Home ECONOMY Counties Owed KSh20.94 Billion in Pending Bills

Counties Owed KSh20.94 Billion in Pending Bills

by biasharadigest

National Treasury paid out KSh30.35 billion in pending bills owed to County Governments, leaving out an outstanding balance of KSh20.94 billion. This was the status more than three weeks ago at the close of business on 8th January, 2020.

For the past few months, there have been complaints from members of the public that some County Governments are reluctant to settle their dues even where the correct procedure had been followed and the right documentation provided.

But some Counties with pending bills have disowned the order to pay, questioning some of the work that mostly done by previous regimes, pointing fingers at suspected shoddy or corrupt deals and elephant projects.

In 2018, National Treasury requested the Auditor-General to undertake a special audit to assess the status of the County Governments’ pending bills. This is in line with Section 96(3) of the Public Finance Management (PFM) Act.

As at 30thJune, 2018, this special audit report indicated that out of a total KSh88.98 billion pending bills presented for audit to the Office of the Auditor General, bills amounting to KSh51.2  billion (58%) were reported as payable while  KSh37.7 billion (42%) lacked sufficient  documentation to support services rendered or work done and therefore, were not recommended for payment.

This position was communicated to the County Governments with a
requirement to immediately commence payment of these bills.

Latest figures indicate that as at 8th January 2020, National Treasury had cumulatively released to County Governments KSh126.57 billion as their equitable share of revenue raised nationally, and KSh7.05 billion as conditional grants in the current financial year 2019/2020.

Treasury says it has released these resources to County Governments to
enable them clear all their pending bills.

It says that processing of subsequent disbursements will be  based on submission of monthly  reports on payments of pending bills in line with the County Governments payment plans submitted to National Treasury and Controller of Budget.

In relation to the ineligible pending bills, the Intergovernmental Budget and Economic Council (IBEC) Kenya, through a resolution of 18th June 2019, instructed all the County Governments to establish Ineligible Pending Bills Committee to verify the bills.

Once verified, it was resolved that they should be prioritized and paid within this FY, 2019/2020.

There has been a challenge of variance in figures of pending bills submitted to the Office of Controller of Budget from those disclosed in their annual financial statements and submitted to the Auditor General. 

To this end, the National Treasury has developed a solution to enable counties capture the pending bills at the beginning of every financial year and make payments from authorized list of pending bills without requesting auto create from the National Treasury.

In its draft 2020 budget policy statement, National Treasury also says
it is conducting the on-sight training on pending bills solution to procurement
and accounting officers.

This solution is meant to facilitate tracking and monitoring of county governments list of pending bills. This will further ensure transparency and accountability in capture and payment of eligible pending bills.

It observes that County Governments are still facing challenges in terms of monthly and annual  financial reporting of pending bills and other liabilities (as well  as  assets) due to the cash accounting method currently being applied.

In addition, tracking of resources allocated to specific government
interventions such as the “Big Four” Plan, Climate change mitigation, gender
issues, etc, remains a major challenge. 

To address this challenge, the National Treasury and Planning in partnership with UNICEF is in the process of revising the Standard Chart of Accounts (SCOA).

The exercise, which commenced in July 2018,  among  other objectives, is expected to better address the financial reporting needs of County Governments including facilitating the generation of sector specific reports.

It will also improve support to programme-based budgeting; align accounting and reporting to 2014 Government Finance Statistics (GFS) Manual; and prepare for a possible future migration from cash-to accrual-based accounting as proposed by the Public Sector Accounting Standards Board (PSASB)

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