World Bank seeks merger of small auditing firms

World Bank country director Diarietou Gaye (right) and ICPAK chairman Benson Okundi sign a Sh60m grant deal at the bank’s offices in Upperhill, Nairobi, on Monday. Photo/Diana Ngila 

By George Omondi, omondi@ke.nationmedia.com

In Summary

• Global financier grants ICPAK Sh60m, pushes for closer supervision of firms and accountants.
• ICPAK officials said their partnership with World Bank would enable them to develop financial reporting and budgeting template to be used by counties.

A number of small and medium-sized auditing firms may be forced to merge as the World Bank equips the accountants’ watchdog to enforce financial discipline in public offices.

Under a Sh60 million grant signed with the Institute of Certified Accountants of Kenya (ICPAK) on Monday, the bank said that merger of small-sized firms and training of public sector accountants would boost quality of audit and raise financial management in government offices.

“ICPAK should explore ways of getting SMPs (small and medium practitioners) to establish viable sized firms through mergers and network building to enable them have synergies and bid for big jobs,” said Ms Patricia McKenzie, the World Bank’s financial management manager for eastern and southern Africa.

About 80 per cent of registered audit firms in Kenya fall in the category of one person-owned SMPs while the majority of public-office accountants are neither registered nor regulated by ICPAK.

Without an oversight body, officials believe the two categories of accountants find it easier to flout the rules of the profession, causing public offices to lose billions of shillings each year.

The World Bank officials said that ICPAK would spend part of the grant in developing framework for training programmes for bodies such as Kenya Accountants and Secretaries National Examination Board.

The campaign is seen as a stop-gap measure to tame wastage of taxpayers’ funds by public officials as the Treasury drags its feet in setting up the Public Sector Accounting Board (PSAB) to take over the role.

As part of campaign to promote best accounting and auditing practice under its Reports on the Observance of Standards and Codes – Accounting and Auditing initiative — the World Bank spearheaded the creation of PSAB through a draft Bill handed to the Treasury in 2012.

On Monday, the global financier asked the Treasury to move with haste in processing the Bill saying such an oversight body was necessary under devolution.

“I would like to encourage the National Treasury to provide leadership and set up the PSAB in line with Public Finance Management law,” said World Bank country director Diarietou Gaye.

The calls come hot on the heels of similar concerns from other oversight agencies like Auditor-General and Budget Controller which have particularly questioned counties’ ability to manage public funds.

In an earlier interview, Auditor-General Edward Ouko questioned the ability of ill-trained county employees to audit computerised accounting system. The Controller of Budget has also raised queries over the quality of budgets prepared by most counties.

On Monday, ICPAK officials said their partnership with World Bank would enable them to develop financial reporting and budgeting template to be used by counties.

OPINION: Public sector financial reports below standards

The institute said out of about 20,000 practising accountants and auditors, only 12,000 are its members, something that has made it impossible to take action on professional misconduct committed by the non-registered 8,000.