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Curator suspends engagement with PwC as internal auditor for VBS

Partly in order to evaluate work done.

SizweNtsalubaGobodo as the appointed curator of VBS Mutual Bank has suspended the engagement of PwC as the bank’s internal auditor. 

The curator alluded to potential problems in paying for the services of PwC but also indicated in correspondence with the firm on March 14, that it wanted to “evaluate the extent and scope” of work done by the firm. 

PwC cannot confirm whether any of its employees assigned to the audit have any commercial relationships with VBS.

At a press conference held on Saturday in Johannesburg, KPMG admitted that two of its senior partners had resigned with immediate effect on Friday when presented with disciplinary charges relating to their conduct as the external auditors of VBS. Both men had attempted to conceal the fact that they had received loans from VBS. 

Read: KPMG admits partners took undisclosed loans from VBS

PwC’s chief operating officer, Fulvio Tonelli, provided the following statement in response to Moneyweb’s questions:

“As you are aware, there is a very clear distinction between the role of the internal and external auditor. As internal auditors at VBS Bank, PwC’s role was agreed with management – and approved by the entity’s audit committee. Our mandate generally concerned the consideration of VBS’ risk management, internal control and governance processes. It would not ordinarily require the examination or testing of individual transactions or specifically the identification of fraud. PwC confirms that it was not within our scope of engagement to identify fraudulent transactions.
 
PwC’s engagement has not been terminated, but we have been requested by the curator to halt our engagement pending further instructions from the curator. In e-mail correspondence from the curator on March 14, 2018 the curator advised that “we are in the infancy stage of curatorship. The bank is not in a position to make any payment to you at this point in time. I would also need to evaluate the extent and scope of your work done, and this can only be done at a later stage from our side. Please may you cease all work with immediate effect. My office will be in contact with you in due course”. 

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The pure fact that auditors doesn’t have to comply with the FICA Act requirements (as part of their fiduciary duties), methinks is tantamount to the ”Laurel and Hardy” show – just read between the lines here…absolutely no accountability accepted as an internal audit!

SNG suspends PwC, that’s rich! Because SNG are such angels? What is happening to the profession?

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