Accountants are expressing strong objections to what they describe as the illegal profiling of audit firms in the country.
Through their regulatory and professional body, they have claimed that some financial institutions are placing discriminatory restrictions on clients of accounting firms concerning the legitimacy of their audited financial statements.
The institute has denounced this as an unlawful and unacceptable attempt to undermine its authority.
The Institute of Certified Public Accountants of Kenya (ICPAK) reported that several firms have raised concerns that preference is being given to statements audited by the ‘big four’—PriceWaterhouseCoopers (PWC), Deloitte, KPMG, and Ernst & Young—over those audited by smaller firms.
“The institute has observed that some stakeholders have raised concerns about certain financial institutions only acknowledging financial statements audited by one of the ‘big four’ audit firms, which they consider to be the only valid and acceptable reports,” the statement said in part.
ICPAK clarified that all auditors and accounting firms licensed by them have undergone rigorous vetting. As a result, all licensed audit firms are fully qualified to provide services within their respective license categories.
The institute added that details of all licensed audit firms are available on its website and are regularly published in national newspapers for further clarification if needed.
ICPAK explained that audit firms are categorized based on the number of partners, ranging from sole practitioners to firms with more than ten partners, to reflect their varying capacities.
The institute’s chairman, Philip Kaikai, stated, “Any profiling that designates some audit firms as ‘the big four’ or suggests that only financial statements audited by these firms are valid or acceptable is discriminatory, biased, irregular, and anti-competitive.”
ICPAK, the statutory body for accountants established under the Accountants Act of 1978, derives its authority from the Accountants Act No.15 of 2008.
The ICPAK licenses audit firms and practitioners under four categories: C, A, M, and T.
- Category C (Composite License): Authorized to provide Audit and Assurance Services, Tax Services, Accounting, Controls, and Consulting Services.
- Category A: Permits firms to perform only Audit and Assurance Services.
- Category M: Covers Accounting, Controls, and Consulting Services.
- Category T: Focuses on Tax practices.