YOUR VIEWS SHARE YOUR VIEWS Email: accountant@icpak.com Address: ICPAK, CPA Centre, Thika Road P. O. Box 59963 - 00200 Nairobi Kenya 2 JANUARY - FEBRUARY <strong>2017</strong>
EDITORIAL Dear Reader, Happy New Year! With effect from 31st December 2016, ISA 701 requires the description of - Key Audit Matters (KAM) to be tailored to the facts and circumstances of the individual audit engagements and the entity. This will provide relevant and meaningful information to intended users of the auditor’s report. It is however expected that KAM will vary in terms of the number and selection of topics addressed and the nature in which they may be described. Unless law or regulation prescribes otherwise, when KAM are communicated, auditors are required to include certain introductory language under the heading Key Audit Matters in a separate section of the auditor’s report. Our cover story provides in-depth information on this. A derivative security is generally referred to as a financial contract whose value is derived from the value of an underlying asset or simply underlying. <strong>The</strong>re are a wide range of financial assets that have been used as underlying, including equities or equity index, fixedincome instruments, foreign currencies, commodities, credit events and even other derivative securities. Depending on the types of underlying, the values of the derivative contracts can be derived from the corresponding equity prices, interest rates, exchange rates, commodity prices and the probabilities of certain credit events. Find these facts in the economy segment where we discuss the role of commodities and derivatives markets on Kenya’s economic growth. Currently several NSE listed firms are looking for a strategic investor or issuing right issues to raise the working capital level. A positive cash flow from operations implies that a firm was able to generate enough cash from continuing operations without the need for additional funds and shall give high returns to the shareholder. Some firms created this through dividends payment freezing. A negative cash flow from operations indicates that additional cash inflows were required for day-to-day operations of the firm/s. Find this report in Finance and Investment. In another article under this segment the author says that when informing to an audience that they can have profits but no money in the bank or incur losses and have money in the bank, the participants are astonished. <strong>The</strong>n on pointing out to a new venture business owner that profits do not equate to salary, they are mystified. Read it; it is a captivating story. In Public Policy, we discuss strengthening the Office of the Auditor General. Significant attention is being given to security apparatus of the country (in the past). This is done in order to secure our borders and maintain law and order internally - including shutting out oversight agencies from policing them; <strong>The</strong> National Assembly is not spared, ostensibly due to confidentiality. Under the 2010 constitution, the Office of the Auditor General has been mandated to audit all public institutions. In order to discharge this role in an effective way, sufficient funds should be allocated to protect public interest. Any organization needs good management for long-term success and efficient operation. Energy management is no different. However, the management of energy is often neglected, although there is considerable potential to save energy and reduce costs. At the same time, there is increasing pressure from rising energy prices, climate change legislation and the need to be seen to be environmentally responsible by customers and stakeholders. Saving energy makes business sense, and having a structured, co-ordinated and integrated approach maximizes these benefits. However, without good energy management, cost-effective opportunities can be easily overlooked. We reveal more in the environment section. It is said that the longest journey in the world begins with a single step. <strong>The</strong> Financial Reporting (FiRe) Award was launched in Kenya in 2002 and is today believed to be the most prestigious and coveted award in East Africa for Financial Reporting. <strong>The</strong> promoters of the FiRe Award were delighted to mark the 15th Anniversary of the Award whose 2016 theme was; Accountable governance for excellence and reliability in financial reporting in East Africa. We have a comprehensive analysis of the latest edition of this event. Barclays Bank of Kenya was declared overall winner. Additionally, Barclays won in the banking, listed, governance and in the International Financial Reporting Standards (IFRS) categories. It is a delight to win the FiRe Award whose value and popularity continues to be felt beyond its borders. In the health segment, we discuss allergies. As an allergy sufferer you should take control over the food you eat. Either make a list or track of the foods you are allergic to and ensure you exclude them from your diet. Consume foods that you have no trouble with and let them be as natural as possible. As often as possible, cook your own food and when you go to restaurants, make certain that the ingredients included in the food you are going to eat, agree with your system. Enjoy these wonderful articles plus all your regular features and have a Blessed and Prosperous New Year! Mbugua Njoroge Editor JANUARY - FEBRUARY <strong>2017</strong> 3