By Walter Kabeo - Senior Manager, Audit
The Sacco Societies Regulatory Authority (SASRA) in December 2025 issued a circular aimed at improving the efficiency, integrity and timeliness of audited financial statement submissions by regulated SACCOs.
Grounded in Section 41 of the SACCO Societies Act, the guidance provides clarity to both SACCOs and external auditors on submission requirements, alongside stricter expectations in financial reporting. Beyond procedural requirements such as proper signing, authentication and submission of supporting documents, SASRA has emphasized several critical considerations in the preparation of audited financial statements.
- First, no proposal of payments of dividends or honoraria or staff bonuses are made in the Audited Financial Statements, unless the SACCO Society has complied with all the capital adequacy requirements with key focus on the Institutional Capital and the 20% statutory reserve has been appropriated.
- Ensure the non-performing loan ratio is computed in accordance with Reg. 41& 44 of Regulations 2010 for DT-SACCOs; Reg. 40 & 42 of Regulations 2020 for NWDT-SACCOs and International Financial Reporting Standards (IFRS 9) and ensure appropriate and adequate Provisions for probable losses are made.
- Saccos are required to undertake a comprehensive ageing analysis of doubtful assets and ensure appropriate provisions are made in line with the law and accounting standards.
- Where a proposal for payment of dividends or honoraria or staff bonus or interest on member deposits is proposed for recommendation in the Audited Financial Statements, the SACCO Society must demonstrate availability of liquid reserves for such payment as at the end of the financial year; and in this regard no external borrowing should be procured or proposed to be procured for payment of such payment of such proposed dividends or honoraria or staff bonus or interest on member deposits.
- Regulated SACCOs must exclude fair value and credit risk reserves when computing core capital and capital adequacy ratios.
Further, the circular introduces a more structured submission and verification framework, requiring SACCOs to submit audited financial statements within three months after year-end (by 31 March) in line with Section 41 of the Act, with an initial soft-copy pre-verification stage aimed at enhancing accuracy and compliance before final approval.
The guidance also specifies mandatory accompanying documents; including auditor’s opinion, management letters, board approvals, and detailed financial disclosures all meant to strengthen accountability and completeness of reporting.
Notably, SASRA has set clear turnaround timelines, committing to provide feedback within seven working days at both verification and approval stages, thereby promoting efficiency, predictability, and timely presentation of approved financial statements to members at Annual General Meetings.
The circular underscores SASRA’s continued push for stronger governance, transparency and financial discipline across the SACCO sector.