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Audit quality implications of regulatory change in South Africa

Harina Ndaba (University of the Witwatersrand, Johannesburg, South Africa)
Michael Harber (Accounting, The University of Notre Dame Australia, Sydney, Australia) (Department of Accountancy, University of Johannesburg, Johannesburg, South Africa)
Warren Maroun (University of the Witwatersrand, Johannesburg, South Africa)

Journal of Accounting in Emerging Economies

ISSN: 2042-1168

Article publication date: 31 March 2021

Issue publication date: 31 May 2021




This paper explores how technical constructions of audit practice are influenced by mandatory audit firm rotation (MAFR) regulations. The paper responds to calls for additional research on how external regulation influences audit quality and supplements the predominately quantitative research dealing specifically with firm rotation and its relevance for audit quality.


Data are collected from South Africa which is the latest jurisdiction to adopt MAFR (from 2017). Detailed interviews with 49 participants comprising 24 audit partners and 25 non-auditors are conducted to explore how MAFR can impact audit quality. For this purpose, audit quality is defined according to a schematic developed interpretively and based on professional auditing standards and the prior research on audit quality.


There is no guarantee that MAFR will bolster auditors' independence or contribute to a more thorough audit approach. On the contrary, the effort required by incoming audit firms to gain an understanding of new clients coupled with material tendering costs is expected to decrease the profitability of audit engagements with adverse implications for audit quality. A loss of client experience and staff retention challenges may contribute further to a decline in audit quality. There may be some improvements to audit practice when an incumbent firm's work is going to be scrutinised by a new auditor but audit methodologies, including the nature and extent of testing performed, are not expected to change significantly because of MAFR. In this way, the regulation may be a symbolic response to a perceived decline in audit quality and auditor independence rather than part of an effective strategy to encourage more rigorous audit practice for the benefit of the users of financial statements.


The current paper provides one of the first exploratory accountants of how MAFR is expected to impact audit practice and, in turn, audit quality. The research responds to the call for more field-work studies on the mechanics of the audit process by engaging directly with practitioners instead of relying on inferential testing of broad audit quality surrogates. The study also makes an important empirical contribution by providing primary evidence on how external regulation influences audit practice from a seldom studied African perspective.



Ndaba, H., Harber, M. and Maroun, W. (2021), "Audit quality implications of regulatory change in South Africa", Journal of Accounting in Emerging Economies, Vol. 11 No. 3, pp. 477-507.



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