Project funds approved through the annual budget will be sent directly to designated bank accounts for the ventures, if Parliament approves a proposed law.
The Public Finance Management (Amendment) Bill, 2025, seeks to amend Section 83 of the Public Finance Management Act to ensure mandatory exclusive accounts for project implementation funds.
The Bill, sponsored by Rongo MP Paul Abour, proposes that the Controller of Budget (CoB) be mandated to ensure that all funds disbursed to project-specific accounts are monitored and that quarterly compliance reports are submitted by the ministries, departments, and agencies.
“As this responsibility falls squarely within the existing functions of the CoB, including authorising withdrawals from public funds and preparing quarterly budget implementation reports, this provision would not result in additional public expenditure,” Mr Abour said in the Bill.
“The Bill provides that funds disbursed by the National Treasury for approved projects in the annual budget must be deposited into designated project-specific bank accounts.”
Mr Abour said the Bill seeks to cure the persistent diversion of project funds by entities, especially when the Treasury undertakes budget cuts through supplementary budgets.
The Bill has been approved by the Budget and Appropriations Committee (BAC) for publication.
It also seeks to formalise and make periodic training a statutory requirement by mandating the National Treasury, and relevant oversight bodies, to provide regular training for authority to incur expenditure holders and accounting officers, focusing on the management of project-specific bank accounts.
“In doing so, the Bill embeds this obligation in law and requires Parliament to expressly appropriate funds for its implementation through the national budget, in line with Article 114(3)(c) of the Constitution,” Mr Abuor said.
He said the current legal and policy framework under the Public Finance Management Act (PFMA), 2012, empowers the National Treasury to oversee capacity building for accounting staff within ministries, departments and agencies, including Accounting officers and authority to incur expenditure holders.
“However, the Act only provides for general training and does not impose an explicit legal obligation on the Treasury to conduct regular or mandatory training on specialised areas such as the management of project-specific bank accounts,” Mr Abuor said.
“As a result, training in this area remains ad hoc, informal, and largely dependent on the discretion of individual institutions or ministries, with occasional support from the Kenya School of Government, Institute of Certified Public Accountants (ICPAK), or donor-funded initiatives.”
Mr Abuor told the BAC, chaired by Alego Usonga MP Samuel Atandi, that while capacity development is broadly promoted, the law neither describes the frequency of such training nor addresses the particular requirements of the project-account management.
He said the ongoing accrual accounting transition from 2024 to 2027 has temporarily increased structured training activities across public sector entities.
“Under the guidance of the Public Sector Accounting Standards Board, the initiative includes mandatory training on International Public Sector Accounting Standards (IPSAS) and related systems,” he said.
“However, this is a time-bound initiative and not a permanent policy embedded in law. The funding for these trainings is allocated as part of the broader transition programme and not through a standalone, recurring budget line specific to the periodic training of AIE holders and accounting officers.”
An analysis by the Parliamentary Budget Office (PBO) on the cost of implementing the Bill shows that it will cost Sh528.7 million in the first year, Sh555.13 million in the second year, and Sh582.89 million in the third year to train AIE holders once a year.
The costing and financial assessment of the proposed Bill was undertaken on the basis that a total of 87 votes shall be considered, each administered by an accounting officer.
The PBO said there are 84 special funds, each assigned an accounting officer; a total of 432 semi-autonomous agencies (Sagas) shall be included, each under the responsibility of an accounting officer, and 337 decentralised funds.
The PBO, which advises MPs on fiscal and budget, said for the ministries of Education and Interior, each sub-county shall be treated as having an AIE holder, resulting in 674 sub-county AIE holders, based on the 2019 Kenya National Bureau of Statistics census.
For the Roads and Transport ministry, it is assumed that the Kenya Rural Roads Authority (KeRRA) has 47 AIE holders based at the regional level, while the Kenya Urban Roads Authority (Kura) has eight AIE holders based at the regional level.
“The cost of training one AIE holder is estimated at Sh100,000 per year (once annually), " the PBO said.
“Each accounting officer under each vote, special fund, and Saga may delegate authority up to seven individuals to serve as AIE holders under their respective entities.”
