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DA refers KMPG to Independent Regulatory Board for Auditors

The Democratic Alliance has written to the Independent Regulatory Board for Auditors (IRBA) requesting a thorough review of KPMG’s conduct over the last three years.

KPMG has been implicated in the “Great Bank Heist”, after they allegedly turned a blind eye to irregularities and corruption at the bank. Today, it emerged that millions of rands in donations may allegedly have been made to the ANC, at the behest of then-ANC Treasurer-General Mkhize Zweli, but KPMG failed to flag these irregularities.

The auditing firm has also been implicated in various ANC/Gupta state capture fiascos, as well as authoring the SARS “Rogue Unit” Report.

Corruption is not a victimless crime as demonstrated from the VBS heist that directly impacted South Africans, especially the poor. KPMG’s apparent corrupt collaboration with ANC elites has cost South Africa dearly, and we are still footing the bill.

Necessary enforcement actions need to take place to ensure that KPMG is held accountable for any misleading and/or fraudulent reports.

KPMG has not met the necessary standards required to perform its vital function, and as such, the firm may be in breach of its fiduciary and legal responsibility.

The firm’s actions have cast a dark shadow over the audit profession, which has a vital role to play in the fight against corruption.

By turning a blind eye to numerous allegations of misconduct, KPMG has effectively facilitated corruption and has brought into question the controls, checks and balances at the firm.

The DA trusts that IRBA will probe KPMG’s role in these scandals to ensure that the necessary enforcement action is taken to ensure that the firm is held accountable for any misleading and/or fraudulent reports.

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KPMG must come clean

The DA welcomes the announcement by KPMG Chairperson Wiseman Nkhulu of a broad scale review of all KPMG’s work in the past 18 months. This is particularly necessary given the revelation yesterday that two partners, Sipho Malaba and Dumi Tshuma, had resigned when faced with disciplinary charges.

According to an earlier statement, the two partners faced charges relating to a failure to comply with the firm’s policies and procedures relating to the disclosure of financial interests.

As Malaba and Tshuma were intimately involved in the audit of VBS Mutual Bank, I will be writing to Mr. Nkhulu tomorrow to request that he reveal whether either former partner had any financial relationship with VBS Mutual Bank, or any of its investors, the nature of that relationship, and whether any unlawful benefit accrued to either of them.

I have already communicated a request to the Independent Regulatory Board for Auditors (IRBA), requesting that they extend their ongoing investigation into KPMG to include the role they played at VBS. The CEO of the IRBA, Bernhard Agulhas, has responded that this will, indeed form part of their investigation.

The Latin phrase “Quis custodiet, ipsos custodes?” means “Who will guard the guardians?” It is particularly apt when referring to the audit profession. KPMG needs to come clean in order to ensure that trust is restored in auditors and that we can get to the bottom of the problems at VBS.

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DA requests urgent probe into KPMG over VBS audit irregularities

The DA has written to the Independent Regulatory Board for Auditors (IRBA) to request an urgent investigation into allegations that KPMG failed to raise the alarm over alleged fraudulent transactions at VBS Mutual Bank.

It is being reported that KPMG failed to report irregularities pertaining to R900 million in deposits at VBS which could not be traced. The SARB has also uncovered a number of potential “fraudulent transaction” not raised by either KPMG or PwC.

The DA has been concerned about business practices at VBS for some time – and these allegations of fraudulent activity could have serious consequences for the more than 20 municipalities which have investments with the bank.

We therefore urge the IRBA to institute a probe into KPMG and PwC urgently to get to the bottom of these accusations.

When an auditing firm fails to conduct its business diligently and independently it does not only tarnish the profession, but it puts the entire financial sector at risk and in this case, it could jeopardise the financial security of municipalities.

Urgent action is needed as the possible collapse of VBS could potentially threaten the day-to-day operations of the municipalities and ultimately disrupt service delivery to the people.

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DA welcomes IRBA’s decision to extend the scope of its investigation into KPMG SA’s forensic audit of SARS “Rogue Unit

A copy of the correspondence from the Chief Executive Officer of IRBA, Bernard Agulhas, to David Maynier MP, DA Shadow Minister of Finance, can be found here 
We welcome the decision by the Chief Executive Officer of the Independent Regulatory Board of Auditors (IRBA), Bernard Agulhas, to extend the scope of the investigation into KPMG South Africa to include the conduct of the auditor responsible for the forensic investigation into the SARS “Rogue Unit”.
We requested the investigation following a determination that the forensic audit into the SARS “Rogue Unit”, conducted by KPMG South Africa, and which was finalised on 04 December 2015, was signed off by a registered auditor, and could therefore be investigated by IRBA.
We received a reply from IRBA to the request to extend the scope of the investigation into KPMG South Africa on 06 October 2017, which reads as follows:
“We hereby confirm that the Independent Regulatory Board for Auditors (IRBA) will be extending the scope of the investigation to include the conduct of the auditor responsible for producing the forensic SARS “Report on Allegations of Irregularities and Misconduct”.
If the auditor, who was responsible for the forensic investigation into the SARS “Rogue Unit”, is charged and found guilty, he could receive a caution or reprimand, incur a fine of up to R200 000 per charge, be suspended from practice for a specified period, or he could be removed from the register, which would effectively terminate his career in the auditing profession, forever.
We hope that, given the public interest in this matter, this investigation will also be fast-tracked by IRBA.
In the end, auditing firms such as KPMG South Africa, which allegedly not only turned a blind eye, but also supplied the corporate grease to lubricate the wheels of state capture, tax evasion and corruption, must be held to account in South Africa.

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KPMG failures pose risks to the state

Today’s SCOPA briefing by KPMG on the SARS Rogue report revealed a lack of transparency and audit integrity by KPMG with regards to reportable irregularity to the Independent Regulatory Board for Auditors (IRBA) , over a three year period, within the 33 state entities that it was providing audit services for.
The briefing provided clear evidence of poor oversight that exists over audit firms in South Africa. We are concerned that this poor oversight may have negatively affected the proper functioning of government departments and state entities.
Due to the compromised SARS rogue unit report prepared by KPMG, the DA will call for an independent inquiry that:
· will be transparent and composed of a member of Parliament, as per the DA’s initial suggestion to the SCOPA chairman, Temba Godi;
· will review the documents of the briefing that SARS gave to KPMG, which KPMG has agreed to provide; and
· will review all documentation and reports of the Gupta related companies doing business with the State. SCOPA has requested these from KPMG.
It is unacceptable for auditors to claim to assist state departments and entities but fail to report irregularities, as required by law, to IRBA and SAICA for further investigation.
KPMG has entered into 1 301 projects with the state and constitutional institutions last year and 3 948 over the last three years. It is clear that the presence of systemic problems at KPMG could pose a great risk for the state.
The DA, therefore, calls for a review of all the contracts that government departments have entered into with KPMG including all the contracts that the firm has tendered for.
The DA will not tolerate corruption and poor oversight, whether in the private or public sector as this has consequences financial accountability.

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DA formally request IRBA to extend the scope of its investigation into KPMG SA

We welcome the fact that the Chief Executive Officer of the Independent Regulatory Board for Auditors (IRBA), Bernard Agulhas, has decided to “fast track” the investigation into KPMG South Africa.
However, the fact that KPMG South Africa has reportedly failed to fully cooperate with the investigation, as they promised to do in their mea culpa on or about 15 September 2017, is a major concern.
We also welcome the fact that it has been determined that the forensic audit into the so-called SARS “Rogue Unit”, conducted by KPMG South Africa, and was finalised on 04 December 2015, was in fact signed off by a registered auditor, and is therefore a matter that falls within the mandate of IRBA.
I have, therefore, written to the Chief Executive Officer of IRBA, Bernard Agulhas, formally requesting him to extend the scope of the investigation to include the conduct of the auditor responsible for forensic audit into the so-called SARS “Rogue Unit”.