ICPAK queries quality of counties’ financial reports
The Institute of Certified Public Accountants of Kenya (ICPAK) has raised concerns regarding the inability of county governments to maintain unmodified financial reports over the past decade.
They emphasize the importance of achieving zero-fault audits and enhancing reporting standards nationwide for accountability and transparency. Unmodified opinions provide a reasonable level of assurance from the auditor that the financial statements present a true and fair reflection of an entity’s results for the period reported.
Speaking after a Senate’s Public Accounts Committee review of Auditor General reports on county governments, ICPAK warned that treating audit reports as mere formalities undermines their crucial role in ensuring accountability and preventing future audit issues.
According to the Office of the Auditor General (OAG) Report for the financial year 2022/23, 67 per cent of county governments received a clean audit opinion, while 32 per cent received qualified opinions, and 1 per cent received adverse opinions.
However, opinions on county governments’ financial statements have remained stagnant over the years, with the number of qualified opinions increasing and the disclaimer of opinion decreasing. This trend raises concerns, particularly regarding the consistency of unmodified reports in subsequent years.
“Over the ten years of devolution in the country, most of the county governments have consistently been issued with modified auditor’s report and for the few cases where unmodified reports have been issued, the same has not been sustained in the subsequent year,” said ICPAK chair Philip Kakai. Kakai stressed the need to analyse the root cause of this trend, involving not only the preparers of financial statements but also other stakeholders in the financial management chain.
“ICPAK has a well-structured independent disciplinary process that its members who fail professional conduct are taken through. Members of the public and institutions are encouraged to report these cases of misconduct for action,” read a section of the institute’s press statement.
To enhance the quality of general-purpose financial reporting in devolved units and enable better resource allocation decisions, ICPAK calls for the establishment of financial reporting units in all public institutions. These units should deploy staff with the necessary expertise and undergo continuous training to produce consistent and high-quality financial reports.
The institute is also proposing nomination of a qualified member of the institute to sit in the Senate Public Accounts Committee (PAC) hearings and to provide technical expertise on accounting matters.
Further, the institute rooted for a relook at the role and involvement of Accountants in public procurement process across the 28 stages of public procurement following revelations that accountants are involved in the very last stages of payment hindering their effective assessment of price, the value of the procured goods and services and the authenticity of documents provided.
“County governments should ensure internal audit reports and recommendations from the audit committees are taken seriously and acted upon. Treating these reports as formalities undermines their critical role in ensuring accountability and preventing future audit issues,” the statement further read.
