South Africa: Audit Profession Needs a New Dawn

Outside the South African Revenue Service (SARS) office in Cape Town (file photo).

The audit profession needs a new and different regulatory framework, new legislation and a new and effective Independent Regulatory Board, with total legal and financial liability for damages the profession may cause to investors or nations.

The US Securities and Exchange Commission (SEC) has charged KPMG SA and Deloitte & Touche and BDO for their involvement in audit work that circumvented the full oversight of the Public Company Accounting Oversight Board. Consequently, BDO Canada paid a US$50,000 penalty, KPMG in South Africa $100,000, while Deloitte in Zimbabwe agreed to pay disgorgement and interest totalling $99,057, and KPMG in Zimbabwe agreed to pay disgorgement and interest totalling $141,305.

Almost two years ago, on 1 April 2016, KPMG publicly withdrew its professional services from the Gupta group of companies. We now know a great deal more than then, and yet the full extent of KPMG's violation of codes of good corporate governance, and duty of care as auditors, as well as their total disregard for risk identification and mitigation, are yet to be divulged. Based on publicly available information, including KPMG's own public admissions, things went horribly wrong within the firm. The company had to dismiss its top 10 executives in an...

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