Durban - The scandal surrounding auditing firm KPMG will have huge implications not only for the firm itself but for the finance industry, economists have warned.
Economist Dawie Roodt said the scandal was “up there” with some of the biggest experienced in the finance sector in recent years.
He said KPMG, which has already suffered financial loss, also stands to lose trust from the public and the business sector, which he said was an auditor’s most important asset.
Economist Bonke Dumisa said KPMG had suffered serious reputational damage because “the more they are seen to be doing the right thing the more they are actually putting their own brand at stake”.
“It is a catch 22 for them,” he said. Dumisa added that the admission by KPMG that some of its work had been sub standard had opened a can of worms and stressed that there were many other firms and auditors who flouted rules for devious ends.
“In the industry there are guns for hire, people who have been taking shortcuts to make easy money, knowing the objectives.”
KPMG could also face serious sanctions from industry bodies. The Independent Regulatory Board for Auditors (IRBA) said it was conducting its own investigation into the matter and would be meeting with the new management of the firm.
Economist Iraj Abedian from Pan African, said it was “way too late” for KPMG to try to save their reputation. “Even now they try to deny the real issues and damage caused to the economy. Understandably, they are scared of the truth.”
Abedian said even though the company had offered to repay Sars and donate the money it had taken from the Guptas to charity, this was not enough.