By far the biggest challenge was the introduction of International Financial Reporting Standards (IFRS). This will be the common reporting structure for listed companies globally and auditors were required to overhaul the presentation of financial statements. Listed companies had to adopt them for financial periods starting on or after January 1 2005.

In addition, the introduction of International Standards of Auditing, which were implemented throughout the year, will affect the processes auditing firms follow during audits. "It's been nothing short of a revolution," says head of accounting and auditing firm Grant Thornton, Leonard Brehm. "We've always been watchdogs, but new rules require us to be bloodhounds."

Deloitte CEO Grant Gelink says audits are becoming far more complex, detailed and risky. "Auditors are now expected to look for fraud indicators at the planning stage of an audit and to evaluate controls," he says. "With the current shortage of skills, firms' resources are stretched." He says the Auditing Professions Act also expands auditors' responsibilities outside traditional boundaries: "We're now responsible to a range of stakeholders, not just shareholders of companies."

But KPMG executive director Darryl Jackson says the pendulum seems to be swinging back to a more balanced approach to regulating the way companies behave.

"Companies have had to plough their way through the unprecedented amount of business regulation at major cost, but the intense focus on compliance and risk management has ensured that executives now have their house in order," says Jackson. "They can start to shift their focus from compliance to a more outward-looking approach."

Jackson says there may be minor modifications to the regulatory frameworks, "but there won't be that desperate focus on compliance that has absorbed the industry over the past year."

Then there's the issue of auditor rotation. The Corporate Law Amendment Bill (tabled in parliament but not passed by end-May) will require audit partners to rotate every five years.

Still, the big four continue to audit the majority of the JSE-listed companies, while small to mid-sized firms have battled to break in.

Says Brehm: "Regulators in many jurisdictions have expressed concern about the dominance of the big four in the listed market," he says. "Locally it's a cause for concern too." But KPMG's Jackson says it's not surprising that the big four should dominate. "People who invest and lend to listed companies still want to see a big-name brand signing off the accounts," he says.

Brehm says though mid-sized firms like Grant Thornton are capable of auditing big listed entities, the real gap for smaller players is providing advisory services to listed companies. "They're less likely to use their existing auditors for advisory services," he says. "And the Corporate Law Amendment Act will prohibit listed companies from getting internal audit services and tax advice from their own auditors."

Advisory services are also expanding beyond the traditional offerings. Companies, keen to show they take governance and ethics seriously, are increasingly reporting on non-financial issues such as sustainability.

PricewaterhouseCoopers (PwC) says clients are looking to firms to add credibility to their sustainability initiatives. By bringing together specialists from different disciplines, including from the social and environmental fields, firms such as PwC are tailoring their advisory services and expanding their expertise.

On the empowerment front, black auditing firms are coming into their own. Over the past five years they've partnered bigger firms and beefed up technical expertise. Many empowered firms are still servicing government and parastatals, but some have broken into the private market.

Where companies have demanded joint audits, there is increasing emphasis on ensuring that bigger firms share the work equitably with smaller empowered partners. "It's 50-50," says Gelink.

But as the big four are on track to meet the target of 25% black equity by 2008, there's likely to be less pressure to use joint auditors to improve empowerment. "By then we'll be empowered enough to contribute meaningfully to clients' balanced scorecards," says Gelink.

Black membership of the SA Institute of Chartered Accountants has grown by more than 92%, to 2 568, over the past four years.