Auditing is great.
It can also be a waste of time, and money.
Audit firms cook up a load of audit procedures to inspect and analyse the books of a company and charge a ton of cash for the time their itsy-bitsy audit clerk sits and scrolls through countless transactions.
And at the end of the day, unless there is some obvious non-disclosure or irregular entry, the audit is an exercise in futility and wastefulness.
Well, at least that’s how the South African legislators must have seen it when they rehashed the Companies Act in 2008, as they effectively removed the audit requirement for companies turning over less than R100,000,000.
But if R100m, why R100m, and not R50m, or R500m for that matter?
Which begs the question, WHY AUDIT AT ALL?
Local Government Minister Brandon Lewis said:
The decision to abolish the Audit Commission was because it was a wasteful, ineffective and undemocratic. What should have been a voice for taxpayers became a creature of the central state.
Instead of just auditing accounts: it was regulating, micromanaging, and inspecting, forcing councils to spend time ticking boxes and filling in forms rather than getting on with the business of local government.
Our new law will replace this old fashioned quango by passing power down to people through more local choice and transparency. Better local audit arrangements will replace central dictat.