Audit firm‘needs a miracle to survive’ in this country
KMPG’s woes worsened after the South African Institute for Chartered Accountants supported calls for a commission of inquiry into the auditing firm.
The call came after Finance Minister Malusi Gigaba announced the government would review all the work that has been done by the firm.
The DA has also said it would do the same in the 30 municipalities it governs across the country.
And economist Iraj Abedian, of Pan-African Capital Holdings, warned yesterday that the government’s review of KPMG’s work would be the ruin of the company.
“Basically, KPMG needs a miracle to survive. It’s almost untenable for it to continue,” said Abedian.
Nhlamu Dlomu, the new KPMG chief executive, who replaced Trevor Hoole after the scandal involving the auditing firm’s report on the Sars “rogue unit”, faces a daunting task to change the reputation of the company.
Gigaba said that what has happened at KPMG needed to be investigated. The primary concern was that it had damaged the reputation of the industry.
“In the immediate term, and as a measure to restore confidence in audits, all of government and its entities must consider reviewing their work programmes with KPMG to ensure their audit processes have not been compromised in any way, and to take appropriate steps if they have been,” he said.
One of the problems in the industry was that a few firms dominated the market and they wanted the work to be spread across all the players, he added.
DA deputy spokesperson on finance, MP Alf Lees said they would follow suit and review all the work that has been done in the 30 municipalities the party governs across the country.
KPMG had done some work for the Guptas and the family has been at the centre of state capture, Lees added.
“Now that National Treasury has announced that government departments and entities will review all KPMG contracts, it is imperative that they now take the lead and empower the structures to do so,” he said.
Saica said it wanted the commission of inquiry to be headed by a judge. Saica chief executive Terence Nombembe, who was the former auditor-general, said they were not downplaying the work done by the Independent Regulatory Board for Auditors in probing KPMG. “Saica has received widespread requests from its stakeholders, including Saica members, significant players in business and civil society as well as the general public to take a strong stand against unethical behaviour by its members,” said Nombembe.
Business Leadership South Africa (BLSA) also announced that it has suspended KPMG pending an investigation into the company. BLSA said it would not allow a company with a cloud hanging over its head to remain in its fold until the entire matter has been investigated.
“We are deeply concerned by the unethical and unprofessional conduct that KPMG engaged in in South Africa.
“The firm became party to the project of ‘state capture’, which has harmed our country, victimised certain individuals and damaged the reputation of business,” said Business Leadership SA chief executive Bonang Mohale. He added that those who had violated the law must be prosecuted.
Former finance minister Pravin Gordhan and former deputy finance minister Mcebisi Jonas have met with a KPMG delegation led by KPMG International chairperson, John Veihmeyer.
Gordhan called on KPMG to be frank and open with South Africans about what has gone down there.