The Accountant-Jan-Feb 2017

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.
There 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.
Then 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;
The 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.
The 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. The 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 2017 3