The Public Finance Management (Amendment) Bill, 2024

Background

The Public Finance Management (Amendment) Bill, 2024 seeks to amend the Public Finance Management Act, 2012 (No. 18 of 2012). The principal objective of the Bill is to reduce the time allowed for public entities to submit annual financial statements after the end of a financial year. By cutting these reporting windows from three or four months down to one or two months, the Bill aims to give the Office of the Auditor-General adequate time to conduct required audits and prepare reports. Additionally, the Bill seeks to strengthen the Public Sector Accounting Standards Board (PSASB) by establishing it as a body corporate.

Key Amendments

Transition of the Public Sector Accounting Standards Board

Section 192 is restructured to make the Board a body corporate. The Board succeeds the unincorporated Accounting Standards Board existing prior to the commencement of the Act. Under Section 194, its mandate is expanded to:

• Prescribe a framework for implementing accrual accounting in Government.
• Prescribe a risk management framework.

Expedited Deadlines for Financial Reporting

The Bill systematically reduces the statutory timelines for financial submissions. Key statutory reductions include:

• National Treasury Consolidated Statements: Reduced from four months to two months after the end of the financial year (Section 80).
• County Treasury Consolidated Statements: Reduced from four months to two months after the end of the financial year (Section 163).
• Accounting Officers, Receivers of Revenue, and Fund Administrators: Timelines are cut from three months to one month after the end of the financial year across national and county governments (Sections 23, 24, 68, 81, 82, 84, 115, 116, 149, 164, 165, and 167).

New Obligations

For the Board and its Administration

• Appointment of CEO: Under Section 195A, the Board is required to competitively appoint a Chief Executive Officer. The candidate must possess a degree in accounting or finance, be a member in good standing of the Institute of Certified Public Accountants of Kenya (ICPAK), have at least five years of management experience, and meet the leadership and integrity requirements of Chapter Six of the Constitution.
• Staffing and Funding: The Board may competitively recruit its own staff or request the Public Service Commission to second public officers. It must prepare and submit annual revenue and expenditure estimates to the Cabinet Secretary for tabling in the National Assembly.
• Books of Accounts: The Board must keep proper books of accounts and submit them to the Auditor-General within three months after the end of each financial year.

For Accounting Officers

• Auditor-General Recommendations: Under Section 68(4B) (for National Government) and Section 149, accounting officers are obliged to prepare reports on actions taken to implement recommendations adopted by Parliament or County Assemblies.

Penalties

• Non-Implementation of Recommendations: A new Section 68(4A) establishes that any accounting officer of a national government entity who fails to implement recommendations made under Section 68(4) (reports on National Assembly committee recommendations) shall be personally liable to the general penalties provided for under Section 199 of the Principal Act.

Transitional Provisions

• Accrual Accounting Transition: Section 194(6) introduces a three-year transition period starting from the commencement date of the Act to implement the accrual accounting framework in Government.
• Transfer of Assets and Rights: The Second Schedule of the Principal Act is amended to automatically transfer all rights, duties, obligations, assets, and liabilities of the former Public Sector Accounting Standards Board to the newly corporate Board. Administrative directions previously made by the old Board or Cabinet Secretary will remain in force.