The Relevance of Financial Disclosure Requirements’ of the International Financial Reporting Standards (Ifrss) and the Cbk Prudential Guidelines to Kenyan Investors

Abstract

The Kenyan Bank crisis of 1989 and 1998 which lead to major changes including the restructuring of financial institutions by the CBK in an effort to put several measures to foster a sound and stable banking system in the country financial reporting therefore acts as the only interface tool between the investing group and the entities of interest. This consequently, gave the wealth to the study of establishing how relevant the commercial banking reporting frameworks are to Kenyan investors. Faced with this scenario, the purpose of this study was to establish the relevance of financial disclosure requirements of the IFRS’s and CBK’s prudential guideline of 2006 to the Kenyan investors. The research design employed in this study was descriptive in nature. The target population in the study was a total of 50 investors. Primary data was collected using a semistructured questionnaire. The study used the quantitative method of data analysis, and results presented by use of charts and tables. To ensure easy analysis, and minimize the margin of errors, questionnaire was coded according to each variable. Based on the findings, the study concluded that the role of the IFRSs and the CBK’s prudential guideline of 2006 are very crucial and relevant in decision making process to the investors. The study further conclude that other quantitative information needs to be disclosed or be made mandatory to help enhance understandability and try to reduce the risk disclosure skweness in the annual reports and financial statements. It finally concludes that harmonization of the two framework need to be done from time to time to enhance their relevance to stakeholders. The study recommends that IFRSs should be given more prominence in financial reporting by banking institutions given that most items considered as useful in the study under the CBK’s prudential guideline are still mandatory disclosure items under the IFRSs while the later is considered more superior by the study. The study finally recommends regular review of the CBK’s prudential guidelines and that more provisions on useful information need to be done by the reporting institutions.