Steer clear of Nkonki Inc until you know who owners are, MPs tell AG

Cape Town – Parliament’s standing committee on the auditor general has urged Auditor General Kimi Makwetu not to conduct any business with Nkonki Inc until its ownership and shareholding is known and clarified.

Makwetu told the committee that it stopped doing business with the firm when it emerged Nkonki Inc's own leadership was not fully cognisant of its shareholder and ownership structure. The firm is currently facing voluntary liquidation.

Makwetu said the Nkonki issue had to do with the firm’s independence and potential risks management environment. He said his office wants to know whether the shareholders were registered in the auditor profession.

“One of the key elements of independence for auditors is enshrined in the Auditor Professions Act, which stipulates that the only firms that may be registered auditors are partnerships where all individuals are registered auditors, sole proprietorship where the owner is a registered auditor or companies which are registered by the Independent Regulatory Board of Auditors (Irba),” he said.

He said his office has continued to engage with Nkonki Inc and KPMG, because young professionals would likely be affected by the voluntary winding down of the former. This could affect their ability to qualify and advance in their careers if handled recklessly.

Young professionals' careers at risk

“Among these are young professionals who had either just signed up on their articles or just concluded them. It speaks to the question of why we did not just walk away. We can’t easily walk away from them because of the time they have invested into getting [their] qualification,” he said.

Explaining the laws governing which external auditors the AG could work with, Makwetu said: “The Auditor Professions Act stipulates that the only firms that may be registered auditors are partnerships where all individuals are registered auditors, sole proprietorships where the owner is a registered auditor or companies which are registered by Irba.”

Committee chair Vincent Smith said neither Parliament nor the Office of the Auditor General should entertain the idea of working with Nkonki Inc until its ownership is established and clarified, as it would not be clear in whose interests they would be helping audit departments and entities.

“Until Nkonki declares who their shareholders are, they are barred from doing business with the AG. We can’t have a situation where we don’t know who you are doing business with. Nkonki had better declare or ship out,” said Smith.

African People’s Convention MP and chair of the standing committee on public accounts Themba Godi was mystified by the suggestion that a company could operate under leadership who did not know who owned it.

“I don’t understand how Nkonki can say that they are (the) leadership but they don’t know who their shareholders are. There is nothing more you can say to compromise yourself. At best it makes you look like a clown. At worst, you look like a crook,” said Godi.