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The Independent Regulatory Board for Auditors (IRBA) said on Monday that it had noted that KPMG had taken steps to enforce accountability relating to its controversial South African Revenue Service (Sars) report, but added that it would continue with its own independent investigation.
Last week KPMG announced that it had withdrawn its report on the work the audit firm did for Sars and on behalf of the Gupta family.
On Friday, KPMG South Africa appointed Nhlamu Dlomu as its new chief executive. Dlomu said that she was committed to restore the embattled audit firm’s fundamental values of ethics and integrity in a bid to salvage the firm’s credibility as she takes over the helm at a time of deepening crisis.
This came as Trevor Hoole tendered his resignation on Friday as the chief executive KPMG SA, with chief operating officer and country risk management partner Steven Louw also stepping down. Five other senior partners of KPMG SA also decided to leave the firm.
KPMG SA would also be taking disciplinary action seeking the dismissal of Jacques Wessels, the lead partner on the audits of the non-listed Gupta entities.
KPMG received criticism regarding the “Sars Report” in which it was commissioned by Sars to investigate allegations of a rogue unit allegedly set up by Pravin Gordhan, who was Sars commissioner at the time.
On Monday, IRBA said of the KPMG announcement on its Sars report that “IRBA is pleased that the firm has made known its findings, enforces accountability and is taking action in the public interest. The IRBA will, however, continue with its own independent investigation in order to bring the matter to the necessary conclusion”.
IRBA CEO Bernard Agulhas said in a statement: “The IRBA cannot at this point give an indication of how long the investigation will take nor what the complete list of allegations will cover. It is, however, committed to performing a robust investigation in as short a time as reasonably possible to deliver on its mandate to serve the public interest.
“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. The IRBA intends to meet with the new team at KPMG to discuss their remedial action programmes which will be regularly monitored by the IRBA.
“Now, more than ever, regulators and oversight bodies must work together with the profession to respond to the challenges facing the economy and the country. It is critical that the profession remains responsive to regulators’ measures to protect, not only the public and investors, but also audit firms from exposing themselves from falling short in areas such as ethics, including independence, and the required standards.
“Only then will we be able to maintain confidence in the profession, which remains a vital component in creating credible financial markets that will attract the required investment to the benefit of all citizens.”
Sars will on Monday host a media conference dealing with the withdrawal by KPMG of its Sars report.