Gauteng seeks legal opinion on KPMG

Cape Town – Gauteng has asked for a legal opinion that will determine the provincial government’s position on whether to review contracts undertaken by KPMG.

This was revealed in a Gauteng legislature written reply by Gauteng Provincial Treasury MEC Barbara Creecy on October 27.

Gauteng has paid KPMG over R4m since 2013 for audit-related contracts, Creecy explained in her response.

The legal opinion comes as several companies and organisations cut ties with the auditor after an investigation revealed questionable practises with the work it conducted for the Guptas and the South African Revenue Service (SARS).

Creecy was asked "whether, in light of the current scandal concerning KPMG, the department and the treasury will continue to make use of KPMG or a consortium where KPMG was a member".

She responded: "The Gauteng provincial government, subject to a legal opinion which is being sought, will determine a provincial position on whether to review contracts undertaken by KPMG."

In September, Finance Minister Malusi Gigaba called on “all of government and its entities” to “consider reviewing their work programme with KPMG”.

He said this measure would ensure “that their audit processes have not been compromised in any way, and to take appropriate steps if it has been compromised”.

Following KPMG’s internal investigation, the Independent Regulatory Board for Auditors is now conducting a fast-tracked independent investigation into the auditor’s work for the Guptas’ Linkway Trading.

So far, 13 entities have suspended or cut ties with KPMG, but the firm believes most of its clients will remain loyal to the firm.

KPMG SA CEO Nhlamu Dlomu told Fin24 recently that the majority of clients were sticking with KPMG. “But they have asked questions to ensure they are happy with our quality,” she said.

“It takes a lot of time to build the relationship [with a client],” she said. “Each and every client of ours matters to us.”

Dlomu said KPMG SA had not identified job cuts as a result of losing clients. The auditor was focusing on retaining clients at the moment, rather than the clients it had lost. “If we are to retain jobs, we must retain our clients,” she said.

FULL STORY: KPMG boss opens up about Gupta red flags

So far, the following companies and entities have suspended or cut ties with KPMG:

• African Rainbow Minerals
• Wits
• Parliament
• Parmed board
• Munich Re of Africa
• Sygnia Asset Management
• Sasfin
• Hulisani
• Interwaste
• The Foschini Group
• AVI
• Business Leadership SA
• Telkom (all new business).

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