KPMG South Africa said that it was disappointed to lose Nedbank as its client but it understood the decision. David Ritchie / African News Agency

JOHANNESBURG - Troubled audit firm KPMG South Africa said on Monday that it was disappointed to lose Nedbank as its client but it understood the decision was part of the industry wide move towards mandatory audit firm rotation.

Nedbank announced on Monday it would appoint Ernst & Young as joint external auditors in May 2019 to replace KPMG. 

KPMG lost a number of clients and sacked its South African leadership last September after becoming entangled in a corruption scandal following revelations that the work it had done for companies owned by the wealthy Gupta family, which has ties to former president Jacob Zuma, was not up to standard.

Professor Wiseman Nkuhlu, KPMG executive chairman, said the decision by Nedbank was part of the industry wide move towards mandatory audit firm rotation, which seeks to ensure objectivity and robust auditing services are provided to all public interest entities. 

Nkuhlu said this will likely involve a higher degree of change among established auditing relationships than they have been used to going forward.

"It is always disappointing to lose a client, but we remain very proud of the work that we have performed for Nedbank over many years, and of the diligence and professionalism of the team who served them," Nkuhlu said.  

"KPMG itself is a very different business from a year ago, as we have implemented far reaching changes to all aspects of the firm including; governance and leadership, the client roster, quality as well as culture and ethics. I am confident we are taking the right steps and that this is being recognised by clients."

Nkuhlu said the firm's readmission earlier this month to membership of Business Leadership South Africa was a welcome recognition of the changes it was making and had bolstered the company's determination to continue taking all measures to restore trust in the firm.

Earlier this month, KPMG announced that chief executive officer Nhlamulo Dlomu was stepping down and it would seek an external head to spearhead the company quest to repair its reputation. Dlomu was appointed last year to steady the ship after KPMG suffered reputational damage and its former chief executive, Trevor Hoole, resigned.

- African News Agency (ANA)