Sanchia Temkin
8 April 2008
Johannesburg — THE auditing profession stands to lose most of its members by 2013 due to overregulation in the light of corporate scandals worldwide, says Allen Blewitt, CEO of the UK-based Association of Chartered Certified Accountants (ACCA).
"Only the big four auditing firms (PricewaterhouseCoopers, Deloitte, KPMG, and Ernst & Young) will be viable in the next several years. The sheer number of audits is dropping," Blewitt said.
Blewitt was in SA last week addressing stakeholders on the role of the ACCA in helping the accounting profession in SA.
"Legislators do not understand the auditing profession," Blewitt said. When they regulate the profession, all they see is red tape.
"The regulators have a blinkered view of audit."
Blewitt said small and medium-sized audit firms could not compete with big auditing companies. "The number of audits is dropping," he said. "If I had to complain to the regulators, they would simply turn around and say it was a matter of self-interest. "
The auditing profession would have to work hard to maintain itself.
Blewitt said the complexity of auditing was likely to increase in the next few years, and fees were likely to rise. Audit fees had increased 30%-40% in the past two years.
Auditors faced higher risks and fewer rewards, Blewitt said.
The fee increases were due to new legislation and rigorous new auditing and accounting standards.
Blewitt said he was concerned about "standards overload" on smaller firms. "They have to meet new requirements. There is standards fatigue. Although there is a moratorium on the International Accounting Standards Board releasing new standards, it won't be long before more standards are issued."
He did not foresee the complexity of international financial reporting standards easing. Compliance with international accounting standards was the biggest challenge facing the accounting profession, he said.
SA's success had created an unprecedented demand for skills.
The country had about 25000 professional accountants , which even by the most conservative estimate was at least 15000 short of the number required.
Blewitt said SA was not unique when it came to the "war for talent". The country had to find the right solution for the problem.
SA had young people with passion and ability, eager to train, to learn, to develop, but with no route to qualifying as an accountant.
ACCA had worked closely with the big four auditing firms in the UK in recent years to help widen their pool of talent. KPMG and Ernst & Young had both worked closely with ACCA in formulating nongraduate entry routes for their UK businesses, both of which had proved extremely successful, he said.
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