KPMG’s decision to no longer provide non-audit-related services to our JSE-listed audit clients made sense, as it aligned to our firm culture and in many ways inspired ongoing debate and discussion about ethics within our firm and the profession − all of which ultimately protect the interests of the public, writes Ignatius Sehoole.
Earlier this year, KPMG was the first firm in South Africa to announce that it will voluntarily not be providing non-audit-related services to its JSE-listed audit clients from 31 March 2021. While we can lawfully still offer these services, the reality is that today clarity is needed around auditor independence, and this is one of the steps we have taken towards this approach – an approach that underpins the core of who we are: a firm ready to take real action to restore trust in the profession.
We know of course that the future of financial audit is a burning topic, with widespread expectations of reform of the audit process, and rightly so. The profession stands at a crossroads in its history, with the public interest at stake. Given this scrutiny of an industry that has been rattled by uncertainty, we knew we needed to take the initiative to implement several strategic changes to our business processes, but ensure this change was part of the DNA of the firm.
Of course, many argue this was needed, but this announcement was not made from the mere necessity to improve trust in our firm. We fully recognise that it is critically important to comply with the regulations that govern jurisdictions and our work. However, as a profession, and a firm, we may need to go beyond existing regulations to embrace the principles and values on which we base our conduct. Our stakeholders were supportive of the decision and labelled it ‘bold and courageous and a move that should be followed by the rest of the industry.’
Certainly, while we firmly understand that this type of approach is for each business to make for themselves, for KPMG, our culture − one we have worked hard on since 2017 − gave rise to the decision. Over the last few years we have worked to create a culture that prioritises the interests of the public, and one in which colleagues, on all levels, feel comfortable to raise and address ethical concerns. We believe one of the markers of a healthy firm culture (and a healthy profession) is the willingness to discuss the big ethical questions of our profession. And this is what we have been doing. We recognise that objectivity and independence are necessary conditions for doing our job well − to be guardians in society.
If we agree that the roots of our profession lie in a fundamental need for trust, assurance and confidence, then it becomes important to provide a platform for commitment to these areas − where individuals within the firm can consistently demonstrate conduct for the common good − to take the right course of action. And while we serve the public interest by doing our jobs with diligence and care, and professional rigour, protecting the public interest also means considering the public perception of our actions and decisions.
As we move forward in 2021, given the significant governance and leadership changes the firm has made, we stand committed to continuing to lead the rebuilding of trust of our firm and our profession. However, we also know that we have a responsibility to stimulate change in attitudes or approaches. My responsibility as a leader is to get every staff member to buy into our purpose and ethical values. This means knowing our core values and having the courage and clarity to live by them – which, when done correctly, will always resonate positively with our staff and clients.
Ignatius Sehoole, CEO, KPMG South Africa