STATE CAPTURE: KPMG is under investigation by South Africa’s Independent Regulatory Board for Auditors. Photo: Kayleen Morgan
WITS ACCOUNTING students should not worry about the relationship the firm has with the accounting faculty as sponsorships, internships and employment opportunities will still be available to them.
This is according to KPMG spokesperson, Nqubeko Sibiya, who told Wits Vuvuzela that, “We are looking forward to welcoming them to a strong team of 3 400 skilled professionals committed to take KPMG forward.” He also said that although Wits, along with other entities, has decided not to extend its contract with KPMG, the firm is working “tirelessly to enhance the business”and to repair its reputation.
This follows the announcement by Wits Vice-Chancellor Adam Habib that the university would not renew its contract with the auditing firm at the end of the 2017 financial year.
Habib said in a statement released on Wednesday, October 4, that, “The company should have embarked on programmes to correct the wrongs that have been done to individuals and institutions and an independent investigation should have been initiated at the outset.”
The auditing firm has been on the ropes ever since revelations from leaked emails
that work it had done for companies owned by the politically-connected Gupta family facilitated state capture.
KMPG also withdrew a report it had prepared for the South African Revenue Service (SARS) on a so-called rogue unit, that had pitted SARS
Commissioner Tom Moyane against then minister of finance, Pravin Gordhan.
Newly-appointed CEO of KPMG, Nhlamulo Dlomu, has committed the firm to donate R40 million to education and anticorruption, not-for-profi t organisations.
The figure is based on the total fees earned from Gupta related entities to which KPMGSouth Africa provided services from 2002.Dlomu also said that, “These events do
not represent KPMG, our people or the values we have adhered to over decades of committed client service. My pledge and promise to the country is that we can will regain the public’s confidence.”
Fourth-year accounting science studentShivant, who preferred not to have his surname published, said that if KPMG offered him a position he would not accept it because of personal reasons but felt that other students may accept an offer from them because KPMG is not a growing risk. However, he added that student graduates would not be able to make a huge change at the firm because, “The culture of the firm comes from the board and as a graduate you’d start at a junior position with very little influence.”
Shivant said that he believes the only way to bring change in South Africa’s auditing field is for young auditors to start their own firms and challenge the monopoly of the “big four” – Deloitte, Ernst & Young, PricewaterhouseCoopers (PwC) and KPMG.
The Accountancy Head of School could not be reached for comment regarding the relationship between KPMG and the faculty by the time of going to print.
*The quote by Shivant has been altered in the above article from “Fourth-year accounting science studentShivant, who preferred not to have his surname published, said that if KPMG offered him a position he would not accept it because independence is key in the auditing fraternity.”
The university has made a decision not to renew its contract with auditing firm KPMG at the end of the 2017 financial year.
The decision was made at a meeting with the university’s council on Friday, September 29.
Members of the council audit and council risk audit committees met with the current CEO of KPMG South Africa, Nhlamulo Dlomu and international representatives from the firm a few weeks ago and deliberated on presentations which were made by KPMG.
The university has acknowledged that KPMG has taken steps to ease the reputational damage it suffered because of its relationship with companies connected to the Gupta family. However, it says, these steps are not enough.
In a statement released this morning, Vice-Chancellor Adam Habib says, “It is hard to reconcile KPMG’s conclusion that no one did anything illegal, when senior individuals have been dismissed and the South African Revenue Services (SARS) report has been retracted. In these circumstances, the council believes that it would have been prudent to acknowledge the ethical and legal lapses of KPMG’s senior management team.”
PricewaterhouseCoopers will remain the external auditors of the University.
[LISTEN]: Wits Vice-Chancellor Adam Habib says KPMG did not do enough for Wits to renew their contract.
KPMG South Africa has been under heavy criticism recently after the auditing firm retracted conclusions and findings of a report conducted for the South African Revenue Services (Sars) following an internal investigation. Finance students have been urged to use the KPMG controversy as a case study for their future careers in the financial services sector. (more…)
THE WITS management council is reviewing its relationship with audit company KPMG.
An online campaign started last week calling on the chairpersons of the internal audit committee and the council to honour its commitment to social justice and sever ties with KPMG as the university’s auditor.
According to Koketso Moeti, the founder of Amandla.mobi, where the petition is hosted, the initiators of the campaign preferred to remain anonymous.
A researcher at the Gauteng City-Region Observatory (a partner of Wits), who signed the petition, said that it is important that people sign. “At this time all organisations should decide what they stand for and who they stand with in society, and Wits needs to do the same,” he said.
In the petition, Wits is asked to join organisations such as investment management company Sygnia, energy investment company Hulisani, and financial services firm Sasfin, among others, in letting go of the services of KPMG and to introduce a policy of ethical procurement.
According to Deputy Vice-Chancellor Tawana Kupe, the university’s official external auditors are PriceWaterhouse-Coopers, but Wits secures its internal audit functions from KPMG.
University officials have been engaging with KPMG, and an announcement will be made next week [this week],”said Kupe, in a note sent out late last Friday.
Minister of Finance Malusi Gigaba said in a statement last week that the events surrounding KPMG have weakened the reputation of good governance and audit independence in a major division in our economy.
He also said, “As a measure to restore confidence in audits, all of government and its entities must consider reviewing their work programmes with KPMG.
KPMG has recently come under fire following a report, based on emails posted by investigative journalism non-profit amaBhungane, for failing to oppose the irregular treatment of the Gupta wedding expenses in 2014.
The emails showed that KPMG was aware that Gupta owned companies were classifying wedding costs as business expenses, which could be deducted for tax purposes, but did not raise concerns.
Eight senior executives, including CEO Trevor Hoole, resigned and KPMG
has announced that a full, independent investigation into its South African branch’s dealings with the Gupta family, and its involvement with a controversial South African Revenue Service report will be conducted by a “senior South African legal figure, who is completely independent of both KPMG South Africa and KPMG International”.
The petition demanding that Wits withdraws from any dealings with KPMG had reached 84 out of 100signatures at the time of going to press on Thursday.
Wits Vuvuzela, September 2017, Four-year LLB limbo
“Dj S’bu came and said the top three students would get a bursary,” said Bengani, who scored three distinctions, including one for Maths, in his Matric finals. Bengani said he not been contacted by the fund since.
Wits Vuvuzela was unable to get comment from SLEF after a week of phone calls to both its communications manager, Itumeleng Sekhu, as well as project manager of the fund Themba Thebe.
When Wits Vuvuzela telephoned Bengani’s high school, a Mbuso Cele, who introduced himself as teacher liaison at Graceland Education Centre, said Dj S’bu’s SLEF did not guarantee scholarships.
“Last year they were meant to give us four scholarships (for 2014 students) but that hasn’t happened. We phoned them last week and they said they are still in the process,” Cele said.
A former learner at the same school and recipient of the “SLEF scholarship”, Reitumestse Motsweneng, now in her second year of a BAccSci, told a different story from Bengani’s of her experiences with SLEF fund.
“SLEF only distributes the funds, it doesn’t come from his (Dj S’bu) pocket. I am with KPMG now. They introduced me to KPMG,” Motsweneng said, emphasising the fund’s intermediary role.
The 19-year-old from Phumula in the East Rand passed her matric with distinctions in Accounting, Economics and Life Orientation, as well scoring a “B” for Maths and Business.
During her mid-year exams in 2012, Motsweneng’s mother passed away, leaving only her father to fend for her and her younger brother, without enough money to fund her “dream” to go to Wits. The teachers at her high school volunteered to raise the R10 000 needed to pay the registration after Motsweneng received her confirmation letter from Wits. But it was after Cele learnt of her predicament that her place as a Witsie was secured.
“Bab’ Cele heard that Dj Sbu was around, so he went to Thembisa High where S’bu was speaking and told him my story… that’s how S’bu intervened and introduced me to KPMG,” Motsweneng said.
Her KPMG bursary pays for her tuition as well as accommodation near the university, the latter being something Motsweneng took a while to warm up to.
“When I moved into res it was the saddest day of my life. They don’t allow males into the res so my dad had to stay outside.
My roommate’s mother was in the room fixing it, putting in curtains, and really making it a home.”
Motsweneng said that scene in her first home away from home made her realise the massive gap her mother’s death had left in her life.