The role and liability of auditors in corporate disclosures and reporting : a legal analysis

Abstract

This thesis examines the role of auditors in mandated corporate accounting reports and disclosures and corporate voluntary sustainability disclosure and reporting, as regulated by the Companies Act 71 of 2008 and the Auditing Profession Act 26 of 2005. Local and international developments in corporate disclosures and reporting affect the role and liability of auditors, due to an increased emphasis on the significance of good governance in the private and public sectors, especially in relation to administration, management and decision-making.

The growing tendency among large companies to include corporate responsibility information in their annual financial reports accentuates the increasingly imperative future role of auditors to maintain and ensure good corporate governance practices. Scandals committed by auditors in particular, which resulted in the collapse of companies and a threat to stakeholder and public interests, have raised concerns about the effectiveness of control by South African bodies over its members.

Despite the current discourse on the legal liability of auditors for auditing the financial statements of companies, the legal liability for auditing voluntary sustainability reporting must still be established. Pressure from various partakers to legislate corporate social responsibility provisions in order to meritoriously move away from the uncertainties associated with voluntarily sustainability reporting, combined with the trend among companies to include corporate responsibility information in their obligatory annual financial disclosure and reporting reports, will certainly have an adverse impact on the legal liability of auditors.