Part XII – ASSET MANAGEMENT · PFM Regulations

132Responsibility for assets management

(1) The Accounting Officer of a county government entity shall take full responsibility and ensure that proper control systems exist for assets and that—

(a) preventative mechanisms are in place to eliminate theft, security threats, losses, wastage and misuse;
(b) movement and conditions of assets can be tracked; and
(c) stock levels are at an optimum and economical level.

(2) The Accounting Officer shall ensure that processes and procedures both electronic and manual are in place for the effective, efficient, economical and transparent use of the county government entity's assets.

(3) The County Treasury shall provide guidelines on county government assets management after seeking the views of the Cabinet Secretary which shall be given in fourteen (14) days.

133Responsibility for county government entity inventory

(1) Accounting Officer shall be responsible for the proper custody, care and use of government inventories under their control including imported goods in vessels awaiting discharge and in customs warehouses awaiting clearance.

(2) Despite paragraph (1) of this regulation, an Accounting Officer shall be responsible for the general management of government inventories held within that county government entity.

(3) Accountability shall only be discharged when government inventories have been—

(a) consumed in the course of public business and records are available to show that the government inventories have been consumed; or
(b) worn out in the normal course of public business and removed from the stores records and has been approved by accounting officer or they have been disposed of in accordance with the Public Procurement and Disposals Act, 2005; or
(c) lost, stolen, destroyed, damaged or rendered unserviceable other than by fair wear and tear, and if removed from the store's records and has been approved in line with section 150 of the Act.

(4) If accounting officer is satisfied that the retention of any government inventories is no longer in the public interest, the accounting officer may authorize disposal in accordance with the Public Procurement and Disposals Act and its Regulations.

(5) Removal from the store's records under paragraph (3) shall be reported to County Treasury by the accounting officer.

(6) Where an Accounting Officer has reason to believe that any person—

(a) has received county government inventory and has not duly handed it over; or
(b) has received county government inventory for which the person is accountable but has not duly accounted for it; or
(c) has in hand county government inventory which has not duly been applied to the purpose for which they were collected,

(7) The Accounting Officer of a county government entity shall in consultation with a technical department review, at least annually when finalizing the budget, all fees, charges, rates, tariffs or scales of fees or other charges relating to the letting of state property to ensure sound financial planning and management.

134Accounting Officers' responsibilities upon transfer of assets and liabilities

(1) When assets or liabilities of a government entity are transferred to another government entity or other institution in terms of legislation or following a re-organization of government functions, the Accounting Officer for the transferring county government entity shall be required to-—

(a) identify an inventory of such assets and liabilities; and
(b) provide the Accounting Officer for the receiving government entity or other institution with necessary records, including human resource records of staff to be transferred.

(2) Both the Accounting Officer for the transferring county government entity and the Accounting Officer for the receiving county government entity or other institution shall sign the inventory when the transfer takes place.

(3) The Accounting Officer for the transferring county government entity shall file a copy of the signed inventory with the County Treasury and the Auditor-General within two weeks of the transfer.

135Assets accruing to the county government by operation of law

Where any money, property or right accrues to the County government by operation of law, the County Treasury, may exercise all powers, authority and prerogatives, and fulfil any obligation on behalf of county government.

136Register of assets

(1) The Accounting Officer shall be responsible for maintaining a register of assets under his or her control or possession as prescribed by the relevant laws.

(2) The register of land and buildings shall record each parcel of land and each building and the terms on which it is held, with reference to the conveyance, address, area, dates of acquisition, disposal or major change in use, capital expenditure, lease hold terms, maintenance contracts and other pertinent management details.

(3) All major items including furniture and equipment issued for a government's quarters or offices, large tools for county government works, plant, equipment, vehicles or (launches) large motor boat shall be recorded in a register.

(4) All acquisitions or assignment of immovable property shall be notified to the County Treasury.

(5) All acquisitions or assignment of land with or without buildings shall be notified to the County Treasury.

137Purchase and capacity of official vehicles for certain county government officers

(1) Official vehicles purchased for use by Governors, shall not exceed 2600 cc for saloon cars and 3000 cc for 4 x 4 utility vehicles.

(2) Official vehicles purchased for use by the Deputy Governors, Speakers of the County Assembly and County Executive Committee members, shall not exceed 2400 cc for saloon cars and 3000 cc for 4 x 4 utility vehicles.

(3) Official vehicles purchased for use by chief officers, clerks of county assemblies other officers on Job Group R and Chief Executives of county corporations shall not exceed 2000 cc for saloon cars and 2900 cc for 4 x 4 utility vehicles.

(4) The County Committee Member for Finance may by way of notice in the gazette specify category of offices and the category of vehicles to be used by those public officers.

(5) Any person who contravenes the provisions of this regulation commits an offence.

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LOSSES AND WRITE-OFFS

138Definition

For purposes of this Part, the term losses is defined to include—

(a) actual loss or destruction of, or damage (other than fair wear and tear) to, or failure to account for the disposal of public money, stamps, securities or property, movable or immovable (including any money or other property not belonging to the county government which is held or used by an officer in his official capacity either alone or jointly with any other person); or

(b) non-collection of any moneys due or belonging to a county government, or for collection of which the county government is responsible; or

(c) payments made or liabilities incurred without or in excess of any statutory, administrative or any other authority, including nugatory and similar payments and payments arising from incorrect certificates, and irregular or excess issues of stores, rations, etc.; or

(d) unauthorized use of county government stores, vehicles, buildings, equipment or any other property, or of service (e.g. repair workshops) provided for official purposes; or

(e) compensation and similar payments (including third party claims in respect of vehicle accidents) legal and court costs and any other additional expenditure or liability which was avoidable and need not have been incurred.

139Accounting officers responsibility for a county government entity

When a loss as defined in this regulation is discovered, the Accounting Officer shall investigate the circumstances of the loss—

(a) to ascertain the extent and amount of the loss;

(b) to determine whether control or operational arrangements need to be improved in order to prevent the occurrence of similar losses in the county government entity; or

140Disclosure of offences

The investigation of a loss does not constitute a disciplinary enquiry and if the investigation reveals that an offence has been committed, it shall be dealt with in accordance with the relevant laws pertaining to that offence, as appropriate, and the relevant disciplinary measures.

141Procedure for handling losses

(1) A loss may be revealed by defalcation or loss due to any cause, and thereafter investigation proceedings shall be commenced immediately and a report made to the Accounting Officer and where necessary, to the police.

(2) The report referred to under paragraph (1) of this regulation, shall give details of the amount involved and any other information available including a brief account of actions to prevent further loss, and effect recovery.

(3) On receipt of the report, the accounting officer shall give instructions regarding accounting entries, if any, to be made and any other action which appears to him or her to be necessary.

(4) Where a liability has been established for a third party, payment shall be made, provided that there is no reason to suspect that the third party had any responsibility for the loss and the payment shall not await the results of the investigations of the loss.

(5) If the loss falls within the accounting officers powers under section 150(1) of the Act, he or she shall authorize the write off of the loss up to an amount not exceeding hundred thousand (KSh. 100,000) shillings in any one incidence and submit a report to the County Treasury and the Auditor-General.

(6) If the loss falls within the County Executive Committee Member's powers under section 150 (2) of the Act, the accounting officer shall seek the approval of the County Executive Committee Member to authorize him or her to write off the loss of an amount exceeding the one hundred thousand (KSh. 100,000) shilling but not exceeding one percent of the county governments' entity's approved estimates excluding the County Revenue Fund Services in any one incidence.

(7) The approval of the County Executive Committee Member shall be communicated to the accounting officer in writing with a copy to the Auditor-General.

(8) Any loss exceeding the threshold set for the County Executive Committee Member for finance shall fall within the County Executive Committee powers under section 150 (3) of the Act, the Accounting Officer shall—

(i) Seek the approval of the County Executive Committee through the County Executive Committee Member to authorize him or her to write off the loss exceeding one percent of the county government entity's approved budget in any one incidence; (ii) The approval of the County Executive Committee shall be communicated to the Accounting Officer through the County Executive Committee Member in writing with a copy to the Auditor General; (iii) The accounting officer shall also make a disclosure in the financial statements of that county government entity.

(9) The accounting officer shall also make a disclosure in the financial statements of that county government entity.

142Categories of losses

(1) For the purposes of this regulation, cash deficiency is a loss arising from a deficiency of cash or other negotiable instrument, whether it arises from a simple cash shortage or from the use of fictitious entries or vouchers to conceal the existence of a deficiency.

(2) Revenue losses may arise from—

(a) uncollectable revenue when debts due to county government cannot be collected by reason that the debtor cannot be traced or is insolvent; and
(b) loss of revenue, arising from failure to assess or collect in circumstances which preclude subsequent assessment or collection, and include any loss of interest caused by delay in making payments into the appropriate public funds or from the making of irregular advances.

(3) Expenditure losses may arise from—

(a) irrecoverable overpayments, when an excess payment has been made by error and recovery cannot be effected because the recipient cannot be traced or is otherwise incapable of making repayment; or
(b) nugatory payments, which arise in circumstances such as, the incurrence of a penalty in which a county government entity has been legally obliged to make payment, but for which no corresponding receipt of goods or services has been derived; or
(c) fraudulent payments which arise from transactions which involve a breach of the criminal code, by the use of falsified documents or certificates to steal money or other property belonging to a county government and it is not recoverable.

(4) Inventory and equipment losses may arise from—

(a) deficiencies, including fraudulent issues of stores from stock and issues of stores without proper evidence of use; or
(b) damage or deterioration of goods in stock; or
(c) loss by accident in so far as they relate to equipment and inventories in use.

(5) Financial losses may arise from—

(a) irrecoverable advances and loans when money due to a county government entity cannot be recovered by reason of a debtors default and include default on county government guarantees; or
(b) irregular advances and loans when money cannot be recovered because a county government entity cannot establish a claim against any person or institution, as in the case of expenditure wrongly charged to advances, or advances and loans made without agreement for recovery;
(c) reduction of financial asset where the value of any financial asset has to be reduced by reason of failure or capital restructuring of an enterprise; or
(d) losses on sale of securities where the losses are aggregated with gains over the financial year, and any net loss is written off at the end of the year.

(6) Miscellaneous losses may arise from—

(a) loss of fixed fee receipts; or
(b) the loss of safe keys of any county government safe or the compromise of any combination lock; or
(c) the cost of altering locks and providing new keys or combinations;
(d) the value of any missing items from the safe; or
(e) irrecoverable claims dealt with as laid down in these Regulations.

143Investigation of every case of loss

(1) The accounting officer of a county government entity shall cause an investigation to be conducted into every reported case of loss, and where the accounting officer of that entity is implicated in the loss, the County Executive Committee Member shall be the appropriate authority to cause investigation to be conducted.

(2) In the case where the investigation report implicates the accounting officer, the County Executive Committee Member shall revoke the designation and also report the matter to the relevant authority.

144Defective systems

If the report of the investigating authority indicates that systems currently in operation, including those for the training of staff are defective, the accounting officer of the county government entity shall consult with the County treasury to consider measures for rectification.

145Financial liability of officers

(1) Recovery of the value of a loss, whether by recovery proceedings under these Regulations, shall constitute a settlement of a civil claim against the officer arising from the loss.

(2) Recovery of a loss shall not be a substitute for criminal prosecution or disciplinary proceedings.

146Annual statement of losses

The Accounting officer shall maintain a register of all losses incurred by his or her county government entity and attach a list of all losses incurred during that year to the financial statements submitted to the Auditor-General for audit with a copy to the County Treasury.

147Clarifications on classification of losses

Where any doubt arises on the correct classification of a loss or the accounting procedure required the directions of the County Treasury shall be sought.

148Claims on damaged or incomplete goods

Where goods are received damaged or incomplete and such goods are subject to a claim on suppliers, insurers or carriers, they shall not constitute a loss until the claims prove irrecoverable.

149Investigation of losses

(1) The fact that losses arise from uncollectable revenue, irrecoverable overpayments, or irrecoverable claims at the time of disposal does not preclude the prior investigation of circumstances of the losses.

(2) Applications for write-off shall be accompanied by an investigation report indicating whether remedial accounting or other action is necessary.

150Writing off of losses

(1) An Accounting Officer may only write off losses owed to the State if he or she is satisfied that—

(a) all reasonable steps have been taken to recover the loss and the loss is irrecoverable; or
(b) he or she is convinced that—
(i) recovery of the losses would be uneconomical; and (ii) it would be to the advantage of the county government entity to effect a settlement of its claim or to waive the claim.

(2) An Accounting officer shall ensure that all losses written Off are done in accordance with this Act, these Regulations or any other relevant legislation.

151Interest payable on recoverable losses

Interest may be charged on recoverable losses arising from cases of losses reported to the county government at the Central Bank Rate.

152Right of the Auditor-General

The authorization of disposal of a case of loss does not prejudice the right of the Auditor-General to carry out further investigation.

PFM Regulations

Part XII – ASSET MANAGEMENT