Auditor-General Kimi Makwetu has defended his decision to terminate relationships with KPMG and Nkonki, following what he says are "misleading statements" that suggest he treated the firms unequally.
Statements that sought to project his office’s decision as "irrational and unsympathetic" paid no heed to the fact that he had given the firms "ample time" to explain matters raised with them regarding corporate governance, Makwetu said.
Having previously cited negative media reports, Makwetu provided more reasons for his decision to end his office’s contracts with the two audit firms.
Suggestions that he had treated them unequally, considering that KPMG’s issues were brought to light in September 2017 and Nkonki’s in March, were "unfounded", he said.
The auditor-general had initially decided to await the outcome of independent investigations into KPMG but realised that these would not be concluded ahead of its statutory audit sign-off dates. This increased risk was compounded by the findings surrounding VBS Mutual Bank, he said.
The firm was not given the opportunity to make written representations, nor had there been any official findings made against it
— Nicqui Galaktiou
Nkonki’s lawyer
The Nkonki story broke when his office was very close to these sign-off deadlines, requiring immediate action, Makwetu said.
The Nkonki leadership had also failed to provide his office with a regulatory report which assessed the firm’s compliance with quality control standards.
Further, acting CEO Thuto Masasa could not until recently confirm who the company’s shareholders were.
The 25-year-old Nkonki said this week it had applied for voluntary liquidation following the auditor-general’s decision, which left the company, reliant on public sector work, unviable.
Makwetu’s decision followed reports in March by investigative journalism unit amaBhungane which revealed that Gupta lieutenant Salim Essa had funded the 2016 "management buyout" by Nkonki’s then managing partner, Mitesh Patel.
Nkonki’s lawyer, Nicqui Galaktiou, said the firm was not given the opportunity to make written representations, nor had there been any official findings made against it.
Makwetu said he would contract in professionals from both firms within its existing audit teams.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.