The National Treasury will now determine incurred revenues and expenses when accounting for public finances as opposed to recording mere movement of cash between departments.
By adopting the accrual basis accounting, Treasury intends to forge a clearer basis for knowing how much the government is spending and the assets held by its different departments.Cabinet approved this mode of accounting on 7th March this year after receiving recommendations from the Public Sector Accounting Standards Board (PSASB), and was formally gazetted on 30th August. The shift was prompted by the loopholes in the cash-based accounting, which exposed the government to an endless litany of pending bills and stalled development projects. “The transition will unfold over the next three years, under the guidance of the steering committee. The effective date for the accrual basis is set for 1st July 2024, with the first accrual-based financial statements expected for the financial year ending 30th June 2025,” said the Treasury.
The Treasury has noted that a detailed review of financial processes will need to be carried out to make the new accounting procedure successful. The IFMIS system, which is used by both the National and County governments, will need to be restructured to align with the aims of accrual basis accounting.
“However, with the support of the steering committee and key stakeholders, these challenges will be navigated successfully,” Treasury added.
The committee is made up of CS John Mbadi, PS Chris Kiptoo, the Head of the Public Service, Director of the Budget National Treasury, Director of the National Assets and Liabilities Management, Director of IFMIS, a representative from the Council of Governors, and a representative from the Parliamentary Budget Office.
