Accounting for NGOs and Non-Profits in Kenya: Key Requirements

By Avatechtax Team — Avatechtax Consultancy

Non-governmental organisations (NGOs) and non-profits in Kenya operate under the NGO Co-ordination Act and are registered with the NGO Co-ordination Board. Their accounting requirements differ significantly from commercial companies — and non-compliance can lead to deregistration.

Applicable Accounting Framework

NGOs in Kenya may apply either IFRS for SMEs or the IPSAS framework, depending on donor requirements. Large NGOs receiving foreign funding typically must follow International Public Sector Accounting Standards (IPSAS). Small local NGOs use IFRS for SMEs.

Fund Accounting

Unlike profit-making entities, NGOs maintain fund accounts — separating restricted funds (specific donor grants) from unrestricted funds (general operations). A restaurant fund should not be mixed with an education programme fund. Commingling is a serious audit finding that can lead to donor suspension.

Key Financial Statements for NGOs

Statement of Financial Position (balance sheet equivalent)
Statement of Activities (income and expenditure account)
Statement of Cash Flows
Notes to financial statements including donor grants breakdown

Annual Filing Requirements

NGOs must file audited accounts with the NGO Co-ordination Board annually. KRA exempts qualifying NGOs from income tax but they must maintain their exempt status by filing returns.

Avatechtax audits NGOs as part of our Starter and Professional audit packages. Learn about our audit services.

Accounting for NGOs and Non-Profits in Kenya: Key Requirements

By Avatechtax Team — Avatechtax Consultancy

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