Nedbank sticking with KPMG - for now

Nedbank will not be cutting ties yet with disgraced auditing from KPMG.

This is according to a statement issued by the bank on Thursday, following the news that Barclays Africa Group has dropped KPMG.

According to the statement Nedbank said it will propose to its shareholders at the next Annual General Meeting on May 10 to consider Deloitte and KPMG as its joint external auditors for the 2018 financial year.

Nedbank is required to have the same auditor as Old Mutual, its parent company. “Any change in Nedbank Group’s auditors would require Old Mutual’s consent under our current relationship agreement,” the statement read.

Old Mutual’s shareholders supported a resolution to reappoint KPMG as its auditors for 2018 at its AGM on April 30.

“We have engaged proactively with KPMG South Africa and KPMG International to ensure that both the required audit capacity and quality assurance are underwritten by KPMG International to ensure full completion of the 2018 Nedbank Group audit,” said Nedbank Group CFO Raisibe Morathi.

This may come as a relief to KPMG which has experienced an exodus of its clients. Most recently the Auditor General terminated its contracts with KPMG.

Dr Iraj Abedian, Chief Executive of Pan African Investments told Fin24 by phone in April that KPMG doesn’t divulge the value of their auditing contracts but he guessed that the loss of the Auditor General as client could cost the auditing firm a fourth or a fifth of its revenue.

He urged KPMG’s largest clients to cut ties with the company. “To me, the big banks, Old Mutual, the JSE and Goldfields, those are the big listed entities, they are quiet... it’s very disturbing.”

“What does it say about their ethics and what they’re covering up

“If (KPMG’s) quality doesn’t stand up for the AG, why are they still using them”.

Abedian resigned as a non-executive board member of insurer Munich Re of Africa in 2017 as they still had KPMG as an auditor. The company subsequently cut ties with KPMG.

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