KPMG SA fined US$275,000 for assigning audit to unregistered Zimbabwe unit – NewZimbabwe.com

By Alois Vinga

THE United States-based Public Company Accounting Oversight Board (PCAOB) fined KPMG South Africa and two of its partners a total of $275,000 for contracting audit work to the unregistered KPMG Chartered Accountant Zimbabwe.

The PCAOB established that between 2015 and 2017, KPMG South Africa used an unregistered accounting firm, KPMG Chartered Accountant Zimbabwe, in conducting three audits of an unidentified public company.

“KPMG-South Africa had used KPMG Chartered Accountant Zimbabwe in a substantial role that would have required KPMG-Zimbabwe to be registered with the PCAOB.

“During the 2017 audit, KPMG-South Africa and two of its audit partners used a series of unreasonable adjustments to reduce KPMG Zimbabwe’s recorded hours by 77%, according to the PCAOB ,” the PCAOB said in a statement.

Allegations are that KPMG-South Africa relied on the downwardly adjusted hours to conclude that KPMG-Zimbabwe had not exceeded the PCAOB substantial role registration threshold and to inaccurately report in a Form AP filing with the PCAOB that KPMG-Zimbabwe had incurred only 17% of the total audit hours.

As a result, the PCAOB fined KPMG South Africa US$200,000, its partner Van Niekerk $50,000, and another partner Coenraad Basson $25,000.

Van Niekerk agreed to a two-year bar from working as an associate of a registered accounting firm, after which he must petition for reinstatement.

Basson also agreed to a one-year suspension from working as an associate of a registered accounting firm.