Choppies supermarket and its former auditors KPMG face potential hit to their reputation in the fall out of the ongoing misconduct investigation by Botswana Accountancy Oversight Authority (BAOA).
BQA which will be summoning Choppies and KPMG to show cause why punitive action should not be taken against them for misconduct warned this week that the two companies are expected to suffer reputational damage.
Appearing before the Committee on Statutory Bodies and State Enterprises, Chief Executive Officer of BAOA Duncan Majinda issued a stark warning that Choppies and KPMG should be more concerned about the reputational damage than sanctions that would be meted out against them should the hearings reveal misconduct by the duo
Responding to Selebi Phikwe East MP and Committee member Kgoberego Nkawana who sought to know what action would be taken against the supermarket and the auditing firm should they be found to have violated some financial laws, Majinda said the two entities would be more concerned about reputational damage than sanctions when the investigations and hearings are completed.
Initially Majinda was reluctant to disclose the names of the two entities.
He said they were concerned about big companies and some well-established auditing firms with international networks. Majinda said some of these big auditing firms have serious problems.
“We have some auditors and one company that are currently going through a hearing. We are going to deal with the company and then with the auditors,” said Majinda adding that “you can now see that our teeth are coming out and we are ready to bite.”
During the question and answer session, Nkawana insisted that Majinda should disclose the names of the entities he spoke of during his presentation. Nkawana also sought know the names of the two auditors and a listed company mentioned in Majinda’s presentation; what was the outcome of BAOA investigations and what action was likely to be taken against them.
“We were investigating Choppies. We had the first hearing and the last hearing will be on 30 November. They have responded. Now they should come and explain and show cause why action should not be taken against them,” said Majinda.
With regard to the auditors, Majinda replied thus; “The auditors involved are KPMG. We have finalised hearing with one of the auditors. We received a letter yesterday that another one is in France.”
According to Majinda, the current legislation if enforced would not have serious consequences on Choppies and KPMG should the ongoing hearings point to misconduct on their part.
“They would be mostly worried about the reputational damage,” he said.
He added that “when we go to our big auditors it is still worrisome. Ernest & Young, Delloite , KPMG etc are not doing well if we talk in comparative terms. They do not meet the mark.”
According to the outspoken Majinda, “I have statistics showing how they have performed. They are doing very badly.”
Majinda also expressed concern about the performance of both small and big auditors.
“Our small auditors are performing very badly in the field of auditing. Only 20 percent are performing well. It means 80 percent are not performing well. Our small auditors are hopelessly resourced,” said Majinda.
Responding to Sunday Standard enquiries, about the ongoing hearings and the report released by BAOA, KPMG said “The matter is still currently before BAOA and it would therefore not be appropriate to provide comment at this stage.”
Choppies has since professed ignorance about the findings of the report by BAOA or its existence. The regional grocer is still trying to get back on its feet after it was suspended by both Botswana Stock Exchange and Johannesburg Stock Exchange after failing to publish financial statements.
