A Review of Entities Contracted To Medical Schemes For Auditing Services In South Africa

Audit firms are essential in ensuring companies’ financial statements are reliable and accurate. The Independent Regulatory Board for Auditors (IRBA) regulates the audit profession in South Africa. The IRBA sets auditing and ethical standards and oversees the registration and monitoring of auditors and audit firms. According to a 2020 report by the IRBA, there are over 4,200 registered auditors and more than 400 registered audit firms in South Africa. The Big Four audit firms (PwC, KPMG, Deloitte, and EY) dominate the audit market. Increasing the inclusion of historically underrepresented groups, such as black and female auditors, in the auditing profession has been a significant focus of developing auditing services in South Africa in recent years. There have been calls for reform in the auditing industry in South Africa, with some advocating for increased regulation and oversight to ensure that audit firms fulfill their responsibilities to the public interest. However, there remains a gap in tools used to assess, monitor, and increase transformation initiatives in auditing services. This study review examines the status of entities contracted to medical schemes auditing services to determine the number of players and the level of transformation and market dominance in the medical schemes. A select handful of audit firms dominate the market, impacting how the medical scheme industry transforms. According to this report, PwC Inc. or Deloitte & Touche accounts for nine out of 10 beneficiaries of medical schemes. According to the study’s findings, the Board of Trustees (BoT) can play a significant role in ensuring that other competitors are provided with an equal opportunity to compete for auditing services in the medical scheme’s environment. Contracting of auditing firms by the BoT, in particular schemes contracted to the same administrator, needs further exploration from a contract management and value-add perspective