The Accountant-Mar-April 2017

EDITORIAL
Dear Reader,
Kenya has been ranked among
the most unequal societies as
the rich get richer and the poor
get poorer. The concept behind
it is a theoretical process
called “wealth concentration.” People who
already hold wealth have the resources
to invest or to leverage the accumulation
of wealth, which creates new wealth. The
process of wealth concentration arguably
makes economic inequality a vicious cycle.
Economy allocates income and wealth,
which creates winners and losers. That’s
OK; the challenge however, is finding
the right balance. It is clear that overall
progress remains slow and uneven;
too many Kenyans remain caught in
downward spirals of poverty, insecurity
and marginalization and only a few people
benefit from the country’s growth trend
and rising geo-strategic importance. It
has in addition been noted that too much
of Kenya’s enormous resource wealth
remains in the hands of narrow elites and,
increasingly, foreign investors without
being turned into tangible benefits for its
residents. Extreme disparities of income
are slowing the pace of poverty reduction
and hampering the development of broadbased
economic growth. Disparities in
life-chances – for health, education and
participation in society are preventing
millions of Kenyans from realizing
their potential, holding back social and
economic progress in the process. Growing
inequality and the twin problems of
marginalization and disenfranchisement
are also threatening the country’s prospects
and undermining the very foundations of
its recent success… find out more in the
cover story.
In the work place segment, we bring you
a feature on transformational leadership.
Transformational leadership is where a
leader works with subordinates to identify
needed change, thus creating a vision to
guide the change through inspiration
and executing the change in tandem with
committed members of a group. With
transfiguration leadership the main goal is
to develop the followers into future leaders
either in business or job industry and it
entails understanding the strengths and
weaknesses of various employees/followers
in order to align them to the right tasks
that optimize their performance; it is a
good read.
It always seems that the ideal way to grow
plants is to plant them in soil. However,
substitutes have been found to posses
certain advantages. The ‘modern trend’
of planting in water has been gaining
currency for a while now even though it
has been in existence in certain countries
for many years. South China, Thailand and
Indonesia who cultivated and farmed rice
in paddy fields in combination with fish
are cited as examples of early aquaponics
systems. These polycultural farming
systems existed in many Far Eastern
countries. Aquaponics consists of two main
parts, with the aquaculture part for raising
aquatic animals and the hydroponics part
for growing plants. Aquatic effluents,
resulting from uneaten feed or raising
animals like fish, accumulate in water
due to the closed-system recirculation of
most aquaculture systems. The effluentrich
water becomes toxic to the aquatic
animal in high concentrations but this
contains nutrients essential for plant
growth. Although consisting primarily of
these two parts, aquaponics systems are
usually grouped into several components
or subsystems responsible for the effective
removal of solid wastes, for adding bases
to neutralize acids, or for maintaining
water oxygenation. Read more about
this interesting topic in the environment
segment.
In the economy slot, the writer discusses
corporate bond market and economic
growth. There has been an upsurge in
bond market trading in Kenya since the
advent of government infrastructure
borrowing. Bond markets as transferable
debt securities have increased substantially
in the last decade in Kenya. However, there
are concerns over whether or not bond
market trading has any significant effect
on the Kenyan economy. Bond market
is one of the major sources of finance to
government and corporate firms in both
developed and developing countries. To
this effect, people in academics and policy
makers have focused extensively on the
developmental impact of bond market on
the economic growth process of countries.
Kenya, has witnessed rapid and remarkable
economic growth over the past two
decades. You will find interesting insights
in this story.
Meanwhile, fraud detection and control is
our focus in finance and investment. What
is the risk or likelihood of a fraud occurring
in your organization? This is a more
difficult question to answer than one might
think. In the standard audit reports that
accompany corporate financial statements,
the auditor’s responsibility for detecting
fraud is not discussed. Yet whenever an
accounting deception is uncovered, one of
the first questions investors ask is, “Where
were the auditors?” Capital Market
Authority has introduced new guidelines,
which the auditors must highlight beyond
their opinion; this will go a long way in
protecting investors’ wealth and creating
confidence in the market.
In the financial reporting and assurance
section, the author, in discussing the role
of auditors during these trying times of
corruption, says auditors can actually help
to stem graft by enhancing compliance
with policies, laws and regulations. Even
though these are not the primary roles of
an auditor, they can engage management
in understanding the laws, policies and
regulations in place. They can in addition
ensure they adhere to them. Working
with regulatory bodies can also enhance
management compliance and strengthen
ties between the regulatory bodies and
management.
We bring you these interesting articles,
along with our regular features.
Mbugua Njoroge
Editor
MARCH - APRIL 2017 3