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KPMG under the cosh again over VBS Bank

Embattled audit firm KPMG South Africa has announced that two of its partners have resigned, rather than face disciplinary charges for failure to disclose their financial interests in VBS Mutual Bank.
When VBS recently went into curatorship, information arose in relation to these partners that prompted KPMG to launch an independent investigation, conducted by Bowmans. That investigation is ongoing and further action will be taken as appropriate.

Explainer: what happens when a bank is put into curatorship

The South African Reserve Bank has placed a small bank - VBS Mutual Bank curatorship

By Jannie Rossouw 6 Apr 2018

Sipho Malaba was the lead auditor responsible for signing off the bank’s financials year to March 2017‚ He did not file any "reportable irregularities" with Independent Regulatory Board for Auditors.

It has since emerged, from the court documents by the Reserve Bank in relation to VBS’ curatorship, that about R900-million is missing.

Malaba held loans with the bank but had not declared their full extent. During the course of a KPMG internal investigation, similar concerns had also emerged regarding fellow partner Dumi Tshuma.

“This has been a very disappointing episode for KPMG. There can be no tolerance, however, of any conduct that compromises our reputation and we have moved decisively to deal with the situation,” said Nhlamulo Dlomu KPMG South Africa chief executive.

Eight senior KPMG South Africa executives resigned last year after questions were raised about the audit firm’s work for the Guptas and the report on the South African Revenue Services’ so-called ‘rogue unit’.

KPMG heads roll after Gupta probe

Eight of KPMG SA's senior executives "resigned" following KPMG International's investigation...

15 Sep 2017

Following the latest resignations, KPMG South Africa announced measures to prevent a repeat of problems with the VBS and Gupta accounts.

The first is to go beyond the normal integrity checks done by their internal units on conflicts of interests. Instead an external independent partner will conduct the checks. Thereafter external checks will be done every two years.

The firm will also review all work done in the past 18 months.
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