JOHANNESBURG - South African lender Nedbank yesterday became the latest financial services group to sever ties with embattled audit firm KPMG.
The bank said KPMG would cease to look after its books with effect from next year. Nedbank, which recently unshackled from Old Mutual, said it had appointed Ernst & Young as its new joint external auditors after a competitive bidding process. The company said the appointment of the firm would be given the green light at its annual general meeting (AGM) set for May.
“As a consequence, KPMG will rotate off the companies’ audits on conclusion of its external audit responsibilities for the year ending December 31, 2018, expected to be at the conclusion of the relevant AGMs,” Nedbank said.
The bank also uses the services of Deloitte & Touche as its joint auditors. The SA Reserve Bank requires commercial banks to have two external auditors acting jointly. Nedbank in May gave KPMG a temporary reprieve when it proposed to its shareholders at its AGM to consider Deloitte and KPMG as its joint external auditors for the 2018 financial year.
At the time, it said it based its decision on the requirement for it to have the same auditors with its then parent company Old Mutual. KPMG South Africa executive chairperson Wiseman Nkuhlu said the firm was a different business from a year ago after implementing changes in its culture. “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,” Nkuhlu said. Nedbank becomes the second top four bank to let go of KPMG. In May, Absa said its board had decided to no longer use the firm as its auditors.
KPMG also looks after the books of Standard Bank and Investec. The duallisted Investec in August decided to buck the trend and reappointed KPMG as its auditors. However, 19.5 percent of its shareholders voted against KPMG’s appointment. Standard Bank has previously stated that its relationship with the firm remained under review. KPMG’s troubles in South Africa were sparked by its dealing with the Gupta family and the shoddy work it did on the Sars “rogue unit” report. However, it was its role over the collapse of VBS Mutual Bank that drew the harshest criticism.
The auditor-general reacted to the scandal by cancelling the group’s government contracts.