The 2026 Statutory Audit Thresholds in Kenya: Who Must Comply and Who Is Exempt
As of 2026, Kenya’s statutory audit regulations have clarified which companies must undergo an audit and which qualify for exemption under the Companies Act and related KRA guidelines. Understanding these thresholds is crucial for CEOs, CFOs, and business owners to ensure compliance, avoid penalties, and optimize financial reporting.
What Are Statutory Audit Thresholds?
Quick Advisory:
Statutory audit thresholds define which companies are legally required to have their financial statements audited. In 2026, thresholds are based on turnover, asset value, and number of employees. Companies below these limits may qualify for exemption.
Statutory audits provide assurance to stakeholders that financial statements are accurate and comply with IFRS and Kenyan laws. In 2026, the thresholds for mandatory audits consider:
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Annual turnover
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Total assets
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Number of employees
Adamjee Advisory Insight:
The Finance Act 2025 amendments reinforced these thresholds, emphasizing compliance for SMEs and micro-companies. Businesses falling below the limits can apply for audit exemption but must maintain proper bookkeeping for KRA verification. For guidance, see our Audit Exemption Kenya service.
2026 Audit Thresholds for Different Company Types
Quick Advisory:
Private companies, public companies, and small enterprises have distinct thresholds. Knowing where your company falls ensures legal compliance and avoids penalties.
| Company Type | Mandatory Audit Thresholds (2026) | Exemption Criteria |
|---|---|---|
| Private Limited Company | Turnover > KES 50M, Assets > KES 50M, Employees > 50 | Below all three thresholds may qualify for exemption |
| Public Company | All public companies require audit regardless of size | N/A |
| Small Companies | Turnover ≤ KES 50M, Assets ≤ KES 50M, Employees ≤ 50 | Can file audited exemption form with Registrar |
Adamjee Advisory Insight:
Many SMEs mistakenly assume they are exempt. Adamjee Auditors can review your financials and advise whether your company needs a statutory audit or qualifies for exemption. Check our First Financial Audit Kenya guide for detailed steps.
Who Must Comply in 2026?
Quick Advisory:
Any company exceeding the thresholds or classified as a public company must undergo a statutory audit. Non-compliance can result in fines, penalties, and increased scrutiny from KRA.
Key compliance obligations include:
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Annual statutory audit by a licensed auditor
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Submission of audited financial statements to Kenya Revenue Authority (KRA) and Registrar of Companies
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Maintenance of records for eTIMS and IFRS reporting standards
Adamjee Advisory Insight:
Adamjee Auditors’ Audit and Assurance Services help companies meet statutory audit obligations efficiently and mitigate risks during KRA inspections.
Who Is Exempt from Statutory Audits?
Quick Advisory:
Small companies below the statutory thresholds can apply for audit exemption. Exemption does not remove accounting or KRA compliance obligations.
Exemptions apply to:
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Private limited companies meeting all of the following:
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Turnover ≤ KES 50M
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Total assets ≤ KES 50M
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Employees ≤ 50
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Dormant companies that have not traded in the year
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Non-profit companies registered under NGO or charity status (subject to regulator approval)
Adamjee Advisory Insight:
Even if exempt, companies must maintain accurate bookkeeping. Adamjee Auditors offers Bookkeeping Services to ensure your records are audit-ready if circumstances change.
Impact of eTIMS and KRA Compliance on Audit Exemption
Quick Advisory:
Exemption does not remove KRA responsibilities. Expenses, invoices, and tax returns must still comply with 2026 eTIMS rules.
Even exempt companies must:
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Record all expenses with eTIMS-compliant invoices
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Ensure payroll and supplier payments are properly documented
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Maintain digital audit trails for potential KRA verification
Adamjee Advisory Insight:
Adamjee Auditors integrates statutory audit planning with KRA compliance strategies through Payroll Services and Tax Compliance Advisory. This ensures exemptions do not lead to non-compliance penalties.
Sector-Specific Considerations for 2026
Quick Advisory:
Industry type may affect statutory audit obligations. Certain sectors, such as banking, insurance, and large-scale trading, have stricter reporting requirements.
| Sector | Statutory Audit Notes |
|---|---|
| Banking & Finance | All licensed institutions require annual audits regardless of size |
| Insurance | Audits required due to public policy obligations |
| Manufacturing & Trading SMEs | Threshold rules apply, but KRA may review invoices under eTIMS rules |
| Non-profits/NGOs | Exemption possible, but regulated by NGO Coordination Board |
Adamjee Advisory Insight:
Adamjee Auditors can conduct pre-audit reviews to determine sector-specific requirements and avoid surprises during regulatory inspections. See our Statutory Audit Kenya Guide for step-by-step preparation.
Benefits of Compliance Beyond Legal Requirements
Quick Advisory:
Audits enhance credibility, attract investors, and improve financial management. Even if exempt, voluntary audits can provide strategic advantages.
Benefits include:
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Improved financial transparency for investors and lenders
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Early identification of financial discrepancies or fraud
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Alignment with IFRS standards, easing cross-border operations
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Enhanced internal controls and risk management
Adamjee Advisory Insight:
Our CFO Advisory Services help SMEs leverage audit insights for strategic growth, even when not legally required.
How to Apply for Audit Exemption in 2026
Quick Advisory:
Exemption requires formal application to the Registrar of Companies. Maintain proper records to avoid rejection or KRA queries.
Steps:
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Prepare financial statements demonstrating threshold compliance
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Submit exemption form with the Registrar of Companies
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Retain bookkeeping records and invoices, including eTIMS-compliant documentation
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Notify KRA in case of tax deductions claimed
Adamjee Advisory Insight:
Adamjee Auditors guides clients through the exemption process, ensuring compliance with Companies Act, IFRS, and KRA requirements. Learn more via our Company Secretarial Services.
Common Mistakes Companies Make
Quick Advisory:
Mistakes often arise from misunderstanding thresholds or poor recordkeeping. Avoid non-compliance by following clear internal policies.
Typical errors include:
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Assuming exemption without verifying thresholds
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Failing to maintain accurate bookkeeping for KRA validation
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Ignoring eTIMS invoice requirements for expenses
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Delaying financial statement preparation until year-end
Adamjee Advisory Insight:
Adamjee Auditors offers Training Webinars to educate management teams on audit thresholds, compliance, and KRA reporting requirements.
Preparing for 2026 Statutory Audit or Exemption
Quick Advisory:
Preparation reduces risk, improves compliance, and saves costs. Companies should reconcile accounts, review thresholds, and engage professional auditors early.
Key actions:
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Conduct internal review of financial statements
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Confirm turnover, asset, and employee thresholds
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Verify all expenses against eTIMS records
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Engage audit professionals to advise on compliance
Adamjee Advisory Insight:
Through Audit and Assurance Services, Adamjee Auditors helps companies determine if they must comply or qualify for exemption, minimizing KRA exposure.
Conclusion
The 2026 statutory audit thresholds in Kenya are clearer than ever, emphasizing turnover, assets, and employee count as the determining factors. While exemptions exist for small companies, maintaining accurate financial records, eTIMS compliance, and proper bookkeeping remains mandatory.
By engaging professional services from Adamjee Auditors, companies can navigate compliance, maximize strategic advantages, and maintain readiness for any regulatory inspection.
Gain Clarity and Confidence in Your Finances
Navigate the complexities of compliance, tax, and financial management with a trusted partner. Adamjee Auditors, a member of Santa Fe Associates International (SFAI), provides world-class audit, tax, and advisory services to help your business achieve its goals.
Schedule a consultation with our expert team in Nairobi or Mombasa to discuss your business needs.
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info@adamjeeauditors.co.ke
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