Panic rules at KPMG as state axes its audits
Panic. That is how KPMG employees described the situation at the country’s fourthlargest audit firm this week. The latest fears were stoked by the office of the auditor-general, which pulled the plug on KPMG’s audit contracts on Monday.
Employees are now faced with the real prospect of retrenchment. It is understood there has already been a steady exodus of staff since signs of trouble in the audit firm, linked to Gupta accounts, emerged last year.
Former KPMG employees told Business Times that morale was at an all-time low and that it was “panic as usual”.
Auditor-General Kimi Makwetu said the decision to terminate contracts was based on concerns over breaches of professional competence, independence and ethics.
Two KPMG partners, Sipho Malaba and Dumi Tshuma, who are facing disciplinary charges relating to their audits of VBS Bank — placed under curatorship last month — resigned recently. The pair failed to disclose loans they held with VBS Bank.
One source said while nothing had been communicated about job security, staff who would ordinarily have been assigned to the auditor-general’s audits this time of the year had now not been tasked with these jobs.
The firm’s regional offices in Nelspruit, Polokwane and Pretoria, believed to rely heavily on government audit work, and other smaller ones, are expected to be affected.
A meeting held on Friday was expected to deal with the way forward for the firm after losing the auditor-general as a client. It is understood that up for discussion by KPMG’s top brass were retrenchments, what to do with the regional offices, and how to deal with trainees. KPMG has already lost about 10% of its clients after it was implicated in state capture last year.
Nqubeko Sibiya, KPMG spokesman, said the company was actively engaging with the auditor-general around transition arrangements for the work currently under way and the associated implications for the business. It would not be appropriate to comment further until this assessment was completed.