What keeps Safaricom auditor on toes? : The Standard

Safaricom may be the biggest company in Kenya that is hated and loved in equal measure, but the firm’s systemic importance to the economy, especially on M-Pesa cannot be underestimated. But who is the face of managing the risk in the company that is too big to fail? Financial Standard talked to CPA Denish Osodo Director Internal Audit and Institute of Certified Public Accountants of Kenya (Icpak) National Vice-chairman to get what keeps the auditor on his toes at Safaricom Block 3. What does your everyday job entail? I have worked in Safaricom since 2013. Before that, I worked at PwC for many years building an audit career. In May every year, internal auditors celebrate the global audit awareness month where we let the public appreciate what internal auditors do and what auditors do not do. There is quite a bit of confusion as to what we do.  The big split is that external auditors report to shareholders while internal auditors report to the board, those in charge of running the company. Increasingly, the internal audit role is becoming more important as external auditors mainly focus on financial risk which is an important thing but one aspect of risk.  Entities fail for many other reasons other than financial reporting risk. Speaking of risks, Safaricom is big and you appreciate the extent to which you are systemic how do you handle that pressure?

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We recognise where we are, how we influence the daily lives of people. It is about a woman in Sololo, Moyale, trying to send out money to a sick patient and it must go to the right person.   It is about a girl in Homabay going on the internet for the first time on their phone to explore their world. It is about providing solutions like M-Tiba or Digifarm allowing farmers to access fertiliser, it is about someone trying to get school fees for their child and borrowing on M-Shwari or Fuliza to complete a transaction.    We also recognise the significant impact which we play in the economy because we connect people and businesses, so if we are down we know some other businesses will be down as well because they heavily depend on us so maintaining up-time of the system is a core thing that we must do every day. We must over-invest even if it is inefficient we must overinvest to ensure there is no single point of failure. We recognize the heavy responsibility we carry for our customers and our country. We are increasingly seeing failure in corporate spaces in Kenya one day you are big the next day you are gone yet these companies were being audited. What do you think auditors miss? The biggest risk we face in this country is a governance risk. For example, a lot of organisations are just poorly governed by design or default and as a result of that risk, by the time the external auditor picks it up, it is already a disaster.   But if you have a strong internal audit team you may be able to stop them from occurring much earlier because internal auditors continue to do their work they do not wait for financial cycles. They deal with people risk, culture risk and system risk. People put so much hope in audited financials. Why is it so easy for management to hide practices that harm corporates? There is an expectation gap that we accountants need to explain to the public and get a way to cure it. The auditors audit accuracy of financial statements, they check whether the financial statements are fairly stated.  That is why there was this misnomer about how comes companies that are winning theses financial reporting awards like Imperial Bank were going down.  Because financial reporting has nothing to do with how you run a company, it is what you report. A lot of companies have right financial statements and still go down, business risks and challenges and the biggest risk which we are not auditing currently and we need to as well as governance risk. It is just poor leadership and conflict of interest that messes up our organisations.   You get an owner of a business has brought in new shareholders and is trying to play the other people or am a supplier somewhere and I want to supply this company. That is not a financial issue, it might or might not show up in the financials but it does not mean the firm will go down.

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Icpak as at some point reviewing auditors of 16 companies that had gone bust, why is there so little to show for it? To serve a public purpose, any process should be fast and efficient. I think it is time as a country we need to do justice not just within Icpak but the whole judicial process, we need to have a timeline for economic crimes.

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SafaricomDenish OsodoM-Tiba