Deloitte to become joint auditor of Old Mutual alongside incumbent KPMG

South African financial services and insurance firm Old Mutual has added global professional services firm Deloitte as an auditor, in addition to rival firm KPMG, which has been Old Mutual’s auditor for nearly two decades. The move is another indication of KPMG’s crumbling reputation in South Africa.

Having been tangled up in a scandal involving nepotism and corruption at the highest level in South Africa last year, KPMG’s functioning in the country has been far from smooth sailing. At first, the firm appeared to have survived the initial backlash from the scandal, which hit fellow consulting firm McKinsey & Company immediately.

First a flurry of South African banks dropped McKinsey as their partner, following which it was dropped by multinational firms such as Coke and Sasol. KPMG’s contracts were said to be under review at the time, and the firm took urgent measures to restructure, revamping its entire leadership team in the country.

However, KPMG eventually had to face the music in recent months, when the Auditor General’s office terminated relations with the firm, followed by the severing of relations with Absa. The firm has since gone into damage control mode, announcing plans to offload a large portion of its staff and calling in international reinforcements.

The latest move from Old Mutual to add Deloitte to its auditors is an indication of what the firm is currently going through in South Africa. KPMG’s reputation has been smeared and its credibility damaged, translating into a situation where the firms that don’t drop them as clients end up taking other measures to shield themselves from its volatile internal struggles.

Big Four accounting and advisory rival Deloitte will now act as joint auditor for Old Mutual, which is an insurance and financial services firm of pan-African stature, serving over 12 million customers across the continent. KPMG has been the sole auditor at Old Mutual for nearly two decades now.

A statement from Old Mutual read, “Old Mutual has been continuously engaging with KPMG International and KPMG South Africa on concerns regarding the ongoing challenges raised in their South Africa business. Until these challenges are resolved, Old Mutual believes it is prudent to appoint a joint auditor.”