Presented by: CPA Georgina Malombe

 AQA taskforce formed in 2002  Countywide workshops exposing the product being developed.  Culmination was the AQA Framework launched in May 2004.

 Firm Review (ISQC 1)  Engagement Review (ISAs

 Promote compliance with professional standards.  Demonstrate that the profession is committed to self regulation.  Bring increased user confidence in the reliability of financial statements.  Continuously identify weaknesses in the audit process and provide technical assistance for professional development.  Assist in identifying and removing from practice those practitioners who do not adhere to professional standards.

 To date 440 firms have been reviewed. - 2 nd time reviews62 firms - 3 rd time reviews 5 firms  All regions have been covered.

 Compliance with professional standards, legal and regulatory requirements still remain very low. What do you think can be done to raise the level of compliance?  Out of the 62 firms reviewed for the 2 nd time, only 12 firms (8%) were issued with satisfactory reports i.e. 4 big four firms, 2 medium tier firms, 6 small tier firms.

 Attitude / Mind set  Partners are behind the current developments in the profession.  No set policies and guidelines to guide the practice (ISQC 1)  Low charge out rates which cannot match the quality of work expected.

 Pre-engagement  Control environment  Risk & Fraud Assessment  Completion & Review  Reporting (Fairly done)

 How well do we use the technical materials developed by the Institute?  When was the last time you called the Institute for technical guidance?  What caliber of staff do you engage?

 In-house training  Support for professional examinations (Financial, time, rewarding mechanism etc)  What is the the staff turnover rate?  How do you retain competent personnel?

 We are still the leaders in the EA region.  ICAEW Consultants perspective. `` ICPAK IS FAR MUCH AHEAD’’ compared to 5 other Institutes they are undertaking AQR Capacity building.

- Leadership attitude - Reviewers - Technical materials - Approach - Reports issued

 Evading of review  Lack of support from some branch leadership  `` Perception’’ that we are KRA agents OR the review is meant to close the ``shop’’

 Who will cater for the cost of reviews? KenyaICAEW Cost of Annual licence – Kshs. 10,000 1,100 GBP ~ Kshs. 140,000 Composite licenseSpecific licences ( Audit, Advisory, Insolvency, Accountancy etc)

 Self Review  Review cycle  Audit tool  Peer reviews

``EVERY ONE IS THE CHIEF’’  Mismanagement of expectations  Team Change- Know your partner  Company direction change- Know what is happening with your partner’s other Companies.  No skin in the game - `` Does your partner need what you offer to succeed or vice versa ‘’?

No set guidelines and policies at the point of merging (gentleman agreement) Lack of trust Lack of Perseverance Failure to have a rewarding system Specialization.

 Develop a clear decision making process  Be clear about your values and only bring on partners who concur  Develop a culture where everyone learns how to be a rainmaker  Develop a vision for the company that people must opt-in to before joining  Be sure to nurture the relationships within the partnership, not just take care of client work. Remember, people work together for more than making money

 Be clear about the end game for the partnership, e.g., to be acquired, to grow into a powerhouse or to be a lifestyle business  Determine in advance how partners can exit gracefully if they determine it’s time to move on, e.g., financial aspects of the separation

 The need for SME firms to come together to exploit the advantages resulting from economies of scale and specialization.

THANK YOU & GOD BLESS