THE BOTTOM LINE
Barclays calamity means KPMG could shut its doors
Scandal-ridden audit firm faces the prospect of going under after losing bank’s R138-million account
KPMG’s loss of the Barclays Africa account is a game changer. Estimates suggest that the audit of the bank contributed R138-million to KPMG’s revenue in 2017 – far more than any other client it has lost – while about 250 of the firm’s employees worked on the audit.
KPMG now faces the very real prospect of going under.
South Africa may well face a world with only three of the traditional “big four” audit firms.
It is possible that the other three premier league firms, PwC, Deloitte, and EY, as well as their second-tier peers SizweNtsalubaGobodo, Grant Thornton, BDO and Mazars, will quickly fill the gap left by KPMG and absorb the excess employees.But this will be a lengthy, costly and painful process. Certainly none of these firms are celebrating the possible demise of KPMG, understanding as they do the negative effect this will have on SA’s economy and the audit profession in the long run.
Already there is talk that senior KPMG employees, not those fingered in any of the firm’s scandals, have simply left the country to work for other audit firms around the globe.
That represents the loss of skilled labour and taxpayers, both of which SA has in short supply. Likewise KPMG is a contributor to the fiscus and to the country’s chartered accountant force, training hundreds of would-be CAs annually.
The loss of the firm would be a loss to SA. Having said that, it is high time that companies face the consequences of their own bad business practices.