Less than 25 per cent of small and medium enterprises (SMEs) in the country have adopted International Financial Reporting Standards (IFRS), forcing majority of commercial banks to shun them.
The Institute of Certified Public Accountants of Kenya (ICPAK), says majority of the SMEs lack proper books making it hard for banks to ascertain their financial worthiness.
“What is hindering the SMEs is that avenue to properly put out their information in a way that providers of capital can give them money to shore up their business,” said acting ICPAK chief executive Edwin Makori.
“We sampled around 250 firms which are small- and medium-term enterprises. We only discovered 40 out of 250 using financial reporting standards.”
He was speaking in Nairobi during a workshop organised by the accountant’s body.
The two-day workshop was themed Best Policy Practices and Guidelines on Accounting and Insurance Regulation for Micro, Small and Medium-sized Enterprises (MSMEs).
Its objective is to assist decision makers and other key stakeholders in addressing issues of financial inclusion and in design and implementation of accounting and insurance policies to help MSMEs.
Mr Makori said the current situation affects the lifespan of businesses in a negative way.