Companies free to pick auditors —Bank

The Reserve Bank says it has continued to engage with KPMG and banks that use it, emphasising it does not interfere in the appointment of auditors.

The Reserve Bank said on Thursday that it continues to engage with KPMG as well as with banks that use the auditing firm. And it again stressed that it does not interfere in the process of who an institution appoints as its auditor.

In its second public statement on the controversy surrounding KPMG, the Reserve Bank said it had noted recent developments regarding the audit firm, in particular its audit of VBS Mutual Bank.

In October 2017, in response to market speculation that it had instructed banks not to fire KPMG, the Reserve Bank issued a statement noting that it had not instructed banks on what steps they should or should not take with regards to their contracts with KPMG.

In Thursday’s statement the Reserve Bank said that as stated in 2017, its “interest in the KPMG matter stems from a public policy perspective, arising from the [Bank’s] mandate to ensure the soundness and stability of SA’s financial system”.

The Bank said a capable and competitive audit and auxiliary services industry was essential for the maintenance of a healthy business environment.

“The choice of auditor remains that of a firm, with due regard to the firm’s need and commercial interest as well as the capacity and quality of the audit firm.

“The Prudential Authority regulation of this process largely deals with the capacity and quality assurance provision of the audit firm,” it said.

The Bank said auditors play an important role in fostering market confidence in the financial statements of financial institutions.

“The quality of these audits also provides invaluable input into the work of regulators of financial institutions,” said the Bank.

But it added that the role of auditors should not be seen in isolation and that the robustness and integrity of audits depend, to a large extent, on the strength of governance and the depth of an ethical culture within a financial institution.

“These are issues that we monitor constantly,” the Reserve Bank said.

THE CHOICE OF AUDITOR REMAINS THAT OF A FIRM, WITH REGARD TO ITS NEEDS AND INTERESTS