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Ntsebeza panel considers extending KPMG inquiry to VBS

Apr 16 2018 16:34
Tehillah Niselow

Johannesburg - The secretariat to the Ntsebeza Inquiry into auditing firm KPMG will discuss the latest revelations around KPMG's audit of VBS Mutual Bank to decide whether this should be included as part of the probe.

In response to a query from Fin24 on Monday, the secretariat said that while it has not received a complaint related to the VBS issue, its terms of reference allow for media reports to be taken into consideration.

KPMG announced on Saturday that its partners Sipho Malaba and Dumi Tshuma, who were facing disciplinary charges related to work done for VBS Mutual Bank, had resigned with immediate effect. 

Both Malaba and Tshuma are members of the South African Institute of Chartered Accountants (Saica). The inquiry is restricted to investigating members of the organisation.

The bank was placed under curatorship by the South African Reserve Bank (SARB) in March. 

On Sunday, meanwhile, KPMG chairperson Wiseman Nkuhlu announced that the auditor will launch an "unprecedented" review of all its work done by partners in the last 18 months, in a bid to regain public trust.

Gupta-linked companies

The inquiry, which is headed by Advocate Dumisa Ntsebeza, was launched by Saica to independently investigate allegations that some of its members employed by KPMG may have contravened the institute's code of professional conduct with their audit of Gupta-linked companies.

The probe is also examining KPMG's report about the South African Revenue Service 'rogue unit', which the auditing company retracted in part in September 2017.

Progress at the inquiry has generally been slow, with several postponements caused by participants questioning its terms of reference.

Willi Coates, SAICA senior brand executive, said the auditing body doesn't comment on disciplinary matters. 

In a press briefing on Sunday, Nkuhlu said Malaba and Tshuma had failed to disclose loans they held with VBS Mutual Bank. SARB, meanwhile, last week announced a forensic audit into the bank's books after R900m in deposits were allegedly unaccounted for.

The Independent Regulatory Board for Auditors has separately issued an investigation letter to Malaba, KPMG’s lead audit partner for VBS Mutual Bank. It said it only received notice of a reportable irregularity on April 11 2018. 

Auditors are required by law to report irregularities to the statutory regulatory body. The organisation was not immediately available for comment on whether Tshuma would also receive an investigation letter.

*Update: Irba confirmed by email to Fin24 that an investigation letter was issued to Tshuma on Monday, following the disclosures by KMPG at the weekend, notifying him of an investigation into his role in auditing VBS.

*Update: The article originally quoted Saica senior executive for legal and governance Welsh Gwaza as saying Saica does not comment on disciplinary matters. Fin24 would like to clarify that it was in fact Willi Coates, Saica's senior brand executive, who gave this quote. 

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kpmg  |  vbs mutual bank  |  probe  |  ntsebeza inquiry  |  sa economy
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