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• Fri Apr 18 2025

The National Treasury has issued fresh guidelines to help all government entities transition from cash-based to accrual-based accounting, in line with a 2024 Cabinet directive

Treasury PS Chris Kiptoo stated that accrual accounting will improve financial transparency by enabling better tracking of assets, liabilities, and public institutions? financial health

Economist Daniel Kathali welcomed the move but emphasized that without political goodwill, even the best financial systems, including IFMIS, can be undermined

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Elijah Ntongai, a journalist at TUKO.co.ke, has more than four years of financial, business, and technology research and reporting expertise, providing insights into Kenyan and global trends.

The National Treasury has issued fresh guidelines to steer all government entities in transitioning from cash-based to accrual-based accounting.

Treasury Principal Seretary Chris Kiptoo at a past event. Photo: @KeTreasury.

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This is a move aimed at improving transparency and combating corruption in ministries, constitutional commissions, and county governments.

In a circular dated April 14, 2025, Treasury Principal Secretary Chris Kiptoo, who also chairs the National Steering Committee overseeing the transition, said the shift aligns with the Cabinet?s 2024 directive and will be implemented progressively.

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?Accrual accounting enables better tracking of assets, liabilities, and overall financial health of public institutions. It introduces accountability in a way the current cash system does not,? said Kiptoo.

The shift, guided by the International Public Sector Accounting Standards (IPSAS), is expected to enhance financial reporting, reduce loopholes for misappropriation of public funds, and align Kenya with global public finance management practices.

What is new with accrual accounting?

Speaking to TUKO.co.ke Daniel Kathali an economist explained that accrual accounting records financial transactions when they are earned or incurred, regardless of when cash is actually received or paid, providing a more accurate picture of an entity?s financial health.

He also noted that cash accounting only records transactions when money changes hands, income is recorded when received, and expenses are recorded when paid.

Kathali opined that cash accounting is simpler, accrual accounting offers greater transparency by capturing obligations and revenues as they arise, which is critical for budgeting, planning, and curbing financial mismanagement.

According to the circukar from the treasury, dedicated technical officers will support ministries and counties during the transition to accrual accounting, with guidance also available through IPSAS-aligned online resources.

A network of Trainers of Trainees (TOTs) has been established to facilitate capacity building, while the Steering Committee will disseminate updates via a dedicated website, newsletters, emails, and social media.

Public entities can access key documents and tools on the National Treasury?s website, and full cooperation with trainers and technical officers is expected throughout the implementation process.

Will accrual accounting end corruption?

According to Kathali, the public finance administration has sufficient legislations to promote integrity and the lack of polical goodwill is the main enabler of corruption.

"The existing measures in public Finance are more than enough to counter graft and promote transparency and integrity. The problem we always have is lack of political goodwill. The IFMIS is itself a game changer in the public Finances. However, the various stakeholders are more than desperate to compromise and find ways to manouvre the same," Kathali said.

The Ministry has invited institutions with questions or clarifications to contact the Steering Committee directly at [email protected].

Source: TUKO.co.ke