KPMG CEO comments on the firm's new integrity checks policy
Speaking at a Customer Experience Management Africa Summit in Cape Town, CEO at KPMG South Africa Ignatius Sehoole has highlighted the importance of checks to ensure that no illicit activities slip under the radar. KPMG has implemented such checks in its South Africa practice.
The firm has come under fire over the last two years following its involvement in the Gupta scandal, leading to reputational damage and the loss of business. However, this year has brought with it a fresh profile for the Big Four accounting and advisory firm, in light of new leadership and improved policy.
In March, KPMG released a report that detailed its new approach to business in South Africa, which is characterised by more stringent checks and balances. Ignatius Sehoole, who took charge of the firm’s operations in May this year, has now offered greater insight into one such check.
Sehoole points out that the lifestyle of employees can be an indication as to their tendency to engage in illicit activities of the kind that dealt a blow to the firm recently. Extravagant spending – particularly when inconsistent with earnings – can be a red flag when it comes to employees, which could indicate ongoing corruption or the propensity for the same.
According to Sehoole, such indications must be acted upon early. “It seems that, when people get away with things, they start getting greedy and want more and more,” he said, speaking at the Customer Experience Management Africa Summit in Cape Town, which took place on 31st July.
Given its tightened grip in South Africa, KPMG has taken measures to consider such factors. “We have now adopted a policy to do integrity checks and lifestyle audits to look for abuse,” explained Sehoole.
“Every single partner, their spouses and dependent children go through this. Even I, my wife and my 19-year-old student son had to undergo integrity and lifestyle checks done by an independent party - a law firm. These are some of the things we put in place after looking at how we could have prevented things that happened in the past,” indiciating the lack of hierarchical discrimination in this new policy.
On the other hand, Sehoole acknowledges that illicit activity can go unnoticed irrespective of how tight the regulations are. “even with the best audits in the world, if you have crooks who are colluding, you will be unlikely to detect things and then their greed becomes bigger. They steal, and then they steal bigger and bigger every year”
