Finance Minister Malusi Gigaba says developments involving KPMG has undermined the reputation of good governance and audit independence in one of the key sectors and institutions in the South African economy.
"These developments further threaten to undermine our efforts in reinforcing confidence and enhancing a climate for investments, both domestic and international," said Minister Gigaba on Friday.
Minister Gigaba expressed deep concern at the audit matters surrounding KPMG, adding that the developments over the past week have reaffirmed government's position that there must be mandatory rotation of audit firms.
"Government should explore possible regulations for both the public and private sector in an effort to ensure and preserve the integrity and good governance in the audit fraternity. This move will not only ensure that companies diversify their audit options but also build in a peer review oversight mechanism. It cannot be in the interest of good governance to have one audit firm auditing a company perpetually," said the Minister.
Minister Gigaba said government and its entities must consider reviewing their work programs with the company.
"As a measure to restore confidence in audits, all of government and its entities must consider reviewing their work programs with KPMG, to ensure that their audit processes have not been compromised in any way, and to take appropriate steps if it has been compromised."
Recent developments further highlight the risks posed by market dominance and concentration of a few firms in key industries and offer yet another opportunity for introspections and reforms, the Minister said.
"We call for a concerted effort by all stakeholders to open up the sector to more players for a more de-concentrated and transformed audit sector."
Minister Gigaba called on all role-players to work together to root out wrong-doing.
"It is our belief that despite the setback, not all is lost. We should all join hands in rooting out bad elements that undermine the optimal functioning of our promising economy and its globally reputable institutions.
"It is therefore, warranted and critical that the relevant law enforcements and bodies such as the Independent Regulatory Board for Auditors (IRBA) look into this matter to identify and sanction those responsible for any wrong-doing," said Minister Gigaba.
On Thursday, the Reserve Bank also expressed concern at KPMG's involvement in conduct related to state capture.
The central bank said South Africa has over many years been ranked highly because of, among other factors, the strength of its auditing standards and the soundness of its banks.
"As the regulator of banks, the SARB would obviously be concerned about any developments that question auditing standards or could potentially cast a shadow on the quality and reliability of sets of audited financial statements."