’s Competition and Markets Authority is calling for mandatory joint audits, where big four firms will have to work alongside “challenger” audit firms, to improve both the quality of audits and promote choice and competition.

The Australian Joint Committee on Corporations and Financial Services has expressed concerns about audit quality in the country “for some time now” and merits for the Australian audit industry to undergo “serious review” are reportedly well founded.  The recently delivered assessment of the current state of auditor disciplinary functions, in Australia, proposed that company auditors who are under investigation for poor audit quality should be named, the results published, and firms identified in the Australian Securities and Investments Commission (ASIC) audit inspection.  In the Commission’s latest study, 24% of the key audit areas reviewed, registered company auditors had not obtained reasonable assurance that the financial report was free of material misstatement.