FULL STATEMENT: KPMG's plan to regain 'damaged' trust and place quality and integrity at its heart | Fin24

FULL STATEMENT: KPMG's plan to regain 'damaged' trust and place quality and integrity at its heart

Apr 15 2018 15:23

KPMG South Africa is hoping to speed up its efforts to rebuild public trust as it announced further steps to accelerate significant change at the scandal-hit audit firm. Read the full statement below.

KPMG has suffered severe reputation damage since allegations of misconduct emerged regarding the work it did for Gupta-linked companies and its role in the controversial SARS “rogue unit” report.

The embattled firm has launched what it called an "unprecedented" review of all the work done its partners in the last 18 months.

KPMG South Africa on Sunday announced further steps to accelerate change and rebuild public trust. 

Since last September KPMG has already taken significant steps to change the firm. These include changes to governance, to leadership, significant changes to improve quality and risk management and to our client portfolio and the work we do in the market. 

We recognise that each of these measures can only be part of our continuous effort to rebuild public trust.

The departure from the firm this week of two partners, as part of the ongoing investigation by Bowmans into events at VBS, is a reminder how much more needs to be done to reaffirm the public’s trust in KPMG.

We are putting quality and integrity at the heart of our mission. Everything we do – in terms of the business we do, the clients we work with, and how we do our business - will be shaped by how they serve these two principles.   

As part of this, we are implementing the following immediate additional steps: 

1. Integrity

We have commenced an expanded process of Integrity and background checks of all partners (and their spouses/partners).   

The process will be coordinated by KPMG International using the expertise of an external firm and the findings will be reported directly to the Board Quality and Risk committee.   

2. Quality

A new programme of extensive quality file reviews has commenced and will run over the next several weeks. These reviews will cover all audit partners. This programme will be in addition to other internal and external reviews that have been carried out to date.    

The purpose of this new programme is to assess the commitment to quality and professionalism of our engagement teams. These reviews will be conducted by experienced KPMG partners from elsewhere in our network and will be overseen by a board committee of majority independent non-executive directors.

3. Governance

We will appoint additional non-executives on the Board to ensure that independent scrutiny is built into the DNA of the firm at the highest level. 

4. Implementing a “Speak Up” programme

This is an immediate, expanded initiative that will sit alongside normal whistle-blowing policies.  We will be encouraging colleagues over the next 30 days to speak up if they believe they have any information of relevance to the quality and integrity of the firm’s work. 

In addition to the immediate steps outlined above, we intend to make further changes to our business. We are well advanced in thinking through these and expect to communicate further in the coming weeks. 

KPMG South Africa chairperson Wiseman Nkhulu commented: 

"We recognise that we have damaged the trust of key stakeholders and that further and deeper changes are needed to regain that trust. We must reassure the public and our clients that we are totally committed to the standards they expect.

"The initiatives we are announcing today (Sunday), taken with extensive measures already underway, will help restore the reputation KPMG previously enjoyed. We have a responsibility and a duty to rebuild the firm, and the leaders of the firm will stand together to achieve this." 

KPMG South Africa chief executive Nhlamu Dlomu commented: 

"We realise that to build a KPMG that we and South Africa can be proud of, one that has quality and integrity at its heart, we must be prepared to adopt and embrace significant change to our culture and partner conduct.

"Some of the steps we are taking are not easy, but we are in a position where such measures are unavoidable requirements to rebuild trust. We are more resolved than ever to take the necessary steps to restore the firm to health. And we will not hesitate to act decisively when issues are identified."


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kpmg  |  financial services


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