Barclays Africa Group has dropped KPMG’s South Africa as its auditor, resulting in yet another client lost amidst the company’s ongoing crisis. Barclays is one of KPMG’s major financial customers and South Africa’s No.2 lender by market value.
The bank announced in a statement that “Subsequent to the release of our AGM Notice, the Board has carefully evaluated the on-going and more recent developments and decided that it is no longer able to support the reappointment of KPMG.”
This follows Barclays initial recommendation to reappoint KPMG as one of its external auditors for the year 2018, subject to the board’s decision at its Annual General Meeting (AGM) on May 15.
“The appointment of KPMG will cease on completion of the statutory and regulatory audit and reporting matters relating to the 2017 financial year, which is expected to take effect by approximately May 31,” the bank added.
KPMG SA reacted to the news in a separate statement, where it noted that its disappointment about Barclays decision, but however accepts it.
In the meantime, Ernst & Young Inc. will be the sole auditor of the group while the bank starts a formal process to appoint a second auditor, it said.
Barclays Africa joins the league of companies that wants nothing to do with scandal-tangled KPMG that has been under scrutiny since 2017 for its involvement with companies linked to the Guptas. The Guptas have been accused of using their friendship with South Africa’s former President Jacob Zuma to win government contracts. Zuma and the Guptas have denied any wrongdoing, and the accusations are part of judicial inquiry into “state capture”.
South African government recently banned the global audit firm from auditing public institutions in South Africa. “Recent media reports relating to the external audit of VBS Mutual Bank and the conduct of KPMG audit partners are some of the reasons that prompted the decision to withdraw all KPMG audit mandates with immediate effect,” South Africa’s Auditor General Kimi Makwetu said in a statement.
Other companies to have fired the accounting firm include South African miner African Rainbow Minerals, South African retailer The Foschini Group (TFG), Wits University, Telkcom and Standard Bank.
KPMG recently announced that it would be reviewing past audit files. The company cleaning house to ensure it can salvage what is left of its public reputation.