University of the Free State: Business School

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Browsing University of the Free State: Business School by Author "Chawaremera, Edson"

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    Perceptions of South African chartered accountants' and registered auditors' value in investment decision making
    (University of the Free State, 2020) Chawaremera, Edson; Crous, C.
    The purpose of this study is to establish if asset management firms, as a select group of investors, perceive the work of Chartered Accountants (CAs) and Registered Auditors (RAs) to be valuable in the investment decision making process. The study conceptualised value through literature review. The study further seeks to gather recommendations for improving or maintaining the investors’ perceptions of South African Chartered Accountants’ and Registered Auditors’ value in the investment decision-making process. A qualitative research approach that allowed multiple individuals or participants, who experience similar events to tell their stories without any distortions or persecutions, was followed. Data collection was done using a semi-structured interview approach. The open-ended questions embedded in interview questions allowed responses that gave breadth and representative coverage. A semi-structured interview was the most appropriate research approach to complement the qualitative research design. The method allows the researcher to collect open-ended data, to explore participant thoughts, feelings and beliefs about the research topic and to delve deeply into personal and sometimes sensitive issues. A total of 11 out of 23 participants that were considered for the study were interviewed. The analysis of the data gathered during the interview indicated that investors considered qualified CAs or RAs to be competent professionals. The investors considered that it is through the qualification and competencies of CAs and RAs that the CAs and RAs provide the services that provide value for investment decision making. The information relevant for investment decision making includes audited financial information. Where necessary, it was considered that CAs and RAs need to make use of specialists when executing their roles to ensure adequate value is realised. In terms of investor expectations and value, it was noted that investors consider CAs and RAs to be generally ethical professionals. The investors expect RAs to be independent when conducting audit responsibilities. To ensure independence, the investors advocate for Mandatory Audit Firm Rotation (MAFR). As a result, CAs and RAs are not considered to be generally corrupt or professionals who engage in acts of misconduct. The participants recommend action, which includes harsher penalties and sanctions against CAs or RAs who are found guilty of misconduct. The study recommended further studies to be done to: 1) determine if there are professionals with qualifications other than those of CAs and RAs who can provide value equivalent to that which is being provided by CAs and RAs in investment decision making; 2) determine if the transparency of audit approaches followed by auditors adds value to the investment decision-making process; and to 3) deduce quantitative and qualitative materiality from an investor perspective when it comes to investment decision making.The results of this study add to the existing body of knowledge about the work of CAs and RAs, including its relevance to the investment decision-making process. The results of this study could also assist the Independent Regulatory Board on Auditors (IRBA) and the South African Institute of Chartered Accountants (SAICA) in identifying ways to sustain or enhance the professional reputation of the accounting and auditing profession. The SAICA can use the findings of the study to make informed decisions on training, products and services for the development of SAICA members, specifically in the Investment industry.