The organizers of the Financial Reporting Excellence (FiRe) Award launched the 2019 edition of this
competition on 3 July 2019. The winners were presented their prizes at a spectacular dinner at the Carnivore on Friday 8 November 2019. An immediate question arises. Why are these two dates so far apart? Does it take four months to work out who the winners are? The answer is yes. Firstly, there are two separate categories in the competition: in the 2019 version, over one hundred private entities entered and over six hundred government entities took part. Secondly, the judging process
takes place at three levels. The first level examines the annual reports of private sector entities for the financial year ended between 30 June 2018 and 31 March 2019, or the Report of the Auditor-General on the Financial Statements of the Ministry, Department or Agency of a government
entity for the year ended 30 June 2018, for example, “The Report of the AuditorGeneral on the Financial Statements of the Anti-Counterfeit Agency for the year ended 30 June 2018”. The second level checks the first level judging and short-lists the contestants; the third and final checks
the first and second level judging: so the process is very similar to what happens to an audit file towards the completion of the audit process – maybe even more thorough.
The theme of the 2019 FiRe Award was
Enhancing corporate value through excellence in financial reporting for crossborder trade and investment facilitation in East Africa and beyond.
The person who proposed this theme must be a prophet: the reason why will become clear when you come to the list of winners later in this article.
Speaking during the launch Mr. Geoffrey Odundo, Chief Executive, Nairobi Securities Exchange (NSE) noted,
As an Exchange, we are committed to supporting the awards as it seeks to enhance a strong financial system supported by robust governance, high quality financial reporting standards and a sturdy regulatory framework, which is fundamental in mobilizing domestic investments and international capital flow to Kenya”. The Capital Markets Authority Chief Executive, Mr. Paul Muthaura, observed “high standards in financial reporting and corporate governance practices are fundamental in positioning Kenya as the pre-eminent financing and investment hub in the region. Following the official launch of the Africa Continental Free Trade Area, there will be increased opportunities for business growth through trade and investment but the sustainability of this growth will rely on the quality of financial reporting adopted. Sound reporting ensures an increase in transparency on developing corporate value. The adoption of high standards is therefore an important foundation for attracting investors, particularly through the capital markets, as Kenya seeks to be the heart of African capital markets and meet the funding needs to facilitate the attainment of the Big 4 Agenda.
The FiRe Award was started in 2002, with ICPAK, the Nairobi Stock Exchange (now the Nairobi Securities Exchange) and the Capital Markets Authority as promoters: the CEO of ICPAK at the time was John Njiraini, who went on to become the Commissioner of the Kenya Revenue Authority – up to that time the competition was called the Best Presented Accounts of the year Award (which itself was started in 1986), but Njiraini realized that the competition could die out unless he revamped it into its present form: with
the benefit of the passage of time, one can see how wise this decision was. The 2019 edition of the competition is the eighteenth of the FiRe Award series – the re-vamped competition has now reached
its adulthood.
Kenya adopted International Accounting Standards (IASs), now International Financial Reporting Standards (IFRSs), for all entities in the private sector, for financial statements for all periods which commenced on or after 1st January 1999. International Standards on Auditing (ISAs) were adopted with effect from the same date: but because audits are conducted in arrears, in the year which commenced on 1st January 1999,
auditors in Kenya were auditing financial statements for the preceding year 1998, using ISAs: so auditors will point out that, in reality, ISAs were adopted one year earlier. This is a debatable point which one can discuss without ever coming to a conclusion.
In 2009, the FiRe Award was transformed into a regional event in line with the integration in the region as
envisaged in the East African Community Common Markets Protocol. Since then, the Award has received entries from Rwanda, Uganda and Tanzania: however, Rwanda now runs its own version of the
competition. In 2014, the Public Sector Accounting Standards Board of Kenya (PSASB-K) requested to join the Award as one of the promoters: the group of initial promoters accepted this request.
The primary objective of the FiRe Award is to ensure that corporate reporting, not only of financial results and position, but also of corporate governance and of corporate social responsibility, are up to world standards. The International Federation of Accountants (IFAC) strongly supports the use of the Integrated
Report: the FiRe Award has a special contest for companies that have adopted Integrated Reporting in communicating the results of their operations. A user of the annual report of a company quoted
on the Nairobi Securities Exchange, the Dar es Salaam Stock Exchange or the Uganda Securities Exchange, should be able to read a comprehensive document about the company that gives her or him
the same quality of information, in clarity, in breadth, in relevance and in precision, as those produced by companies in NewYork, on NASDAQ, in London, in Tokyo, on the Shanghai Stock Exchange in China,
in Hong Kong, or on Euronext (Europe’s largest stock exchange which combines five markets based in Belgium, France, Ireland, the Netherlands, and Portugal). The FiRe Award aims to promote excellence in three areas: firstly, Financial Reporting; secondly, disclosure of sound corporate governance practices; and thirdly, corporate social responsibility and environmental reporting. If a company reports on these functions excellently, it is likely that the company operates in these areas excellently: but just as a human person can act hypocritically (a hypocrite is a person who pretends to have certain beliefs, attitudes or feelings when they really do not: an example of a hypocrite is a person who says they care about the
environment, but are constantly littering), companies can also act hypocritically – this is not true – the directors and management act hypocritically – examples are those in Mumias Sugar Company, Kenya Airways, Imperial Bank, Chase Bank, CMC in the private sector, and the directors and management in State Corporations such as in the Kenya Planters Cooperative Union (KPCU – quasi state really), the Pyrethrum
Board of Kenya, Nairobi City County, Kenya Farmers Association, etc.
In early November 2009, the Business Daily carried an article whose headline was:
“Kenya to adopt international accounting tools ” :
the very first sentence of the article seems to contradict the headline: the sentence states “Kenya may take longer to adopt the international accounting standards designed for the public sector due to lack of the right personnel”. Amos Kimunya (a former Chairman of ICPAK), the then Trade Minister, pointed out that
“Getting the right calibre of accountants has been a problem for the State and private companies locally and globally. Previously, the State would have a problem with ICT systems but the ministries have been
networked. I am aware that some countries have adopted International Public Sector Accounting Standards (IPSASs) and we in Kenya will be looking forward to hearing the experiences and challenges those
countries have encountered. The linkage between expenditure and productivity must be the driver towards prosperity. National planners need information that is easy to understand and useful for planning. Performance comparisons between departments and State entities need to be done using a common
reporting framework, to be able to assess where additional resources are required”. The KPMG chief executive Mr Josphat Mwaura was also quoted as saying that KPMG was keen on the implementation
of IPSASs given their contribution to the quest for accountability. Kenya actually adopted IPSASs in 2014. It is important to remember that IPSASs target national and county governments but do not apply
to State-owned enterprises which are supposed to apply International Financial Reporting Standards (IFRSs). In addition to there being IPSASs promulgated by the International Public Sector Accounting
Standards Board, an independent Board within the International Federation of Accountants (IFAC), Section 192 of the Public Finance Management Act, Chapter 412C of the Laws of Kenya (Revised Edition 2015), establishes a Public Sector Accounting Standards Board (PSASB) whose functions are to “provide frameworks and set generally accepted standards for the development and management of
accounting and financial systems by all State organs and public entities, and in particular
The preparation of an excellent annual or integrated report is hard work – it is like a marathon.
Once one wins, it is back to more hard work to win the following year’s contest.
to perform the following functions: (a) set generally accepted accounting and financial standards; (b) rescribe the minimum standards of maintenance of proper books of account for all levels of Government; (c) prescribe internal audit procedures which comply with this Act; (d) prescribe formats for financial statements and reporting by all state organs and public entities; (e) publish and publicise the accounting and financial standards and any directives and guidelines prescribed by the Board; (f ) in consultation with the Cabinet Secretary on the effective dates of implementation of these standards, Gazette the dates for
application of the standards and guidelines; and (g) perform any other functions related to advancing financial and accounting systems management and reporting in the public sector”. The Chairman of the
PSASB is CPA Bernard Ndung’u: he is also the Director General of Accounting Services at the National Treasury. Since the 2015 FiRe Award, he has made it mandatory for all National Government Ministries, Departments and Agencies that prepare a separate set of Financial Statements to submit their financial
statements for examination by the FiRe Award team of judges. CPA Ndung’u says:
“the participation of public sector entities in the FiRe Award is a demonstration of the commitment to transparency as to how public resources are utilized and an opportunity for feedback to public sector
entities on how they can improve their financial reporting on a continuous basis to entrench best practices.’’
It can be deduced that the FiRe Award is not only a competition but also a healthy gauge ofcompliance trends among public entities: but the same applies also to private sector entities. The continued articipation of the public sector is one element to improving reporting and corporate governance practices in the public sector: a friend of mine told me recently that he no longer reads any newspaper, because every newspaper contains at least one story about public funds being stolen or misused in some way – he wants to read positive news; let us face it, much has to be done to inspire more confidence in reporting by public sector entities in Kenya. The public sector entities that participated in the 2019 FiRe
Award included Ministries, Departments and Agencies, State Corporations, SemiAutonomous Government Agencies and the County Governments. For the first time ever, the financial statements of three
counties came up to a standard whereby they could be awarded prizes. The Chief Executive Officer of ICPAK, CPA Edwin Mr. Makoro said
‘’the Fire Award has been going on for 18 years awarding excellence in financial reporting. One mandate of the Institute of Certified Public Accountants of Kenya is to develop and implement financial reporting standards. It is with this background that the institute teamed up with NSE, CMA and PSASB to promote the FiRe award, and will continue to do so’’.
to perform the following functions: (a) set generally accepted accounting and financial standards; (b) prescribe the minimum standards of maintenance of proper books of account for all levels of Government; (c) prescribe internal audit procedures which comply with this Act; (d) prescribe formats for financial statements and reporting by all state organs and public entities; (e) publish and publicise the accounting and financial standards and any directives and guidelines prescribed by the Board; (f ) in consultation with the Cabinet Secretary on the effective dates of implementation of these standards, Gazette the dates for
application of the standards and guidelines; and (g) perform any other functions related to advancing financial and accounting systems management and reporting in the public sector”. The Chairman of the
PSASB is CPA Bernard Ndung’u: he is also the Director General of Accounting Services at the National Treasury. Since the 2015 FiRe Award, he has made it mandatory for all National Government
Ministries, Departments and Agencies that prepare a separate set of Financial Statements to submit their financial statements for examination by the FiRe Award team of judges. CPA Ndung’u says:
“the participation of public sector entities in the FiRe Award is a demonstration of the commitment to transparency as to how public resources are utilized and an opportunity for feedback to public sector
entities on how they can improve their financial reporting on a continuous basis to entrench best practices.’’ It can be deduced that the FiRe Award is not only a competition but also a healthy gauge of
compliance trends among public entities: but the same applies also to private sector entities. The continued participation of the public sector is one element to improving reporting and corporate governance
practices in the public sector: a friend of mine told me recently that he no longer reads any newspaper, because every newspaper contains at least one story about public funds being stolen or misused in
some way – he wants to read positive news; let us face it, much has to be done to inspire more confidence in reporting by public sector entities in Kenya. The public sector entities that participated in the 2019 FiRe
Award included Ministries, Departments and Agencies, State Corporations, SemiAutonomous Government Agencies and the County Governments. For the first time ever, the financial statements of three
counties came up to a standard whereby they could be awarded prizes. The Chief Executive Officer of ICPAK, CPA Edwin Mr. Makoro said
‘’the Fire Award has been going on for 18 years awarding excellence in financial reporting. One mandate of the Institute of Certified Public Accountants of Kenya is to develop and implement financial reporting standards. It is with this background that the institute teamed up with NSE, CMA and PSASB to promote the FiRe award, and will continue to do so’’.
humility. But he worked for that day. Has he (Kipchoge Keino) stopped working? The answer is no. The reparation of an excellent annual or integrated report is hard work – it is like a marathon. Once one wins, it is back to more hard work to win the following year’s contest.
Congratulations to the winners, especially CRDB Bank plc from Dar es Salaam. They had 100% compliance with IFRSs. They were the overall winner of the private sector 2019 FiRe Award.
FCPA Jim McFie is a Fellow of Institute of Certified Public Accountants of Kenya
