Accounting: State organs get deadline for standards
The government has set a July 2023 deadline for public entities to complete the shift from cash to accrual accounting standards in a move aimed at enhancing financial reporting.
Unlike cash basis accounting which only considers receipts and payments, accrual accounting includes non-financial items such as assets and liabilities.
Jonah Wala, a senior Deputy Accountant General at the National Treasury said authorities are in the process of transitioning the Central Government, Ministries, Departments and Agencies (MDAs), as well as County government’s, with State Corporations already on either IFRS or accrual accounting standards.
“There is a process for doing this. We have to involve the cabinet in this process. We have a road map and tentatively, the effective date for the migration is 1st of July 2023,” he said at the opening of this year’s Financial Reporting (Fire)awards ceremony, .
Quick transition
George Mokua (pictured), Chairman of the Institute of Public Accountants of Kenya said it is crucial the country expedites the transition quickly as this would help verify the Sh504 billion pending bills owed to suppliers by MDAs as well as prevent occurrence of a financial crisis through accumulation of public debt, which by March this year was Sh8.4 trillion.
He said for instance that verification of actual public debt position and the exact amount of pending bills accumulated by MDAs and County governments in each year is a quagmire that requires an adept think-solution.
“This is because the amounts maintained in excel worksheets keep changing daily and one wonders what happened to the cut-off concept which is partly blamed on the cash-basis of accounting,” said Mokua.
In July this year the Public Sector Accounting Standards Board (PSASB) rolled out a five-year strategic plan to complete the transition to accrual accounting by empowering the auditor general to include assets and liabilities during financial auditing..
This will see an adjustment of the Integrated Financial Management System (IFMIS) under the National Treasury, which is said to be prone to error, fraud and non-disclosure of revenue.
