As London contemplates an auditing Big Three sans KPMG, in SA it’s already here

By Alec Hogg

A lot has gone down in the eight months since Nhlamu Dlomu accepted the job to run the South African office of KPMG. The first non-CA in the role, it was always going to be tough for the HR consultant to resuscitate a firm that for 15 years had been the Gupta auditors. The surprise at December’s ANC’s elective conference lengthened her odds.

Nhlamu Dlomu has been appointed to succeed Trevor Hoole as KPMG SA CEO.

Ms Dlomu may have bet on support from the global parent. But she got the opposite. This week the UK’s auditing oversight body, the Financial Reporting Council, slammed KPMG’s work, saying over half its 2016 and 2017 UK listed company audits were sub-standard. Far worse than other Big Four members PwC (16%), EY (18%) and Deloitte (21%).

KPMG was already reeling after the collapse of UK government outsourcer Carillion which it gave a clean bill of health nine months before the implosion. This month it was fined £3.2m for work which “fell significantly short” of acceptable standards on Quindell, whose doctored financials had prior to exposure made it a UK stock market darling.

Reputation is everything for auditors as they enjoy a legislated monopoly in return for independently monitoring clients. KPMG may have passed the point of no return in the UK with pundits now debating implications of an auditing Big Three. In a vengeful South Africa where KPMG couldn’t buy a new client, it looks like that has already happened.

Biznews community member David Mordant

The only way to protect minority shareholders is for the auditors in a country to be employed by the tax authorities and paid by them. I presume then auditing fees will be passed on to the client in their tax assessments.

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