Original Research

Audit regulation and its relevance for audit quality in Namibia

Miriam B. Dikuua, Warren Maroun, Wayne van Zijl, Asheer J. Ram
South African Journal of Economic and Management Sciences | Vol 26, No 1 | a4866 | DOI: https://doi.org/10.4102/sajems.v26i1.4866 | © 2023 Miriam Berenice Dikuua, Warren Maroun, Wayne van Zijl, Asheer Jaywant Ram | This work is licensed under CC Attribution 4.0
Submitted: 29 September 2022 | Published: 25 April 2023

About the author(s)

Miriam B. Dikuua, School of Accountancy, Faculty of Commerce, Law and Management, University of the Witwatersrand, Johannesburg, South Africa
Warren Maroun, School of Accountancy, Faculty of Commerce, Law and Management, University of the Witwatersrand, Johannesburg, South Africa
Wayne van Zijl, School of Accountancy, Faculty of Commerce, Law and Management, University of the Witwatersrand, Johannesburg, South Africa
Asheer J. Ram, School of Accountancy, Faculty of Commerce, Law and Management, University of the Witwatersrand, Johannesburg, South Africa

Abstract

Background: Corporate scandals have resulted in decreasing levels of confidence in the audit profession so that audit quality is under finer scrutiny.

Aim: This article has explored the role external audit regulation in Namibia plays in ensuring the quality of its financial statement audits.

Setting: The opinions of audit and regulation experts in Namibia were examined.

Method: A mixed-method approach, grounded in an interpretive epistemology, was employed. A correspondence table was developed, using the current literature. The opinions of audit and regulation experts on the effect that external regulations have on audit quality were then sought, using correspondence analysis and interviews.

Results: The primary themes of audit quality from a regulatory perspective are maintaining independence and consulting on complex audit matters, the employment of competent members in the engagement team and a culture of quality, driven by firm leadership. It is further revealed that administrative functions play a vital role in contributing to the quality of an audit.

Conclusion: A conceptual model, linking regulation and audit quality, is presented. Independence is considered the cornerstone of the audit profession, while regulations are relevant to independence. Regulators may consider introducing measures such as rotation of audit firms or the disclosure of audit tenure in annual financial statements.

Contribution: This is the first research of its kind in Namibia. It is helpful to regulators and audit practitioners because it allows them to gain a better understanding of whether the current regulations adequately enhance audit quality, instead of being perceived as a ‘tick-box’ exercise.


Keywords

audit quality; external regulation; International Standard on Quality Control 1 (ISQC 1); Namibia; Public Accountants’ and Auditors’ Board (PAAB); Institute of Chartered Accountants of Namibia (ICAN)

JEL Codes

M40: General; M42: Auditing; M48: Government Policy and Regulation

Sustainable Development Goal

Goal 16: Peace, justice and strong institutions

Metrics

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