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{
"id": 1213837,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1213837/?format=api",
"text_counter": 208,
"type": "speech",
"speaker_name": "Molo, UDA",
"speaker_title": "Hon. Kuria Kimani",
"speaker": null,
"content": "Committee and I spoke before we started this conversation and I looked at the Report, I realised that I have the solution to one of the recommendations the Committee is making. I have taken time to ask myself why we continue talking about pending bills and how these pending bills come. I will try to explain this without being very technical. Next week, we are starting to process the Budget Policy Statement (BPS). Immediately after that, we will start processing the Estimates for the 2023/2024 Financial Year. After that, we will do the Finance Bill. The Finance Bill proposes tax revenue measures to raise revenue to finance the budget. You will realise that by the time we are passing the Finance Bill, we will have passed the Budget. Later, once the State Departments and MDAs get their approved estimates or budgets, they will do their procurement plans. They will say what the ministries want to do and they have their plans. However, when making these plans for the said departments for ministries, they do not have the Exchequer. They do not have money in the accounts, but they have plans. The performance of even the officers is based on the execution of the plans. So, they start spending money that they do not have, money not disbursed to them. Towards the end of the year, that is when they realise they spent this much, but they have only received this much. Therefore, there is a difference. Around that time, that is when most governments resort to borrowing. They say, “because we have a fiscal deficit of Ksh300 billion, we go and borrow.” It creates a debt problem. Most importantly, it creates an unpaid bill. When reported in the financial statements of that year, the Government of Kenya has adopted an Accrual Reporting System. An Accrual Reporting System means that we record expenses and income when they are received. When the MDAs and State departments do the financial reports, the issue of pending bills is nowhere on the actual report or the actual statement. It is just an observation that this ministry or this particular department has a pending bill of this much. It is not in the financial statement of that MDA or State department. That is why the Constitution in its wisdom, and this Parliament passed the Public Finance Management Act establishing the Public Sector Accounting Standards Board. The Public Sector Accounting Standards Board has recommended. I say I have a solution to this problem because the Public Sector Accounting Standards Board is one of the MDAs under the Departmental Committee on Finance and National Planning. They are tasked to come up with an Accrual Reporting System and not the Cash Reporting System. What the Government is using is the Cash Reporting System. What is reported in the financial statements is the amount actually collected or expenses paid for. However, with that plan, remember there are commitments already made, but not reported because we use the Cash Reporting System. That is why it is my mandate here, and my Committee’s, to make sure that within the shortest time possible, we come up with that amendment and have the Government of Kenya adopt an Accrual Reporting System, so that all these expenses are properly reflected on the financial statements, not just a note that a particular MDA or State department had a pending bill of amount X. If you could just get me a minute, I would weigh in a little on pensions. What Hon. Kirwa said about pensions is very painful. Hon. Makilap, one of my friends and a Member of my Committee, was telling me that when this Committee was doing the Report, they realised there are pensioners from Asian and Indian countries who were born in 1924. Somehow, they have never died."
}