Institute of Certified Public Accountants of Kenya (ICPAK) has raised a red flag over delayed establishment of a government’s assert and liabilities inventory five years since this process began.
The accountants body said the situation has created loopholes which could be exploited by exiting elected officials to pilfer public assets during and after the August 8 poll.
“The Institute is concerned that it’s now five years since this process began and closer to another election cycle, the process remains incomplete. The situation has created loopholes which could be capitalised on by exiting elected officials to pilfer public assets during the election period and beyond,” said ICPAK chairman Fernandes Barasa.
He said the International Public Sector Accounting Standards (IPSAS 17), Accounting for Property, Plant and Equipment, is essential in enabling the users of the financial statements to discern information about an entity’s investment in its property, plant and equipment and the changes in such investment.
“Kenyans have not known how many assets the government own, their carrying amounts and the depreciation charges and impairment losses relating to them and it was hoped the process of establishing this was to be known before we go for another election,” he said.
He said there is an urgent need for extensive asset audit and update of the inventory in counties before outgoing governors hand over powers to incoming leaders.
“The extensive audit is necessary in not only informing future acquisitions but also in ensuring prudent management of the assets and improved service delivery. We call for an urgent update of the status of asset audit and inventory. Further, we call for proper accounting in line with the International Public Sector
Accounting Standards 17 in the management of and accounting the public assets,” added Barasa.
The defunct Transition Authority had established several initiatives among them; issuance of an order (moratorium) barring all public entities from transferring assets and liabilities before March 2016 and establishment of an Integrated National and County Assets Register Centre (INCAR) to prepare an interim register of assets and liabilities of the 47 counties in collaboration with the Auditor General to address this issue.
“The Transition to Devolved Government Act, 2012 was enacted to among other objectives, provide for policy and operational mechanisms during the transition period for audit, verification and transfer to the national and county governments of-assets and liabilities; human resources; pensions and other staff benefits of employees of the government and local authorities,” he noted.
The institute further said it is concerned with the rising public debt due to the Debt Service to Revenue Ratio which measures how much of revenues is servicing country’s debt. ”The ratio for 2017/18 is projected at 34.7%, against recommended threshold of 30%. This implies that a substantial amount of our revenue being applied to pay off our debts,” he added.
Barasa said debt Interest and redemption for the FY 2017/2018 is projected at Sh. 621.8 billion rising from Sh. 466.5 billion in FY 2016/2017. ”The increase has been primarily due to the maturing of several loans. This is a red flag!
This could be problematic should KRA fail to meet its quarterly revenue targets,” Barasa said. ICPAK urged the government to keep an eye on these indicators to ensure that sufficient resources are allocated to debt servicing without compromising resources meant for service delivery.