Update on the Ntsebeza inquiry into the conduct of SAICA members employed by KPMG
Johannesburg, 20 January 2018 - In November 2017, the South African Institute of Chartered Accountants (SAICA) convened what is now known as the “Ntsebeza Inquiry” [also referred to as the Inquiry] with the aim that it should investigate, independently, allegations that some of its members who were/are employed by KPMG, had allegedly engaged in conduct in contravention of the SAICA Code of Professional Conduct. This followed the emergence of claims relating to unethical and unprofessional conduct in relation to audit work carried out by KPMG for both public and private sector clients and the South African Revenue Service.
The Inquiry is chaired by Advocate Dumisa Ntsebeza SC. Other members of the panel include Advocate Vuyani Ngalwana SC, who is the Chair of the General Council of the Bar, Dr. Claudelle von Eck, the CEO of the Institute of Internal Auditors SA (IIA SA), former Accountant-General, Mr. Freeman Nomvalo, as well as the former Chair of the JSE, Mr. Malcolm Robert “Bobby” Johnston.
The Inquiry was established to convene in four key phases.
The first phase constituted of a call for written submissions, and was scheduled to run between 2 to 30 November 2017. However, due to numerous requests for extensions, including from KPMG, the panel exercised its prerogative to allow these extensions as they were deemed both necessary and feasible. In addition, the advent of the festive period also necessitated further delays due to the unavailability of both the panellists and those making submissions, due to respective predetermined schedules. These circumstances have naturally impacted on the Inquiry’s timeframe for the first phase, albeit not to the detriment of its mandate.
During the submission period the panel noted the following:
There is a general lack of understanding of the difference between the roles of the Ntsebeza Inquiry and that of the Independent Regulatory Board for Auditors (IRBA) investigation, both of which inquiries/investigations deal, in different ways, with the so-called, KPMG saga.
It appears to the Ntsebeza Inquiry that there is a general tendency, by some in the general public, to conflate these roles. This statement is intended to correct that tendency, which, as much as it may be genuine, is nonetheless erroneous.
As the industry regulator, IRBA is responsible for investigations into the conduct of KPMG as an entity, and for it to determine whether the implicated Registered Auditors should be de-registered. SAICA, on the other hand, has set up the Inquiry to determine whether those who are implicated, who are members of SAICA, and hold the Chartered Accountant CAs(SA) designation, should be disciplined under SAICA’s Code of Conduct
It is therefore within the ambit of IRBA, and not of SAICA nor of the independent panel, to determine whether KPMG as an entity should, or should not be held accountable for its presumed or alleged wrongful actions.
Moreover, the panel has received submissions that fall outside of its scope. For example, requests were received to investigate the conduct of other organisations. The panel will forward these and other related allegations to IRBA. Should the behaviour of CAs(SA) come into question in that process, SAICA will investigate these allegations, as per its disciplinary procedures. The panel’s sole focus is presently on current and former employees of KPMG who are members of SAICA and who have been adversely implicated in the relevant period.
There appears to be an expectation that the Inquiry will hold any implicated CAs(SA) accountable. There are three distinct processes, namely, an investigation, adjudication and imposition of sanctions. The Ntsebeza Inquiry is only responsible for the first leg. Once its work is complete, its report will form the basis on which SAICA may decide to discipline its implicated members, if so advised. This would ordinarily be after its coded disciplinary processes have been followed which may include disciplinary hearings.
Further, it must be noted that during the submissions period the panel adopted a proactive approach, and sought out both individuals and organisations which it believed may have additional and corroborative information. It is unfortunate that not all requests were received in the spirit in which they were intended. The panel regrets this, as any additional information would have enhanced its ability to ensure that it will reach comprehensive conclusions.
The panel is currently in the “review of submissions phase” and is in the process of appointing an evidence leader, whose name will be announced in due course, to assist it in the execution of its duties.
Should the panel conclude that its investigation of a CA(SA), who is also a Registered Auditor (RA), may require the panel to report this member to the IRBA, then it will facilitate the necessary flow of information to the IRBA. Similarly, the IRBA may refer an implicated CA(SA) to SAICA.
It is the considered view of the Chair of the Inquiry, Advocate Ntsebeza SC, that the panel is on track to meet its overall deadline. However, this would be impacted, naturally, by the scale and nature of the issues raised in the submissions. Should an extension of the overall deadline be necessary, this will be communicated timeously, given the significant public interest in the matter.
The panel wishes to thank members of the public, as well as organisations who have assisted it thus far, and urges others to submit whatever information they may have via the Secretariat.
The Chairman of the Inquiry will be available to deal with such further inquiries as there may be, and can be reached at 082 467 2490.
MMMG Attorneys Inc.
Secretariat to the Ntsebeza Inquiry
Ms Tebogo Motsai
010 590 5727