Trouble for South Africa-based embattled audit firm KPMG continues as Barclays Africa Group Ltd decides to cut its business relationship with the audit firm, further putting it into disrepute.
Barclays, one of KPMG’s major financial customers and South Africa’s second-biggest lender by market value, joins more than 10 other clients, including the government and broker Sasfin, to break ties with KPMG since 2017.
KPMG’s image has been tainted for the work it did for the Gupta family in South Africa. The business family being investigated for using their friendship with former President Jacob Zuma to win government contracts and influence cabinets appointments.
Back here in Uganda, KPMG alongside PwC was recently singled out as unfit to investigate the controversial give-away of Crane Bank to DFCU Bank by Bank of Uganda in early 2017, having taken over the bank in late 2016.
KPMG had tendered in its bid to Uganda’s Auditor General alongside other firms like Ernst & Young Uganda, Deloitte and Touch; Tomson & Company and Price Waterhouse Coopers (PwC).
KPMG and PwC may as such fail to be enlisted by the auditor General for having conflict of interest as clients of the defunct Crane Bank, which is a subject of the investigation as the audtor General prepares inquiry into Bank of Uganda troubles caused by the sale of Crane Bank.
Both KPMG and PwC have also been BoU auditors and have previously worked as auditors for Crane Bank.
That means some staff at KPMG may lose jobs as its work contracts are cut and reviewed. “There’s going to be some job losses because KPMG has lost so many clients and they are probably going to lose more. They aren’t getting new clients,” Bloomberg quoted Wayne McCurrie, a money manager at Ashburton Investments Management Co.
KPMG audits four of South Africa’s six biggest lenders, including Barclays Africa but last year lost publicly traded clients including clothing retailer The Foschini Group Ltd., financial services firm Sasfin Holdings Ltd. and consumer-goods distributor AVI Ltd. KPMG South Africa employs 3,400.
Barclays Africa’s board said Thursday in a statement that: “It is no longer able to support the reappointment of KPMG,” the lender, which is changing its name to Absa Group Ltd..
KPMG’s contract will cease once all regulatory steps associated with the 2017 audit have been completed by the end of this month, it said, adding KPMG Inc. and KPMG International had supported the local firm’s work.
KPMG South Africa in the recent past months has issued a public apology for work done for the Gupta family, withdrawn the findings of a report about the country’s tax authority, and interrogated staff who signed off on VBS Mutual Bank’s accounts before it failed.
“We are disappointed by, but fully accept, the decision,” KPMG South Africa said in a separate statement. But this has not saved the once powerful firm from being quashed in the public.
The unfolding developments in South Africa raise concerns about the professional conduct of KPMG Uganda which has for many years conducted high level audits of government institutions and commercial banks.
Standard Bank Group Ltd., Africa’s biggest lender by assets, is assessing the latest “adverse information” about KPMG South Africa, a spokesman said last month, while Nedbank Group Ltd. said it can’t practically change auditors this year because parent company Old Mutual Plc is splitting into four separate units.