Wahasibu Auditors LLP

Auditors’ forms part of the persons who manages or controls the activities of a licensed or a
regulated person.1 A duty is posed for one to provide an annual audit report within 90 days after
the end of every financial year an annual report. An auditing firm has the responsibility to
prepare an audit that is accordance with the accounts of the regulated persons. In the course of
this contractual obligation, they are obligated to report a matter in writing to the authority of a
serious irregularities that have occurred.2

A market intermediary through an engagement letter sets the powers and duties of the external
auditor.3 The auditor has reasonable access to all accounting records of the market intermediary
and may request any information whenever necessary. The Auditors are posed with the duty of
examining the financial statements before preparing a report. 4 Furthermore, they have a duty to
ensure that the financial statement is true and fair. The financial statement should reflect the true
and fair view of the profit or loss of the market intermediary. 5 The auditing firm has to submit a
report that it has been audited in accordance with the international standards on Auditing in his
report.6

The whistleblower having the privilege to reporting a misconduct to the capital markets
authority, wrote that prior to auditing, Ms. Whistleblower informed her immediate supervisor the
anomalies which in return assured her of looking into the matter. 7 The misconduct that can be
reported include capital markets fraud. 8 The Capital markets Act further provides that the fraud
entails making or publishing any statement, promise or forecast which is misleading, false or
deceptive.9

The legal action against Wahasibu Auditors LLP shall constitute negligence and breach of
contract. The auditing firm is under a contractual obligation to provide an auditing report that is

1
Capital Markets Act of 1989 CAP 485A, Section 2
2
Ibid Section 18J (2)
3
The capital markets (conduct of business) (market intermediaries) regulations, 2011 sec 42
4
Ibid section 43
5
ibid
6
Supra note 1 above Section 30GA (2)
7
The Capital Markets (Whistleblower) Regulations, 2022 Section 5
8
Ibid Section 5(2)(c)
9
Supra 1 above, Section 32H
true and failure to this constitutes to an offence. The limited liability partnership is an external
auding firm that is tasked with providing examination on the financial report.

The other potential breach is that of negligence having the third element of damage suffered is
yet to be occasioned. The anomalies that were later confirmed poses a high risk to the market for
the innocent players. A duty exists upon the auditing firm to examine, they have indeed failed to
examine thus posing a risk of damage.