Economists have warned that the KPMG scandal will have huge implications, not only for the firm itself but for the finance industry, according to a report in The Mercury. Economist Dawie Roodt reportedly said the scandal was ‘up there’ with some of the biggest experienced in the finance sector in recent years. He said KPMG, which has already suffered financial loss, also stands to lose trust from the public and the business sector. ‘They have done other auditing firms a huge disfavour as they, too, will now be put under a magnifying glass.’ He said the scandal could also have huge implications for SARS and tax collection, as a tax collection agency has to be seen as being squeaky clean. Economist Bonke Dumisa said the admission by KPMG that some of its work had been sub-standard had opened a can of worms, and stressed that there were many other firms and auditors who flouted rules for devious ends. ‘In the industry there are guns for hire, people who have been taking short cuts to make easy money, knowing the objectives.’ KPMG could also face serious sanctions from industry bodies. The Independent Regulatory Board for Auditors said it was conducting its own investigation into the matter and would be meeting with the new management of the firm. ‘It is critical for the reputation of the profession and the stability of our capital markets that the Irba continues to work with audit firms to strengthen independence, professional scepticism and compliance to standards,’ the body said.
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