KPMG South Africa Finds No Evidence That Errors Are `Systemic’

JOHANNESBURG (Capital Markets in Africa) – KPMG LLP’s South African unit hasn’t found evidence that mistakes it made during work done for the politically connected Gupta family and the country’s tax authority run throughout the auditing firm’s business.

The errors are not “systemic,” KPMG South Africa Chief Executive Officer Nhlamu Dlomu told parliament’s Standing Committee on Public Accounts in Cape Town on Thursday. The company will continue to take “strong action” to address the issues, she said.

KPMG International said last month that the local business will face an independent inquiry after an internal investigation found its work for companies associated with the Guptas fell short of its own standards. Eight senior executives quit in the wake of the findings even though KPMG didn’t find evidence of illegal behaviour or corruption. Some of them were paid severance packages, acting Chairman Gary Pickering said.

The internal probe also resulted in KPMG South Africa withdrawing the findings of a report about a so-called rogue unit at the Revenue Service.

The accounting firm is seeking a meeting with the revenue authority to discuss the report, Dlomu said. The company’s investigation didn’t review the report line by line and instead focused on the methodologies and standards and “found the conclusion, legal opinion and recommendations to be lacking,” she said, leading to the decision to withdraw it and offer to refund the 23 million-rand ($1.7-million) fee.

Apart from the independent investigation, the firm is being probed by the country’s regulatory body for auditors and the South African Institute of Chartered Accountants for the work it did for the Revenue Service and the Gupta family, who have been accused of using their friendship with President Jacob Zuma to wield undue influence over state contracts and cabinet appointments. The Guptas and Zuma have denied wrongdoing.

Munich Re of Africa, Sasfin Holdings Ltd., Sygnia Asset Management and Hulisani Ltd. are among companies that have stopped using the accountancy firm’s services.

Source: Bloomberg Business News