NEWS

Reserve Bank Concerned About KPMG As Firm Launches Independent Investigation

KPMG says it will institute an independent investigation into itself to restore the trust of its clients.

21/09/2017 06:29 SAST | Updated 21/09/2017 06:29 SAST
Siphiwe Sibeko / Reuters

KPMG's new CEO, Nhlamulo Dlomu, has called for an independent investigation into the auditing firm, Business Day reported on Thursday. Meanwhile, the paper also reported that the Reserve Bank is due to meet with South Africa's largest banks over concerns about the implications of a possible collapse of the firm.

KPMG has lost several clients over its handling of audits of the Gupta companies, which allegedly allowed public funds to be siphoned offshore, and its handling of an investigation into the so-called "rogue unit" at the SA Revenue Service (Sars). It retracted the report into Sars and apologised for what it called lapses in its standards.

On Wednesday, Dlomu reportedly said an independent investigation was necessary to reassure KPMG's employees and clients following the scandal. Dlomu took over at KPMG when its top leadership resigned in the wake of the controversy.

In an interview with Talk Radio 702, she reportedly said: "We have agreed with the South African Industry of Chartered Accountants that it would be appropriate to set up an inquiry into the matters... This would be an additional assurance lens, to ensure the public can truly see we have opened up our doors. We want to be clear about what has happened."

Meanwhile, the Reserve Bank is set to meet with the banks over concerns about what will happen to the sector should KPMG go under.

According to Business Day, banks are required to have two auditing firms, and KPMG is the joint auditor of four of the biggest banks. If KPMG, one of the big four auditing firms, goes out of business, it will affect the banks' ability to secure auditors.

KPMG reportedly employs 3,500 people.

The Reserve Bank would not comment on the meeting, while Finance Minister Malusi Gigaba is reportedly planning to make a public statement on the matter soon.