ICPAK defends auditors of collapsed banks

The Institute of Certified Public Accountants of Kenya (ICPAK) chairman Fernandes Barasa. PHOTO | FILE  

By BRIAN NGUGI

Posted  Tuesday, April 12  2016 at  21:07

The accountants’ regulatory body has made a strong defence of its members who audited the collapsed Dubai, Imperial and Chase banks, shifting blame to management and boards of the lenders.

The Institute of Certified Public Accountants of Kenya (ICPAK), which is the body mandated to regulate accountants, absolved the external auditors of the lenders of complicity in their collapse.

“Whilst it is very common to put the spotlight on the role of various regulators and the external auditors, the primary responsibility for fair presentation of the financial results is that of the board of directors…the Kenyan Companies Act is very clear on the duties and responsibilities of the board of directors of any company, whether a bank or otherwise,” said ICPAK chairman Fernandes Barasa in a statement.

He spoke at a time the role of external auditors has come under mounting scrutiny. Auditors have been blamed for either sleeping on the job or colluding with rogue directors in the abuse of corporate governance guidelines which eventually caused the collapse of the three lenders.

But Mr Barasa, in the stinging statement, said the blame lies squarely in the hands of bank directors adding that in the case of the three banks, external auditors were limited in their roles of providing oversight for institutions.

“It is worth to appreciate that external audit is just that — external — it is not part of internal control and not a substitute, therefore, for good corporate governance. At best, external auditors spend a limited number of days or weeks focused on key financial information and financial statement presentation.

“It is not designed like a forensic audit that seeks to validate the authenticity of every single transaction. Neither is it designed as internal audit which seeks to critically review compliance with internal policies and procedures and regulatory requirements,” he said.
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