The KPMG saga with SARS and the Gupta companies boggles the mind! There is often a perception that “international” audit and accounting firms operate on “above reproach” standards and business values. The collapse of Anderson; the misdemeanor of Bell Pottinger; and now the dodgy conduct of KPMG, should educate us differently!
The decisions that executives make, to operate underhandedly, have a huge impact on the lives of ordinary workers and scrupulous professionals whose jobs and careers are ruined and tainted; sometimes irreparably!
In like manner, the malpractice in one institution of public trust, like an audit firm such as KPMG, brings the industry into disrepute, and threatens to place the whole accounting and audit profession under the dim light. This has led to much public consternation in South Africa today.
The SACC notes the extensive statement issued by KPMG last weekend. We understand that the substance of the statement seeks to explain away a number of the allegations against KPMG South Africa, and announces extensive leadership changes, flowing out of the investigation by KPMG International. Many questions remain unanswered; and these include:
- Why did the senior executives, board members and the chairperson have to leave?
- What did they know about any malpractices?
- The KPMG statement cites a number of moments of the failure to adhere to their standards, was this an isolated case? If so, what caused these lapses?
- How did the SARS brief change, as is claimed, and how was the new brief absorbed into KPMG?
- How could all of this remain only with one person whose signature is identified with the altered SARS project?
- How come all the Gupta-linked projects are only now seen as badly handled in retrospect? Are these isolated lapses or do they reflect institutional weaknesses that indeed can and should be remedied through a wholesale leadership change?
With due respect, with so much that is left hanging, we do not believe it is enough for KPMG to investigate itself. We welcome the initiative of the Independent Regulatory Board for Auditors, promising a “robust investigation into the KPMG performance. We are, however, concerned that the IRBA parameters may limit their investigation within the audit sphere of the KPMG business. This may not adequately address any possible wrongdoing by professionals in the non-audit parts of the company’s vast operations.
For this reason, and in the interests of drilling down on specific individuals who dealt with specific non-audit projects, we appeal to the South African Institute of Chartered Accountants, the premier professional association of all accountants, to initiate a wider investigation that looks into individual members in a much more focused way. It must be an independent probe conducted by a judge or Senior Counsel experienced in such public enquiries. Such an enquiry into the whole saga and its context, will bring relief to the situation. It will be able, we would hope, to separate the fingered individuals from the rest of the ethical professionals, restore public confidence and save the careers of innocent people.
The SACC has written to the SAICA, urging for this additional comprehensive professional enquiry into KPMG. This is necessary for the thousands of employees who otherwise will now always work under a cloud. This is necessary for the SARS saga to also be able to reach its clarifications in the interests of the lives and careers of affected professionals, past and present.
This enquiry is necessary for this accounting industry of public trust to survive this episode. The South African accounting industry has been rated number one in the world for several years – a proud tradition! Indeed such a thoroughgoing enquiry will clean up the place, and empower the new CEO, Ms Nhlamu Dlomu, to deliver on her promise, to “regain the public’s confidence”. This is necessary for the common good!