S/African Reserve Bank refutes instructing banks to shun KPMG
APA-Pretoria (South Africa) - South Africa’s central bank on Monday refuted claims that it has instructed banks on what steps they should take against auditing firm KPMG, which has fallen from grace for its close working relations with the controversial Gupta family, APA has learnt.
The South African Reserve Bank (SARB) said it “has not instructed banks on what steps they should or could not take with regards to their contracts with KPMG.”
“As stated by SARB Governor Lesetja Kganyago in a statement issued at the Monetary Policy Committee media conference on 21 September, the SARB’s interest in the KPMG matter stemmed from a public policy perspective, arising from the SARB’s mandate to regulate banks and ensure the stability of our financial system,” the central bank said.
The apex bank said that it would engage banks and auditing firms primarily to understand the context so that it was better placed to manage any potential financial stability risks that may arise from the issues around KPMG.
“These engagements have taken place but at no point did the SARB instruct banks on how they should deal with KPMG. The SARB’s position on the KPMG matter was further expanded on by Deputy Governor Francois Groepe in a speech delivered in September.
“Mr Groepe stated that developments around KPMG called for ‘thoughtful leadership and restraint’, as the South African economy would be better served if further market concentration within the auditing and auxiliary professional services sector could be avoided,” the bank said.
South Africa’s Section 61 of the Banks Act states that no person shall be appointed as an auditor of a bank unless the appointment has been approved by the Registrar of Banks.
The section also sets out conditions under which the Registrar (SARB) may withdraw the approval of the appointment of an auditor.
In September, the central bank announced its concern at developments involving the KPMG for its questionable dealings following the fallout as a result of the work done by the company on behalf of the controversial Gupta family.
This resulted in several resignations at the company and the appointment of Nhlamu Dlomu as new chief executive officer of the multinational.
KPMG has since apologised for the mishap and its top nine bosses have resigned from the auditing company after appointing the new CEO.