A case for minimum fee guidelines for accountants, auditors

Professional services require regulation to protect the public and consumers of such services.

The regulation ensures adherence, by practitioners, to professional standards and ethics.

In Kenya, lawyers, doctors and engineers all have gazetted guidelines on fees that they are required to charge for the various services they offer. Unfortunately, accountants have not been able to regulate the minimum fees chargeable by the auditors and accountants due to a lack of enabling legislation and more recently, due to an objection by the Competition Authority, which has cited consumer protection and threats to healthy competition.

There are various reasons for the objection to the attempt by the Institute of Certified Public Accountants of Kenya (Icpak) to set the guidelines to bring into effect the remuneration order as provided for in the Accountants Act No. 15 of 2008.

While consumer protection is a justified ground to ensure they are not exploited, it is a concern mitigated by minimum fees that are considered fair and consistent with the required quality - just like in other jurisdictions.

On limiting competition, professional services for accountancy can only be provided by those who qualify as defined in the Accountants Act 2008.

Qualified members are only guided on minimum fees to guarantee quality and ensure they comply with the international standards as prescribed by the International Federation of Accountants.

Accountants have argued that without regulation of the fees charged, quality is compromised as price undercutting emerges with little or no regard for the expertise, time and technology required to deliver services.

A key concern for Icpak has been the quality of services offered in an environment where the price quoted is considered a more important factor than the technical competence required to perform a given engagement.

A case in point is when an entity worth Sh30 billion is audited for a fee of Sh500,000.

From a cost perspective, that is music to the ears of the consumer, but let us unpack the fees.

For a start, the cost of professional indemnity for an opinion of such magnitude is huge.

The risk the entity has exposed Sh30 billion to has to be reviewed and it is enormous; then the human resource and technology required to offer assurance on the risks and security of software in place does not come cheap.

These technical aspects when put together would lead one to question the quality of service and assurance obtained for such a low value of fees charged.

The author is a council member of Icpak and managing partner Bon & Drew Associates. The views expressed here are personal and may not necessarily reflect those of Icpak