KPMG expects some 400 people to leave the firm as it shuts several regional offices.
The beleaguered audit firm announced on Monday that it was “reshaping” its business and “strengthen[ing] leadership capacity”.
“These changes follow a strategic review of the firm’s activities and take into account recent client losses and current levels of demand for certain services. They are the latest in a series of initiatives announced by the firm in recent months to support its drive to restore KPMG’s strength in South Africa,” KPMG said in a statement.
“We anticipate up to 400 people leaving the firm as a result of our plan to close certain regional offices, operate a refocused advisory business and scale back our internal business support to reflect our reduced footprint.”
The business will continue to operate out of Johannesburg, Cape Town, Durban and Port Elizabeth.
It will remain a “business of significant scale”, KPMG said, with more than 130 partners and 2 200 employees.
“It will continue to offer a wide range of the core services that our global, regional and local clients require.”
The leadership changes will involve several senior KPMG partners from across the international network being embedded into board and executive positions, as well as senior client service roles, the company said.
“This is to further strengthen the leadership capacity available to the South African firm as it navigates the current challenges it faces, implements the enhanced internal procedures to which it has committed, and continues to serve our significant client base to the highest levels of quality.” Further details would be announced at a later stage.
The changes come in the wake of cutting ties with the SA Institute of Chartered Accountants (Saica) as its external auditor.
“The Saica board has accepted KPMG’s offer to resign as Saica’s external auditors, citing possible perceived independence concerns if they were to perform the 2018 audit, as a result of the current Saica-appointed Ntsebeza inquiry, which is looking into some of the former and current KPMG-employed chartered accountants and which will be concluding shortly,” Saica said on Friday.
Saica is conducting a probe into KPMG staff. KPMG, meanwhile, has lost millions in fees due to a growing list of clients dumping the company.
“These hard decisions were necessary to put the firm on a more sustainable footing, while ensuring we continue to offer our clients the best service and support. We are putting quality and integrity at the heart of the business and, from now on, the firm will be focused on doing fewer things better. I am confident that we have taken the right steps to reform and reshape the business. Now we need time for these to take hold,” said Nhlamulo Dlomu, chief executive of KPMG South Africa.
“It is a matter of great regret that, as a result, we will be parting company with loyal colleagues. We are taking all possible steps to ensure these changes are managed in a caring manner and that everyone is treated with dignity.”
Professor Wiseman Nkuhlu, chairperson of KPMG South Africa, added that the announcement was “difficult but necessary” and that his priority was to “rebuild relationships with society” and to “reassure clients of our professional rigour and integrity”.
The announcement was part of KPMG’s “mission to restore [the firm’s] reputation and honour its legacy”, he added.