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We gave KPMG, Nkonki Inc enough time to explain, says AG Kimi Makwetu

Apr 26 2018 06:47
Liezel Hill, Bloomberg with Fin24

Johannesburg - Auditor-General Kimi Makwetu said that KPMG’s South African unit and Nkonki Inc both were given “ample time” to explain concerns that were raised by his office before it terminated auditing contracts with the firms.

The Auditor-General announced the decision earlier this month and Nkonki has since applied for voluntary liquidation.

KPMG, which has come under fire for work done for the politically connected Gupta family, is introducing a range of reforms in an effort to stem the outflow of business in South Africa.

“Our termination of these contracts was not merely based on media reports on the governance of these firms,” Makwetu said in an emailed statement Wednesday.

The two beleaguered companies had been doing public sector audits on behalf of the Auditor General of South Africa, the AG said in a statement last week when it announced the decision to terminate, with immediate effect, the government's auditing contracts with them.

The contracted firms are obliged to "stringently follow" the AG’s auditing standards as well as the ethics that are the pillars of the accounting profession, it said. 

KPMG has experienced a harrowing few days, following the resignation of two partners facing internal disciplinary charges and the announcement that it would review all the work done by its partners over the past 18 months in a bid to regain public trust.

"What we are doing is basically opening ourselves up to scrutiny," said its CEO Nhlamulo Dlomu in Johannesburg on April 15

KPMG’s audit of VBS Mutual Bank was the final straw for the AG. Makwetu had said in 2017 that he would wait for results of various investigations into the auditing company’s handling of Gupta accounts and a South African Revenue Service (SARS) report, before deciding whether to terminate its services.

On the termination of Nkonki Inc’s contract, Makwetu said media reports on matters arising from the shareholder transactions involving the firm were of "grave concern and pose significant risk on the reputation of my office through the statutory audits contracted" to Nkonki Inc.

The decision to terminate Nkonki Inc’s contract follows the resignation of its CEO Mitesh Patel. Patel resigned after investigative journalism centre amaBhungane revealed that his R107m "management buyout" of the auditing firm was funded by Gupta associate Salim Essa.

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nkonki inc  |  kpmg  |  kimi makwetu  |  auditing
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