KPMG banned from auditing South Africa's state bodies

South Africa on Tuesday announced it has banned KPMG from auditing its government institutions following a series of scandals involving the international auditor in the country.

The decision to terminate KPMG's contracts is with "immediate effect", auditor-general Kimi Makwetu's office said in a statement.

The cancellation was in "recognition of the significant reputational risks associated" with matters affecting the firm in the country, it said.

KPMG came under fire after a local bank that the firm had given a clear audit in 2017 collapsed last month.

Makwetu said "recent media reports relating to the external audit of VBS Mutual Bank and the conduct of KPMG audit partners are some of the reasons that prompted the decision to withdraw all KPMG audit mandates with immediate effect."

The firm had also come under scrutiny for its work on firms linked to the controversial Gupta business family, which is accused of receiving favourable government deals under president Jacob Zuma, who was turfed out of office in February.

KPMG was last year embroiled in a scandal over a report that Zuma had used as grounds to fire then finance minister Pravin Gordhan, triggering a collapse in the rand currency and two credit rating downgrades.

Opposition parties alleged that Zuma had removed Gordhan -- who returned as minister of public enterprises in February -- at the instigation of the Guptas so that a candidate more favourable to their financial interests could be installed.

KPMG later apologised for its work and cleared out its senior management.