Accountant Journal

MANAGEMENT
By CPA Maroa Julius Mwita
juliusmaroas@gmail.com
IMPORTANCE
OF THE TONE
AT THE TOP
Tone at the top is a word used
both in accounting and auditing
to refer to the attitude of an
organization’s senior leadership
towards internal financial
controls. This concept became popular
during major corporate scandals such as
those affecting Enron, Tyco international,
Adelphia and World com and has
continuously become a global issue.
In Kenya we have heard several
scandals; they include the fall of Uchumi
supermarket, currently the closure of
Kisii branch, closure of some Tuskys
supermarkets outlets, Kenya Airways,
Mumias Sugar Company, Imperial
bank, Dubai bank, Pan paper millers ltd
(Webuye), Akamba Bus Service, several
community financial services that were
initiated by IFAD and recently Chase
bank, to mention but a few. Many have
been put under receiver ship because
of worrying working capital / liquidity
position others asking the government for
bailout. The question is, who is to blame
in this kind of mess, is it the auditors who
audit the books or the management who
prepare the books or both?
Many questions have recently arisen
raising concern on the professional conduct
of auditors who are seen to issue misleading
financial reports and or statements which
tend to be appealing in the short run but
turn out to be an issue in the long run. To
my understanding the role of Preparation
and Presentation of financial statements
lies with the management and not with
auditors. The auditor’s role is mainly to
express an opinion as to whether the
financial statements reflect a true and fair
view with respect to all material aspects.
Of late, the banking industry has
become an issue of concern to shareholders
and depositors with many shareholders
unable to tell the connection between tone
at the top versus corporate failure and
fraud and who to blame for the fall; thus
becoming an agency problem between
4 JULY - AUGUST 2016