The Institute of Certified Public Accountants of Kenya (ICPAK) has raised an alarm over the prejudicial and partial profiling of some audit firms in the financial sector.

In a statement, ICPAK has highlighted that some of its members and stakeholders are concerned that some financial institutions only favour bigwigs termed as the “Big Four” undermining small audit firms.

ICPAK said that several organisations do not accept financial statements from the lesser known companies and will only accept those audited by the big four.

Various stakeholders

 “Institute has noted concerns from its members and various stakeholders that some of the Financial Institutions only recognise financial statements that are audited by one of the ‘big four’ audit firms which, they deem, to be the only valid and acceptable audit reports,” said Philip Kakai, Chairman at ICPAK.

Kakai stressed that profiling audit firms or determining only financial statements by the “Big Four” as valid or acceptable is discriminatory, irregular, and does not foster competition in the market.

 “The terminology, ‘the big four audit firms’ is a terminology that does not exist in its regulatory framework as a regulator of all accounting/ audit firms in Kenya,” he added.

 The institution also noted that all licensed firms in Kenya meet the professional standards, regardless of fame and popularity, adding that they were thoroughly vetted and trained.

 It highlighted that audit firms and practitioners licensed by the Institute, under Category ‘C’ (Composite License) are authorized to perform Audit and Assurance Services, Tax Services & Accounting, Controls and Consulting Services.

Audit companies licensed under Category ‘A’ License are authorised to perform only Audit and Assurance Services. On the other hand, category ‘M’ licenses are authorised to perform Accounting, Controls, and Consulting while Category ‘T’ Licensees are to be engaged in performing Tax practices.

“The Institute has categorised the audit firms with respect to the number of Partners, whereby there are Sole Practitioners, Two to Five Partner Firms, Six to Ten Partner Firms and over Ten Partner Firms to demonstrate their varying capacities,” further noted ICPAK.

 ICPAK also noted that these categories do not by any means promote or discriminate against any firm and that any attempt to usurp its mandate is considered unlawful.

Additionally, it has vowed to relevant players to address the issue a

Level playing field

 This move will ensure smaller firms have a level playing field in the financial sector and will protect them from unfair practices.

 “The Institute wishes to inform its members, accountancy practitioners, members of the public, and particularly the Financial Institutions, to take note and apply accordingly,” said Kakai.