A trader monitors stocks at the NSE. Last year, NSE-listed firms spent Sh418 million on auditing up from Sh329 million in 2009. FILE
By DAVID HERBLING
IN SUMMARY
Executives of the top accounting firms say salaries in the profession have more than doubled over the past five years.
Entry level managers now earn between Sh200,000 and Sh300,000 from about Sh150, 000 three years ago, added Mr Onyango.
Audit fees account for between 50 and 70 per cent of the auditors’ earnings with the remaining share being taken by consulting, tax and financial advisory.
Fat salaries and regulatory workload have forced auditors of publicly traded companies to raise fees by nearly a third over the past two years.
Data from the annual reports of 48 Nairobi Securities Exchange (NSE) listed firms indicate that last year they spent Sh418 million on auditing up from Sh329 million in 2009, reflecting a 27 per cent increase and auditors say the fees will continue rising.
Executives of the top accounting firms say salaries in the profession have more than doubled over the past five years as increased poaching of top talent push the financial advisory companies to up their wages in an attempt to retain key staff.
The firms including PriceWaterhouseCoopers (PwC), Deloitte, Ernst & Young and KPMG are increasing fees to cover the rising cost of doing business that has been deepened by the complexity of auditing due to the change in rules, increased regulatory demands and expansion of Kenyan firms.
“Pay has been rising by between 10-15 per cent annually recently. It is becoming difficult to get talent as there is also international demand and firms are losing people to firms outside Kenya,” said Sammy Onyango, the managing partner at Deloitte.
Entry level managers now earn between Sh200,000 and Sh300,000 from about Sh150, 000 three years ago, added Mr Onyango.
Similar comments were made by PKF Eastern Africa, which has managed to break the dominance of the ‘Big Four’ audit firms to serve listed firms like Home Africa, Marshalls East Africa and Express Kenya.
“The profession is now heavily regulated, increasing the complexity of preparing books of account has increased,” said Atul Shah, CEO at PKF Eastern Africa. “The size of the businesses have also grown hence volume of auditing work has increased.”
Top Kenyan firms have been increasing their foot print in the country and across the region to include Tanzania, Uganda and South Africa as they seek to cut reliance on the home market.
Audit fees account for between 50 and 70 per cent of the auditors’ earnings with the remaining share being taken by consulting, tax and financial advisory.
The fees had remained flat in the years leading to 2010 due to a vicious pricing war until the ballooning wage bill forced the firms to change tack.
The competition, however, has not changed the market structure with the four top firms maintaining a stranglehold of contracts based on fees from NSE listed firms — a proxy measure of industry trends.
Small firms including BDO, Crowe Horwath and PKF earned less than Sh8 million of the Sh418 million paid in fees last year.
PwC accounted for 35 per cent of the fees, benefiting from its heavy representation among multinational firms such as Safaricom, Kenya Airways and Barclays Bank of Kenya. Deloitte and KPMG had 24 per cent stake each with Ernst & Young taking 17 per cent
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