Former KPMG South Africa auditor Jacques Wessels is to face sanctions from South Africa’s Independent Regulatory Board for Auditors (IRBA) in relation to the work he conducted for Gupta owned company Linkway Trading.
This is the first investigation to reach the sanction stage out of a range of Gupta-linked inquiries and investigations by various bodies.
In a hearing which took place over two days last week, IRBA’s disciplinary committee heard arguments in mitigation and aggravation relating to proposed sanctions against Wessels.
The disciplinary committee had previously found Wessels guilty on all six charges made against him after the hearing process ended last year.
The six charges were:
- Charge 1: Gross negligence regarding the audit of Linkway for the year ending 28 February 2014
- Charge 2: Lack of professional scepticism on the audit of Linkway – lack of identifying and responding to money laundering red flags.
- Charge 3: Dishonesty by changing financial statement to assist Linkway to evade tax.
- Charge 4: Dishonesty to the IRBA relating to the restatement of the financial statement mentioned in charge 3
- Charge 5: Failure to perform appropriate procedures on client continuance
- Charge 6: Lack of independence (attendance of wedding) and incorrect audit opinion
IRBA CEO Bernard Agulhas said: “We are satisfied with the committee’s finding of guilt on the charges. The committee now has 30 days to deliberate and finalise the appropriate sanction.”
KPMG South Africa has been battling to rebuild its reputation in the country following high-profile scrutiny, a loss of clients, and a ban from public sector auditing which resulted from the work it conducted for Gupta family owned entities.
At the end of last year, the firm employed a new CEO from outside of the business to boost trust and also donated the fees it earned from Gupta businesses to organisations helping to promote ethical leadership.
IAB has approached KPMG South Africa for comment and will update this article once a response has been received.