The Public Finance Management (Amendment) Bill No. 2 of 2024 has been tabled for its first reading in the National Assembly. Sponsored by the Chairperson of the Departmental Committee of Finance and National Planning, Kuria Kimani, the Bill seeks pivotal changes to the Public Finance Management Act of 2012.
The proposed legislation intends to significantly reduce the timeframe for public institutions to submit their financial statements. Under the new provisions, public entities will have just one month, instead of the current three months, to finalize and submit their financial reports at the close of each fiscal year. This move aims to provide the Office of the Auditor General with a more extended window for conducting rigorous audits, thereby enhancing oversight and fostering improved financial management across the board.
“The principal object of this Bill is to reduce the time for submission of financial statements by public entities from three months after the end of a financial year to one month,” states the memorandum accompanying the Bill. “This will ensure that the Office of the Auditor General has adequate time to carry out required audits and prepare the required reports.”
In addition to the shortened submission deadline, the Bill also introduces the establishment of the Public Sector Accounting Standards Board. This new board will supplant the existing Accounting Standards Board and will be entrusted with a broader mandate, encompassing the setting of reporting standards, enhancing accounting practices, formulating new accounting principles, and promoting public awareness about accounting standards.
Moreover, if the Bill receives the green light, counties will be mandated to prepare quarterly statements and reports highlighting both financial and non-financial performance aspects, such as service delivery, project implementation, and compliance.
Further expanding its scope, the Bill seeks to create two new funds – the Parliamentary Fund and the National Government Public Fund. These funds are designed to cater to specific needs related to financial management and governance, as outlined in the Bill.
While the proposed amendments are sweeping, the Bill ensures it does not delegate legislative power to the Cabinet Secretary nor does it infringe on fundamental rights and freedoms. It is also clarified that the Bill does not qualify as a money Bill under Article 114 of the Constitution and is primarily focused on enhancing the efficiency and transparency of financial reporting mechanisms.
“The enactment of this Bill is not likely to occasion additional expenditure of public funds. Instead, it aims to streamline processes, bolster oversight, and ultimately enhance financial transparency and accountability,” said Kuria Kimani.
