The new profile and practices of KPMG South Africa after restructuring

Following its involvement in a number of major infamous scandals over the course of last year, global professional services firm KPMG now published a report detailing the comprehensive structural and practical changes that it has made in order to improve its practices and operations. 

Big Four accounting and advisory firm KPMG has had a turbulent couple of years, to say the least, in South Africa. The firm was embroiled in the Gupta scandal that caused public outrage in 2017, and subsequently lost contracts with a number of major clients in the country.

The firm was also linked to poor reporting practices for the South African Revenue Services (SARS) and was the auditor of VBS, which has since been accused of fraudulent practices. To cut its losses, the firm has been making a number of major changes to its South African outfit over the last two years.

Shortly after the Gupta scandal, KPMG restructured its entire South African team with a new CEO Nhlamu Dlomu. Towards the end of last year, however, the firm made the decision to change CEO again, with hopes to completely rebrand its profile. Now the firm has released a report detailing all the changes it has implemented.

Changes have been made to a number of aspects of its operations. For starters, the firm has made significant changes to its board, introducing a number of independent members to act in a non-executive capacity, with the objective of maintaining neutrality.

These changes are accompanied by a higher degree of board supervision in certain quality and assurance domains. To avoid a scenario like the Gupta scandal, the firm has also become substantially more stringent in its selection of clients, and has removed those clients that appear to have a risky profile.

The firm is also rebuilding its social profile, which not only includes the establishment of a public interest and ethics committee, but also includes the donation of the fees that it obtained from deals with the Guptas and others for social causes. These funds amount to nearly R50 million.

Lastly, the firm has introduced a new remuneration model to pay its employees, which better aligns with its priorities. “The remuneration model rewards performance that reflects an individual’s contribution to medium and long-term value creation, as well as short-term or current year performance against his or her goals.”