JOHANNESBURG - The South African Institute of Chartered Accountants (SAICA) yesterday said that Advocate Dumisa Ntsebeza has assembled an inquiry to decide whether its members in KPMG contravened the institute’s code of professional conduct in the work they did for a Gupta company and the SA Revenue Service (Sars) report.
The institute said Ntsebeza would be joined by General Council of the Bar of South Africa Vuyani Ngalwana SC, Dr Claudelle Von Eck – the chief executive of the Institute of Internal Auditors, Malcolm Johnston, the former chairperson of the Johannesburg Stock Exchange and former Accountant-General at National Treasury Freeman Nomvalo who also co-authored of the Auditing Profession Act of 2005.
It said the team would investigate whether there were any endemic or systemic deficiencies in the KPMG risk management systems that eventuated instances of unprofessional conduct or reportable offenses by members in the course of performing auditing, consulting and advisory work for their clients. It said the inquiry would also probe whether the KPMG employees in executing their clients’ mandate maintained and adhered to the fundamental principles as encapsulated in the Code of Professional Conduct amongst other terms of reference laid out by SAICA.
Have you read: KPMG embroiled in yet another auditing scandal
Ntsebeza said the independent probe would complete its work within five months and that the important purpose of the Inquiry has been conveyed to the Independent Regulatory Board for Auditors (IRBA) and IRBA seems to understand it.
Picture: David Ritchie/ANA
“In terms of SAICA’s Constitution and the Auditing Profession Act, SAICA will seek to explore to what extent those instruments provide an opportunity for SAICA to liaise and cooperate with IRBA, with respect to the findings and recommendations of this Inquiry,” he said.
“This Inquiry does not aim to usurp the statutory functions of the IRBA. It seeks to inquire into the conduct of the members of SAICA, an independent professional body, as it is entitled to do by section 48(6) of the Auditing Profession Act.”
In September, IRBA hit back at SAICA after the institute announced its plans to launch an independent inquiry into KPMG’s conduct following allegations of the audit firm’s improper conduct in the audit of Gupta-owned Linkway Trading and the ill-fated SARS “rogue unit” report. IRBA had charged that SAICA, as a member body, does not have the legal mandate to lead independent inquiries into the conduct of audit firms. IRBA is also in the middle of its own inquiry into KPMG. A spokesperson for IRBA would not be drawn to comment on SAICA’s announcement and said the regulator's chief executive could not be reached as he was traveling on business overseas.
Also read: Imperial puts KPMG on notice over ‘state capture’
KPMG dropped a bombshell in September after the beleaguered firm withdrew parts of its report that refers to conclusions, recommendations and legal opinions in a probe it conducted into the existence of a Sars “rogue spy unit” and said that its audit on Gupta-owned Linkway Trading was below standard. KPMG could not be reached to comment on SAICA’s impeding probe.
Ntsebeza said submissions to the inquiry commenced yesterday and will close at the end of the month. “Prior to the commencement of the hearing of evidence, the panel shall review and consider the written submissions, statements and/or evidence pertaining to the members herein.”
Nqubeko Sibiya, a spokesperson for KPMG, said the firm has been made aware of SAICA-convened Independent Inquiry. “We will need to take time to study the Inquiry’s announcement and to apply our minds to what it means. We are committed to rebuilding public trust and look forward to understanding how the Independent Inquiry can support us in doing so,” Sibiya said.