The Standing Committee on Devolution and Intergovernmental Relations has pledged to amend the Public Finance Management (PFM) Act to establish clear guidelines and procedures for the opening, maintenance and closure of bank accounts operated by county governments.
Amending the PFM Act, they explained, will ensure that the 47 devolved units comply with the regulations requiring bank accounts to be opened at the Central Bank of Kenya in order to enhance accountability and transparency.
Regulation 82 (1) (b) of the Public Finance Management (County Governments) Regulations, 2015, provides that all county government bank accounts shall be opened at the Central Bank of Kenya except for imprest bank accounts for petty cash.
However, despite these regulations, many counties still operate accounts in different commercial banks across the country contrary to the law.
While meeting with the Council of Governors (COG), the Controller of Budget and the Office of the Auditor General earlier today, Members of the Senator Mohamed Abass-led Committee underscored the need for compliance with the Public Finance Management Act and regulations, urging counties to adhere to all legal requirements.
They explained that operating multiple commercial bank accounts hampers the accountability, transparency and efficiency of the county governments, thus crippling their financial autonomy.
“Many counties have not been following the law. We need to review the legal provisions under the PFM Act and related regulations so that we ensure compliance in the opening and management of county government bank accounts,” Abass, the Chairperson of the Committee, said.
Senators suggested strengthening the enforcement mechanism, including penalties and closing dormant or misused bank accounts, to ensure county governments comply with legal requirements in their financial management and reporting.
In their defence, the Chairperson of the Council of Governors’ Finance Committee and Kakamega Governor Fernandes Barasa explained that counties open several commercial bank accounts to manage funds received as conditional grants from development partners, as part of the requirements from these development partners.
He, however, agreed with the Devolution Committee’s view on amending the law to align it with the new laws and ensure that all county government bank accounts are properly reconciled, approved by the National Treasury, and disclosed.
“Counties have many bank accounts as part of the requirement from our development partners. I agree with the Committee that we need to amend the law to give us more flexibility,” Barasa said.
The Controller of Budget, Margaret Nyakang’o and the Auditor General Ms Nancy Gathungu urged the Committee to engage with the National Treasury to ensure that all grant and donation agreement funds are deposited in the County Revenue Fund before being wired to the project-specific accounts.
“Empower the Controller of Budget to impose sanctions, such as delaying fund disbursements, on counties that fail to follow the law,” Gathungu opined.
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