JOHANNESBURG – Former South African finance minister Trevor Manuel on Tuesday said that it is going to take the adults in the room to deal with the situation at KMPG.
Manuel said the auditing profession needs time to heal following the blow out at KPMG.
Speaking at the Deloitte Risk Conference 2017 conference 2017 in Johannesburg, he said it would mean if the big four firms came down to three.
“It would be a profound tragedy for risk going forward,” said Manuel, referring to a world without auditors. He explained that South Africans should consider what it means for the economy if trust is lost and if the key assurance that auditors provide to investors is removed.
Manuel gave credit to KPMG, which lost its top nine people. “To lose the top nine people as KPMG has done, and with it a collective 400 years of experience of the profession, is a big decision. A big decision that ought to lay the basis for a new beginning.
“My own sense is we must cut them some slack and support a process that must be a about a new beginning.”
Manuel took aim at the fact that auditors have about 30 to 40 pages of disclaimers to cover themselves in the case of a flawed opinion. Referring to the people who lost their jobs at the South African Revenue Service as a result of the report, Manuel said that the clock could not be rewound.
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“We must turn to the profession and (have) got to say to the profession: 'we need a healing process and make sure we do not have a further decline in trust'."
Manuel said he does not think the crisis in the profession is terminal, but the fact that the World Economic Forum re-ranked the quality of South Africa’s audit quality from 1 to 30 within a year’s time is cause for concern.
The conference was hosted in a bid to inform decision-makers on how to better understand the new environment of risk and how to manage it for improved business outcomes.