Counties asked to improve financial reporting standards

County governments have been urged to improve their financial reporting and governance systems to help attract investment and business entities into the regions.

Public Sector Accounting Standards Board Chairman Bernard Ndung’u said that a sound and robust financial reporting system in the devolved units would promote good competition, facilitate capital inflows and in turn bring about the much-needed economic development.

Ndung’u who spoke during a media briefing for this year’s FiRe Awards at a Nairobi hotel also asked public sector companies to enhance excellence through financial reporting and corporate governance.

The awards launched 17 years ago is jointly promoted by Institute of Certified Public Accountants of Kenya (ICPAK), Capital Markets Authority (CMA), Nairobi Securities Exchange (NSE) and Public Sector Accounting Standards Board. Ndung’u said the awards were not only a competition but also a healthy gauge for the compliance trends among corporate entities.

“The assessment is benchmarked against global standards through the international public sector accounting standards,” he said, adding that the event set for November 16 in Nairobi will focus on best corporate governance practices in the region. Its objectives are to promote financial reporting excellence, foster sound corporate governance practices and enhance corporate investment and environmental reporting.

The ceremony will be preceded by a conference to engage key stakeholders on topical issues which would be held on November 15. Ndung’u said the public sector entities expected to participate in the event include ministries, departments and agencies, state corporations, semi-autonomous government agencies and the County governments.

ICPAK Chief Executive Officer, Edwin Makori, said the public sector participation into the FiRe awards follows the adoption of the International Public Sector Accounting Standards as the reporting framework in Kenya in 2014. He said excellence in financial reporting and corporate governance is the key to the opening up of public sector entities for scrutiny through the FiRe Award evaluation process.

Makori said weak corporate governance and financial reporting could lead to missed opportunities to address concerns which should have been flagged earlier. “We encourage entities to enhance value creation through more open financial reporting to ensure business sustainability,” he said.

Capital Markets Authority Chief Executive Officer, Paul Muthaura said as Kenya seeks to position itself as the premier choice for investors and issuers on the continent, it is important to improve the financial reporting and governance systems. “A robust financial reporting and corporate governance practices are key pillars to ensure our capital markets are aligned to global best practices,” he said.

Muthaura said a sound reporting and disclosure framework ensure investment decisions are based on accurate and timely information which enhances confidence in the capital markets while also lowering barriers to access to capital for issuers. “It is only through growth on both the issuance and investor sides that Kenya will achieve its aspiration to move from frontier to emerging market status,” he said. Geoffrey Odundo, NSE chief executive officer, said corporate governance is now a key concern for investors in the public markets.

He said companies with sound corporate governance practices tend to attract high profile investors. “We, therefore, encourage listed entities, to enter the 2018 FiRe Award as they will be exposed to review and assessment by independent evaluators, enhancing their reporting standards and ultimately boosting investor confidence and participation in our capital markets,” Odundo said.

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