The impact of economic governance on the trade in accounting and audit services

Abstract

This study explores the impact of economic governance on the trade in accounting and audit services. A lot of research has been conducted on the trade in goods, but a lot less research on the trade in services. Similarly, as much as research on economic governance has been conducted, little research is available on the impact the rule of law, the control of corruption and the quality of institutions has on the trade in accounting and audit services in Africa. Institutional theory was used to structure the study, particularly in unpacking the importance for a country to have a well-structured institutional framework enabled by formal and informal institutions that are effective. The research comprised of semistructured interviews conducted with nine senior executives from three large firms, two mid-tier firms and the South African regulator. The study found that membership of the firms to global networks enabled them to possess the necessary systems, processes and procedures to assess and develop appropriate strategies to respond to the state of economic governance in countries they operated in, or intended to operate in. The study also established that, in arriving at the decision to enter or continue operating in a territory, firms did not only rely on the assessment of the state of economic governance, but took into account factors. The study contributes to the firms, professional bodies and regulators in the potential enhancements to processes and standards aimed at further capacitating formal institutions in creating an environment conducive to economic activity, whilst also contributing to areas where the firms can strengthen their capacity to assess and respond to the state of economic governance.