Susan Maina is a content writer at Mugo and Company, where she simplifies Accounting, Auditing, and Forensic Audit services with her finance expertise.
LinkedIn >>If you run or manage an NGO in Kenya, you know how important it is to keep your finances transparent and accountable.
Donors, regulators, and the public trust you to use funds wisely — and the way you report your finances plays a huge role in maintaining that trust.
Even though IFRS for NGOs in Kenya isn’t fully developed yet, you don’t have to wait. By applying relevant IFRS standards, you can make your NGO’s financial reporting reliable, consistent, and donor-friendly.
This guide by Mugo & Company walks you through the standards you should focus on, with practical tips for accountants, finance officers, and managers.
Table of Contents:
Here’s the simple truth: there isn’t an IFRS created specifically for NGOs yet. That means there’s no single set of rules written just for non-profits in Kenya.
But don’t worry — you can still use the existing International Financial Reporting Standards (IFRS) to prepare clear, reliable, and donor-friendly financial statements for your NGO.
In addition, there are international initiatives working to create NGO-specific guidance:
For now, as a beginner, your focus should be on adapting the IFRS standards that are most relevant to your NGO’s activities — such as revenue recognition, financial instruments, and fair value measurement — while keeping an eye on these emerging NGO-specific standards.
Still wondering how IFRS can make your NGO’s reporting easier?
Request your FREE IFRS Consultation with Mugo & Co todayEven though IFRS was designed for businesses, it can help you as an NGO accountant or finance officer in Kenya.
Here’s a simple breakdown of the most relevant standards and how they apply to your day-to-day NGO accounting:
Here’s a simple guide to the most important ones:
| IFRS / IAS | What It Means for You | Example in Your NGO |
|---|---|---|
|
– IFRS 1 helps you transition your NGO’s financial statements to IFRS for the first time.
– Ensures reports are transparent, reliable, and comparable, with some simplifications to make it easier. |
– Your NGO prepares its first IFRS financial statements, showing all projects and grants, with explanations of changes from the old system.
|
|
|
– IFRS 15 helps you know when to record donations, grants, or project funding as income.
– The standard treats grants and donations as contracts with performance obligations. – This means you only recognize the money as you fulfill the obligations, not necessarily when the cash arrives. – It also reminds you to distinguish between restricted and unrestricted funding, so donor money is reported correctly. |
– Your NGO receives a multi-year donor grant for an education project.
– You only record revenue as you deliver the project activities each year, ensuring your accounts match the work done. |
|
|
– IFRS 9 helps you track all your NGO’s financial assets, like grants receivable, investments, or cash reserves.
– It gives guidance on how to classify and measure these instruments and requires you to assess credit risks for funds owed to your NGO. |
– Your NGO holds restricted donations in a bank account.
– IFRS 9 helps you report these funds accurately, giving donors and regulators a clear picture of your financial position. |
|
|
– IFRS 16 helps you record office or vehicle leases on your balance sheet, showing both what your NGO owes (lease liability) and what it uses (right-of-use asset).
– This is important for NGOs that rely on long-term leases for operations. |
– Your NGO leases a van for outreach programs.
– IFRS 16 guides you to show the van as an asset and the lease payments as a liability, making your accounts more transparent. |
|
|
– IFRS 13 helps you value in-kind donations fairly in your accounts.
– This ensures that gifts like donated goods or services are accurately reflected in your financial statements. |
– Your NGO receives computers and building materials as donations.
– IFRS 13 guides you to report them at fair value, showing the true resources available to your NGO. |
|
|
– IAS 1 helps you prepare statements that show a true and fair view of your NGO’s finances, making it easier for donors and regulators to understand.
|
– Your NGO produces a balance sheet, statement of activities, and cash flow statement so donors and regulators can clearly see how funds were received and used.
|
|
|
– IAS 20 helps you report government grants as income only when you meet the conditions attached to them.
– This ensures transparency in your accounts and helps donors and regulators see how funds are actually used. |
– You receive a government subsidy to run a community clinic.
– You record the income progressively as the clinic delivers services, not when the grant is paid. |
Please note that the list is not exhaustive and more IFRS standards may apply depending on the nature of your NGO operations.
To make the relevant IFRS for NGOs in Kenya work for your NGO, here are some practical tips:
| Rule of Thumb | What It Means for You | Example in Your NGO |
|---|---|---|
|
Keep project funds separate
|
– Always keep money for Project A separate from Project B to stay accountable.
|
– Funds for an education project are kept in a different account from a health project.
|
|
Track deferred or unused income
|
– If a grant or donation isn’t fully used in the year it’s received, carry it over to the next year as deferred income.
|
– A grant received in December for a school project is partially carried to the next financial year if not all funds are used.
|
|
Follow donor reporting requirements
|
– Make sure your financial statements meet any rules your donors ask for, alongside IFRS standards.
|
– A donor requires quarterly updates on how their grant is spent; your reports include these details.
|
|
Prepare donor-friendly statements |
– Make your reports clear and easy to read: balance sheet, income/activities statement, and cash flow statement.
|
– Present a summary showing total project income, expenses, and cash flow for the year. |
|
Document everything
|
– Keep records of all transactions, approvals, and fund movements to build transparency and trust.
|
– Maintain receipts, approval notes, and transfer records for all project funds
|
These simple habits help you maintain trust, comply with donor regulations, and make IFRS reporting manageable.
Let Mugo & Company guide you step-by-step through simplified financial reporting tailored for Kenyan NGOs.
Request your FREE IFRS Consultation with Mugo & Co todayUsing the relevant IFRS for NGOs in Kenya, even if only some of the standards, can make a big difference for your NGO.
Here’s why it matters:
In short, using IFRS for your NGO is about more than compliance — it’s about building credibility, maintaining trust, and setting your organization up for long-term success.
Here’s what to watch out for:
Despite these challenges, applying IFRS standards where possible strengthens your NGO’s credibility, reliability, and accountability. It shows donors, regulators, and the public that your organization is professional, trustworthy, and committed to transparency.
There’s exciting news for NGOs in Kenya and around the world! Even though IFRS for NGOs isn’t fully developed yet, international projects are working to create standards specifically for non-profits.
When these standards are finalized, they will give NGOs like yours clear, easy-to-follow guidance, making financial reporting simpler and more consistent across the sector.
For now, learning and applying relevant IFRS standards will prepare your NGO to transition smoothly to these future NGO-specific standards.
Now that you understand the basics of IFRS for NGOs in Kenya, here’s how you can put it into action.
| Your Next Steps | |
|---|---|
|
1. Identify which IFRS standards apply to your NGO
|
– Look at your NGO’s activities and funding, and decide which standards, like IFRS 15 (Revenue), IFRS 9 (Financial Instruments), or IAS 20 (Government Grants), are relevant.
|
|
2. Train your finance team on IFRS basics
|
– Make sure your staff understand how these standards work and how to apply them to your NGO.
– Even a simple introduction can make a big difference. |
|
3. Prepare donor-friendly financial statements
|
– Use clear, easy-to-read formats that show a true picture of your finances.
– Include a statement of financial position, a statement of activities, and a cash flow statement so donors can see how funds were used. |
|
4. Keep up with emerging NGO standards
|
– Watch for IFR4NPO (International Financial Reporting for Non-Profit Organizations) and INPAS (International Non-Profit Accounting Standard).
– By preparing now, your NGO will be ready to adopt these new standards smoothly when they are finalized. |
|
5. Get professional support from Mugo & Company
|
– Mugo & Company helps NGOs prepare financial statements that are both donor-compliant and IFRS-compliant.
– They can guide you in applying the relevant IFRS standards to your NGO, ensuring transparency, accountability, and credibility with donors, regulators, and stakeholders. – By taking these steps, and with expert guidance from Mugo & Company, your NGO becomes more credible, transparent, and donor-ready, showing that you manage funds responsibly and in line with international best practices. |
By taking these steps, your NGO becomes more credible, transparent, and donor-ready, building trust and demonstrating that you manage funds responsibly.
1. Is there a specific IFRS for NGOs?
Not yet. NGOs currently use the IFRS standards that apply to their activities. However, new NGO-specific frameworks like IFR4NPO and INPAS are being developed to provide clearer guidance in the future.
2. What are the required financial statements for NGOs in Kenya?
Your NGO should prepare statements that are clear and donor-friendly, including:
3. How can IFRS help NGOs in Kenya?
IFRS makes your financial reporting clearer and more reliable. It helps donors trust your work, keeps your statements consistent, and prepares your NGO for upcoming standards made specifically for non-profits.
4. What is deferred income, and how should I handle it?
Deferred income is money received for a project but not yet used. You should carry it over to the next financial year or until the obligations are fulfilled, making sure it’s properly tracked and reported.
Even though there isn’t a fully dedicated IFRS for NGOs in Kenya yet, applying the relevant IFRS standards today makes your financial reporting clearer, more transparent, and easier for donors to trust.
It shows that your NGO is accountable, organized, and committed to using funds responsibly — something every donor values.
Ready to simplify your NGO’s financial reporting and ensure it is both donor-compliant and IFRS-compliant?
Mugo & Company is here to help. We offer a free consultation to guide you through the process, answer your questions, and help you apply relevant IFRS standards to your NGO’s financial statements.
Get in touch today to schedule your consultation and take the first step toward clearer, simpler, and fully compliant financial reporting for your NGO.
Click the WhatsApp button to book your free consultation with Mugo & Company now.
Or email us at info@mugo-co.com
WhatsAppThis guide is for general information only and should not replace professional advice. Always consult your accountant, auditor, or financial advisor for guidance specific to your NGO’s situation.
Making International Financial Reporting Work for NPOs | IFAC.
Financial reporting standard for not-for-profit entities – Business Daily
Financial Reporting Standards (IFRS) Applicable to NGOs
IAS 20 — Accounting for Government Grants and Disclosure of Government Assistance
IFRS 15 in Kenya – Simple Guide to Revenue from Contracts with Customers | Mugo & Company
IFRS 9 Financial Instruments in Kenya (2025) | Mugo & Co..
IFRS 1: First-Time Adoption Guide
Industry Leaders Delivering Client-Focused Solutions with Proven Expertise and Excellence.
Woodland Business Park, 4th Floor, Suite 15, Kiambere Road, Upperhill, Nairobi
info@mugo-co.com
+254 736 570 370
Copyright © 2025 Mugo & Company | All Rights Reserved.
Mugo & Company – Experts in assurance services in Kenya since 1984.
