Barclays Africa Group, one of the largest banking groups in the region, has told shareholders it will not re-appoint KPMG as one of its external auditors following the completion of the statutory and regulatory audit and reporting matters relating to the 2017 financial year.
Previously, the board had proposed KPMG be re-appointed to the position for the 2018 financial year, but had also said it would monitor developments relating to the firm.
Since then, KPMG has been banned from public sector auditing in South Africa. The board noted: “Subsequent to the release of our Notice of AGM, the ongoing and more recent developments were evaluated by the board, which decided that it is no longer able to support the re-appointment of KPMG.”
Barclays said it expected to complete its statutory and regulatory audit and reporting matters for the financial year by the end of the month.
As a result of the move, the bank has begun a formal process of appointing another audit firm. The bank is required to appoint joint auditors by the South African Reserve Bank. With EY already acting as an auditor for Barclays in South Africa, the pool of potential replacement candidates is somewhat thin – something the bank recognised in its initial Notice when explaining the reasons for potentially re-appointing KPMG.
KPMG itself was appointed one of the Groups auditors in 2015 following the required rotation of PwC at a global Barclays level.
From 2023, mandatory audit firm rotation is being introduced in South Africa itself. From May that year, audit firms must be rotated every 10 years. After this, the audit firm will only be eligible for reappointment as the auditor after another five years. EY has acted as an auditor for Barclays Africa Group for over 25 years, meaning it’s position will also come up for tender in five years’ time.