Susan Maina is a content writer at Mugo and Company, where she simplifies Accounting, Auditing, and Forensic Audit services with her finance expertise.
LinkedIn >>Table of Contents
1. Introduction to IFRS 10 in Kenya – Why it matters for businesses, SMEs, SACCOs & NGOs
2. What is IFRS 10 – Consolidated Financial Statements in Simple Terms?
3. Scope of IFRS 10 in Kenya: Who Must Consolidate?
4. Brief History of IFRS 10 – Global to Kenyan Adoption
5. Disclosure Requirements under IFRS 10 in Kenya
6. Substantive vs. Protective Rights under IFRS 10
7. The Three Elements of Control in IFRS 10
8. Exemptions from Consolidation under IFRS 10 in Kenya
9. Core Principles of IFRS 10 – The Fundamentals Every Kenyan Entity Must Know
10. IFRS 10 Adoption in Kenya (ICPAK & Companies Act)
11. Why IFRS 10 Matters in Kenya – For Businesses, NGOs, SACCOs & Regulators
12. Quick Case Study: IFRS 10 Application in a Kenyan SACCO
13. Who is Required to Apply IFRS 10 in Kenya?
15. Final Word from Mugo & Company – IFRS 10 Compliance Support in Kenya
16. Disclaimer
If you run a company in Kenya – whether it’s a family business, an SME, a SACCO, or a growing NGO – you’ve probably heard about IFRS 10 – Consolidated Financial Statements.
It sounds technical (and honestly, it is). But don’t worry – you don’t need to be an accountant to understand the basics.
In this guide prepared by Mugo & Company, we’ll break down what IFRS 10 really means for you, why it matters in Kenya, and how to apply it in your organisation.
Avoid IFRS 10 Pitfalls
Book a Compliance Review Today!!Think of IFRS 10 as the rulebook for “who’s really in charge” when one company has ties to another.
For example:
IFRS 10 says:
if you control another entity (you’re the “parent”), you must prepare consolidated financial statements – a single set of accounts that shows the entire group as if it were one big company.
In Kenya, IFRS 10 – Consolidated Financial Statements applies to any parent company.
That means you need to consolidate if:
However, not all organisations need to consolidate—there are exemptions (we’ll cover those in a bit).
In simple terms: if you call the shots in another company, IFRS 10 applies to you.
IFRS 10 didn’t just appear out of nowhere. It’s the result of years of fine-tuning how businesses report their group structures:
| Year | IFRS 10 Development |
|---|---|
|
2002
|
The conversation on consolidation officially started. Standard-setters realized the old rules weren’t clear enough about what “control” really meant.
|
|
2011
|
After almost a decade of debate, IFRS 10 was published, bringing a fresh, principle-based approach to consolidation.
|
|
2013 |
The standard went live globally. From this year, companies around the world – including Kenya – had to follow the new rules.
|
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2014 – 2024
|
Tweaks and amendments came along, especially focusing on investment entities (think private equity funds and similar structures)
|
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2026 |
More changes are expected, particularly around disclosures, so companies will need to be extra clear and transparent in their reporting.
|
In short: IFRS 10 has evolved steadily, and it’s not done yet – so Kenyan companies need to keep an eye on upcoming updates.
In Kenya, IFRS 10 was adopted by ICPAK (Institute of Certified Public Accountants of Kenya) to align with global standards.
When you apply IFRS 10 in Kenya, you must clearly disclose:
Simply put: IFRS 10 wants transparency. It asks you to show who’s behind the curtain so that regulators, donors, and investors can trust your financials.
Not all rights give you control. IFRS 10 separates them into:
| Type of Right | Definition |
|---|---|
|
Substantive Rights
|
These are rights that give you real decision-making power. Example: Owning 60% of the shares and having the authority to approve budgets or appoint directors. |
|
Protective Rights
|
These don’t give you control; they only protect your stake. Example: A bank stopping you from selling property until you’ve cleared a loan. |
In short: substantive = power, protective = safeguard.
In Kenya, this comes up a lot in SACCOs and NGOs where donors or partners have protective rights. Remember: protective rights alone don’t equal control.
According to IFRS 10 – Consolidated Financial Statements, you control another entity if you have:
Example: If your Nairobi-based holding company can decide how:
then you clearly control it.
Not every parent company has to consolidate. IFRS 10 gives two main carve-outs:
Investment entities
If your company is set up purely to invest in other businesses (like a private equity or venture capital firm), you don’t consolidate. Instead, you measure those investments at fair value.
Subsidiaries held for sale
If you’ve already decided to sell a subsidiary (and it’s classified as “held for sale” under IFRS 5), you don’t consolidate it – because it’s temporary in your group.
So, if you’re running an investment company in Kenya, you might just measure your subsidiaries at fair value through profit or loss instead of consolidating them.
At its heart, IFRS 10 – Consolidated Financial Statements is built on a few simple but powerful principles that you, as a business owner or financial manager in Kenya, should always keep in mind:
1. If you control it – you consolidate it.
2. Control is about influence, not just ownership.
3. Use uniform accounting policies across your group.
4. Transparency through clear disclosures
In short: IFRS 10 is about telling the full story of your group, not hiding parts of it.
Kenya fully adopted IFRS 10 under ICPAK and the Companies Act.
This means:
(If you’re a SACCO, you may also want to read about IFRS 9 compliance in Kenya since it directly affects financial instruments and provisioning)
SMEs using IFRS for SMEs may have simplified requirements, but bigger NGOs with complex donor-funded structures often need full IFRS 10 compliance.
So, why should you care about IFRS 10? Because it affects almost everyone in the ecosystem:
| Entity | Importance of IFRS 10 in Kenya |
|---|---|
|
For Businesses
|
It makes sure your group structure is reported honestly and consistently, so no one is left guessing.
|
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For NGOs & Donors
|
It proves transparency by showing clearly how funds flow across all related entities.
|
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For regulators (BRS, KRA, CBK)
|
It closes the door on companies hiding debts or risky assets inside subsidiaries.
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For investors & members
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It builds confidence. When financial reports are clear, people trust you more.
|
Let’s say a Kenyan SACCO owns a subsidiary property company in Eldoret.
The SACCO only reports savings and loans. The property company reports separately. Nobody sees the full picture.
The SACCO consolidates both. The financial statements now show loans, deposits, AND property investments – all in one.
This way, regulators, donors, and SACCO members get a complete, transparent view.
Get expert Consolidation & Compliance Support Today!
Secure My ORGANIZATION1. Is IFRS 10 mandatory in Kenya?
Yes, it is. If your company controls another entity – even if it’s just one subsidiary – you’re required to consolidate under IFRS 10. No shortcuts here.
2. What’s the difference between IFRS 3 and IFRS 10?
Think of it this way:
Read more about IFRS 3 – Business Combinations here
3. What’s the main goal of IFRS 10?
To give a true and fair view of your group. IFRS 10 makes sure your consolidated financial statements actually reflect who’s in control and how the group really operates—no smoke and mirrors.
4. Has IFRS 10 been adopted in Kenya?
Yes, fully. Kenya adopted IFRS 10 in 2013, and it’s been the standard ever since. Today, regulators, auditors, and investors all expect compliance.
5. Does IFRS 10 apply to small companies or SMEs?
Yes, but with some flexibility. If you’re an SME using the IFRS for SMEs framework, you may not need to follow the full IFRS 10 rules. However, if your SME controls another company (say you have a subsidiary), you’ll still need to consolidate in line with IFRS principles.
6. Do NGOs and SACCOs in Kenya need to follow IFRS 10?
In many cases, Yes.
If your NGO or SACCO controls other entities – like a property company, an investment arm, or different registered branches – you’ll likely need consolidated financial statements. Donors and regulators (like BRS or CBK) expect this transparency.
At Mugo & Company, we know that standards like IFRS 10 – Consolidated Financial Statements can feel overwhelming. But you don’t have to navigate them on your own.
Our audit and assurance experts in Kenya help SMEs, corporates, SACCOs, and NGOs apply IFRS 10 correctly – so your reports are not just compliant, but also transparent and trustworthy.
Call us today for a free consultation on IFRS 10 compliance in Kenya.
Let’s make it simple together.
💬 Speak to Mugo & Company today – your IFRS & Audit Partner in Kenya.
This guide is meant to share general information on IFRS 10 in Kenya. It’s not professional advice. Always check with your accountant or advisor before making any decisions.
If you’d like tailored support, feel free to reach out to Mugo & Company for guidance on IFRS 10 compliance in Kenya.
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