The regulatory scrutiny the South African audit profession has come under as a result of the state capture scandal is not without precedent. During the 1980s the eight major audit firms that existed at the time consolidated through a series of mergers to form five firms. Then, in 2002 the collapse of Enron led to the demise of Arthur Andersen, its auditor, which was broken up and sold to other large auditors the world over. In SA, this was to KPMG, while in other countries it was to Deloitte, EY or PwC. Then came the global banking and financial crisis of 2008, which led to renewed interest in both the question of competition in the audit sector as well as the part that should be played by auditing companies in preventing company failures and economic downturns. The objective of an audit is to express an independent opinion as to whether the company’s financial statements are a true and fair reflection of its financial health and are prepared in accordance with the law. Potential in...

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