KCB Group #ticker:KCB will this Thursday replace KPMG Kenya with PricewaterhouseCoopers (PwC) as its external auditor, dealing a blow to the consultancy after it lost Absa Kenya job last year.
The changes will now hand PwC audit control of Kenya’s top two banks — KCB and Equity Group #ticker:EQTY. Equity dropped Ernst & Young for PwC in 2017.
KCB audit job has been among the highest payers, with remuneration paid by the lender amounting to Sh55 million in the financial year ended December 2019.
Absa Kenya last year also dropped KPMG after two years of auditing its books, dealing it a blow of annual audit fees of between Sh32 million and Sh40 million.
KPMG’s credibility was put to question over work done for controversial Gupta family, which faced corruption investigation in South Africa. Absa Group, the parent firm of the Kenya unit, also dropped it.
Top banks’ audit jobs are the most lucrative and are usually shared among the Big Four auditors — PwC, Deloitte, EY and KPMG.
For instance, PwC made Sh54 million for auditing Safaricom in the year to March 2019 yet the telco’s profitability is nearly 2.5 times higher than that of KCB. It made Sh39.6 million for auditing East African Breweries.
KCB has spent Sh333.05 million on audit remuneration for the last nine years that KPMG has been its principal auditor.
Part of the payment has been going to PwC, Deloitte and Ernst & Young that have been auditing some of KCB’s subsidiaries in the region.
KCB board is set to recommend to shareholders to endorse PwC as new auditors in the virtual annual general meeting set for this Thursday.
“To appoint Messrs PwC, Certified Public Accountants, as the new Auditors of the Company in place of KPMG, Certified Public Accountants whose term expires at the end of this meeting,” reads AGM notice in part.
This will offer PwC a huge revenue boost given that it has historically been auditing National Bank of Kenya alone but will now extend to KCB.
KPMG is leaving at a time the acquisition of NBK by KCB saw audit fees jump from Sh45 million in 2018 to an all-time high of Sh55 million last year.