Auditors who hide or fail to submit statutory reports on saccos’ operations, financial condition and regulatory compliance will be permanently banned from auditing the institutions, as the regulator tightens oversight of Kenya’s cooperative sector.
The Sacco Societies Regulatory Authority (Sasra) says in a new circular that some external auditors are either failing to submit the statutory report or filing it beyond the required window of four months after the end of a financial year, in breach of the Sacco Societies Act.
Audit firms charge saccos annual fees that can run into millions of shillings, depending on the size of the institution, meaning that those banned risk losing business from a sector with thousands of clients.
Failure by auditors to furnish the mandatory report has deprived Sasra of key insights into the financial health and compliance of regulated saccos, threatening its ability to protect the billions of shillings held as deposits in the saccos under its watch.
Sasra, which approved 402 external auditors to scrutinise sacco’s books for the financial year ended December 2025, says that those who have not shared the statutory reports for 2024 will be permanently expelled from its register unless they comply within 30 days.
“The Authority has noted with concern that some external auditors and audit firms which rendered external auditing services to regulated sacco societies for the financial year ended December 2024 have failed and/or neglected to furnish the Authority with the prescribed statutory report,” said David Sandagi, Sasra’s acting CEO in a circular dated October 16.
“Any failure to submit the statutory report for any financial period of auditing and within the prescribed timelines, shall result in a permanent removal from the annual list of registered and approved external auditors for regulated sacco societies.”
Under Section 45 of the Act, Sasra maintains a list of approved external auditors who are eligible to conduct audits for regulated saccos. Removal from this list effectively bars a firm or individual from doing any sacco audit work in Kenya.
The saccos sector plays a critical role in mobilising savings and providing affordable credit to millions of Kenyans.
Sasra’s move follows a string of governance lapses and liquidity crises that have plagued sections of the sacco movement in recent years. Some societies have collapsed after years of weak oversight, prompting Sasra to strengthen reporting obligations and demand higher standards of transparency from auditors and boards alike.
A recent PricewaterhouseCoopers forensic audit made public early in the year showed former top executives at the saccos’ umbrella body Kenya Union of Savings & Credit Cooperatives (Kuscco) were complicit in a Sh13.3 billion heist.
The heist was executed through years of shady financial dealings that included cooking of books to declare phantom profits while making large, unexplained withdrawals.
Section 44(3) of the Sacco Societies Act requires every Sacco to appoint external auditors during annual general meetings. The external auditors are charged with preparing the statutory report and sharing with Sasra within four months after the end of a financial year.
This means Sasra should have received the reports for the year ending December 2024 by the end of April.
The statutory report is a legally mandated document submitted to Sasra. It supplements the audit report delivered to the sacco’s management and provides the regulator with an independent assessment of the institution’s solvency, internal controls and adherence to prudential standards.
According to the Act, auditors must disclose whether a sacco is solvent, flag any violations of licensing conditions, report evidence of fraud or illegal activities and evaluate whether management practices safeguard members’ assets.
They must also confirm to Sasra whether sacco officers cooperated fully by providing the information required to conduct the audit.
Missing statutory reports deny Sasra early-warning data on institutions that may be sliding into financial distress, mismanaging funds or breaching laws and putting savers money into jeopardy.
Mr Sandagi copied the memo to the Institute of Certified Public Accountants of Kenya (ICPAK), signalling that disciplinary action could follow at the professional-body level for auditors found in breach of statutory and ethical obligations.
Kenya’s co-operative industry is the largest in Africa, serving more than six million members. Latest data shows the assets of 177 deposit-taking (DT) saccos and 178 non-withdrawable deposit-taking (NWDT) saccos supervised by Sasra crossed the Sh1 trillion mark for the first time in the year ended December 2024, reflecting the growing stature of saccos in the financial sector.
