Impact of the change in the Companies Act on the strategies of large and medium sized audit firms in South Africa.
Date
2014-07-28
Authors
Lambat, Ismail
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Abstract
ABSTRACT
This study is focussed on strategy formulation in large and medium sized audit
firms in South Africa and the key issues that contribute to the formation thereof.
The study explores the impact of a specific change in the Companies Act which
exempts certain companies from a statutory audit and the impact this has on
the future strategy of large and medium sized audit firms.
A qualitative research methodology was applied with data collected through
semi-structured, in-depth interviews that were conducted with senior executives
responsible for the formation of strategy at their respective firms. The data that
was gathered was analysed through a thematic content analysis.
The results of the research indicated that room for improvement exists in the
formulation of strategies in these audit firms. The results revealed that a
significant paradigm shift has occurred in the role that an audit firm has
traditionally played. It was confirmed that audit firms would need to craft and
glean their existing strategies given the impact of the change in the Companies
Act and specifically the inherent provision which has removed the obligation of
qualifying entities from a mandatory audit.
It was deduced that strategies around pricing structures, industry attractiveness,
transformation and identifying opportunities resulting from the change in the
Companies Act, were the key areas impacted in large and medium sized audit
firms. The data gathering exercise and related analysis enabled the researcher
to develop a model for use by audit firms in their strategy sessions to ensure
that they prepare appropriate mitigating responses in dealing with the identified
industry challenges.
The strategy formulation process and the major contributing factors were
established in the study together with an assessment of the effectiveness
thereof. The shortcomings identified in the strategy creation process formed a
basis for the researcher in formulating an approach recommended to firms in
determining a sustainable strategy.
Description
MBA 2012
Keywords
Auditing, Corporation law.