Doing Business in Kenya - RSM International

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6.0 ACCOUNTING6.1 Statutory Framework Governing FinancialReporting in KenyaIn Kenya, the main legislation governing companies, including financial reporting isthe Companies Act. However, there are other legislations that impact on financialreporting. These deal with specialised sectors such as insurance, banks, retirementbenefits schemes and listed companies.The Companies Act requires all limited liability companies to prepare and keepproper books of account as are necessary to give a true and fair view of the state ofthe companies’ affairs. The Act further requires companies to lay before an AnnualGeneral Meeting a profit and loss account and a balance sheet, and also prescribesthe contents of these.With respect to audits, the Act requires companies to appoint auditors who must bepractising members of ICPAK and who meet the criteria for an auditor as laid outin the Accountants Act. The Act further specifies that the auditor’s report shouldappear as an annex to the profit and loss account and balance sheet and prescribesthe contents of the auditor’s report.6.2 Financial Reporting and Auditing StandardsICPAK, which is the regulatory accountancy body, requires that all financialstatements must be prepared in accordance with International Financial ReportingStandards (IFRS) or International Financial Reporting Standards for Small andMedium Enterprises (IFRS for SMEs) framework. Some legislation like the BankingAct has enshrined this requirement in the statute. ICPAK also requires that all auditsare to be carried out in accordance with International Standards on Auditing (ISA).The definition of an SME in Kenya as formulated by ICPAK is an entity:• That does not have public accountability;• That publishes general purpose financial statements for external users (e.g.owners not involved in day to day management, KRA, existing and potentialcreditors, credit rating agencies);• Whose debt and equity instruments are not traded in the public market (adomestic or foreign stock exchange or an over-the-counter market); and• That does not hold funds in a fiduciary capacity for a broad group of outsidersas one of its primary businesses such as banks, credit unions, insurancecompanies, securities brokers/dealers, mutual funds and investment banks.70DOING BUSINESS IN KENYA
In the context of Kenya, the Council has designated the following entities as publiclyaccountable and therefore cannot use IFRS for SMEs as a framework for externalreporting:• Companies whose debt or equity instruments are traded in a public market orare in the process of issuing such instruments for trading in a public market;• Banks and building societies;• Savings and credit unions including SACCOs;• Insurance companies;• Retirement benefit schemes;• State owned entities including state funded parastatals;• Mutual funds;• Investment banks; and• Stock brokers.All other entities not listed above and preparing general purpose financial statementsfor external users including those that meet the definition of SMEs above may optwhether to comply with full IFRS or IFRS for SMEs and should indicate this in theirfinancial statements.DOING BUSINESS IN KENYA71
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2.0 General2.1 IntroductionKenya li
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Kenya Tanzania Uganda Rwanda Burund
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A huge chunk of the Act regulates m
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• Stamping of the Memorandum of A
Page 19 and 20: the Registrar within a statutory pe
Page 21: 3.2.3 Thin CapitalisationThin capit
Page 24 and 25: Where a business is carried on or e
Page 26 and 27: territory or domestic market. Motor
Page 28 and 29: • Unrealised foreign exchange los
Page 30 and 31: 4.2.6 Business with Non-Resident Pe
Page 32 and 33: Installments Due Date RateNon-Agric
Page 34 and 35: The current Personal Income Tax rat
Page 36 and 37: c) Housing• The higher of market
Page 38 and 39: partnership in which the husband or
Page 40 and 41: (1) East African Community partner
Page 42 and 43: Where the taxpayer still disputes w
Page 44 and 45: The VAT rates applicable in Kenya a
Page 46 and 47: 4.8.4 De-registration and Disposal
Page 48 and 49: • Payment is received for all or
Page 50 and 51: 4.8.7 Records, Invoices, Credit and
Page 52 and 53: A credit note should be serially nu
Page 54 and 55: However, where a motor vehicle or o
Page 56 and 57: Where there is no tax payable a ‘
Page 58 and 59: granted or is partly granted, the b
Page 60 and 61: • Airtime on cellular mobile phon
Page 62 and 63: Transit VisasThese are visas requir
Page 64 and 65: Class K is for persons who have an
Page 66 and 67: 5.3.2 WagesAlthough the Employment
Page 68 and 69: NSSF provides the employee with a l
Page 72 and 73: 7.0 INTELLECTUAL PROPERTYRIGHTSKeny
Page 74 and 75: Years 1 Shs 1,000Year 2 Shs 1,500Ye
Page 76 and 77: 8.0 Listing Rules8.1 The Capital Ma
Page 78 and 79: • At the date of application, the
Page 80 and 81: 8.3 Payable FeesCompanies pay an in
Page 82 and 83: 9.0 Investing in Kenya9.1 General I
Page 84 and 85: 9.3 Foreign Ownership of Shares and
Page 86 and 87: Contact Details - RSM AshvirRSM Ash
Page 88 and 89: Appendix of Acronyms used in the Bo
Page 90: Notes90DOING BUSINESS IN KENYA
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