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Openly, honestly and transparently – more on KPMG saga: Glynnis Carthy

JOHANNESBURG — The likes of Pravin Gordhan and Iraj Abedian have criticised KPMG for not going far enough in apologising to South Africa. There have been calls for a full disclosure, and the ball is now in KPMG’s court. In this piece, Glynnis Carthy dissects KPMG’s recent statement and bolts on additions/amendments that she thinks the company should have made. – Gareth van Zyl

By Glynnis Carthy*

I must confess to a certain ambivalence in my attitude towards KPMG SA in the last few weeks. On the one hand, I acknowledge that people make mistakes and that the vast majority of those at KPMG SA are honest and professional. On the other hand, it is time that South Africans started punishing those that choose to act in a corrupt or incompetent manner. If a company is simply allowed to say “sorry, we made a mistake” and then continue business as usual, no one will change the blasé attitude towards corruption that many in South Africa have.

I was encouraged by the fact that KPMG SA was taking the bull by the horns and leaving no stone unturned. As early as the 15 September 2017, it committed to being open, honest and transparent – as can be seen in the extracts below:

18 September 2017

LISTEN: KPMG shows little remorse. No wonder Pravin (and SA) is furious.

https://www.biznews.com/leadership/2017/09/18/kpmg-press-conference-pravin-gordhan/

“KPMG’s new CEO, Nhlamulo Dlomu, has given her word that the auditing firm will deal openly and honestly with an independent inquiry into its activities.”

23 September 2017

WATCH: KPMG CEO promises transparency

https://www.enca.com/money/watch-kpmg-ceo-promises-transparency-in-independent-inquiry

“Now that we feel that we have done the work we needed, we really want to be as open and transparent as we possibly can be and to respond to each and every concern that’s been raised.”

In the past week, my attitude started changing.  

In the early part of last week, the Chief Executive Officer of the ‎Independent Regulatory Board for Auditors (IRBA), Bernard Agulhas, told the Standing Committee on Public Accounts (SCOPA) that KPMG South Africa has not fully cooperated with the IRBA investigation.  

Apparently in the beginning of the KPMG investigation, the IRBA did not get all the necessary documentation was fed “bits and pieces” of information. The fact that the IRBA is the regulator of auditors should be sufficient to immediately ensure full cooperation by all auditors! There should be no need for a subsequent meeting (on 27 September 2017) between the IRBA, KPMG International and KPMG SA to finally agree on “full cooperation” – especially as the media statement by KPMG on 15 September 2017 stated:

“KPMG South Africa will fully co-operate with IRBA (Independent Regulatory Board for Auditors) to assist in its investigation.”

Thereafter, KPMG SA had its turn to have a “conversation” with SCOPA. I watched the full broadcast and was disappointed to learn that the executive team that had resigned had been paid to leave but was relieved to be taught that somehow this “should not be viewed as condoning misconduct”.  All in all, other than Nhlamulo Dlomu, KPMG SA came across as defensive and sometimes even aggressive, all “lawyered-up” and certainly not open, honest or transparent unless pressed to answer a direct question.

I wonder KPMG SA – do you know what “open”, “honest” and “transparent” mean?

To help you better understand these concepts, I have made some suggestions on how certain parts of your media statement on 15 September 2017 could have been amended (disclaimer – these amendments are based on the subsequent information that has come out thus far only):

  • Glynnis Carthy is a chartered accountant based in England. She is an independent financial reporting advisor and previously worked at Deloitte.
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