Getting value from your audit firm in Kenya.
Getting Value from your accounting firm in Kenya.
Audit firms in Kenya conduct internal or external auditing or both. Auditing is simply the examination of the financial records to determine their accuracy and in relation to the application of the accounting policies and standards. It is important for any business organization to achieve its business objectives, attain reliable financial reporting on the operations, prevent fraud and misappropriation of assets and reduce the cost of capital as much as possible.
Being an economically emerging and developing country, Kenya has observed business growth and opportunities in various sectors including travel, tourism, education, sports, manufacturing, transportation, financial institutions and NGOs, Public sector and other sectors. This has led to the growing number of audit firms in Kenya. For any business firms, it is important to get audited annually to have an insight into the operations and compliance of the company.
Importance of Audit Firms in Kenya
As we already mentioned earlier, the country of Kenya has observed considerable growth in a wide range of business sectors. Thus, audit firms in Kenya have gained importance in recent times. In this section of the article, we are going to discuss on what makes the audit firms valuable for any business.
Business Objectives: With an effective audit firm, it will become easy for a company to pursue and attain corporate objectives. Business processes require different forms of internal controls for detection and preventing irregular transactions, measure ongoing performance, ensure adequate business records are kept and promote operational productivity. This is mostly done by internal auditors. They review internal controls, propose recommendations to process owners and document any irregularities for further investigation by the management. These evaluations can be done by an external party reporting to the Audit and Risk Committee.
Preventing the Risk of Misstatement: With the help of auditors, it becomes easier to assess the potential risk misstatements that could be there in the company’s financial reports. Without proper audit procedures, it would not be possible for a company to create a reliable financial report be it for internal or external purposes. This is why it would be difficult for the company to determine how to allocate the resources and know exactly which product lines are profitable and which are not. Apart from that, without a proper audit, the company would not be able to tell the status of assets and liabilities and whether they require a change in strategies or not.
Advice of Return on Investment: The cost of capital is very important for any company irrespective of its size. The cost of capital is mostly comprised of the risks associated with investments. If an investment has more risks, then the investor would require a higher rate of return on investment. With a strong audit system, the various forms of risks are reduced including information risk, fraud and misappropriation of asset risks and the risk of suboptimal management because of insufficient information on operations.
Insight in Fraud Prevention: Audit firms play an important role in fraud identification and prevention. Analysis of the company’s operations and recommendations of strong systems on internal control by audit firms prevent and detect countless forms of malpractices and other irregularities. Audit firms like Ronalds LLP can assist in design, modification and implementation of strong internal control systems.
Evaluation of Accounting Policies and reporting framework: With a proper audit, it becomes easier to evaluate the appropriateness of the accounting policies that have been used previously and also the reasonableness of the accounting estimates created by the directors. It is important to those who desire to have a detailed knowledge of the performance as well as the good health of the institution.
External Auditing or Internal Auditing – Which One to Choose?
Well, when it comes to the different types of auditing by audit firms in Kenya or any other countries, they are primarily divided into two sectors. They are;
● Internal Auditing
● External Auditing
Whether you should opt for internal auditing or external auditing, can be confusing. Both of them are important in their own ways. An organization can choose to have an audit to be done internally and externally as well. In this section of the article, we are going to bring you the differences between internal and external audit.
● The internal audit considers whether the business practices are actually helping the businesses to manage the risks. It also helps in meeting the strategic objectives that will cover the operational and the financial matters as well.
● The audit firms in Kenya can opt for internal audit where auditors can come from an auditing background or from other backgrounds as well.
● The internal audit agenda is set internally according to the business’s objectives and risks.
● The internal auditors report internally, where the relevant managers receive copies of reports. The auditors might report to the audit committee. Thus, there is a high level of oversight. There will be recommendations for discussion and implementation on the report.
● Internal auditors offer a tailored report on the risks and objectives of a certain business area that are being managed currently. The objective of internal auditing is to help the business in moving forward.
● After an internal audit, the follow up will be agreed on a case by case basis. The recommendations might be implemented or be used as a consultative help for moving on with the operations of the company.
● The external audit includes a true and fair view of the annual accounts that are prepared in compliance with the legal requirements.
● The external audit is done by the external auditors from outside the business organization. But they should be registered auditors.
● The external audit agenda is set by the firm according to its own programme of work that is based on its assessment of the risks of the accounts.
● The external auditors mostly report to the shareholders or the trustees of the business organization.
● From the external auditors, you are going to receive the accounts report in the format of the Auditing Standards. The reports are focused on whether the accounts are offering a fair view complying with the legal requirements. If any other issues come to light, then the auditors will report directly to the
management of the organization.
● After the audit is done, there is no external audit follow up.
List of Top Audit Firms in Kenya
On your quest for the best audit firms in Kenya, we have brought you the consolidated list of the top 5 audit organizations.
Ronalds LLP: Yes, we understand this might feel like we are too proud of ourselves. But it’s not boasting when we have got facts to back it up. As one of the most renowned audit firms in Kenya, Ronalds llp understands the locals and the mindset of the major small and large scale business organizations here. Apart from that, being established in Kenya, we don’t charge any additional transaction costs. We understand your business in a much better way than any other foreign audit firms. Our experienced and trained professionals can help you deal with any business or finance related issues in the easiest possible way.
Deloitte & Touche Limited: This is one of the four biggest audit firms in Kenya. Their offices are located in Westlands Nairobi. Being one of the best audit firms in Kenya, the company employs more than 200 fresh graduates every year and 300 experienced professionals.
PricewaterhouseCoopers (PwC Kenya): PwC Kenya is a respected audit firm that has got a global presence. We already mentioned above that most of the renowned audit firms in Kenya perform globally. The range of services offered by PwC includes industry-focused advisory, tax, and assurance services for the public sector entities and private companies.
Earnest & Young: This is a professional services firm that offers assurance, advisory, tax, and transactions advisory services. This audit firm has got connections across more than 33 countries in Africa. The firm works on wide areas including asset management, automotive, banking sectors, consumer products, insurance, oil & gas and other industry sectors.
KPMG East Africa: As one of the well-established audit firms in Kenya, the core of KPMG is to work on the vibrant culture of East Africa to bring out the best in people. One of the great features of this audit firm is they encourage people to make a sustainable difference while ensuring that the common people have access to knowledge and skills too.