Nkonki Inc, as it is known, says it was left with no option but to wind up the company following the auditor general’s decision to terminate its contracts with the firm.
That decision was prompted by revelations that majority shareholder Mitesh Patel’s management buyout of Nkonki was funded by Gupta lieutenant Salim Essa, and that Patel was effectively a front for Essa.
Plans by Nkonki’s management to buy Patel out, following his resignation, were, the firm says, thwarted by the loss of public sector contracts.As audit firms fight one scandal after another, the latest hit is not only a blow to the profession. Nkonki is one of a handful of sizable black-owned audit firms (it employs 180 people) and its closure is a setback for transformation of the profession, and diversification away from the big four.
Of course, it is true that black audit firms should not be held to different ethical or operational standards than their traditionally white counterparts. After all, the auditor general also cancelled its contracts with KPMG.
The difference is that Nkonki, unlike KPMG, derives the majority of its revenue from public sector audits. This is true for most black audit firms, and it is not for a lack of trying to win private sector work. Black firms all too often face closed doors in this regard – just ask the country’s fifth-largest audit firm, SizweNtsalubaGobodo.
One wonders whether auditor-general Kimi Makwetu considered this in making his decision. Was there a way to sanction the company without destroying it?