Business News 4.10.2017 09:38 am

Wits University drops KPMG as its auditor

FILE PICTURE: Professor Adam Habib, Vice-Chancellor at the University of the Witwatersrand. Picture: Gallo Images / Sunday Times / Waldo Swiegers

FILE PICTURE: Professor Adam Habib, Vice-Chancellor at the University of the Witwatersrand. Picture: Gallo Images / Sunday Times / Waldo Swiegers

Wits says the committees acknowledged that KPMG did take some action following the Gupta family controversy, but felt that it had not gone far enough.

The University of the Witwatersrand (Wits) said on Wednesday that its council had resolved not to renew contracts with KPMG South Africa for internal auditing and risk management services.

The contracts lapse at the end of the 2017 financial year.

The Wits move is a fresh blow against the embattled audit firm, which continues to lose clients over its controversial report on a “rogue spy unit” within the South African Revenue Service (Sars), and also being implicated in covering money laundering in Gupta-owned businesses.

When the scandal surfaced KPMG SA fired its senior partners, including former chief executive Trevor Hoole, chairman Ahmed Jaffer, chief operating officer Steven Louw and appointed Nhlamu Dlomu as its new chief executive.

In a statement, Wits said the decision was taken following a meeting with the new chief executive of KPMG and the company’s international representatives and members of the university council’s audit and council risk committees.

Wits said the committees acknowledged that KPMG did take some action, including releasing the CEO, COO and a number of senior partners to mitigate against reputation damage suffered as a result of its relationship with Gupta-associated companies and its complicity in the Sars report, but felt that it had not gone far enough.

“Further, it was agreed that KPMG had not been sufficiently transparent and that it is hard to reconcile KPMG’s conclusion that no one did anything illegal when senior individuals have been dismissed and the Sars report has been retracted,” Wits spokesperson Erna van Wyk said.

“In these circumstances, the council believes that it would have been prudent to acknowledge the ethical and legal lapses of KPMG’s senior management team.

“Further, the company should have embarked on programmes to correct the wrongs that have been done to individuals and institutions. The council also believes that an independent investigation should have been initiated at the outset.”

Van Wyk said audit firm PWC would remain the university’s external auditors.

In a statement on Monday, Barclays Africa and Absa bank said that it would also continuously reconsider its position with embattled auditing firm KPMG South Africa as more information becomes available on some investigations and reviews that are currently underway.

This comes as the South African Reserve Bank (Sarb) over the weekend reportedly told the banks that they cannot fire KPMG  because it might undermine financial stability despite the firm being entangled in a forensic report scandal.

Last month, KPMG announced that it intended to withdraw its report on a probe into the existence of a “rogue spy unit” within the South African Revenue Service (Sars), while it said audit work done for the controversial Gupta family “fell considerably short of KPMG’s standards”.

The auditing firm also fired its senior management and appointed a new leadership team. This led to the the Independent Regulatory Board for Auditors (IRBA) beginning its own probe of KPMG and a clients exodus.

KPMG is one of the joint auditors of Barclays Africa and Absa bank.

Absa said though the behaviours underlying the allegations in these reports against KPMG were “in conflict with our values”, a multitude of factors come into play when appointing, terminating or changing auditors, including considerations of audit quality and independence.

“This process includes consultation with our primary regulator, the South African Reserve Bank (Sarb), which requires two joint auditors for the major South African banks. The Sarb has indicated that it will await the outcomes of further independent investigations before making further decisions or pronouncements,” Absa said in a statement.

“The extent to which the public at large and notably investors and credit ratings agencies rely on the integrity of our financial reporting means that robust and credible audited financial statements, subject to a high-quality audit by our independent auditors, must be delivered to stakeholders.”

Absa further said it had asked for and received assurances of additional support and quality reviews from KPMG International in relation to audit work done for Barclays Africa.


‘Profound tragedy’ if KPMG fell over

To comment you need to be signed in to Facebook. Please do not comment by saying anything prejudiced.
We reserve the right to remove offensive comments.


The Citizen Trail Run 2018

today in print