KPMG takes further steps to improve image of auditors
CAPE TOWN - KPMG South Africa will cease all non-audit-related services to its listed clients from March 31 as it tries to patch up broken public perceptions about auditor independence and protecting the interests of the public.
South Africa has been rocked by financial scandals, both in government (such as through the rising evidence of state capture and theft of funds), and among corporates (such as the collapse of Steinhoff), and the role of the auditors either implicated or for signing off clearly misleading financial statements has been questioned.
KPMG South Africa, one of the big four global accounting firms, was part of it in 2017 when it confessed to publishing a misleading report on the SA Revenue Service (Sars) doing work for the Gupta family and turning a blind eye to corruption as an auditor for the collapsed VBS Mutual Bank. At least eight of KPMG's top staff resigned that year, including former chief executive Trevor Hoole. Some of the biggest companies in South Africa replaced KPMG as their auditors in the wake of the scandal.
Other governance measures KPMG subsequently took in South Africa was to appoint independent non-executive directors last year, as well as change the traditional systematic model of audit firms by doing away with partners at board level. It also late last year undertook to contribute to reparations for Sars employees implicated in its misleading report.
“The provision of non-audit-related services to our audit clients, while technically permissible under current laws, regulations and International Federation of Accountants principles, understandably creates challenges in the public perception of auditor independence,” KPMG SA chief executive Ignatius Sehoole said in a statement yesterday.
KPMG is the first firm in the country to take this voluntary step forward.
Sehoole said that while non-auditrelated services were typically well managed by audit committees, particularly those of listed companies, the objective of no longer providing such services was to help restore trust in the auditing profession, “as it removes any perception of conflicts of interest with our audit work for listed entities”.