Kenya 2023

Notes:

Notes:
Aggregate expenditure outturn was between 85% and 115% of the approved aggregate budgeted expenditure in the last three completed fiscal years. It was 85.4% in FY 2018/19, 86.8% in FY 2019/20 and 87.2% in FY 2020/21.

Notes:

Notes:
The composition out turn by administrative classification was more than 15% in the last three completed fiscal years. It was 33.9%, 36.1% and 38.2% for the FYs 2018/19, 2019/20 and 2020/21 respectively.

Notes:
Variance in expenditure composition by economic classification was less than 15% in at least two of the last three years. It was 16.2% in FY 2018/19, 4.2% in FY 2019/20 and 12.2% in FY 2020/21.

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No expenditure was charged to the contingency vote for FYs 2018/19 to 2020/21.

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Notes:
Aggregate revenue outturn was 86.3%, 84.4% and 94.1% for the FYs 2018/19, 2019/20 and 2020/21 respectively, which is less than the requirement for a “C” score (i.e., actual revenue is between 92% and 116% of budgeted revenue in at least two of the last three years).

Notes:
Variance in revenue composition was more than 5% but less than 10% in two of the last three years.

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Budget formulation, execution and reporting are based on administrative, economic and functional/sub-functional classification based on the GFSM 2014 standards.

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Budget documentation fulfils 8 elements, including all 4 basic elements, plus 4 additional elements.

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Table 6.1 above provides a summary of expenditures outside central government financial reports. The analysis indicates that 2.98% of government expenditures are outside central government financial reports for FY2020/2021.

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As indicated in Table 6.2 above, revenues outside central government financial reports for FY2020/2021 represent 4.27% of budgeted central government operations.

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Officials from the National Treasury and OAG indicated that in practice, submission of detailed annual reports from all extra-budgetary units is done within three months. That said, there is no evidence to support this claim.

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Notes:
The horizontal allocation of both conditional and unconditional transfers for the devolved sectors to county governments from central government is determined by a transparent, rule-based system. These rules apply to budgeting and actual allocations for both conditional and unconditional grants.

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The CARA, which determines the county allocation, has been consistently delayed over the last four years, a couple of months after the start of the new fiscal year.

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Notes:
All sectors prepare sector plans in line with the MTP III and these are published on the National Treasury and Planning website. The plans build up on lessons learned and challenges faced on the second MTP and include objectives, expected output/outcomes, and performance indicators.

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The APRs present information on the progress in the implementation of policies, programs and projects; challenges encountered and proposals to address them; and recommendations for future MTP implementation. The reports also compare the annual target and achievement for each performance indicator for all sectors.

Notes:
Information on resources received by frontline service delivery units is not collected or recorded annually for at least one large ministry. Besides, a survey providing estimates of the resources received by service delivery units for one last ministry was not undertaken in the past three years.

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Performance evaluation for MDAs is conducted by the Ministry of Public Service and Gender, State Department of Public Service, but this is not published.

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Table 9.1 analyses information made to the public for the completed fiscal year 2020/2021. The Government of Kenya makes available to the public four basic elements plus four additional elements in accordance with the specified timeframe.

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Notes:
As indicated in Table 10.1 below, for FY2020/2021, 99.5% by value of SoEs submitted their annual financial statements to GoK/OAG within 6 months after end of fiscal year.

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Counties prepare and submit annual financial statements to OAG/GoK within four months after the end of the previous month. Whilst the unaudited annual financial statements are not published, the audited reports are published but significantly late, more than 12 months after the end of the previous financial year.

Notes:
GoK quantifies all significant contingent liabilities, including PPPs. This is reported in the FY2020/2021 annual financial statements, which is published.

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Notes:
For FY2020/2021, all major investment projects (as shown in Table 11.1 above) went through economic analysis and appraisal in accordance with the established guidelines. The results of the analyses were submitted to PIM under NT for review to ascertain the socio-economic viability of these projects before selection for budget funding. The results of these feasibility studies were however not published.

Notes:
Before new investment projects are selected and included in the annual budget for funding, the Resource Allocation Panel (RAP) reviews and prioritises these projects and submits its report to cabinet. For FY2020/2021, Cabinet, after consideration of the RAP report, prioritised and selected all investment projects on the basis of the published PIM guidelines.

Notes:
For FY2020/2021, the annual budget documentation which has an MTEF, presents projections of the total capital cost of investment projects, in addition to the capital cost outlay for the current budget year plus those for the two outer years. There are however no estimates of the recurrent cost associated with the new capital investment projects, either for the current budget year or the two outer years.

Notes:
Both the State Department for Planning and the MDA CPPMU monitored and evaluated the physical and financial progress of investment projects initiated and executed. This was done in line with circular number 16/2019 dated 24th January 2020, issued by the National Treasury, as guidelines for public investment management for all central government entities (budgetary and extra-budgetary units). Each CPPMU prepares quarterly physical and financial progress reports of all investment projects, in addition to annual progress reports. There is no evidence of publication of these reports.

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Notes:
The government maintains records of its holdings in major categories of financial assets. Whilst the government publishes the consolidated annual financial statements with information on GoK’s investment portfolio, detailed information on such investments in terms of performance, i.e., movement of shares, dividends, capital appreciation etc., is not published. GoK’s investments are recognised at nominal value.

Notes:
Each central government (budgetary and extra-budgetary) institution maintains an asset register with information on age, status and location of asset. Whilst the government maintains a register of its lands, it does not maintain a register of its subsoil assets such as minerals, energy and other naturally occurring assets.

Notes:
The procedure and rule for the disposal and transfer of tangible assets are well established. Sections 163 to 166 of the Public Procurement and Asset Disposal Act (PPADA) 2015 and Sections 176 to 202 of the Public Procurement and Asset Disposal Regulations 2020 outline detailed procedure for disposal and transfer of non-financial assets. The consolidated annual financial statements of GoK provide partial information (original purchase cost and disposal value) on asset disposal. Currently, there is no specific law or regulation that governs the disposal and/or transfer of financial assets.

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Notes:
Whilst domestic debts (representing 48% of total public debt) are reconciled on a weekly basis, external debts (which constitutes 52% of total public debt) on the other hand are reconciled on a quarterly basis with statements received from creditors each quarter. The data is accurate and complete. PDMO publishes an annual Public Debt Management report which comprises the stock of domestic debt, external debt, debt service payments and disbursements, and selected public debt sustainability ratios and relevant statistics.

Notes:
Sections 46 to 62 of the Public Finance Management Act (PFMA) 2012 and Section 27 of the Public Private Partnership Act of 2011 place the responsibility and approval of loans and guarantees including all PPP projects solely to the Cabinet Secretary of the National Treasury. All public borrowings and issuance of guarantees must be approved by parliament in accordance with the law. Policies and procedures for borrowing are documented in the PFM regulations as well as the MTDMS.

Notes:
The most recently published medium-term debt management strategy (MTDMS) relates to the period FY2021/22- FY2023/24. This was published in February 2021. The FY2021/22-FY2023/2024 debt management strategy covers both existing debt portfolio and forecast debt figures for all central government operations including budgetary and extra-budgetary units. The PDMO of the NT prepares an annual report on all central government debts and guarantees, and submits same to parliament.

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Notes:
The government prepares forecasts of key macroeconomic indicators, which, together with the underlying assumptions, are included in budget documentation submitted to the legislature. These forecasts are updated at least once a year. The forecasts cover the budget year and the two following fiscal years. The projections have been reviewed by an entity other than the preparing entity. The projections include GDP growth and inflation but not exchange rate and interest rate.

Notes:
The detailed budget estimates present projections of the main fiscal indicators, including revenue by type, expenditure, the budget balance and financing, for the ensuing fiscal year plus two outer years. Underlying assumptions to the projections are included in the BPS. The BROP also explains the differences with the forecasts made in the previous year’s budget. The BPS and the BROP are submitted to the National Assembly for FYs 2018/2019, 2019/2020, and 2020/2021.

Notes:
The government prepares a range of fiscal forecast scenarios (included in the BPS) based on alternative macroeconomic assumptions, and these scenarios are published, together with its central forecast.

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Notes:
The GoK prepares estimates of the fiscal impact of all proposed changes in revenue policy for the budget year only, which is submitted to the legislature. Fiscal impact of proposed changes in expenditure policy is not prepared.

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The GoK has set three-year medium-term fiscal objectives with quantitative targets at the start of the budget preparation in each of the last 3 FYs.

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The government has submitted to the legislature along with the annual budget a report that describes progress made against its fiscal strategy and provides an explanation of the reasons for any deviation from the objectives and targets set.

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Notes:
The annual budget includes estimates of expenditure for the budget year and the two following fiscal years allocated by administrative, economic and program (or functional) classification.

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Aggregate and ministry-level expenditure ceilings for the budget year and the two following fiscal years are approved by government before the first budget circular is issued.

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Medium-term strategic plans are prepared and costed for all ministries but the cost information is not complete. The expenditure policy proposals in the approved medium-term budget estimates align with the strategic plans.

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The budget documents provide an explanation of some of the changes to expenditure estimates between the second year of the last medium-term budget and the first year of the current medium-term budget at the aggregate level.

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Notes:
A clear annual budget calendar exists. The calendar allows budgetary units four weeks from receipt of the budget circular. All budgetary units are able to complete their detailed estimates on time.

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A comprehensive and clear budget circular is issued to MDAs, covering total budget expenditure for the full fiscal year. The budget reflects ministry ceilings approved by the cabinet prior to the circular’s distribution to budgetary units.

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The executive has submitted the annual budget proposal to the parliament at least two months before the start of the fiscal year in each of the last three years.

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Notes:
The legislature first reviews and approves the BROP and BSP before the budget is formally presented. The timeframe allows detailed debate and scrutiny. The budget scrutiny covers fiscal policies, medium-term fiscal forecast, detailed revenues and expenditures, as well as medium-term priorities.

Notes:
The legislature’s procedures to review budget are firmly established in law and are respected. Procedures include public consultation, technical support office, specialized committees and negotiations.

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The legislature approved the annual budget before the start of the FY in the last three years.

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Clear rules exist for in-year budget adjustments by the executive. The rules set strict limits on the extent and the nature of the amendments and are adhered to in all instances.

Notes:

Notes:
KRA (collecting 83% of national government revenues) uses multiple means to inform the public on tax and other revenue measures including taxpayer obligations (registration, complete/accurate filing and payment) and taxpayer redress mechanisms. Information is comprehensive, accurate and reliable. There is also a functional tax appeals mechanism which is publicly known.

Notes:
KRA (collecting 83% of national government revenues) has a structured and systematic approach to revenue risk management. This is based on its compliance risk management and improvement plan. Case selection for tax audit is automatically generated and prioritised through iTax without any human interference.

Notes:
As shown in Table 19.2 below, KRA (collecting 83% of national government revenues), for FY2020/2021, completed 70% of all planned audits and investigations according to a documented compliance improvement plan.

Notes:
The stock of revenue arrears, as indicated in Table 19.3A represents 102.5% of total domestic revenue collections. As shown in Table 19.3B, revenue arrears older than twelve months represent 71% of total revenue arrears.

Notes:

Notes:
KRA (collecting 83% of central government revenue) submits the daily, weekly and monthly revenue reports to the National Treasury (NT).

Notes:
All taxpayers therefore, pay their taxes directly into treasury-managed accounts, held at the Central Bank of Kenya. In addition to the treasury-managed bank accounts, mobile money platform (managed by KRA with 83% collections, but directly transferred into the treasury bank account daily) is also available for taxpayer collections.

Notes:
At least once a quarter, KRA reconciles its collections with NT’s bank and mobile money deposits even though there are no transit bank accounts operated by KRA.

Notes:

Notes:
As at the time of this assessment, the National Treasury (NT) does not consolidate budgeted central government cash and bank balances, either on a daily, weekly or monthly basis.

Notes:
As at the time of this assessment, the NT prepared a consolidated annual cash flow plan, broken down monthly. There is however no evidence suggesting that the annual cash flow plan is updated either monthly or quarter on the basis of actual inflows and outflows of cash.

Notes:
The practice is that the NT issues quarter expenditure ceilings to MDAs for recurrent expenditure, and semi-annual commitment ceilings to MDAs for development expenditure. That said, the most reliable expenditure commitment system currently in place is a monthly expenditure warrant accompanied by monthly Exchequer actual cash releases to MDAs bank accounts.

Notes:
In-year budget adjustments take place in the form of a supplementary budget done once, or maximum twice a year. The adjustments are done transparently.

Notes:

Notes:
Pending bills (for budgeted central government) were below 6% in two of the last three completed fiscal years. Actual percentages were 6.3% in FY2018/2019, 2.88% in FY2019/2020, and 2.21% in FY2020/2021.

Notes:
Each MDA submits quarterly report on pending bills to the NT. The OCOB generates a consolidated pending bill report each quarter within two months after the end of the previous quarter. For instance, quarter 1 of FY2019/2020 was issued in November 2019; quarter 2 of FY2019/2020 was issued February 2020.

Notes:

Notes:
There is currently no direct linkage between personnel and payroll records. Nevertheless, the payroll is supported by full documentation for all changes made to personnel records every month. Staff hiring and promotion, which is under the purview of PSC, is controlled by a list of approved staff positions.

Notes:
Changes to personnel and payroll records takes up to two months to be updated. Retroactive adjustments are few.

Notes:
The procedure for changes to personnel and payroll records is well established, clear and adequate to support the integrity of both personnel and payroll data. Whereas the IPPD has an audit trail and passworded for access to authorised staff only, the HR database is largely manual, without sufficient audit trail.

Notes:
A comprehensive physical personnel and payroll audit covering all central government institutions (budgetary and extra-budgetary units) was undertaken in FY2021/2022 by the National Treasury (NT) Internal Audit Department.

Notes:

Notes:
Procurement monitoring by the Public Procurement Regulatory Authority (PPRA) and an electronic database (Public Procurement Information Portal (PPIP)) for advertisement of procurement opportunities and publication of details of contracts awarded has been established and accessible through https://tenders.go.ke. The procurement data published in the PPIP is not complete and comprehensive as not all contracts awarded by all national government procuring entities for the FY2020/2021 had been published or maintained.

Notes:
The data published through the PPIP is not comprehensive and complete in terms of coverage of all procurement contracts awarded by all national government procurement entities. Therefore, it is not possible to determine the value of competitive contracts/procurement from the available data.

Notes:
The government meets at least three out of the six PEFA criteria as shown in Table 24.2 below. The procurement information is complete and reliable for all procurement operations and has been independently verified by the PPRA.

Notes:
The procurement complaints management system, for FYs 2020/2021 meets five (5) out of the six (6) PEFA elements as indicated in Table 24.3 above.

Notes:

Notes:
The PFM Act 2012, PFM Regulations 2015, the Public Procurement Act 2015 and Regulations 2020 outline detailed and appropriate segregation of duties. The expenditure payment and procurement management processes equally outline appropriate segregation of duties. Responsibilities are clearly laid out.

Notes:
Expenditure commitment controls are in place for both budgetary and extra-budgetary units but are partial, as they only limit expenditure commitments to approved budgets and expenditure ceilings, not to projected cash available.

Notes:
As at the time of assessment, all central government payments (including budgetary units, extra-budgetary units, and social security fund) were compliant with regular payment rules and procedures. There were no exceptions to the rule as far as payments were concerned.

Notes:

Notes:
As at the time of assessment, internal audit coverage averaged 93% for both revenues and expenditures. As indicated in Table 26.1 below, internal audit coverage for revenues stood at 94% of total central government operations. In terms of expenditure, coverage was 92% of central government operations.

Notes:
As at the time of assessment, public sector internal audit across central government (for budgetary and extra-budgetary units as well as social security fund) largely meets international standards. Tables 26.2A and 26.2B provide a summary of internal audit activities as at June 2021. As indicated, 60% of internal audit activities focus on high-risk areas, with 52% focusing on financial compliance. There is a quality assurance process in place.

Notes:
As the assessment team is yet to receive consolidated information from the NT internal audit department in terms of the implementation of internal audit, this dimension cannot be assessed due to insufficient data, hence a score of ‘D*’.

Notes:
This dimension is also rated ‘D*’ due to insufficient information in terms of management response to internal audits across central government institutions from the NT internal audit department.

Notes:

Notes:
As at the time of assessment, all treasury-managed bank accounts plus sampled bank accounts from MDAs such as education, health, and gender were fully reconciled and approved by the supervisory authority on or before the 10th of the following month.

Notes:
In practice, suspense account is reconciled annually, still with huge uncleared balances in, as indicated in Table 27.2 above. The analysis shows uncleared balance of Ksh3.3 billion as at June 2021, even though there is a marginal decline of Ksh60.2 million (1.8% in percentage terms) in FY2020/20201 from FY2019/2020 balances.

Notes:
Table 27.1 above provides the comparative analysis. The analysis indicates that Ksh227.9 million still remain unretired as at June 2021. Reconciliation usually takes places annually within two months, but the data shows delays in full acquittal.

Notes:
The IFMIS has password protection. The system prompts users to change and update their access credentials every three months. All transactions and changes within the IFMIS system result in audit trail. There is however no separate operational body responsible for checking data integrity.

Notes:

Notes:
For FY2020/2021, actual revenues and expenditure were directly comparable with the originally approved budget for the main administrative classifications. Revenues and expenditures were also reported in aggregates using economic and functional classifications. Expenditures made from transfers to de-concentrated government units were also reported.

Notes:
Quarterly in-year budget execution reports are issued within two months (eight weeks) after the end of the previous quarter. For FY2020/2021, quarter 1 report was issued in November 2021; quarter 2 was issued in February 2022; quarter 3 was issued in May 2022; and quarter 4 was issued in August 2022.

Notes:
The Quarterly Economic and Budgetary Review (QEBR) reports (also known as in-year budget execution reports) capture expenditure at payment stage only. Data concerns and reconciliation issues have been raised by OAG, but they do not significantly affect the usefulness of financial data. These concerns are not highlighted in the QEBR reports.

Notes:

Notes:
The AFS as indicated in Table 29.1 above, contain information on revenues (partial, as there is no information on revenue/tax arrears), expenditure, financial assets, financial liabilities, guarantees, and long-term obligations. The statements are also supported by a reconciled cash flow statement.

Notes:
The annual financial statements for the last completed fiscal year 2020/2021 were submitted to the Office of the Auditor-General for external audit on the 30th October 2021, four (4) months after the end of financial year in accordance with Section 80(4) of the PFM Act 2012.

Notes:
For the last three completed fiscal years 2018/2019, 2019/2020, and 2020/2021, the consolidated annual financial statements (AFS) have been prepared consistently in accordance with the IPSAS Cash. The accounting standards have been disclosed under note 10 of the AFS. There are no disclosures of gaps in the implementation/adoption of IPSAS cash.

Notes:

Notes:
As indicated in Table 30.1 above, audit coverage for FY2018/2019 stood at 91.2% and 80.3 of central government revenues and expenditures respectively. For FYs 2019/2020 and 2020/2021, audit coverage was 87.2% and 90% of central government revenues, and 78.9% and 80.2% of central government expenditures respectively. The audit reports highlight material issues as well as weaknesses in systems and internal controls.

Notes:
Table 30.2 above indicates dates of submission of audit reports of the consolidated annual financial statements by OAG to the National Assembly. For FY2018/2019, the audit report was submitted 18 months after receipt from the NT. In 2019/2020 and 2020/2021, they were submitted within 7 months after receipt from the NT.

Notes:
The audited entities provide formal responses to audit findings. The audit reports for the last three completed fiscal years summarise management responses to audit findings. The reports from OAG indicates that some accounting officers do not fully address the issues raised.

Notes:
OAG has administrative independence since it operates separately from the executive. The Executive President nominates the Auditor-General subject to the approval of the National Assembly. It has unrestricted access to public records, freedom to decide on its audit work, freedom to publish its audit findings, as well as right to interrogate public officials in the course of its audit. Nevertheless, OAG has no financial independence. Its staff are also public servants.

Notes:

Notes:
As indicated in Table 31.1 above, the scrutiny of 2018/2019 and 2019/2020 audit reports took 13 months and 12 months respectively from the date of receipt of the reports from OAG.

Notes:
This dimension is not rated due to insufficient data.

Notes:
Once PAC scrutinises OAG’s audit reports, it prepares a detailed report with recommendations which is tabled in the plenary for adoption. That said, no systematic framework, such as an action plan to measure and/or follow-up on the implementation of PAC’s recommendation.

Notes:
PAC hearing is open to the public except for sensitive issues. PAC reports are presented to the plenary for consideration and adoption. PAC reports are published on parliament’s website, but delayed due to delays in scrutiny.