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KPMG: We lacked professional scepticism when doing Gupta work

Oct 05 2017 12:27
Liesl Peyper

Cape Town – KPMG maintains that there is no systemic risk in the organisation, despite ignoring red flags raised in the work it has done for Gupta-linked entities.

The auditing firm appeared before Parliament’s standing committee on public accounts (Scopa) on Thursday to answer members’ questions about allegations the company is facing.

David Maynier from the Democratic Alliance asked KPMG if it would not be better for the firm to voluntarily withdraw from all existing bids for work in the public sector.

KPMG has more than 3 900 contracts with public entities, it told Parliament earlier.

“Don’t you think it would be appropriate for you to act in public interest and voluntarily withdraw all your bids and place a moratorium on bidding until an independent inquiry has been completed?” Maynier asked.

Gary Pickering, KPMG’s interim chair of the auditor's policy board, said there is no evidence of systemic problems and emphasised that its work is regularly submitted to quality reviews, such as annual inspections by the Independent Regulatory Board for Auditors, KPMG International and quality reviews from all the major banks.

Pickering also pointed out that KPMG has 2 500 clients and the red flags raised related only to one small client of the firm.

KPMG started doing work for Gupta-linked firms in 2002, Parliament was told, which amounted to 35 different entities. The auditing firm resigned from doing auditing work for the family’s businesses in 2016.

Veronica Mente from the Economic Freedom Fighters asked KPMG if it came across any irregularities while doing the work for these entities.

Pickering conceded there had been red flags, and that there had not been enough “vigour” to address them. “We should have resigned from these firms earlier, as we already stated in a media release.”

He added that the auditors who did the work lacked “professional scepticism” while doing the auditing work. 

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