Changes coming at KPMG SA as parent moves in
KPMG SA has lost its ability to rehabilitate its image and win back the confidence of its corporate clients in SA.
It turns out KPMG International is looking to take much deeper and extensive control of the local outfit. This was one of the observations that came from an update the company provided on Monday.
The firm also announced that due to recent client losses and levels of demand it would undertake restructuring in which it expects to retrench 400 employees over the next two months. This will see its head count falling from 2,700 to 2,300 by the end of July.
The restructuring will also result in the closure of its regional offices in Bombela, Bloemfontein, Polokwane and East London. While the regional offices are mainly involved in audit work, there will also be job losses in the firm’s consulting and administration divisions.
The company indicated that it did not expect any changes to staff levels in its financial services audit franchise.
The local division of the international audit and consulting group has lost high-profile listed companies due to unbecoming professional conduct, including a cosy relationship with the Guptas, which led to substandard audits of Gupta family companies.
The most recent controversy involved two KPMG partners resigning as a result of their role in the audit of VBS Mutual Bank, recently put into curatorship by the South African Reserve Bank.
“The leadership changes will involve embedding … for an extended period a number of senior KPMG partners from across the international network into board and executive positions, as well as senior client service roles,” said KPMG SA.
Nhlamulo Dlomu, CE of KPMG SA, said: “These hard decisions were necessary to put the firm on a more sustainable footing, while ensuring we continue to offer our clients the best service and support.
“We are putting quality and integrity at the heart of the business and, from now on, the firm will be focused on doing fewer things better.”
The retrenchments come despite the decline in staff numbers as a result of natural attrition. KPMG SA employed about 3,400 people in September 2017 (including trainee chartered accountants) before it formally began to address its challenges. This led to a number of senior partners being shown the door in September, and the company formally withdrawing conclusions made in the so-called SARS “rogue” report.
KPMG plans in the next few weeks to complete the quality reviews it undertook in the wake of the VBS controversy. This involved having its work reviewed by the firm’s international partners as a means of allaying concerns that the audit quality of its work had declined across its franchise.