Audit regulator launches probe into KPMG audits of Linkway Trading

Johannesburg, Friday, 30 June 2017 - Following today’s media revelations, the Independent Regulatory Board for Auditors (IRBA) has confirmed that it will initiate a mero motu investigation into the 2014 audit of Linkway Trading (Pty) Ltd, the company alleged to be involved in the Gupta wedding scandal. The audit watchdog has the power to initiate such investigations without having to receive a formal complaint.

Says Bernard Agulhas, CEO of the IRBA: “While we have not received a formal complaint, we have nevertheless initiated our own probe into the audit of Linkway Trading by KPMG for its audit in 2014. It is important that we take seriously allegations in the public domain, which are in the public interest.”

The investigation may be initiated despite the fact that KPMG terminated its 15-year relationship with the affected companies in 2015. Notices have been issued to the auditors and the audit firm has also been informed.

Concludes Agulhas: “The IRBA has since December 2015 been rolling out measures to increase transparency, improve independence and enhance audit quality. Among these were the mandatory disclosure of audit tenure in the independent auditor’s report to enable shareholders to consider the length of relationship between auditor and company in light of the need for independence, as well as the new requirements to disclose key audit matters and how these were resolved. The most recent measure to strengthen independence is the requirement for mandatory audit firm rotation every ten years, which is effective in April 2023.”

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More about the IRBA:
The IRBA is a public protection statutory body established to protect the financial interests of the public by ensuring registered auditors and their firms deliver services of the highest quality. It upholds audit firm independence to ensure that audit quality is such that it enhances the accuracy and credibility of financial performance reporting. In this way, the IRBA has an important role to play in building the reputation of South Africa as an investment market for both local and global investors and driving economic growth for the country.

As an internationally recognised regulator of the auditing profession and other assurance services relevant to the South African environment, it has been recognised by the World Economic Forum as the top independent audit regulator worldwide for seven consecutive years for the strength of its audit controls and standards. The IRBA also registers suitably qualified accountants as auditors, who must adhere to the highest ethics standards, and promotes the auditing profession through the effective regulation of assurance conducted in accordance with internationally recognised standards and processes.