Loss of AG contract forces KPMG to close four regional offices

KPMG SA CEO Nhlamulo Dlomu
KPMG SA CEO Nhlamulo Dlomu

KPMG SA will be closing its regional offices in Bloemfontein, Mbombela, Polokwane and East London, in part due to the termination of its contract to provide services to the Auditor-General. 

In a conference call with journalists on Monday, the auditing firm’s CEO Nhlamulo Dlomu said the decision to close the four regional hubs came as parts of the firm "simply just did not have enough business".

"This made retrenchments inevitable. Mostly these are taking place in our small regional offices, which will be closing, and also in parts of our advisory businesses and our support areas."

The decision to close down the hubs comes in the wake of Auditor-General Kimi Makwetu's announcement in April that the state would no longer use the services of KPMG SA for auditing contracts. 

"Most of our regional businesses are quite dependent on audit work that was done for the auditor general. And because of the losses we have seen there, it really has been difficult to retain those offices," said Dlomu.  

Earlier on Monday, KPMG announced in a statement that it expected 400 people to leave the firm as a result of the regional hubs closing. It would also be cutting staff from its advisory business and internal business support sections. 

Dlomu said consultations with staff that may face the axe had begun. "We will be going through a normal retrenchment process."  

KPMG International to help out 

KPMG international, meanwhile, will be sending some staff to South Africa to try to strengthen the local leadership. 

"There will be an additional KPMG International person on the board, who will actively participate in the oversight. There will also be a few in the executive committee," Dlomu said.  

The international staff have not yet arrived in SA, and the auditor cannot yet say how long they will stay. Dlomu added that, since the auditor's local leadership resigned in mid-September 2017, KPMG SA had been in close contact with the parent body. 

In response to a question, Dlomu said this in no way meant the that KPMG SA was being "taken over" by the parent body. Rather, she said KPMG SA would benefit from the experience they bring. KPMG would seek to replace the international executives with South Africans, in time. 

In an earlier statememt, Bill Thomas, the chairperson of KPMG International, said that South Africa was an "important part of our global firm".

"[The] announcement to embed additional senior international partners into the South African leadership team is evidence of the significant investment KPMG International is providing to help ensure KPMG SA can continue to focus on trust, quality and integrity."

Dlomu also said that despite some high-profile departures reflected in the media "most of our clients have stayed with us".  

She did not want to give details on how many clients had left the firm in recent months, and what this had cost the auditor in fees.  

"Similarly, with colleagues, although there has been attrition, many colleagues have made the conscious decision to stay with KPMG and play an active part in the future of the firm," she said.

SUBSCRIBE FOR FREE UPDATE: Get Fin24's top morning business news and opinions in your inbox.

ZAR/USD
17.38
(-0.05)
ZAR/GBP
22.72
(-0.10)
ZAR/EUR
20.56
(-0.12)
ZAR/AUD
12.45
(-0.12)
ZAR/JPY
0.16
(-0.19)
Gold
1942.90
(+0.07)
Silver
26.42
(+0.07)
Platinum
941.16
(+0.46)
Brent Crude
44.74
(-0.36)
Palladium
2104.73
(+0.41)
All Share
57077.48
(-0.60)
Top 40
52737.48
(-0.65)
Financial 15
10156.41
(-0.69)
Industrial 25
75107.47
(-0.84)
Resource 10
58926.78
(-0.40)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Do you think it was a good idea for the government to approach the IMF for a $4.3 billion loan to fight Covid-19?
Please select an option Oops! Something went wrong, please try again later.
Results
Yes. We need the money.
11% - 1004 votes
It depends on how the funds are used.
74% - 6748 votes
No. We should have gotten the loan elsewhere.
15% - 1417 votes
Vote