The auditing profession’s ind ependence — or lack of it — is in the spotlight again. Reg Rumney reports
The University of Pretoria’s School of Accountancy has produced what it says is proof that providing non-audit services does impair the independence of auditing firms.
The background to the report is a continuing debate about a conflict of interest between two sorts of services provided by auditing firms. The charge is that the often lucrative non-audit services provided by auditors to the institituions they are supposed to examine and verify lessens their objectivity and independence.
Auditors say the fact that they are paid for other services — such as computer consultancy — does not impair their independence and objectivity.
The university says its study shows the provision of these non-audit services is perceived to not only impair auditors’ independence, but damages the confidence a particular user has in the audit report.
Moreover, the report notes that the South African Institute of Chartered Accountants and other accounting firms have approached the auditor-general to change his rules on this matter.
The AG does not allow an auditing firm to audit an institution on the AG’s behalf at the same time as it is rendering consultancy or other non-audit work for that institution. The university says its study shows the AG’s ruling is in the public interest. And it says the ban should be extended to the auditing of listed companies.
Two of the most salient points of the study, which the university says involved more than 10 000 financially knowledgeable people are:
* Forty-three percent of those polled said they believe the provision of other services lessens the auditors’ independence.
* A full 20 percent of auditors surveyed confessed to “diminished objectivity during the performance of an audit where other services were rendered to the same audit client.”
The initial reaction of the SAICA chief executive Ken Mockler was that the SAICA, and international view generally, is that non-auditing services do not impair independence.
SPORT