The emerging effects of audit profession providing assurance and consultancy roles : South African context

No Thumbnail Available

Date

2018

Authors

Mokwatlo, Dina Dau

Journal Title

Journal ISSN

Volume Title

Publisher

Abstract

A credible audit function is essential for information users to place reliance on financials and internal control environment of an organisation. Therefore, an audit function should provide a role that enables independence. The traditional role of audit is to provide assurance as an independent validator of organisation information. The role has since evolved by adding performing consultancy. While there have been numerous studies relating to the credibility of the audit profession; previous studies have not addressed challenges encountered by the profession when balancing assurance and consultancy roles in South Africa. The primary objective of this research is to analyse the emerging challenges that the audit profession encounters while attempting to provide dual roles, considering current organisational and professional dynamics. This research reviewed primary and secondary data. A sample of 54 auditors and non-auditors were interviewed through an online self-administered questionnaire consisting of open-ended and nominal questions to collect primary data. The topic is currently widespread in South Africa therefore; academic journals, books and media articles formed basis for secondary data. The secondary data showed conflicting perspectives about redefining audit. However, empirical findings revealed that there is the need to redefine the audit profession by providing consultancy role to add value and be sustainable. A further revelation was that there are emerging unintended consequences when providing dual roles, due to current professional and organisational needs and changes. The empirical findings revealed:  Conflict of interest increases when audit provides dual roles, therefore, the risk of unethical and criminal misconduct heightens;  The ethical conduct of the profession could be a further reflection of the ethical status of the overall South African organisations;  Challenges faced by the regulator when enforcing regulation; and  Continual challenges for the profession to balance the narrow line of pursuing business and maintain its mandate of independent validator. 2 There is, therefore, the need for the profession to implement a methodology to analyse the benefits of providing consultancy role to explore the extent of the requirement for dual roles. There is also, urgency for government, regulator and audit profession to enforce effective regulatory environment to address the unintended consequences in the quest to remain relevant, sustainable while pursuing intended mandate. Regulation should include guidelines on segregation of duties at auditor, partner/director, team and service provider levels, which could address conflict of interest. Given the gap in discussion of challenges when performing dual roles, the collective theory in this research should be helpful to contribution of further studies relating to the role of the audit profession. Keywords: Audit, assurance, consultancy, independence, credibility, ethical conduct, regulation, conflict of interest, audit failures

Description

MBA

Keywords

Auditing. Auditors' reports. Auditing -- Data processing.

Citation

Collections

Endorsement

Review

Supplemented By

Referenced By