THE AUDIT ECOSYSTEM
CREATING COMPETITION Measures must be implemented to open up the sector, says the former head of ACCA Southern Africa Pat Semenya.
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mall and medium practices (SMPs) face numerous barriers to growth in the audit space. If the industry is to encourage diversity and inclusion, reduce the monopoly of the Big Four firms and maximise employment opportunities, steps need to be taken to overcome these barriers. This, says Pat Semenya, who until recently headed up the Association of Chartered Certified Accountants (ACCA) for Southern Africa, is key to achieving genuine transformation within the sector.
creation potential of SMPs, steps should be taken to prioritise their growth.
Under Pat’s leadership, ACCA saw a growth in membership, accredited universities and approved employers.
“A lot of the time, clients want SMPs to demonstrate experience in their sector, but it’s hard to develop that experience,” she says. “Perhaps we need to return to the model of joint audits, where a Big Four firm is appointed for 60 or 70 percent of the audit, and an SMP for the remaining percentage. What that does is ensure that knowledge sharing and capacity building are taking place, and that SMPs are getting exposure in the market. Otherwise, we’re only going to have four big firms continuing to take space in this sector, and the economy cannot afford that.”
“Right now, the reality is that while we talk a lot about SMPs in the audit sector, they can’t really hold space among the Big Four, especially when it comes to multinationals that appoint an auditor based on where they’re headquartered, and then expect subsidiaries around the world to use the same firm,” she says.
She notes that it’s widely recognised that small businesses can be the lifeblood of South Africa’s economy and says that if we truly believe that to be the case, we – from regulators to industry bodies and business at large – should be doing more to prioritise SMP growth.
Pat believes that as the digitisation of the profession (and of business in general) continues, small firms won’t have the capital available to compete with larger players, which are investing significantly in technologies like data analytics and proprietary AI systems. “Once again, the gap widens,” she says. “The question then becomes what to do about this.”
“This ties into the desire to re-instil trust in the profession too,” she says. “We need to bring in diverse opinions for better balance, which means ensuring the sector allows new entrants.”
Opening up the market to smaller players With the industry starting to feel the effects of Covid-19, Pat says there are many organisations that previously insisted on using Big Four audit firms who can no longer afford them, which is an opportunity SMPs need to pursue. She also says that given the job-
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CFO MAGAZINE • FUTURE OF AUDIT
Balancing the roles of people and tech While she believes there’s currently not a level playing field for SMPs when it comes to investing in technology, Pat points to successful up-and-coming SMPs that have developed out of the Big Four as examples of companies doing good work when it comes to creating jobs. She underscores that there is also room for job creation in the advisory services divisions within
