Shelter Afrique managing director James Mugerwa. PHOTO | FILE
What you need to know:
Godfrey Waweru’s decision to prepare Shelter Afrique’s financials, and write directly to the board and financiers was in breach of accountants code of ethics, says a report by Deloitte.
The report affirms most of the allegations raised by the whistleblower, but says Mr Waweru contravened rules on reporting and confidentiality.
Shelter Afrique’s board of directors meet in Nairobi on Tuesday for an extraordinary sitting to discuss and adopt the Deloitte forensic audit report.
The accountant who blew the whistle on accounting and lending irregularities at Shelter Afrique acted in breach of professional guidelines, a forensic audit report into the matter has stated.
The report by Deloitte says Shelter Afrique’s former head of finance Godfrey Waweru’s decision to prepare the mortgage lender’s financials, and write directly to the board and financiers was in breach of accountants code of ethics.
The report affirms most of the allegations raised by the whistleblower, but says Mr Waweru contravened rules on reporting and confidentiality.
“With respect to the preparation of the of the 2015 financials and the allegations raised in the email dated September 9, 2016, it appears Mr Waweru was in contravention of the code of ethics as provided for by the Institute of Certified Public Accountants of Kenya (Icpak),” reads the forensic audit report seen by the Business Daily.
In a rejoinder however, Mr Waweru defended his decision to write to Shelter Afrique’s financiers such as African Development Bank, European Investment Bank, French development agency Agence Française de Développement, German Reconstruction Bank (KfW), and Islamic Corporation for Development.
“As head of finance, I assert that lenders have taken the biggest / highest risk in the institution, are main stakeholders and therefore not third parties and I felt I had an obligation to inform the lenders, especially the ones that I had been involved in seeking funding from,” Mr Waweru said in a statement.
Shelter Afrique’s board of directors meet in Nairobi on Tuesday for an extraordinary sitting to discuss and adopt the Deloitte forensic audit report, and seek ways of raising fresh capital for the cash-strapped lender.
Kenya’s accounting watchdog requires bookkeepers to recuse themselves from preparing financial statements they think are cooked; and that audit information should not be disclosed to persons outside the organisation.
“Where it is not possible to reduce the threat to an acceptable level, a professional accountant in business should refuse to remain associated with information they consider is or may be misleading,” reads section 320 of Icpak’s code of ethics for professional accountants.
Mr Waweru however says he believes “the issues raised would have been hushed up and there would have been no investigation or serious follow up as have been the case with the concerns raised by staff in anonymous emails to the board in the past.”
The Deloitte report says Mr Waweru had raised multiple queries to the board including concerns on inadequate loan loss provision, queries on loan swaps for non-performing loans, and complaints on discrepancies on Shelter Afrique’s loans software platform.
The auditors have recommended disciplinary action against managing director James Mugerwa for conflict of interest in doing business with the lender he heads, staff harassment, and blowing up $7,845 (Sh784,500) in advances he couldn’t account for.
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