Arwa and Company

31/08/2026

28/07/2026

Kenya's AML/CFT framework has been substantially strengthened in recent years. The Proceeds of Crime and Anti-Money Laundering Act, most recently updated in August 2025, is now supported by the Proceeds of Crime and Anti-Money Laundering Regulations 2023 and the Financial Reporting Centre's 2025 Guidance on Customer Due Diligence, which translates legislative obligations into practical implementation expectations.

CDD requirements for individuals and businesses

Identity verification standards, including accepted document types, database checks, biometric verification, and approaches for foreign customers

Beneficial ownership identification and representative verification obligations

Enhanced due diligence requirements for higher-risk customers, PEPs, and cross-border relationships, and how risk-based workflows support them

Transaction monitoring and suspicious activity reporting obligations

AML Screening requirements covering UN, EU, OFAC, and HM Treasury sanctions lists, PEP databases, and adverse media

Travel Rule considerations for businesses engaged in virtual asset transfers

A product mapping table showing coverage across financial institutions, digital assets, iGaming, and SEC registrants

For more information, contact us:

Arwa & Company
Upperhill Mara Road,
KMA Centre, 2nd Floor, Suite 2.2
P.O. Box 76849 - 00620
Nairobi
Tel. +254 735 655 705
Email: [email protected]
Website:

27/07/2026

The requirement for Public Interest Entities (PIEs) to complete the ICPAK Mandatory Sustainability Readiness Assessment by 31 July 2026 as part of national preparedness for sustainability reporting.

* Evaluate current sustainability governance structures.
* Identify gaps in climate-related data and reporting processes.
* Assess governance readiness for sustainability disclosures.
* Prepare implementation roadmaps for IFRS Sustainability Disclosure Standards.

Preparing for IFRS S1 and IFRS S2

* IFRS S1 – General Requirements for Disclosure of Sustainability-related Financial Information
* IFRS S2 – Climate-related Disclosures

* Board oversight responsibilities for sustainability.
* Integration of ESG risks into enterprise risk management.
* Climate-related financial risks affecting lending portfolios.
* Governance expectations for sustainability reporting.
* The strategic importance of sustainability information to investors, regulators, lenders, and other stakeholders.

Arwa & Company
Upperhill Mara Road,
KMA Centre, 2nd Floor, Suite 2.2
P.O. Box 76849 - 00620
Nairobi
Tel. +254 735 655 705
Email: [email protected]
Website:

27/07/2026

Internal Control Systems (ICS): Foundation of Effective Governance

An effective Internal Control System (ICS) is a framework of policies, procedures, governance structures, and activities established by the Board and Management to provide reasonable assurance that the Sacco:

* Achieves its strategic and operational objectives.
* Safeguards members’ assets and resources.
* Produces reliable financial and operational information.
* Complies with applicable laws, regulations, and internal policies.
* Detects and prevents fraud, errors, and operational inefficiencies.

For more information on our Training modules, contact us:

Arwa & Company
Upperhill Mara Road,
KMA Centre, 2nd Floor, Suite 2.2
P.O. Box 76849 - 00620
Nairobi
Tel. +254 735 655 705
Email: [email protected]
Website:

22/07/2026

The Law of Stupidity

The law of stupidity, formulated by Carlo M. Cipolla, states that a stupid person is someone who causes harm to others without gaining any benefit and may even harm themselves.

Overview of Cipolla’s Five Laws of Stupidity

1. Underestimation of Stupid People: Everyone consistently underestimates the number of stupid individuals in society, regardless of context or setting.
2. Independence of Stupidity: The probability that a person is stupid is independent of any other characteristic, such as education, social status, or intelligence.
3. The Golden Law of Stupidity: A stupid person causes losses to others while deriving no personal gain and may even incur losses themselves.
4. Underestimating the Harmful Potential: Non-stupid people often fail to recognize the full danger posed by stupid individuals, leaving themselves vulnerable to irrational actions .
5. The Most Dangerous Type: Stupid people are more dangerous than bandits because their actions are unpredictable and counterproductive to both themselves and society.
Four Behavioral Phenotypes

Cipolla also categorized human behavior based on the effects of actions on oneself and others:
• Intelligent: Actions benefit both the individual and others.
• Helpless: Actions benefit others but harm the individual.
• Bandit: Actions benefit the individual at the expense of others.
• Stupid: Actions harm both the individual and others, representing the most dangerous type.

Implications

Cipolla emphasized that stupidity is not linked to IQ or education but to relational intelligence and the consequences of actions. Stupid behavior is unpredictable and can cause significant societal harm, especially when individuals in positions of power act irrationally. Understanding these laws helps in anticipating risks, protecting oneself from harmful actions, and recognizing that anyone can act stupidly at times.

By applying Cipolla’s framework, individuals and organizations can better navigate social interactions, mitigate losses, and develop strategies to counteract the negative impact of irrational behavior.

16/07/2026

In Kenya, the **Office of the Auditor-General (OAG)** conducts compliance audits as part of its constitutional mandate under **Article 229(6) of the Constitution of Kenya, 2010**, the **Public Audit Act, 2015**, and the **International Standards of Supreme Audit Institutions (ISSAIs)**. Compliance audits are undertaken alongside financial audits to determine whether public resources have been used lawfully and effectively. ([Office of the Attorney General of Kenya][1])

# # # Objectives of Compliance Audits

The primary objectives are to determine whether:

* Public funds have been applied lawfully.
* Public resources have been used effectively.
* The audited entity complies with:

* The Constitution of Kenya;
* Acts of Parliament;
* Public Finance Management (PFM) Act, 2012;
* Public Procurement and Asset Disposal Act, 2015;
* Government regulations and circulars;
* Internal policies and procedures;
* Grant agreements and donor conditions, where applicable. ([Office of the Attorney General of Kenya][2])

# # # Typical Areas Covered in Compliance Audits

The Office of the Auditor-General examines compliance in areas such as:

1. **Budget Implementation**

* Budgetary approvals
* Expenditure within approved budgets
* Supplementary budgets

2. **Procurement and Asset Management**

* Procurement planning
* Competitive bidding
* Contract management
* Disposal of assets

3. **Revenue Management**

* Revenue collection
* Banking of revenue
* Revenue reconciliation

4. **Payroll and Human Resource Management**

* Recruitment procedures
* Payroll accuracy
* Staff establishment
* Allowances and benefits

5. **Management of Public Assets**

* Asset registers
* Verification of assets
* Safeguarding government property

6. **Project and Development Expenditure**

* Compliance with project agreements
* Timely implementation
* Value obtained from expenditures

7. **Statutory Deductions**

* PAYE
* Pension contributions
* NHIF/SHIF obligations
* NSSF
* Other statutory remittances

8. **Governance and Internal Controls**

* Risk management
* Internal audit effectiveness
* Audit committee operations
* Delegation of authority

9. **Environmental and Social Compliance**

* Compliance with environmental laws
* Occupational health and safety requirements
* Gender and disability mainstreaming where applicable

10. **Information and Communication Technology (ICT)**

* ICT governance
* Data security
* System access controls
* Disaster recovery arrangements

# # # Audit Criteria

Compliance audits are conducted against applicable criteria, including:

* Constitution of Kenya, 2010
* Public Finance Management Act, 2012
* Public Audit Act, 2015
* Public Procurement and Asset Disposal Act, 2015
* Leadership and Integrity Act
* State Corporations Act (where applicable)
* Treasury Circulars
* Government Financial Regulations
* Donor agreements
* Entity policies and procedures
* Relevant sector-specific legislation. ([Office of the Attorney General of Kenya][1])

# # # Audit Methodology

Compliance audits generally involve:

* Reviewing laws, regulations and policies.
* Assessing risks of non-compliance.
* Examining records and supporting documentation.
* Interviewing management and staff.
* Testing transactions and controls.
* Inspecting assets and project sites.
* Evaluating evidence against the applicable legal and regulatory framework.
* Reporting findings, conclusions and recommendations. ([Office of the Attorney General of Kenya][1])

# # # Common Audit Findings

The Auditor-General frequently reports issues such as:

* Irregular procurement practices.
* Unsupported expenditure.
* Payments made without adequate documentation.
* Non-compliance with procurement laws.
* Pending bills.
* Weak internal controls.
* Inaccurate financial records.
* Unremitted statutory deductions.
* Idle or stalled projects.
* Poor contract management.
* Failure to implement previous audit recommendations.

# # # Reporting

Compliance audit findings are presented in the Auditor-General's report and include:

* Audit criteria.
* Condition (what was found).
* Cause.
* Effect or risk.
* Recommendations.
* Management responses.

These reports are submitted to **Parliament** or the relevant **County Assembly**, where Public Accounts Committees (PAC) or County Public Accounts and Investments Committees (CPAIC) examine the findings and require accounting officers to respond. ([Office of the Attorney General of Kenya][1])

# # # Entities Subject to Compliance Audits

The Office of the Auditor-General conducts compliance audits for:

* National Government ministries, departments and agencies.
* County Governments.
* State corporations.
* Constitutional Commissions and Independent Offices.
* Public universities.
* Public schools and tertiary institutions.
* Funds and authorities.
* Parliament and County Assemblies.
* Publicly funded political parties.
* Any other entity funded from public resources.

Compliance auditing complements financial and performance auditing by providing assurance that public entities not only account for public resources correctly but also comply with the laws, regulations and policies governing their use, thereby strengthening accountability and good governance.

03/07/2026

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