Auditors board in messy licensing row

The Public Accountants and Auditors Board (PAAB) is embroiled in a bruising wrangle with two clients that sought to register as a firm, but had their application turned down on technicalities which one of the parties has dismissed as baseless, further claiming some officers of the board demanded a US$15 000 bribe to approve their application.

Officers implicated in the bribery claims are Admire Ndurunduru and Donald Mangenje.

In a letter to the affected parties, PAAB said in its preliminary investigations, Ndurunduru and Mangenje unequivocally denied soliciting for or being offered any bribes to register clients as public accounts and auditors.

PAAB dismissed the bribery claims from Samuel Makuvire and Last Matema, insisting the said officers had acted professionally in terms of regulations governing the accounting and audit profession.

The accounting and auditors board, a statutory entity that regulates the accounting profession in Zimbabwe, said recently it was keen on the matter being investigated by the Zimbabwe Anti-corruption Commission (ZACC) after the aggrieved clients reportedly indicated that the matter had been reported to the country’s anti-graft authorities.

PAAB said in July 2023, it received an application to register as a firm of registered public accountants and auditors from a company incorporated as Alinial Chartered Accountants.

The application identified Makuvire as the senior managing partner and chief executive and Matema as the other director and registered public accountant in the firm.

“A preliminary assessment of the application revealed some anomalies including the fact that Matema does not hold a practising certificate. The board (also) raised an objection to the name Alinial because the board was aware of the existence of an international network of accounting firms called Alinial Global.

“The board took the view that the use of this name could mislead the public into believing that they were dealing with the international firm or a firm that was somehow affiliated with the international entity.

“Lastly, incorporated entities can not offer audit services in Zimbabwe. These anomalies were pointed out to the applicants,” PAAB said.

In early December 2023, PAAB said Makuvire and Matema made another application, this time under the name Makuvire and Matema Advisory.

The accounts board argued that while the legal form of the application indicated a sole proprietorship, the name of the firm name suggested the proprietorship of two individuals, Makuvire and Matema.

PAAB again stressed that while Makuvire was a registered public accountant, Matema was not.

“The applicant’s status was anomalous as it held out on the one hand to be a sole proprietorship when it was apparent in its application material that it was, in fact a partnership,” PAAB said.

The regulator said its other concern was Matema is not a registered accountant, while he is a partner in the firm.

“Section 26 of the Act prohibits a person, whether directly or indirectly by himself or in partnership or association with any other person, except in accordance with terms and conditions of a valid practising certificate.

“The partnership is therefore prohibited by law from practising. Section 39 deals with practising business entities and sets conditions for them to practise. The conditions are that the partners or directors, as the case may be, must be registered public auditors or public accountant and hold practising certificates and directly control the provision of services,” PAAB said.

In this regard, PAAB said it declined the application for registration by Alinial to operate as a registered firm of public accountance because Matema did not hold a practising certificate.

“The board categorically denies that its decision to decline the application was motivated by reasons that have to do with corruption. The board was properly exercising its duty as a regulator to protect to act in the public interest by ensuring that it registers only those applicants who are qualified to practise.

“Granting the licence under the circumstances would have would have created a risk of services being provided by an unlicensed person” PAAB further stated.

In the case that the affected parties were not happy, PAAB said it had advised the prospective accountants to exercise their right, as provided in Section 40 of the Public Accountants and Auditors Act, and appeal to the High Court.

Through their lawyers Mudimu Law Chambers, Makuvire and Matema argued that they were not only aggrieved by the board’s decision to decline their application but also the process leading up to the decision, which they said was not administratively fair.

“Contrary to your view that Section 26 of the Act is not applicable, we are of the view that all persons listed in Section 19 thereof, including firms, are registrable in terms of Section 26, especially when regard is had to the Interpretation Act (Chapter 1:01), which defines a person to include an unincorporated body of persons, of which firms are.

“Be that as it may, it would have been better if you had forwarded us or advised us of the specific authority in terms of which the board is supposed to proceed with an application by a firm.

“Our clients fail to make sense of your client’s findings on the appropriateness of their proposed name as well as how that finding influenced its decision.

“The board has, in the past and on many occasions registered firms which are sole proprietors and whose names not only suggest the existence of a partnership, but sometimes the names are totally divorced from the name of the firm,” Makuvire and Matema said.

The two alleged PAAB had not told the whole truth. They claimed that since PAA had demanded that the applicants provide affidavits abolishing a supposed partnership between Makuvire and Matema, compliance with the directive was only at the demand of PAAB officers.

“The affidavits were duly accepted by your client and their claim of there being a partnership falls away,” Makuvire and Matema said. They further claimed that the withdrawal of Matema, as a partner, over concerns he was not a licensed accounting practitioner, was inconsequential, as PAAB had previously registered firms in which there were audit and non-audit partners.

“We refer to MNK Chartered Accountants, Reg Number Z10066 and Royal Chartered Accountants Reg Number Z10096 to mention just but a few. This is to let you know that the withdrawal by our clients was done begrudgingly, as they still believe that it had no merit.

“As you will obviously know, Mr Makuvire is a holder of a practising certificate as an auditor. He applied to practice as a sole proprietor. Mr Makuvire being entitled to practise as an auditor and being the one who applied to practise as a sole proprietor under Makuvire and Matema Advisory, there cannot be any fear that audit services may be rendered by an unregistered person. There is no prejudice to your client if our clients are registered under Makuvire and Matema Advisory, as this is not a new thing in the business of your client.

“There are many firms who appear to be composed of partners but, in actual fact, are sole proprietors. For example, Daniels and Richards Chartered Accountants Reg Number Z10074 clearly gives the impression of partnership yet it is a sole proprietorship under Joshua Gondo.

“Sam goes with Mwaturura and Company, Reg Number Z10049, as well as Jack & Field International Reg Number Z10037, which is not an international firm the name suggests. This is to name just a few,” Makuvire and Matema argued.

Makuvire and Matema also dismissed PAAB’s claims that their company website….

They averred through their lawyers that they did a full name search for their initially suggested company name, Alinial, which was then accepted by the Registrar of Companies under the Companies and Other Businesses Act Chapter 24:31 without objection.

“Our clients never purported to provide services similar to those of Alinial Global nor does it purport to be a member of that association. May it be noted by your office that Alinial Global is not a company registered in Zimbabwe nor anywhere on earth.

“Our diligent search has revealed that Alinial Global is an association of firms and not a company as you want to put it. Be that as it may, our clients would like to know the legal capacity in which you purport to act on behalf of Alinial Global. Neither is it an advisory firm,” Makuvire and Mtema said.-ebusinessweekly