KPMG South Africa has announced that it will not be taking up any other work for JSE-listed companies, save for auditing contracts.
The auditing firm which is still cleaning up its image after the state capture and the VBS scandals said it will cease all future non-audit-related services to its listed audit clients from 31 March 2021.
The fact that firms have been providing consulting services to the same clients they are supposed to audit has largely been blamed for the recent scandals accounting, not just in South Africa.
In the UK, the Financial Reporting Council ordered the big four accounting firms – KPMG, Deloitte, Ernst & Young, and PricewaterhouseCoopers to break up their audit and non-audit operations to enhance transparency and to make audit operations truly independent from the rest of the firm.
In SA, providing non-audit-related services to audit clients is still permitted under current laws. KPMG is the first firm to voluntary follow the UK developments.
The company said that its decision to cease offering consulting services to its listed clients came after an intensive review process that seeks to improve the perception of auditor independence.
The firm added that while it can lawfully continue to offer these services, it was concerned about the public perception of auditor independence.
"While this is an area that is typically already very well managed by audit committees, particularly those of listed audit clients, the objective of such a move is to help restore trust in the profession, as it removes any perception of conflicts of interest with our audit work for listed entities," said KPMG SA CEO, Ignatius Sehoole in a statement.
Sehoole added that because the auditing profession relies on trust, the firm will do all that's needed to rebuild that element.
"After the significant and market leading governance and leadership changes the firm made in the last three years, we are committed to continuing to lead the rebuilding of trust in the firm and the profession. We look forward to witnessing a positive industry shift that will result from this enhanced independence model," said Sehoole.