A finance team can submit every donor report on time and still struggle to explain the organisation’s overall financial position. Different reporting periods, budget headings and accounting bases can leave management with several versions of the same numbers, each answering a different question.
For Kenyan NGOs, Public Benefit Organisations and other non-profits, the International Non-Profit Accounting Standard (INPAS) provides an opportunity to build a clearer and more consistent reporting foundation. With Kenya’s adoption roadmap already published, our advice is to begin assessing readiness now and involve the board, programme teams and finance staff from the outset.
What INPAS is and why it matters
Published by the International Non-Profit Reporting Foundation in October 2025, INPAS is an accrual-based accounting framework developed specifically for non-profits. Its development was driven by CIPFA and Humentum through the IFR4NPO project. It addresses the sector’s funding arrangements and accountability needs, including grants, donations, fund accounting and narrative reporting.
Accrual accounting records transactions when the relevant accounting recognition requirements are met, rather than simply when cash moves. For management, this helps explain unpaid obligations, resources held for future activities and the relationship between funding and delivery.
The practical objective is better visibility. A board needs to understand which resources can support the organisation generally, which are committed to particular purposes, and whether the organisation can sustain its operations beyond its current grants.
The Kenyan adoption position
ICPAK released Kenya’s national INPAS adoption roadmap in July 2026. It sets out a phased approach: awareness, capacity building and voluntary early adoption from 1 January 2026; structured implementation and mandatory INPAS financial reporting requirements from 1 January 2027; and full sector integration from 1 January 2028. Narrative reporting is also part of the transition.
Organisations should establish how the roadmap applies to their circumstances, financial year and first reporting period, including transition provisions and the timing of narrative reporting. An adoption date refers to the applicable reporting period; it is not necessarily the date on which accounts must be filed.
INPAS implementation should be coordinated with applicable regulatory filings and donor obligations. Changing an accounting framework does not, by itself, change registration status, tax treatment or the terms of a grant agreement.
What this means for your organisation
1. Review grant accounting before the year end
Bring signed agreements, amendments and funding schedules together. Assess how each arrangement should be accounted for under INPAS, rather than applying one rule to all receipts. The terms of an agreement matter: neither immediate recognition of every receipt nor automatic deferral of every unspent balance is a safe blanket policy.
Document the conclusions and identify the data needed to support them. Where accounting policies will change, assess the effect on opening balances and comparative information before preparing the first accounts.
2. Make fund balances useful for decisions
Management should be able to distinguish resources available for general operations from amounts limited to particular purposes. A healthy bank balance alone does not establish that an organisation has enough flexible funding to pay its core costs.
Review the records supporting each fund and investigate old balances, unexplained transfers and negative project positions. A clear monthly fund report can help management identify funding gaps while there is still time to respond.
3. Review cost allocation and reporting systems
Shared salaries, rent and technology costs need a documented allocation approach supported by appropriate evidence. Management should be able to explain both the accounting allocation and what each donor permits the organisation to claim.
Test whether the existing system can analyse transactions by expense type, donor, grant and programme. A new software purchase should follow an identified need. In many cases, better coding, configuration and review procedures should be evaluated first.
4. Connect financial reporting with programme evidence
INPAS includes narrative reporting to help users understand objectives, achievements and governance. Finance and programme teams should agree who owns the information and how it will be checked. Expenditure figures and delivery claims should tell a consistent story, with explanations for significant delays or variances.
How Practice Guide 1 can reduce donor reporting work
INPAS and its companion Practice Guide 1 have different purposes. INPAS addresses annual reporting for the organisation as a whole. Practice Guide 1 provides a harmonised format for supplementary statements covering specified grants, projects or activities. Its use is voluntary and should be agreed with the relevant funder.
The guide provides standard expense headings and reconciliations that connect grant reporting to the organisation’s audited financial statements. It can also be used alongside another accrual-based reporting framework where the relevant requirements are met. Using the guide alone does not establish full INPAS compliance.
For an organisation with several donors, the opportunity is to build a common reporting foundation and reduce repeated spreadsheet reconstruction. The benefit depends on donor acceptance, sound records and consistent mapping. Existing donor templates remain applicable unless the funder agrees to a change.
A reconciliation also has limits. It helps explain how the figures connect; it does not automatically give a supplementary statement a separate audit opinion. Any assurance required over a donor report must be addressed through the relevant engagement scope.
A practical example
Consider a non-profit running education, health and livelihoods programmes with three funders. One wants reports by activity, another by expense type, and the third uses a different reporting year. Staff split their time across programmes, while rent supports all three.
MGK’s recommended starting point is a single controlled ledger with consistent expense codes and separate donor and project identifiers. Payroll allocations should have supporting records, shared costs should follow an approved method, and reporting differences should be reconciled and reviewed. The team can then test a Practice Guide 1 statement with a willing donor while retaining any other required reporting.
This is an illustrative implementation approach, not a prescribed template. The appropriate design will depends on the organisation’s agreements, systems and reporting obligations.
What to do over 90 days
Days 1 to 30 -Assign an implementation lead, brief the board and assess the gaps in accounting policies, grant records, fund balances, systems and staff skills. Confirm the applicable adoption timetable. Accelerate this schedule where necessary to meet the applicable first reporting period.
Days 31 to 60 – Agree policy changes, test transaction coding, document cost allocations and prepare a transition plan covering opening balances and comparative information. Discuss grant reporting options with key donors.
Days 61 to 90-Produce a trial set of reports, resolve reconciliation differences and obtain management review. Give the board a progress report with remaining actions, owners, costs and deadlines.
Among other relevant questions, the board should ask management: Who owns implementation? What are the material gaps? Can we explain our available unrestricted resources? Can donor reports be reconciled to the ledger? What decisions and resources are needed before the first reporting period?
How MGK can support your transition
MGK works with NGOs and other non-profit organisations on financial reporting, accounting systems, internal controls and governance. We can support an INPAS readiness assessment, transition planning, accounting policy review, fund and cost allocation mapping, staff training and preparation of reporting templates.
Our recommended first step is a focused assessment of your current financial statements, major grant agreements and accounting system. This establishes what needs to change and helps management prioritise the work.
To discuss your organisation’s readiness, contact MGK at info@mgkconsult.co.ke or visit www.mgkconsult.co.ke.
This article provides general information. Application depends on the organisation’s circumstances and current guidance from the relevant authorities.