Kampala, Uganda — The Finance Ministry is considering introducing a policy that sets standard rates for private audit firms that provide services to microfinance institutions.
The Microfinance State Minister, Haruna Kyeyune Kasolo, says the ministry is concerned about the exorbitant costs microfinance institutions are incurring to procure external audit services.
Kosolo notes that they have established that the growth of many of microfinance institutions is being hampered by high costs, part of which are incurred in sourcing external audit services that necessitates setting limits.
According to Kasolo, due to high operational costs, the microfinance institutions are transferring the burden to members through high interest rates on credit facilities hence failing to meet their intended objectives.
He explains that they are working out a policy that will set a maximum cost at which private audit firms will offer services to SACCOs.
According to Kasolo, the ministry has also learnt that some unscrupulous managers are conniving with auditors to cook-up audit reports to cover-up their financial mismanagement practices.
He however, says plans are underway to empower Uganda Microfinance Regulatory Authority-UMRA with an independent audit department to conduct spontaneous audits on SACCO, as a way of curtailing irregularities.
Swaibuh Makumbi, one of the delegates of Masaka Elder's SACCO is optimistic that once adopted, the policy will save them suspicious expenses that are usually negotiated by the audit firms, board of directors and managers.
He also adds that the proposal to have independent auditors sent in by the ministry will also address the syndicate corruption by management bodies who are usually the ones under question.
But Charles Kilibo, a Senior Auditor with Felbright and Company Auditors, who recently audited Masaka Elders' SACCO at Shillings 10 million, noted that fees are charged based on the scope of work available.