Nairobi:  How will the new Constitution affect Kenya's accountability on public finance? To Kenya, the promulgation of the Constitution has paved way for efficiency in public funds use. There is cause to celebrate after more than two decades in search of a new constitution.  Apart from the gains to be realised in governance, rights and freedoms, land reforms, and devolution of government, the new Constitution is promising better management and accountability of public finance.

Chapter 12 deals with public finance, providing for openness and accountability, public participation in financial matters, an equitable society, responsible financial management, and clear fiscal reporting.  Chapter 11 on the other hand provides for a devolved government, thus creating two centres of accountability; at the national level and at the county level.

For Kenya to be able to achieve accountability, there is need for radical changes in the way public finances are managed and reported.  The Finance ministry is one of the dockets set to changes, a move that will force officials to account for use of public finance.

Before the coming into force of the new constitution, the Minister of Finance presented the National Budget to parliament in June, less than one month before the beginning of the new financial year.  This has been one of the reasons why government funds are disbursed to the various ministries late, affecting service delivery.  Also, the public is not involved in the budgeting process.

However, Article 221 of the new constitution provides that the cabinet secretary responsible for finance shall submit to the National Assembly estimates of the revenue and expenditure for the following financial year, at least two months before the end of each financial year.  The budget will be presented not later than 30 April every year.  This will now allow the National Assembly adequate time to scrutinise and approve the budget, and allow the funds to be disbursed in good time.

In addition, the article now provides for receiving of representations and recommendations from the public by a committee of the National Assembly.  This means that the public have a defined avenue for airing their views on government spending.

The revenue raising powers of the national and county governments have been clearly defined and the procedures of collation and division of the funds.  The National government has greater sources for revenue collection, but with equal measure, have the responsibility to ensure its equitably distributed.  To achieve this, the law provides for establishment of a commission on revenue allocation, which will oversee the allocation of funds.

The county governments are now entitled to not less than 15 per cent of the revenue collected by the national government.  The determination of the amount collected by the national government will be based on the most recent audited accounts of revenue received, as approved by the National Assembly. This means that there will be great pressure from the National Assembly and the county governments for timely provision of audited revenue accounts.

There will also be greater scrutiny of the revenue numbers as they will determine how the revenue cake will be shared.  The national governments will, therefore, need to strengthen their revenue collection and reporting processes in line with time requirements, while improving checks and balances for accountability in the collection of revenue.

Under article 203, one of the significant criteria of sharing the national resources to the county governments will be the capacity and efficiency.  The county governments will, therefore, need to invest in appropriate financial management systems and policies, build capacity to utilise available funds, and ensure transparency and efficiency in the use of funds. If the county government is unable to use and account for resources, their financial allocation will be slashed.

In the new constitution, the process of appointment, qualifications, period of service and roles and responsibilities of the Auditor General are well defined. The performance of the Auditor General will be scrutinised by parliament and county assemblies with the audit reports being submitted to these two organs.  The new law provides that within six months after each financial year, the Auditor General shall audit and report on the spending by the national and county governments.  The reports are to be tabled to parliament or county assemblies where they will be debated and considered within three months of submission.  This gives a defined timeline of nine months for the audits to be concluded.

This will be a complete contrast from the current practice where audits are carried out years later, making the audit findings difficult to follow up on.

The big question, however, is: what can the Auditor General do to comply with the new timelines? The options available are either hiring more trained auditors, or outsourcing some of the audit tasks to private firms.  In the end, irrespective of which option taken, there will be demand for skilled accountants and auditors to undertake the required audits.

In responding to overall timelines stipulated, the Auditor General will set new schedules by which spending units provide their books of accounts for the audit, and with the requirement that the reports be debated in the county assembly and parliament, the spending units can ill afford to have qualified audited reports.  It is therefore important for the Government to begin thinking of an accounting framework that is uniform and allows for comparability and consolidation of government's accounts.

International Public Sector Accounting Standards (IPSASs) are an optimal option as they allow for transparency, comparability, and improved financial information accountability within the government.

The Government also needs to make critical investments on systems and people to make the process of accountability easier.

Although much effort has been placed on Integrated Financial Management Information Systems (IFMIS), there is need to expand the scope of the implemented systems to support the management of internal and external resources, including tangible assets, financial resources, materials, and human resources.

There is need to also train accountants in the public service.  However, the long-term benefits of effective accountability and transparency in use of public finance will outweigh the cost.  Not only will the public benefit by having the government more accountable, this will also have a direct impact on service delivery.

*  Samuel Kiiru is a manager in PricewaterhouseCoopers Public Sector Assurance. E-mail: samuel.kiiru@ke.pwc.com