Introduction

If you run an audit or accounting practice in Kenya, several rule changes arrive close together. IFRS 18 and the first mandatory ISSB sustainability reporting both apply from 1 January 2027. KRA said it would start checking declared expenses against eTIMS data from 1 January 2026. Kenya is still on the FATF grey list, and the Office of the Data Protection Commissioner (ODPC) is enforcing the Data Protection Act.

Each rule adds checking work that repeats: matching invoices, mapping accounts, keeping onboarding records. AI and automation handle that kind of work well, as long as an accountant reviews the result.

Regulations Overview

IFRS 18 and the new income statement

IFRS 18 replaces IAS 1 for annual periods beginning on or after 1 January 2027. It re-cuts the statement of profit or loss into set categories, including operating, investing and financing, and it requires disclosure of management-defined performance measures.

The standard applies retrospectively, so a company with a December year end will restate its 2026 comparatives. ICPAK's training on the standard names system updates, chart-of-accounts restructuring and data model reviews as the main implementation work. It applies to companies reporting under full IFRS Accounting Standards, so confirm which framework each client uses.

ISSB standards and ICPAK's roadmap

ICPAK's roadmap for IFRS S1 and S2 has three phases. Adoption has been voluntary since 1 January 2024. It becomes mandatory for public interest entities for periods beginning on or after 1 January 2027. Large private entities follow from 1 January 2028 and SMEs from 1 January 2029. ICPAK has not yet set a date for government organizations.

Sustainability reporting needs assurance. The IAASB's ISSA 5000 applies to assurance on sustainability information for periods beginning on or after 15 December 2026, so audit firms with public interest clients should expect questions about it.

KRA, eTIMS and expense validation

Under the Income Tax Act, as amended by the Finance Act 2023, an expense is not deductible unless an electronic tax invoice from eTIMS backs it. Transactions exempted under the Tax Procedures Act, such as emoluments, imports and interest, sit outside the rule. In a public notice dated 10 November 2025, KRA said that from 1 January 2026 it would validate the income and expenses declared in income tax returns against eTIMS data, withholding tax certificates and customs import records.

In practice, a supplier who does not issue a valid eTIMS invoice can cost your client a deduction. Check KRA's current notices for any transitional relief on the return year you are filing.

AML duties and the FATF grey list

The FATF added Kenya to its list of jurisdictions under increased monitoring in February 2024. In September 2026, Kenya's Director of Public Prosecutions said deficiencies in the country's FATF action plan remain. Kenya has since passed the Anti-Money Laundering and Combating of Terrorism Financing (Amendment) Act, 2025 and the Virtual Asset Service Providers Act, 2025, and officials say supervision of designated non-financial businesses and professions has become stronger.

Under the FATF framework, accountants fall into that group when they carry out certain activities. Ask the Financial Reporting Centre which of your services trigger reporting duties, and keep complete, dated onboarding records.

Data protection

The Data Protection Act 2019 treats client files as personal data. The ODPC registers data controllers and processors above the registration threshold, audits them and can issue penalty notices. Its penalties have reached KES 5 million. This applies the moment client data goes into an AI tool.

The global picture in brief

The IASB's effective date for IFRS 18 is 1 January 2027, the same date ICPAK is training toward. The ISSB's IFRS S1 and S2 are a global baseline for sustainability reporting, and local bodies such as ICPAK set their own timelines for them. The IAASB's ISSA 5000 is the matching baseline for assurance.

ACCA's Digital Pathways Playbook gives a sense of where most organizations stand on automation. Published in November 2025, it surveyed 1,026 finance professionals across more than 100 markets. Only 4% of organisations run at the advanced automation level today, and 41% expect to be there within three years. Cost (62%), skills (46%) and time (32%) are the barriers they cite most. ACCA argues that SMEs will reach AI-enabled operations if their finance teams lead the way.

AI and Automation in Practice

The accountant still signs the work. The tools take on the matching and sorting.

eTIMS matching

A tool can read supplier invoices and receipts, match each expense to a valid eTIMS invoice and to the bank or M-Pesa line that paid it, and list the expenses with no match. Run monthly, or before the return is filed, that list lets a client chase suppliers while they can still issue a compliant invoice. The result is fewer disallowed deductions and a calmer year end.

IFRS 18 account mapping

AI can read a client's chart of accounts, propose which IFRS 18 category each account belongs in, and draft the restated 2026 comparatives from the ledger. The accountant checks every mapping, because a wrong category changes the subtotals readers look at. Doing this work now means the ledger is ready when the first 2027 period opens.

Bank reconciliation and full-ledger review

Large firms use AI to test whole ledgers instead of samples, flagging unusual entries such as duplicates and postings that break a client's normal pattern. A ten-person Nairobi firm can start smaller with bank reconciliation, which is repetitive, follows rules and is easy to check. The time saved goes to review and client advice, and routine work with predictable hours makes fixed fee quotes easier to price.

AML onboarding

Digital onboarding checklists, document capture and red flag prompts produce a dated record for each client. If the Financial Reporting Centre or another supervisor asks how you checked a client, the record already exists. Staff still decide whether a client looks suspicious.

Guardrails

Client files are personal data, so set these rules before anyone pastes a document into a tool. Use business-grade tools whose terms say how client data is stored and whether the vendor uses it to train models. Remove names, ID numbers and KRA PINs from files when the task does not need them. Have a person review every output that reaches a client or a tax return. Keep a log of which files each tool touched. Kenya's National AI Strategy 2025-2030, launched on 27 March 2025, aims to address gaps in AI regulation, investment and skills. The rules on AI use will keep changing, so review these practices each year.

What this means for an SME

SME clients feel these rules unevenly. ISSB reporting does not reach SMEs until 2029, but eTIMS applies to them now. The cheapest place to start is one repeat task. Pick bank reconciliation or expense-to-invoice matching, run it with an AI tool for 30 days, and write down which data may go into the tool. Measure the hours saved and the errors the tool caught that people missed.

When you talk to an adviser or a vendor, ask where client data is stored, who can see it, whether you can export a log of what the tool did, and who reviews the output.

Our team trains finance staff to use AI safely (AI Foundations), builds automations for tasks like the ones above (AI Automation), and helps firms decide where to begin (AI Consultation). If you would like to go through your own year-end checks, book a discovery call.

Disclaimer

This article is general information, not legal, tax or accounting advice. Take professional advice on your own case.

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