alexa State on course to adopt modern accounting system soon - Daily Nation

State on course to adopt modern accounting system soon

Wednesday January 29 2020

I concur with Jaindi Kisero’s assertion in “If we want to end corruption, let’s adopt modern accounting systems” (Daily Nation, January 22), that a robust accounting system is a key driver of prudent financial management.

Unfortunately, the article misses critical information as to the status of financial accounting, especially in the public sector.

The National Treasury and Planning, which is the ministry in which public finance management frameworks rest, started a process to review the country’s accountability framework in the public sector in 2012 with the enactment of the Public Finance Management Act (PFMA).

This has been ongoing and led to the establishment of the Public Sector Accounting Standards Board (PSASB) through Articles 192 to 195 of the PFMA 2012. The board is mandated, among other responsibilities, to set generally accepted accounting standards for the public sector (national and county governments) and their entities. Since its operationalisation in February 2014, the PSASB has made tremendous progress towards financial accountability and reporting in the public sector.

On August 8, 2014, the board approved (gazette notice 5440) the adoption of the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB); the International Public Sector Accounting Standards (IPSAS) issued by the International Public Sector Accounting Standards Board (IPSASB); and the International Professional Practices Framework (IPPF) promulgated by the Institute of Internal Auditors (IIA).

In response, the national and county governments and their respective entities apply the IPSAS cash-based standard; semi-autonomous national and county government agencies IPSAS accrual-based standards; state and county corporations carrying out commercial activities IFRS; and regulatory and non-commercial state and county corporations IPSAS accrual.

To facilitate the application of these standards, in use for the past six years, the board and the National Treasury enhanced capacity building programmes for public sector accountants; prescribed financial reporting templates for the public sector as per the PFM Act; implemented strategies to improve compliance to the standards; entered into partnerships with professional bodies to push for financial reporting and accountability; and is strengthening internal audit and risk management.

Notable achievements include the standardisation of financial reporting across the public sector; and enhanced understandability of financial statements that are prepared and submitted on time by the reporting entities.

The board has prepared a draft roadmap to transition the national and county governments and their respective entities.

FREDRICK RIAGA, CEO, Public Sector Accounting Standards Board (PSASB).​