Kenya’s largest lender by market value, Equity Bank has dismissed Ernst & Young as its external auditors and like most companies, the bank chose not to provide investors with information on why the changes were made.
“The Group has also completed a self-initiated process of rotating out its long serving statutory auditors Ernest & Young (EY). The proposed new statutory auditors who is one of the “Big Four” global names will be presented to the Group’s shareholders for approval at the forthcoming Annual General Meeting . The changeover is planned to take effect for the financial year beginning 1st January 2017″ The Bank noted in a statement.
It’s always a big deal when a company changes its auditors given that Ernst & Young has been the bank’s external auditors since 2004 when Equity Bank acquired a commercial banking licence.
The audit firm has been severely criticized for its role in helping Uchumi Supermarkets window- dress its dodgy financial structures during a rights issue in 2014 which led to losses of more than Sh1 billion.
Jamii Bora Bank, which was a significant participant in the rights sued EY for negligence saying they relied on the information memorandum prepared by the audit outfit to make the purchase decision.
No action had been taken against EY over their role in the Uchumi saga – at least not until last year when CMA issued a notice to the audit firm requiring them to respond to allegations of misconduct by September 24, 2016, failure in which the regulator would take legal action.
EY went to court seeking to stop CMA from investigating them.
However, a high court in Nairobi last month rejected the application by EY and further ruled that CMA had acted in pursuant to the law and no breach of fundamental right had taken place hence gave CMA a go ahead to investigate and prosecute the audit firm.
When an auditor departs, investors and the public deserve to know why.
