KPMG and South Africa
Earlier this summer, Ukraine gave PwC the boot over some bad auditing. It was a humiliating moment but by no means a major blow to the firm as the inability to conduct business in Ukraine will not severely hamper PwC’s business.
KPMG is facing similar threats of expulsion from South Africa, thanks to the work it did for the Gupta family and some questionable behavior by some executives. Reuters reported yesterday that the firm had already lost a couple of clients over the scandal, and others, including Barclays Africa, are “weighing whether to ditch the auditor.”
Is this serious? Well, KPMG Global Chairman John Veihmeyer apologized, so that’s something. Plus, other people think this feels familiar:
This is world-wide stuff, with KPMG potentially facing the same kind of melt-down as Arthur Andersen did in 2002. Back then, Andersen fired the partner in charge of auditing the Enron Corporation, admitting it had ordered the destruction of thousands of email messages and documents after it learned the US securities and exchange commission was investigating the Enron accounts.
But it was too late. Within months Andersen, which traced its originals all the way back to 1913, had gone, a huge international business brought down by one rogue client and one greedy partner (who later became the star witness for a criminal prosecution of the firm) in its Houston office.
Ehhh, I’m not so sure about the “same kind of melt-down as Arthur Andersen.” If a similar situation arose in say, Germany or the UK or China, then I think the handwringing could commence in earnest. Losing the ability to do business in a key country will ripple out to the other member firms who depend on the network to perform massive multi-national engagements. And this could happen to any of the Big 4. But rest easy, KPMG’s entire network of firms isn’t going to implode over some graft in South Africa.
Occupational hazards
Yesterday, I mentioned a Grant Thornton partner who’s being detained in the United Arab Emirates. That’s inconvenient, probably stressful, but a risk some globe-hopping partners are willing to take.
Back here in America, there’s a different kind of danger:
A tax agent shot multiple times Tuesday afternoon at the Kansas Department of Revenue tax office in west Wichita is improving at a local hospital. Tuesday evening, a house supervisor at Via Christi-St. Francis says Cortney Holloway’s condition has improved from critical to serious.
The suspect is Ricky Todd Wirths, 51, who owns and operates a construction business that owes $200,000 in sales taxes. The local sheriff had been ordered by Kansas DOR to seize and sell Wirths’s assets so it seems he was upset by that.
“I knew him to have a temper, but I didn’t think he’d be capable of this,” a neighbor told the local news, “But I guess he was losing everything, though. So that’d be hard to swallow.” It’s a little shocking to hear someone excuse attempted murder but this is America, so I assume societal norms allow it if the victim works for a tax collection agency.
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The University of North Carolina presented a post on how a graduate degree in accounting can pay off.
Previously, on Going Concern…
Tim Gearty wrapped up our video series on revenue recognition. In Open Items, someone worries if they’re in IT audit for life.
In other news:
- CEO Catches Stranger After Hours, Prompting Espionage Charges
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- Doctor goes into labor while delivering patient’s baby
- Man tries to eat rattlesnake; snake bites back
- The Mad Pooper.
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