To fulfil its transformation agenda, State-owned transport and logistics group Transnet has appointed local black-owned accountancy firm SekelelaXabiso to lead its five-year, R2-billion internal audit contract.

SekelelaXabiso would be awarded 40% of the work during the first year, while empowered auditing and accounting firm Nkonki Incorporated and “big four” member KPMG would be responsible for 20% and 40% of the work respectively.

However, to drive empowerment objectives, by the fifth year, SekelelaXabiso’s share would increase to 45%, while Nkonki’s would peak at 35%, leaving global counterpart KPMG’s share reduced to 20%.

“We are happy to downscale our involvement as the contract progresses to enable transformation,” said KPMG South Africa CEO Moses Kgosana.

The tender was split into Option A – which awarded 60% of the work to majority black-owned firms – and Option B – which represented a 40% share and was open to traditional firms with international experience.

The external audit account contract, which Transnet argued was the biggest outsourced contract of its nature globally, was awarded after a rigorous public tender process run by the Transnet board’s audit committee, and was worth about R1.3-billion over five years.

This followed the appointment of black-owned accounting firm SizweNtsalubaGobodo as Transnet’s external auditors in 2012 – an account worth some R450-million.

This would bring the total value of audit work performed or led by local firms for Transnet to over R2-billion over five years.

Transnet disbanded its in-house internal audit department and decided to outsource this function to an external service provider in 2005, following a review of its then Transnet Group Audit Services.

The parastatal believed this would enable it to achieve a globally competitive status in terms of internal controls, risk management and governance, implement sustainable best practice methodologies in line with international standards and allow local black firms to gain expertise.

Commenting on the contract, Transnet chairperson Mafika Mkwanazi said the appointments were an example of Transnet’s commitment to pursuing meaningful empowerment and skills development priorities that targeted black people and, in particular, black women.

“With its stable financial footing, a solid management team and massive infrastructure projects, Transnet is at the forefront of government’s drive to transform the economy in a sustainable manner, as dictated by the objectives of the New Growth Path,” he said.

Transnet independent director and audit committee chairperson Israel Skosana added that the contract set out stringent skills and intellectual property transfer requirements.

“Throughout the duration of the contract, the two local firms will be expected to strengthen and enhance their expertise in areas such as information technology, as well as infrastructure and engineering-related processes to enable them to service accounts like Transnet’s on their own,” he said.

In addition, SekelelaXabiso and Nkonki were expected to grow and develop other black firms and small, medium-sized and micro enterprises in line with Transnet’s supplier development commitments.

The announcement came as Transnet continued rolling out its Market Demand Strategy – a R300-billion rolling seven-year infrastructure investment programme to revamp and expand its port, rail and pipeline infrastructure.