Commission on Revenue Allocation chairman Micah Cheserem (left) with Transition Authority chairman Kinuthia Wamwangi during a seminar on country governance at the Kenya School of Government in Nairobi last week. Photo/ ANTHONY OMUYA
What you need to know:
Work on the criteria is expected to be completed by June this year, said CRA’s director of county fiscal affairs Stephen Masha.
The Commission for Revenue Allocation (CRA) will partner with the Institute of Certified Public Accountants of Kenya (ICPAK) to develop criteria for assessing how counties manage resources.
Work on the criteria is expected to be completed by June this year, said CRA’s director of county fiscal affairs Stephen Masha.
The application of the fiscal responsibility criteria is supposed to tell policy makers which counties are using their allocations well and which are misusing them, or not using them optimally.
“We will develop criteria for fiscal responsibility in the counties so that we can determine objectively those that have performed well and those that don’t,” said Mr Masha.
In developing the criteria, the two organisations will take account of such standards as those used in ICPAK’s annual Financial Reporting (FiRe) awards, among others, said ICPAK chairman Patrick Mtange.
During a press conference on the sidelines of the ICPAK meeting last Friday, Mr Mtange said there would also be similar awards for counties as part of enhancing financial reporting of the devolved units. Each county will be ranked with top ones given awards.
“The criteria we use in FiRe awards is going to form a good basis or starting point in developing criteria for fiscal responsibility.
‘‘We will also look at the ability of the counties to generate revenue to enable them meet their responsibility,” said Mr Mtange.
For the FiRe awards, the financial statements and reports of a participating company are evaluated from two broad perspectives, namely financial reporting and corporate citizenship aspects.
In the financial reporting aspect, the awards team evaluates financial statements to determine if they have been prepared in accordance with all provisions of International Financial Reporting Standards, the provisions of the Companies Act with respect to financial reports, and any other provisions specific to the sector.
In the case of counties, the assessment will be expected to consider provisions in the Constitution and Public Financial Management Act, among other legislation that governs usage of funds at that level.
Reporting entities
The FiRe awards team also checks whether accounting policies adopted by reporting entities, and notes to the accounts, are clear and enhance the user’s understanding of the financial statements.
The awards also recognise those who voluntarily make disclosures over and above what is required by the various reporting standards. This is because the information, while not mandatory, enhances the ability of the user to understand the financial reports.
In corporate citizenship, the FiRe awards consider corporate governance and social responsibility as well as environmental reporting.
Mr Masha said there would be need to review the numerous devolved funds with a view to finding the best way in which they can be restructured and managed to remove duplication and increase impact.
There is a legal moratorium of three years after the coming into operation of counties before the devolved funds can be restructured.
The discovery of minerals and oil in some counties will also call for the discussion of terms of sharing accruing benefits between counties and the national government, Mr Masha said.
