The Economic Freedom Fighters (EFF), South Africa's third largest political party, welcomed as overdue, a decision by the Auditor-General to cancel contracts with embattled audit firm KPMG, and said there was evidence to prosecute some partners.

Auditor-General Kimi Makwetu said on Tuesday his office had decided to terminate the KPMG contract, as well as that of fellow auditing company Nkonki Inc., with immediate effect.

KPMG has been embroiled in auditing scandals over the work it did for businesses owned by the controversial Gupta family, and also over a discredited report it compiled about the existence of a so-called "rogue unit" at the SA Revenue Service (Sars).

In addition, KPMG failed to flag R900-million missing from the 2017 financial statements of VBS Mutual Bank, which the central bank placed under curatorship last month over increasing liquidity challenges.

KPMG has admitted that senior partners Sipho Malaba and Dumi Tshuma misled the firm about their relationship with the bank and did not disclose loans they took from VBS.

The EFF said some senior KPMG partners had been at the centre of efforts to legitimatize the looting of state resources by a Gupta-led syndicate.

"There is prima facia evidence sufficient for criminal prosecution and their own admission of incompetent and unethical conduct," the party said.

It said the auditor-general had never made any serious findings on the looting of state resources, or state capture, because KPMG, like many other audit firms, had been appointed to audit its own client and had possibly assisted the Gupta-led syndicate to hide evidence.

The EFF urged the auditor-general to appoint an internal team to review all related audit work and pursue a civil case to recover money in cases where there was concrete evidence that poor work had been done.