The Public Finance Management (Amendment) Bill, 2023
Status Timeline
Proposed
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Public Review
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Debate
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Executive
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Final
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Counties Given One Year to Launch Secure Revenue Systems
Each County Treasury must, in consultation with the National Treasury and Kenya Revenue Authority, design and implement a county revenue collection system within one year of commencement. Under the new section 160A, this system must be secure, transparent, simple, and capable of separate accounting and reporting to prevent fraud and financial losses.
Mandatory Quarterly Reporting on Revenue Systems
Under the newly inserted section 160B, County Treasuries are obligated to prepare and submit quarterly financial and non-financial performance reports of their revenue systems. These reports must be submitted to:
- The respective county assembly
- The Senate
- The National Treasury
New Funding Protections for Transferred Public Functions
The Bill introduces sections 191F and 191G to regulate funding when functions are transferred between the national and county levels of government.
- Cost Determination: The transferring authority determines the service cost in consultation with the receiving government.
- Funding Minimums: The appropriating legislature (National Assembly or County Assembly) must allocate funds for the transferred function. This allocation cannot be lower than the amount appropriated for the function in the preceding financial year.
Auditor-General to Audit Transferred Services Within Three Months
To ensure accountability for transferred public services, the Auditor-General is required to conduct a special audit. This audit must examine the financial and non-financial performance of any entity executing transferred functions and must be completed and submitted to Parliament and the respective county assemblies no later than three months after the end of each financial year.
Bill No.
Senate Bills No. 40 of 2023
Gazette No.
Supplement No. 160
Sponsor
Hamida Ali Kibwana
Background
The Public Finance Management (Amendment) Bill, 2023 seeks to amend the Public Finance Management Act, No. 18 of 2012. The bill addresses two critical areas of intergovernmental finance: boosting own-source revenue collection by county governments and establishing clear guidelines for the costing, funding, reporting, and auditing of public functions transferred between the national and county governments under Article 187 of the Constitution.
Key Amendments
- County Revenue Systems (Sections 160A & 160B): Inserts a legal requirement for county governments to establish a dedicated, secure, and transparent system for revenue collection to assist counties in reaching their own-source revenue targets.
- Funding of Transferred Functions (Part VA, Sections 191F & 191G): Outlines specific legal mechanisms for transferring funds when a function is transferred either from the National Government to a county government, or from a county government to the National Government.
New Obligations
- County Treasuries: Must design, develop, and implement a secure county revenue collection system in consultation with the National Treasury and the Kenya Revenue Authority. They must also prepare and submit quarterly performance reports on these systems to their respective county assemblies, the Senate, and the National Treasury.
- Legislative Assemblies: The National Assembly and County Assemblies must appropriate funds to support any transferred functions. These allocations must not be less than the amount appropriated for that function in the preceding financial year.
- Service Providers of Transferred Functions: Entities executing a transferred function must submit quarterly progress and implementation reports to the Senate and the respective county assembly.
- The Auditor-General: Must prepare a special audit report on the financial and non-financial performance of the transferred functions within three months of the end of each financial year. These reports must be submitted to the National Assembly, the Senate, and the respective county assemblies.
Transitional Provisions
County Treasuries are granted a transitional period of one year from the date the Act comes into force to fully design, develop, and implement their respective county revenue collection systems.
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