CMC is under investigation. So, we are yet to see the last of it.

Which other quoted companies at the stock market do we need to be wary of?

Someone suggested Sasini, Sameer and Neveready either because they share a common leading shareholder or he had vested interest in them. But some adequate data or information needs to be discussed before a clearer picture emerges.

Audit firms which have dealt with conniving companies should also be named and shamed. Deloitte has already lost its reputation for not seeing the rot in CMC. They received payments yr in yr out for incompetent auditing jobs at the company either because they were sharing in the loot or turned a blind eye in order to retain the contract with the company.

Holy shit, why would anyone pay millions of shillings to an auditor who cannot even smell a rat? It means the firm is a rat itself. Hopeless case.

In the history of the stock market, has any auditor ever blown the whistle to warn shareholders that the company under scope is being bled by directors or management?

Pricewaterhouse failed to warn shareholders about Uchumi's demise. I have been trying to get the last Financial report to see if they stated that Uchumi was a going concern for the next one or so years. Anyone with a copy?

One suspect I have to present a case against is KK. With Bicholas having initially been a serious owner of the company (that guy could be as dirty as the bull of Auckland) and current duo Chairmanship and CEO status of one Sacob Jegman, they must be having a Vise Grip on the company and no shareholder can know who pees in the corner office.

CMA, you have to wake up like yesterday. But with Gatabaki pretending to be a strict enforcer, (Remember he was ousted from HF for inefficiency and strong headedness) nothing much will come out of it as he is part and parcel of the baggage that is the dirty old men of corporate Kenya.

Are you defending the thugs?

When you do auditing, the results are used to give a clear picture of the status of a company financially. For example, they should have highlighted the fact that the company was leaking cash from uncompetitive logistics and supply contracts.

If you look at the books, the obvious picture that would emerge when you sell more cars is better profits. Instead, even after selling 150 Passats, the idiots did not reflect an appreciation in profits. Why?

That is when the auditors would have informed shareholders that they could not guarantee the company to be a going concern as it was leaking from the rear end, front and under. Tell tail signs are always there. If they can steal from the source of the vehicles, what would stop them from stealing from the selling point and by extension other funds made available to them by shareholders locally?

Maybe they are paid to close their nose if you know what I mean.

Kihangeri and Gathige si kwa ubaya but I am speaking as an expert on this matter. The external auditors' sole responsibility in expressing an opinion is to state whether a company's books of accounts are free of material misstatement.

The responsibility to ensure that shareholders are not shafted rests with the board of directors. The board of directors can of course delegate this responsibility to internal auditors (who would be expected to discover that a company was being overcharged and do something about it).

So their work is to rubber stamp whatever they are told?

@Kihangiri-stop lowering your guard, u are an american are u????$ The letter of engagement clearly states what a company wants the auditor to undertake. In most audits fraud detection is not part of the engagement/objective. The duty to detect fraud rests with the Big Cats-read Directors and has never been delegated to the auditors not unless they are carrying out INVESTIGATIVE AUDIT

The problem with many shareholder's is that they have never understood the role of auditors.

Auditors express their opinon on whether "the financial statements are materially mistated", their work is not to detect fraud, simply because the procedures they apply are not capable of doing so. Auditors opinion is based on materiality which in many cases is a very big number. This means that should they detect problems below this numbers, they can report this to management/directors, but are not allowed to disclose the same to the shareholders.

But more importantly because a statutory audit is more of a post morterm, the correct controls required to safe guard a company are the preventive one's which are supposed to be implementd by directors and management.

How would an auditor uncover a fraud being perpetrated by directors of a company? Directors who appointed the auditor and whose responsibility it is to avail the financial statements to be audited? What should be made clear is this:

1. It is the responsibility of the company to prepare the financial statements and make sure they reveal the true financial position of the company. Due diligence here is exercised by the directors, not the auditors. If the service provider is overcharging the company, the prerogative is with the management to compare such charges with other service providers and rectify the position.

2. The auditor's work is to review the financial statements as & when availed by the company. The auditor will design tests that will check the integrity of the figures in the statements. As long as the figures are supported (LPOs, invoices, DNs, 3.0), the auditor has no further work. Where there are queries, the auditor will raise the issue with the company for explanation. If a good explanation is not forthcoming, they auditor can qualify the accounts.

3. The auditor does not go into comparing invoices of service providers to check whether the charges are fair. That is the work of the company's accountants & management as stated above and laying the blame of overcharged services on an auditor is very far-fetched!

So for all you saying that an audit firm (whether PwC or Deloitte) are culpable in any way in the CMC or Uchumi issues, you could not be more wrong. As already said by many people, an external auditor cannot unearth a fraud that was done off the records or, as in the case of CMC, where all transactions are well supported (despite the overcharging)!

THE BOTTOM LINE

Auditor ‘watchdog’ not ‘bloodhound’

http://www.thebottomline...ticle&articleid=317

interesting debate, in my view audited accounts add very value when valuing a company. I have seen my accountant cook books the auditors didn't notice the glaring errors and of course he takes them out for lunch. It's always upon the investor to put a true value to an investment, it's a risk that's why you invest in a company you understand. if you are purchasing land you don't go to the government valuer to give you report, you must do the due diligence yourself, check the property if it has squatters.