If KPMG South Africa, counted among South Africa's big four auditing firms, were to collapse because of its most recent scandal, the banking sector would be left in a precarious position. "It's very difficult when you have [audit] rotation and there are only four firms you can rotate to," Investec CEO Stephen Koseff said this week. If the number of big audit firms was slashed to three, banks would find it almost impossible to retain the services of two auditors with the scale and expertise required to deal with their complexity for a rotation period of five years, as required by the Reserve Bank. "Banks are complex animals and many of them operate internationally, so you have to be at the forefront of international regulation to audit banks properly. The smaller firms don't have that capability and international reach," Koseff said. "If something were to happen [to KPMG] it would be a tragedy for the profession and would make rotation for the banks difficult. The regulator will have...

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