The Accounting Sector in South Africa
The accounting sector is the guarantor of financial reporting standards and performs a critical function in the economy. Although well-established and anchored by the world’s largest accounting firms, the auditing profession has been mired in controversies relating to fraud and financial irregularities involving its clients. These have highlighted the shortcomings of the external audit and various stakeholders have called for audit reforms. Regulatory changes that are set to disrupt the industry include the mandatory rotation of auditors, which is scheduled to come into effect on 1 April 2023.
Poor accountability, specifically the failure of certain major auditing firms to report financial malpractice and fraud involving private companies and public entities, has resulted in a credibility crisis for the auditing profession. Major firms have implemented controls including audit quality monitoring systems, integrity checks, whistle-blowing initiatives and publication of annual transparency reports. The large firms’ increased reticence to take on clients who present an elevated risk is expected to drive many clients to smaller accounting firms.
While traditional accounting software has reduced the amount of time spent on routine tasks such as transaction entry, data capture and number crunching, new technologies are fundamentally changing the structure of the profession, entirely automating some of the work. Large firms have launched digital auditing platforms and some have partnered with international technology companies. Big data analytics and the internet of things will vastly increase the amount of data that is analysed and stored.
This report focuses on the accounting sector in South Africa and includes information on the state of the sector, recent developments and influencing factors. There are profiles of 18 companies including the big four, PwC, Deloitte, EY and KMPG, as well as other prominent companies including BDO and Mazars, and a number of smaller firms.