2.0 Audit framework and regulations

In Kenya, the audit framework and regulations are primarily governed by the Companies Act, Cap 486, and the Accountants Act, Cap 531. These laws, along with other relevant regulations and standards, establish the requirements and guidelines for conducting audits in Kenya. Here is an overview of the audit framework and regulations in Kenya:

1. Companies Act, Cap 486: The Companies Act in Kenya sets out the legal framework for companies and their audits. It includes provisions related to the appointment, qualifications, and duties of auditors, as well as requirements for audit committees and financial reporting.
2. Accountants Act, Cap 531: The Accountants Act regulates the accounting and auditing profession in Kenya. It establishes the Institute of Certified Public Accountants of Kenya (ICPAK) as the professional body responsible for regulating and licensing auditors. The Act outlines the qualifications, registration, and disciplinary processes for auditors in Kenya.
3. International Standards on Auditing (ISAs): Auditors in Kenya are required to follow the International Standards on Auditing issued by the International Auditing and Assurance Standards Board (IAASB). These standards provide guidance on the responsibilities of auditors, audit planning and procedures, risk assessment, and reporting.
4. Auditing Guidelines and Pronouncements: The Institute of Certified Public Accountants of Kenya (ICPAK) issues auditing guidelines, pronouncements, and practice notes that provide additional guidance and interpretation of the auditing standards in the Kenyan context. These guidelines are developed to enhance the quality and consistency of audits conducted in Kenya.
5. Capital Markets Authority (CMA): For entities listed on the Nairobi Securities Exchange (NSE), the Capital Markets Authority (CMA) plays a significant role in regulating and overseeing audits. The CMA issues regulations and guidelines that require listed companies to have their financial statements audited in accordance with applicable auditing standards.
6. Public Sector Audits: The Office of the Auditor General (OAG) is responsible for auditing the accounts and financial statements of public entities in Kenya. The OAG conducts audits of government ministries, departments, and agencies, as well as local authorities and other public sector entities, in accordance with the Public Audit Act.
7. Tax Audit Regulations: The Kenya Revenue Authority (KRA) has its own audit regulations and guidelines related to tax audits. These regulations specify the procedures and requirements for tax audits conducted by the KRA to ensure compliance with tax laws and regulations.