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March 26, 2012

Motor dealer sues PwC Kenya over forensic audit

Troubled motor dealer CMC has initiated legal proceedings against PwC Kenya over the outcome of a forensic audit the firm performed.

PwC is accused of failing to comply with generally accepted accounting standards and publishing and distributing a report that allegedly contains ‘material falsehoods’.

The lawsuit is the first against a Kenyan audit firm and was brought by the CMC’s largest shareholder Peter Muthoka. It aims to nullify PwC’s forensic audit, which was conducted late last year.

The forensic audit revealed serious flaws in dealings between the motor dealer and its former logistic services provider Andy Forwarders, concluding that CMC owed Andy Forwarders KES 1.1b ($13,054).                                                                                                                

CMC says the audit was not authorised by its board and is in violation of a memorandum of association.

PwC has denied all charges and argued its report was compliant with materials CMC had provided. 

Earlier this month, CMC’s former auditor Deloitte and a local bank withdrew their services to the company.

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