BusinessDesk: KPMG quits as Pyne Gould Corporation's auditor over related party transactions, adequacy of governance

Pyne Gould Corp's auditor KPMG has quit after a disagreement as to what related party transactions the George Kerr-controlled wealth manager should disclose and the adequacy of its governance.

Pyne Gould "strongly rejects" the auditor's claims and has taken the "untimely resignation of KPMG very seriously," it said in a statement. The Christchurch-based wealth manager said it resolved to settle the "technical impasse on disclosure matters" by publishing whatever the auditor thought appropriate in its 2012 annual report.

KPMG's reason for resigning was "unresolved differences as to whether certain transactions should be disclosed as related party transactions, and concerns over the adequacy of governance and management of financial reporting," the statement said.

Since April 2, Pyne Gould has shifted its central accounting functions to Deloitte to "ensure a very high standard of internal accounting controls and activities," and will replace its auditor as soon as possible, it said.

The resignation comes a week after managing director John Duncan unexpectedly stepped down, after joining Pyne Gould in 2009 from a 15-year career with Macquarie Group.

Kerr replaced Duncan with immediate effect, having taken control of Pyne Gould via his Australasian Equity Partners No 1 LP (AEP) venture with US hedge fund Baker Street Capital.

AEP secured 76 percent of the company in a 37-cents-a-share takeover bid that closed in March.

Kerr argued the company's profile has changed since its divestment of the Marac finance unit last year, saying it won't make shareholder returns as it realises assets over a longer period of time.

The shares were unchanged at 34 cents in trading yesterday.