ACCOUNTABILITY

Auditor general to include non-cash assets in reports

This mode of accounting will tell how and where state agencies procure largest to smallest asset

In Summary

• Kenya adopted IPSAS on July 1, 2014, leads Africa in implantation

• National and county governments yet to adopt accrual format, still using the cash format.

Deputy Auditor General Sylvester Kiini during a press briefing by KPMG in Nairobi on April 11,2019.
Deputy Auditor General Sylvester Kiini during a press briefing by KPMG in Nairobi on April 11,2019.
Image: ENOS TECHE

The Office of Auditor General will next year adopt accrual International Public Accounting Standards (IPSAS), to enable it assess  both financial and non financial resources in state agencies.  

According to the deputy auditor general Sylvester Kiini, the new accounting format to be put in place in July 2020 will detail how government agencies procure and use its assets and finances.

"This mode of accounting will tell how and where state agencies procure largest to smallest assets including: furniture, stationery, office tea supply and larger assets like buildings. We will not just settle on financial book," Kiini said.

Currently, the office of auditor general evaluates use of state resources in government institutions purely on cash, leaving room for corrupt officials to sneak out both major and minor assets.

Although Kenya is ahead of its continental peers in implementation of IPSAS which come into effect on July 1, 2014, both national and county governments are still using the cash format.

The public sector continues to report high cases of resource wastage estimated at 30 per cent.

"Auditors in the public sector must shift focus from mere financial reportage…..how much the agency cannot account for to how much resources it had, how much was used, where and track value for money," Ann Kamau, head of Association of Chartered Certified Accountants (ACCA) Kenya said.

John Ndunyu, head of public sector development at KPMG said governments that report on a cash basis do not account for significant liabilities, such as pensions and infrastructure development.

He asked state institutions to adopt the accrual basis of accounting, which holds the potential to improve financial management and increase transparency resulting in a more complete and accurate view of a government's financial position.

‘’Accrual accounting improves the quality of general purpose reporting by public sector entities, leading to better informed assessments of the resource allocation decisions made by governments, thereby helping in the increase of transparency and accountability,’’ Ndunyu said.

He added that strong and transparent financial reporting has the potential to improve public sector decision making and to make governments more accountable to their constituents.