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KPMG on Nedbank: We are disappointed, but our business has changed

Oct 29 2018 18:14
Khulekani Magubane, Fin24

Nedbank's decision to appoint new auditors is "disappointing", but KPMG remains proud of its work and is a "very different business from a year ago", the embattled audit firm has said.

Earlier on Monday, Nedbank [JSE:NED] announced that EY and Deloitte & Touche would be taking over its external auditing.

This was in line with the Independent Regulatory Board of Auditors' rules on mandatory audit firm rotation, Nedbank said in a SENS announcement.

The bank did not allude to KPMG's reported links to various governance scandals.

Nedbank said audit rotation and regulations stipulated that firms may not serve as an auditor of a public interest entity for more than 10 years in a row, with effect from April 1, 2023.

The nominated firms' joint appointment was subject to approval from shareholders at AGMs in 2019, the bank added.  

On Monday afternoon, KPMG praised the industry-wide move towards mandatory audit firm rotation, saying it aimed to ensure objectivity and robust auditing services to all public interest entities.

"Going forward, this will likely involve a higher degree of change among established auditing relationships than we have been used to," the firm said.

Executive Chairperson of KPMG SA Professor Wiseman Nkuhlu said, "It is always disappointing to lose a client, but we remain very proud of the work that we have performed for Nedbank over many years, and of the diligence and professionalism of the team who served them.

"KPMG itself is a very different business from a year ago, as we have implemented far reaching changes to all aspects of the firm including governance and leadership, the client roster, quality as well as culture and ethics. I am confident we are taking the right steps and that this is being recognised by clients."

KPMG's recent readmission to Business Leadership SA was a "welcome recognition" of the changes the firm was making, he added.

Earlier this month, KPMG vowed to work on rebuilding trust in its reputation following the release of the South African Reserve Bank's report into VBS Mutual Bank. 

The headline of this article was amended to reflect that KPMG executive chair Professor Wiseman Nkuhlu said it had implemented changes in its business and governance practices.

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