Telkom puts KPMG on hold – report

Listed telecoms group Telkom has joined a growing list of companies that have decided to temporarily cut ties with auditing firm KPMG, according to Business Report.

Bloomberg reported last week that consumer goods firm, AVI, would stop using KPMG as an external auditor after it admitted to falling short of its own standards when doing work for the politically connected Gupta family.

AVI, Bloomberg said, becomes one of the largest South African companies to drop KPMG after Munich Re of Africa, Sasfin Holdings, Sygnia Asset Management and Hulisani also announced they would stop using the firm’s services.

The country’s biggest banks and largest insurer are also reviewing their continued use of KPMG.

An e-mail sent to Business Report by an internal source at Telkom said the firm has taken note of the allegations “against organisations offering services to Telkom”.

“We have engaged with our Telkom Group Board Audit Committee on this matter and the audit committee has decided that the Telkom Group will not award any new business to KPMG SA until the investigation by the Independent Regulatory Board for Auditors (Irba) has been concluded.”

“Since the chairperson of KPMG International has announced that the company will be launching its own independent investigation into the work conducted by KPMG SA, Telkom took note of the intent of the investigation to address the allegations, enhance business transparency and rebuild trust with South Africa.

“We emphasise that the decision to withhold any further awarding of business to KPMG SA is subject to the outcome of the final investigation report by the Irba.”

The e-mail leaked to Business Report was distributed to Telkom employees from the group chief risk and compliance officer, Tsholofelo Molefe.

KPMG International said last month that the local business will face an independent inquiry after an internal investigation into the work done for companies associated with the Guptas.

Eight senior executives quit in the wake of the findings even though KPMG didn’t find evidence of illegal behavior or corruption.

The internal probe also resulted in KPMG South Africa withdrawing the findings of a report about a so-called rogue unit at the Revenue Service.

The firm is being probed by the country’s regulatory body for auditors and the South African Institute of Chartered Accountants for the work it did for the Revenue Service and the Gupta family, who have been accused of using their friendship with President Jacob Zuma to wield undue influence over state contracts and cabinet appointments, Bloomberg said.

The Guptas and Zuma have denied wrongdoing.

Telkom said it issued a statement to staff in which it said, it has not terminated relations with KPMG.

“We will not grant KPMG any new contracts until the investigation by the Independent Regulatory Board for Auditors (IRBA) is concluded and we will determine a way forward. All existing contracts and work currently being undertaken will continue until their expiry date, Telkom said.

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Telkom puts KPMG on hold – report