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KPMG bleeds another client

May 04 2018 14:15
Khulekani Magubane

Cape Town – Redefine Properties [JSE:RDF] has joined a growing list of companies and institutions to cut its business with auditing firm KPMG short.

The diversified real estate investment trust (REIT) announced on Friday that it would renege on its annual general meeting proposal to re-appoint KPMG as its independent external auditor.

Redefine CEO Andrew Konig said, "Redefine’s reputation is everything and our decision was made for this reason. We will have a new auditor on board for the 2019 financial year".

CFO Leon Kok added that the decision was not taken lightly.

“Audit quality, consistency and continuity are of paramount importance to Redefine and we are mindful of the time and effort it takes to on board new external auditors.

"Given the current circumstances and in the best interest of all our stakeholders, we felt it appropriate to commence with this change as soon as possible." 

On Thursday Barclays Africa Group [JSE:BGA] announced that ABSA would no longer be working with KPMG. Its banking peer Nedbank however said it would stay the course with the firm pending the outcome of ongoing investigations into their conduct.

Losing the Auditor General account to audit departments and entities in the public sector was a huge blow for the firm. The firm landed itself in hot water when the Companies and Intellectual Property Commission laid criminal charges against it over a report it compiled for the SA Revenue Service.

Redefine said subsequent to its AGM and the successful re-appointment of KPMG, the Board assessed the continuing and more recent developments communicated by KPMG and reported on in the media.

“As a result of concerns over good governance and ethics compliance, the board has resolved that it is no longer able to support the company's long-term association with KPMG.”

Redefine said it would commence with a formal tender process to appoint a firm of auditors to replace KPMG. An announcement, containing details of the new audit firm and designated audit partner, will be released in due course, they said.

“The Board and the Audit and Risk Committee remain satisfied with the real estate experience and technical expertise of KPMG and the designated audit partner and accordingly they will continue as auditors during the transition period to assist in a smooth and efficient handover to the new external auditors,” they said.

Redefine shares were changing hands 0.59% lower at R11.71 by 13:48 on the JSE.

KPMG’s appointment as external auditors will terminate on conclusion of the audit relating to the 2018 financial year, which is expected to be on or about 30 November 2018, Redefine said.

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