This report provides an assessment ofaccounting and auditing practices in South Africa, withinthe broader context of institutional capacity available forensuring high-quality financial reporting. Nationalaccounting and auditing standards in South Africa aredeveloped on the basis of international standards; but lackof legal backing for accounting standards give rise toproblems. South African accountancy professionals play animportant role in international standard-setting bodies.However, the existing mechanisms for enforcing compliancewith accounting and auditing standards seem to be weak.Opportunities exist for undetected accounting manipulation,financial statements misrepresentation and departures fromestablished accounting and auditing requirements. Ten yearsof discussions on the revision of the legislative frameworkfor accounting and auditing, have contributed touncertainties in the profession. Immediate steps are neededfor enactment of the Financial Reporting Bill, amendments tothe Companies Act, and the Accountancy Professions'Bill; and, to ensure proper enforcement of establishedstatutory requirements. Recognizing the need for reform, theGovernment is currently in the process of implementingsignificant changes. The report provides policyrecommendations specifically focusing on strengthening theenforcement mechanisms for ensuring compliance withestablished accounting and auditing requirements. Moreover,suggestions have been made about some important elements ofa regulatory framework for the auditing profession, namelyestablishing an independent oversight body, consisting ofeminent persons, and, restructuring the statutory regulatorof the auditing profession under an effective governancestructure, with a broader mandate for efficiently regulatingthe profession.
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