Au­dit firm‘needs a mir­a­cle to sur­vive’ in this coun­try

The Sunday Independent - - POL­I­TICS -

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.

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