Treasury shuts 4 transaction accounts in accountability push
The National Treasury has wound up four transaction accounts as it stepped up a shift to a single consolidated one to hold the cash for government ministries, departments, and agencies to enhance transparency and accountability in the use of public resources.
Treasury Cabinet Secretary Njuguna Ndung’u said in an official communication that the accounts known as the Kenya Local Loans Support Fund, the Government Coast Agency Fund, the Pre-Shipment Inspection Fund, and the Treasury Main Clearance Fund had all been wound up.
“The administrator of the Fund shall pay any amount remaining in the Fund into the National Exchequer Account for the credit of the national government, or the Cabinet Secretary shall pay any deficit in the Fund from funds of the national government in the National Exchequer Account with the approval of the National Assembly, and the Cabinet Secretary shall submit a final statement of accounts to Parliament,” he said about each of the affected funds.
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In an attempt to curb the loss of billions of shillings every year, the Treasury has stepped up its push for a single account to hold the cash for government ministries, departments, and agencies to enhance transparency and accountability in the use of public resources and limit borrowing yet some cash stayed idle in some unnoticed accounts.
The concept commonly referred to as The Single Account(TSA) has become popular in public financial management systems globally to help curb the challenges of a fragmented system for handling government receipts and payments through the banking system.
First, transactions through multiple accounts limit transparency and heighten the risk of theft of public funds. Secondly, idle cash balances in bank accounts often fail to earn market-related remuneration.
Additionally, the government, being unaware of these resources, incurs unnecessary borrowing costs on raising funds to cover cash shortages for development expenditures. Analysts also point out that, idle government cash balances in the commercial banking sector are not idle for the banks themselves, and can be used to extend credit.
The TSA housed at the Central Bank of Kenya gives the State a birds-eye view of all its consolidated cash positions. It enables the government to better plan its cash flows and possibly reduce borrowing through overdrafts and other short-term treasury securities.
Under the arrangement, all national government revenues are passed through the revenue collection account, credited to the exchequer account from which outflows will be managed. This helps to generate consolidated financial statements which boost transparency.
The Treasury has enhanced the consolidation of financial transactions through the enhancement of the national Integrated Financial Management System (Ifmis) portal.
For example, the enhanced Ifmis has shifted the management of purchase orders and invoices online in a bid to make the processing of payments to suppliers more efficient and transparent. The enhanced system, which went live early last year has removed human interaction and will enable suppliers at the national and county levels of government to get purchase orders generated from Ifmis through email.
Emails and text messages are also sent to suppliers at various stages of the payment process after the delivery of goods and services to purchasing State entity is confirmed.
Ifmis was created to provide audit trails of all financial transactions with details of the person who logged in, the time, the computer used, and the action performed in a bid to end corruption in government contracts. BY DAILY NATION
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