KPMG embroiled in yet another auditing scandal
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JOHANNESBURG - The auditing firm has had to fend off fresh allegations of mismanagement after being accused of overseeing what could possibly be the "biggest accounting scandal in the history of Botswana."
This Sunday, Botswana paper, Sunday Standard published an allegation made by a liquidator, John Little, from Kingdom Bank Africa (KBAL), accusing the auditing giant of misconduct by signing off its books even after the collapse of the bank two years ago. Little has since filled a lawsuit of close to R262m against the company on behalf of creditors.
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Filed court documents show the liquidation of liabilities, which followed the banks insolvency in 2010, totaling over R24.8m but the liquidator only recovered R65m from the bank's assets. The lawsuit also states that KBAL continued trading until 2014 despite its insolvency back in 2010 due to KPMG falsely reporting that the back was solvent, further incorrectly signing KBAL off as a going concern.
Little is quoted alleging that KPMG Botswana in fact “acted negligently in breach of its contract by failing to report the true situation to either the management of KBAL or to Bank of Botswana, further stating that KMPG has “not qualified its audit opinion or indicated that the going concern assumption was incorrect”.
“In the premises, in conducting the audit for the year ended 31 December 2013 and in conducting the audits for the prior years, KPMG Botswana acted negligently and accordingly breached the terms of its contract with KBAL,” Little continued. He states that KMPG further failed to report its dealings to KBAL management
Had KMPG acted accordingly, the bank would have had adequate time to ''recover sufficient assets to pay off liabilities, Little states. KPMG’s Nigel Warren-Dixon reportedly issued a statement that read that it would be “business as usual at the Botswana office,” doing little to repress the reputational damage plaguing the firm.
- BUSINESS REPORT ONLINE