Auditors' board to fast-track KPMG investigation

03 October 2017 - 10:18 By Reuters
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KPMG offices in Parktown.
KPMG offices in Parktown.
Image: Bruce Gorton

The Independent Regulatory Board for Auditors (IRBA) met with KPMG executives last week as part of its investigation into the auditing firm's conduct in relation to Gupta-owned companies.

IRBA CEO Bernard Agulhas told Parliament's finance committee that the meeting had been held with KPMG International chairman Bill Thomas and KPMG SA CEO Nhlamu Dlomu to discuss the process of the investigation and to urge their cooperation.

"At the beginning we did not always obtain the information we required‚" Agulhas said. He said the international leadership had committed themselves to cooperate and to provide all the necessary information.

The IRBA board held a special meeting to discuss the KPMG matter and has asked that the investigation be fast-tracked while adhering to prescribed procedures.

Agulhas said it was not possible to give a time-frame for the completion of the investigation but he wanted to finalise it as soon as possible as it was a public interest matter.

The investigation concerns the role of KPMG in the auditing of Gupta-owned company Linkway Trading and the diversion of public funds invested into a Free State dairy farm to offshore bank accounts in the United Arab Emirates.

The funds were allegedly used to fund the Gupta wedding in 2014. The IRBA is also investigating the presence of KPMG executives at the wedding.

Agulhas said it might be necessary to extend the investigation to cover other auditors.

Leaked Gupta-related e-mails indicate that KPMG was aware that Gupta family companies were categorising the wedding costs as business expenses‚ which can be deducted for tax purposes. The e-mails suggest that KPMG was aware of what was going on but did not raise any concerns.

The IRBA initiated the investigation on its own and not in response to a complaint.

Agulhas noted that IRBA investigations of non-public interest cases could take on average 18 months but it wanted to finalise the high-profile case as soon as possible.

He said the IRBA also had to manage the risk of loss of confidence in the profession arising from the case. This required that appropriate regulatory action be taken if improper conduct was established during the investigation.

Should an auditor be found guilty of improper conduct‚ the IRBA can impose sanctions‚ including the withdrawal of the licence to act as an auditor.

Committee chairman Yunus Carrim called for those found guilty to be referred to the police for prosecution.

Agulhas said IRBA been engaging with international regulators who had an interest in the outcome of the KPMG case because it had become an international matter.

KPMG might have audited companies with branches overseas who fell under the supervision of international regulators.

With regard to the investigation into African Bank‚ which was launched in December 2014‚ Agulhas said draft allegations had been tabled with the investigating committee in December 2016. An initial response was received from African Bank in June 2017. The investigating committee would consider what recommendation to table with the disciplinary committee this month.

- BusinessLIVE


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