Barclays Africa and Absa bank on Monday, said that it would 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.