South Africa

Another blow for KPMG as Barclays Africa Group drops battered auditing firm

By Marianne Thamm 3 May 2018

It's two steps forward, one step back for embattled auditing firm KPMG, this as the board of directors of Barclays Africa Group Limited announced that it has withdrawn its recommendation to reappoint the firm as auditors. The decision comes weeks after two KPMG partners were found to have had undeclared financial interests in the embattled VBS bank.

Barclays Africa Group Limited, in its initial notice of an upcoming AGM, had proposed that KPMG be re-appointed as one of the group’s external auditors, along with Ernst & Young, for the 2018 financial year.

On Thursday however, BAGL, announced that the Board had “carefully evaluated the on-going and more recent developments and decided that it is no longer able to support the reappointment of KPMG”.

The appointment of KPMG as external auditors of BAGL will cease on completion of the statutory and regulatory audit and reporting matters relating to the 2017 financial year, which is expected to take effect by approximately 31 May 2018,” BAGL announced in a statement.

The group said that for the 2017 audit the BAGL Group Audit and Compliance Committee had secured additional support, enhanced quality processes and quality reviews from KPMG and KPMG International and that the committee and the board had been “satisfied with the quality of the audit of the 2017 annual financial statements, which was conducted jointly with EY”.

Responding to the announcement KPMG South Africa said that while it was “disappointed” by the decision it “fully accepted it”.

We are very proud of the work that we have performed for Barclays Africa Group over many years, and of the diligence and professionalism of the team who served them. We have implemented far-reaching changes over the past seven months to all aspects of the firm including governance, quality, and risk management. Work to further underpin the quality of our services and integrity of our professionals continues,” said a statement released by Nqubeko Sibiya, KPMG’s communications manager.

BAGL said that it was a current requirement of the South African Reserve Bank that the group requires two external auditors, acting jointly and that it would begin a formal process to appoint a second firm of auditors. Ernst & Young would be the sole auditors of BAGL.

The decision by BAGL follows the resignation of two KMPG partners tasked with auditing VBS Mutual Bank – placed under curatorship by the Reserve Bank in March after a liquidity crisis – for failing to declare their financial interests in the bank. The partners, Sipho Malaba and Dumi Tshuma, resigned ahead of disciplinary proceedings. Malaba held loans with the bank.

VBS bank, which loaned Jacob Zuma R7.7-million to pay back the money spent on upgrading Nkandla, could not account for almost R1-billion deposited with the bank. Nine of the bank’s 20 biggest advances, totalling R400-million were found by the curator to be “non-performing” and that bank staff did little to follow up money owed to the bank.

Court papers also revealed that VBS bank is exposed to around R1.5-billion in municipal deposits and holds approximately R370-million in funds intended for the beneficiaries of deceased mine workers. The PIC’s investment in VBS amounts to around R368-million.

The Independent Regulatory Board for Auditors (IRBA) announced that it was also investigating Malaba’s conduct. IRBA also said that KPMG had only filed a reportable irregularity with it on 11 April while VBS had been placed under curatorship in March. DM

Gallery

In other news...

South Africa is in a very real battle. A political fight where terms such as truth and democracy can seem more of a suggestion as opposed to a necessity.

On one side of the battle are those openly willing to undermine the sovereignty of a democratic society, completely disregarding the weight and power of the oaths declared when they took office. If their mission was to decrease society’s trust in government - mission accomplished.

And on the other side are those who believe in the ethos of a country whose constitution was once declared the most progressive in the world. The hope that truth, justice and accountability in politics, business and society is not simply fairy tale dust sprinkled in great electoral speeches; but rather a cause that needs to be intentionally acted upon every day.

However, it would be an offensive oversight not to acknowledge that right there on the front lines, alongside whistleblowers and civil society, stand the journalists. Armed with only their determination to inform society and defend the truth, caught in the crossfire of shots fired from both sides.

If you believe in supporting the cause and the work of Daily Maverick then take your position on the battleground and sign up to Maverick Insider today.

For whatever amount you choose, you can support Daily Maverick and it only takes a minute.

Support Daily MaverickPayment options


Comments - share your knowledge and experience

Please note you must be a Maverick Insider to comment. Sign up here or if you are already an Insider.

COURT DRAMA

‘Do not disturb’ sign stays on Kuben Moodley’s safety deposit boxes – for now

By Jessica Bezuidenhout for Scorpio

DIPLOMATIC SNAGS

Another snag in appointing US ambassador to SA

Peter Fabricius 4 hours ago

"Everything is flux" ~ Heraclitus