ADVOKS GLOBAL · KENYA
Microfinance Act
29. Appointment of external auditor
Edition: 2024-12-27 · In force
29. Appointment of external auditor
(1)An institution shall, in each year, appoint an external auditor who shall be a person qualified under section 30 and approved for appointment as such by the Central Bank.(2)The external auditor shall audit the accounts of the institution and shall make a report on the annual balance sheet and profit and loss account to be submitted to the Central Bank.(3)An institution shall not remove or change its external auditor except with the prior approval of the Central Bank.(4)An external auditor shall make a report to the Board of Directors identifying key concerns with respect to the financial condition of the business.(5)An external auditor shall, not less than four months after the end of each financial year, submit an audit report to the Central Bank, on the financial condition of the business.(6)An external auditor’s reports submitted under subsection (5) shall contain information on the—(a)solvency of the business;(b)any violation of prudential standards or a condition imposed on the licence; and(c)any other contravention of this Act.(7)The Central Bank may require an external auditor to undertake the following duties in addition to those provided under subsection (2)—(a)to submit such additional information in relation to his audit as the Central Bank may consider necessary;(b)to carry out any other special investigation; and(c)to submit a report on any of the matters referred to in paragraphs (a) and (b) above,and the institution concerned shall remunerate the auditor in respect of the discharge by him of all or any of such additional duties.(8)If the external auditor of an institution, in the course of the performance of his duties under this Act, is satisfied that—(a)there has been a serious breach of or non-compliance with the provisions of this Act, the Central Bank of Kenya Act or the regulations, guidelines or other matters prescribed by the Central Bank;(b)a criminal offence involving fraud or other dishonesty has been committed by the institution or any of its officers or employees;(c)losses have been incurred which reduce the core capital of the institution by fifty per cent or more;(d)serious irregularities have occurred which may jeopardize the security of depositors or creditors of the institution; or(e)he is unable to confirm that the claims of depositors and creditors of the institution are capable of being met out of the assets of the institution,he shall immediately report the matter to the Central Bank.(9)The Central Bank may arrange trilateral meetings with an institution and its auditor from time to time, to discuss matters relevant to the Central, Bank's supervisory responsibilities which have arisen in the course of the statutory audit of the institution including relevant aspects of the institution's business, its accounting and control system and its annual accounts.(10)If an external auditor of an institution fails to comply with the requirements of this Act, the Central Bank may remove him from office and appoint another person in his place.