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Telkom cuts ties with Nkonki Inc as voluntary liquidation continues

May 07 2018 11:17
Khulekani Magubane

Cape Town – Telkom [JSE:TKG] announced on Monday that it would be cutting ties with Nkonki Inc as its joint auditors following developments that have led the latter to undergo voluntary liquidation.

The company said, as per its announcement in August 2017 it was prepared to procure from Nkonki Inc as its external audit services to assist with financial reporting for the period ending in March 2019.

However the company is undergoing voluntary liquidation, following misgivings from the office of the Auditor General Kimi Makwetu on a lack of clarity in their ownership.

In line with the AG’s concerns, Sibanye Stillwater [JSE:SGL], ABSA Bank of Barclays Group Africa [JSE:BGA] and Redefine Properties [JSE:RDF] also announced that it would no longer be using KPMG’s services as an independent external auditor, all in a matter of a few days.

The Independent Regulatory Board of Auditors announced over the weekend that it would review KPMG’s turnaround strategy in light of the perceptions of the auditing profession following the firm’s conduct while working with SARS, Eskom, Transnet and VBS Mutual Bank.

In a SENS announcement on Monday, Telkom said its annual general meeting, set to take place in August, will discuss appointing PwC and SizweNtsalubaGobodo to take the place of Nkonki as external auditors.

Following an extensive and robust process…the audit committee intends to nominate for approval by Telkom’s shareholders at the forthcoming Annual General Meeting to be held on 23rd August 2018 the appointment of PwC and SizweNtsalubaGobodo (SNG) as Telkom’s new joint external auditors for the financial year ending 31 March 2019,” the company said.

Speaking to Parliament last week Makwetu said the Nkonki issue had to do with the firm’s independence and potential risks management environment. He said his office wanted to understand whether the shareholders were registered in the auditor profession or not.

“One of the key elements of independence for auditors is enshrined in the Auditor Professions Act which stipulates that the only firms that may be registered auditors are partnerships where all individuals are registered auditors, sole proprietorships where the owner is a registered auditor or companies which are registered by the Independent Regulatory Board of Auditors,” he said.

Makwetu told the Standing Committee on the Auditor General that his office was engaging with Nkonki Inc to minimise the impact of the liquidation on young professionals at the firm completing their articles.

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