Susan Maina is a content writer at Mugo and Company, where she simplifies Accounting, Auditing, and Forensic Audit services with her finance expertise.
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Which Other IFRS Standards Does IFRS 18 in Kenya Work Alongside?
Have you ever opened a Kenyan company’s financial statements and wondered what all the numbers actually mean?
Maybe you’re an investor looking at Safaricom’s annual report, or a small business owner in Nairobi trying to understand your profit margins, or even a regulator at the Capital Markets Authority checking compliance.
Before IFRS 18 in Kenya, financial statements often left readers scratching their heads.
Companies calculated profits correctly, but how they presented income, expenses, and assets varied, making it hard to compare one company to another.
That’s where IFRS 18 – Presentation and Disclosure of Financial Statements comes in.
This global standard from the International Accounting Standards Board (IASB) tells companies exactly how to present financial information clearly and consistently, without changing how profits or losses are calculated.
For Kenyan businesses, IFRS 18 in Kenya isn’t just a technical update — it’s a move toward transparency, consistency, and comparability, helping investors, lenders, and stakeholders make better decisions.
In this guide by Mugo & Company, we’ll walk you through IFRS 18 in Kenya, why it matters, and how your business can prepare.
Still unsure what IFRS 18 means for your Kenyan business?
Request your FREE IFRS Consultation with Mugo & Co todayBefore we dive in, let’s quickly go over a few terms you’ll see repeatedly:
| Terms | What It Means (Simple English) |
|---|---|
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IFRS 18 – Presentation of Financial Statements:
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– The standard that tells companies how to display financial results clearly.
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Statement of Profit or Loss:
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– A report showing income, expenses, and profit over a period.
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Subtotals: |
– Totals like Operating Profit or Profit before Tax that help readers quickly see how the business performed.
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Categories:
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– Groups of items in profit or loss, such as Operating, Investing, Financing, Income Taxes, and Discontinued Operations.
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Imagine you run a medium-sized manufacturing company in Nairobi.
Every month, your accountant prepares a financial statement, but when investors or banks read it, they ask:
IFRS 18 in Kenya – Presentation and Disclosure in Financial Statements solves this problem.
It doesn’t change how profits are calculated, but it provides a consistent, easy-to-read structure for presenting them.
That way, anyone looking at your financial statements — whether in Kisumu, Nairobi, or Mombasa — can immediately understand how your company performed.
In simple terms:
IFRS 18 in Kenya mandates that companies present their financial statements in a clear, consistent, and structured way, so anyone reading them — investors, regulators, or business owners — can easily understand how profits, expenses, assets, and liabilities are reported.
Let Mugo & Company walk you through IFRS 18 in Kenya — step-by-step, in plain language you’ll actually understand.
Request your FREE IFRS Consultation with Mugo & Co todayIFRS 18 was issued by the International Accounting Standards Board (IASB) in April 2024.
For Kenyan companies, it becomes mandatory for annual reporting periods starting 1 January 2027, but if your business is ready, you can adopt it early.
ICPAK is continuously offering more clarity and specifications on its adoption in Kenya.
This gives companies a few years to prepare systems, train staff, and update reporting processes before full compliance is required.
Early adoption allows Kenyan businesses to align their reporting with IFRS 18 Presentation and Disclosure in Financial Statements best practices even before 2027.
IFRS 18 takes over from IAS 1 – Presentation of Financial Statements.
Think of IAS 1 as giving you the “basic rules” for showing numbers on a page.
IFRS 18 in Kenya goes a step further. Now, companies must:
The outcome? Kenyan financial statements that aren’t just accurate, but clear, consistent, and easy to compare – whether you’re an investor in Nairobi, a regulator in Nairobi, or a business owner in Kisumu.
Our IFRS experts will help you transition smoothly, ensuring your business stays compliant and confident under the new standard.
Request your FREE IFRS Consultation with Mugo & Co todayIFRS 18 in Kenya tells companies not what to calculate, but how to present their financial statements clearly — covering assets, liabilities, income, expenses, and equity.
IFRS 18 applies to all Kenyan companies preparing financial statements under IFRS. It focuses on how to present:
| Area | What IFRS 18 Covers | Notes |
|---|---|---|
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Assets & Liabilities
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– How companies present what they own and owe
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– Measurement rules are governed by other standards like IFRS 9
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Income & Expenses
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– How revenues and costs are reported
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– IFRS 15 governs revenue recognition
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Equity
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– How owners’ capital and retained earnings are displayed
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– IAS 8 provides guidance on accounting policies
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Comparative Figures |
– Previous year numbers must be presented for comparison
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– Helps stakeholders see trends over time
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By following IFRS 18 Presentation and Disclosure in Financial Statements, Kenyan companies ensure that every aspect of their reporting — from assets to comparative figures — meets global clarity and comparability standards.
We’ll show you exactly how to present your financial data clearly and consistently
Request your FREE IFRS Consultation with Mugo & Co todayIFRS 18 in Kenya ensures that Kenyan companies don’t just crunch numbers, but also present them in a way that tells a clear story about the business’s performance.
| Objective | What It Means (Simple Terms) |
|---|---|
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Clarity
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– Financial statements should be easy to read and understand — no more guessing what the numbers mean.
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Consistency
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– Companies present their financials in a standard way, making it easy to compare performance across businesses.
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Focus on Important Info
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– Key figures like Operating Profit, Profit before Tax, and Total Profit are highlighted, so readers see what really matters.
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IFRS 18 in Kenya groups income and expenses into five categories:
| Category | What It Covers | Kenyan Example |
|---|---|---|
|
Operating |
– Profits and costs from core business activities
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– Safaricom Ltd reporting mobile service revenue and related costs
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Investing |
– Gains and expenses from investments
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– A Nairobi-based company selling surplus land or shares
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Financing |
– Income and expenses from loans, bonds, or other finance activities
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– Interest paid on a loan for a new factory in Mombasa
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Income Taxes |
– Interest paid on a loan for a new factory in Mombasa
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– Taxes paid to the Kenya Revenue Authority (KRA)
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Discontinued Operations |
– Profit or loss from business units that have been closed or sold
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– A manufacturer closing a non-profitable branch in Kisii
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IFRS 18 in Kenya doesn’t just stop at categories — it also requires certain key totals, called subtotals, to be clearly presented.
These help readers quickly understand a company’s performance without getting lost in all the numbers. Think of them as signposts in your financial statements.
| Subtotals | What It Shows | Kenyan Example |
|---|---|---|
|
Operating profit
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– Profit from core business activities, before considering financing or taxes
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– Safaricom Ltd showing revenue from mobile services minus operating costs
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Profit before Financing and Income Taxes
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– Profit after accounting for operating activities but before interest and taxes
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– A Nairobi-based manufacturing company showing profit from production and sales before paying interest on a Mombasa factory loan or KRA taxes
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Total Profit
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– The company’s overall profit after all expenses, financing costs, and taxes
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– Kenya Breweries Ltd reporting net profit after taxes and loan interest for the year
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By presenting these subtotals, Kenyan companies make it easier for investors, lenders, and regulators to see not just whether the business is profitable, but where the profits are coming from.
IFRS 18 in Kenya introduces a more structured and transparent approach to presenting financial statements.
Companies in Kenya must organize their income, expenses, and profits in a consistent way to make reports easier to interpret and compare across financial periods.
| Aspect | What It Means |
|---|---|
|
Required Subtotals |
– Key totals such as Operating Profit, Profit before Financing and Income Taxes, and Total Profit must be clearly presented, even if figures remain unchanged.
|
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Clear Grouping |
– Income and expenses must be organized under specific categories — Operating, Investing, Financing, Income Taxes, and Discontinued Operations — for better clarity. |
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Comparative Figures |
– Companies must include prior-year numbers to help readers assess performance trends over time.
|
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Overall Benefit |
– The financial statements become clearer, more transparent, and easier for investors, auditors, and regulators to analyze
|
Ultimately, IFRS 18 Presentation and Disclosure in Financial Statements brings a global structure to Kenyan reporting — ensuring that every profit or loss statement tells a consistent financial story.
IFRS 18 applies to all Kenyan companies preparing financial statements under IFRS.
It ensures consistent presentation of financial information and works alongside other IFRS standards such as IFRS 7 (Financial Instruments) and IAS 8 (Accounting Policies).
| Category | Who It Covers |
|---|---|
|
Affected (Must Apply IFRS 18) |
– All Kenyan companies preparing financial statements under IFRS, including public companies, listed entities, and large private businesses. |
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Exempt (Not Required to Apply IFRS 18)
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– Small companies not required to prepare IFRS financial statements, certain private entities using local accounting standards, or organizations that do not issue formal financial statements under IFRS. |
Adopting IFRS 18 in Kenya helps Kenyan businesses communicate their financial performance more clearly and consistently.
Here’s what Kenyan companies gain:
| Benefit | Description |
|---|---|
|
Clarity
|
– Adopting IFRS 18 in Kenya helps Kenyan businesses communicate their financial performance more clearly and consistently.
Here’s what Kenyan companies gain:
|
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Comparability
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– Investors and stakeholders can compare performance across companies more effectively.
|
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Better Insights
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– Provides meaningful information for investors, lenders, and regulators to make informed decisions. |
Let’s be honest — adopting IFRS 18 in Kenya isn’t always straightforward.
While the standard promises clearer and more comparable financial statements, local businesses may face a few real-world challenges.
Some of the common hurdles include:
| Challenge | What It Means for Kenyan Businesses |
|---|---|
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Updating financial reporting systems
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– Companies across Nairobi, Mombasa, Kisumu, and beyond may need to upgrade accounting software and reporting tools to handle IFRS 18’s new presentation structure. |
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Training staff on new categories and subtotals
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– Finance teams must learn how to classify income and expenses correctly, calculate required subtotals like Operating Profit and Profit before Tax, and prepare statements that comply with IFRS 18. |
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Restating prior-year comparative information
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– Kenyan businesses need to adjust past financial statements so they align with IFRS 18, essentially rewriting last year’s figures in the new format for comparability.
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Yes, these challenges take time and effort.
But the payoff is significant: once adopted, IFRS 18 in Kenya makes financial statements clearer, consistent, and easier for investors, lenders, regulators, and management to interpret, ultimately strengthening trust in your business.
Mugo & Co. can help you interpret and apply IFRS 18 confidently in your business
Request your FREE IFRS Consultation with Mugo & Co todayWhat is IFRS 18 in Kenya in simple terms?
Is IFRS 18 in Kenya mandatory?
What did IFRS 18 replace?
What’s the difference between IFRS 15 and IFRS 18 in Kenya?
To learn more about IFRS 15 check out our simplified guide on IFRS 15 – Revenue from Contracts.
IFRS 18 in Kenya focuses on how financial information is presented, but it doesn’t operate in isolation.
It works alongside other IFRS standards that cover measurement and recognition, including:
| IFRS Standard | What It Covers |
|---|---|
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– Governs how revenue is recognised
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– Covers the measurement and classification of financial assets and liabilities
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– Ensures relevant financial instrument disclosures are included
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IAS 8 – Accounting Policies, Changes in Accounting Estimates, and Errors
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– Guides consistency in applying accounting policies
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Together, these standards ensure that Kenyan companies not only calculate financials correctly but also present them clearly and transparently.
IFRS 18 in Kenya is more than just another accounting standard — it’s a presentation revolution.
With IFRS 18, Kenyan companies can now show profits, expenses, and financial positions clearly and consistently.
This clarity builds trust, supports better decision-making, and makes financial statements easier to understand for everyone.
Whether you’re running a business in Nairobi, investing in Mombasa, or working as a regulator, IFRS 18 ensures that everyone reads the same story from the financial statements — no guesswork, no confusion, just clear and comparable information.
Partner with us for smooth IFRS 18 adoption and clear, professional presentation of your financial statements.
Request your FREE IFRS Consultation with Mugo & Co todayNavigating IFRS 18 in Kenya doesn’t have to be overwhelming.
At Mugo & Company, our IFRS specialists are ready to guide your business every step of the way — from updating systems to training your staff and preparing compliant reports.
Get clarity, confidence, and peace of mind with your financial reporting. Book a free consultation today and let us help you make IFRS 18 work for your business.
This guide is for general information purposes only and does not replace professional advice. Always consult a qualified accountant or auditor for guidance tailored to your business.
https://mugo-co.com/ifrs-7-financial-instruments-disclosures-kenya/
IFRS 9 Financial Instruments in Kenya (2025) | Mugo & Co..
IFRS 15 in Kenya – Revenue from Contracts with Customers (Simple Guide).
IFRS 18 is here: Redefining financial performance reporting
Get ready for IFRS 18 | Grant Thornton insights
IFRS 18 Presentation and Disclosure in Financial Statements | ACCA Global
https://www.iasplus.com/en/standards/ifrs/ifrs-18
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