NEWS

KPMG Stands To Lose Its Biggest Clients

The auditing firms woes are far from over.

20/09/2017 06:28 SAST | Updated 20/09/2017 06:28 SAST
USA Today Sports / Reuters
Photo: Caylor Arnold-USA TODAY Sports

Embattled auditing firm KPMG is facing even more trouble as more firms threaten to stop using the company's services, with its biggest clients reportedly considering ending their contracts with the firm, and the possibility that it will lose state contracts.

Several JSE listed companies are reportedly also considering ending their relationship with KPMG, MoneyWeb reported on Wednesday.

On Friday, KPMG announced that it was distancing itself from its controversial report on the Sars "rogue unit", which resulted in the departure of several key executives from the tax collection service. Several senior executives from KPMG resigned, and although the auditing firm said there was no illegality on the part of its employees, it said its work had fallen short of its standards.

KPMG also reportedly allowed the Gupta family to move public funds offshore to pay for the 2013 Gupta family wedding, according to amaBhungane.

KPMG offered to repay the R23 million it was paid by Sars for the work done.

KPMG was fired by Sygnia Asset Management, and The Times reported on Wednesday that six more companies have stopped using the firm as their auditors in the last two months. Financial services company, Sasfin, and investment company Hulisani have reportedly decided to terminate their business dealings with KPMG.

According to The Times, Sars wants to have KPMG's contracts with all state entities reviewed. Investec, Standard Bank, Old Mutual, Growthpoint Properties, Sibanye Stillwater and Absa are reportedly considering firing KPMG as auditors.

Eyewitness News (EWN) reported on Tuesday that Parliament's Standing Committee on Finance wants the firm to appear before it next month. Chairperson of the committee, Themba Godi, reportedly said:

"Our view of the KPMG debacle is not necessarily centred around Sars. Sars can fight their own battles. But as you know, KPMG does a lot of business with government and so it is necessary to ask the question: is there integrity in their work? Should we doubt their work?"

According to MoneyWeb, Nedbank welcomed KPMG's announcement and said it would engage KPMG on the contents of its report before deciding on a way forward. Nedbank, Old Mutual and Investec are reportedly KPMG's biggest clients.

Investec told MoneyWeb that its audit committee would "make a recommendation to the board on how the group should proceed".

The Independent Regulatory Board for Auditors and Companies and Intellectual Property Commission are also investigating KPMG.