Exploring a South African solution to an international concern over auditor independence: The South African audit profession's opinions with regard to mandatory audit firm rotation

 

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dc.contributor.advisor West, Darron en_ZA
dc.contributor.advisor Willows, Gizelle en_ZA
dc.contributor.author Harber, Michael en_ZA
dc.date.accessioned 2017-01-19T12:30:40Z
dc.date.available 2017-01-19T12:30:40Z
dc.date.issued 2016 en_ZA
dc.identifier.citation Harber, M. 2016. Exploring a South African solution to an international concern over auditor independence: The South African audit profession's opinions with regard to mandatory audit firm rotation. University of Cape Town. en_ZA
dc.identifier.uri http://hdl.handle.net/11427/22838
dc.description.abstract The provision of assurance services, most notably the audit function, is an activity of public protection that requires a high degree of independence between the auditor and the audit client to ensure audit quality is achieved. Internationally, especially in the European Union, there is a legislated move towards mandatory audit firm rotation (MAFR) to ensure auditor independence. South Africa is currently faced with the decision of whether to change legislation and follow suit. Using a qualitative and descriptive methodology, through the use of semi-structured and open interviews with experienced South African audit partners, the direct and indirect effects of mandatory firm rotation on the audit profession was explored. This study will therefore present the opinions of the regulator and a small group of experienced audit partners, most being regional or national managing partners, from audit firms that perform public interest entity audits. Of particular interest will be the opinions of the respondents around (1) the state of independence in South Africa, (2) whether mandatory audit firm rotation will increase audit quality, (3) whether there are better alternatives to mandatory audit firm rotation, and (4) what the perceived direct and indirect effects of mandatory rotation will be within the South African legal and regulatory context. A particular emphasis is also placed on the argument from the national audit regulator that mandatory audit firm rotation, in addition to strengthening independence, will also reduce market concentration (promote competition) in the South African audit industry, as well as promote black economic transformation. The results show significant disagreement by the audit practitioners against the arguments in favour of mandatory audit firm rotation, with most claiming that it will not achieve an increase in audit quality and will produce many unintended consequences that will in their opinion actually reduce audit quality. There is a significant amount of agreement amongst the audit partners on the key issues and no partner interviewed is fully in favour of changing legislation to require MAFR. A number of alternative means for improving audit quality are suggested, which in the opinion of many of the partners, will be less damaging to audit quality and the audit profession. en_ZA
dc.language.iso eng en_ZA
dc.subject.other Financial Management en_ZA
dc.title Exploring a South African solution to an international concern over auditor independence: The South African audit profession's opinions with regard to mandatory audit firm rotation en_ZA
dc.type Master Thesis
uct.type.publication Research en_ZA
uct.type.resource Thesis en_ZA
dc.publisher.institution University of Cape Town
dc.publisher.faculty Faculty of Commerce en_ZA
dc.publisher.department Department of Finance and Tax en_ZA
dc.type.qualificationlevel Masters
dc.type.qualificationname MCom en_ZA
uct.type.filetype Text
uct.type.filetype Image
dc.identifier.apacitation Harber, M. (2016). <i>Exploring a South African solution to an international concern over auditor independence: The South African audit profession's opinions with regard to mandatory audit firm rotation</i>. (Thesis). University of Cape Town ,Faculty of Commerce ,Department of Finance and Tax. Retrieved from http://hdl.handle.net/11427/22838 en_ZA
dc.identifier.chicagocitation Harber, Michael. <i>"Exploring a South African solution to an international concern over auditor independence: The South African audit profession's opinions with regard to mandatory audit firm rotation."</i> Thesis., University of Cape Town ,Faculty of Commerce ,Department of Finance and Tax, 2016. http://hdl.handle.net/11427/22838 en_ZA
dc.identifier.vancouvercitation Harber M. Exploring a South African solution to an international concern over auditor independence: The South African audit profession's opinions with regard to mandatory audit firm rotation. [Thesis]. University of Cape Town ,Faculty of Commerce ,Department of Finance and Tax, 2016 [cited yyyy month dd]. Available from: http://hdl.handle.net/11427/22838 en_ZA
dc.identifier.ris TY - Thesis / Dissertation AU - Harber, Michael AB - The provision of assurance services, most notably the audit function, is an activity of public protection that requires a high degree of independence between the auditor and the audit client to ensure audit quality is achieved. Internationally, especially in the European Union, there is a legislated move towards mandatory audit firm rotation (MAFR) to ensure auditor independence. South Africa is currently faced with the decision of whether to change legislation and follow suit. Using a qualitative and descriptive methodology, through the use of semi-structured and open interviews with experienced South African audit partners, the direct and indirect effects of mandatory firm rotation on the audit profession was explored. This study will therefore present the opinions of the regulator and a small group of experienced audit partners, most being regional or national managing partners, from audit firms that perform public interest entity audits. Of particular interest will be the opinions of the respondents around (1) the state of independence in South Africa, (2) whether mandatory audit firm rotation will increase audit quality, (3) whether there are better alternatives to mandatory audit firm rotation, and (4) what the perceived direct and indirect effects of mandatory rotation will be within the South African legal and regulatory context. A particular emphasis is also placed on the argument from the national audit regulator that mandatory audit firm rotation, in addition to strengthening independence, will also reduce market concentration (promote competition) in the South African audit industry, as well as promote black economic transformation. The results show significant disagreement by the audit practitioners against the arguments in favour of mandatory audit firm rotation, with most claiming that it will not achieve an increase in audit quality and will produce many unintended consequences that will in their opinion actually reduce audit quality. There is a significant amount of agreement amongst the audit partners on the key issues and no partner interviewed is fully in favour of changing legislation to require MAFR. A number of alternative means for improving audit quality are suggested, which in the opinion of many of the partners, will be less damaging to audit quality and the audit profession. DA - 2016 DB - OpenUCT DP - University of Cape Town LK - https://open.uct.ac.za PB - University of Cape Town PY - 2016 T1 - Exploring a South African solution to an international concern over auditor independence: The South African audit profession's opinions with regard to mandatory audit firm rotation TI - Exploring a South African solution to an international concern over auditor independence: The South African audit profession's opinions with regard to mandatory audit firm rotation UR - http://hdl.handle.net/11427/22838 ER - en_ZA


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