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AUDITED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31ST DECEMBER 2015

Financial Review

4 ICPAKANNUALREPORTANDAUDITEDFINANCIALSTATEMENTS2015 ICPAKANNUALREPORTANDAUDITEDFINANCIALSTATEMENTS20155

Institute information 5 - 6

Report of the council 7 - 8

Statement of council’s responsibilities 9

Report of the independent auditor 10

Financial statements:

Statement of comprehensive income 11

Statement of financial position 12

Statement of changes in equity 13

Statement of cash flows 14

Notes 15 - 43

Table of contents Page

Chairman : FCPAFernandesO.Barasa -electedJune2015 FCPABensonO.Okundi -retiredJune2015Vice-chairman : FCPAJuliusW.MwatuMembers : CPAObareNyaega CPARoseMwaura CPASusanOyatsi CPAJuneKivinda -electedJune2015 CPASamuelOkello -electedJune2015 CPARashidM.Khamis,MBS -retiredJune2015

Mrs.DamarisKimosop -representingOtherprofession CPAGeoffreyMalombe -representingNationalTreasury FCPAPiusNduatih -representingKASNEB CPAWycliffeShamiah -representingCMAChiefExecutive&Secretarytothecouncil : CPADr.PatrickNgumi(PhD)

Council committees

Committee: Chairperson/Convener:

AuditRiskandCompliance CPAWycliffeShamiahDisciplinary FCPACharityMuya-Ngaruiya -appointedonApril2016 FCPADr.JonathanCiano -revokedonMarch2016FinanceandStrategy CPASamuelOkelloMemberServices CPARoseMwauraPractitionersDevelopment FCPAJuliusW.MwatuProfessionalStandards CPAMichaelMugasaPublicPolicyandGovernance FCPAJohnOdhiamboMudanyRegistrationandQualityAssurance FCPADr.JimMcFieResearchandDevelopment CPAObareNyaegaPublicSector CPASusanOyatsi

KCA University representatives

BoardofTrustees FCPAFernandesO.Barasa -electedJune2015 FCPABensonO.Okundi -RetiredJune2016 FCPAJoeMuchekehu FCPASteveLugalia FCPAJohnKabiru

FinanceCommittee CPAEverlyneM.MuriukiAuditRiskandGovernanceCommittee CPACharlesRingera

Secretary to the council

CPADr.PatrickNgumi(PhD)P.O.Box59963-00200NAIROBI.

Members of the Council

Institute Information For the Year Ended 31 December 2015


Institute Information For the Year Ended 31 December 2015 (Continued)

Registered Office and Principal Place of Business

CPACentreRuaraka,ThikaRoadP.O.Box59963-00200NAIROBI.Telephone :+254(020)2304226,2304227Mobile :+254727531006/733856262/721469796/721469169E-mail :[email protected] :www.icpak.com

Independent Auditor

MAZARSCertifiedPublicAccountants(K)GreenHouse,NgongRoadP.O.Box61120-00200NAIROBI.Telephone :+254-20-3861175/76/79Cell :0722-440270E-mail :[email protected] :www.mazars.co.ke

Principal Bankers

StandardCharteredBankofKenyaLimitedRuarakaBranchP.O.Box32886-00600NAIROBI.

BarclaysBankofKenyaLimitedMoiAvenueBranchP.O.Box30116-00100NAIROBI.

Legal Advisors

HamiltonHarrison&Mathews4thfloor,ICEABuildingKenyattaAvenueP.O.Box30333-00100NAIROBI.

Report of the Council For The Year Ended 31 December 2015

TheCouncilsubmittheirreportandtheauditedfinancialstatementsfortheyearended31stDecember2015,whichshowthestateoftheInstitute’sfinancialaffairs.

1. Incorporation

TheInstituteofCertifiedPublicAccountantsofKenya(ICPAK)isabodycorporateestablishedin1978undertheprovisionsoftheAccountantsAct,Chapter531oftheLawsofKenya(re-enactedastheAccountantsActNo.15of2008)andisdomiciledinKenya.Theaddressoftheregisteredofficeisassetoutonpage2.

2. Principal Activities

The principal activities of the Institute are to promote standards of professional competence and practiceamongstmembersoftheInstitute;topromoteresearchintothesubjectofAccountancyandFinanceandrelatedmatters,and thepublicationofbooks,periodicals, journalsandarticles inconnection therewith; topromoteinternationalrecognitionoftheInstituteandtheCPA(K)brand;advisetheKenyaAccountantsandSecretariesNationalExaminationBoard(KASNEB)onmattersrelatingtoexaminationsstandardsandpolicies;andtoadvisetheMinisterresponsibleforfinanceonmattersrelatingtofinancialaccountabilityinallsectorsoftheeconomy.

3. Membership

Activemembersatendofyear 16,711 11,671

Activemembersatbeginningofyear Practising 994 945 Nonpractising 9,221 7,873 Overseas 429 426 Retired 535 532 Associates 492 192

11,671 9,968Newmembersintheyear 5,120 1,910Deceasedandchangeofstatus (130) (30) 16,661 11,848Membersindefault -writtenoff (410) (313) -recovered 460 136Activemembersatendofyear 16,711 11,671

Fullmembers 15,752 11,279Associatemembers 959 392Activemembersatendofyear 16,711 11,671

Activemembersarethosememberswhoowelessthantwoyearssubscriptionfeesasatyearend.

2015No.

2014No.


Report of the Council For The Year Ended 31 December 2015 (Continued)

5. Members of the Council

Thecouncilmemberswhoheldofficeduringtheyearandtothedateofthisreportarelistedonpage89.

6. Financial Statements

Atthedateofthisreport,theCouncilwasnotawareofanycircumstanceswhichwouldhaverendered thevaluesattributedtotheassetsinthefinancialstatementsmisleading.

7. Auditor

TheInstitute’sauditorMAZARS,CertifiedPublicAccountants(K)hasindicatedwillingnesstocontinuein office.

By order of the Council

CPADr.PatrickNgumi(PhD) Secretary to the Council _____________________

4. Results for the Year

Totalcomprehensiveincomefortheyear

2015Kshs. ‘000’

7,380

2014Kshs. ‘000’

2,956

TheAccountantsActNo.15of2008requirestheCounciltopreparefinancialstatementsforeachfinancialyearthatgiveatrueandfairviewofthestateofaffairsoftheInstituteasattheendofthefinancialyearandofitsoperatingresultsfortheyear.ItalsorequirestheCounciltoensurethattheInstitutekeepsproperaccountingrecordsthatdisclose,withreasonableaccuracy,thefinancialpositionoftheInstitute.TheCouncilisalsoresponsibleforsafeguardingtheassetsoftheInstitute.

TheCouncilacceptsresponsibility for thepreparationandfairpresentationoffinancialstatementsthatare free frommaterialmisstatementwhetherduetofraudorerror.Italsoacceptsresponsibilityfor:

(i) designing,implementingandmaintaininginternalcontrolrelevanttothepreparationandfairpresentation of the financialstatements;(ii)selectingandapplyingappropriateaccountingpolicies;and(iii)makingaccountingestimatesandjudgementsthatarereasonableinthecircumstances.

TheCouncilisoftheopinionthatthefinancialstatementsgiveatrueandfairviewofthestateofthefinancialaffairsoftheInstituteasat31December2015andofitsfinancialperformanceandcashflowsfortheyearthenendedinaccordancewithInternationalFinancialReportingStandardsandtherequirementsoftheAccountantsActNo.15of2008.

NothinghascometotheattentionoftheCounciltoindicatethattheInstitutewillnotremainagoingconcernforatleastthenexttwelvemonthsfromthedateofthisstatement.

ApprovedbytheCouncilon___________________________andsignedonitsbehalfby:-

_________________________ _________________________

FCPAFernandesO.BarasaCPASamuelOkelloChairman Convener Finance and Strategy committee

Statement of the Council Responsibilities on the Financial Statements For the year ended 31 December 2015

17th May 2016

17th May 2016


Report on the Financial Statements

Wehaveauditedtheaccompanyingfinancialstatementsof the InstituteofCertifiedPublicAccountantsofKenya,setoutonpages 11 to43whichcomprise thestatementoffinancialpositionasat31December2015and thestatementofcomprehensiveincome,statementofchangesinequityandstatementofcashflowsfortheyearthenended,andasummaryofsignificantaccountingpoliciesandotherexplanatoryinformation.

The Council’s Responsibility for the Financial Statements

TheCouncil is responsible for thepreparationand fairpresentationof thesefinancial statements inaccordancewithInternationalFinancialReportingStandardsandtherequirementsoftheAccountantsActNo.15of2008;andforsuchinternalcontrolastheCouncildeterminesisnecessarytoenablepreparationoffinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.

Auditor’s Responsibility

Ourresponsibilityistoexpressanindependentopiniononthesefinancialstatementsbasedonouraudit.WeconductedourauditinaccordancewithInternationalStandardsonAuditing.Thosestandardsrequirethatwecomplywithethicalrequirementsandplanandperformtheaudittoobtainreasonableassurancewhetherthefinancialstatementsarefreefrommaterialmisstatement.

Anaudit involvesperformingprocedures toobtainauditevidenceabout theamountsanddisclosures in thefinancialstatements.Theproceduresselecteddependontheauditor’s judgment, includingtheassessmentofrisksofmaterialmisstatement of financial statements, whether due to fraud or error. In making those risk assessments, the auditorconsidersinternalcontrolsrelevanttotheentity’spreparationandfairpresentationofthefinancialstatementsinordertodesignauditproceduresthatareappropriateinthecircumstances,butnotforthepurposeofexpressinganopinionontheeffectivenessoftheentity’sinternalcontrol.Anauditalsoincludesevaluatingtheappropriatenessofaccountingpoliciesusedandthereasonablenessofaccountingestimatesmadebymanagement,aswellasevaluatingtheoverallpresentationofthefinancialstatements.

Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforouropinion.

Opinion

InouropiniontheaccompanyingfinancialstatementsgiveatrueandfairviewofthefinancialpositionoftheInstituteofCertifiedPublicAccountantsofKenyaat31December2015andofitsfinancialperformanceandcashflowsfortheyearthenendedinaccordancewithInternationalFinancialReportingStandardsandtheAccountantsActNo.15of2008.

Theengagementpartnerresponsiblefortheauditresultinginthisindependentauditor’sreportisFCPACharlesGathuto-P/No1231

_________________________ MAZARSCertified Public Accountants (K)Nairobi _________________________

Report of the Independent AuditorTo the members of the Institute of Certified Public Accountants of KenyaFor the year ended 31 December 2015

Financial Statements For the year ended 31 December 2015

Statement of Comprehensive Income For the year ended 31 December 2015

Income

SubscriptionsMembers’servicesCPACentreSocialresponsibilityactivities

Expenses

MemberservicesSocialresponsibilityactivitiesOperatingexpenses

Operating surplus/(deficit)

NetGrantincome

Otherincome

Surplus for the year

Othercomprehensiveincome

Total comprehensive income for the year

Note

4567

578

9

10

(a)

(a)

(b)(b)

2015Kshs. ‘000’

191,305313,671

5,338247

510,561

161,864434

345,966

508,264

2,297

3,280

1,803

7,380

-

7,380

2014Kshs. ‘000’

145,308246,134

5,439730

397,611

137,363670

259,912

397,945

(334)

580

2,710

2,956

-

2,956

17th May 2016


Statement of Financial Position as at 31 December 2015

Financial Statements For the year ended 31 December 2015 (Continued)

ASSETS

Non current assets

PropertyandequipmentWork-in-progressInvestmentpropertyPrepaidoperatingleaseIntangibleassetsOtherreceivablesInvestmentinCPACentreLimited

Current assetsInventoriesTradeandotherreceivablesCashandbankbalances

Total assets

EQUITY AND LIABILITIESEquityGeneralfundRevaluationreserveDesignatedfund

Non current liabilitiesRetentiononconstructionDuetoCPACentreLimitedBorrowings

Current liabilitiesRetentiononconstructionBorrowingsTradeandotherpayablesDeferredgrantincomeAdvancesubscriptions

Total equity and liabilities

Note

11121314151617

181920

21

222623

2223249 (c)

2015Kshs. ‘000’

84,633954,808

21,0003,3932,734

115,58050

1,182,198

3,348107,44525,286

136,079

1,318,277

613,92454,352

5,561673,837

-50

343,820343,870

80,79559,484104,471

5,54950,271

300,5701,318,277

2014Kshs. ‘000’

84,892700,71021,000

3,523782

85,47150

896,428

3,79299,08927,128

130,009

1,026,437

604,09956,6105,748

666,457

58,98150

139,318198,349

-51,98269,37614,02726,246161,631

1,026,437

Thefinancialstatementsonpages11to43wereauthorisedforissuebytheCouncilon

__________________________andweresignedonitsbehalfby:

_________________________ _________________________FCPAFernandesO.BarasaCPASamuelOkelloChairman Covenor Finance and Strategy Committee

Statement of Changes in Equity


At 1 January 2014

Changes in equity in 2014TotalcomprehensiveincomefortheyearTransferofexcessdepreciationSurplusfromsocialresponsibility

At 31 December 2014

At 1 January 2015

Changes in equity in 2015

TotalcomprehensiveincomefortheyearTransferofexcessdepreciationDeficitfromsocialresponsibility

At 31 December 2015

Note

7

General Fund

Kshs. ‘000’

598,945

2,9562,258

(60)

604,099

604,099

7,3802,258

187

613,924

Designated Fund

Kshs. ‘000’

5,688

--

60

5,748

5,748

--

(187)

5,561

Revaluation Reserve

Kshs. ‘000’

58,868

-(2,258)

-

56,610

56,610

-(2,258)

-

54,352

TotalKshs. ‘000’

663,501

2,956--

666,457

666,457

7,380--

673,837

17th May 2016


Statement of Cash Flows


Cash flows from operating activities:

Totalcomprehensiveincomefortheyear

Adjustments for:

DepreciationandamortisationAmortisationofprepaidoperatingleaserentalLossondisposalofequipmentInterestincome

Surplus/(deficit)beforeworkingcapitalchanges

IncreaseinVATrecoverableonconstruction(Decrease)/IncreaseininventoriesIncreaseintradeandotherreceivablesIncreaseintradeandotherpayablesProceedsfromgrantsPaymentsmadeusinggrantsIncrease/(Decrease)inadvancesubscriptions

InterestincomeNetcashgeneratedfromoperatingactivities

Cash flows from investing activities:

PurchaseofpropertyandequipmentPurchaseofintangibleassetProceedsfromsaleofpropertyandequipmentRetentiononconstructionforworkcertifiedWorkinprogressNetcash(usedin)investingactivities

Cash flows from financing activities:

ProceedsfromlongtermborrowingsInterestpaid(capitalisedunderworkinprogress)Netcashfromfinancingactivities

Decrease in cash and cash equivalents

At start of year

At end of year

Note

888

10

1618192499

10

1115

2211

23

20

2015Kshs. ‘000’

7,380

7,113130

--

14,623

(30,109)444

(8,356)35,09521,814

(30,292)24,025

27,244

-27,244

(6,155)(2,651)

-21,814

(254,098)(241,090)

212,004

212,004

(1,842)

27,128

25,286

2014Kshs. ‘000’

2,956

5,996130

19(2,450)

6,651

(33,933)(2,030)(5,533)10,88217,908

(3,881)(7,574)

(17,510)

2,450(15,060)

(4,917)-

3324,610

(307,885)(288,159)

191,300

191,300

(111,919)

139,047

27,128

1. Summary of significant accounting policies

Theprincipalaccountingpoliciesadoptedinthepreparationofthesefinancialstatementsaresetoutbelow.Thesepolicieshavebeenconsistentlyappliedovertheyearspresentedunlessotherwisestated.

a) Basis of preparation

ThefinancialstatementsarepreparedonagoingconcernbasisincompliancewithInternationalFinancialReportingStandards(IFRS).TheyarepresentedinKenyaShillings(Kshs)whichisalsothefunctionalcurrency(see(c)below),roundedtothenearestthousand(Kshs.‘000’).

Thefinancialstatementscompriseastatementofcomprehensiveincome,statementoffinancialposition,statementofchangesinequity,statementofcashflows,andnotes.Incomeandexpenses,includingthecomponentsofothercomprehensive income,are recognised in the statementof comprehensive income.Othercomprehensive incomecomprisesitemsofincomeandexpenses(includingreclassificationadjustments).

ThepreparationoffinancialstatementsinconformitywithInternationalFinancialReportingStandardsrequirestheuseofestimatesandassumptions.ItalsorequiresmanagementtoexerciseitsjudgmentintheprocessofapplyingtheaccountingpoliciesadoptedbytheInstitute.AlthoughsuchestimatesandassumptionsarebasedontheCouncil’sbest knowledge of the information available, actual results may differ from those estimates. The judgments andestimatesarereviewedattheendofeachreportingperiod,andanyrevisionstosuchestimatesarerecognisedintheyearinwhichtherevisionismade.Theareasinvolvingthejudgmentsofmostsignificancetothefinancialstatements,andthesourcesofestimationuncertaintythathaveasignificantriskofresultinginamaterialadjustmentwithinthenextfinancialyear,aredisclosedinNote2.

Notes For the year ended 31 December 2015


1. Summary of significant accounting policies (Continued)

Measurement basis

Themeasurementbasisusedisthehistoricalcostbasisexceptwhereotherwisestatedintheaccountingpolicies below.

Forthoseassetsandliabilitiesmeasuredatfairvalue,fairvalueisthepricethatwouldbereceivedtosellanassetorpaidtotransferaliabilityinanorderlytransactionbetweenmarketparticipantsatthemeasurementdate.Whenmeasuringthefairvalueofanassetoraliability,theInstituteusesmarketobservabledataasfaraspossible.Ifthe fairvalueofanassetora liability isnotdirectlyobservable, it isestimatedby the Instituteusingvaluationtechniquesthatmaximisetheuseofrelevantobservable inputsandminimise theuseofunobservable inputs (e.g.byuseof themarketcomparableapproachthatreflectsrecenttransactionpricesforsimilaritemsordiscountedcashflowanalysis).Inputsusedareconsistentwiththecharacteristicsoftheasset/liabilitythatmarketparticipantswouldtakeintoaccount.

Fairvaluesarecategorisedintothreelevelsinafairvaluehierarchybasedonthedegreetowhichtheinputstothemeasurementareobservableandthesignificanceoftheinputstothefairvaluemeasurementinitsentirety:

• Level1fairvaluemeasurementsarethosederivedfromquotedprices(unadjusted)inactivemarketsforidentical assetsorliabilities.• Level2fairvaluemeasurementsarethosederivedfrominputsotherthanquotedpricesincludedwithinLevel1 thatareobservablefortheassetorliability,eitherdirectly(ieasprices)orindirectly(iederivedfromprices).• Level3fairvaluemeasurementsarethosederivedfromvaluationtechniquesthatincludeinputsfortheassetor liabilitythatarenotbasedonobservablemarketdata(unobservableinputs).

TransfersbetweenlevelsofthefairvaluehierarchyarerecognisedbytheInstituteattheendofthereportingperiodduringwhichthechangeoccurred.

Notes For the year ended 31 December 2015 (Continued)


b) New and revised standards

i) Adoption of new and revised standards

Thefollowingnewandrevisedstandardsandinterpretationshavebecomeeffectiveforthefirsttimeinthefinancial yearbeginning1January2015andhavebeenadoptedbytheInstitutewhererelevanttoitsoperations:

• AmendmentstoIAS19titledDefinedBenefitPlans:EmployeeContributions(issuedinNovember2013)–The amendments, applicable retrospectively to annual periods beginning on or after 1 July 2014, clarify the requirementsthatrelatetohowcontributionsfromemployeesorthirdpartiesthatarelinkedtoserviceshould beattributedtoperiodsofservice.Inparticular,contributionsthatareindependentofthenumberofyearsof servicecanberecognisedasareductionintheservicecostintheperiodinwhichtherelatedserviceisrendered (insteadofattributingthemtotheperiodsofservice).

• AmendmenttoIAS16andIAS38(AnnualImprovementstoIFRSs2010–2012Cycle,issuedinDecember2013) –Theamendment,applicabletoannualperiodsbeginningonorafter1July2014,clarifieshowthegrosscarrying amountandtheaccumulateddepreciation/amortisationaretreatedwhereanentityusestherevaluationmodel.

• Amendment to IAS 24 (Annual Improvements to IFRSs 2010–2012 Cycle , issued in December 2013) - The amendment,applicabletoannualperiodsbeginningonorafter1July2014,clarifieshowpaymentstoentities providingmanagementservicesaretobedisclosed.

• Amendment to IFRS 8 (Annual Improvements to IFRSs 2010–2012 Cycle , issued in December 2013) - The amendment,applicabletoannualperiodsbeginningonorafter1July2014,requiresdisclosureofthejudgements madebymanagementinapplyingtheaggregationcriteriatooperatingsegments,andclarifiesthatreconciliations ofthetotalofthereportablesegments’assetstotheentity’sassetsarerequiredonlyifthesegmentassetsare reportedregularly.

• Amendment to IAS 40 (Annual Improvements to IFRSs 2011–2013 Cycle , issued in December 2013) - The amendment,applicabletoannualperiodsbeginningonorafter1July2014,clarifiesthat IFRS3andIAS40 arenotmutuallyexclusive:whileIAS40assistspreparerstodistinguishbetweeninvestmentpropertyandowner- occupied property, IFRS 3 helps them to determine whether the acquisition of an investment property is a businesscombination.

• Amendment to IFRS 3 (Annual Improvements to IFRSs 2011–2013 Cycle , issued in December 2013) - The amendment,applicableprospectivelytoannualperiodsbeginningonorafter1July2014,clarifiesthatIFRS3 excludesfromitsscopetheaccountingfortheformationofanyjointarrangementinthefinancialstatementsof thejointarrangementitself.




b) New and revised standards (continued)

i) Adoption of new and revised standards (continued)

• Amendment to IFRS 13 (Annual Improvements to IFRSs 2011–2013 Cycle, issued in December 2013) - The amendment,applicabletoannualperiodsbeginningonorafter1July2014,clarifiesthattheportfolioexception inIFRS13-allowinganentitytomeasurethefairvalueofagroupoffinancialassetsandfinancialliabilitiesona netbasis-appliestoallcontracts(includingnon-financial)withinthescopeofIAS39/IFRS9.

TheadoptionoftheabovewhererelevanthashadnomaterialeffectontheInstitute’saccountingpoliciesordisclosures.

ii) New and revised standards and interpretations in issue but not yet effective

Atthedateofauthorisationofthesefinancialstatements,thefollowingrevisedstandardsandinterpretationswereinissuebutarenotyeteffectivefortheyearbeginning1stJanuary2015.TheInstitutehasnotadoptedanyoftheserevisedstandards,amendmentsandinterpretationsinadvanceoftheeffectivedate:

• IFRS14RegulatoryDeferralAccounts(issuedinJanuary2014)-Thenewstandard,effectiveforannualaccounting periodsbeginningonorafter1January2016,definesaregulatorydeferralaccountbalanceandallowsentities tocontinuetoapplytheirexistingpolicyforregulatorydeferralaccountbalances,butrequirescertaindisclosures.

• AmendmentstoIFRS11titledAccountingforAcquisitionsofInterestsinJointOperations(issuedinMay2014) –Theamendments,applicableprospectively toannualperiodsbeginningonorafter1January2016,require anacquirerofaninterestinajointoperationinwhichtheactivityconstitutesabusiness(asdefinedinIFRS3) toapplyallofthebusinesscombinationsaccountingprinciplesanddisclosureinIFRS3andotherIFRSs,except forthoseprinciplesthatconflictwiththeguidanceinIFRS11.Theamendmentsapplybothtotheinitialacquisition ofaninterestinajointoperation,andtheacquisitionofanadditionalinterestinajointoperation(inthelatter case,previouslyheldinterestsarenotremeasured).

• AmendmentstoIAS16andIAS38titledClarificationofAcceptableMethodsofDepreciationandAmortisation (issuedinMay2014)–Theamendmentsaddguidanceandclarifythat(i)theuseofrevenue-basedmethods tocalculatethedepreciationofanassetisnotappropriatebecauserevenuegeneratedbyanactivitythatincludes theuseofanassetgenerallyreflectsfactorsotherthantheconsumptionoftheeconomicbenefitsembodiedin theasset,and(ii)revenueisgenerallypresumedtobeaninappropriatebasisformeasuringtheconsumptionof theeconomicbenefitsembodiedinanintangibleasset;however,thispresumptioncanberebuttedincertain limitedcircumstances.Theyareprospectivelyeffectiveforannualperiodsbeginningonorafter1January2016.

• AmendmentstoIAS16andIAS41titledAgriculture:BearerPlants(issuedinJune2014)–Theamendments, applicabletoannualperiodsbeginningonorafter1January2016,definebearerplants–ielivingplantswhich areusedsolelytogrowproduceoverseveralperiodsandusuallyscrappedattheendoftheirproductivelives(eg grapevines,rubbertrees,oilpalms)-andincludethemwithinIAS16’sscopewhiletheproducegrowingon bearerplantsremainswithinthescopeofIAS41.




ii) New and revised standards and interpretations in issue but not yet effective (continued)

•Amendments to IAS27 titledEquityMethod inSeparateFinancialStatements (issued inAugust2014)–The amendments,applicabletoannualperiodsbeginningonorafter1January2016,reinstatetheequitymethod optionallowingentitiestousetheequitymethodtoaccountforinvestmentsinsubsidiaries,jointventuresand associatesintheirseparatefinancialstatements.

•IFRS15RevenuefromContractswithCustomers(issuedinMay2014)-Thenewstandard,effectiveforannual periodsbeginningonorafter1January2018,replacesIAS11,IAS18andtheirinterpretations(SIC-31andIFRIC 13,15and18).Itestablishesasingleandcomprehensiveframeworkforrevenuerecognitiontoapplyconsistently across transactions, industriesandcapitalmarkets,witha coreprinciple (basedonafive-stepmodel tobe appliedtoallcontractswithcustomers),enhanceddisclosures,andneworimprovedguidance.

•IFRS9Financial Instruments (issued in July2014)–This standardwill replace IAS39 (andall theprevious versionsofIFRS9)effectiveforannualperiodsbeginningonorafter1January2018.Itcontainsrequirementsfor theclassificationandmeasurementoffinancialassetsandfinancialliabilities,impairment,hedgeaccounting andderecognition:

* IFRS9requiresallrecognisedfinancialassetstobesubsequentlymeasuredatamortisedcostorfairvalue (throughprofitorlossorthroughothercomprehensiveincome),dependingontheirclassificationbyreference tothebusinessmodelwithinwhichtheyareheldandtheircontractualcashflowcharacteristics.* Forfinancialliabilities,themostsignificanteffectofIFRS9relatestocaseswherethefairvalueoptionis taken:theamountofchangeinfairvalueofafinancialliabilitydesignatedasatfairvaluethroughprofitor lossthat isattributabletochanges inthecreditriskof that liability isrecognised inothercomprehensive income(ratherthaninprofitorloss),unlessthiscreatesanaccountingmismatch.* For the impairment of financial assets, IFRS 9 introduces an “expected credit loss” model based on the conceptofprovidingforexpectedlossesatinceptionofacontract;itwillnolongerbenecessaryforthereto beobjectiveevidenceofimpairmentbeforeacreditlossisrecognised.* Forhedgeaccounting,IFRS9introducesasubstantialoverhaulallowingfinancialstatementstobetterreflect howriskmanagementactivitiesareundertakenwhenhedgingfinancialandnon-financialriskexposures.* ThederecognitionprovisionsarecarriedoveralmostunchangedfromIAS39.

•Amendment to IAS 19 (Annual Improvements to IFRSs 2012–2014 Cycle, issued in September 2014) - The amendment,applicabletoannualperiodsbeginningonorafter1January2016,clarifiesthatthehighquality corporatebondsusedinestimatingthediscountrateforpost-employmentbenefitsshouldbedenominatedin thesamecurrencyasthebenefitstobepaid.





ii) New and revised standards and interpretations in issue but not yet effective (continued)

• Amendment to IFRS 5 (Annual Improvements to IFRSs 2012–2014 Cycle, issued in September 2014) - The amendment, applicable prospectively to annual periods beginning on or after 1 January 2016, adds specific guidancewhenanentityreclassifiesanasset(oradisposalgroup)fromheldforsaletoheldfordistributionto owners,orviceversa,andforcaseswhereheld-for-distributionaccountingisdiscontinued.

• Amendment to IFRS 7 (Annual Improvements to IFRSs 2012–2014 Cycle, issued in September 2014) - The amendment,applicabletoannualperiodsbeginningonorafter1January2016,addsguidancetoclarifywhether aservicingcontractiscontinuinginvolvementinatransferredasset.

• AmendmentstoIFRS10andIAS28titledSaleorContributionofAssetsbetweenanInvestoranditsAssociateor Joint Venture (issued in September 2014) – The amendments, applicable prospectively to annual periods beginningonorafter1January2016,addressacurrentconflictbetweenthetwostandardsandclarifythatgain orlossshouldberecognisedfullywhenthetransactioninvolvesabusiness,andpartiallyifitinvolvesassetsthat donotconstituteabusiness.

• AmendmentstoIFRS10,IFRS12andIAS28titledInvestmentEntities:ApplyingtheConsolidationException (issued inDecember2014)–Theamendments,applicabletoannualperiodsbeginningonorafter1January 2016,clarifytheapplicationoftheconsolidationexceptionforinvestmententitiesandtheirsubsidiaries.

• AmendmentstoIAS1titledDisclosureInitiative(issuedinDecember2014)–Theamendments,applicableto annual periods beginning on or after 1 January 2016, clarify guidance on materiality and aggregation, the presentationofsubtotals,thestructureoffinancialstatementsandthedisclosureofaccountingpolicies.

TheCouncilhasassessedthepotentialimpactoftheaboveandexpectthattheywillnothaveasignificantimpactontheInstitute’sfinancialstatementsfor2016.



c) Foreign currency transactions

Oninitialrecognition,alltransactionsarerecordedinthefunctionalcurrency(thecurrencyoftheprimaryeconomicenvironmentinwhichtheInstituteoperates),whichisKenyaShillings.

Transactionsinforeigncurrenciesduringtheyearareconvertedintothefunctionalcurrencyusingtheexchangerateprevailingatthetransactiondate.Monetaryassetsandliabilitiesatthereportingdatedenominatedinforeigncurrenciesaretranslatedintothefunctionalcurrencyusingtheexchangerateprevailingasatthatdate.Theresultingforeign exchange gains and losses from the settlement of such transactions and from year-end translation arerecognisedonanetbasisinthestatementofcomprehensiveincomeintheyearinwhichtheyarise.

d) Revenue recognition

RevenuerepresentsthefairvalueofconsiderationreceivedorreceivablefortheservicesofferedbytheInstitute.ItisrecognisedwhenitisprobablethatfutureeconomicbenefitswillflowtotheInstituteandtheamountofrevenuecanbemeasuredreliably.Itisstatednetofrebatesanddiscounts.

(i)Subscriptionincomefromactivemembersisrecognisedintheyearinwhichitisdue. Activemembersareconsideredtobethosemembers: -whoareuptodatewiththeirsubscription;and/or -owinglessthantwoyears.(ii)Subscriptionincomefromothermembersisrecognisedwhenitisreceivedandistreatedasrecovery.(iii)Registrationfeeisrecognisedonmemberapplication.(iv)Memberservicesincomeisrecogniseduponservicedelivery.(v)Rentalincomeisrecognisedonastraight-linebasisovertheperiodofthelease.(vi)Interestincomeisrecognisedonatimeproportionbasisusingtheeffectiveinterestmethod.

e) Property, equipment and depreciation

Allpropertyandequipment is initiallyrecordedatcostandthereafterstatedathistoricalcost lessaccumulateddepreciation and accumulated impairment except for buildings. Historical cost comprises expenditure initiallyincurredtobringtheassettoitslocationandconditionreadyforitsintendeduse.

Buildingsaresubsequentlyshownatmarketvalue,basedonperiodicbutatleasttriennialvaluationscarriedoutbyexternalindependentvaluers,lesssubsequentdepreciation.Anyaccumulateddepreciationatthedateofrevaluationiseliminatedagainstthegrosscarryingamountoftheasset,andthenetamountisrestatedtotherevaluedamountoftheasset.

Subsequentcostsareincludedintheasset’scarryingamountorrecognisedasaseparateasset,asappropriate,onlywhenitisprobablethatfutureeconomicbenefitsassociatedwiththeitemwillflowtotheInstituteandthecostcanbereliablymeasured.Thecarryingamountofthereplacedpartisderecognised.Allotherrepairsandmaintenancearechargedtotheprofitorlossduringthefinancialyearinwhichtheyareincurred.




e) Property, equipment and depreciation (continued)

Increases in the carrying amount arising on revaluation are recognised in other comprehensive income andaccumulated inequityunder theheadingof revaluationsurplus.Decreases thatoffsetprevious increasesof thesameassetare recognised inothercomprehensive income.Allotherdecreasesarecharged to thestatementofcomprehensiveincome.Annually,thedifferencebetweendepreciationchargebasedontherevaluedcarryingamountoftheassetchargedtothestatementofcomprehensiveincomeanddepreciationbasedontheasset’soriginalcostistransferredfromtherevaluationsurplusreservetothegeneralfund.

Depreciationiscalculatedonthestraight-linebasistowritedownthecostofeachasset,ortherevaluedamount,toitsresidualvalueoveritsestimatedusefullifeusingthefollowingrates:

BuildingsOverthe42yeartermoftheleaseholdlandEquipment4yearsComputers4yearsFurnitureandfittings10years

Gainsandlossesondisposalofpropertyandequipmentaredeterminedbycomparingtheproceedswiththecarryingamountandaretakenintoaccountindeterminingthesurplusfortheyear.Ondisposalofrevaluedassets,amountsintherevaluationreserverelatingtothatassetaretransferredtothegeneralfund.

f) Investment property

Investmentpropertyispropertyheldtoearnrentalsorforcapitalappreciationorboth.Itisalongterminvestmentin buildings that are not occupied substantially for own use. Investment property is initially recognised at costandsubsequentlycarriedat fairmarketvalue,basedonperiodicbutat least triennialvaluationscarriedoutbyexternalindependentvaluers.Gainsorlossesarisingfromchangesinfairvaluearerecordedinthestatementofcomprehensiveincome.

Subsequentexpenditureon investmentpropertywheresuchexpenditure increases the futureeconomicvalue inexcessoftheoriginalassessedstandardofperformanceisaddedtothecarryingamountoftheinvestmentproperty.Allotherexpenditureisrecognisedasanexpenseintheyearinwhichitisincurred.

Gainsandlossesondisposalofinvestmentpropertyaredeterminedbyreferencetotheircarryingamountandaretakenintoaccountindeterminingoperatingsurplus.

g) Leases

Leasesofassetsunderwhichasignificantportionoftherisksandrewardsofownershipareeffectivelyretainedbythelessorareclassifiedasoperatingleases.

Amortisationofprepaidoperatingleaserentalsischargedtothestatementofcomprehensiveincomeonastraightlinebasisoverthe42yeartermoftheleaseholdland.



h) Intangible assets

Computer software

Computersoftwarelicencesarecapitalisedonthebasisofthecostsincurredtoacquireandbringtousethespecificsoftware.Thesecostsareamortisedovertheirestimatedusefullifeofthreeyears.

Costs associatedwithdevelopingormaintaining computer softwareprogrammesare recognisedas anexpenseas incurred.Costs thataredirectlyassociatedwith theproductionof identifiableandunique softwareproductscontrolledbytheInstitute,andthatwillprobablygenerateeconomicbenefitsexceedingcostsbeyondoneyear,arerecognisedasintangibleassets.Directcostsincludesoftwaredevelopmentstaffcostsandanappropriateportionofrelevantoverheads.

i) Impairment of non-current assets

Internalandexternalsourcesofinformationarereviewedateachreportingdatetoidentifyindicationsthatassetsmaybeimpairedoranimpairmentlosspreviouslyrecognisednolongerexistsormayhavedecreased.

Ifanysuchindicationexists,theasset’srecoverableamountisestimated.Therecoverableamountofanassetisthehigherofitsfairvaluelesscoststosellandvalueinuse.Animpairmentlossisrecognisedinthestatementofcomprehensiveincomewheneverthecarryingamountofanassetexceedsitsrecoverableamount.

An impairment loss is reversed if there has been a change in the estimates used to determine the recoverableamountandwhichresultsinanincreaseintherecoverableamount.Areversalofimpairmentlossislimitedtotheasset’scarryingamountthatwouldhavebeendeterminedhadnoimpairmentlossbeenrecognisedinprioryears.Reversalsof impairment lossesarecredited to thestatementofcomprehensive income in theyear inwhich thereversalsarerecognised.

j) Inventories

Inventoriesarestatedatthelowerofcostandnetrealisablevalue.Costisdeterminedbythefirst-infirst-out(FIFO)method.Netrealisablevalueistheestimateofthesellingpriceintheordinarycourseofbusiness,lessthesellingexpenses.

k) Financial instruments

Classification

TheInstituteclassifiesitsfinancialinstrumentsintothefollowingcategories:

Loans and receivables, whichcomprisenon-derivativefinancialassetswithfixedordeterminablepaymentsthatare not quoted in an active market, and excludes assets which the entity intends to sell immediately or in theneartermorthosewhichtheentityuponinitialrecognitiondesignatesasatfairvaluethroughprofitorlossorasavailable-for-salefinancialassets.

Financial liabilities,whichcompriseallfinancialliabilitiesexceptfinancialliabilitiesatfairvaluethroughprofitorloss.




k) Financial instruments (continued)

Recognition and measurement

Financial assets

Financialassetsareinitiallyrecognisedatfairvalue.TheInstitute’sfinancialassetswhichincludecashandcashequivalentsandreceivablesfallintothefollowingcategories:

Cash and cash equivalents: For the purposes of the statement of cash flows, cash and cash equivalents comprisecashinhandandshorttermmarketablesecurities.

Receivables: Receivablesare carriedat original invoicedamount lessanestimatemade fordoubtful debts basedonareviewofalloutstandingamountsattheyear-end.Baddebtsarewrittenoffintheyearinwhichthey areidentified.Subsequentrecoveriesofamountspreviouslywrittenoffarecreditedtoincomeintheyearoftheir recovery.

Financial liabilities

Financial liabilities including trade and other payables are initially recognised at fair value and subsequentlymeasuredatamortisedcost,usingtheeffectiveinterestratemethod.

l) Cash and cash equivalents

Cashandcashequivalentsincludecashinhandanddemandandtermdeposits,withmaturitiesofthreemonthsorlessfromthedateofacquisition,thatarereadilyconvertibletoknownamountsofcashandwhicharesubjecttoaninsignificantriskofchangesinvalue,netofbankoverdrafts.Inthestatementoffinancialperformance,bankoverdraftsareincludedasborrowingsundercurrentliabilities.

m) Employee benefits

Post-employment benefit obligations

The Institute operates a defined contribution staff retirement benefit scheme for its employees. The scheme isadministeredbyInsuranceCompanyofEastAfricaandisfundedbycontributionsfromboththeInstituteandtheemployees.TheInstitute’scontributionstothedefinedcontributionretirementbenefitschemearechargedtothestatementofcomprehensiveincomeintheyearinwhichtheyrelate.

The Institute and its employees contribute to the National Social Security Fund (NSSF), a statutory definedcontributionschemeregisteredundertheNSSFAct.TheInstitute’scontributionstothedefinedcontributionschemearechargedtothestatementofcomprehensiveincomeintheyeartowhichtheyrelate.

Employees’ entitlements

The estimated monetary liability for employees’ accrued annual leave entitlement and gratuity payment at thereportingdateisrecognisedasanexpenseaccrual.Onlyseniorstaffundercontractareentitledtogratuity.



n) Grants

GrantsarenotrecogniseduntilthereisreasonableassurancethattheInstitutewillcomplywithconditionsattachingtothemandthatgrantswillbereceived.

Grantsarerecognisedinthestatementofcomprehensiveincomeonasystematicbasisovertheperiodsinwhichtheinstituterecognisesasexpensestherelatedcostsforwhichthegrantsareintendedtocompensate.Specifically,grantswhoseprimaryconditionisthattheInstituteshouldpurchase,constructorotherwiseacquirenon-currentassetsarerecognisedasdeferredrevenueinthestatementoffinancialpositionandtransferredtoprofitorlossonasystematicandrationalbasisovertheusefullivesoftherelatedassets.

Grants thatare receivableascompensation forexpensesor lossesalready incurredor for thepurposeofgivingimmediatefinancialsupporttotheinstitutewithnofuturerelatedcostsarerecognisedinprofitorlossintheperiodinwhichtheybecomereceivable.

o) Borrowing costs

Borrowingcosts,netofanytemporaryinvestmentincomeonthoseborrowingsthatareattributabletoacquisition,constructionofaqualifyingassetarecapitalisedaspartoftheasset.Thenetborrowingcostcapitalisediseithertheactualborrowingcostincurredontheamountborrowedspecificallytofinancetheasset;orinthecaseofgeneralborrowings, the borrowing cost is determined using the overall weighted average cost of the borrowings on alloutstandingborrowingsduringtheyearlessanyspecificborrowingsdirectlyattributabletotheassetandapplyingthis rate to the borrowing attributable to the asset. Capitalisation of borrowing costs ceases when all activitiesnecessarytopreparethequalifyingassetforitsintendeduseorsalearecomplete.Allotherborrowingcostsarerecognisedintheprofitorlossintheyearinwhichtheyareincurred.

p) Advance subscriptions

Advancesubscriptions (alsoknownasdeferred/unearned income)aresubscription fees received frommembersforsubsequentperiodsasatyearend.Theyarerecordedasaliabilityuntilthefeesaredue,atwhichtimetheyarerecognisedasincome.



2. Significant judgements and key sources of estimation uncertainty

IntheprocessofapplyingtheaccountingpoliciesadoptedbytheInstitute,theCouncilmakescertainjudgementsandestimatesthatmayaffecttheamountsrecognisedinthefinancialstatements.Suchjudgementsandestimatesare based on historical experience and other factors, including expectations of future events that are believedtobereasonableunder thecurrentcircumstances.However,actualresultsmaydiffer fromthoseestimates.Thejudgementsandestimatesare reviewedateachfinancial reportingdate toensure that theyarestill reasonableundertheprevailingcircumstancesbasedontheinformationavailable,andanyrevisionstosuchjudgementsandestimatesarerecognisedintheyearinwhichtherevisionismade.

Significant judgements in applying the entity’s accounting policies

IntheprocessofapplyingtheInstitute’saccountingpolicies,theCouncilhasmadejudgementsindetermining:

•Whetherassetsareimpaired•Theclassificationoffinancialassets•Whethertheinvestmentpropertyvaluationfairlyreflectscurrentmarketvalue.

3. Risk management objectives and policies

a) Financial risk management

The Institute’sactivitiesexpose it toa varietyoffinancial risks includingcredit, liquidityandmarket risks.RiskmanagementiscarriedoutbythesharedservicescommitteeunderpoliciesapprovedbytheCouncil.ThepoliciesfocusontheunpredictabilityofchangesinthebusinessenvironmentandseektominimisethepotentialadverseeffectsofsuchrisksontheInstitute’sperformancebysettingacceptablelevelsofrisk.TheInstitutehasnothedgedagainstanyrisksinthecurrentyear.

i) Credit risk

Creditriskistheriskthatonepartytoafinancialinstrumentwillcauseafinanciallossfortheotherpartybyfailingtodischargeanobligation.Creditriskarisesfromcashandcashequivalents,aswellascreditexposurestocustomers,includingoutstandingreceivables.

Creditriskontradereceivablesismanagedbyensuringthatcreditisextendedtocustomerswithanestablishedcredithistory.Thecredithistoryisdeterminedbytakingintoaccountthefinancialposition,pastexperienceandotherrelevantfactors.Credit ismanagedbysettingthecredit limitandthecreditperiodforeachcustomer.Theutilisationofthecreditlimitsandthecreditperiodismonitoredbymanagementonamonthlybasis.

ThemaximumexposureoftheInstitutetocreditriskasatthestatementoffinancialpositiondateisasfollows:


3. Risk management objectives and policies (continued)

i) Credit risk (continued)

Thepastduedebtorsarenotimpairedandcontinuetobepaid.TheInstitutedoesnotholdanycollateralagainstthepastdueorimpairedreceivables.Themanagementcontinuestoactivelyfollowuppastdueandimpairedreceivables.


31 December 2015

Financial assets

Subscriptionreceivables

Otherreceivables

Cashatbank

Grossfinancialassets

31 December 2014

Financial assets


Otherreceivables

Cashatbank

Grossfinancialassets

Fully

performing

Kshs. ‘000’

-

17,184

25,286

42,470

-

7,838

27,128

34,966

Past due and

impaired

Kshs. ‘000’

7,939

6,809

-

14,748

6,282

-

-

6,282

Past due but

not impaired

Kshs. ‘000’

16,937

188,904

-

205,841

5,999

170,723

-

176,722

Total

Kshs. ‘000’

24,876

212,897

25,286

263,059

12,281

178,561

27,128

217,970



ii) Liquidity risk

Prudent liquidity riskmanagement impliesmaintainingsufficientcashandcashequivalents tomeetobligationsastheyfalldue.Themanagementensuresthatadequatecashreservesaremaintainedtopayoffliabilitiesastheycrystallise.Financialassetsareheldinshorttermfixeddepositsmaturingwithin3and12months.

Thecurrentratioduringtheyearwas0.6:1(2014:0.8:1).

Thetablebelowsummarisesthematurityanalysisforfinancialliabilitiestotheirremainingcontractualmaturities.


Between 1 - 3 monthsKshs. ‘000’

71,497

-

-

71,497

57,930

-

-

57,930

Between 3 - 12 months

Kshs. ‘000’

32,068

28,785

-

60,853

6,542

57,440

-

63,982


103,565

458,855

80,795

643,215

64,472

216,263

58,981

339,716

Over 12 months

Kshs. ‘000’

-

430,070

80,795

510,865

-

158,823

58,981

217,804

31 December 2015

Tradeandotherpayables

Borrowings

Retentiononconstruction

31 December 2014

Tradeandotherpayables

Borrowings

Retentiononconstruction


a) Financial risk management (continued)

iii) Market risk

Market risk is the risk that the fair valueor future cashflowsoffinancial instrumentswill fluctuatebecauseofchangesinmarketpriceandcomprisesthreetypesofrisks:currencyrisk,interestrateriskandotherpricerisk.

Interest rate risk

TheInstitute’sinterestrateriskarisesfromshorttermbankdepositsandmortgageloansbecauseofchangesinmarketinterestrates.

If the interest rates on the Institute’s short term bank deposits at the year-end were to increase/decrease by 5percentagepoints,withallotherfactorsremainingconstant,thesurplusfortheyearwouldbelower/higherbyNil(2014:Kshs6,500).

If the interest rates on the Institute’s borrowings at the year-end were to increase/decrease by this number ofpercentagepoints,withallotherfactorsremainingconstant,thecapialisedwork-inprogresswouldbelower/higherbyKshs16,644,821(2014:Kshs2,185,391)respectively.

Currency risk

Currencyriskarisesonfinancialinstrumentsthataredenominatedinforeigncurrency.

TheInstitutehasnotradereceivables,nortradepayables,norborrowingswhicharedenominatedinforeigncurrencyasatthereportingdate.

b) Capital management

TheInstitute’sobjectiveinmanagingitsequityistoensurethatissupportsthedevelopmentofitsbusinessandisabletocontinueasagoingconcern.TheInstituteisnotsubjecttoanyexternalequityorcapitalrequirements.



(a) Income

Monthlyseminars/videosessions

Annualseminar

Executiveretreat

Managerialseminar

Internalauditconference

Economicsymposium

Saleofpublications

(b) Expenses

Monthlyseminars/videosessions

Annualseminar

Executiveretreat

Managerialseminar

Internalauditconference

Economicsymposium

Saleofpublications

Surplus from members’ services

Theexpensesexcluderelatedstaffcosts.

4. Subscriptions income

5. Members’ services

Subscriptiondebtorswrittenoffrepresentsthevalueofsubscriptionsduefrommembersowingmorethantwoyearsthatremainunpaidatthereportingdate.Thisisinaccordancewiththeaccountingpolicyonrevenuerecognition(setoutinpolicy1(d)above).


Practising

Nonpractising

Overseas

Retired

Associatemembers

Newmembersintheyear

Subscriptiondebtorswrittenoff

Subscriptiondebtorsrecovered

Activemembersatendofyear

2015Kshs. ‘000’

19,880

95,533

3,325

2,006

984

66,302

188,030

(7,939)

11,214

191,305

2015Kshs. ‘000’

157,141

97,192

16,448

14,528

15,614

11,948

800

313,671

82,292

48,734

11,666

6,435

6,823

5,490

424

161,864

151,807

2014Kshs. ‘000’

18,900

80,278

3,302

1,995

384

43,023

147,882

(6,282)

3,708

145,308

2014Kshs. ‘000’

110,886

79,457

18,641

12,663

12,657

11,296

534

246,134

67,007

37,957

17,286

5,438

4,961

4,154

560

137,363

108,771


6. CPA Centre

7. Social responsibility

Socialresponsibility isthenetproceedsfromanannualcharitygolftournament.Theseproceedsareutilisedinfundingvariouscorporatesocialresponsibilityactivitiesotherthaneducatingneedystudents.BursaryexpensesincludedinCSRactivities,Kshs.252,000(2014:Nil).

Rent

(a) Income

Golftournament

(b) Expenses

CSRactivities

Surplus from social responsibility activities

Bursaryexpenses

2015Kshs. ‘000’

5,338

2015Kshs. ‘000’

2014Kshs. ‘000’

5,439

2014Kshs. ‘000’

247

434

(187)

730

670

60

8. Operating expenses

Employeebenefit(Note27)

AdvocacyandInternationalrelations

Governance

Marketingcosts

Legalfees

Publication

Professionaldevelopment

Telephone,postage,printingandstationery

Sharedservices

Staffmeetingsandwelfare

ITcosts

Depreciationandamortisation

Impairmentoftradeandotherreceivables

Researchanddevelopment

Bankcharges

FiReAward

Insurance

Auditfees

RentandUtilities

Amortisationofprepaidoperatingleaserental

Lossondisposalofassets

2015Kshs. ‘000’

174,996

33,003

30,313

16,661

11,500

11,252

11,196

7,828

7,708

7,426

7,387

7,113

6,809

3,091

2,630

2,000

1,719

1,628

1,576

130

-

345,966

2014Kshs. ‘000’

136,792

44,992

15,808

7,578

-

11,812

10,265

5,858

3,890

5,718

3,700

5,996

-

889

1,275

2,000

142

1,081

1,490

130

19

259,912


2014Kshs. ‘000’

2015Kshs. ‘000’

9. Grants

World Bank IDF GrantThe Institute signed an InstitutionalDevelopment Fund (IDF) grant on 27 January 2014 over 18 months period,amounting toUS$698,000 tocontribute toenhancingfinancial transparency,accountabilityandgovernance inKenya.Theprojects includeenhancing thecapacityof ICPAKsecretariat to international standards,automationof ICPAKinternalprocessesandstrengtheningtheaccountingprofession inbothprivateandpublicsectors inadevolvedenvironment.ThegrantisconditionalonICPAKmeetingitsobligationsforeachoftheprojectscomponentsandfundsaredrawndownaspertheapprovedprocurementplan.

Asat31December2015,theInstitutehadreceivedKshs.32,834,373(US$321,906)towardtheprojectsofwhichatotalofKshs.28,213,000(US$276,598)hadbeenusedtosettleprojectcostsincurred.

Business Advocacy Fund (BAF) Grant

Theinstitutesignedanagreementon11June2012withtheBusinessAdvocacyFund(BAF)tosupportitsadvocacyworkonthelegalframeworkforbusinesslawsthatenhancesthebusinessenvironment.Thetotalfundingunderthisgrantreceivedin2015wasKshs3,088,000outofwhichBAFfunded80%and20%fromtheInstitute.ThegrantisconditionalonICPAKmeetingitsobligationsaspertheagreement.

Asat31December2015,theInstitutehadreceivedthetotalamountofKshs.2,470,000towardtheprojects.ThetotalcostswereKshs.4,013,000.


(a) Grant income

Grantfundsutilisedduringtheyear

(b) Grant expenses

WorldBankIDFGrant

Strengtheningaccountingprofession

Trainingplan

Bankcharges

BusinessAdvocacyFund(BAF)Grant

Training

At1January

Receipts

Payments

-operatingexpenses

-assetsacquisition

At31December

10. Other income

Interest

Miscellaneousincome

9. Grants (continued)

2015Kshs. ‘000’

30,292

2014Kshs. ‘000’

3,881

World BankIDF Grant

Kshs. ‘000’

13,490

19,344

(23,802)

(3,280)

5,752

Business Advocacy Fund

(BAF) Grant Kshs. ‘000’

537

2,470

(3,210)

-

(203)

2014Kshs. ‘000’

-

17,908

(3,301)

(580)

14,027

2,450

260

2,710

2015Kshs. ‘000’

14,027

21,814

(27,012)

(3,280)

5,549

-

1,803

1,803

14,964

8,782

56

3,210

27,012

1,991

886

25

399

3,301


(c) Deferred grant income/(receivable)

2014Kshs. ‘000’

2015Kshs. ‘000’


11. Property and equipment

Cost or valuation

At1January2014

Additions

Disposals

At31December2014

At1January2015

Additions

At31December2015

Depreciation

At1January2014

Chargefortheyear

Eliminatedondisposal

At31December2014

At1January2015

Chargefortheyear

At31December2015

Net book value

At31December2015

-Costorvaluation

At31December2014

-Costorvaluation

Buildings

Kshs. ‘000’

82,000

-

-

82,000

82,000

-

82,000

2,929

2,828

-

5,757

5,757

3,036

8,793

73,207

76,243

Computers

Kshs. ‘000’

8,163

3,083

(110)

11,136

11,136

5,356

16,492

6,609

1,050

(54)

7,605

7,605

1,782

9,387

7,105

3,531

Furniture

and fittings

Kshs. ‘000’

7,745

1,332

-

9,077

9,077

210

9,287

4,253

810

-

5,063

5,063

927

5,990

3,297

4,014

Equipment

Kshs. ‘000’

12,130

502

-

12,632

12,632

589

13,221

10,897

631

-

11,528

11,528

669

12,197

1,024

1,104

Total

Kshs. ‘000’

110,038

4,917

(110)

114,845

114,845

6,155

121,000

24,688

5,319

(54)

29,953

29,953

6,414

36,367

84,633

84,892


Buildings were valued on 18th December 2012 by Paragon Property Valuers Limited (an independent registeredvaluerwhoholdsa recognisedandrelevantprofessionalqualificationandhasrecentexperience in the locationand category of building being valued) based on an open market value. The carrying amount of the asset wasrestatedtotherevaluedamountoftheasset,andtheresultingsurplusarisingonrevaluationwasrecognisedinothercomprehensiveincomeandcreditedtotherevaluationsurplusinequity.

Goingbythepolicy,thenextvaluationwasdueintheyear2015.However,theCouncildeferredthevaluationprocesstotheyear2016whenitisexpectedthatconstructionoftheICPAKcomplexshallbecomplete.TheInstituteshallthereaftersanctionacomprehensivevaluationofall itsbuildingsandinvestmentproperty.TheCouncil isof theviewthatthefailuretoconductthevaluationintheyear2015doesnotresultinanymistatementofthesefinancialstatements.

11. Property and equipment (continued)

12. Work-in-progress

At1January

Additions

At31December


BuildingsKshs. ‘000’

55,676

(2,141)

53,535

Furniture, fittings andequipment

Kshs. ‘000’

934

(117)

817

BuildingsKshs. ‘000’

19,672

20,567

2015 Kshs. ‘000’

700,710

254,098

954,808

48,978


56,610

(2,258)

54,352

Furniture and fittingsKshs. ‘000’

2,480

3,080

2014 Kshs. ‘000’

392,821

307,889

700,710

5,282

Ifthebuildingsandfurnitureandfittingswerestatedonthehistoricalcostbasis,thecarryingvalueswouldbeasfollows:

Thisrelatestocapitalisedcostsfortheongoingconstructionofanultramodernmulti-storeyofficeparkattheCPACentre.Thecumulativeborrowingcostsincludedinthework-in-progresstodateamounttoKshs.54,260,028.

Capitalisedborrowingcostsincludedinthework-in-progress

At31December2015

At31December2014

At1January2015

Transferofexcessdepreciation

At31December2015

Net book value

Revaluation reserve movement



Investmentpropertyvalueisbasedonthevaluationcarriedouton18thDecember2012(Level2)byParagonPropertyValuersLimited(anindependentregisteredvaluerwhoholdsarecognisedandrelevantprofessionalqualificationandhas recentexperience in the locationandcategoryof investmentpropertybeingvalued)basedonanopenmarketvalue.

Investmentpropertyisinitiallyrecognisedatcostandsubsequentlycarriedatfairmarketvalue,basedonperiodicbutatleasttriennialvaluationscarriedoutbyexternalindependentvaluers.

Goingbythepolicy,thenextvaluationwasdueintheyear2015.However,theCouncildeferredthevaluationprocesstotheyear2016whenitisexpectedthatconstructionoftheICPAKcomplexshallbecomplete.TheInstituteshallthereaftersanctionacomprehensivevaluationofall itsbuildingsand investmentproperty.TheCouncil isof theviewthatthefailuretoconductthevaluationintheyear2015doesnotresultinanymistatementofthesefinancialstatements.

Thefairvalueof theassetsclassifiedasprepaidoperating leaserentals isKshs.140,000,000basedonanopenmarketvaluationcarriedouton18thDecember2012byParagonPropertyValuersLimited(anindependentregisteredvaluerwhoholdsarecognisedandrelevantprofessionalqualificationandhasrecentexperienceinthelocationandcategoryofpropertybeingvalued).

Theprepaidoperatingleaserentalisamortisedoverthe42yeartermoftheleaseholdlandacquiredin1999.ThelandislocatedattheCPACentre,LRNo.28799/2alongThikaRoad.

TheinputVATonconstructionshallberecoveredfromtheoutputVATonrentalincome.Therecoveryisexpectedtocommenceinthethirdquarterof2016whentheICPAKcomplexshallbereadytobeoccupiedaspertherevisedconstructioncompletiondate.

TheInstituteisabeneficialownerofCPACentreLimitedwithadirectshareholdingof50.02%oftheissuedsharecapital.Theinvestmentcomprises10,004sharesofKshs.5each.Thiscompanydidnottradeduringtheyearandhasremaineddormantsinceitsincorporation.

At31December

Rentalincomefrominvestmentproperty

Therewerenodirectoperatingexpenses(2014:Nil).

2015 Kshs. ‘000’

21,000

5,338

2014 Kshs. ‘000’

21,000

5,439

14. Prepaid operating lease

15. Intangible assets

Software costs:

Cost At1stJanuary

Additions

At31stDecember

Amortisation At1stJanuary

Chargefortheyear

At31stDecember

Netbookvalue

17. Investment in CPA Centre Limited

InvestmentinCPACentreLimited

18. Inventories

IFRSBooks

16. Other receivables

VATrecoverableonconstruction

Cost At1stJanuary

At31stDecember

Amortisation At1stJanuary

Chargefortheyear

At31stDecember

Netbookvalue

2015Kshs. ‘000’

5,478

5,478

1,955

130

2,085

3,393

2015Kshs. ‘000’

6,020

2,651

8,671

5,238

699

5,937

2,734

115,580

2015Kshs. ‘000’

50

2015Kshs. ‘000’

3,348

2014Kshs. ‘000’

5,478

5,478

1,825

130

1,955

3,523

2014Kshs. ‘000’

6,020

-

6,020

4,561

677

5,238

782

85,471

2014Kshs. ‘000’

50

2014Kshs. ‘000’

3,792


2014Kshs. ‘000’

2015Kshs. ‘000’

13. Investment property



19. Trade and other receivables


Less:Transfertonon-activecategory

Netsubscriptionreceivables

VATrecoverableonconstruction

Duefromrelatedparty(Note26)

Otherreceivables(netofimpairmentloss)

Depositsandprepayments

Staffreceivables

2015Kshs. ‘000’

24,876

(7,939)

16,937

3,564

44,728

20,494

11,114

10,608

107,445

2014Kshs. ‘000’

12,281

(6,282)

5,999

3,132

55,916

24,523

5,154

4,365

99,089

20. Cash and bank balances

Cashatbankandinhand

Shorttermbankdeposits

25,117

169

25,286

26,998

130

27,128

Theweightedaverageeffective interest rateon short termbankdepositsat the year-endwas 13.0%p.a. (2014:13.0%).

Forthepurposeofthestatementofcashflow,cashandcashequivalentscomprisecashinhandanddepositsheldatcallwithbanks,netofbankoverdrafts.

IncludedincashatbankbalanceisKshs.11,660,000(2014:Kshs.14,027,000)whichrelatestograntfundsnotyetutilisedasatendofyear,alsoclassifiedasdeferredgrantincome(Note9)


21. Designated fund

Year 2015:

Atstartofyear

Transferfromthegeneralfund

Atendofyear

Year 2014:

Atstartofyear

Transferfromthegeneralfund

Atendofyear

Bursary funds

Kshs ‘000’

5,000

(252)

4,748

5,000

-

5,000

Charity funds

Kshs ‘000’

748

65

813

688

60

748

Total funds

Kshs ‘000’

5,748

(187)

5,561

5,688

60

5,748

ThebursaryfundwassetupbytheInstitutefromthegeneralfundtosupporteducationofneedystudents.

Surplus/(deficit)arisingfromsocialresponsibilityactivitiesundertakenaretransferredfromthegeneralfundstothecharityfund.

22. Retention on construction

Retentioninconstructiononworkcertified

Forconstructionworkoftheultramodernmulti-storeyofficeparkat

theCPACentre.

Payableasfollows: Within12months

After12months

2015Kshs. ‘000’

80,795

80,795

-

80,795

2014Kshs. ‘000’

58,981

-

58,981

58,981

2014Kshs. ‘000’

2015Kshs. ‘000’


At 31 December 2014

FinancialassetsSubscriptionreceivablesOtherreceivablesCashatbankGrossfinancialassets

FinancialliabilitiesBorrowingTradeandotherpayablesAdvancesubscriptionsGrossfinancialliabilities


24. Trade and other payables

Tradepayables

Otheraccruals

Staffgratuity

Advancereceipts

Rentaldeposit

Duetorelatedparties(Note26)

Rentreceivedinadvance

PanAfricanFederationofAccountants

FiReawardfund

IntheopinionoftheCouncil,thecarryingamountsofpayablesapproximatetotheirfairvalue.

39,965

30,482

8,331

11,035

841

459

325

7,299

5,734

104,471

32,450

19,056

1,384

4,904

841

459

-

9,242

1,040

69,376

2015Kshs. ‘000’

2014Kshs. ‘000’

25. Financial assets and liabilities

Thetablebelowshowsanalysisoffinancialinstrumentsrecordedatfairvaluebyleveloffairvaluehierarchy.

At 31 December 2015

FinancialassetsSubscriptionreceivablesOtherreceivablesCashatbankGrossfinancialassets

FinancialliabilitiesBorrowingTradeandotherpayablesAdvancesubscriptionsGrossfinancialliabilities

--

27,12827,128

-103,564

50,271153,835

16,937206,088

-223,025

403,304--

403,304

----

----


23. Borrowings

StandardCharteredBank

Theborrowingsareanalyzedasfollows:

Currentportion

Non-currentportion

BorrowingsrelatetoaconstructionloanfromStandardCharteredBankinSeptember2014amountingtoKenya

shillings425millionforpartfinancingofconstructionoftheICPAKComplexinSeptember2014.Theloanissecured

byafixedchargeovertheICPAKcomplexwithtenureof10yearsandinterestat14%ontheamountsdrawndown

asperthecontractor’scertificates.Thefacilityisrepayablequarterlywithamoratoriumof1yearfortheprincipal.

Asat31December2015,atotalofKenyaShillings403.3millionhadbeendrawndown.Duetomarketvolatilitythe

interestrateontheloanfacilitywasadjustedto18%inthemonthsofNovemberandDecember2015.Howeverthis

ratewasre-negotiateddownwardto16%.

403,304

59,484

343,820

403,304

191,300

51,982

139,318

191,300

2015Kshs. ‘000’

2014Kshs. ‘000’

Level 1Kshs. ‘000’



--

27,12827,128

-69,37626,24695,622

5,999178,561

-184,560

191,300--

191,300

----

----



iv) ICPAK-KCAU-Maarifa partnership

AttheSpecialGeneralMeetingofICPAKheldon11March2015,ICPAKmembersapprovedICPAK-KCAU-Maarifapartnership. ThepartnershipallowsKCAUniversity (KCAU) toenter intoa long-termstrategicpartnershipwithEmergingCapitalPartners(ECP)andMaarifaEducationHoldings(Maarifa).

ICPAKanditsmembersarenotrequiredtomakeanyfinancialinvestmentorcommitmenttoKCAUorKCAEducation(KCAE).KCAEisthenewservicecompanythatwascreatedtoprovideongoingservicestoKCAU.ICPAKnegotiatedtoown25%oftheordinarysharecapitalofKCAEinrecognitionofitsroleasSponsoranditsexpectedongoingstrategicsupportandinput.

ICPAK and Maarifa will control KCAE jointly with a ratio of 25%:75% shareholding respectively. The principalroleofKCAEistoundertakeallnon-academic(non-degree-focused)operationsandfinancialservicesforKCAU.KCAEwillmanagenon-academicfunctionssuchasenrolmentmanagement,marketing,accountingandfinancialmanagement.

ICPAKandKCAUniversityweretofacilitatethecompletionofthetransactionhenceagreedtosharethetransactioncostsoftheFinancialadvisorandthetranscationallawyers.DuringtheyearKCAUniversitysettledthefirstinvoicesfromthetransactionaladvisor.ICPAKoffstetitsportionfromKCAuniversitydebttothetuneofKshs.11,500,000.

iv) Council remuneration

v) Committees remuneration

27. Employee benefit

Salariesandwages

Medicalexpenses

Pensioncosts

Grouplife

Staffgratuity

Leaveallowances

Otherstaffcosts

Subscriptions

Recruitmentcosts

Stafftraining

145,015

8,224

6,094

1,383

6,948

994

1,215

551

253

4,319

174,996

111,719

8,186

5,596

1,383

1,384

767

705

227

3,918

2,907

136,793

2015Kshs. ‘000’

2014Kshs. ‘000’

28. Tax

TheInstituteisexemptfromincometaxunderSection13(2)oftheIncomeTaxAct(Cap.470)andLegalNoticeNo.168of22October1980.


Totalcommitments

Paidtowardstheconstructionandincludedinwork-in-progress

1,108,580

(900,548)

208,032

950,000

(695,428)

254,572

AllthepaymentstodatehavebeenoutofinternalsourcesandbankborrowingsfromStandardCharteredBank.

30. Contingent liabilities

ThreelegalsuitshavebeenfiledincourtagainsttheInstitutebyformerstaffallegingwrongfuldismissal.Thesemattersaroseintheyear2014andtheInstituteinstructeditslawyerstorespond.OnematterwascompletedinDecember2015andtheplaintifffiledanappeal,whiletheothertwoareatthehearingstage.Thelikelyoutcomecouldnotbedeterminedasatthedateofsigningthesefinancialstatementsasthematterswereinthepreliminarystage.

31. Comparatives

Wherenecessarycomparativefigureshavebeenadjustedtoconformtochangesinpresentationinthecurrentyear.

29. Commitments

Capital commitments

TheInstitutehascontractualobligationsfortheconstructionofanultramodernmulti-storeyofficeparkattheCPACentrewhoseconstructioncommencedinMay2012andwasexpectedtobecompletedinApril2014.TheprojectarchitectshavereviewedprogressonworkapeggedtherevisedcompletiondatetoJune2016.

2015Kshs. ‘000’

2014Kshs. ‘000’

Thedecreaseduringtheyear2015isfromoffsetingICPAK

portionoflegalexpensesICPAK-KCAU-Maarifapartnership.

Therearenoimpairmentprovisionsheldagainstanyrelated

44,728

459

50

509

29,789

6,948

36,737

4,196

4,820

55,916

459

50

509

17,482

1,461

18,943

4,336

2,225

26. Related party transactions

i) Due from related parties

DuefromKCAUniversity(Note19)

ii) Due from related parties

DuetoKCAUniversity(Note24)

DuetoCPACentreLimited

iii) Key management compensation

Salariesandothershorttermbenefits)

Postemploymentbenefits

2015Kshs. ‘000’

2014Kshs. ‘000’

Documents

Financial Review - ICPAK Review. 4 ICPAK ANNUAL ... National Examination Board (KASNEB) ... Investment in CPA Centre Limited Current assets …