Extent of compliance with IFRS Financial Instrument Standards - a case study of Banks in Kenya
Ochieng', Yvonne Adhiambo
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The aim of this study is to identify the extent to which listed banks in Kenya comply with International Financial Reporting Standards, with particular reference to financial instruments IAS 32, IAS 39 and IFRS 7. It also seeks to identify the formal mechanism employed to monitor and enforce IFRS compliance in Kenya. In addition, it is further intended to identify the problems listed banks encounter in complying with IFRS.The level of mandatory compliance with lAS 32, JAS 39 and IFRS 7 was measured using a mandatory disclosure index (MDI) which the researcher developed from a self-constructed compliance checklist. An open ended questionnaire was also used to gather data for the study. The sample consisted of 42 registered banks and covers the period of2012. The overall results show a high degree of compliance with lAS 32, lAS 39 and IFRS 7, though not absolute. The study reveals the existence of a monitoring and enforcement mechanism which the researcher finds to be not too rigorous. Finally, the study identifies the number of regulatory requirement registered banks had to comply with in addition to the IFRS requirements, the ever changing IFRS, and the inability of the banks to automate the IFRS into their system to make it easier and faster for financial statement preparation, as some of the major challenges that registered banks go through in complying with the IFRS.