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KPMG SA agrees to pay R1m US penalty over audit work

14 March 2018 1:48 PM
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KPMG SA agrees to pay R1m US penalty over audit work

Cape Town - KPMG South Africa has agreed to pay a penalty of $100 000 (R1.17m) for becoming involved in audit work that did not comply to US audit standards.

Foreign affiliates of accounting firms Deloitte & Touche and BDO have also agreed to pay penalties in the same matter.

According to the Securities and Exchange Commission (SEC) in the US, KPMG SA relied on audits produced by KPMG Zimbabwe in 2013 and 2014 when auditing the books of an unnamed SA company incorporated in Canada.

While KPMG SA is a member of US audit regulator the Public Company Accounting Oversight Board, KPMG Zimbabwe is not.

This, according to the SEC, meant that KPMG Zimbabwe should not have audited the assets and revenues of the company.

According to the SEC, BDO Canada similarly used the services of Deloitte Zimbabwe between 2006 and 2012 to audit the financials of a separate SA company incorporated in Canada. Deloitte Zimbabwe was not registered with the PCAOB.

KPMG Zimbabwe has been ordered to pay a fine of $141 305, BDO $50 000 and Deloitte Zimbabwe $99 057.

KPMG SA, meanwhile, has 30 days to pay what the SEC calls the “civil money penalty” of $100 000.

All companies will pay the penalties “without admitting or denying the findings”.

“It’s in the best interest of Main Street investors that all firms substantially involved in the audit of a public company are properly registered with the PCAOB so they are subject to the oversight necessary to ensure accuracy and prevent fraud,” said Scott Friestad, associate director of the SEC’s division of enforcement in a media statement.

KPMG SA said in a statement on Wednesday that it had reached a settlement with the SEC. It noted it reported the matter to the SEC itself in May 2016 after it was flagged by internal quality controls.

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Source: fin24.com

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