Sarb concerned about KPMG’s accounting practices

Governor Lesetja Kganyago says the institution will approach banks and audit firms primarily to understand the context of the fallout.

Picture: @KPMG

JOHANNESBURG - The South African Reserve Bank (Sarb) says it's concerned about "regrettable accounting practices" at KPMG.

Governor Lesetja Kganyago says the institution will approach banks and audit firms primarily to understand the context of the fallout.

He says the central bank wants to make sure it’s well placed to manage any potential financial stability risk that may arise from the issues around KPMG.

The auditing firm cleared out its South African leadership last week after it found that work it did for firms owned by the Gupta family "fell considerably short" of its standards.

The scandal has cost KPMG at least three clients and several of South Africa's largest companies are reviewing whether to continue using the auditing firm.

Meanwhile, pressure is mounting for KPMG to be held further accountable for its conduct with two of its clients cutting ties with the firm and other companies reviewing their relationship with the auditor.

Financial services group Sasfin took a bold step on Monday by announcing that it is terminating its services with KPMG after 18 years. This was followed by another company, Hulisani, confirming that it too would be cutting ties with the firm.

KPMG's international chairperson John Veihmeyer apologised for what went wrong in South Africa after eight executives resigned and the findings of its South African Revenue Service (Sars) report was withdrawn.

KPMG has been put into the spotlight in the past few days and while the firm says it is taking action to rebuild trust, three clients have already cut ties with the auditor.

Sasfin's Michael Sassoon said in light of the recent controversies, they fast-tracked audit rotation but pointed out that they haven't had problems with KPMG.

"Just for the record, we've been very happy with the auditors, audit partners and the people we've been engaged with over the years and we've had no concerns around ethics or integrity."

Additional reporting by Gia Nicolaides.