Part XII – ASSET MANAGEMENT · PFM Regulations

139Responsibility of an accounting officer of a national government entity on assets

(1) The Accounting Officer of a national 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 government entity's assets.

(3) The National Treasury shall provide guidelines on assets management.

140Responsibility for national 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) under this regulation, an Accounting Officer shall be responsible for the general management of government inventories held within that national 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;
(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 Asset Disposals Act (Cap. 412C); or
(c) lost, stolen, destroyed, damaged or rendered unserviceable other than by fair wear and tear, and if removed from the store's record and has been approved in line with section 69 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 Asset Disposals Act (Cap. 412C) and the Regulations made thereunder.

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

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

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

(7) The Accounting Officer of a government entity shall in consultation with a technical department review, at least annually when finalising 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.

141Accounting 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 reorganization of government functions, the Accounting Officer for the transferring 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 national government entity and the Accounting Officer for the receiving national government entity or other institution shall sign the inventory when the transfer takes place.

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

142Assets accruing to the Government by Operation of Law

Where any money, property or right accrues to the national government by operation of law, the National Treasury, may exercise all powers, authority and prerogatives, and fulfill any obligation on behalf of national governments.

143Register 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 items of furniture and equipment issued for a government's quarters or offices, large tools for government works, plant, equipment, vehicles or launches (large motor boats) shall be recorded in a register.

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

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

144Purchase and the capacity of official vehicles for certain government officers

(1) Official vehicles purchased for use by Cabinet Secretaries, Speakers of the National Assembly and the Senate, Chief Justice, the Attorney-General, Secretary to the Cabinet and the Head of Public Service, shall not exceed 2600 cc for saloon cars and 3000 cc for 4 x 4 utility vehicles.

(2) Official vehicles purchased for use by Principal Secretaries, Accounting Officers, Judges of the Supreme Court and Court of Appeal, Director of Public Prosecution, Clerk of the National Assembly and the Senate, Heads of Constitutional Commissions and Independent Offices, commissioners of constitutional commissions, Inspector-General of Police shall not exceed 2400 cc for saloon cars and 3000 cc for 4 x 4 utility vehicles.

(3) Official vehicles purchased for use by other officers on Job Group R and above and High Court Judges and Chief Executive of state corporations shall not exceed 2000 cc for saloon cars and 2900 cc for 4 x 4 utility vehicles.

(4) This section shall not apply in case of vehicles for official use by the President and the Deputy President.

(5) The Cabinet Secretary may by way of notice in the gazette specify category of offices and the category of vehicles to be used by those public officers.

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

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LOSSES AND WRITE OFFS

145Definition

For purposes of this Sub-Part, the term losses includes—

(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 national 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 national government, or for collection of which the national 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 national 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.

146Accounting officers responsibility for a national 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; or

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

147Revelation of offence

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

148Procedure 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), shall give details on 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 69(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 National Treasury and the Auditor-General.

(6) If the loss falls within the Cabinet Secretary's powers under section 69 (2) of the Act, the accounting officer shall seek the approval of the Cabinet Secretary to authorize him or her to write off the loss of an amount exceeding the one hundred thousand (KSh. 100,000) shillings but not exceeding one percent of the national governments' entity's approved estimates excluding the Consolidated Fund Services in any one incidence.

(7) The approval of the Cabinet Secretary shall be communicated to the accounting officer in writing with a copy to the Auditor-General.

(8) Any loss exceeding the threshold for the Cabinet Secretary shall fall within the Cabinet powers under section 69 (3) of the Act, the Accounting Officer shall—

(a) seek the approval of the Cabinet through the Cabinet Secretary to authorize him or her to write off the loss exceeding one percent of the national government entity's approved budget in any one incidence;
(b) the approval of the Cabinet shall be communicated to the Accounting Officer through the Cabinet Secretary in writing with a copy to the Auditor General;
(c) the approval of the Cabinet shall be communicated to the Accounting Officer through the Cabinet Secretary in writing with a copy to the Auditor General.

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

149Categories of losses

(1) For the purposes of this regulation, cash deficiency is a loss arising from a deficiency of cash or other negotiable instruments, 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 national government cannot be collected by reason that the debtor cannot be traced or is insolvent; and
(b) 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;
(b) nugatory payments, which arise in circumstances such as, the incurrence of a penalty in which a national government entity has been legally obliged to make payment, but for which no corresponding receipt of goods or services has been derived;
(c) fraudulent payments which arise from transactions which involve a breach of the Criminal Code (Cap. 75), by the use of falsified documents or certificates to steal money or other property belonging to a 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;
(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 moneys due to a national government entity cannot be recovered by reason of a debtors default and include default on National Government Guarantees;
(b) irregular advances and loans when money cannot be recovered because a national 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 government safe or the compromise of any combination lock; or
(c) the cost of altering locks and providing new keys or combinations; or
(d) the value of any missing items from the safe; or
(e) irrecoverable claims dealt with as laid down in these Regulations.

150Investigation of every case of loss

(1) The accounting officer of a national 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 Cabinet Secretary shall be the appropriate authority to cause investigation to be conducted.

(2) In the case where the investigation on report implicates the accounting officer, Cabinet Secretary shall revoke the designation and also report the matter to the relevant authority.

151Defective 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 national government entity shall consult with the National Treasury to consider measures for rectification.

152Financial 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.

153Annual statement of losses

The Accounting officer shall maintain a register of all losses incurred by his or her national 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 National Treasury.

154Clarifications on classification of losses

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

155Claims 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.

156Investigation of losses

(1) The fact that losses arise from un-collectable 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.

157Writing off of losses

(1) An Accounting Officer may only write off losses if he or of she is satisfied that—

(a) all reasonable steps have been taken to recover the losses and the loss is irrecoverable; or
(b) he or she is convinced that—
(i) recovery of the loss would be uneconomical; (ii) it would be to the advantage of the state 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.

158Interest payable on recoverable losses

Interest may be charged on recoverable losses at the Central Bank Rate.

159Right 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