Part VIII – COUNTY TREASURY AND CASH MANAGEMENT · PFM Regulations

80Composition of County Revenue Fund

(1) The County Treasury shall administer the County Revenue Fund in accordance with the Constitutional provisions in Article 207 and 209 (3) and (4) in controlling revenue receipts to ensure that—

(a) all revenue receipts by the county government are paid into the County Exchequer Account, except revenue receipts reasonably excluded by the Act, or any other Act of Parliament or an Act of County Assembly; and
(b) withdrawals from the County Revenue Fund are done—
(i) in accordance with an appropriation by an Act of County Assembly; or (ii) as a direct charge against the County Revenue Fund authorized by the Act, an Act of Parliament or an Act of County Assembly.

(2) The administrator of the County Revenue Fund shall keep proper books of accounts of the County Revenue Fund in accordance with standards and formats prescribed by the Public Sector Accounting Standards Board.

81Process of receipts into County Revenue Fund

(1) Receivers of revenue shall promptly deposit into the County exchequer account all receipts due to the County Revenue Fund.

(2) The receivers of revenue shall promptly pay the revenue received into the County Revenue Fund, as soon as possible and in any case not later than five (5) working days after receipt thereof.

(3) The County Treasury shall issue a receipt to a receiver of revenue to acknowledge the receipt of revenue thereof.

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CASH AND BANKING ARRANGEMENTS

82Criteria for approval of opening and operating county government entities bank accounts

(1) Subject to the provisions of section 119 of the Act, the following criteria shall be considered by the County Treasury before granting approval to a county government entity to open and operate a county government bank account—

(a) all county exchequer accounts shall be opened at the Central Bank of Kenya;
(b) for avoidance of doubt, all county government bank accounts shall be opened at the Central Bank of Kenya except for imprest bank accounts for petty cash.

(2) All county government entities operating bank accounts outside the provisions of paragraph (1), shall comply with the provisions under this Regulation within six (6) months from the date of commencement of these Regulations.

(3) Except with the prior authority of the County Treasury, no accounting officer may open a bank account for the deposit, custody or withdrawal of public moneys or other moneys for which he or she is responsible in his or her official capacity or for the transaction of official banking business.

(4) The authority of County Treasury shall be conveyed in writing to the responsible Accounting Officer with a copy to the Controller of Budget and the Auditor-General.

(5) County Treasury may prescribe the banking rules and the maximum balance which may be held in any official County Treasury Single Account sub account or other bank accounts, and if at any time this balance seems likely to be exceeded, the officer operating the accounts shall consult County Treasury on the action to be taken.

(6) No official county government bank account shall be overdrawn, nor shall any advance or loan be obtained from a bank account for official purposes beyond the limit authorized by the County Treasury in line with section 119 (4) of the Act.

(7) The authority in paragraph (7) shall be conveyed in writing to the responsible Accounting Officer and copied to the Auditor-General.

(8) Personal cheques shall not be deposited in an official bank account.

83Guiding principles for cash management

(1) The County Treasury shall be responsible for establishing sound cash management systems, procedures and processes, to ensure efficient and effective banking and cash management practices.

(2) For purposes of this regulation, sound cash management includes—

(a) assessing the cash inflows and outflows expected at any one time;
(b) ensuring payments, including transfers to Other levels of government and county-government entities are made when due for efficient, effective and economical programme delivery and the county government's normal terms for account; or
(c) avoiding accumulation of idle balances;
(d) using short term borrowing only when it is necessary;
(e) avoiding prepayments for goods or services unless required by the contractual arrangements with the supplier;
(f) accepting discounts to effect early payment only when the payment has been included in the monthly cash flow estimates provided to the County Treasury;
(g) pursuing debtors with appropriate sensitivity and rigour to ensure that amounts receivable by the county government are collected and banked promptly; and
(h) recognizing the time value of money and managing inventories to the minimum level necessary for efficient and effective programme delivery, and selling surplus or under-utilised assets.

(3) County government overdraft at the Central Bank of Kenya shall be retired by the end of the financial year.

84Surrender of End-of-Year Surplus Cash Balances

Not later than the 31st January each year, each Accounting Officer shall surrender to the County exchequer account unexpended voted money or excess Appropriations-in-Aid, as confirmed by Auditor-General in the audit report.

85Cheques and electronic payments

(1) All signatories in respect of cheques, or electronic payments and fund transfers shall be designated by the Accounting Officer and any changes in signatories shall be authorized by him or her.

(2) There shall be two authorized signatories to sign a cheque drawn or electronic payment or fund transfer on a county government bank account.

(3) The names and designation of those officers in paragraph (1) and their specimen signatures shall be advised to the bank where the account is held by the accounting officer, with copies of the advice sent to the County Treasury, and any change in signatories shall be advised in writing.

(4) The signatories under this regulation shall—

(a) initial the counterfoil or enter with their personal passwords;
(b) be equally responsible for the regularity of the payment; and
(c) thoroughly scrutinize the documents supporting the payment.

(5) Spoilt cheques shall be marked prominently with the stamp "cancelled", and fixed securely to the cheque-list used for controlling the cheques issued each day.

86Cash Management Advisory Committee

(1) The County Executive Committee Member may establish a Cash Management Advisory Committee.

(2) The Cash Management Advisory Committee under paragraph (1) shall be comprised of—

(a) Chief Officer of the County Treasury who shall be the chairperson or an Officer designated by him or her;
(b) the department responsible for accounting policy within the County Treasury, which shall also provide the secretariat;
(c) the department responsible for economic affairs in the County Treasury;
(d) the department responsible for public debt management in the County Treasury; and
(e) the department responsible for budget matters in the County 'Treasury.

(3) The responsibilities of the Cash Management Advisory Committee shall be determined by the County Executive Committee Member during its establishment.

87Registers and records of county government bank accounts

(1) The County Head of Accountancy Services shall maintain a register of all CTSA sub accounts and other bank accounts opened by County government entities including public funds and donor funded projects.

(2) The office of the County Head of Accountancy Services shall reconcile periodically the government bank accounts list, with the records maintained by the Central Bank of Kenya.

(3) The Accounting Officer of a county government entity shall, by the 30th September of each year, provide the County Treasury with an up-dated list of bank accounts held by the county government entity.

(4) The list referred to under paragraph (3) shall include the following information—

(a) name of the bank where the account is held;
(b) name of the bank account;
(c) type of bank account;
(d) signatories of the bank account;
(e) date on which the bank account was opened;
(f) the bank account number;
(g) purpose for the bank Account, if different from the main operational bank account of the government entity;
(h) the bank account balances as at 30th June each year; and
(i) the reference number and date of the County Treasury, letter granting approval for opening and operating the bank account.

88Authority to have access to county government bank accounts

(1) The County Treasury shall, when granting authority to Accounting Officers to open and operate bank accounts, require them to include as a pre-condition to that bank, that the County Executive Committee Member may request bank statements for that account without any reference to the authorized bank signatories of that bank account.

(2) The County Executive Committee Member may suspend the operations of any county government bank account or impose certain conditions, if he or she reasonably believes the purpose of that account no longer exists, or that fraud or fraudulent transactions are being undertaken in that specific account and shall institute investigations immediately.

(3) Where in the opinion of the County Executive Committee Member finds it necessary, he or she may share the report of the investigation carried out in paragraph (2) with the Auditor-General and the Controller of Budget.

89Security for cash in transit

The Accounting Officers shall ensure that adequate arrangements are made to protect both cash and staff for cash in transit and such measures shall include the following—

(a) safe or strong rooms and restricted access to the cash handling locations;

(b) police or armed security escorts;

(d) suitable transport and variation of movement, times, and routes.

90Reconciliation of bank accounts

(1) Accounting Officers shall ensure bank accounts reconciliations are completed for each bank account held by that Accounting Officer, every month and submit a bank reconciliation statement not later than the 10 th of the subsequent month to the County Treasury with a copy to the Auditor-General.

(2) Similar reconciliations shall be carried out when responsibility for any bank account or cheque book is handed over from one officer to another and on the occasion of any surprise inspection or survey.

(3) Accounting Officers shall ensure any discrepancies noted during bank reconciliation exercise are investigated immediately and appropriate action taken including updating the relevant cash books.

(4) The County Treasury shall analyze and review the bank reconciliation statements submitted under paragraph (3) of this regulation and take the necessary action.

MANAGING IMPREST TRANSACTIONS

91Nature of imprest

(1) For the purposes of this subpart, an imprest is a form of cash advance or a float which the Accounting Officer may authorize to be issued to officers who in the course of duty are required to make payments which cannot conveniently be made through the cash office of a government entity or bank account.

(2) The officer authorized to hold and operate an imprest shall make formal application for the imprest through an imprest warrant.

(3) Funds disbursed for imprest shall not be kept or held in an official bank account, but in a separate or personal bank account operated by the imprest holder or in the form of cash under safe.

92Determination of imprest levels

(1) The Accounting Officer or Authority to Incur Expenditure (AIE) holder shall approve the establishment of an imprest facility including the maximum amount for the specific purpose of that facility.

(2) In determining the level of an imprest, many factors shall be considered, but in the interest of economy and as a matter of prudence, an imprest shall be fixed at the lower figure compatible with requirements and in any case a standing imprest shall not exceed one month's estimated expenditure on the intended purpose.

93Classes of imprest

(1) An imprest shall be issued for a specific purpose, and any payments made from it, shall be only for the purposes specified in the imprest warrant.

(2) There are two types of imprests namely—

(a) Temporary or Safari imprest; and
(b) Standing Imprest.

(3) Temporary imprests shall be issued mainly in respect of official journeys and are intended to provide officers with funds with which they can meet travelling, accommodation and incidental expenses.

(4) Before issuing temporary imprests under paragraph (2), the Accounting Officer shall ensure that—

(a) the main objective of the journey cannot be achieved by other cheaper means;
(b) the applicant has no outstanding imprests;
(c) the applicant imprest has been recorded in the imprest register including the amount applied for; and
(d) that adequate funds are available against the relevant items of expenditure to meet the proposed expenditure.

(5) A holder of a temporary imprest shall account or surrender the imprest within seven (7) working days after returning to duty station.

(6) In the event of the imprest holder failing to account for or surrender the imprest on the due date, the Accounting Officer shall take immediate action to recover the full amount from the salary of the defaulting officer with an interest at the prevailing Central Bank Rate.

(7) If the Accounting Officer does not recover the temporary imprest from the defaulting officer as provided for in this regulation he or she commits an offence as provided under the Act.

(8) In order to effectively and efficiently manage and control the issue of temporary imprests, an accounting officer or AIE Holder shall ensure that no second imprest is issued to any officer before the first imprest is surrendered or recovered in full from his or her salary.

(9) If the accounting officer or AIE Holder under paragraph (8) does not comply with the provisions of this paragraph, he or she commits an offence as provided under the Act.

(10) If an imprest is to be recovered from any public officer by instalments, the Accounting Officer shall personally authorize such recovery and such moneys shall no longer be an imprest but an unauthorized advance from county government funds, and in addition to the interest charged under paragraph (6), the Accounting Officer shall take appropriate disciplinary action against the officer concerned for the abuse of the imprest.

(11) Standing imprest shall be intended to be in operation for a time and requires bringing the cash level of the advance continuously up to the agreed fixed level by systematic reimbursement of expenses

(12) Standing imprest shall involve personal responsibility as it shall be issued to an officer in his or her own name, and not to the holder of an office.

(13) When an imprest holder leaves the service, or is transferred, he or she shall surrender the total standing imprest which includes cash plus payment vouchers which together amount to the fixed level of the imprest, and a new imprest issued to his successor.

(14) The holder of a standing imprest shall keep a memorandum cash book to record all receipts and payments and the balance on hand shall agree with the cash balance recorded in the memorandum cash book, and in the absence of any receipts, the actual cash balances plus the expenses paid shall equal at all times the fixed level of the imprest for which the imprest holder is personally responsible.

(15) When the imprest holder needs to have his or her funds replenished, he or she shall send an abstract and analysis of his or her memorandum cash book, plus originals of the supporting payment vouchers to accounts division.

(16) If the accounts division in paragraph (15) is satisfied that the expenditure has actually been incurred, and that it has been incurred for the intended purposes, and there is no irregularity in the payment vouchers, it shall arrange for the analysed expenditure to be posted to the various heads and items, and arrange for the cash to be transferred to the imprest holder so as to "top-up" his or her fund.

(17) In addition to paragraph (15) the head of accounts division shall also ensure that frequent spot checks are made of the standing imprest itself by a responsible officer as follows—

(a) count the cash on hand;
(b) Confirm that the actual cash on hand corresponds with the balance on hand as recorded in the memorandum cash book;
(c) ensure that the documents justify the difference between the fixed imprest level and the actual cash balance; and
(d) report on any anomalies found to the head of the accounts section.

94Duties of Imprest Holders

An officer holding an imprest shall ensure that—

(a) the imprest issued to him or her shall be used for the intended purpose only;

(b) the imprest moneys and any payment vouchers awaiting replenishment are adequately safeguarded at all times;

(d) the full amount of the imprest can be accounted for at all times in cash, stamps, money at bank and completed payment vouchers; and

(e) goods purchased through imprest are taken on charge and certificate issued.

COUNTY TREASURY SINGLE ACCOUNT

95Establishment of a County Treasury Single Account

(1) Each County Treasury hereby establishes a ( ............ ) County Treasury Single Account (CTSA) pursuant to section 119 (2) of the Act, which shall become operational within six (6) months after the commencement of these Regulations and shall be kept at the Central Bank of Kenya.

(2) The County Executive Committee Member shall from time to time issue County Treasury Single Account guidelines to accounting officers for the operations of the County Treasury Single Account.

96Operation of a Treasury Single Account

(1) The County Treasury shall ensure operating cash balances in the CTSA sub accounts are kept to a minimum through consolidation into a County Treasury Single Account.

(2) The County Treasury Single Account shall reflect at the minimum the following features—

(a) unified banking arrangements to enable the County Treasury to have proper oversight of county government cash inflows and outflows on these bank accounts;
(b) that no county government entity shall operate bank accounts outside the County Treasury Single Account unless expressly authorized by the County Executive Committee Member; and
(c) the comprehensive consolidation of county government controlled public monies encompassing all government cash resources, including county exchequer account, special funds, trust funds and other public funds unless expressly exempted by the County Executive Committee Member.

(3) County government deposits or exchequer releases to County government entities by the County Treasury shall be deposited in the CTSA sub-accounts and shall form part of cash balances of these accounts.

(4) Unless exempted by an Act of Parliament or by judicial order, all deposit bank accounts of the county government's entities shall be sub-accounts of the County Treasury Single Account for the county governments.

PFM Regulations

Part VIII – COUNTY TREASURY AND CASH MANAGEMENT