Public Sector Financial Reporting
Accounting
Public Sector Financial Reporting
Syllabus tag: KASNEB CPA | Advanced Level | CA35S2 Advanced Public Financial Management
1. Financial reports in Kenya's public sector
The PFM Act 2012 requires annual financial statements from: all national government ministries and departments; state corporations; county governments and their entities. The Auditor General audits these statements and reports to Parliament and County Assemblies.
2. National government financial statements
The National Treasury consolidates the accounts of all MDAs (ministries, departments, and agencies) into national government consolidated financial statements. The primary statements include:
- Statement of revenue and expenditure (income and expenditure)
- Statement of assets and liabilities (balance sheet)
- Cash flow statement
- Statement of comparison of budget and actual amounts — required by IPSAS 24
The Exchequer and Audit Act requires the statements to be submitted to the Auditor General within six months of the financial year-end (31 December for national government).
3. Budget performance reporting
Beyond the financial statements, the PFM Act requires regular budget execution reports:
Monthly: the National Treasury publishes monthly revenue and expenditure outturn reports. Quarterly: the Controller of Budget publishes quarterly budget implementation review reports for both national and county governments. Annual: each accounting officer prepares an annual performance report linked to programme outputs and outcomes.
4. The Controller of Budget's role
The Controller of Budget (CoB) monitors implementation of budgets and must approve all withdrawals from the Consolidated Fund and County Revenue Fund. The CoB reports to Parliament and the public on budget execution, identifying cases of: irregular expenditure, failure to absorb allocated funds, and cases of overspending.
5. Integrated reporting in the public sector
The International Integrated Reporting Council (IIRC) framework encourages reporting on how organisations create value across financial, manufactured, human, social, natural, and intellectual capital. Public sector entities increasingly adopt integrated reporting to demonstrate value for money and transparency beyond financial figures alone.
6. IMF Government Finance Statistics (GFS)
Kenya reports to the IMF using the GFS framework, which classifies government revenues and expenditures for international comparison. GFS uses two main classifications: economic classification (wages, goods and services, subsidies, capital expenditure, debt service) and functional classification (education, health, defence, infrastructure, social protection). GFS differs from IPSAS — GFS focuses on fiscal statistics; IPSAS focuses on financial reporting to users of financial statements.
7. Public sector audit
The Auditor General conducts: financial audits (true and fair view); compliance audits (adherence to law and regulations); value for money (performance) audits (economy, efficiency, and effectiveness). Results are published and presented to the relevant legislature for action through the Public Accounts Committee.