Sars boss Tom Moyane. File Image
Sars boss Tom Moyane. File Image
File picture: Ziphozonke Lushaba, Independent Media
File picture: Ziphozonke Lushaba, Independent Media

JOHANNESBURG - The very existence of embattled audit firm KPMG on Monday came into question as the commissioner of the SA  Revenue Services (Sars) Tom Moyane said he had recommended to the government to blacklist the firm as the fallout over Sars “Rogue unit” report ensued unabated.

Moyane who was addressing the media in the wake of Friday’s media statement by KPMG that it had failed to apply its own risk management and quality controls and that part of the Sars report which refers to conclusions, recommendations and legal opinions should no longer be relied upon.

Moyane said the revenue services would institute legal proceedings against KPMG for reputational damage to Sars, including, but not limited to a civil claim.  

Also read: 7 things you should know from the SARS press briefing

“Sars sees KPMG’s conduct as nothing else but a dismal attempt to portray Sars, its leadership, and in particular Sars commissioner as incompetent, corrupt, inefficient and involved in a witch-hunt,” charged Moyane.

Amongst the other steps, Moyane said Sars would take against the audit firm was to report it to the relevant statutory audit bodies both locally and internationally. 

Sars would also KPMG to the Minister of Finance to consider stopping all work currently performed by KPMG in other departments as well as any work in the pipeline until all the work KPMG conducted for the state have been investigated and reviewed for quality and proper auditing quality and expected standards.  Moyane said the revenue services would immediately seize any work which KPMG was currently performing for Sars and assess the work KPMG had performed in the past10 years with the aim to determine whether there was a value for money and whether Sars should demand its money back. 

Have you read: KPMG facing backlash from corporate South Africa

Themba Godi, the chairperson of the standing committee on public accounts (scopa), on Monday said that if KPMG was to continue doing business with government departments and state-owned-enterprises, it must provide clarity about various media reports on its behaviour.

“Private audit firms must demonstrate that they have integrity and work in the public interest, beyond simply making a profit. Scopa will not hesitate to call on the government not to use certain audit firms if they are found to be unethical,” Godi said.

In a statement on Friday, KPMG conceded that it had not done justice to the Sars report. 

“The Sars Report refers to legal opinions and legal conclusions as if they are opinions of KPMG South Africa. However, providing legal advice and expressing legal opinions was outside the mandate of KPMG South Africa and outside the professional expertise of those working on the engagement,” read the statement.  However, Moyane said Sars still stood by the contents of the KPMG report, despite the firm saying it could no longer be relied upon. 

Also read: 6 ways SARS is considering to go after KPMG legally

"We stand by the reports in front of management that there was a prima facie evidence that a rouge unit did exist in Sars before i disbanded it.  The report by KPMG is not flawed, in fact that report confirms that there was wrong doing at Sars and people were involved in matters besides that of tax collection."

Besides the looming legal action by Sars, KPMG will also have to contend with legal threat by former minister of finance Pravin Gordhan, who said he would seek legal advice following KPMG’s admission it erred in when it said Gordhan knew, or ought to have known, of the “rogue” nature of the said Sars unit.  Banking giants Barclays Africa and Investec have already said they will be reviewing their relationship with the firm, while the Independent Regulatory Board for Auditors (IRBA) is currently investigating the firm over its work for the Gupta companies. 

File picture: Ziphozonke Lushaba, Independent Media

JSE-listed asset manager Sygnia was the first listed company to sever ties with KPMG after allegations emerged it had turned a blind eye to money laundering by a Gupta company.

KPMG on Friday also announced a raft of changes to its management team as it tries to clean up its battered reputation. Bernard Agulhas, the chief executive of the IRBA, on Monday said that the watchdog intended to meet with the new team at KPMG to discuss their remedial action programmes which will be regularly monitored by the IRBA. 

“It is critical for the reputation of the profession and the stability of our capital markets that the IRBA continues to work with audit firms to strengthen independence, professional scepticism and compliance to standards,” Agulhas said.