This archive report was first published on 23 December 2019.
December 23, 2019, marked a significant shift in the Kenyan auditing landscape as major firms began adopting limited liability partnerships (LLPs) to protect their executives from claims that exceed business assets.
PricewaterhouseCoopers (PwC) is the latest to make this change, joining RSM Eastern Africa, which made a similar decision last year.
According to PwC, the partnership was converted to PricewaterhouseCoopers LLP, a limited liability partnership under the Limited Liability Partnerships Act, 2011, effective December 11, 2019.
Analysts attribute this move to a global trend aimed at protecting partners from increasing regulatory actions and litigation, with major accounting firms facing billions of shillings in fines overseas for professional misconduct.
"The shift to LLPs is a global trend that is now entrenched in the US and Europe. The main advantage of LLPs is that it limits liability for partners," a senior partner at one of the audit firms told the Business Daily.
While insurance covers will still be used, the LLP structure offers an additional layer of protection for executives. The move is in line with global trends, with the United States' Securities and Exchange Commission (SEC) handing down significant fines to major audit firms, including KPMG and PwC.
