South African Company Laws Allowing An Option for Audit/Review Can Be Dangerous!

South African Institute of Chartered Accountants has been on its tiptoes as far as the new company laws are concerned. The new laws, if passed, will allow the companies in the southernmost African nation to bypass a formal audit in favor of an independent review from a body of regulators and executive auditors.




The Institute has warned directors and owners of firms across South Africa, that a review may not be cheaper or the safer mode of handling accounts, especially with the punishment of such offenses becoming stricter in the near future. This warning has not gone unnoticed, as almost 125 of 200 firms surveyed have affirmed their trust on audits, even if they are self-initiated, as against relying on independent reviews as per the new law.

Chartered accountants in London or New York or elsewhere have been a crucial keg in the financial machinery of the companies worldwide. One of the main factors that bolstered this claim was the fact that bad audits, especially of the Lehman Brothers had actually snowballed into the dreaded economic crisis of 2008-09.

If South African firms happen to be wiser, they would opt for a robust regulating pattern, rather than taking it easy with the option of independent reviews and not opting for audits at all.

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