South Africa

What is the Value of Audit?

Investors, shareholders and society is demanding more from corporate reporting in the wake of the economic crises and scandals of the past few years. The public’s trust in the integrity of business is at a low point and the audit profession can and must play an important role in the restoration of confidence.

KPMG believes that auditors should listen to key stakeholders to help better understand their changing needs and expectations of the audit. Through the Value of Audit programme, we are bringing together investors, audit committee members, regulators, standards setters and management to share ideas and help build consensus around the future of audit.

Some of the aspects that contribute to the Value of Audit include the expanded audit report, the independence of auditors and measuring audit quality. These emerged from roundtable discussions that took place around the world and are expanded on in the enclosed toolkit.

closing quote Understanding the Value of Audit in today's modern world
Stakeholders Working in Concert Audit Firm Rotation The Expanded Audit Opinion

Stakeholders Working in Concert... Deliver Audit Quality

Contrary to popular belief, auditing is not an exact science. There is a significant amount of professional judgement used in designing the audit strategy and in coming to the audit conclussions. So to make sure that auditors get it right every time, IAASB has issued an Audit.

Audit Firm Rotation - Risk vs Return

In April 2014, The European Parliament approved the new EU Audit Regulation and Directive, which will require European-listed companies, banks and financial institutions to appoint a new auditor every 10 years.

This can be extended for a further 10 years if companies put their audit contract out to tender before the initial period is up or appoint another audit firm to do a joint-audit. According to Steven Louw, Director: Department of Professional Practice: “At KPMG, we welcome changes that are aimed at improving the relevance and quality of audits and the promotion of sound capital markets and investor protection.

The Expanded Audit Opinion

“Auditors are straight-jacketed by the audit standards.” This is according to Dr Terence Nombembe, Chief Executive of the South African Institute of Chartered Accountants (SAICA) at the Value of Audit roundtable hosted by KPMG.

The statement clearly rings true, as auditors in collaboration with clients are now beginning to look at different aspects of the organisation when preparing audit reports.

 

 

Find out how KPMG can help you. Join the conversation on #valueofaudit or @KPMG_SA