Public Sector Governance and Accountability Series: Budgeting and ...

496 Alta Fölscher
selected across the country, using sampling methods that were statistically
suited to the area and the sector being investigated. Data were collected for
1997 to 2002 on inputs, outputs, quality and quantity of service, financing
and institutional mechanisms, and the accountability systems used (Nafula
and others 2004). The results of the study were diverse but showed critical
shortcomings in policy and in institutions for delivery. The study quantified
and highlighted leakage of resources in the health sector, particularly drugs,
and the presence of ghost workers in the education sector. Poor recordkeeping
and accountability, as well as inadequacies in the deployment of
resources in the sectors, were uncovered (Nafula and others 2004: 63).
In 2004, the Ministry of Finance, together with the planning ministry,
the health ministry, and the education ministry, undertook a joint PETS
of two core poverty programs: rural health services and the secondary
school bursary program. Similar to the initial survey, the findings showed
the present budgeting process and financial administration of funds are
weak and prone to fraud. In the education program, the report pointed to
weaknesses in the reporting system that undermined accountability for
funds received. The report also revealed weaknesses in targeting (Republic
of Kenya 2004b).
Currently, the government has made no clear commitment to institutionalize
PETSs. However, the first surveys have brought valuable information
to light.
Looking for solutions for the remaining challenges
Overall, the public finance reform program (see the discussion in the concluding
section) recognizes that, despite these reforms, key weaknesses in
budget execution persist and further reforms in budget preparation will have
very little benefit unless budget execution reforms provide a stable platform
of in-year budget management. In addition to the issues previously discussed,
several problems persist (Republic of Kenya 2006b):
The quality, accuracy, and timeliness of financial reports and accounting
are still poor. The financial records do not provide sufficient information
for decision makers and are limited in scope by one-dimensional
accounting structures.
The quality of the information in financial reports is still low.
Compliance with Treasury instructions remains problematic. For example,
the fiscal reporting system depends on the reconciliation of records of
exchequer releases and expenditure returns from ministries. It is not