PwC executive Muniu Thoithi. PHOTO | SALATON NJAU | NMG PricewaterhouseCoopers (PwC) now controls nearly a third of audits of the Nairobi bourse firms, in latest rotations of auditors that looks set to take its fees above Sh398 million.
The audit firm has won three additional clients— KCB Group , HF Group and CIC Insurance — as several listed firms moved to change auditors in what is usually called auditors rotation.
The rotations are usually initiated by either the company boards or by the audit firms to address issues such as familiarity threat, which is perceived to be high when an auditor stays with one client for long.
Regulators have mixed requirements on the period after which auditors must be rotated.
For instance, while Insurance Regulatory Authority require mandatory audit firm rotation after every seven years, Capital Markets Authority corporate governance code only recommends rotation after every six to nine years.
For banks, Central Bank of Kenya is silent on rotation of audit firms. The Prudential Guidelines only require audit firms to rotate partners and managers after every five years.
PwC will now be auditing 18 Nairobi Securities Exchange (NSE)-listed firms, trailed by other major audit firms such as KPMG, Deloitte and Ernst & Young (EY).
The audit firm last year earned about Sh398.6 million from auditing 16 firms, up from Sh351.7 million. However, it has now lost to EY its key client, Safaricom , from where it earned Sh54 million.
KPMG Kenya, whose fee grew from Sh214.8 million to Sh253.8 million, has lost four clients in the latest rotations. It now remains with 11.
Standard Chartered Bank , KCB and HF group, which last year earned KPMG Sh116.67 million or 46 percent of fees from NSE firms, have all changed auditors.
KPMG last year also resigned from auditing the struggling Sameer Africa , leaving RSM Eastern Africa to complete the audit.EY has gained Safaricom and Stanchart, taking its client base to 10 after rotating out of CIC. Its audit fee was Sh112.9 million last year.The winning of the two new clients will hand EY at least Sh74 million, going by what Safaricom and CIC spent on their previous audits.Another audit firm, Deloitte, which has the three agricultural firms— Kapchorua , Kakuzi and Williamson —among its clients earned Sh84.33 million last year.