To contain the rising inflation and weakening shilling, the Government took appropriate policy action by combination of tight monetary policy and fiscal restraint. The Central Bank of Kenya raised the Central Bank Rate (CBR) from 6.25% in May to 18.00% by December 2011.
How SMPs are Adapting to Change through New Service Offerings and Better Practice Management
How SMPs are Adapting to Changethrough New Service Offerings andBetter Practice ManagementPresenter: Simant PrakashPartner Designate,RSM Ashvir
REVIEWCOMPILATIONASSURANCEENGAGEMENTSAUPASSURANCE REPORT STANDARDLIMITEDASSURANCECONCLUSION(NEGATIVEASSURANCE)ISRE 2400NO ASSURANCE NO CONCLUSION(REPORT ONCOMPILATION)ISRS 4410NO ASSURANCE NO CONCLUSION(REPORT ONFACTUALFINDING)ISRS 4400REASONABLE ORLIMITEDASSURANCEOPINION/CONCLUSIONISAE 3000, 3402,3410,3420
Reviews - ISRE 2400Apply when practioner is NOT the independent auditorof the entityLimited assuranceEvidence gathering to support the conclusion (evidencebased review)Primarily consists of inquiries and analyticsExistence of reliable accounting system and anacceptable financial reporting frameworkIn some cases required by law or regulations when anaudit is not required
Compilations - ISRS 4410No assuranceAssisting management with preparation andpresentation of financial information in accordancewith an applicable financial reporting frameworkUseful in SMEs which have external financial reportingrequirements e.g. to financiers/revenue authoritiesPractitioners involvement increases the userconfidence
Agreed Upon Procedures – ISRS 4400No assuranceFactual findings from performing specifiedproceduresUseful alone or in conjunction with compilations tomeet specific user needs
Assurance engagements International Framework on Assurance engagementsISAE 3000 – Other than audit or review of historicalinformation ISAE 3402 – Assurance reports on controls at serviceorganisation ISAE 3410 - Assurance reports on Green House GasStatements (New*)ISAE 3420 - Assurance Engagements to Report on theCompilation of Pro Forma Financial Information (PFI)Included in a prospectus (New*)
OpportunityRegulatory trends (rotation of audit firms,Independence/conflict of interest) Meet specific needs of SMEs. Buildingpanels/associations to source skill gapsLeveraging technology to provide cost effective servicestailored to needs of SMEsScalability from no assurance to reasonable assuranceConsolidationInvolvement with policy setters in the country
ChallengesRegulatory trends (Audit thresholds,Independence/conflict of interest) Building knowledge specialisation (understandingaccounting framework, industry information andbenchmarking, techniques for alternative offering)Audit scaling (Practioners performing more proceduresthan required)Fee levels (balancing quality and profitability)Availability and retention of quality staff
Better Practice Management Approachibility Confidentiality Understand the drivers of demand for your services (strongbrand, quality work, efficiency, competitive fees) Understand the drivers of price for your services (qualityperception, availability of competitors)Leveraging technology Building the human capital of your firm Understand your client mix and opportunities for increasingyour share of annual client spend
Better Practice ManagementProbabilityoftechnicalsuccessPEARL BREAD AND BUTTERHigh rewardLow reward-but no brainer projectsi.e. low time costOYESTER WHITE ELEPHANTSGood fees but low likelihood of technicalsuccess. Technical breakthrough will paveway for solid fees.Low technical success and low fees.High time cost and difficult to kill theproject in time. Can send companybroke.NPV (Reward)
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