Sygnia cuts ties with Deloitte in South Africa due to reputational concerns
The plethora of alleged malpractice scandals continues to damage the operations of major accounting and advisory firms across South Africa, with Deloitte being the latest firm to lose business due to its tarnished reputation. Asset management firm Signia has terminated its association with the Big Four firm.
The consulting industry in South Africa has been suffering from a trust deficit in recent years, as a number of major firms have been named in one scandal of corruption or the other. The Gupta scandal caused substantial problems for KPMG and McKinsey & Company, while Bain & Company and Deloitte have also been implicated.
Deloitte came under fire for its involvement in the collapse of South Africa’s largest retail firm Steinhoff International, and has subsequently also come under investigation for its auditing practices of agri-business giant Tongaat Hulett. These issues are now starting to manifest themselves for the firm.
While KPMG and McKinsey have both lost a number of clients due to the reputational damage that they have undergone, Deloitte has also been losing ground in the market. Asset management firm Sygnia has now announced that it will no longer associate with Deloitte, citing the firm’s tarnished image as a reason.
Sygnia is a fintech-based firm, which is growing rapidly in tandem with the country’s rapidly expanding fintech environment. The firm is JSE listed and offers services in stockbroking and administration, in addition to its flagship asset management vertical. The firm’s decision is based on the current perception of Deloitte.
Evaluating the current market scenario, the firm has made the decision to seek “alternative external auditors given our unsatisfactory engagement with Deloitte and the reputational risk associated with the firm.” This is according to a statement released by Sygnia to its shareholders.
The firm indicated to Deloitte that it wished to terminate the relationship. “Deloitte subsequently resigned as Sygnia’s auditors on 11 June 2019, ahead of Sygnia’s [meeting]. The process of reviewing and appointing alternative external auditors is well advanced and the appointment of Sygnia’s new auditors will be communicated in due course,” said the statement.
Deloitte, meanwhile, urged that Sygnia’s move was based on false premises. “Whilst as Deloitte we maintain the highest standards of ethical behaviour and client confidentiality, we are of the view that it is prudent in this instance to set the record straight. We intend to do so in due course.”
