By Our Reporter
The regulator has directed all non-deposit taking Saccos to maintain their external auditors for another year after Covid-19 scuttled annual general meetings (AGMs) where a change of auditors is usually ratified.
The Acting Commissioner for Cooperatives Geoffrey Njang’ombe has in a circular to all cooperative societies said only those hard-pressed to change auditors should write to him for further direction.
“I hereby direct all cooperative societies to continue to be audited by the auditors appointed by the members during the last general meeting,” said Njang’ombe in a circular seen by the Sacco Review.
Njang’ombe said the move is to ensure continuity of operations in the cooperatives given that AGMs were suspended on March 16 due to imposition of ban on public gatherings to prevent the spread of the infectious virus.
The Cooperative Societies Act requires all Societies to have their accounts audited at least once in every financial year by an auditor appointed at the AGM from a list of approved auditors.
However, the ban on social gatherings has made it impossible for cooperative societies to convene AGMs, given that the Covid-19 caseload is still on an upward trend.
Njang’ombe’s guidance means that the current auditors will be allowed to carry out the next audit in the respective societies for the next financial year, awaiting the ratification during the next general meeting.
The regulator has, however, allowed those societies who still want to go ahead and change auditors to inform him in writing.
“Where a society for its reason seeks to change the appointed auditors due to one reason or another, then the society is hereby directed to seek approval of the Commissioner for Cooperative Development,” said Njang’ombe in the circular.
The onset of Covid-19 has seen regulators of financial institutions issue several guidance notes to help institutions navigate the pandemic.
In July, Njang’ombe also issued directions on the budgets of 2020/2021 Financial Year, which have also not been approved at AGMs as required by the law.
The Cooperatives whose budget had not been approved by the members have been allowed to incur half of the expenditures approved by members in the last year’s estimates.
The move offered a reprieve for the many societies who were facing a spending dilemma after rising Covid-19 cases forced the state to extend the ban on gatherings such as AGMs, where budgets are supposed to be reviewed and approved by members.
However, it also means that the affected cooperative societies will have to operate on limited budgets until they get a chance to hold AGMs.
Section 24(a) of the Cooperative Societies Act provides that for each financial year, “the committee shall cause to be prepared estimates of societies’ income and expenditure including recurrent and capital estimates.”
The budgets are supposed to be approved by societies’ members during AGMs at least three months before the end of the preceding financial year. This falls between April and June.
In March, Njang’ mobe also had to issue circular allowing cooperative societies to pay dividends without holding AGMs.
The move came barely two weeks after Kenya reported its first Covid-19 case on March 13, compelling the government to put measures to limit the spread of the pandemic.
The cooperatives were cleared to pay the dividends and interest on deposits, which will eventually be ratified by members during the next possible date of holding AGM.