Auditing sector deserves redemption, says Manuel | Fin24
 
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Auditing sector deserves redemption, says Manuel

Oct 03 2017 15:56
Natalie Greve

While KPMG’s recent fall from institutional grace is a dramatic example of corporate rot, it should not be used as an excuse to tar and feather the entire auditing industry, says former finance minister and Old Mutual chairperson Trevor Manuel.

“We need, as a profession, to understand where we've gone wrong. This is not just a KPMG issue. I’m convinced that the majority of people at KPMG are good people, so we need to be introspective.

“My own sense is; cut them some slack and support the process, which is about a new beginning. I don't think the crisis is terminal,” he told the Deloitte Risk Conference 2017 on 3 October.

KPMG has admitted serious failings related to work it did for Gupta-owned firms and the South African Revenue Service (Sars).

The auditing group has also withdrawn its findings from the controversial Sars report into the allegations of a rogue unit at the service, which had profound knock-on political implications and resulted in the investigation of former finance minister Pravin Gordhan by the Hawks.

Manuel says the failings of one of the industry’s most prominent players should be considered an opportunity to re-examine corporate good governance and independent oversight.

“It’s not about this firm or that firm, because there is no glory in trying to celebrate the challenges of KPMG, but we need to look at how the industry recognises its importance in capital markets. We need some adults in the room now,” he remarked.

Deloitte Africa CEO Lwazi Bam added that while the financial services industry should feel “uncomfortable” with the reputational damage, the vast majority of the sector remained a force for good.

“Society perceives business as aiding corruption, but this isn't true. But in order to speak up with a credible voice, we need to make sure that our house is in order,” he commented.

Fellow KPMG corporate McKinsey has also been fingered in questionable dealings with Gupta-linked Trillian and energy utility Eskom.

Manuel partly attributes the apparent governance collapse within KPMG to poor communication within the organisation, adding that CEOs often surround themselves with “acquiescent types” unlikely to challenge executive decisions.

“If communication within the organisation as well as between it and government [was better], the situation at KMPG may have been different. We need to look at how we can build trust in the context of communication,” he said.

Manuel believes the exodus of leading KPMG executives was an appropriate demonstration of accountability by the firm, noting that corporates were sometimes poor at allocating responsibility for internal failures.

Following the very public exit of former KMPG CEO Trevor Hoole along with a group of senior executives in September, seasoned auditor Nhlamu Dlomu has been brought on board to head the reputationally damaged firm.

She has since indicated that the group will implement an internal enquiry into the matter.

state capture  |  kpmg  |  trevor manuel  |  auditing
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