Change is imminent for the world and the audit profession: panellists at webinar on Chancellor Prof Nkuhlu’s book on his time at KPMG SA

Posted on November 13, 2020

The world is changing rapidly and so should the audit profession. This was the broad sentiment at a webinar hosted by the University of Pretoria’s (UP) Faculty of Economic and Management Sciences (EMS)

During the webinar, titled ‘Professor Wiseman Nkuhlu and KPMG SA: Lessons from the Crucible’, UP Chancellor and Chairperson of KPMG SA Prof Nkuhlu shared his experiences at the auditing firm and ideas set out in his new book, Enabler or Victim? KPMG SA and State Capture. 

Prof Nkuhlu was joined in the conversation by corporate governance expert Professor Mervyn King and UP professor in auditing Professor Karin Barac. The session was facilitated by Professor Tawana Kupe, Vice-Chancellor and Principal of UP.

The webinar was a part of the centenary celebrations of the EMS Faculty this year and was presented under the Faculty’s talk series. 

From left to right: Prof Tawana Kupe, Vice-Chancellor and Principal of UP; Prof Elsabe Loots, Dean of UP's Faculty of Economic and Management Sciences; Prof Wiseman Nkuhlu, Chancellor of UP; UP professor in auditing Professor Karin Barac; and corporate governance expert Professor Mervyn King.

Opening the conversation, Prof Barac commended Prof Nkuhlu for providing his insider view into the KPMG SA saga. “While the debate is still continuing on whether KPMG SA was an enabler or victim in its association with corporate as well as public sector SA, I see Prof Nkuhlu’s book as being an enabler or motivator to restore the trust in the South African audit profession,” she said. 

She added that she agrees with Prof Nkuhlu that there has been a logic shift within the audit field, and that the values that used to define the profession have changed, from a professional logic to a commercial logic. 

Prof Nkuhlu, while giving a brief overview of his book, advised that one way to combat this commercial logic that sometimes leads to the flouting of ethics and good governance principles is to overhaul the culture of the organisation, and for leaders to tap into their moral compass. 

The Chancellor said an important lesson, not only for KPMG SA and the audit profession but for other leaders as well, is “to appreciate that even if there are one or two incidents of unethical conduct or being implicated in corruption, it’s just too much if you are really proud of your reputation”. 

“You must respond by saying let’s review the work habits, the behaviours in the whole organisation and not just be satisfied with dealing with those implicated individuals,” he said. 

Prof King added his thoughts to the discussion, sharing his ideas on audit liability. 

“I call the big four firms the final four because the claims against them run into hundreds of millions of US dollars. Why? When a limited liability goes bankrupt, the liquidator sees the auditor as the one with the deepest pockets because they are compelled to have insurance. I have been in the corporate world, academically, as a chairman or director of companies, and I have never seen a corporate failure where the sole cause is an audit fail, that in the international standards of auditing there hasn’t been a dotting of I’s or crossing of T’s. It’s a conglomeration of events. If we think with a canine mentality, an auditor must not be a lapdog, it must not be a bloodhound, the auditor is not there to sniff out fraud, at the most, it’s a watchdog,” he said. 

WATCH: Professor Wiseman Nkuhlu and KPMG SA: Lessons from the Crucible

- Author Masego Panyane

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