KPMG South Africa has received a great deal of negative publicity after the firm was associated with state capture activities. However, since 2017 the auditing and professional firm has made ethics and integrity one of its major priorities in an effort to regain public trust.
Speaking to GIBS Interim, Dean Morris Mthombeni during a Flash Forum, CEO of KPMG South Africa Ignatius Sehoole said the firm’s aspiration is to be, “the most trusted and trustworthy professional services firm in the country. We are doing everything in our power to bring that ambition to life.”
Appointed to lead KPMG South Africa in May 2019, he said leadership was working hard to understand what staff went through, and become an audit firm that the public is happy to engage and do business with.
Rebuild perceptions of public trust
Sehoole acknowledged that state capture remains an open wound for South Africans, and KPMG continues to work closely with the law enforcement authorities to assist with any information that can expedite cases and result in successful prosecutions, while rebuilding the firm.
In order to restore perceptions of public trust, KPMG SA has placed a renewed emphasis on values and ethics, and there is an expectation that its value system will extend from employees’ professional into their private lives.
“Partners, trainees, and employees at all levels must realise that joining KPMG is a lifestyle choice and they must align with what we stand for. We expect our people to be accountable and trustworthy in their professional, social and political lives, as they represent the company wherever they go,” Sehoole said.
Employees are expected to exemplify and live the firm’s values in their day-to-day lives, as this is representative of and indicative of their overall character: “People that do not buy into our value system should not feel at home at KPMG, they should feel uncomfortable amongst us and that they do not belong,” he added.
All partners and board members, including independent non-executive board members, as well as their spouses and dependent children, are required to undergo extensive lifestyle audits and integrity checks. These integrity checks include tax compliance and an audit of SARS filings, performed and subject to review and oversight by KPMG’s global head office.
“With us it is all or nothing,” Sehoole said.
“The more the good make themselves heard, the more we will overcome this morass that we have seen sweep our country, in particular during the state capture days. It is up to you and I, each and every individual.”
Professional ethics in the broader accounting profession
Mthombeni pointed out that the broader accounting industry is replete with examples of accounting failures and scandals, both globally and in South Africa.
“There has been a realisation in the broader profession that serious reforms are needed and a renewed focus on ethics so that the profession can continue to serve the public interest,” Sehoole agreed.
“We are all aware that the profession has lost its luster and aura of integrity and that we need to get it back. We are acutely aware as an industry that things need to change, and we are working on that.”
On balancing ethics and profits
Sehoole explained KPMG is “very discerning about who we do business with,” and that the company’s goal is “not to be the biggest or to win the most clients, but to be a firm that people can trust and that is trustworthy to the masses.”
“It is in our behaviour, what we do and how we do it, that will determine whether we succeed.”
To this end, KPMG South Africa took a decision in February 2021 to cease offering consulting and non-audit-related services to its JSE listed audit clients in a bid to restore trust in the company. It is the first partner in the group’s global network to make the move.
“We took the decision due to disquiet from the public regarding the association between auditing and consulting and how it impedes the independence needed to be an objective auditor.”
While Sehoole admitted the decision is likely to cost the firm money immediately and in the long term, he is of the belief that it serves the public interest: “We need to follow our principles first and then deal with the fall out. But we can see from the number of new assignments that we have won that we are making progress.”
Sehoole added that he does not believe that values and profit are competing issues: “If you ensure the governance, culture and quality is right, then the till will look after itself.”
He concluded that KPMG would like its clients and potential clients to hold it accountable to its values: “It doesn’t matter what the underlying assignment is, we expect our staff to follow the ethos that whatever work we do, we need to be able to deliver the quality that we are all proud of.”
“As a firm, we impress upon our people that we need to be doing the right thing, all the time, especially when no one is watching.”