South Africa watchdog seeks higher sanctions
The Independent Regulatory Board for Auditors in South Africa proposed to lift a limit on the level of fines it can issue. The regulator requested that parliament allow it to issue fines above the current limit of R200,000 (HK$122,900). “There have been too many recent examples of improper conduct by auditors to continue to believe that it is ‘business as usual,’” said Bernard Agulhas, Chief Executive Officer of the IRBA. “[Our professional standards and code of conduct] uphold the quality of audit services, which ultimately builds confidence in our financial markets. What is the use of having standards if those who fail to comply cannot be held accountable?” The decision follows two business scandals in the country involving clients of KPMG and Deloitte.
Corruption watchdog arrests executives
The Independent Commission Against Corruption arrested four listed company senior executives for suspected corruption earlier this month in an operation jointly conducted with the Securities and Futures Commission. It was later revealed that the chairman, vice chairman and executive director of financial services provider Convoy Global were the ones arrested, along with the chairman of Lerado Financial Group. The action came after 136 officers from the securities regulator searched multiple premises as part of an investigation into the so-called “Enigma Network,” a group of 50 listed businesses – including Lerado and Convoy – involved in a web of cross-shareholdings.
KPMG China partners accused of contempt
Current and former KPMG partners face contempt charges in a Hong Kong court for refusing to turn over work papers, according to Reuters this month. The move relates to the firm’s audit of defunct United States-listed China Medical Technologies, whose former executives are being prosecuted in the U.S. for allegedly defrauding investors out of more than US$400 million. In 2016, KPMG refused to give liqui- dators for China Medical audit papers claiming that it would be violating China’s national security laws if the documents held state secrets or sensitive information. According to the contempt summons, seen by Reuters, the 91 individuals named were partners of KPMG China in 2015 when the court dispute began.
PCAOB gets new chairman
William Duhnke was appointed as the Public Company Accounting Oversight Board’s Chairman earlier this month by the United States’ Securities and Exchange Commission, replacing James Doty who was chairman since 2011. The SEC also added four new board members to its accounting oversight unit. Observers say the new leadership team will have many issues to tackle, including a long-running dispute over whether the PCAOB has authority to inspect audits of U.S.-listed Chinese companies.