KPMG BATTLES FOR SURVIVAL

Thu, 21 Sep 2017 10:58:27 +0000

The very existence of international audit firm KPMG has come into question following the decision of the South African Revenue Service (Sars) recommendation to the government that the firm should be blacklisted.

According to the Tuesday 19 September 2017 edition of the South African Financial Daily; Business Report, Sars Commissioner Tom Moyane has announced that the revenue service would in addition to recommending to the government to black list KPMG also report the audit firm to the relevant statutory audit bodies both locally and internationally.

KPMG admitted on Friday 15 September 2017 in a media statement that it had failed to apply its own risk management and quality controls and that part of the report it prepared on Sars which refers to conclusions, recommendations and legal opinions should no longer be relied upon.

Moyane who addressed the media in reaction to the KPMG media statement, said that Sars would institute legal proceedings against KPMG for reputational damage to Sars including, but not limited to a civil claim.

“Sars sees KPMG’s conduct as nothing else but a dismal attempt to portray Sars, its leadership and in particular the Sars Commissioner as incompetent, corrupt, inefficient and involved in a witch hunt,” Moyane charged at a media briefing on Sunday.

Moyane said that Sars would immediately seize all work that KPMG was currently undertaking for the revenue service and that they would also request the Minister of Finance Malusi Gigaba to consider stopping all work being performed by KPMG for other government departments as well as any other work in the pipeline until all work conducted by KPMG for the state had been investigated and reviewed for proper auditing quality and expected standards.

Business Report has also quoted the chairman of the standing committee on public accounts (Scopa) Mr. Themba Godi as having demanded clarification from KPMG on its media statement before the audit firm can continue working for government departments and state owned enterprises.

“Private audit firms must demonstrate that they  have integrity and work in the public interest beyond simply making a profit. Scopa will not hesitate to call on the government to not use certain audit firms if they are found to be unethical.” Mr. Godi said.

KPMG is also facing legal action from former Minister of Finance Pravin Gordhan who announced that he would seek legal advice from his lawyers in the wake of the KPMG media statement.

KPMG is also likely to lose clients. Johannesburg Stock Exchange (JSE) listed company, Sygnia, has already severed ties with KPMG after allegations that the audit firm had turned a blind eye to money laundering by a Gupta company. Other companies which are reviewing their relationship with KPMG are Barclays Africa and Investec.

Meanwhile, the Independent Regullatory Board for Auditors, (Irba) is investigating KPMG over its wok for the Gupta companies. Business Report quoted the Irba Chief Executie Bernard Agulhas as saying that the watchdog body would meet the new KPMG management to discucss their remedial action programmes which would regularly be monitored by Irba.