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The auditor responsible for auditing Gupta-linked company Linkway Trading has been struck from the register of the Independent Regulatory Boards for Auditors.
This is the first matter arising from the Gupta Leaks to reach a disciplinary conclusion and sanction, IRBA noted.
In a strongly worded statement issued on Thursday, IRBA said Jacques Wessels, formerly of KPMG, had been removed from the register after being found guilty on six charges of improper conduct. He was also ordered to pay a contribution towards IRBA's costs.
The committee would be making his name, his firm, the charges and the findings public, as well as notifying the South African Institute of Chartered Accountants of the details, IRBA added, calling Wessels's conduct "an egregious form of dishonesty".
In July 2018, IRBA’s disciplinary committee convened a disciplinary hearing against Wessels, whose six charges each incorporated several sub-charges.
Wessels pleaded guilty to all six charges on a qualified basis.
Two of the six charges involved allegations of dishonesty, three charges related to negligence and one charge related to a breach of auditor independence. All the charges emanated from auditing the annual financial statements of Linkway Trading for the year ended February 28, 2014.
IRBA found that Wessels failed to design and perform enough audit procedures that would be responsive to the assessed risks of material misstatement due to fraud; that there was a failure to investigate some seven unusual transactions reflected in Linkway's financial records, including the Gupta family wedding; and that Wessels "failed to comply with the responsibilities imposed […] when conducting an audit in terms of the IRBA’s Money Laundering Guide".
He also restated certain costs related to the Gupta wedding as an unspecified tax deductible, which it was not, IRBA said. As a result, SARS lost over R2m in income, IRBA added.
Additionally, IRBA found Wessels had "failed to apply his mind at all" and failed to document considerations regarding unusual transactions related to revenue and Linkway's loan account.
"His conduct reflected a lack of understanding and compliance with the laws and regulations governing money laundering and terrorist financing," IRBA said.
Linkway Trading formed part of a group of companies called Islandsite Group whose major shareholders were the Gupta family. Wessels was the KPMG engagement partner for Linkway Trading and most of the companies in the Islandsite Group.
