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Given the importance of the auditing industry to financial markets, accountants are always under scrutiny. There have been a number of auditing related scandals in recent years on the local bourse (Steinhoff, Tongaat and EOH, to name a few), bringing the industry into disrepute. BizNews editor-at-large Jackie Cameron interviewed the former chairman of the SA Institute of Chartered Accountants and Deloitte CEO Lwazi Bam on a number of issues plaguing the industry. – Justin Rowe-Roberts
Lwazi Bam on whether auditors should be held accountable for detecting fraud:
There is discussion whether a scope of an audit should be expanded to that of detecting fraud. The view is that if you expand the scope of an audit to fraud detection, it will be extremely expensive. The benefits would not outweigh the costs of doing that.
On why auditors have struggled to detect fraud, leading to a number of corporate scandals:
At the moment it is not part of the scope of an audit. If you were to change it, it would mean structuring the audit in a completely different way to how we do it now. This is where the debate of cost vs benefit comes in.
On what auditors do, if it isn’t to detect fraud:
That’s a very good question. Auditors are there to look at the financial statements to arrive at the question whether statements are materially misstated.
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