Money Markets
Stockbrokers and CMA differ over reporting format
The bourse has been on an upward trend since the year began. Photo/FILE
Stockbrokers and investment banks are set for a collision course with the market regulator over a move to develop a reporting format for their results.
In a statement sent to the media by Kasib, the lobby group for Kenyan investment banks and stock brokers, the investors indicate that their reporting standards were up to date in accordance with the Company Act (Cap 486) under which they are formed.
This is in response to an earlier story in the Business Daily indicating that the Capital Markets Authority (CMA) had requested the Institute of Certified Accountants of Kenya (ICPAK) to develop a reporting template for its licensees.
“Stockbrokers and investment banks would like to point out that the notion of creating a template on the basis that the accounts are inaccurate is superfluous and misplaced,” said a statement from Kasib, signed by Jane Njeru its chief executive officer.
Kasib further sort to absolve its members from blame in any case of irregularities in reporting standards as they are audited by qualified members of ICPAK, who should adhere to the highest standards of financial reporting.
“The finger of blame would be pointing at the members of ICPAK and not at Kasib members,” said the statement.
This comes at a time when investment banks are publishing their half year results, with Suntra Investment Bank reporting improved pre-tax profit of Sh17.2 million from a Sh21.2 million loss in the same period last year.
Upward trend
Local investors have been streaming back to the bourse, accounting for 64 per cent of market activity in the first five months of this year and edging out foreign investors who accounted for 63 per cent of market turnover last year.
Stockbrokers and investment banks are registered as limited liability companies and are regulated by the CMA Act and the Companies Act, both provide for presentation of audited accounts every year.
However, stockbrokers never used to publish their statements until a proposal passed by the Finance minister during the 2008 budget reading that necessitated them to start doing so.
For the last two years, CMA licensees have been publishing unaudited half year results, and audited end year results in at least two national circulation newspapers for transparency and public scrutiny.
CMA stated that its actions were aimed at strengthening financial reporting among investment banks and stockbrokers in a bid to enforce compliance with international best reporting standards, which the stockbroker’s body refutes.
The new reporting template was set to be ready by October. In an earlier statement, Ms Kilonzo said CMA was working with ICPAK on sharing information to ensure compliance.
More inclusive
The International Financial Reporting Standards (IFRS), which contain details of financial reports, was recently changed to be more inclusive in terms of the amount of details included in published statements.
The income statement and the balance sheet were also renamed to statement of comprehensive income, and the statement of financial position respectively.
This followed misrepresentation of facts on companies’ dept level and profitability under the previous reporting standards that saw several firms collapse during the global financial crisis.
The new standards require that unrealised gains and losses be disclosed and should be part of the reported financial results as this gives a true reflection of a company’s actual financial health.
Similarly, Kenyan accountants are pushing for a review of the international rules to incorporate emerging issues and improve accuracy and reliability.
ICPAK says it has also developed a reporting template for small and medium enterprises (SMEs).
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