THE BOTTOM LINE
Telkom’s hunt for an auditor: This is getting ridiculous
That five major audit firms hold such sway smacks of some sort or regulatory capture
What a huge relief it must have been to KPMG that they were not the external auditors being dropped by Telkom. On Monday the telecommunications company announced it had terminated the appointment of Nkonki as joint external auditors. Telkom didn’t have much choice given that Nkonki, hard on the heels of the auditor-general’s decision to exclude it from any government-related business, has recently filed for voluntary liquidation.
The decision to terminate Nkonki means that Telkom has only one auditor signing off its financial statements for the year ended March 2018. EY will be signing off those accounts for the 20th time. It will also be the last time they sign off on Telkom accounts.No doubt encouraged by the Independent Regulatory Board for Auditors’ campaign to push for auditor rotation every nine years, Telkom decided last year to look for new auditors to replace EY. The company recently informed shareholders that “following an extensive and robust process” the board intends to nominate PwC and SizweNtsalubaGobodo for shareholder approval at the next annual general meeting, to be held in August.
It’s difficult to imagine that the process of finding a replacement for EY was that extensive given the dismal lack of options in the marketplace for major audit firms. KPMG would have been an inspired choice, given it’s likely to be super-alert right now, but one Telkom might have shirked. This left just PwC and Deloitte. It’s difficult to see how the choice between the two could have involved an “extensive and robust” search.
That there is an almost complete lack of choice is a ridiculous situation for the business community to be in. This is not just a South African problem, it is a global one. How did it come to this? That five major audit firms hold such sway over the global business community smacks of some sort or regulatory capture.