Jacques Wessels, KPMG’s engagement partner on many of the Gupta audits, has been barred from using the CA (SA) designation after the cancellation of his membership. He may reapply for South African Institute of Chartered Accountants (SAICA) membership in five years at the discretion of the board. This action resulted from a SAICA Disciplinary Committee and follows on from a disciplinary hearing instituted by the Independent Regulatory Board for Auditors (IRBA), which found that he had contravened numerous provisions of its Code of Conduct. On 1 March 2019, IRBA cancelled Wessels’s registration as a registered auditor.
Draft charge sheets have been issued in respect of two other members involved in the Gupta audits. SAICA’s Professional Conduct Committee (PCC), in a process not open to the public, is now required to request these members’ representations and discharge its obligations in terms of By-law 19. SAICA is unable to comment further on the processes in respect of these two members at this stage.
The news is the latest step in the implementation of the recommendations of the Ntsebeza Inquiry following wide-spread reports of wrongdoing by KMPG relating to the audit of Gupta companies and the SARS Report amongst others. KPMG audited the group of Gupta companies that were implicated in corruption. KPMG also conducted the forensic investigation into SARS that culminated in a discredited report that caused significant damage to SARS.
“The Ntsebeza report points to endemic and systemic failures of oversight, risk management and quality assurance at KPMG during the period 1 January 2013 until 15 September 2017. SAICA understands that KPMG has since undertaken significant corrective measures to address its leadership, oversight, policies and risk management procedures,” Nomvalo added.
“SAICA is compelled to take action against our members for breaches of the SAICA Code. However, SAICA’s By-laws do not allow us to pursue primary disciplinary proceedings against members who are also members of the Independent Regulatory Board for Auditors (IRBA), unless IRBA has declined to pursue them itself. Most of the former KPMG leadership fall into this category and SAICA is therefore, according to its By-laws, obliged to wait for formal confirmation from IRBA as to whether it will proffer charges against implicated members. IRBA is also the body responsible for investigating the conduct of KPMG as a firm. SAICA is working closely with IRBA and assisting them where possible.”
Two SAICA members were among the senior KPMG employees directly responsible for the SARS Report. The first is also a member of IRBA. SAICA awaits IRBA’s decision as to whether it plans to proceed with disciplinary charges. The second SAICA member involved has been referred to the PCC in terms of By-law 19. As the PCC process is a closed preliminary process, SAICA is unable to offer further comment at this stage.