KRA Audit Survival Guide: 7 Proactive Steps to Prepare Your Business

KRA Audit Survival Guide

Facing a KRA audit can be intimidating for any business in Kenya. However, with the right preparation, audits don’t have to be stressful. This KRA Audit Survival Guide provides 7 proactive steps to prepare your business, ensure compliance, and minimize penalties while maintaining smooth operations.

At Adamjee Auditors, we help businesses across Nairobi, Mombasa, Kisumu, Nakuru, and other regions stay audit-ready. Our services, including audit and assurance, tax compliance, bookkeeping, payroll, and CFO advisory services, provide businesses with professional support at every stage of a KRA audit.

Why KRA Audits Matter

The Kenya Revenue Authority (KRA) conducts audits to ensure businesses comply with tax laws including PAYE, VAT, corporate tax, withholding tax, and excise duties. Non-compliance can result in:

Penalties and interest for underreporting or late filing
Follow-up audits and prolonged scrutiny
Operational disruptions due to document requests
Reputational damage with clients, suppliers, and partners

Being proactive reduces these risks and gives you control over the audit process.

Step 1: Maintain Clean and Accurate Books

Accurate bookkeeping is the cornerstone of KRA audit readiness. Auditors examine:

Financial statements (profit & loss, balance sheet, cash flows)
Bank reconciliations
VAT returns and PAYE remittances
Sales and purchase invoices

Adamjee Auditors provides bookkeeping services that ensure records are always audit-ready.

Pro Tip: Every transaction should have supporting receipts, contracts, or invoices. Avoid unrecorded cash transactions.

Step 2: Conduct Internal Audit Checks

Internal audits help identify discrepancies before KRA does. Key focus areas:

VAT, PAYE, and withholding tax reconciliations
Verification of NSSF & NHIF contributions
Accurate application of corporate tax deductions
Recording of loans, advances, and related-party transactions

Learn more about our Audit Services Nairobi.

Step 3: Organize Supporting Documents

KRA auditors require supporting documents. Ensure easy access to:

Sales and purchase invoices
Payroll records and PAYE remittance slips
Bank statements
Supplier and client contracts
Loan agreements and capital injection documents

Well-organized records reduce audit time and demonstrate professionalism.

Step 4: Review Compliance With Tax Obligations

Businesses must stay current with monthly and annual tax obligations:

PAYE, VAT, and withholding tax
NSSF, NHIF, and Housing Levy
Corporate tax filing via KRA iTax
Excise duty and stamp duty

Adamjee Auditors Tax Compliance Kenya ensures businesses meet statutory obligations.

KRA Audit Preparation Checklist (with Timelines)

Task	Frequency	Deadline / Timeline	Responsible Person	Notes
Update bookkeeping & reconciliations	Monthly	End of month	Finance Manager	Ensure all transactions have receipts
Payroll verification (PAYE, NHIF, NSSF)	Monthly	5th of following month	HR/Payroll Officer	Include updated allowances & deductions
VAT & Withholding Tax review	Monthly	10th of following month	Accountant	Verify e-TIMS entries & payments
Corporate Tax filing	Annual	6 months after FY end	CFO / Accountant	Cross-check with prior year returns
Organize supporting documents	Ongoing	Before audit notice	Finance/Admin	Include contracts, invoices, bank statements
Internal audit checks	Quarterly	Quarterly review	Audit Team	Identify discrepancies & corrective actions
Staff training	Annually	Before fiscal year-end	HR/Finance	Prepare staff for audit queries

This checklist keeps businesses audit-ready year-round.

Step 5: Train Your Team

Staff should know how to handle KRA audit requests:

Appoint audit coordinators to liaise with KRA
Train staff on document preparation and retrieval
Escalate complex queries to finance leads or auditors rather than guessing

Adamjee Training offers workshops to prepare finance teams for audits.

Step 6: Engage Professional Support

Professional advisors provide:

Representation during audits
Pre-audit assessments and documentation review
Post-audit reporting and remediation

Adamjee Auditors ensures businesses remain compliant while minimizing audit risk.

Case Study:
A Nairobi SME faced a VAT audit discrepancy. Adamjee Auditors helped reconcile records before KRA assessed penalties, saving over KES 500,000 in fines.

Step 7: Implement Post-Audit Improvements

After the audit:

Correct any identified gaps
Implement automated payroll and bookkeeping systems
Update internal policies to prevent recurring errors
Schedule regular compliance reviews

Adamjee Auditors Payroll Services Kenya and bookkeeping keep businesses audit-ready year-round.

Frequently Asked Questions

What triggers a KRA audit?
Random selection, high-risk transactions, discrepancies, or third-party cross-checks.

How long does a KRA audit last?
Typically 1–4 weeks depending on size and complexity.

Can Adamjee Auditors represent my business?
Yes, full audit support and representation are provided.

Which documents are needed?
Invoices, receipts, payroll, bank statements, contracts, prior tax returns.

What happens if discrepancies are found?
KRA may assess additional tax, penalties, and interest. Professional advisory can mitigate impact.

Partner With Kenya’s Trusted Audit and Tax Advisors

Preparing for a KRA audit is strategic. Adamjee Auditors offers audit readiness, tax compliance, bookkeeping, payroll, and CFO advisory services to ensure smooth audits.

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