The Legal Regulation of the Essay
EXTERNAL COMPANY AUDITOR
IN POST-ENRON SOUTH AFRICA
THESIS PRESENTED IN FULFILMENT OF THE
REQUIREMENTS FOR THE DEGREE OF MASTER OF
LAWS AT THE UNIVERSITY OF STELLENBOSCH
Supervisor: Prof A.H. van Wyk
By submitting this thesis electronically, I declare that the entirety of the work contained therein is my own, original work, that I am the owner of the copyright thereof (unless to the extent explicitly otherwise stated) and that I have not previously in its entirety or in part submitted it for obtaining any qualification.
Date: 25 February 2009
Copyright © 2009 Stellenbosch University
All rights reserved
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The question is now whether these new restrictions in the wake of corporate failures have been the right approach with which to prevent future failures and to provide adequate protection to shareholders. Although the general legislative increase in auditor awareness is welcomed, the efficacy of several provisions in South African legislation can be questioned.
Widespread reform has taken place in the appointment and remuneration of the auditor, which now has to be independently determined by the audit committee. In particular, South
Africa’s new regulation of non-audit services, and the lack of refined regulation on compulsory auditor rotation as well as the cross-employment of auditors by clients, needs a critical discussion.
It is submitted that the discretion of a well-regulated audit committee, combined with increased disclosure and transparency, should be enough to regulate most of the key aspects of auditor independence. Care should be taken to not overlegislate in haste to reform. South
Africa needs a flexible and customised approach in this regard.
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