Helping disadvantaged students : findings from the Thuthuka programme

Drawing on social closure theory, this study achieved a deep understanding of the perceptions and experiences of the first cohort of candidates passing through the Thuthuka support programme. Using semi-structured interviews as part of a qualitative approach, currently prevalent modes of professional closure were considered by taking the backgrounds of these students into account, together with their perceptions of the accounting profession. Their views on whether the Thuthuka programme as an intervention had been successful in removing post-apartheid professional closure were determined by taking into account the Thuthuka students’ readiness to sit for professional examinations and to enter the workplace. The findings of the study suggest features that could be considered in support programmes intended for socio-economically disadvantaged students to facilitate their entry into a restrictive and restricted market.http://www.tandfonline.com/loi/raed202016-10-31hb2016Auditin

A reflection on accounting within Sout Africa's higher education landscape

The purpose of this inaugural address is to consider the state of accounting as an academic discipline within South Africa’s higher education landscape, and the responsibility that brings to deliver graduates who are able to function effectively from the moment they enter the business world. Drawing on legitimacy theory, activities of the universities of today are focussed on and by society’s demands. Academic accounting in South Africa, and elsewhere, is furthermore influenced by the nationally recognised professional accounting bodies, an influence manifesting as tension between the need for “training” (for immediate and efficient absorption into the workforce) and “educating” (for a more contemplative life). This tension, plus the additional business-world attributes new accounting graduates are now expected to possess, and national objectives of transformation within academia and business, together have resulted in accounting departments in South Africa becoming teaching-intensive institutions (with a “designed-for-business” product), as opposed to places where knowledge is created, which is/was the core aspect of a research-focused university. Should South African universities offering professional accounting programmes meet their constituents’ transformation expectations to redress imbalances of the past by developing competent graduates from disadvantaged communities, closure within the South African accounting profession will be reversed. Simultaneously, our society’s demands that universities develop human and institutional capacity (an imperative for a developing economy), so as to alleviate pressures of scarce and critical skills, will then also be met. But the question still remains: are the needs that society has currently identified and voiced for itself in its longer-term best interests? Put another way: is the development of essentially vocational skills, and the effecting of social and economic transformation, being achieved at the expense of knowledge creation and the stimulation of critical, independent thought?Text of inaugural address by Prof. Karin Barac, Department of Auditing on 12 November 2013km201

Disclosure of independence-enhancing attributes within the audit committee/internal audit activity relationship

Independence is a cornerstone of the internal audit profession, hence its prominence in the definition of internal auditing. The quality of the audit committee/internal audit activity relationship is important for the enhancement of the independence of the internal audit activity. Using content analysis, this article examines attributes within the audit committee/internal audit activity relationship. Information disclosed in the annual reports of the Top 40 companies listed on the Johannesburg Stock Exchange on the internal audit activity was used during the content analysis. The findings revealed that most companies did not disclose the selected attributes extensively in their annual reports. Since there are no legislative requirements on the extent to which such disclosures should appear in the annual reports of companies in respect of the internal audit activity, the results of this study can be used by the internal audit standard setters to advance their work in this area.http://www.journals.co.za/content/journal/sajaaram2017Auditin

The application of analytical procedures in the audit process : a South African perspective

The application of analytical procedures has become an integral part of the audit process. It has the ability to increase audit quality and is an effective and efficient manner of gathering audit evidence. Indications are that the application of these procedures will increase in audits of the future. Numerous studies have been conducted in various countries to determine the auditor’s application of analytical procedures in the audit process. However, little is known about how auditors in South Africa apply analytical procedures as part of their audit process. The objective of this study was to investigate the application of analytical procedures in the audit process by South African auditors. A qualitative research approach was selected, utilising three units of analysis, and data was collected through interviews with senior audit managers at large audit firms in South Africa. The fi ndings of the study revealed that auditors in South Africa do perceive that analytical procedures add value to the audit and that their use enhances audit efficiency and effectiveness. Auditors in South Africa apply analytical procedures in all phases of the audit process. Factors were identified that have an effect on the use of analytical procedures: the business risk methodology; accelerating advancements in technology, and the growing use of non-financial information to assess the reasonableness of financial data.http://www.unisa.ac.za/default.asp?Cmd=ViewContent&ContentID=22335am2017Auditin

Internal audit in state-owned enterprises : perceptions, expectations and challenges

State-owned enterprises are critical vehicles for the delivery of goods and services, and can contribute to the sustainable economic growth of developing countries. The business environments in which these state-owned enterprises operate pose risks to the enterprises, which then rely on internal audit, amongst other options, to managing these risks. The objective of this study was to determine the perceptions of, expectations for and challenges experienced by internal audit functions in today’s state-owned enterprises. A qualitative research approach was selected, utilising a case study method, and data was collected through interviews with important role players associated with the internal audit function of three South African state owned enterprises. The findings of the study revealed that internal audit functions are perceived in a positive light and that participants do place reliance on internal audit. The internal audit functions act as business partners to management, and expect support from the audit committees and management in terms of ensuring the internal audit functions’ independence, and the provision of required resources and skills. The internal audit functions face diverse challenges. These relate to the relative novelty of performance auditing and combined assurance in state-owned enterprises, the differences in methodologies and auditing systems used by outsourced functions, repeat (negative) audit findings, a lack of business knowledge and insight on the part of the entity, and non-compliance with quality assurance and improvement Standards.http://reference.sabinet.co.za/sa_epublication/sajaaram201

Managing risk : what should internal audit do?

Internal auditors, having the required knowledge of risk management, organisational processes and internal controls systems, could perform a number of activities for the organisation in order to assist in managing risks. The Institute of Internal Auditors provides guidance to internal auditors indicating their related roles. Previous studies (which do not include a South African perspective) suggest that internal auditors’ involvement in these roles tend to differ between countries and could change over time. Additionally, while a key role for internal auditors is to identify and evaluate risks within an organisation, little guidance is provided as to how internal auditors should achieve this. This article explores internal auditors’ involvement in consulting and assurance activities within South African private sector organisations, and secondly, how internal auditors identify and evaluate risks within organisations. Data was collected by means of an online survey instrument, directed at chief audit executives. Survey results indicated that internal auditors have a large degree of involvement in providing assurance on risk functions, a moderate degree of involvement in providing consulting activities and a limited degree of involvement in risk management roles. Internal auditors utilise previous experience and various external sources of information, when identifying risks, and consider risk impact in both a qualitative and quantitative manner. Statistical analysis reveals that the internal auditors’ degree of involvement in the various roles differs in the manufacturing and financial services sectors.http://reference.sabinet.co.za/sa_epublication/sajaarhb201

Combined assurance : a systematic process

There is a clear shift in corporate governance towards understanding and managing the risks that could prevent an organisation from achieving its objectives. This has resulted in enterprise risk management and combined assurance becoming fundamental and integral components of corporate governance. Although enterprise risk management is a well-researched field, limited research is available on the introduction and/or maintenance of combined assurance processes, and how these relate to enterprise risk management. The objectives of the study reported on in this article are twofold. Firstly, it presents the interrelationships between the features of enterprise risk management and the combined assurance processes. Secondly, by conducting a survey of the views of chief audit executives within the private sector it determines how these features were considered and addressed by organisations during the introduction and subsequent maintenance of their organisations’ combined assurance processes. The most significant finding is that there appears to be a dependency on the enterprise risk management process as a prerequisite for the implementation of a combined assurance process. Furthermore, significant differences were found to exist between perceptions from respondents from companies that had already implemented combined assurance / enterprise risk management and those respondents from companies that are currently in the process of implementing combined assurance / enterprise risk management.http://reference.sabinet.co.za/sa_epublication/sajaaram201

The capability and competency requirements of auditors in today's complex global business environment.

In 2013 ICAS and the UK Financial Reporting Council (FRC) commissioned two international teams of researchers to undertake studies to investigate what mix of attributes, competencies, professional skills and qualities need to be combined in an audit team in order for it to perform a high quality public interest audit in a modern and complex global business environment. This report is one of the two independent research reports published as a result of this call for research. This report explores the views of key audit stakeholders in Australia, South Africa and the UK. The researchers conducted interviews with individuals who are directly involved in the audit process (engagement partners, chairs of audit committees, chief financial officers, chief audit executives (internal audit) and experts) in six of the largest listed companies in Australia, South Africa and the UK. Individuals who have some oversight, public policy or educative role with regard to audit, in each of the three countries, were also interviewed, giving a total of 84 interviews

Audit committees' communication on internal audit to boards of directors

Audit committees are expected to communicate effectively as trusted relationships are created when high quality communication takes place. Very little research has been performed on communication between audit committees and boards of directors and no studies have been performed on audit committees’ communication of internal audit information to boards of directors. In closing the gap this article examines the effectiveness of the process of communicating internal audit information between the audit committee and the board, and is useful as previous audit committee studies focussed predominantly on the diligence, resources, authority, and composition of the audit committee and not on the actual process of communication. A case study of three JSE listed mining companies operating in the South African gold, platinum, coal and energy sectors was performed to understand whether communication processes between their audit committees and boards of directors were effective. This involved understanding the views of the chairpersons of the audit committee and board, non-executive directors and chief audit executives for the three companies concerned, because these parties are important role players in communicating internal audit information between their corresponding committees. The findings of the study identified strengths and weaknesses of internal audit information to be communicated and considered the communication process. Barriers, such as board dynamics, culture and language, and the conduct of members were identified. The study showed the importance of the role of the chairperson of the audit committee to promote effective communication and to fulfil such a role, identified attributes are needed.http://www.journals.co.za/content/journal/sajaaram2017Auditin

Stakeholder perceptions on the role of internal audit in risk management : a mining industry perspective

Organisations are faced with risks that can hinder them from meeting their objectives: these risks are both expected and unexpected and could include ‘black swans’. The internal audit function assists management by providing assurance regarding the effectiveness of its risk management processes. By applying a risk-based audit approach internal auditors could enhance the risk management process. However, the literature indicates that the internal audit function may not be playing the role in risk management that its stakeholders require. Interviews were conducted with four groups of stakeholders in the risk management process in the mining industry to identify the expected role of internal audit. The research found that internal audit was performing in line with expectations, but must in future play a bigger role in determining the organisation’s strategic direction by challenging risk identification and assumptions, thereby promoting sustainability. This requires enhancing their technical skills in understanding operational risks specific to mining.http://reference.sabinet.co.za/sa_epublication/sajaaram201