Part X – EXPENDITURE MANAGEMENT · PFM Regulations

111County Revenue Fund Services

(1) Where an Act of Parliament or a county legislation provides for some specific categories of expenditure to be a direct charge on the County Revenue Fund, such expenditures shall be included in the recurrent budget estimates of the county government as part of the County Revenue Fund Services.

(2) Subject to an Act of Parliament and for the avoidance of doubt, the County Revenue Fund Services shall be limited to the following—

(a) county public debt; and
(b) salaries and allowances of the Governor and the Deputy-Governor.

(3) The County Revenue Fund Services shall be provided for in the recurrent estimates, but shall not be subject to County Assembly debate nor to the expenditure limited by estimates nor vote on account.

(4) County Revenue Fund Services shall be administered by the County Treasury.

(5) The County Treasury may arrange for another Accounting Officer to make payment in the first place on its behalf against subsequent reimbursement from the appropriate Vote of the County Revenue Fund Services.

112Excess vote

If an Accounting Officer finds, after Appropriation Accounts are completed, that he or she has spent more than the total vote, that Accounting Officer shall seek County Assembly approval through the County Executive Committee Member for that Excess Vote.

113Payments to which an Accounting Officer objects

(1) An Accounting Officer who is instructed by his or her County Executive Committee Member to make payment which for any reasons the accounting officer has concerns, he or she shall raise those concerns in writing to his or her County Executive Committee Member.

(2) In the event his or her County Executive Committee Member approves for the processing of the payment despite the concerns raised by the Accounting Officer, he or she shall obey the instructions without further responsibility.

(3) Upon payment, the accounting officer may bring those concerns in writing under paragraph (1) of this regulation, to the attention of the County Assembly with a copy to the Auditor-General.

114Goods, works and services to be procured according to an approved procurement plan

(1) All purchases of goods, works and services from suppliers, including capital investments, shall comply with the provisions prescribed in the Public Procurement and Disposals Act, 2005 and the Regulations made thereunder and shall have the prior approval of the Accounting Officer.

(2) Every year a procurement plan shall be prepared by Accounting Officers to form the basis for procurement activities undertaken by government entities in the fiscal year.

(3) The procurement plan in paragraph (2) of this regulation shall, where necessary, include estimated costs of procurement, insurance, clearing, forwarding, warehousing and demurrage charges for goods imported and have to undergo clearing and forwarding through ports of entry into the country.

115Recovery, disallowance and adjustment of payments

(1) Amounts charged to Voted Funds, which are recovered in the financial year in which payment was made, shall on or before the closing of books of that financial year, be allocated to the budget item that was originally debited.

(2) Such amounts which are recovered after the closing of books of a financial year shall be paid to the County Revenue Fund, provided that such amounts have not been allocated to a clearing or suspense account during the financial year in which payment was made.

116Re-Vote of Budget

(1) Where an AIE holder observes that it will not be possible to utilize all the funds allocated for a particular project in a given financial year, the AlE holder shall inform the accounting officer not later than the 15th February each year.

(2) The Accounting Officer shall then surrender the resources to the County Treasury and the County Treasury shall ensure that the funds are re-voted for the project in the following financial year in order to continue the implementation of the project.

117Accountable documents

(1) Accountable documents whether manual or electronic shall be under strict control at all times and they shall include—

(a) indent forms (for supplies from government printer or government stores);
(b) local purchase order;
(c) local service order;
(d) authority to incur expenditure;
(e) cheques;
(f) receipt books;
(g) imprest warrants; and
(h) Central Bank Kenya overseas payment authority form.

(2) The Accounting officer shall keep his or her stock of accountable documents whether manual under lock and key, issuing them in accordance with the daily needs of the service, and keeping an accurate up-to-date record of their use by means of continuity control sheets.

(3) Where the accountable documents are in electronic form, the accounting officer shall ensure appropriate mechanism are put in place for safeguarding and tracking them.

118Preservation of accountable documents, books and records

(1) Accounting Officers shall, subject to the provisions of the relevant national legislation, retain certain documents, of whatever kind, which shall be preserved in the following circumstances—

(a) where they may be of value to the national archives;
(b) if they are the subject of unfinished audit enquiries; or
(c) if they are likely to be needed for pension purposes (including salary records).

(2) After the expiry of the retention periods under paragraph (3) of this regulation, the information may, if required, be secured in an alternative form that ensures the integrity and reliability of the data and ensures that the information can be reproduced, where necessary.

(3) Subject to the overriding consideration under paragraph (1) of this regulation, certain classes of documents and records are to be preserved for a stipulated minimum period of time as detailed in the table below:

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EXPENDITURE IN RELATION TO HUMAN RESOURCES

119Expenditure in relation to human resources

(1) Personnel management activities relating to gazettement of appointments, the authorization of payments and the recording of those payments may not be performed by the same officer.

(2) The budgetary allocation for personnel costs shall be determined on the basis of a detailed costing of a human capital plan of a county government entity as approved by the responsible county department for public service management matters, the County Public Service Board and County Treasury.

(3) The Accounting Officer of a county government entity shall ensure that the personnel cost of all appointees, as well as promotion and salary increases, can be met within the budgetary allocation voted for the county government entity.

(4) The responsible county government department for public service management matters, the County Public Service Board, shall only approve establishment of new public service positions after getting confirmation of availability of budgetary provisions from the County Treasury.

(5) For purposes of ensuring a sustainable wage bill, where the County Executive Committee Member intends to approve any changes under this regulation, he or she may consult the Salaries and Remuneration Commission.

(6) No change relating to the above matters shall be introduced into the expenditure estimates of the respective county government entity without the requisite authority.

120Payroll certification by accounting officer

(1) Personnel costs shall be classified based on the Government Finance Statistics Manual and the standard chart of accounts used in capturing government expenditure.

(2) Each employee shall be linked to a program in the budget of a county government entity's Vote.

(3) At least once every month, the accounting officer shall certify the correctness of the payroll.

121Deduction codes to be assigned to all payroll deductions

(1) The County Treasury shall set requirements for issuing payroll deduction codes for all discretionary and non-discretionary deductions.

(2) The Accounting Officer shall specify the purpose for which the code is applied for.

(3) The County Treasury may levy a fee on the discretionary deductions which shall be paid by the receiving institution.

122Remuneration of members of committees and commissions of inquiry

(1) Remunerative benefits and other allowances for members and the staff of the secretariat of special committees and commissions of inquiry shall be determined by the county government entity responsible for matters relating to public service management in consultation with the County Public Service Board and the County Executive Committee Member taking into account any recommendations by the Salaries and Remuneration Commission.

(2) The remuneration of all members of a commission or committee shall be disclosed as foot notes to the financial statements of the county government entity by the accounting officer.

123Services rendered by members during private time

Where the chairperson requests a non-official member of a commission or committee to render services in his or her private time, other than the normal preparations for meetings, the person may be paid an allowance as determined by the relevant Accounting Officer.

124Compensation and ex-gratia payment

No offer of compensation in settlement of any claim against the county government or ex-gratia payment may be made without prior authority of the County Treasury, except where powers are available to accounting officer to settle such claims.

BENEFITS AND ALLOWANCES OF PUBLIC OFFICERS

125Authority for loans and advances

(1) The accounting officer may only authorize salary advances for public officers under him or her to be paid if there exists a budgetary provision in his or her Vote.

(2) No staff loan or advance which is properly chargeable to a head of expenditure shall be debited to a salary advance expenditure item.

126Benefits and allowances for Public Officers

(1) The County Executive Committee Member may by way of a gazette establish a mechanism for public officers to access loans including car loans, mortgage, housing loans and bicycle loans which shall be within the guidelines issued by the Cabinet Secretary.

(2) Despite the provisions of paragraph (1) of this regulation, the county executive committee member may issue guidelines on benefits and allowances for county public officers by way of a notice in Kenya Gazette within the guidelines issued by the Cabinet Secretary.

LEASE FINANCING AND JOINT COUNTY INFRASTRUCTURE INVESTMENTS

127Lease financing transactions by accounting officers of county governments

(1) For the purpose of this regulation, a lease is regarded as a contract that gives the lessee (the renter) the right to the use of property, plant or equipment for a fixed period of time with a fixed schedule of payments to the lessor (the owner).

(2) The accounting officer of a county government entity may, for the purpose of conducting the entity's business, enter into finance lease transactions.

(3) The accounting officer of a county government entity may under no circumstances enter into finance leases (non-operating lease) without the approval of the relevant County Treasury.

(4) For the purpose of paragraph (3) of this regulation, a lease is considered to be a finance lease if—

(a) the lease transfers ownership of the asset to the government entity by the end of the lease period;
(b) the government entity has the option to purchase the asset at a price which is expected to be sufficiently lower than the fair value at the date the option becomes exercisable, so that at the inception of the lease it is reasonably certain that the option will be exercised;
(c) the lease term is for the economic life of the asset even if the title is not transferred;
(d) at the inception of the lease, the present value of the minimum lease payments amount to at least 90% of the fair value of the leased asset;
(e) the leased asset is of azettetiosed nature such that only the government entity can use the asset without major modifications being made;
(f) the lessor's losses associated with cancellation of the lease by the lessee is borne by the lessee; and
(g) the leased asset cannot be easily replaced by another asset.

(5) The County Treasury shall monitor all finance lease transactions and report associated obligations.

128Joint Infrastructure Investments

(1) For purposes of this regulation, "joint infrastructure investment" means any capital project(s) initiated and undertaken as a joint venture between two or more county governments which involve development expenditures for the project(s) where—

(a) the nature and costs of the project(s) is beyond the means of one county government;
(b) the project traverses more than one county government territory; or
(c) the project benefits can be enjoyed by more than one county government.

(2) A joint infrastructure investment shall be solemnized through an intergovernmental agreement which shall be filed with the office of the Attorney-General and the Department of Justice and shall specify—

(a) the county governments involved;
(b) the management and administrative structure of the joint investment project;
(c) the description of the joint investment project and its objectives;
(d) the description of the joint investment project and its objectives;
(e) the responsibilities and obligations of each county government involved;
(f) the joint investment project implementation modalities including procurement procedures and administrator of the project;
(g) the joint investment project financing options;
(h) the dispute resolution mechanisms between the county governments involved and the arbitrator in case of any dispute;
(i) the reporting mechanism including the regularity of the reports by the management to all county governments involved; and
(j) the apportionment of sharing of the benefits and maintenance costs, if any, between the county governments involved.

PFM Regulations

Part X – EXPENDITURE MANAGEMENT