Watchdog considers break-up of auditors
South African audit profession’s watchdog will require transparency reports and proposes spinning off of advisory services for more independence
The South African audit profession’s watchdog is considering forcing firms to split their audit and advisory arms in an effort to enhance their independence and improve audit quality. With auditors embroiled in a rising number of scandals globally and at home, the Independent Regulatory Board for Auditors (Irba) was weighing up the benefits of creating "audit-only" firms, Irba CEO Bernard Agulhas said. Irba would also soon require audit firms to produce "transparency reports", which would disclose audited financial statements of these firms, including the revenue split between advisory and audit, Agulhas said on Friday. Advisory services had become an increasingly large source of revenue for audit firms, which could lead to audit quality being compromised when higher investments were made in nonaudit services, Agulhas said. "While we recognise arguments that clients might prefer a one-stop shop when securing professional services, this can never outweigh the risk that the audit has ...
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