US regulator fines KPMG South Africa for using Zim...

US regulator fines KPMG South Africa for using Zimbabwe affiliate

A US regulator, the Public Company Accounting Oversight Board (PCAOB) has levied a $200,000 penalty Monday against KPMG's member firm in South Africa.

There was also an additional combined $75,000 in penalties against two of its partners for improperly using and misreporting a KPMG member firm in Zimbabwe that wasn't registered with the PCAOB to help with its audits.

The penalty is for 2015, 2016, and 2017 audits of a public company. PCAOB says KPMG-South Africa had used KPMG Chartered Accountant Zimbabwe in a substantial role that would have required KPMG-Zimbabwe to be registered with the PCAOB.

PCAOB says that during the 2017 audit, KPMG-South Africa and two of its audit partners used a series of "unreasonable" adjustments to reduce KPMG Zimbabwe's recorded hours by 77%.

KPMG-South Africa used the adjusted hours to conclude that KPMG-Zimbabwe had not exceeded the PCAOB substantial role registration threshold and to inaccurately report in a Form AP filing with the PCAOB that KPMG-Zimbabwe had incurred only 17% of the total audit hours.

KPMG Zimbabwe is a member firm of KPMG International global network of Audit, Tax and Advisory services provision firms.

PCAOB is a nonprofit corporation created by the Sarbanes–Oxley Act of 200 that oversee the audits of public companies and other issuers in order to protect the interests of investors and further the public interest in the preparation of informative, accurate and independent audit reports.

The PCAOB also oversees the audits of broker-dealers, including compliance reports filed pursuant to federal securities laws, to promote investor protection. All PCAOB rules and standards must be approved by the U.S. Securities and Exchange Commission (SEC).