State agencies are gearing up to transition to an accrual accounting system next month. As the government moves to streamline financial efficiency in parastatals.
The transition comes as part of a comprehensive effort to tackle the issue of pending bills, which have been a persistent challenge in recent years.
Fredrick Riaga, the chief executive officer of the Public Sector Accounting Standards Board, announced this development, emphasising that the new accounting system will prioritise the timely payment of suppliers at the outset of each financial year.
Pending bills had surged by a staggering 29.2 percent in the last financial year, amounting to a total of Ksh567.5 billion.
Of this considerable sum, ministries and state departments are responsible for Ksh123.9 billion in unpaid bills.
To address this issue and streamline financial processes, state agencies are poised to adopt the accrual accounting system, replacing the cash-based accounting reporting currently in use.
This transition signifies a fundamental shift in the way financial transactions are recorded and managed.
Mr Riaga reaffirmed the significance of the new system, highlighting that it will ensure pending bills are given utmost priority right from the start of each financial year.
This move is expected to bring much-needed relief to suppliers and contribute to more responsible and transparent financial practices within the government.
In another development, the Public Sector Accounting Standards Board and the Institute of Internal Auditors have signed a memorandum of understanding.
This partnership aims to provide comprehensive training for accountants on best practices in preparation for the adoption of the accrual accounting reporting system.
By equipping professionals with the necessary skills and knowledge, this collaboration seeks to facilitate a smooth transition and ensure the success of the new accounting framework.
As the government takes these important steps towards financial reform, ministries and their affiliated agencies are expected to embrace the accrual accounting system starting November.
This transition signals a commitment to resolving the pending bills issue and enhancing financial accountability, ultimately leading to improved fiscal management for the benefit of all stakeholders.