Professional Documents
Culture Documents
General Notes:
1. This checklist covers the accounting requirements of the Kenyan Companies Act and is applicable to all
limited liability companies incorporated under the Act and to any other body corporate to which the
accounts provisions of the Act apply. The checklist does not cover the special regulations which apply to
insurance companies or banks (Sch 6 Part III).
2. The checklist is for guidance only and where in doubt reference should be made to the Act itself for more
detailed interpretation.
3. Where this checklist is used it should form part of the working papers and a conclusion should be drawn
indicating that the disclosure requirements have been fully considered as part of the work performed in
arriving at our opinion. Thus additional notes should be attached where difficulties in interpretation have
arisen, indicating the conclusion reached. As an alternative to using the checklist, the auditor may
develop specimen financial statements which comply fully with the financial reporting requirements of the
Kenyan Companies Act, and ensure that the financial statements conform to these specimen financial
statements.
4. In addition to the statutory disclosure requirements consideration should be given to the reporting and
disclosure requirements of International Financial Reporting Standards, and all areas of conflict between
the Act and the standards recorded together with a conclusion on how such conflicts have been resolved.
Ref. to Act Yes / No /
N/A
PROFIT AND LOSS ACCOUNT
1. GENERAL
1.1 Has the Registrar of Companies modified the requirements of the S149(4)
company’s disclosure requirements? 6Sch. 12(2)
2. REVENUE ITEMS
2.1 Company (or group) profit or loss for the financial year of the S149(1)
company or of the company and its subsidiaries. S151(1) + (2)
2.2 Interest paid on debentures and other fixed loans. 6Sch. 12(1)(b)
2.3 Income from investments divided between trade and other 6Sch. 12(1)(g)
investments.
2.4 Auditors’ remuneration including expenses. 6Sch. 13
3. DEPRECIATION
5.1 Amount of the charge for income tax and any other taxation on 6Sch. 12(1)(c)
Ref. to Act Yes / No /
N/A
profits to date.
5.2 Basis of computation of the amount, if any, set aside for income 6Sch. 14(3)
tax.
6. PROVISIONS AND RESERVES
7.1 Aggregate amount of the dividends paid and proposed. 6Sch. 12(1)(h)
7.2 Whether the amount stated is for dividends subject to deduction 6Sch. 14(4)
of income tax.
8. EXCEPTIONAL ITEMS
The extent to which the consolidated profit or loss is dealt within the S149(5)(b)(ii)
accounts of the holding company (where no separate company profit and
loss account is presented).
10. GENERAL
Comparative figures for all items (except in case of the company’s first 6Sch. 14(5)
profit and loss account).
BALANCE SHEET
1. SHARE CAPITAL
2. RESERVES
3.1 The aggregate amount of provisions (other than for depreciation, 6Sch. 6
renewals or diminution in value of assets).
3.2 For each subdivision of provisions:
(a) the source of any increase 6Sch. 7(1)
(b) the application of any decrease, unless used for the
purpose for which the provision was created.
4. LOANS AND DEBENTURES
4.1 Particularly of any redeemed debentures which the company has 6Sch. 2(d)
power to reissue.
4.2 The aggregate amount of bank loans and overdrafts. 6Sch. 8(1)(d)
4.3 For debentures of the company held by a nominee of or trustee 6Sch. 10
for the company:
(a) the nominal amount held.
(b) the book value of the holding.
4.4 The number, description and amount of the company's 6Sch. 15(3)
debentures held by subsidiaries or their nominees.
5. TAXATION
5.1 The basis of computation of the amount set aside for income tax. 6Sch. 11(10)
5.2 The tax equalisation account, and any amount previously set 6Sch. 6(implied)
aside for taxation equalisation now used for any other purpose.
6. LIABILITIES - GENERAL
6.1 The description "secured" against any liabilities of the company 6Sch. 9
secured otherwise than by operation of law on any assets of the
company.
6.2 The net aggregate amount (after deduction of income tax) which 6Sch. 8(1)(e)
is recommended for distribution by way of dividend.
7.1 Particulars (including amounts) of any charge on the assets to 6Sch. 11(6)
secure the liabilities of any other person.
7.2 The aggregate or estimated amount, if material, of contracts for 6Sch. 11(5)
capital expenditure, so far as not provided for.
7.3 Nature of any other contingent liabilities not provided for, if
material, including where practicable the aggregate or estimated
amount of those liabilities.
8. FIXED ASSETS
8.1 The method used to arrive at the amount of the fixed assets 6Sch. 4(3)
under each heading.
Ref. to Act Yes / No /
N/A
8.2 With the exception of assets included in the company's books as 6Sch. 5(1)
at January 1962 for which details of cost and accumulated
depreciation could not be calculated without undue expense or
delay, the method used will be to take the difference between:
(a) the cost or amount of valuation; and
(b) the aggregate amount provided or written off since
acquisition or valuation, as the case may be, for
depreciation or diminution in value in each case showing
the aggregate amount.
9.1 The aggregate amount of shares in subsidiaries (for consolidated 6Sch. 15(2)
accounts, shares in subsidiaries not consolidated).
9.2 Where the financial year of any of the subsidiaries does not 6Sch. 15(6)
coincide with the company's:
(a) the dates on which the subsidiaries' years, ending last
before that of the company, respectively ended, or the
earliest and latest of those dates;
(b) the reason why the company's directors consider that the
subsidiaries' financial years should not end with that of the
company.
9.3 For subsidiaries omitted from group accounts: 6Sch. 15(4)
(a) the reason why the subsidiaries are not dealt with; S150(2)(b)
(b) the net aggregate amount attributable to the holding
company of profits less losses of such subsidiaries both (i)
dealt with this year and (ii) not so far dealt with, in the
company's accounts, both for:
(i) the respective financial years of the subsidiaries
ending with or during the financial year of the
company, and
(ii) their previous financial years since acquisition
(c) any material qualifications in the auditors' report or notes on
the accounts;
(d) if (a) (b) or (c) above are not available, a statement to that
effect.
10. INVESTMENTS - ALL OTHERS INCLUDING FELLOW SUBSIDIARIES
12.1 Basis of conversion into East African currency of assets and 6Sch. 11(9)
liabilities in foreign currencies.
12.2 Disclosures by the directors where in their opinion the realisable 6Sch. 11(7)
value of current in the ordinary course of business is less than
their balance sheet values.
DIRECTORS' REPORT
1. Whether they have obtained all the information and explanations 7Sch. 1
which to the best of their knowledge and belief were necessary for
the purpose of their audit.
2. Whether in their opinion proper books of account have been kept 7Sch. 2
by the company, so far as appears from their examination of those
books, and proper returns adequate for the purposes of their audit
have been received from branches not visited by them.
3.
i) Whether the company's balance sheet and (unless it is framed as 7Sch. 3
a consolidated profit and loss account) profit and loss account
dealt with by the report are in agreement with the books of
account and returns.
ii) Whether, in their opinion and to the best of their information and
according to the explanations given them, the said accounts give
the information required by this ordinance in the manner so
required and give a true and fair view:
(a) in the case of the balance sheet , the state of the
company's affairs at the end of its financial year; and
(b)in the case of the profit and loss account, of the profit or
loss for its financial year.
Or, as the case may be, give a true and fair view thereof subject
to the non-disclosure of any matters (to be indicated in the report)
which by virtue of Part III of the sixth schedule to this ordinance
are not required to be disclosed.
4. In the case of a holding company submitting group accounts, 7Sch. 4
whether in their opinion, the group accounts have been properly
prepared in accordance with the provisions of this ordinance so
as to give a true and fair view of the state of affairs and profit or
loss of the company and its subsidiaries dealt with thereby so far
as concerns members of the company, or as the case may be so
as to give a true and fair view thereof subject to the non-
disclosure of any matters (to be indicated in the report) which by
virtue of Part III of the sixth schedule to this ordinance are not
required to be disclosed.
CONSOLIDATED ACCOUNTS
1. BOOKS OF ACCOUNT
1.1 Every company shall cause to be kept proper books of account in the S147
English language with respect to:
(a) all sums of money received and expended by the company
and the matters in respect of which the receipt and
expenditure takes place;
(b) all sales and purchases of goods by the company;
(c) the assets and liabilities of the company.
2. STATUTORY BOOKS AND RECORDS - This part is included for
guidance only and the auditor has no duty to ensure compliance
with regards for statutory books and records.
2.1 Every company shall keep at its registered office a register of its
directors and secretaries.
2.2 The company shall deliver to the registrar for registration a return of S201(4) and (5)
appointment or change of directors and secretary in the prescribed
form within fourteen days of the appointment of the first directors
and secretary of the company or change of the directors and
secretary.
2.3 The register of directors and secretaries shall be open for inspection S201(6) to (8)
by members and the general public.
2.4 Every company shall in all trade catalogues, trade circulars, showcards S202(1)
and business letters on or in which the company’s name appears
and which are issued or sent by the company shall, subject to
exceptions, state certain particulars in respect of every director.
Register of members
2.5 Every company shall keep a register of members and index at its S112, 113
registered office or at such place as may be notified to the
Registrar of Companies and enter therein the required particulars.
2.6 Every company shall keep at the registered office of the company a S96 to 106
copy of every instrument creating any charge requiring registration
with the registrar and shall keep at such office a register of
charges and enter therein the required particulars.
Every charge must be registered with the Registrar of Companies
within 42 days after its creation or it shall be void.
Minute books
2.7 Every company shall cause minutes of all proceedings of general S145
meetings and of meetings of its directors to be entered in books
kept for that purpose.
2.8 Minute books of general meetings shall be kept at the registered office S146
of the company and shall be open to the inspection of any
member.
Register of directors’ holdings
2.9 Every company shall keep at its registered office a register of directors’ S196
shareholdings in or debentures of the company or its holding or
subsidiary company, or a subsidiary of the company’s holding
company. S88
2.10 Every company shall keep a register of debenture holders at its
registered office or at such place as may be notified to the
Registrar of Companies.
3. ANNUAL RETURNS
Ref. to Act Yes / No /
N/A
Every company shall, once at least in every calendar year, make a return S125 to 129
upto the fourteenth day after the date of the annual general meeting and
file it with the Registrar of Companies within the prescribed time limit (A
certified true copy of the balance sheet, directors’ report and auditors’
report must be annexed to the return of a public company, or a private
company which has a Kenyan public company as a shareholder).
4.1 Every company (other than a private company) registered after 1st S177
January 1962 shall have at least two directors. Every company
registered before 1st January 1962 and every private company
shall have at least one director.
4.2 Every company shall have a secretary. S178, 179
4.3 The directors, subject to certain exemptions, shall lay before the S148
company in general meeting, not later than eighteen months after
incorporation and subsequently once at least in each calendar
year, a balance sheet and profit and loss account made up to a
date not earlier than the date of the meeting by more than nine
months, or in the case of a company carrying on business or
having interest abroad, by more than twelve months.
4.4 Every balance sheet of a company, subject to certain provisos, shall S155
be signed on behalf of the board by two directors or if there is only
one director, by that director.
4.5 The profit and loss account, and, so far as not incorporated in the S156
balance sheet or profit and loss account, any group accounts laid
before the company in general meeting shall be annexed to the
balance sheet and the auditors’ report shall be attached.
4.6 A directors’ report shall be attached to every balance sheet laid before S157
a company in general meeting.
4.7 A balance sheet, including every document required by law to be S158
annexed thereto, which is to be laid before a company in general
meeting, together with the auditors’ report shall be circulated not
less than twenty one clear days before the date of the meeting to
every member, every debenture holder and any other person who
is entitled to receive notice of general meetings of the company.
4.8 Every company shall in each calendar year hold a general meeting as S131
its annual general meeting in addition to any other meetings in that
year and not more than fifteen months shall elapse between the
date of one annual general meeting of a company and that of the
next.
4.9 At least 21 days notice in writing shall be given for a general meeting S133
of the company (other than an adjourned meeting).
4.10 The minimum number of members for a public company is seven S4
with no maximum and for a private company is two, but with a
maximum, excluding employees and past employees, of fifty.
4.11 A director who is required by the articles of the company to hold a S18
specified share qualification shall obtain his qualification within two
months after his appointment.
4.12 No person shall be capable of being appointed a director of a S186, 17
company either if he has not attained the age of twenty one or if he
has attained the age of seventy unless appointed at a general
meeting of which special notice is given.
(This section does not apply to a private company which is not a
subsidiary of a public company).
4.13 Special provisions of companies incorporated outside Kenya S365 to 381
should be complied with where applicable.
5. AUDITORS
Ref. to Act Yes / No /
N/A
5.1 Every company shall at each annual general meeting appoint auditors S159
to hold office till the next general meeting. Notwithstanding the
above retiring auditor, however appointed, shall be deemed to be
re-appointed, without any resolution being passed subject to
certain provisions.
5.2
(a) A person or firm shall not be qualified for appointment as auditor of S161
a company unless he or, in the case of a firm, every partner in the
firm, is the holder of a practising certificate issued pursuant to
Section 21 of the Accountants Act.
(b) None of the following persons shall be qualified for appointment as
auditor of a company:
(i) an officer or servant of the company;
(ii) a person who is a partner of or in the employment of
an officer or servant of the company;
(iii) a body corporate.
Provided that sub-paragraphs (ii) shall not apply in the case of a
private company.
(c) A person shall also not be qualified for appointment as an auditor
of a company if he is, by virtue of (b) above, disqualified for
appointment as auditor of any other body corporate which is that
company’s subsidiary or holding company or would be so
disqualified if the body corporate were a company.
5.3 Special notice is required for a resolution at an annual general meeting S160
for removal of auditors (28 days notice).
5.4 Remuneration of auditors shall be fixed by either: S159(7)
(a) the directors or the registrar whoever appointing; or
(b) the company in general meeting or in the manner
determined by the general meeting.
5.5 The auditors shall make a report to the members on accounts S162
examined by them and laid before the company in general
meeting. The report must contain statements as to the matters
mentioned in the 7th Schedule.
5.6 The auditors have a right of access at all times to the accounts, books S162(3)
and vouchers of the company and to require from the officers of
the company explanations and information as they think necessary
for the performance of their duties as auditors.
5.7 Auditors have a right to attend any general meeting of the company S162(4)
and to receive all notices of and other communications relating to
any general meeting which a member is entitled to receive.