On the surface, it's been a relatively quiet year for the auditors and accountants of SA's top companies. With a hold on new International Financial Reporting Standards (IFRS) until 2009, the past year made a marked difference from previous years.

"We did get a much-needed breather," says Deloitte CEO Grant Gelink, "most firms were still trying to digest earlier changes." But changes to numerous regulations have meant auditing firms haven't had a quiet time.

"Behind the scenes, changes have been coming thick, fast and furious from every quarter," says head of auditing at KPMG Devon Duffield. Some of the changes include preparing for a new batch of IFRS statements due out in 2009. "Companies have underestimated the size and breadth of these changes and this also puts pressure on auditors."

The profession has also had to deal with increasing regulation from various bodies, including the newly established Independent Regulatory Board for Auditors (IRBA). Established by the Audit Profession's Act, the board's mandate is to review the quality of audits of both firms and individual partners. "It's necessary, but it does take up time," says Duffield.

Auditors also have to face the prospect of complying with provisions in the new Corporate Laws Amendment Act. Among the new provisions, auditors will have to attend company AGMs and be required to answer questions from shareholders. "Smart investors will be thinking about the questions they can ask," says Duffield.

But what is now frustrating audit and accounting firms is that the new Companies Bill, sponsored by the department of trade & industry (DTI), is likely to replace the Corporate Laws Amendment Bill in just two years' time. "Many of the new definitions will then go back to the old definitions," says Duffield. "The cost of compliance to the economy will be huge."

Director at Ernst & Young's Professional Practice Group Sarah Ford says the achievement of a single set of global accounting standards is getting closer and that those standards will be IFRS.

Since early 2002 the US Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) have been working towards developing common accounting standards for use in the world's capital markets.

One of the recent benefits of the convergence project is the US Securities Exchange Commission's decision to no longer require foreign companies listed in the US to use US Gaap. Several SA companies are listed on the JSE and on US bourses and will benefit.

However, says Ford: "These companies will still need to consider how the SEC interprets IFRS when they prepare their financial statements."

Head of audit at E&Y Ajen Sita says that with the focus having been on companies using a common standard, the unintended consequence has been that company accounts have become less useful for investors. "The statements of a bank look like those of a retailer (or) an oil company."

Audit firms must now rotate their audit partners every five years. Historically, firms tended to rotate audit partners every seven years to enhance independence. "It's a significant shift," says Sita. "Especially since the five-year rotation comes at a time when there is a shortage of chartered accountants. A seven-year period gave the incumbent time to get up to speed with the complexity of an account and to generate sufficient value for the client."

The JSE is considering a register for auditors. In order for firms to qualify to audit listed firms, they would have to have at least three audit partners, as well as at least one IFRS specialist and one internal reporting accountant specialist. "This would cut the number of firms that qualify dramatically," says PKF CEO Andrew Hannington. Only 13% of the 26 803 chartered accountants in SA are black. Thuthuka, a programme run by the SA Institute of Chartered Accountants (Saica) to boost the number of black CAs is yielding an 80%-plus pass rate. For the first time, the pass rate was the same among black chartered accountant trainees as it was among whites.

Deloitte's Gelink remains optimistic. "Ten years ago, the number of black chartered accountants would have filled five tables, now they would fill an entire ballroom," he says. "And more than 50% of our intake is now black."

Local firms are having to pay to keep skills. "Last year, the increase in salaries for senior staff was double inflation," says Gelink. "This year will be an even more difficult negotiation."