Part VIII – TREASURY AND CASH MANAGEMENT · PFM Regulations

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CONSOLIDATED FUND

80Composition of the Consolidated Fund

(1) The National Treasury shall administer the Consolidated Fund in accordance with the constitutional provisions in Articles 206 and 209 (1), (2) and (4) in controlling revenue receipts to ensure that—

(a) all revenue receipts by the national government are paid into the national exchequer account, except revenue receipts reasonably excluded by the Constitution, the Act, or another Act of Parliament; and
(b) withdrawals from the Consolidated Fund shall be done—
(i) in accordance with an appropriation by an Act of Parliament; (ii) in accordance with Articles 222 or 223 of the Constitution; (iii) as a direct charge against the Consolidated Fund as authorised by the Constitution or an Act of Parliament.

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

81Process of receipts into Consolidated Fund

(1) Receivers of Revenue shall promptly deposit into National Exchequer Account all receipts due to the Consolidated Fund.

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

(3) The National Treasury shall issue a receipt to a Receiver of Revenue to acknowledge the receipt of revenue thereof.

CASH AND BANKING ARRANGEMENTS

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

(1) Subject to the provisions of section 28 of the Act, the following criteria shall be considered by the National Treasury before granting approval to a national government entity to open and operate a national government bank account—

(a) all national government bank accounts shall be opened at the Central Bank of Kenya, except—
(i) where the Central Bank of Kenya has no branch; (ii) it is expressly provided for under a financing agreement and with approval of the Cabinet Secretary; (iii) where Central Bank of Kenya has confirmed in writing it is unable to offer banking facilities; (iv) where the National Treasury has granted authority to an accounting officer or receiver of revenue or collector of revenue to open and operate a bank account in a commercial bank for purposes of revenue collection, and that commercial bank shall have a wide branch network and is government linked;
(b) any national government entity which draws over seventy five (75) percent of its resources from the National Exchequer Account shall apply for opening and operating bank accounts at the Central Bank of Kenya, unless exempted under paragraph (1).

(2) Where a national government entity is unable to comply with the provisions under paragraph (1), it may apply for grant of Cabinet Secretary approval to open and operate a bank account in a commercial bank under special circumstances.

(3) All national government entities operating bank accounts outside the provisions of paragraph (1) of this regulation, shall comply with the provisions under paragraph (1) within six (6) months from upon publication of these Regulations.

(4) Except with the prior authority of the National 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.

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

(6) National Treasury may prescribe the banking rules and the maximum balance which may be held in any official 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 National Treasury on the action to be taken.

(7) No official 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 National Treasury in line with section 28(4) of the Act.

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

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

83Guiding principles for cash management

(1) The National 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 national-government entities are made when due for efficient, effective and economical programme delivery and the government's normal terms for account;
(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 National Treasury;
(g) pursuing debtors with appropriate sensitivity and rigour to ensure that amounts receivable by the government are collected and banked promptly;
(h) recognising 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) National government overdraft at the Central Bank of Kenya shall be retired by the end of the financial year.

84Surrender of End-Year Surplus Cash Balances

Not later than the 31st January each year, each Accounting Officer shall surrender to the National 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.

(2) There shall be two authorized signatories to sign a cheque drawn or electronic payment or fund transfer on a national 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 National 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 Cabinet Secretary may establish a Cash Management Advisory Committee.

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

(a) the Principal Secretary of the National Treasury who shall be the chair person or an officer designated by him or her;
(b) the department responsible for matters relating to accounting policy within the Nat
(c) the department responsible for matters relating to economic affairs in the National Treasury;
(d) the office of the public debt management in the National Treasury; and
(e) the department responsible for matters relating to budget matters in the National Treasury.

(3) The responsibilities of the Cash Management Advisory Committee shall be determined by the Cabinet Secretary during its establishment.

87Registers and records of government bank accounts

(1) The office of the Accountant-General shall maintain a register of all Treasury Single Account sub-accounts and other bank accounts opened by national government entities, including public funds and donor funded projects.

(2) The office of the Accountant-General shall reconcile periodically with the government bank accounts list, maintained by the Central Bank of Kenya.

(3) The Accounting Officer of a national government entity shall, by the 30th September of each year, provide the National Treasury with an up-dated list of bank accounts held by the national 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 National Treasury, letter granting approval for opening and operating the bank account.

88Authority to have access to government bank accounts

(1) The National 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 Cabinet Secretary may request bank statements for that account without any reference to the authorized bank signatories of that bank account.

(2) The Cabinet Secretary may suspend the operations of any 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) The Cabinet Secretary may, where in his or her opinion finds it necessary, 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 10th of the subsequent month to the National 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 National Treasury shall analyse and review the bank reconciliation statements submitted under paragraph (3) of this regulation and take the necessary action.

MANAGING IMPREST TRANSACTIONS

91Definition of imprest

(1) For the purposes of this regulation and Regulations 92, 93, and 94, an imprest means 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

The Accounting Officer or AIE holder shall approve the establishment of an imprest facility including the maximum amount for the specific purpose of that facility.

93Classes of imprest

(1) There shall be three types of imprests, namely—

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

(2) 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.

(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 has been recorded in the imprest register including the amount applied for;
(d) 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 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 the Accounting Officer commits an offence as provided for 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 fails to comply with the provisions of paragraph (8), he or she commits an offence as provided for 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 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 re- imbursement 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 or her 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 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 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, 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 (16) 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 cash book;
(c) confirm that all movements (expenses and receipts) since the last check have been properly recorded and are properly documented;
(d) ensure that the documents justify the difference between the fixed imprest level and the actual cash balance; and
(e) report on any anomalies found to the head of the accounts section.

(18) Any Special Imprest utilized for any expenditure on services of a confidential nature, the purpose add the particulars of which cannot be made public, shall be supported by a certificate that the money has been paid, and a declaration by the Cabinet Secretary responsible for the national government entity and the relevant Accounting Officer that they have satisfied themselves that the money has been properly expended, and has not been used to supplement the emoluments of any officer.

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.

TREASURY SINGLE ACCOUNT

95Establishment of a Treasury Single Account

(1) The National Treasury hereby establishes a Treasury Single Account (TSA) pursuant to section 28(2) of the Act, which Account. shall become operational within six (6) months upon commencement of these Regulations and shall be kept at the Central Bank of Kenya.

(2) The Cabinet Secretary shall from time to time issue Treasury Single Account guidelines to accounting officers for the operations of the Treasury Single Account.

96Operation of a Treasury Single Account

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

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

(a) unified banking arrangements to enable the National Treasury to have proper oversight of national government cash inflows and outflows on these bank accounts;
(b) that no national government entity shall operate bank accounts outside the Treasury Single Account unless expressly authorized by the Cabinet Secretary;
(c) notwithstanding the requirement under sub-paragraph (b), the Cabinet Secretary may authorize exemption from the requirements of sub-paragraph (b); and
(d) the comprehensive consolidation of government controlled public monies encompassing all government cash resources, including National Exchequer Account, special funds, trust funds and other public funds unless expressly exempted by the Cabinet Secretary.

(3) National government deposits or exchequer releases to national government entities by the National Treasury shall be deposited in the Treasury Single Account 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 national government's entities shall be sub-accounts of the Treasury Single Account for the national governments.

PFM Regulations

Part VIII – TREASURY AND CASH MANAGEMENT