The Accountant Sep-Oct-2016

COVER STORY
The new law opens up a new world
of possibilities for Kenyan bank
services consumers. Setting lower
caps on interest would provide a
conducive environment to all.
Kenya’s largest growth industry and
consumes a great deal of the government
budget. Besides this, the introduction of
cost sharing has burdened both parents
and the communities surrounding the
school since there is need for additional
finance to back up the limited public
funds provided by the government. With
this kind of investment, parents and the
communities in question require that
there be proper financial management by
the school administrators.
Notwithstanding this development,
there are problems in schools over the
management of funds. Parents have
been kept in the dark over how much
money has been received and spent in the
schools. In fact, parents have complained
of financial mismanagement with a good
number of audit reports indicating that
books of accounts are not properly kept
in some schools. Such circumstances
normally leave room for manipulation by
unscrupulous persons who have access to
school funds and therefore there is need
to find out ways of ensuring efficient and
effective financial management in public
secondary schools.
In light of this, the Institute appeals
to the Cabinet Secretary to consider the
following proposals during the hiring
process of school bursars:
a. School Bursars should be qualified
accountants, and bona fide members of the
Institute of Certified Public Accountants
of Kenya (ICPAK).
b. The school administrators should
be accountable to the government as
far as expenditure within the budget is
concerned and should show a high degree
of transparency and accountability. They
should comply with the Constitution and
PFM Act.
c. Review of education, legal and policy
framework in the country to conform
with modern realities. This calls for
an immediate dialogue with various
stakeholders to urgently address any issues
of concern.
3. Elections Campaign
Regulations
The Institute takes cognizance of
Campaign Financing Regulations that
were released recently by the Independent
Electoral Commission of Kenya (IEBC).
While appreciating the good intention
behind these regulations, we cannot afford
to sit on our laurels.
We therefore recommend complete
transparency of accounts through sound
accountability. Each party and candidate
should be required to present to the
Campaign Finance Committee of the
IEBC its audited financial statements
within acceptable timelines. We propose
that the audited financial statements
of political parties and candidates be
submitted to the Committee within three
(3) months of the elections.
Electoral financing legislation and
regulations should therefore consider
in particular four (4) distinct aspects
relating to the transparency of political
finance:
• Disclosure rules which oblige political
parties to open up their financial accounts
and reveal information on their levels of
income, including the identity of donors,
and expenditure.
• Reporting regulations stipulating that
audited party accounts be made public and
reported to the appropriate institution.
• Monitoring provisions for an
independent body to inspect and control
party accounts.
• Enforcement of a legal system of
sanctions to ensure that regulations on
party financing are not evaded and to
impose penalties when the law is breached.
Disclosure rules in respect of campaign
financing should adopt the following
reporting guidelines:
• Disclosure provisions should
distinguish between income and
expenditure.
• Donations exceeding a certain
minimum threshold should be disclosed.
• Donations should be itemized into
standardized categories.
• Disclosure provisions should
distinguish between the financing of
political parties and the financing of
candidates.
• Disclosure provisions should
distinguish between routine party finances
and electoral finances.
• Disclosure rules should include both
national and local party finances.
• Disclosure should be a responsibility
of donors, parties and candidates receiving
donations.
It is a fact that electoral processes
play a critical role in the governance of a
nation. Political process being at the center
of representative democracy, the process
should therefore be supported by clear
rules and regulations more so on financing
and budgeting as a means of restoring
public trust.
SEPTEMBER - OCTOBER 2016 39