Take charge of your industry, accountants tell Central Bank

Kampala.

Accountancy firms should not be blamed for the mismanagement and closure of financial institutions in Uganda because that is the Central Bank’s work.

According to the leadership of the Institute of Certified Public Accountants of Uganda, the financial industry regulator, Bank of Uganda (BoU), should take responsibility for what is happening in the sector and avoid related problems in the future.

Already, there are attempts to apportion blame for alleged mismanagement and resulting fraud that saw the industry regulator take over the management of Crane Bank before Dfcu bought it earlier in the year.

On the spot is the reputation and quality of audits done by accountancy firms which critics believe are wanting.
This is because before the Central Bank pulled the curtains on Crane Bank, the locally-owned financial institution had, for years, been receiving a clean bill of health from auditors — accountancy/audit firms.

Speaking in an interview early in the week after announcing celebration of the 25th anniversary of the Institute of Certified Public Accountants of Uganda (ICPAU), the institute’s president, Dr Protazio Begumisa, said BoU should strengthen regulation of the industry and improve its team’s capacity to deal with such situations.

He continued: “Closure of any bank is bad for a country and it is wrong for a crime to be happening for 10 years undetected. Competence of staff should be improved and harsh punishment should be imposed instead of pointing fingers elsewhere.”
He also said BoU should investigate its own people and take action against staff that could be involved in the mess unfolding in the banking industry.

Although he did not completely absolve his members, he said they unearthed the alleged mess that some people are trying to blame them for.

The Institute chief executive officer, Mr Derick Nkajja, said most of the alleged crimes happening in organisations are being perpetuated by the management. So they should be the ones who are culpable and not accountancy firms.

In case of doubts, a forensic audit should be instituted, just the way it was done with Crane bank, if deeper analyses and discoveries need to be brought to light.

Regulation
Bank of Uganda regulations require that before it approves financial statements of a commercial bank, an external auditor must have expressed an opinion to show that whatever was audited represents a true and fair view of a bank.

Prior to Crane Bank’s takeover by BoU on October 20, 2016, the external auditors had expressed an opinion on April 29, 2016, that the financial statements were true and fair.

But that, according to Mr Nkajja and Begumisa, does not make the accountancy firms culpable because they work within the scope of work they are given or asked to verify.

An audit is important because it provides reasonable assurance about whether the financial statements are free from factual misstatement and whether the representations therein are from error or fraud.

In an earlier interview with Daily Monitor, Central Bank Governor Emmanuel Mutebille-Tumusiime said although there have been some challenges, the regulator is still on top of the situation. For the case of Crane Bank, he distanced himself from the mess, saying he is not criminally liable.