“Mistakes have been made‚” KPMG SA said on Friday. The auditing firm announced it had suspended its lead audit engagement partner and was relieving two other partners of their duties pending the outcome of a review of the work the company did for Gupta-linked companies.
However‚ the company is mum on who these partners are.
KPMG SA CEO Trevor Hoole admitted on Friday that the global consultancy should have stopped working for the controversial family sooner than it did.
The company ended its 15-year relationship with the Gupta family after the Public Protector initiated an investigation into their dealings.
Hoole said while the last audit opinions for the group were signed off for the February 28 2015 year end‚ it was “now clear… [that] KPMG should have resigned earlier” than March 2016.
KPMG has initiated a review of the work done for the Guptas.
Leaked e-mails recently revealed that payments made to the Gupta’s Linkway Trading had been used to cover the costs of the notorious wedding held at the Sun City resort in 2013. Four KPMG partners had also attended the wedding as guests.
According to reports‚ KPMG had allowed Linkway to account for the wedding as a business expense.
The firm has denied being involved in any money laundering activities
Hoole on Friday said the review would be “independently” lead by KPMG International (KPMGI).
“Accordingly‚ the review team is now being led by an experienced senior partner from the KPMG network‚ reporting directly to KPMGI’s global vice chair of quality risk and regulatory‚ as well as to the South African board‚” he said.
Legal firm Norton Rose Fulbright continues to provide external counsel.
“All aspects of our work related to the Gupta group is being robustly reviewed‚ including client acceptance‚ execution and the quality of the work. Where any problems or issues are found‚ those KPMG individuals responsible will be held accountable.”
However‚ he said to date neither KPMG’s review of Linkway Trading‚ which is also the subject of an Independent Regulatory Board for Auditors investigation‚ or the broader review into the professional services rendered‚ to date had found any evidence that KPMG had in any way supported or condoned alleged tax evasion or money laundering.
There was also no evidence that there was any dishonesty by the teams involved.
Hoole said the company did understand the criticism surrounding the attendance of four KPMG partners at the 2013 Gupta wedding and accepted that they should not have attended.
“Mistakes have been made and painful lessons learnt. We commit to take every action necessary to apply these learnings to strengthen the way we work‚ and help restore the public trust we have earned over more than a century of commitment to the highest professional and ethical standards and dedicated service to South African businesses‚ the capital market and the wider public interest‚” he said.
KPMGI’s review would also include the SA firm’s role in the SA Revenue Service report‚ Hoole said.
SARS had spent more than R23m on a KPMG investigation into the alleged “rogue unit” at the authority.
The contentious report was among the issues that arose between SARS commissioner Tom Moyane and former Finance Minister Pravin Gordhan.
Hoole said the engagement partner for the SARS project had resigned from KPMG in March 2017.
Source: TMG Digital.