South Africa’s ministry of finance has announced that, following the media reports and statements made over the past week surrounding auditing firm KPMG and its work with SARS and the Guptas, it has no choice but to consider reviewing all government contracts with the firm.<\/p>\n
The announcement caps off a bad week for KPMG, which started with a public lashing from SARS over its decision to walk back on a report it issued over a so-called “rogue unit” at the revenue service.<\/p>\n
SARS saw the move from KPMG as trying to discredit the service and its head, Tom Moyane, and threatened legal action against the auditor, as well as seeking to have it blacklisted.<\/p>\n
KPMG’s problems have only compounded since its internal investigations found that senior management had not met quality standards in working with Gupta-owned and linked companies, which resulted in eight senior executives, including the CEO, resigning.<\/p>\n
Despite its attempts to undo the damage caused by doing business with the Gupta family, KPMG\u2019s reputation has been tarnished by the saga, with two investigations \u2013 one by the\u00a0Independent Regulatory Body for Auditors (IRBA) and another by\u00a0Companies and Intellectual Properties Commission (CIPC) \u2013 still ongoing, while several big firms are reconsidering their relationship with the auditor.<\/p>\n
In a statement on Friday, National Treasury said that as a long-term solution to the issues surrounding KPMG, it will seek tighter regulation in both the private and public sector with regard to audits, and wants to institute a mandatory rotation of auditing firms.<\/p>\n
“In the immediate term, as a measure to restore confidence in audits, all of government and its entities must consider reviewing their work programmes with KPMG, to ensure that their audits have not been compromised in any way, and to take appropriate steps if it has been compromised,” it said.<\/p>\n
The finance department said the events of the past week are further proof that the audit sector needs to be transformed, and cannot be subject to a few dominant players.<\/p>\n