Audit fee revenue plunges 64 percent

Audit fee revenue  plunges 64 percent
MartinMakaya

Institute of Chartered Accountants of Zimbabwe president, Martin Makaya.

ACCOUNTING firms are grappling with shrinking audit revenue due to a worsening economic environment that has resulted in the closure of companies and left many others struggling to survive.
Institute of Chartered Accountants of Zimbabwe (ICAZ) president, Martin Makaya, disclosed last week that audit fees from companies listed on the Zimbabwe Stock Exchange went down by 64 percent from about $25 million in 2012 to about $9 million in 2015.
The ICAZ president, who is also a partner at BDO Zimbabwe Chartered Accountants, said the institute was still working on the 2016 figures.
The worsening economic conditions in the country, Makaya said, had severely affected companies, with most of them now struggling to survive.
Makaya said: “Zimbabwe has a huge challenge in terms of audit fees. We looked at what the Zimbabwe Stock Exchange listed companies have been paying the local audit firms over the years. In 2012, total audit fees paid was around $25 million but in 2015, the figures had come down to about $9 million.
“This means they have shed off more than 60 percent, and it speaks volumes. We are compiling figures for 2016. There is a lot of jostling among directors when negotiating with auditors. Now, there is a risk of driving audit firms into oblivion. We have a big problem here.”
Makaya said the economic downturn had affected the accounting sector in terms of more downward pressure on fees, rather than demand.
Zimbabwe’s economic growth averaged 10,6 percent during the period between 2009 and 2012, but growth declined to an estimated 4,5 percent in 2013, 3,8 percent in 2014 and 1,5 percent in 2015. Last year, the economy grew by 0,6 percent.
This has impacted on accounting firms which could not increase audit fees.
Well placed sources in the industry told The Financial Gazette that some accounting firms were giving discounts compared to previous years despite having to spend more time on complete audits.
They said many accounting firms were, however, being cautious about the future. They are now expanding into advisory services, including corporate restructuring and consultancy business as audit revenue shrinks.
newsdesk@fingaz.co.zw

  • Idiot

    At last the bean counters realize they need someone to grow and harvest before they come looking for skeletona which don’t exist.

  • Chibaba

    This is a tired proffesion that is severely under regulated in Zimbabwe & adds no value whatsoever to Zimbabwean shareholders. Hopefully this can shake them up from their deep slumber & kick them into action and actually provide a service that will assist their clients to make themselves better.

  • Blessing Sithole

    Rather than just call out problems (findings) they should proffer better solutions for business

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