JOHANNESBURG - Following the statements made by Finance Minister, Malusi Gigaba yesterday about audit firm, Deloitte, saying that the firm was not independent and objective in its forensic report that it had conducted for Treasury on the Integrated Financial Management System (IFMS), Deloitte responded to these allegations.
Lwazi Bam, the chief executive at Deloitte, spoke to Business Report and gave further detail on the dealings between the firm and Treasury. View the full response below.
Also read: Deloitte hits out at Finance Minister Malusi Gigaba
Response from Deloitte:
We can confirm that Deloitte has not been informed by the IRBA of the complaint you refer to. I set out below the facts relating to Deloitte’s appointment by National Treasury to conduct a forensic investigation at National Treasury:
1. The Risk Advisory business of Deloitte responded to a competitive Request for Proposal issued by National Treasury to investigate concerns raised by their internal audit function relating to a Project Management Office established for the implementation of the Integrated Financial Management System (IFMS).
2. Deloitte was appointed on 16 September 2016, and a Service Level Agreement which included a specific scope of work, was subsequently signed by Deloitte on 6 October 2016 and National Treasury on 14 October 2016.
3. Further, to deal with limitations in the scope, Deloitte issued a request for extension of mandate on 15 March 2017 to cover other aspects not included in the initial scope of work.
4. Deloitte, in the normal course of its business which spans audit and advisory services, conducts vigorous independence and conflict of interest checks on opportunities that arise to deliver services to clients. This internal process was triggered following the identification of an opportunity at National Treasury by Deloitte’s Consulting business. It was Deloitte’s view that the forensic service provided within the IFMS environment would not result in a conflict of interest, and therefore would not preclude Deloitte’s Consulting business from responding to further tenders from National Treasury, specifically in relation to the IFMS.
5. To seek clarity on any perceived conflict of interest from National Treasury, the Deloitte Lead Client Service Partner of National Treasury emailed the Deputy Director General of National Treasury’s Corporate Services on 3 March 2017 requesting National Treasury’s view on any perceived conflict of interest.
6. At the time the email was sent (3 March 2017), the forensic investigation was substantially complete as reported in the preliminary report and those findings remained the same in the draft report, which was submitted to National Treasury for comment.
7. In compliance with the requirements of the Service Level Agreement, Deloitte submitted a draft investigative report on 27 March 2017 to National Treasury for discussion purposes and to allow National Treasury to comment on our report. This is normal practice in our forensic investigations.
8. It is important to note that the findings in Deloitte’s draft report does differ in certain respects from the findings contained in the report prepared by National Treasury’s internal audit function.
9. Deloitte stands by the findings of its Forensic report based on the scope contracted for and rejects the inference that Deloitte has not been independent and objective.
10. Deloitte further rejects the allegation that it has been unprofessional.
11. Deloitte has received communication from National Treasury indicating that the draft investigative report submitted by Deloitte does not meet National Treasury’s standards of quality. However, no comment has to date been received on the detail contained in our report.
12. Deloitte has since responded to National Treasury requesting that National Treasury indicate what aspects (if any) contained in the draft report is/are in dispute and that Deloitte be afforded a reasonable opportunity to review and address areas of disagreement as per the provisions of the Service Level Agreement signed by both parties.