KPMG fighting for survival

TRYING HARD TO RETAIN BIGGEST CLIENTS – 4 OF SA’S 6 LEADING BANKS

KPMG SA unit is hurriedly meeting clients to stem any further loss of business after becoming embroiled in three evolving scandals. Over the past eight months, the auditor issued a public apology for work done for the Gupta family; withdrew the findings of a Sars report; and interrogated staff who signed off on VBS Mutual Bank’s accounts before it failed.

This weekend, directors drafted three ways to convince clients that it still deserves its fees. That did not stop it losing one of its biggest customers on Tuesday, the auditor-general (AG).

“We’ve reached the breaking point,” chairperon Wiseman Nkuhlu said on Sunday, before pledging to vet KPMG SA’s more than 3 000 staff every two years. He has also called in international colleagues to help probe the quality of past audits and set up a hotline for staff to report corruption.

Its VBS crisis erupted when two partners resigned for not disclosing financial interests related to VBS. Last year, it lost Sasfin and The Foschini Group.

After the AG cut ties, KPMG can’t afford to further risk its biggest business – auditing four of the country’s six largest lenders.

Standard Bank is assessing the latest “adverse information”, it said. Nedbank said it can’t change auditors this year as parent company Old Mutual splits into four units. Barclays Africa’s board will discuss KPMG’s role in the VBS collapse next month and Investec is scrutinising the auditor’s current work on its 2017 fiscal year. On losing the AG’s contract, KPMG said it’s taking significant steps toward improvement and it hopes “it will prove to only be a temporary break in the relationship”.

While SA banks are required by regulators to have two auditors and there’s a scarcity of alternative candidates, KPMG is “fairly certain” to lose more clients, said economist Dr Iraj Abedian.