The World Bank has called on South Africa to allow firms to organise as limited liability partnerships (LLP) in order to make the auditing profession more attractive.
The call was made in its second Report on the Observance of Standards and Codes – Accounting and Auditing (ROSC A&A) which noted a number of other countries had passed similar legislation in the past 20 years, including the UK and US.
The report highlighted that the number of auditors in the country has remained almost the same for the past decade, despite the country’s economic expansion, and said there was minimal retention of auditors in the profession post qualification due to competing opportunities, perceived unlimited personal liability and demanding technical knowledge.
Grant Thornton Johannesburg chief executive officer Andrew Hannington agreed with this, describing the lack of LLPs as "serious barrier into the profession."
He continued that a serious concern that you could be sued in a personal capacity for the work of someone else frightened off potential young partners.
According to Hannington, this view had been presented to the World Bank by a number of firms during its research for the report.
The report also suggested requiring firms and audit practitioners to carry a sufficient level of professional indemnity insurance.
The ROSC A&A report was done at the request of the Minister of Finance.