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Government to roll out new accounting standard for counties in 2021

The accrual basis of reporting enables reporting entities to accrue both revenues and expenses. It also makes it provides for full disclosures on the reporting entity with respect to its assets and liabilities

In Summary
  • The accrual basis of reporting enables reporting entities to accrue both revenues and expenses
  • Counties are currently reporting on cash basis, which recognizes revenues when cash is received, and expenses when they are paid
Governors Mike Sonko (Nairobi) and Ferdinand Waititu (Kiambu) at a past function
Governors Mike Sonko (Nairobi) and Ferdinand Waititu (Kiambu) at a past function
Image: FILE

The Public Sector Accounting Standards Board (PSASB) is set to partner with counties in an effort to promote sound financial reporting and internal audit standards in the devolved government.

This was revealed after the board conducted county visits targeting five counties in western and Nyanza regions.

According to the chief executive officer, Fredrick Riaga, challenges in financial reporting and internal audit in the counties can be addressed through robust capacity building activities targeting key personnel within the devolved units.

“We embarked on these visits with the sole aim of collecting feedback on the status of implementation of financial reporting templates and internal audit processes in the counties,''Riaga said.

Riaga added that the monitoring and evaluation activities , will provide them with critical information that will enable it address any hindrances towards the migration which is expected to be rolled out in two years’ time.

Most national government entities have embraced the accrual basis of reporting though there are a few which are still on cash-based system.

It is the counties that we are focusing on at the moment because we recognize their critical role as the key drivers of development at the grassroots,'' Riaga said.

Counties are currently reporting on cash basis, which recognizes revenues when cash is received, and expenses when they are paid. The framework does not provide comprehensive information for effective decision making at this level of governance.

It is for this reason that PSASB is advocating for accrual basis of reporting.

The accrual basis of reporting enables reporting entities to accrue both revenues and expenses. It also makes it provides for full disclosures on the reporting entity with respect to its assets and liabilities.

It provides information on an entity’s overall financial position and current stock of assets and liabilities.

In order to facilitate the transition the Board has, in collaboration with the National Treasury, has conducted 27 formal training workshops for accounting and auditing staff of public sector entities at the Kenya School of Government since 2014.