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KPMG International chair apologises to SA

Sep 19 2017 18:34
Jan Cronje

Cape Town - The Chair of KPMG International has apologised for the work the auditing firm did in South Africa.

“I sincerely apologise for what went wrong in KPMG South Africa. This is not who we are,” said John Veihmeyer, the chairperson of KPMG International in a statement on Tuesday evening.

“KPMG International undertook an investigation, with the help of independent legal advisers, which found a number of failings in a report prepared for the South African Revenue Service and in the decisions made, over time, to continue working for the Guptas. KPMG South Africa made serious mistakes and errors of judgement in these engagements,” he said. 

The statement comes four days after the leadership team of KPMG SA, including its CEO Trevor Hoole resigned, and the audit firm retracted the conclusions of its controversial ‘rogue unit” report for the SA Revenue Service.

On Monday SARS hit back at the auditor, threatening to blacklist the firm, take legal action against it and report it to Parliament.

Veihmeyer said KPMG had already taken ‘significant actions’ including the appointment of Nhlamu Dlomu as the new CEO of KPMG SA.

“She immediately issued an apology to the country. Nhlamu represents the best of KPMG, and has proven to be a strong and effective leader,” he said.

In her apology issued on Friday, Dlomu said "ethics and integrity" would be the guiding principles of her leadership. 

Appropriate steps

“Other actions included the announcement of significant governance reforms and 8 partners leaving the firm. Further appropriate steps will be taken if any new information comes to light,” said Veihmeyer. 

He said the work the firm had done was “not reflective of the quality of KPMG’s work in South Africa over many years, or indeed the work we do for clients globally”.

“We are determined to learn from the failings that we have found in these specific client activities. In particular, we will further strengthen the monitoring of which clients we choose to work with and how we handle potentially sensitive client engagements.

The public, our clients and our 200,000 people across the globe rightly expect us to demonstrate that we consistently hold ourselves to the highest standards.

We are committed to making sure this happens.”

The apology comes as at least two more companies cut ties with the auditing firm on Tuesday.

Financial services company Sasfin dropped KPMG as its independent sponsor and said it was searching for a new auditor because of work the auditor did for the politically connected Gupta family.

Bloomberg, meanwhile, reported that Hulisani, which invests in energy projects, also moved to replace KPMG, saying it wanted shareholders to vote to appoint PricewaterhouseCoopers as its auditors. KPMG audited Hulisani’s full year results, which were published in May.

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