Part V – BUDGET EXECUTION

42General rules relating to budget Execution

Overall control of national 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) debt service payments shall be a first charge on the Consolidated Fund and the Accounting Officer shall ensure this is done to the extent possible that the government does not default on debt obligations;

• (b) debt payments shall be made whether or not they meet the general rules provided that the Cabinet Secretary reporting of any excess over appropriations, with full explanations of the circumstances, to Parliament in the next quarterly reporting cycle; and

• (c) other than temporary treasury liquidity management operations, no payment shall be made from the Consolidated Fund as a direct charge, except under an item identified in the annual budget estimates.

43Accounting 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 National Assembly;

• (c) ensure all appropriation-in-aid due to national 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 national government entity has an audit committee in place.

44Accounting Officers to request cash on the basis of an approved quarterly cash disbursement schedule

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

(2) National 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 Contingencies Fund, or supplementary estimates.

(3) The annual cash flow plans prepared by Accounting Officers shall be broken down into a three months rolling basis and shall be adjusted to reflect any implementation realities in consultation with the National 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 Asset Disposal Act (Cap. 412C).

45Consolidation and approval of cash limit to be communicated to accounting officers

(1) The National Treasury shall consolidate all expenditure requirements and projections as forwarded by Accounting Officers, compare with the projected revenues including 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 National Treasury shall issue a National Treasury circular communicating the cash flow projections agreed with the Accounting Officers.

(3) In the event of unanticipated cash flow fluctuations, the National 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.

46Release of funds to meet expenditure

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

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

(3) The National 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 National Treasury shall issue an exchequer notification informing the accounting officer of the amounts authorized.

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

47Budget Variation

(1) The Accounting Officer shall inform his or her responsible Cabinet Secretary 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 national government entity.

(2) The Accounting Officer shall inform his or her responsible Cabinet Secretary of actions taken to mitigate any budget variations.

(3) The responsible Cabinet Secretary shall take the necessary steps to bring to the notice of the Cabinet Secretary, any warnings of significant or material budget variations.

48Budget reallocation

(1) For purposes of section 43(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 National 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 National 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 National 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.

49Reallocation between programmes and sub-votes

The reallocations by the National Treasury in terms of section 43(2) of the Act shall be included in the next revised budget for submission to and approval by the National Assembly.

50Advances from the Contingencies Fund

(1) For an accounting officer to access the contingencies fund in accordance with section 21 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 Contingencies 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 21 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 21 of the Act;
• (b) issue a certificate, countersigned by the Cabinet Secretary of that entity, confirming that the need meets the criteria under section 21 of the Act and paragraph (1); and
• (c) submit the request to the Cabinet Secretary for consideration.

(3) The Cabinet Secretary shall consider the request and assess if the need meets the criteria set under section 21 of the Act and may approve it or reject it.

51Commitment for goods or services

(1) All commitments for supply of goods or services shall be done not later than May 31 st 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 Asset Disposal Act (Cap. 412C) and the 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 Cabinet Secretary of the entity.

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

52Vote Control Procedure

(1) 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 Government's interest and in his own interest, be aware of the essentials of vote control procedures—

• (a) no public officer can 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 it is 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 Ministry or State Department or Agency, the allocation shall be entered as a commitment in the Ministry's or State 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 and projects shall issue AIE's to their field 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 should not exceed the limits authorized in the AIE's;
• (h) all AIE's to field public officers shall show the following details at the minimum and copies submitted to the Internal Audit Department of the National Treasury and 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;
• (j) 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; and (iii) any further known liabilities in respect of the year;
• (k) the AIE holders shall note the following in terms of control of expenditure—
• (i) there shall be no divided responsibility and only the officer to whom the AlE has been issued is permitted to commit or incur expenditure against it; and (ii) an AIE holder shall not wait for suppliers to submit invoices in order to clear his or her commitment, but he or she shall regularly have his or her outstanding commitments checked and enquiries made from the suppliers, particularly in the last three months of the financial year.

53Receipt 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.

54Unauthorized 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.

55Monthly reporting obligations by Accounting Officers

(1) An Accounting Officer of a national 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 national government entity for the preceding month to the National 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) actual expenditures classified in economic classification as follows—
• (i) compensation to employees; (ii) use of goods and services; (iii) transfer to other levels of government; (iv) capital expenditure;
• (c) pending payments with an age of over ninety days;
• (d) a 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.

56Contracts with multi-year financial implications

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

(2) Contracts imposing financial obligations in excess of one year may only 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) they are budgeted for first before new projects are budgeted by the accounting officer of the national government entity; and
• (c) the accounting officers secure the resources required in line with the financing requirements set out in the contracts.

57Reorganization of government functions

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

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

(2) Before embarking on accounting entries and other adjustments, 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 National Treasury—

• (a) the gross budgetary provision;
• (b) the approved A.I.A, if any, and whether in cash or credit purchase;
• (c) the approved development partner assistance and 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 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 Ministry or State 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 be accompanied by analysis of the below the line group of account 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 shall provide the details of the affected votes and the National 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 affected as outlined in the National Treasury Guidelines issued.