A push to introduce minimum fees that accountants charge for advisory services has been dropped by a task force reviewing sector regulations.
In the regulations tabled in Parliament and developed by a team comprising the Treasury and the Institute of Certified Public Accounts of Kenya (ICPAK), accountants will now not dictate fees and remuneration.
The Office of the Attorney General and the Kenya Accountants and Secretaries National Examination Board were also represented in the team that worked on the rules.
The ICPAK said minimum professional fees would curb price under-cutting. “When entering into negotiations regarding professional services, a professional accountant in public practice may quote a fee that he or she deems appropriate,” read the Accounts Regulations 2022.
The regulations provide a means for effecting the Accountants Act 2008 that governs their operations, including quality assurance and ethics.
In September last year, the Treasury came under the spotlight for entertaining proposals by accountants on the regulations.
The rules state that a professional accountant in public practice who quotes a fee lower than another is not unethical.
“But there may be threats to compliance with the fundamental principles arising from the level of fees quoted for instance, a self-interest threat to professional competence,” the rules say. To remedy this, the regulations require making the client aware of the terms of engagement and the basis of charging the fees.
Non-practising members of ICPAK said setting minimum prices could make professional services beyond reach.
The Competition Authority of Kenya (CAK) has previously shot down the proposed minimum fees for accountants, saying it would limit competition, raising questions on the Treasury’s renewed dalliance with the accountants over the matter.
In 2015, ICPAK requested to be exempted from competition rules, a move that would allow it to set minimum professional fees. The request was rejected in a November 2016 decision, with CAK arguing that the benefits of minimum fees were lower than the potential harm on the market.
Clients normally pay more for assurance and non-assurance services, including ordinary audit, forensic audit, tax, management, human resources and management consultancy, and fixing of minimum fees was not expected to tame this.
Accountants argued that clients would be free to pay a premium on minimum fees guided by superior skills, brand or reputation of the audit firm.