Keeping things cosy
What it means when audit firm partners sit on boards of their corporate clients
The strong relationship between major audit firms and the boards of companies they audit could discourage action against them
For decades, qualification as a chartered accountant (CA) hasbeen considered a passport to secure employment in the top echelons of the corporate world. It is the most common qualification found on the boards of JSE-listed companies.Equally inevitable, given it is one of the “big four” audit firms, is that former KPMG partners will feature prominently among board members with CA qualifications. That former KPMG partners serve on the boards of companiesaudited by KPMG may be one of the reasons a decision to fire thescandal-prone firm is proving difficult.Another reason is that changing external auditors is not something to be done lightly, particularly when there are limited options.Research conducted last year by the Independent Regulatory Board for Auditors (IRBA) found that 25% of the JSE top 40 companies have appointed, as chairs of their audit committees, members who were previously employed by the externalauditor, thereby “creating a threat to the independence of theauditor app...
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