Reserve Bank speaks on KPMG

Monday, October 9, 2017

The Reserve Bank has refuted claims that it has instructed banks on what steps they should take against auditing firm KPMG.

“The South African Reserve Bank (SARB) would like to state categorically that it has not instructed banks on what steps they should or should not take with regards to their contracts with KPMG.

“As stated by Governor Lesetja Kganyago in a statement issued at the Monetary Policy Committee media conference on September 21, 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,” said the central bank on Friday.

The central bank said that it would engage banks and auditing firms primarily to understand the context so that it is 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,” said the Reserve Bank.

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. Section 61 also sets out conditions under which the Registrar may withdraw the approval of the appointment of an auditor.

In September, the central bank announced its concern at developments involving KPMG.

The bank’s concerns come 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 Chief Executive Officer. –

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