Reform State accounting system


The subject of reform of the accounting system the government uses is rarely discussed in this country. PHOTO | SHUTTERSTOCK

Whether Felix Koskei, the Chief of Staff and Head of Public Service, will make a big impact in reforming the civil service bureaucracy remains to be seen. I listened to him speak during a workshop dubbed ‘Zero fault auditing’ on Thursday.

He wants to lead the bureaucracy into a regime where there will be no qualified and adverse finding by the Auditor-General in the books of ministries and parastatals.

He had given deadlines for ministries and parastatals to respond to adverse audit queries that recur.

Read: Treasury updates IFMIS to keep tabs on spending

Mr Koskei has put in place the mechanism for achieving a zero-fault auditing regime.

Within his office, he has assembled a team of top accountants working under a department known as the Office of Audit, Legal and Regulatory Compliance.

Even a sceptical journalist like me would be inclined to conclude that the man has approached the assignment with fire in his belly and has the attitude and mind to deliver.

And that he does not want to be a figurehead focused on enjoying the trappings of office.

That workshop on Thursday was one of the largest gatherings of top civil servants I have seen in recent years. There were 33 principal secretaries, 320 CEOs of parastatals, 320 audit committee chairmen, 104 internal auditors and 26 heads of internal audit.

Mr Koskei and company must keep working to make sure that Harambee House — a critical nerve centre of the economy — remains an efficient body where the workplace bubbles with new ideas and where economists and public finance staffers constantly question entrenched practices and alternatives are explored.

I accepted an invitation to be on a panel of discussants in this high-profile event and I can assure you that it was not those ordinary talk shops.

The reason I accepted to participate was the subject of reform of the accounting system the government uses is rarely discussed in this country.

As a student of the history of public finance management in Kenya, my observation has been that economic reforms driven by Harambee House have a better chance of making progress than reforms driven by the Treasury.

At the imperial Treasury— as we used to call that institution before the 2010 Constitution came to town — implementation was approached perfunctorily and without conviction.

We all know the fate that befell the cleverly thought out ideas and fundamental reforms that were recommended by the Presidential Task Force on Parastatal Reforms of 2014.

Amos Kimunya was the first of our top accountants to occupy the office of Cabinet Secretary for Finance. And, there was a time when another of our top accountants — Martin Oduor Otieno — was the Permanent (now Principal) Secretary in the same ministry.

It did not translate into the issue being given more attention the the public finance policy elite would envisage.

The need to reform the government’s accounting system was hardly articulated as a top priority issue in our agenda for reforms.

Mr Koskei and his team must reform accounting by transitioning from a cash-based system to accrual accounting.

In June 2022, former Treasury Cabinet Secretary, Ukur Yatani, sent a public notice where he stated that the government would start shifting from the cash-based system to double-entry accrual accounting. Very little has been heard from the Treasury since that statement was made.

Also read: State plots unfettered access to parastatals' surplus billions

I learnt from the workshop that the issue is on track and that a Cabinet paper proposing this critical change is in the works.

Corrupt elites prefer systems where you can operate without a trail. Indeed, the beauty of accrual accounting is that the system leaves behind a transparent audit trail.

The zero audit fault regime should be treated as the first step towards fundamental accounting reforms. If the government wants to show that it is serious about fighting corruption, let’s move to double-entry accrual accounting.

The writer is a former managing editor, of The East African.