Treasury Issues Guidelines as Govt Transitions from Cash to Accrual Accounting to Tame Corruption
- The National Treasury has issued fresh guidelines to help all government entities transition from cash-based to accrual-based accounting, in line with a 2024 Cabinet directive
- Treasury PS Chris Kiptoo stated that accrual accounting will improve financial transparency by enabling better tracking of assets, liabilities, and public institutions’ financial health
- Economist Daniel Kathali welcomed the move but told TUKO.co.ke that without political goodwill, even the best financial systems, including IFMIS, can be undermined
Elijah Ntongai, a journalist at TUKO.co.ke, has more than four years of financial, business, and technology research and reporting expertise, providing insights into Kenyan and global trends.
The National Treasury has issued fresh guidelines to steer all government entities in transitioning from cash-based to accrual-based accounting.
Source: Twitter
This is a move aimed at improving transparency and combating corruption in ministries, constitutional commissions, and county governments.
In a circular dated April 14, 2025, Treasury Principal Secretary Chris Kiptoo, who also chairs the National Steering Committee overseeing the transition, said the shift aligns with the Cabinet’s 2024 directive and will be implemented progressively.
“Accrual accounting enables better tracking of assets, liabilities, and overall financial health of public institutions. It introduces accountability in a way the current cash system does not,” said Kiptoo.
The shift, guided by the International Public Sector Accounting Standards (IPSAS), is expected to enhance financial reporting, reduce loopholes for misappropriation of public funds, and align Kenya with global public finance management practices.
What is new with accrual accounting?
Speaking to TUKO.co.ke Daniel Kathali, an economist, explained that accrual accounting records financial transactions when they are earned or incurred, regardless of when cash is actually received or paid, providing a more accurate picture of an entity’s financial health.
He also noted that cash accounting only records transactions when money changes hands, income is recorded when received, and expenses are recorded when paid.
Kathali opined that cash accounting is simpler, but accrual accounting offers greater transparency by capturing obligations and revenues as they arise, which is critical for budgeting, planning, and curbing financial mismanagement.
According to the circular from the Treasury, dedicated technical officers will support ministries and counties during the transition to accrual accounting, with guidance also available through IPSAS-aligned online resources.
A network of Trainers of Trainees (TOTs) has been established to facilitate capacity building, while the Steering Committee will disseminate updates via a dedicated website, newsletters, emails, and social media.
Public entities can access key documents and tools on the National Treasury’s website, and full cooperation with trainers and technical officers is expected throughout the implementation process.
Will accrual accounting end corruption?
According to Kathali, the public finance administration has sufficient legislations to promote integrity and the lack of polical goodwill is the main enabler of corruption.
"The existing measures in public finance are more than enough to counter graft and promote transparency and integrity. The problem we always have is lack of political goodwill. The IFMIS is itself a game changer in the public finances. However, the various stakeholders are more than desperate to compromise and find ways to manouvre the same," Kathali said.
The ministry has invited institutions with questions or clarifications to contact the Steering Committee directly at ipsasaccrual@treasury.go.ke.
CS Mbadi raises concerns over wage bill
In other news, the Treasury Cabinet Secretary, John Mbadi, has raised concerns over the government's ballooning wage bill, revealing that nearly KSh 1 trillion is spent annually on salaries.
Mbadi said this is about KSh 80 billion per month, leaving limited room for development.
Speaking after the signing of the Supplementary Appropriation Bill 2025, which increased recurrent expenditure by KSh 138.87 billion, Mbadi noted that out of the KSh 2.5 trillion in tax revenue, KSh 1.1 trillion goes toward debt repayment.
He blamed the sluggish economy on this spending pattern and emphasised the necessity of borrowing, as long as the budget deficit, now at 5.02% of GDP, is managed sustainably.
Proofreading by Mercy Nyambura, copy editor at TUKO.co.ke.
Source: TUKO.co.ke
