Kenya’s skylines are changing fast-new malls, highways, estates, and office blocks rise every year. Behind the concrete and scaffolding are contractors working on long-term projects that often take years to complete. But in accounting terms, these buildings are more than landmarks; they’re ongoing performance obligations under IFRS.

IFRS 15 – Revenue from Contracts with Customers requires companies to recognize revenue based on the transfer of control, not cash received. For many Kenyan construction firms, this means recording revenue over time as work progresses, using methods like percentage of completion.

On paper, this can make a half-built apartment block appear profitable long before the developer collects payments. A contractor may show healthy margins because the stage of completion has increased even if the client is delaying payments or the project is facing cost overruns.

The challenge? Construction in Kenya is unpredictable. Cement prices rise overnight, approvals stall, land disputes emerge, and sometimes clients disappear mid-project. What looks like steady revenue in the financials can mask liquidity struggles on the ground.

And then there’s the taxman. While IFRS 15 recognizes revenue based on performance, KRA often follows a more cash-oriented view, creating a gap between reported profit and tax payable. Developers end up telling two stories: – the IFRS version, where revenue grows as progress grows, and – the cash reality, where delays and cost escalations bite harder than the numbers show.

The big question is whether IFRS 15 truly reflects the economic substance of long-term construction in Kenya. Does the percentage-of-completion method paint a realistic picture of risk and uncertainty? Or does it sometimes make the financials look more complete than the buildings themselves?