The accountants’ regulatory body has developed a system that will lock out from State tenders any firm whose financial statements are prepared or audited by unqualified individuals, making it harder for such companies to access government procurement opportunities.
The new system, built by the Institute of Certified Public Accountants of Kenya (ICPAK), is set to go live in June. It will require every accredited auditor or accountant to generate a digital receipt as a signature to accompany the financial statements they sign off.
This receipt, featuring a quick response (QR) code, will allow anyone reviewing the statements to verify — by simply scanning the code — whether the documents were approved by a licensed professional.
Catherine Asemeit, ICPAK’s director of standards and technical services, told the Business Daily that the organisation is in talks with the public procurement watchdog to require State procuring entities to use the system to verify the authenticity of financial statements submitted by bidding firms.
“We have had cases where quacks have been developing financial statements for people, which they use to bid for tenders, and we’re keen on nipping this issue of quacks,” Ms Asemeit said.
“We’re dealing with the issue by introducing a new system known as the Unique Audit Opinion Authentication, and we’ll be launching it in June.”
The Unique Audit Opinion Authentication system will be accessed only by accredited accountants, who will log in and generate a code for each of the financial statements they sign off.
Firms bidding for State tenders are typically required to present audited financial statements for the past two to three years.
However, there has never been a clear mechanism for verifying whether the professionals who audit the books are genuinely licensed — creating a loophole that some firms have exploited to win tenders using unauthenticated accounts.
“The person doing a financial statement should be a certified public accountant, registered by ICPAK. If they’re not, then that’s a quack, and that financial statement would not be acceptable. Currently, it is, but that will change,” Ms Asemeit said.
The move could potentially lock out thousands of suppliers, given the limited number of accredited accountants.
According to Ms Asemeit, only about 2,000 accountants in Kenya are allowed to sign off financial statements — yet over 16,000 suppliers are registered with the State procurement regulator, and more than 600,000 companies are actively operating in the country.
Government suppliers have, however, supported the move, cheering the regulator on, saying it will help root out unscrupulous elements and corrupt procurement officers making it hard to do business with the government.
“Anything that can help the government do business with the right people, we support it because it also makes the suppliers’ business better,” said Simon Gichuki, secretary-general of the Association of Public Sector General Suppliers (APSGS).
“What ICPAK needs to do now is to empower their own members to uphold prudent audit measures and principles. Because sometimes the problem isn’t quack auditors, it’s that the licensed auditors don’t do their job well.”
According to Mr Gichuki, the move will also help discipline professionals who are negligent in their handling of clients’ accounts because if a problem arises, it will be easy to trace who signed off on which accounts and they won’t be able to deny it.
Some players argue that the shortage of qualified auditors could push up the cost of auditing services, making compliance more difficult for smaller firms. However, ICPAK says it has drawn up a reference remuneration order to guide how much the licensed accountants can charge, depending on the size of the company.
The crackdown comes as ICPAK also prepares to enforce strict new rules on sustainability reporting, following the issuance of standards aimed at enhancing disclosure of environmental, social, and governance (ESG) issues.
Last week, the regulator published a reporting template for the banking sector. Banks and large companies have until 2027 to comply, while small and medium enterprises have until 2029.
The new standards require entities to report, alongside their financials, on governance structures, risk management, strategic priorities, and sustainability targets — including how they measure their impact on the environment.
