KPMG has undermined SA’s reputation for good governance and audit independence, says Finance Minister.
Finance Minister Malusi Gigaba has advised all government departments and entities to consider reviewing their work programs with audit and advisory firm KPMG SA to ensure that audits done by the firm “have not been compromised”.
KPMG is in a fight for its life after it admitted last week that it missed red flags in its auditing of Gupta family-owned companies and also withdrew parts of its controversial report on the South African Revenue Service’s (Sars) so-called “rogue unit”.
“These developments have created a bad image and have undermined the reputation of good governance and audit independence in one of the key sectors and institutions in our economy,” Gigaba said in a statement on Friday.
“These developments further threaten to undermine our efforts in reinforcing confidence and enhancing a climate for investments, both domestic and international.”
Gigaba said the review of KPMG’s work on government would be a measure that helps “to restore confidence in audits.”
On Monday, Sars Commissioner Tom Moyane called on Gigaba to order the government to review all work done by KPMG and to blacklist the firm.
KPMG’s future hangs in the balance as it faces two investigations from the Independent Regulatory Board for Auditors and Companies and Intellectual Property Commission, which are probing the conduct of KPMG’s directors and whether the firm flouted regulations in its audit of Gupta-linked companies. Gigaba said it’s “warranted and critical” that the relevant law enforcement bodies look into KPMG to “identify and sanction those responsible for any wrong-doing.”
JSE-listed companies that are externally audited by KPMG including Sasfin Bank and Hulisani announced this week that they are terminating their relationship with the firm.
The Board of Business Leadership South Africa announced on Friday that it had decided to suspend the membership of KPMG “pending the outcome of an independent investigation into the organisation’s involvement in conduct related to ‘state capture’”.
Former Finance Minister Pravin Gordhan, who was implicated in KPMG’s report for helping set up the “rogue unit” when he was the Sars commissioner, and his former deputy Mcebisi Jonas met KPMG’s global chairman John Veihmeyer and other senior executives on Thursday.
In a statement on Thursday evening, Gordhan and Jonas said KPMG’s transparency “will determine whether KPMG can earn the respect and confidence of both corporates and the audit profession on the one hand and the South African public on the other”.
Gordhan was fired from his post as finance minister partly as a result of KPMG’s report on Sars.