KPMG to continue investigations into VBS saga

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Auditing firm KPMG says it will continue its own internal and independent investigations against two partners who resigned last week amid accounting irregularities related to VBS Mutual Bank. Sipho Malaba and Dumi Tshuma tendered their resignation after facing disciplinary charges that the firm brought against them.

The two signed off on the VBS accounts and failed to report the existence of R900 million in deposits related to fraudulent transactions.  KPMG Chief Executive Officer Nhlamu Dlomu told the media in Johannesburg that she was deeply disappointed with the VBS matter.

She says the company has taken measures to restore the reputation of the auditing firm.

The auditing firm says they have already taken significant measures to change its image. They have included changes to governance and leadership and have also expanded process of integrity by doing background checks on all partners and their spouses.

In addition KPMG says it is implementing a peak up program that will help with whistle blowing. Meanwhile, the Standing Committee on Public Accounts (Scopa) wants KPMG to be transparent in how it deals with all staff members implicated in wrong doing.

On Sunday, the firm announced its decision to review all its work completed over the last 18 months to maintain the trust and integrity of the organisation.

KPMG’s reputation was tarnished by a report done for the South African Revenue Service (Sars), into claims of a so-called rogue unit, which has since been largely discredited.

Responding to the measures that KMPG has undertaken to turn around the corporation, Chairperson Themba Godi says the audit firm has a responsibility to treat all those implicated in the same way. Godi referred to how the firm dealt favourably with former employees who were implicated in the Sars and Gupta matter.

“Actually they should start from the management of KPMG who were in charge when the Sars debacle happened when the auditing of the Gupta leaked companies happened because in that particular instance what happened was that those gentlemen were given three months salaries and they were retired and nothing has happened to them, but in this particular instance these two gentlemen who have resigned are still going to be investigated and whatever they have done is going to come out in the open.”

KPMG Board Chairperson Professor Wiseman Nkuhlu Nkuhlu says it is time that the new leadership be accountable to the public. He confessed that the audit profession has to change.

Nkuhlu says the impact of the initiatives that KPMG has undertaken will only be seen in the next 12 -18 months and at the same time, the Board of Auditors says it will soon require firms to produce transparency reports which would disclose audited financial statements of these firms.  – Diabo Setho, Amina Accram