Part V – BUDGET EXECUTION

41General rules relating to budget Execution

(1) Overall control of county government budget execution shall be exercised through strict application of the following general rules, which shall apply to all transactions with the specific exception of debt service payments—

• (a) aggregate reallocations for a particular appropriation line in a given fiscal year may not exceed' the amount appropriated for that line in the annual Appropriations Act amended from time to time through budgetary reallocations made pursuant to section 154 of the Act and any supplementary Appropriations Acts enacted under section 135;
• (b) total payments for a detailed budget line in a given fiscal year may not exceed the reallocations issued against that budget line.

(2) Debt service payments shall be a first charge on the County Revenue Fund and the Accounting Officer shall ensure this is done to the extent possible that the county government does not default on debt obligations.

(3) Debt payments shall be made whether or not they meet the general rules, provided that the County Executive Committee Member reports of any excess over appropriations, with full explanations of the circumstances, to County Assembly in the next quarterly reporting cycle.

(4) Other than temporary treasury liquidity management operations, no payment shall be made from the County Revenue Fund as a direct charge, except under an item identified in the annual budget estimates.

42Accounting Officers to exercise budgetary control measures

An Accounting Officer shall—

• (a) sign financial statements thereby making himself or herself responsible for their correctness;

• (b) ensure that public funds entrusted to their care are properly safeguarded and are applied for purposes for only which they were intended and appropriated by the County Assembly;

• (c) ensure all appropriation-in-aid due to county government entity are collected and properly accounted for in accordance with the relevant laws, rules and Regulations;

• (d) manage control and ensure that policies are carried out efficiently and wastage of public funds is eliminated; and

• (e) ensure each county government entity has an audit committee in place.

43Accounting Officers to request cash on the basis of an approved quarterly cash disbursement schedule

(1) Accounting Officers shall provide the County Treasury with an annual cash flow plans as a requisition for funds needed for that financial year.

(2) County government entities shall execute their approved budgets based on the annual appropriation legislation, and the approved annual cash flow plan with the exception of unforeseen and unavoidable spending dealt with through the County Emergency Fund, or supplementary estimates.

(3) The annual cash flow plans prepared by Accounting Officers shall be broken down into a three month rolling basis and shall be adjusted to reflect any implementation realities in consultation with the County Treasury.

(4) As far as possible, quarterly cash flow projections prepared by the Accounting Officers shall be supported by a procurement plan approved in accordance with the Public Procurement and Disposal Act (Cap. 412C).

44Consolidation and approval of cash limits issued to accounting officers

(1) The County Treasury shall consolidate all expenditure requirements and projections as forwarded by Accounting Officers, compare with the projected revenues including county net domestic borrowing, and thereafter in consultation with Accounting Officers, agree on an indicative annual cash flow forecast limit for that financial year.

(2) The County Treasury shall issue a County Treasury circular communicating cash flow projections agreed with the Accounting Officers.

(3) In the event of unanticipated cash flow fluctuations, the County Treasury shall inform the Accounting Officers through a circular requesting them to review and submit revised cash flow projections in line with the guideline set out in the circular.

45Release of funds to meet expenditure

(1) The basis for requisition of funds for grant of credit by the Controller of Budget on the account of the accounting officer from the county exchequer account shall be based on the approved cash flow plans communicated to that accounting officer by the County Treasury.

(2) Release of Funds from the County Revenue Fund to County government entities shall be in accordance with the authority granted by the Controller of Budget together with the written instructions of the County Treasury.

(3) The County Treasury shall make requisition from the Controller of Budget as necessary for the exchequer withdrawal of funds which shall be placed to the credit of an accounting officers' entity account.

(4) Pursuant to the grant of credit in paragraph (3), the County Treasury shall issue an exchequer notification informing the accounting officer of the amounts authorized.

(5) The County Treasury may require accounting officers to review their cash flow plans in line with changes in revenue realization, shortfalls in borrowing and unforeseen expenditures.

(6) The County Treasury shall publish and publicize the quarterly liquidity position reports reflecting the impact of revenue collection efforts, spending and county public debt operations on the cash position of county government.

46Budget Variation

(1) The Accounting Officer shall inform his or her responsible County Executive Committee Member immediately of any circumstances that are likely to affect materially the budgetary results either through revenue and expenditure or other receipts and payments of the county government entity

(2) The Accounting Officer shall inform his responsible County Executive Committee Member of actions taken to mitigate any budget variations.

(3) The responsible County Executive Committee Member shall take the necessary steps to bring to the notice of the County Executive Committee, any warnings of significant or material budget variations.

47Budget reallocation

(1) For purposes of section 154(3) of the Act, Accounting Officers, may authorize reallocation of funds within programmes or sub-votes provided that—

• (a) this does not affect the total voted provision;
• (b) the provisions in the budget of the programme or sub-vote from within which the funds are to be transferred are unlikely to be utilized;
• (c) reallocation is in accordance with donor conditions in the case of reallocation impacting on donor-funded expenditure;
• (d) the reallocation does not affect the voted provisions from wage to non-wage expenditure or from capital to recurrent expenditure; and
• (e) allocations earmarked by the County Treasury for a specific purpose may not be used for other purposes, except with Treasury's approval.

(2) Accounting Officers shall keep a register of all budgetary reallocations and use it to prepare a report of all reallocations to the County Treasury not later than the 10th day of each month and the report shall state measures taken by the Accounting Officer to mitigate against future reallocations.

(3) The report referred to in paragraph (2) shall state the impact that the reallocations may have had on program objectives, planned program outputs and outcomes.

(4) The County Treasury shall consolidate all reallocations and include them in the next revised budget.

(5) The reallocations under this regulation shall be approved by the respective Accounting Officer of the entity.

48Reallocation between programmes and sub-votes

The reallocations by the County Treasury in terms of section 154(2) of the Act shall be included in the next revised budget for submission to and approval by the County Assembly.

49Advances from the County Emergency Fund

(1) Where an Accounting officer accesses the County Emergency Fund in accordance with section 112 of the Act, that accounting officer shall first identify resources within his or her vote through identification of savings for re-allocation before applying for financing from the County Emergency Fund.

(2) If an accounting officer is satisfied that there are no savings within his or her vote and the need meets the criteria set under section 112 of the Act and paragraph (1), the accounting officer shall—

• (a) give reasons why he or she believes the need meets the criteria under section 112 of the Act;
• (b) issue a certificate confirming that the need meets the criteria under section 21 of the Act and paragraph (1) of this regulation;
• (c) the certificate shall be countersigned by the County Executive Committee Member for that entity; and
• (d) submit the request to the County Executive Committee Member responsible for Finance for consideration.

(3) The County Executive Committee Member shall consider the request and assess if the need meets the criteria set under section 112 of the Act and may approve it or reject it.

50Commitment for goods or services

(1) All commitments for supply of goods or services shall be done not later than the 31st May each year except with the express approval of the accounting officer in writing.

(2) Expenditure commitments for goods and services shall be controlled against spending and procurement plans approved by the responsible Accounting Officer, based on allocations and allotments from approved budgets.

(3) The Accounting Officer of that government entity shall make an expenditure commitment only against the procurement plan approved for that entity in accordance with the Public Procurement and Disposal Act and Regulations made thereunder.

(4) At minimum, a procurement plan shall include proper descriptions of the procuring items, unit cost, the estimated contract value, and the procurement method relating to the annual portion of a multi-year contract and delivery schedule.

(5) Any changes to approved procurement plan during the year shall be approved by the responsible Accounting Officer in consultation with the county executive committee member responsible for that entity.

(6) Any public officer who contravenes the provisions this regulation commits an offence.

51Vote Control Procedures

Any public officer who holds any post involving, in any degree, the management of public funds, and in particular every officer to whom is delegated the power to expend or receive such funds shall, in the county government's interest and in his own interest, be aware of the essentials of vote control procedures outlined here below—

• (a) no public officer shall spend or commit funds until he or she has been properly authorized by means of an Authority to Incur Expenditure (AIE) to do so;

• (b) AIE holders shall be made to understand that the limit to which they may spend is that prescribed by the authority and not their expectations, however justified these may seem;

• (c) the AIE issued to a public officer shall in the minimum contain—
• (i) the AIE number and to whom issued; (ii) the authorized total expenditure; (iii) a description of the expenditure item; and (iv) the account code to which the. expenditure is to be debited;

• (d) when the AIE is issued by the county department or agency, the allocation shall be entered as a commitment in the county department's or agency's master vote book so as to ascertain at all times the availability of uncommitted funds;

• (e) accounting officers whose votes cover field programmes, sub-county and projects shall issue AIE's to their field programmes, sub-county and project officers not later the 15th day of each quarter;

• (f) public officers issued with AIE's shall also be informed in writing that the actual expenditures shall not exceed the limit authorized in the AIE's;

• (g) sub-AIE's may be issued by AlE holders where necessary and where subcounty treasuries have been established;

• (h) all AIE's to field public officers shall show the following details at the minimum and copies submitted to the Auditor-General—
• (i) the gross total amount of funds per Vote allocated and applied against the AIE issued; and (ii) the total amount of AIA to be collected;

• (i) each accounting officer shall cause records to be kept in such a form as shall clarify at any time, in respect of each of his or her votes—
• (i) the total amount of expenditure sanctioned for service of the year; (ii) the amount of the expenditure charged; (iii) any further known liabilities in respect of the year; and

• (j) the AIE holders shall note the following in terms of control of expenditure—
• (i) there shall be no divided responsibility, only the officer to whom the AIE has been issued is permitted to commit or incur expenditure against it; and (ii) an AlE holder shall not wait for suppliers to submit invoices in order to clear his commitment, but he or she shall regularly have his outstanding commitments checked and enquiries made from the suppliers.

52Receipt of goods and services beyond the stipulated period

(1) A local purchase order or local service order shall be valid for a period of thirty days from the date of issue.

(2) Any public officer who receives goods or services beyond the stipulated period specified in paragraph (1) commits an offence under the Act.

(3) Any public officer involved in the processing of a payment with regard to goods or services delivered after due date shall inform the accounting officer of this anomaly before proceeding to process the payment.

(4) The public officer in charge who fails to ensure the local service order or local purchase order is cancelled after thirty days commits an offence under the Act.

53Unauthorized spending

(1) Except as provided for in the Act and these Regulations, an Accounting Officer of an entity may not authorize payment to be made out of funds earmarked for specific activities for purposes other than those activities.

(2) A public officer who makes a payment contrary to paragraph (1) commits an offence under the Act.

54Monthly reporting obligations by Accounting Officers

(1) An Accounting Officer of a county government entity shall not later than the 10th day of each month submit a monthly financial and non-financial budgetary report in the format to be issued by the Cabinet Secretary relating to the activities of his or her county government entity for the preceding month to the County Treasury with copies to the Controller of Budget and the Auditor-General.

(2) The contents of the report under paragraph (1) shall include—

• (a) actual revenues, including appropriations in aid;
• (b) expenditures classified in economic classification as follows—
• (i) compensation to employees; (ii) use of goods and services; (iii) transfer to other levels of government; and (iv) capital expenditure;
• (c) pending payments with an age of over ninety days;
• (d) projection of expected expenditure and revenue collection for the remainder of the financial year;
• (e) when necessary, an explanation of any material variances; and
• (f) a summary of the steps that are to be taken to ensure that the projected expenditure and revenue remain within budget.

55Contracts with multi-year financial implications

(1) A county government entity may enter into a contract which will impose financial obligations on the county government entity beyond a financial year.

(2) Contracts imposing financial obligations in excess of one year may be concluded by the accounting officer only if—

• (a) the accounting officer discloses all finalized and signed contracts by the beginning of a financial year;
• (b) the finalized and signed contracts are budgeted for first, before new projects are considered by the accounting officer of the county government entity; and
• (c) the accounting officer secures the resources required in line with the financing requirements set out in the contracts.

56Reorganisation of government functions

(1) The county government may make policy changes in a financial year leading to—

• (a) creation of an additional county government entities; or
• (b) transferring certain functions or services of an existing county government department and agencies to—
• (i) another existing county government department or agency; (ii) a new county government department or agency; or
• (c) abolition of an existing county government department or Agency and transferring its functions or services to one or more county government department or agency.

(2) Before embarking on accounting entries and other adjustments to reflect the changes in paragraph (1), it shall be necessary to agree on the Actual status of the vote in respect of the following aspects of the affected functions and services based on the ledger balances of a trial balance to be drawn on a date to be communicated by the County Treasury—

• (a) the gross budgetary provision;
• (b) the approved appropriation in aid, if any, and whether in cash or credit purchase;
• (c) the approved development partner assistance and county government entity own revenue whether in cash or credit purchase if any;
• (d) the net budgetary provision;
• (e) the gross expenditure incurred;
• (f) the amount of county government entity own revenue and development partner assistance applied in cash or in credit purchases; and
• (g) the sharing of amounts held in the below-the-line group of accounts.

(3) When a county department or agency is abolished, its vote shall cease to function and consequently it shall be necessary to extract a trial balance as at the date of abolition and to ascertain the state of financial affairs of that vote which shall include—

• (a) the budgetary provision;
• (b) expenditure incurred; and
• (c) cash balance.

(4) The statement shall also be accompanied by analysis of the below the line group of accounts, on the basis of which, it should then be agreed on the amount of the related budget provision, expenditure incurred and the below the line balances to be shared out, if necessary.

(5) The supplementary Appropriation Act will provide the details of the affected votes, and the County Treasury, shall inform the affected Accounting Officers of the effective date when they shall effect accounting entries in their books and other necessary inter-vote adjustments.

(6) The book-keeping entries of a new vote shall be effected as outlined in the National Treasury Guidelines issued.