KPMG must bear the full brunt of their actions - Iraj Abedian | Fin24
 
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KPMG must bear the full brunt of their actions - Iraj Abedian

Sep 15 2017 17:47
Lameez Omarjee

Johannesburg - KPMG’s admission of wrongdoing is not the end of the road, and there are still corrective steps that need to be taken against the company, said Iraj Abedian.

Abedian, economist and chief executive of Pan-African Investment and Research Services, who has voiced scathing opinions on KPMG’s implication in the Gupta leaks, spoke to Fin24 by phone on Friday following the news that the auditing firm’s chief executive Trevor Hoole and several executives have resigned.

The company also withdrew its report on the SARS rogue unit.

Abedian highlighted that although KPMG has stopped denying its role in being complicit to corruption, further corrective action should be taken against the firm.

One course of action is for the Independent Regulatory Board for Auditors (IRBA) to strip those executives implicated and complicit from their certification as auditors. “IRBA must take action to remove them from the roll of auditors.” Further, if these individuals have been involved in criminal activity then they need to be sued for “abuse of their position”, he said.

Secondly, KPMG should provide “appropriate and fair” compensation, given their admission that the SARS rogue unit report is fake. “That is where the biggest damage to the economy and the South African society is done.”

This compensation is not just the responsibility of the South African branch of KPMG but the global company. “The brand ‘KPMG’ was used to justify the fake and incorrect report, which they have now agreed is not correct.” South Africa has to claim damages done to the economy, governance and institutions.

Finally business and corporates, namely companies like Old Mutual, Investec and Standard Bank, cannot continue to use the services of an audit company which has been discredited and found complicit to corruption, said Abedian.

“I would be amazed if anybody any longer wants to use KPMG," he said. "Any business that still employs KPMG as external auditors, should have their own ethics re-examined."

Earlier this week Abedian resigned from the Munich Re of Africa directorate, as the company refused to stop using KPMG’s services.

Founder and publisher of Biznews Alec Hogg commended Abedian’s actions and urged directors of companies doing business with KPMG to reflect on his actions.

Abedian added that other implicated companies like McKinsey and SAP have to stop denying and pay back the money. Abedian said that the situation with McKinsey is simple, they simply have to return the money stolen to National Treasury. The organisation should then “clean up” and necessary penalties for misbehavior should be issued.

As for those in government and the public sector, this is up to the criminal justice system and law enforcement agencies to deal with. “Obviously civil society and political processes must put pressure on law enforcement agencies to catch crooks and those who have stolen and are complicit in corruption,” said Abedian.

Government intervention

Nicolaas van Wyk, chief executive of the SA Institute for Business Accountants (SAIBA) said that the industry requires more government intervention. "The profession has a stated and expected objective of acting in the public interest, whether it related to audit, accounting, tax, consulting or forensic services. We can no longer only pay lip service to this public expectation," he said in a statement.

Complete independence requirements need to be imposed. “The accountancy profession as a whole has voluntarily adopted a general public interest rule as a governing framework for all accountants,” he explained.

“According to the International Federation of Accountants (IFAC) a distinguishing mark of the accountancy profession is its acceptance of the responsibility to act in the public interest.

“Therefore, a professional accountant’s responsibility is not exclusively to satisfy the needs of an individual client or employer,” he said.

Working in the public interest means that they would be required to have special licences from the State to perform their work. 

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