14 June 2019

South Africa: Deloitte Firing May Reveal More Than Sygnia Would Like

Photo: Screenshot/YouTube
Former Steinhoff CEO, Markus Jooste
analysis

It is almost two years since outspoken Sygnia CEO Magda Wierzycka fired auditor KPMG in 2017 for its role in State Capture. This earned her almost heroine-like status among some in the business community for taking a strong and courageous stand against corruption. Now the same board has fired Deloitte, arguing that engagement with the firm is 'unsatisfactory' and there is reputational risk associated with it. It is hard not to believe this is the case. Except that something just doesn't feel right.

It is almost unheard of for a listed company to fire its auditors. The relationship between a company and its auditor is many things - some would say cosy, others would argue adversarial -- after all, getting the annual financial statements signed off can be a bruising experience. But it is almost never unworkable.

It is true that Deloitte has been in the news for all the wrong reasons recently. A mere mention of the words Steinhoff and Tongaat elicits knowing nods and the immediate question: "Where were the auditors?"

Deloitte, by association, must be tainted. But is this fair? After all, while Tongaat is undergoing a forensic audit and the results will need to be restated...

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