Treasury in trouble for Sh165b backdated expenditure

The National Treasury is on the spot for flouting public finance regulations. This follows revelations that Sh165 billion in budgetary expenditure for the 2020/2021 financial year was backdated, contrary to the set regulations.

In her latest report, Auditor General Nancy Gathungu (pictured) flagged the allocations that were recorded as payments in the cash book but listed as uncleared items in Treasury’s bank statement.   

“Examination of records indicated that the total amount of Sh165 billion related to Exchequer releases to ministries, departments and agencies (MDAs), public debt and county governments disbursed between July 1 and July 8, 2021,” said Ms Gathungu in her report.

“Although management explained that the amount represented receipts of proceeds from sovereign bonds and International Monetary Fund (IMF) and that approval was given by the Office of the Controller of Budget, this was against the provisions of Regulation 97 (4) of the Public Finance Management (National Government) Regulations, 2015.”

The revelations by the Auditor General highlight National Treasury’s tough balancing act in managing the country’s spiralling debt and recurrent expenditure.

According to Article 260 of the Constitution, the government’s financial year ends on June 30 and fiscal regulations indicate that cash transactions taking place after this date shall fall under the next financial year. “The practice of backdating transactions to June 30 is against the concept of IPSAS (International Public Sector Accounting Standards) cash accounting,” said Ms Gathungu.

“The practice has also resulted in discrepancies between exchequer disbursements reported by the Treasury and Exchequer receipts reported by some counties in their financial statements.” The National Treasury has blamed underperformance in revenue collection for delays in the disbursement of funds to counties and MDAs.