We thank you for your ongoing support for impoverished children in Kenya through Friends of Ngong Road (FoNR). In 2016 we faced the challenge of a theft by the Ngong Road Children Association (NRCA) Executive Director and we worked hard to keep you apprised as we worked through that issue. Today we are pleased to provide an update on the results of our activities to strengthen governance and financial control in Kenya.
NRCA has now received a “clean” audit opinion on 2017 financial results from Crowe Horwath, the Kenyan auditor for NRCA. Sammy Anunda, lead auditor has shared a summary of their findings which amount to, in Sammy’s words, “…normal housekeeping issues that management has expressed commitment to address.” He recognized NRCA’s significant improvements in internal controls through creation of an improved procurement process and minimization of cash handling. Crowe Horwath noted that there are no specific high-risk findings to bring to NRCA’s attention.
I wanted to update you on the changes we have made to NRCA’s financial infrastructure that led to this clean audit.
Independent Audit by a Qualified Firm
In 2015 FoNR insisted on the replacement of the existing auditor, a small local CPA firm engaged by the former NRCA Executive Director, with Crowe Horwath, an internationally recognized public assurance firm, to audit NRCA in Kenya. In the March 2016 audit exit interview, we learned that money had probably been stolen, and this conclusion was corroborated by results of a forensic audit in April 2016. Subsequently, three employees including the former executive director were placed on leave prior to the forensic audit and then terminated in May 2016.
Outsourced Accounting to a CPA Firm
After an RFP process, in August 2016 NRCA outsourced accounting to KKCO East Africa, a third party accounting firm in Kenya. KKCO helped NRCA establish sound internal control processes and is responsible for payroll, accounts payable, reconciliation, financial statement preparation and tax management for NRCA. This has added oversight and controls to the financial practices in Kenya, as well as independent insight into best practices.
In September 2016, NRCA created a structured procurement program with support and oversight from KKCO. A procurement committee and policies were created, instilling discipline into the process of making significant purchases of goods and services needed to deliver the program. Acquisitions for items such as uniforms, books, office equipment and services are approved by a finance committee after the procurement team has collected three independent bids and reviewed additional qualitative elements such as conflicts of interest with potential providers.
Stronger Governance in Kenya
Throughout 2016, the NRCA board successfully recruited new volunteer members. They meet monthly and have taken a more active role in oversight of program activities than the previous board. NRCA board members include:
Rajpreet Bains is the NRCA board chair and owner of a human resources consulting firm in Kenya. Rajpreet was trained in the UK, bringing extensive human resources leadership experience. She has been instrumental in recruiting new board members.
Judy Nyaga is the Regional Head of Subsidiary Governance for Standard Chartered Bank in Africa.
Robert Murimi is the Marketing Director and Chief Trainer at Impact Change, Ltd., a management training company.
Anupa Sanghrajka was trained at the London School of Economics and worked in the UK for several years at KPMG. Upon returning to Kenya, she assumed leadership of a segment of a family-owned business that operates in the home construction industry. She takes the lead in Kenya for financial review.
Steve Makimei owns an insurance agency in Kenya and serves on the boards of directors of two schools, bringing thorough understanding of Kenyan education.
Qualified Personnel Experienced in NGO Leadership
Also in August 2016, the board chairs of FoNR and NRCA interviewed and hired a new program director, Maureen Mulievi. Maureen came to NRCA from Planned Parenthood Global where she managed programs in East Africa. She has brought integrity, effective NGO leadership skills and clear commitment to the mission.
Enhanced Oversight by Friends of Ngong Road
In 2017, we created a finance committee to govern and oversee financial activities in Kenya. Committee members include the partner at KKCO (NRCA’s accounting provider in Kenya), the CFO, treasurer and accountant of FoNR, board members from both FoNR and NRCA and the program director of NRCA. The committee meets monthly to review actual results versus budget, major procurement requests from the NRCA procurement process, planned funding and necessary adjustments, potential control issues and proposed remediation plans.
To further strengthen our processes, FoNR hired a part-time, consultant CFO with experience working in the non-profit sector in the U.S. and internationally to ensure effective implementation of financial controls in Kenya and to monitor progress on audit findings from 2015 and 2016. She got up-to-speed on organization processes in September through November 2017 and spent ten days in Kenya in December 2017. During her seven month assignment she:
Reworked the NRCA budgeting and financial reporting process to more closely mirror current management practices in Kenya.
Strengthened the documentation and review processes for all key expenditures in Kenya, in which invoices are put on a shared drive and U.S. partners have visibility into them.
Established electronic access to all financial tools in Kenya for U.S. partners to enable transparency and oversight of financial activities.
The clean audit results of NRCA’s 2017 finances are a welcome indicator that our leverage of highly qualified professional accountants and auditors, improved controls in Kenya and oversight from the U.S., engagement of experienced NGO leadership and more capable governance are working. We believe the environment now ensures all of your contributions will be devoted to the program you have so faithfully supported over the years.
We value your continued support and welcome any questions.
Amy K. Johnson
Chief Financial Officer and Board Member