RELIGIOUS ORGANIZATIONS VALUE OFFERING SERVICES

1. Governance Audit

Entails a comprehensive review and evaluation of the religious organization’s governance structures, registration, processes, and practices.

The purpose of a governance audit is to assess the effectiveness, efficiency, and compliance of governance arrangements, ensuring that they support the religious organization’s objectives. Governance audit examines various organization elements including but not limited to;

  • Composition and effectiveness of the board – Evaluates the composition, independence, expertise and diversity of the board members. It also examines on the skills, qualification and experience of the board members.
  • Risk management strategies – We assess the organization’s risk management framework to identify potential risks and evaluate the effectiveness of mitigation strategies. It involves examining processes and systems in place to identify, assess and manage risks through the organization.
  • Ethical practices – examine the ethical standards and code of conduct upheld by an organization. This involves putting particular emphasis on integrity, fairness and responsible business practices. Good ethical practices ensure trust among stakeholders in aligning with societal expectations.
  • Internal control mechanisms – this involves an evaluation of the adequacy of internal controls, risk assessment methodologies and risk mitigation measures.
  • Financial reporting processes – this a review of the financial reporting process procedures to ensure their accuracy, transparency and compliance with accounting standards and regulations. It also involves examining the financial records, statements and transactions in detail.

Why is it important 

It streamlines any matters relating to governance by identifying and addressing any inherent risks associated with the same. At the same time, governance audits provide oversight on all management practices creating certain checks and balances.

Below are the benefits that arise from the governance audit:

  • Improved Accountability and Transparency
  • Improved Board Performance
  • Strengthening of Internal Controls
  • Strategic Alignment and Performance Improvement
  • Enhanced Ethical Standards and Culture
  • Crisis Management and Preparedness

When is it conducted

They are conducted regularly, especially more often in the public sector where the risk of poor governance is inherently high. However, the frequency of the audit generally lies between 1-2 years.

What is the role of the auditors

Examining areas linked to board effectiveness, overall risk management, compliance with both law and any stipulated regulations as well as Internal controls and organizational culture.

It also helps the organization evaluate and enhance their governance structures, ensuring they meet the highest standards of accountability, transparency and effectiveness.

In general, the aim is to provide a comprehensive governance assessment which thoroughly evaluates the governance framework.

2. Financial audits

A financial statement audit is an independent review of an organization’s financial statements to ensure they are accurate and present a fair picture of the organization’s financial position.

The goal of a financial statement audit is to give management, regulators, and other stakeholders confidence that the financial statements are complete and accurate. There are different types of audits that can be done to any organization for instance:

i. Audit of financial statements

ii. Audit of internal control over financial reporting

iii. Compliance audit

iv. System / ICT audit

Why is it important

The benefit of an audit is that it provides assurance that management has presented a ‘true and fair’ view of an organization’s financial performance and position. An audit underpins the trust and obligation of stewardship between those who manage an organization and those who own it or otherwise have a need for a ‘true and fair’ view, the stakeholders.

What’s the role auditors

The role of external auditors is to express an opinion on the financial statements. A rigorous audit process will, almost invariably, identify insights about some areas where management may improve their controls or processes.

In certain circumstances the auditor may be required to communicate control deficiencies to management and those charged with governance. These communications add value to the organization and enhance the overall quality of business processes.

3. Policy formulation and review.

Policy formulation is the process by which organizations develop policies that guide decision-making and action. Effective policy formulation is essential to addressing social and economic challenges and achieving positive outcomes for individual organizations and society.

On the other hand, a policy review is a process that evaluates the effectiveness of a policy and identifies areas for improvement. It can be conducted per each department in the organization and can cover a wide range of policy areas such as:

i. Finance and procurement policy

ii. Human Resource Policy

iii. Governance policy

iv. Transport policy

v. Communication policy

vi. Whistle blowing policy among others

The purpose of a policy review is to inform decision-making and policy development by providing evidence-based insights and recommendations for policy change. Currently the business world is really evolving and there is a considerate new policy every organization must have to adhere to compliance. This includes:

a) Anti-Money Laundering (AML) and Counter Terrorism Funding (CTF).

AML is the process by which criminals conceal the origins of money obtained through illegal activities, such as drug trafficking, corruption, or fraud, by passing it through a complex sequence of banking transfers or commercial transactions. CTF involves providing funds for terrorist activities, either through legal or illegal means.

AML and CTF measures are essential for maintaining the safety and stability of the financial system, protecting societies from the harms of crime and terrorism and this is enhanced through registration with Financial Reporting Centre (FRC). Entities required to be registered with FRC are:

i.  Financial Institutions e.g.: Banks, Insurance, Micro Finance Institutions, Foreign Exchange Bureau etc.

ii. Designated Non-Financial Businesses and Professions (DNFBPs) e.g.: Lawyers, Accountants/Auditors, Real Estate Agents etc.

iii. Other Entities e.g. NGOs, PBOs, Churches, Trusts etc

Our role as auditors on AML & CTF Regulation

Review the organization’s AML & CTF policies and procedures to ensure they align with regulatory requirements. Evaluate the organization’s AML & CTF risk assessment process.

Ensure that the organization has identified and appropriately mitigated the risks associated with money laundering and terrorist financing. Ensure that any corrective actions required by regulators are implemented effectively.

b) Data protection policy

Refers to the practices, guidelines, and legal requirements that organizations must follow to ensure the privacy and protection of personal data. This is governed by the Data Protection Act, 2019, which guides how personal data is handled, processed and stored.

Office of the Data Protection Commissioner (ODPC) is responsible for compliance of the same. The fine for non-compliance is an amount not exceeding five million shillings or imprisonment for a term not exceeding two years, or to both.

Why is data Protection Policy important

A robust Data Protection Policy ensures that personal information, such as names, addresses, financial information, and health records, is safeguarded against unauthorized access, disclosure, or misuse. A Data Protection Policy reflects an organization’s commitment to respecting the privacy and rights of individuals.

It demonstrates an ethical approach to handling personal data. It prevents information of an organization from fraudulent activities, hacking and identity theft which are frequent occurrences with the ever-progressive technological advancement. It also meets legal requirements, reduces risk and enables business to respond to threats.

What’s our role as auditors

Bolster data security measures and ensure that there is adherence to legal requirements and regulatory compliance. Furthermore, they help streamline processes in that the data security audits uncover a significant number of inefficiencies in data management processes. We also enhance customer trust and mitigate potential risks. We will also help in:

i. Formulating a Data Protection Policy

ii. Training the Sacco staff who are all involved in handling client’s data

iii. Register with the Office of Data Protection Commissioner (ODPC)

iv. Acquire a certificate from the ODPC Office.

4. Tax health checks and KRA Representation

Tax Health Check

Tax Health Check entails a rigorous review of the organization’s tax affairs to ensure compliance with the relevant tax laws, identification potential risks and opportunities for tax savings. The process analyses the past tax returns, financial statements, and any other relevant documents to verify that all income, deductions and credits have been correctly reported.

Generally, tax health checks fall under compliance audits and as auditors we carry out a meticulous tax compliance review of all in-house taxes of the organization. The taxes under review include:

  • Income tax
  • Value Added Tax (VAT)
  • Pay As You Earn (P.A.Y.E)
  • Excise duty
  • Withholding Tax

We also provide actionable recommendations on the findings, such as correcting past filings, improving documentation practices, or adjusting tax strategies, advise on legal avenues to minimize tax liability, such as claiming allowable deductions, taking advantage of tax credits, and optimizing the client’s tax position.

Why you should conduct Tax Health Check

To uncover any inherent risks from potential unpaid taxes through omission or commission and make the necessary remedial action ahead of a formal tax audit from Kenya Revenue Authority (KRA). It also helps with future dealings with various taxes based on the recommendations.

When is tax health check conducted

Preferably they should be conducted on an annual basis, especially before the tax season or crucial financial audits. However, regular reviews should be conducted to foster consistent compliance. It is also recommended that Tax Health Checks should be done at least for the previous three years as KRA would at any point in time look for similar period.

KRA Representation

KRA Representation involves where a tax professional, acts on behalf of an individual or business in dealings with the Kenya Revenue Authority (KRA). It is crucial in various tax-related matters, such as compliance, audits, disputes, and general tax management.

For KRA representation we act as the point of contact between the client and KRA, handling all communications and inquiries on the client’s behalf. This includes responding to KRA’s queries, requests for documentation, or notices of assessment.

During KRA audits we provide necessary documentation, explanations, and justifications for the client’s tax positions. In-case where the client has tax disputes with KRA, we engage the authority through negotiations, filing objections, or presenting the case in tax tribunals if necessary.

Ideally KRA representation is prompted when an organization has concerns with the tax authority. It helps in addressing any arising concerns between the two parties.

5. Human Resource Review

This is a comprehensive evaluation of an organization’s human resources (HR) practices, policies, and processes. The purpose of an HR review is to assess the effectiveness and efficiency of HR operations, ensure compliance with employment laws and regulations, and identify opportunities for improvement. Some of the Service offered by the HR are:

  • Employee Engagement Survey: Employees are given a platform to offer feedback on state of their engagement in the organization aspects such as remuneration, supervision, work environment, quality of job, leadership, work/career progression.
  • Job evaluation: Where different jobs are evaluated to determine their richness, completeness & satisfaction. It later informs jobs that may need to be split or amalgamated.
  • Employee screening: Helps ensure the organization gets employees of the highest skill and integrity.
  • Performance Management
  • Training & Development
  • Executive recruitment