KPMG SA was involved in several major scandals involving the Gupta family in South Africa. One of the most highly publicized scandals was the Dairy Farm scandal that involved international m
II. CASE QUESTIONS Background information and supporting documents are available in Appendix A, Case Online Resources, Parts 1 to 5, and Appendix B.
1. KPMG SA was involved in several major scandals involving the Gupta family in South Africa. One of the most highly publicized scandals was the Dairy Farm scandal that involved international money laundering and the Gupta family wedding in Sun City, SA. (a) What does ”money laundering” mean? (b) Referring to the case Exhibits 3 and 4 and the detailed Wedding Tax Invoice (link in Appendix A), explain how the money laundering scheme operated? (c) How was KPMG SA involved in this situation? (d) What did the IRBA and SAICA investigations find as to KPMG SA’s failures in this scandal? 2. KPMG has suffered severe reputational damage in South Africa and a significant decline in public trust. (a) Discuss the importance of reputation and building public trust to an accounting firm. (b) Access, by using the Appendix A Case Online Resources, the press releases and media statements KPMG issued (September 15 and October 9, 2017, and January 17, April 15, and June 4, 2018) that describe the firm’s responses to the allegation of ethics violations in South Africa. What specific steps has KPMG taken to restore trust in its South African affiliate? (c) In your opinion, is KPMG’s response enough? Do you suggest additional actions should be taken? 3. In the September 2017 media statement by KPMG International, in referring to audits of Gupta companies, the firm stated, ”audit teams (of KPMG SA) failed to apply sufficient professional skepticism.” 50 Holtzblatt, Foltin, and Tschakert Issues in Accounting Education Volume 35, Number 2, 2020 Downloaded from http://meridian.allenpress.com/iae/article-pdf/35/2/37/2715860/i1558-7983-35-2-37.pdf by Sharon Levin on 08 June 2021 (a) Discuss professional skepticism and its role in this situation. (b) Identify and list specific red flags (warning signs) that KPMG SA encountered, both in the public domain (external media) and internally (within engagements). (c) In your opinion, was KPMG SA’s professional skepticism sufficient and should KPMG’s leadership have done a better job of identifying and addressing these red flags? Why? 4. (a) Discuss the concept and importance of auditor independence. Was KPMG SA’s independence compromised in their dealings with the Gupta family businesses? What specific examples point to such KPMG SA failings? (b) Discuss the impact that auditor rotation can have on KPMG SA auditor independence (both internal partner rotation and external firm rotation). 5. By using your University Library article database, review the Wall Street Journal article ”KPMG Acts Globally but Keeps Scandals Local” by Michael Rapoport (see, https://www.wsj.com/articles/kpmg-acts-globally-but-keeps[1]scandals-local-1520418601). (a) Describe the legal structure of the global accounting firms. Why was this model chosen? (b) Do you think KPMG International should be liable for the actions stemming from affiliated entities such as KPMG SA? 6. KPMG International, in its investigation, identified shortcomings by KPMG SA regarding the firm’s requirement to ”re[1]assess its clients annually, and more frequently if significant matters come to the firm’s attention.” (a) Discuss the meaning and importance of ”Client Acceptance and Continuance” as part of the audit process. (b) To what extent did KPMG SA fail to properly conduct the client continuance analysis regarding Gupta-owned businesses? 7. Review the article ”Audit Profession Needs a New Dawn” by Iraj Abedian (see, https://www.dailymaverick.co.za/ opinionista/2018-03-19-audit-profession-needs-a-new-dawn/). (a) Do you agree with the statements made in this article? (b) What regulatory changes would help prevent auditors from unknowingly becoming facilitators of corrupt perpetrators in the future? 8. In recent years, throughout the world, there have been many highly publicized audit failures and accounting scandals. Find and research another global accounting firm, other than KPMG, that encountered similar ethical lapses internationally. Provide a: (a) Description of the accounting firm and its ethical lapse(s), with article citation. (b) Description of the criticism the firm received either abroad or domestically. (c) Description of the firm’s internal firm remedy or government regulatory actions to resolve the issue. 9. KPMG SA issued their first ever Integrated Report (IR) in March of 2019. (a) What is the purpose of an integrated report? (b) Why did KPMG SA decide to start creating integrated reports? (c) In your opinion, what is the value of creating and issuing annual integrated reports to the future of KPMG SA’s operations in South
Collepals.com Plagiarism Free Papers
Are you looking for custom essay writing service or even dissertation writing services? Just request for our write my paper service, and we'll match you with the best essay writer in your subject! With an exceptional team of professional academic experts in a wide range of subjects, we can guarantee you an unrivaled quality of custom-written papers.
Get ZERO PLAGIARISM, HUMAN WRITTEN ESSAYS
Why Hire Collepals.com writers to do your paper?
Quality- We are experienced and have access to ample research materials.
We write plagiarism Free Content
Confidential- We never share or sell your personal information to third parties.
Support-Chat with us today! We are always waiting to answer all your questions.
