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Counties must embrace automation in public finance

FINANCIAL STANDARD
By Penina Nyawira | November 25th 2014

A recent report by the Office of the Controller of Budget has documented major weaknesses in how counties are managing public finances.

Inasmuch as there has been a slight improvement in certain aspects of Budget execution, the numerous incidences of weak financial management could lead to further misuse of national resources if left unchecked.

Easy manipulation

Among the major concerns highlighted by the Controller of Budget is the continued use of manual financial management tools by county governments.

The manual system is prone to manipulation and is seen as a threat to achieving transparent management of public funds in the country.

The continued use of the manual system by the counties prevails, despite the deployment of the Integrated Financial Management Information System (IFMIS). The system has the capacity to eliminate weaknesses and threats in public finance management that have in the past led to the misappropriation of resources.

IFMIS significantly improves transparency and accountability in the management of public funds at both the national and county levels. Although there is a legal requirement that both governments process all their transactions through IFMIS, not all counties have taken this up. Further, many of those that have adopted the system are making piecemeal use of it.

The Public Finance Management (PFM) Act states that all public institutions should carry out their transactions through a system prescribed by the National Treasury, which in this case is IFMIS.

The system was developed in line with Section 12(e) of the PFM Act, which tasks the Treasury to design and prescribe a financial management system for both levels of government to ensure high standards of transparency in financial management.

In addition, there is a constitutional requirement on both the county and national governments to have in place a transparent financial management and standard reporting system.

The manual system that was in use previously was prone to manipulation, and through it, the country has lost billions of shillings in questionable transactions. IFMIS offers huge gains to county governments, including easing management of public resources.

It is also designed to be a vital tool for private sector companies that are doing business with the Government, helping them keep track of the status of their payments.

The truth

Many counties have cited the slow roll out of IFMIS and intermittent connectivity to the system as among the factors that have slowed their adoption of the system.

The truth, however, is that IFMIS was rolled out to the 47 counties last year August. In fact, the system was used in the budgeting process for the current financial year.

For the system to be up and running, all that is required is a basic Internet connection, which is available in all county headquarters. For far-flung counties without access to fibre network, there are modems supplied and serviced by Telkom Kenya, with round-the-clock support.

The Treasury has also made efforts to build the capacity of staff from all counties, equipping them with skills that enable them to effectively handle the system. This is to ensure the counties do not experience any capacity constraints.

The IFMIS Academy has already trained more than 8,000 users. Of the new users that have been trained on handling the system, 3,817 are from the counties, while 4,305 are from State ministries, departments and agencies (MDAs).

Training will be a continuous process to ensure counties, MDAs and other users do not encounter a situation where operations will slow down or stall because of limited staff capacity.

The writer is a communications consultant with a bias in public finance management.

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