KENYA’S FINANCIAL REPORTING SYSTEM FACES SERIOUS TURMOIL WITH NEW INTERNATIONAL STANDARDS

NAIROBI, The Kenyan financial reporting system is likely to be thrown in serious turmoil in two months’ time once the new international accounting system comes into force locally, says the Capital Markets Authority (CMA).

Most companies listed on the local stock market, the Nairobi Securities Exchange, are not likely to be able to comply with the new International Financial Reporting System standard, IRFS 9, which comes into force on Jan 1, 2018.

The CMA Head of Market Development, Justus Agoti, says a task force involving all players in the financial system is compiling a report on corporate Kenya’s preparedness to migrate to the new accounting standard but the clock is fast ticking towards Jan 1, 2018.

With each passing day, it is becoming evident that corporate Kenya will be caught flat-footed by the new IFRS 9 regime.

Policy-makers and accountants in Kenya are not ready to implement the new standard since there are no guidelines to help in its application.

The new system was approved by global accounting bodies in 2014, allowing accounting and financial bodies to test it and generate guidelines several years in advance before it comes into force.

The CMA says the guidelines are expected to be published in Kenya in December 2017, a month before the enforcement of the new standard. Agoti fears the Kenyan capital market is likely to come under sharp pressure if listed companies fail to comply with IFRS 9.

Companies which fail to adopt the new accounting regime are likely to be locked out of the global financial system.

Source: NAM NEWS NETWORK