Auditor General terminates KPMG, Nkonki contracts

WEB_PHOTO_KPMG_190917

Offices of KPMG in Johannesburg

Offices of KPMG in Johannesburg

WEB_PHOTO_KPMG_190917

Offices of KPMG in Johannesburg

Offices of KPMG in Johannesburg

JOHANNESBURG – The Auditor General of South Africa on Tuesday terminated contracts with KPMG and Nkonki.

The two embattled audit firms did work for the office of the Auditor General on public sector contracts.

Auditor General Kimi Makwetu stressed the terminations are not a judgement of the capabilities of individuals at the firm.

Rather, he says issues around the two firms have been concerning and pose significant risk to the reputation of his office.

Last year, he announced he would continue to secure the services of KPMG SA, limited to the audits that were already allocated to the firm at the time while waiting for investigations to conclude.

However, recent scandals involving VBS Mutual Bank have taken the scandal to new levels. 

"Recent media reports relating to the external audit of VBS Mutual Bank and the conduct of KPMG audit partners are some of the reasons that prompted the decision to withdraw all KPMG audit mandates with immediate effect," Makwetu said in a statement.

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On the termination of Nkonki Inc.’s contract, Makwetu said recent media reports on matters arising from the shareholder transactions involving the firm were of “grave concern and pose significant risk on the reputation of his office through the statutory audits contracted” to the company.

READ: Embattled KPMG says working hard on ethics

Makwetu says his office&39;s main priority now is to closely work with all interested stakeholders in the quest to maintain and further improve the confidence that the public places on the external audit function in the public sector.

"We are part of endeavours to help mend the image of the accounting/auditing profession, which has received some reputational dents – most of these self-inflicted – in the recent past."

Another auditing firm, Deloitte, has also been questioned for work done for embattled global retailer Steinhoff.

Steinhoff stands accused of cooking its books, putting the accounting profession in South Africa under extreme scrutiny and furthermore, private sector fraud.