Barclays Bank of Kenya looks to replace KPMG with EY as external auditors

Drawing on the actions of its parent company Absa, Barclays Bank of Kenya is planning to terminate its relationship with global accounting and advisory firm KPMG, which has been its external auditor for two years. Big Four rival EY is set to take KPMG’s place as auditor for the bank.

The decision is amongst the broad and far-reaching repercussions of KPMG’s involvement in the Gupta scandal in South Africa. Most banking institutions in South Africa – including the four major banks – have since terminated their accounting relationship with the global professional services firm.

Absa was amongst those that dissociated itself from KPMG, a decision that was taken in the wake of the Auditor-General of South Africa offloading KPMG as well. Absa’s subsidiary Barclays Bank of Kenya is now set to do the same, and EY will audit the bank again after 16 years.

KPMG has been auditing Barclays Bank of Kenya since 2017, when it took over from fellow Big Four accounting and advisory firm PwC. Prior to the transition, PwC had been auditing the firm’s accounts for 13 years starting from 2004, having taken over from EY before that.

The Barclays Bank of Kenya account is a lucrative one, exemplified by the fact that KPMG earned a fee of Sh40 million to audit its accounts for a single year. The high rates are increasing competition amongst the Big Four in Kenya, who alternatively manage some of the largest accounts in the country. 

Through government contracts alone, the Big Four made more than Sh180 million over the course of last year, in addition to more than Sh 780 million from auditing private players on the Nairobi Stock Exchange. Having lost the account, KPMG’s roster of clients in the country has reduced to 18.

The decision to replace KPMG with EY will be taken at Barclays Bank of Kenya’s Annual General Meeting due to be held at the end of this month, where stakeholders will have the opportunity to express their views on the matter. This was confirmed by a notice released for the Annual General Meeting.

“The company, having received special notice in this regards, to consider if thought fit pass the following as ordinary resolution: That EY be appointed as the new auditors of the company in place of KPMG Kenya with effect from the end of this meeting,” said the notice.