The National Assembly’s Departmental Committee on Finance and National Planning chaired by Homabay County MP, Hon Gladys Wanga today marked its last day of stakeholders engagements over the Bills before the Committee .
The Committee wound up its stakeholder engagements after receiving submissions from the Institute of Certified Public Accountants of Kenya (ICPAK); the Auditor General, Ms. Nancy Gathumbi; The Chief Administrative Secretary , Treasury, Hon. Nelson Gaichuhie and the Principal Secretary, Ministry of Foreign Affairs, Amb. Macharia Kamau among others on the Public Finance Management (Amendment ) Bill, 2020.
Pursuant to the Public Finance Management Act 2012, accounting officers are required to submit financial reports to the Office of the Auditor General by 30th September each year (three months after the end of the financial year). In the case of state corporations, this is done after a quality review submission on August 31st to the National Treasury.
The Bill seeks to reduce the period from three months to one month after the end of a financial year. This is to ensure that the Office of the Auditor General has adequate time to carry out required audits and prepare the required reports. Failure to abide by this provision by the accounting officers will attract a penalty prescribed under section 199 of the Act.
Making their submissions, ICPAK noted that submitting the financial statements not later than three months to the Auditor General makes it impractical for the office to produce quality reports.
On their part, the Ministry of Foreign Affairs led by Principal Secretary (PS) Amb. Macharia Kamau objected the proposed amendments. Amb. Kamau informed the Committee that the Ministry of Foreign Affairs is unique in the sense that about 85% of its expenditure is incurred in the 56 foreign Mission and Embassies.
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This, the PS noted , is a major hindrance to the practicability of implementing the proposed amendments as these expenditures have to be physically remitted to the Ministry Headquarters before they are examined and captured in the IFMIS ledger and ultimately incorporated in the end of year financial statements. Currently, the Missions and Embassies accounting processes are manual and not connected to the IFMIS platform.
But the Auditor General on her submissions supported the amendments saying the Bill recognizes the important oversight role played by the office of the Auditor General and that it proposes to remedy the challenge in the execution of audit and ensure that the Office has adequate time to carry out required audits and prepare required reports for submission to Parliament and the County Assemblies.
“Let me start by saying that legislative timeliness for submitting financial statements should be viewed as a minimum standard rather than as an ideal objective. What is proposed should not be viewed as something new but rather reforms to improve financial management in the public sector”, explained Ms. Gathungu.
“In addition, there are other Public sector entities that have been able to submit their financial statements to us between one and two months after the end of the financial year, which shows that Public sector entities have the ability to report in a timely manner “, she added.
