<\/p>\n
Industry body, the Independent Regulatory Board for Auditors (Irba) has thrown the book at disgraced auditor, Sipho Malaba after its disciplinary hearing panel found him guilty on all charges of improper conduct.<\/p>\n
The findings arise from disciplinary proceedings relating to audits of the financial statements of the now-defunct VBS Mutual Bank, medical scheme Spectramed and the Industrial Development Corporation (IDC), in which Malaba acted as audit engagement partner.<\/p>\n
On his long rap sheep, the former KPMG auditor is accused of failing to raise any red flags in VBS Bank statements and provided a falsified regulatory audit opinion.<\/p>\n
As the engagement partner of the firm with VBS Mutual Bank, he was responsible for conducting and signing off audits. Malaba gave the bank an unqualified opinion when he signed off the 2017 annual financial statements. The mutual bank was later placed under curatorship for liquidity challenges and turned on its head in a massive scandal that left shareholders and depositors reeling.<\/p>\n
He acted in a similar fashion at Spectramed and IDC.<\/p>\n
Read: Financial advisor hit with R3m fine, 10 year ban for role in VBS looting<\/p>\n
In its recent ruling on the merits, the disciplinary hearing panel found that Malaba contravened sections of the Auditing Profession Act, Irba\u2019s rules and prescribed auditing standards, finding him guilty of eight charges across the three audits.<\/p>\n
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Malaba snubbed the sanction ruling on Wednesday (15 April) where the watchdog ruled in favour of his permanent disqualification from registration as an auditor.<\/p>\n
The panel further ordered a fine of R200 000 per charge, totalling R1.6 million in respect of the eight charges referenced in the sanction ruling. This represents the maximum sanction permissible per charge.<\/p>\n
The judgment was handed down with a cost order against Malaba, amounting to R9.2 million.<\/p>\n
Read: Sarb to get stricter with mutual banks<\/p>\n
The VBS Mutual Bank charge<\/p>\n
Some of the salient points in a 101-page document dealing with Malaba\u2019s transgressions include:<\/p>\n
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Cash and cash equivalents: The company\u2019s cash and cash equivalents comprised various general ledger accounts. The engagement team documented that they would obtain bank confirmations or perform alternative procedures; and follow up on significant reconciling items on bank reconciliations. However, there was no evidence that bank statements were reconciled to the full balance or that bank confirmations were obtained.
\nLoans and advances totalled R1.08 billion, an increase of R386.9 million (56%) from the prior year, yet the engagement team failed to identify this aggressive growth as a significant risk. Contract financing made up 39% of the loan book (the bank\u2019s largest asset) and all such loans were recorded in Excel spreadsheets, with journals processed into Pastel from this data, creating concerns about the completeness and reliability of the loan records. An investigator\u2019s report prepared by the Prudential Authority later revealed that VBS Mutual Bank had created fictitious contract finance agreements that falsely inflated income, were processed without sufficient approvals, and served as the primary mechanism for looting funds.<\/p>\n
Malaba and another senior partner, Dumi Tshuma, resigned from KPMG in 2018 amid an internal probe into their conduct. And in 2024, KPMG signed an out-of-court settlement with the liquidators of VBS Mutual Bank.<\/p>\n
Recourse<\/p>\n
The Irba has welcomed the panel\u2019s decision, adding it signals the watchdog\u2019s commitment to upholding the highest standards of integrity in the auditing profession.<\/p>\n
\u201cThe conduct in this matter constitutes a serious breach of those obligations and underscores the risk posed by delinquent auditors to the credibility and trust of the profession,\u201d it says in a statement.<\/p>\n
The summary of the charge sheet, as well as the merits and sanction findings are set to be referred to Malaba\u2019s primary professional member body, the South African Institute of Chartered Accountants, and the National Prosecuting Authority \u201cfor further consideration to the extent of their competence and authority\u201d.<\/p>\n
Read: Sars obtains court order to freeze millions in former employees\u2019 assets<\/p>\n
#Disbarred #VBS #auditor #racks #R10m #fines #costs #looting #scandal #bite<\/p>\n","protected":false},"excerpt":{"rendered":"
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