During the past few months South Africans will have become familiar with adverse news reports and commentary regarding KPMG, who are one of the joint auditors of Barclays Africa and Absa Bank. The behaviours underlying the allegations in these reports are in conflict with our values.
We acknowledge the involvement of and the steps taken by KPMG International so far in this matter. These include the publication on 15 September 2017 of their internal investigation report which contains deeply concerning acknowledgements pertaining to the conduct of some senior people in the firm, adherence to quality standards and the judgment underlying some of the decisions taken.
We note the steps taken by KPMG International and the local firm so far which include the installation of a new leadership and instituting a further, independent investigation. We also welcome the investigation that has been undertaken by the Independent Regulatory Board for Auditors (IRBA).
A multitude of factors come into play when appointing, terminating or changing auditors, including considerations of audit quality and independence. This process includes consultation with our primary regulator, the South African Reserve Bank (SARB), which requires two joint auditors for the major South African banks. The SARB has indicated that it will await the outcomes of further independent investigations before making further decisions or pronouncements.
The extent to which the public at large and notably investors and credit ratings agencies rely on the integrity of our financial reporting means that robust and credible audited financial statements, subject to a high-quality audit by our independent auditors, must be delivered to stakeholders. We have asked for and received assurances of additional support and quality reviews from KPMG International in relation to audit work done for BAGL.
Given that some investigations and reviews are underway we will continuously reconsider our position as more information becomes available.