Accounting specialists to look into KPMG staff

THE SOUTH African Institute of Chartered Accountants (Saica) said yesterday that advocate Dumisa Ntsebeza would head a high-powered inquiry into whether its members at KPMG contravened the institute’s code of professional conduct in the work they did for a Gupta company and the SA Revenue Service (Sars) “rogue unit” report.

The institute said Ntsebeza would be joined by Vuyani Ngalwana SC; Dr Claudelle Von Eck, the chief executive of the Institute of Internal Auditors; Malcolm Johnston, the former chairperson of the Johannesburg Stock Exchange; and former accountant-general at National Treasury, Freeman Nomvalo, who also co-authored the Auditing Profession Act of 2005.

It said the team would investigate whether there were any endemic or systemic deficiencies in the KPMG risk management systems that eventuated instances of unprofessional conduct or reportable offences by members in the course of performing auditing, consulting and advisory work for their clients.

It said the inquiry would also probe whether the KPMG employees, in executing their clients’ mandate, maintained and adhered to the fundamental principles as encapsulated in the Code of Professional Conduct among other terms of reference laid out by Saica.

Conveyed Ntsebeza said the independent probe would complete its work within five months and that the important purpose of the Inquiry had been conveyed to the Independent Regulatory Board for Auditors (Irba) and Irba seemed to understand it.

In September, Irba hit back at Saica after the institute announced its plans to launch an independent inquiry into KPMG’s conduct following allegations of the audit firm’s improper conduct in the audit of Gupta-owned Linkway Trading and the ill-fated Sars “rogue unit” report.

Irba had charged that Saica, as a member body, does not have the legal mandate to lead independent inquiries into the conduct of audit firms. Irba is also in the middle of its own inquiry into KPMG.

A spokesperson for Irba would not be drawn to comment on Saica’s announcement and said the regulator’s chief executive could not be reached as he was travelling on business overseas.

KPMG dropped a bombshell in September after the beleaguered firm withdrew parts of its report that refers to conclusions, recommendations and legal opinions in a probe it conducted into the existence of a Sars “rogue spy unit” and said that its audit on Guptaowned Linkway Trading was below standard. KPMG could not be reached to comment on Saica’s impeding probe.

Ntsebeza said submissions to the inquiry commenced yesterday and would close at the end of the month. “Prior to the commencement of the hearing of evidence, the panel shall review and consider the written submissions, statements and/ or evidence pertaining to the members herein.”