External audits are independent reviews of your company’s financial statements and internal controls. In Kenya, audits are required for most limited companies and organisations that fall under statutory reporting requirements. They provide assurance that the financial information you submit to stakeholders—investors, regulators, and lenders—is accurate and credible.
External auditors play a critical role in financial transparency. They review your accounting practices, assess risk, and ensure that your company complies with:
Kenyan Companies Act requirements
IFRS reporting standards
KRA tax compliance
Corporate governance frameworks
A positive audit outcome boosts business credibility and strengthens investor confidence.
Most auditors request the following:
Updated financial statements
Bank reconciliations
VAT, PAYE, NHIF, NSSF filings
Fixed asset registers
Stock records
Contracts and tax compliance certificates
Pre-cleaning is simply the process of ensuring your financial and operational records are organised, complete, and accurate before the auditor begins their work.
When records aren’t clean, auditors will keep requesting missing or unclear information. This leads to:
Extended audit timelines
Higher audit fees
Increased staff time
Clean and organised records give auditors confidence that your numbers are reliable. This reduces audit risks and minimises the likelihood of negative findings.
Preparing for an external audit doesn’t have to feel stressful or complicated. With the right steps, you can make the process smooth, efficient, and error-free. At Spondoo Kenya, we help businesses get audit-ready by organising their financial records, cleaning up accounting entries, and ensuring compliance with Kenyan standards. Below is a simple, well-explained guide on what clients should pre-clean before the auditor arrives.
Before an audit begins, the most important step is making sure all your financial documents are complete, neat, and easy to retrieve. Auditors rely heavily on these documents because they show proof of the transactions recorded in your accounting system.
Sales invoices – proof of revenue earned.
Purchase invoices – confirmation of expenses and supplier dealings.
Receipts – evidence that cash has come in or gone out.
Payment vouchers – internal approval showing a payment was authorised.
Petty cash records – small daily expenses that still affect your accounts.
Bank statements – external evidence confirming all bank movements.
When these records are clean and organised, the audit moves quickly. When they’re missing or messy, auditors spend extra time requesting clarifications, which slows down the process and increases costs. Good organisation shows that your business has structure and control.
Bank reconciliations are one of the first things auditors inspect because they reveal whether your internal records align with actual bank activity. Clean reconciliations show that all income and expenses flowing through your bank accounts have been fully accounted for, without hidden or unexplained items.
Every bank account has a reconciliation for each month.
Old unreconciled items (payments or deposits stuck for months) are resolved.
All bank charges, fees, and interest appearing in the bank statement exist in your books.
Any differences have a clear explanation, such as:
“Deposit in transit – cash deposited on 30 June, reflecting in July.”
Clean reconciliations tell auditors that your cashbook is reliable, that you monitor your accounts closely, and that there are no hidden transactions or unexplained gaps.
Debtors (customers who owe you) and creditors (suppliers you owe) form a major part of your financial health. Auditors analyse these balances to determine whether your business is collecting payments on time and whether you’re settling obligations responsibly.
An ageing report helps with this by showing how long each invoice has been outstanding — for example:
0–30 days
31–60 days
61–90 days
90+ days
Bring ageing schedules up to date.
Match payments to the correct invoices.
Follow up and explain any very old balances — either correct them or write them off if they’re no longer valid.
Prepare customer and supplier statements for possible confirmations.
This preparation makes it easy for auditors to verify that the amounts owed in your books truly reflect real obligations and real customers.
Payroll is heavily scrutinised because it affects taxes, legal compliance, and employee welfare. Auditors review payroll calculations as well as statutory submissions to ensure everything is accurate and compliant.
Ensure employee details align with their employment contracts.
Confirm that gross salaries recorded in the accounts match the payroll system.
Check that PAYE, NHIF, NSSF, Housing Levy, and other statutory deductions are:
calculated correctly,
paid to the right authorities,
supported by receipts and iTax filings.
Review casual workers and consultants to confirm correct treatment (e.g., withholding tax where required).
Auditors compare payroll summaries, payslips, contracts, and statutory submissions to confirm that salary expenses and tax deductions are consistent and fair.
Your fixed assets — office equipment, computers, vehicles, machinery, and more — need to be properly tracked and valued. Auditors use your fixed asset register to confirm whether your business owns what it claims and whether depreciation is being applied correctly.
Update the asset register with all additions and disposals during the year.
Remove assets you no longer own or use.
Confirm that depreciation has been calculated correctly for the year.
Physically tag assets wherever possible and ensure they can be located.
Auditors may pick a sample of items from your register and inspect them physically. A well-maintained register makes this process quick and straightforward, and it shows strong asset management.
For businesses that manage stock, inventory issues are often the biggest reason audits slow down. Inventory discrepancies can affect your revenue, profits, and the overall accuracy of your accounts — which is why auditors pay close attention to stock management.
Conduct an internal stock count and resolve any differences.
Separate and record damaged, expired, or obsolete items.
Ensure your costing method (FIFO, weighted average, etc.) is used consistently.
Prepare explanations for large differences between physical stock and system records.
Auditors may attend your stock count or perform independent spot checks. Clean stock records help validate your cost of sales, gross profit, and closing inventory value.
Contracts and legal documents provide the foundation for key financial transactions. They explain the terms and conditions under which money is earned or spent. Auditors review these documents to ensure the financial statements reflect actual agreements and obligations.
Lease agreements
Loan agreements
Customer or supplier contracts
SLAs (service-level agreements)
Corporate documents (CR12, incorporation certificates, annual returns)
By having these documents ready, you give auditors a complete picture of your business relationships and commitments.
If you want a clean, efficient audit with fewer queries and faster sign-off, Spondoo Kenya is here to help. We work with you before the audit to clean your books, organise your documents, and ensure you're fully audit-ready — saving you time, reducing costs, and protecting your reputation.