NAIROBI, Kenya Dec 3 – Audit firm PricewaterhouseCoopers (PWC) has been cleared of any malpractice in the lead up to the collapse of Uchumi Supermarkets two years ago.
An investigation by the Institute of Certified Public Accountants of Kenya(ICPAK) absolved the firm from accusations that it did not raise the alarm that the supermarket chain was crumbling under debt.
ICPAK Chairman Steve Lugalia, who released the report on Wednesday, said it had been delayed by constraints of acquiring a fully independent investigator.
“The main challenge we had as an Institute was to get a credible investigator in this matter. As you know Uchumi was a huge corporation with a lot of public interest and PricewaterhouseCoopers is also a big audit firm so we wanted to get an investigator who was seen to be independent,” Mr Lugalia explained.
The investigator’s mandate included probing whether Uchumi’s audits for the years ended June 30, 2004 and June 30, 2005 were conducted in accordance with international standards on auditing and the requirements of the Kenya Companies Act.
The investigation was also to determine whether the “reporting Accountant” report of August 26, 2005 for the Uchumi Rights Issue was followed procedure.
PWC was both the auditing and reporting officer for Uchumi at that point.
“Let me point out that the scope of investigation was limited to those over whom the Institute has legal oversight, the auditor and reporting accountant,” Mr Lugalia stressed.
He said findings from investigation of the audit and financial reports indicate that PWC had acted in compliance with the International Standards on auditing.
Mr Lugalia added that the findings indicated the reports were clear enough for any one who participated in the Uchumi Rights Issue to make an informed decision both from the Uchumi Rights Issue Information Memorandum and the Rights Issue Information Memorandum compiled by PWC in 2004 and 2005 .
Meanwhile ICPAK is encouraging stronger legislation to ensure stricter vigilance on companies to guarantee full protection of stakeholder interests in such cases.
“We really believe that governance structures in especially listed companies need to be strengthened …all listed companies should have a very strong audit committee because this audit companies assist to arrest some of these problems,” he observed.