Public Finance Management Act

This Act shall be cited as the Public Finance Management Act.

Section 2 provides definitions and interpretation rules used throughout the Act (it lists defined terms such as “accounting officer”, “appropriation”, “Cabinet Secretary”, “County Treasury”, “financial statements”, and many others).

Public finances are managed at both the national and county levels of government in accordance with the principles set out in the Constitution.

The Cabinet Secretary may declare or revoke national government entities (with Cabinet and Parliament approval, by order in the Gazette); and must publish annually (at least once a year) a list of declared national entities in the Gazette.

The County Executive Committee member for finance may declare bodies to be county government entities with required approvals and must publish an annual list of such entities in the Gazette; the member may also, with approval and notice, declare that an entity ceases to be a county government entity effective from the order date.

The Act is stated to prevail in matters relating to the preparation and submission of budget estimates, including the time for doing so.

The Parliamentary Budget Office must perform specified functions for Parliament, including preparing reports and analyses, fostering relationships with treasury bodies, publishing reports within fourteen days (subject to Article 35), reporting on Bills with economic impact, proposing alternative fiscal frameworks, and observing public participation.

The National Assembly budget committee must discuss and review the Budget Policy Statement and budget estimates and make recommendations to the National Assembly.

The Senate budget committee must perform specified public finance functions including presenting revenue allocation proposals, reviewing revenue bills, examining financial statements and monitoring adherence to public finance principles; it must consider recommendations from listed bodies when carrying out some functions.

The Parliamentary Budget Office continues to exist as an office of the Parliamentary Service, and the Budget Office must be made up of persons appointed on merit with experience in finance, economics and public policy.

Section 100 establishes a Joint Committee composed of specified officials and requires the Joint Committee to submit progress reports every four months and a final report where appropriate; it may also invite other persons to assist.

Intervention ends when the conditions in Section 101(1)(a)–(d) are met; the Joint Committee must publish and publicise the end of the intervention.

Establishes the National Treasury as an entity of the national government and defines its composition; the Cabinet Secretary is the head of the National Treasury.

Section 12 assigns a set of financial management responsibilities to the National Treasury, including formulating macro-economic policies, managing public debt, preparing budget and revenue estimates, consolidating financial reports, monitoring public finances and state corporations, prescribing accounting standards and issuing financial guidelines.

Section 13 gives the National Treasury powers to access financial management systems and premises, to require compliance with accounting norms, to require information from public officers, to provide information to County Treasuries, to authorise officers in writing, and to revoke authorisations.

The National Treasury may second officers to a County Treasury for capacity building upon the County Treasury's request and for an agreed period; seconded officers are deemed officers of the County Treasury and are subject to its direction and control.

The National Treasury must manage the national government’s public finances according to the Constitution and specified fiscal responsibility principles, and must ensure public debt stays within the level set annually in the medium term debt management strategy submitted to Parliament.

The national government may temporarily deviate from Budget Policy Statement financial objectives with Parliament's approval for major disasters or unforeseen events; a new government may deviate with Parliament's approval but must not deviate from fiscal responsibility principles; the National Treasury must publish and publicise a subsection (3) report within fifteen days of submission to Parliament.

The National Treasury must administer the Consolidated Fund, ensure receipts are paid into it, make authorised withdrawal requisitions to the Controller of Budget, ensure the National Exchequer Account is not overdrawn, disburse monthly payments to counties by the 15th, and prepare and publish an approved disbursement schedule by 30th May.

The National Treasury must administer the Equalisation Fund under Article 204, transfer revenues into and money from the Fund as specified, ensure the Fund account is not overdrawn, requisition withdrawals for Controller of Budget approval, and (with Controller approval and Treasury instructions) the Central Bank may pay amounts from the Fund.

The Contingencies Fund is made up of monies appropriated from the Consolidated Fund by an appropriation Act in any financial year.

The Cabinet Secretary must administer the Contingencies Fund.

The Cabinet Secretary may make advances from the Contingencies Fund for urgent, unforeseen expenditure lacking specific legislative authority, and must (subject to subsection (2)) prescribe criteria for such advances by regulations with Parliament approval.

The Cabinet Secretary must, within two months after a payment from the Contingencies Fund, submit to Parliament a detailed report and seek Parliament's approval; if Parliament is not sitting, seek approval within fourteen days after Parliament next sits; and, once Parliament approves the payment, cause an appropriation Bill to be introduced for the payment and replenishment of the Contingencies Fund.

The National Treasury must prepare and submit to the Auditor‑General financial statements for each year for the Contingencies Fund within three months after the end of the financial year.

Establishes a Parliamentary Fund, requires the Secretary to the Parliamentary Service Commission (on Commission directions) to open and operate bank accounts for it, gives the Cabinet Secretary authority (with National Assembly approval) to create and wind up national public funds, requires designation of administrators and sets duties for administrators and account/reporting requirements including a three-month post-year deadline for submitting financial statements.

The National Treasury must prepare and submit an annual Budget Policy Statement to Cabinet for approval, then submit the approved statement to Parliament by 15 February each year; the statement must set out strategic priorities, fiscal outlook and specified fiscal information, allow representations by listed persons subject to regulations, be tabled by Parliament within 14 days for discussion and resolution, and be published by the National Treasury within 15 days of submission to Parliament.

National Treasury must prepare a Budget Review and Outlook Paper setting out specified fiscal and forecast information; Cabinet must consider and approve the Paper within fourteen days of submission.

National Treasury must publish pre- and post-election economic and fiscal updates with specified content; if Parliament dissolves less than two months before polling day the Cabinet Secretary must arrange the pre-election update within 14 days of dissolution.

The National Treasury must authorise bank accounts for national government entities, establish and operate a Treasury Single Account (which must not prejudice entities), prevent authorised overdrafts by accounting officers, keep records of accounts, and provide monthly revenue statements to the Commission on Revenue Allocation; the Cabinet Secretary or other relevant authorities may impose regulations or requirements under other legislation.

Section 29 requires the National Treasury to establish a cash-management framework; it permits the National Treasury to invest and incur related costs, and grants the Cabinet Secretary the power to limit or suspend national government expenditure subject to the Constitution.

All procurement of goods and services required for the national government or a national government entity must be carried out in accordance with Article 227 of the Constitution and the relevant procurement and disposal legislation.

The Cabinet Secretary must submit to Parliament regular reports on all loans to national and county government bodies and must submit a report within seven days when requested by either House while public debt matters are canvassed.

The Cabinet Secretary must provide Parliament with records and reports about national government guarantees, including specific loan details on request and an annual published report.

The Cabinet Secretary must annually submit a medium-term national government debt management strategy statement to Parliament on or before 15 February, ensure it aligns with the Budget Policy Statement, include specified analyses and disclosures, and within 14 days of submission to Parliament must send the statement to the Commission on Revenue Allocation and the Intergovernmental Budget and Economic Council and publish it.

The National Treasury must provide Parliament with additional reports when required.

The Cabinet Secretary must ensure public participation in the budget process provided for in subsection (1).

The Cabinet Secretary must manage the national budget process, issue annual guidelines (by 30 August) to national government entities describing required content and schedules, prescribe public participation procedures by regulations, and notify the Intergovernmental Budget and Economic Council of the budget process; national government entities must comply with the guidelines and specified schedule dates.

Section 37 sets duties for the Cabinet Secretary to manage publication, timing and submission of budget-related documents and to submit National Treasury comments by 15 May.

Section 38 lists specific budget documents and information to be submitted, including a memorandum by the Cabinet Secretary explaining how National Assembly resolutions on the Budget Policy Statement have been taken into account, and a statement by the National Treasury on measures to implement Assembly recommendations.

The National Assembly must consider and (with or without amendments) approve the national government's budget estimates in time for the Appropriation Bill to be assented to by 30th June each year; committees, the National Treasury, the Speaker and the Controller of Budget have specified roles and timeframes.

Cabinet Secretary must submit the Finance Bill by 30th April; the relevant National Assembly committee must introduce it; the National Assembly must consider and pass it so it can be presented for assent by 30th June.

Each financial year the Cabinet Secretary must, with Cabinet approval, publicly pronounce the national government's budget policy highlights and revenue raising measures and must take into account regional and international agreements, related dates, and specified fiscal considerations.

Section 41 has been deleted.

Parliament must consider three specified revenue Bills within thirty days of their introduction, aiming to approve them with or without amendments.

Limits the accounting officer's power to reallocate appropriated funds and sets conditions when reallocations within programs or Sub-Votes are allowed.

The national government must submit to Parliament a supplementary budget supporting money spent under Article 223; after Parliament approves that spending an Appropriation Bill must be introduced to appropriate the money; the supplementary budget must include a statement relating the additional expenditure to fiscal responsibility principles and financial objectives.

If a national government entity holds appropriated money withdrawn from the National Exchequer Account that remains unspent at the end of the financial year, it must repay that money into the National Exchequer Account and prepare and submit a statement to the Controller of Budget.

The Cabinet Secretary is responsible for overseeing macro-economic and financial policy, helping build financial management capacity by agreement, supporting problem resolution, consulting counties through the Intergovernmental Budget and Economic Council, sharing helpful findings, and publishing monthly revenue and net exchequer statements in the Gazette within twenty-one days after each month; the Cabinet Secretary must also immediately alert entities or counties upon detecting emerging financial problems.

National government or its entities may receive grants or donations from development partners only with Cabinet Secretary approval; recipients must notify the Cabinet Secretary on receipt and must record the amount in their accounts; the Cabinet Secretary must inform Parliament about certain authorisations and may permit donor audits.

Section 48 mandates regulations on grant administration, including procedures, disclosures, participation measures, sanctions, and obligations relating to grants.

The national government may raise loans either within Kenya or from outside Kenya.

The national government must ensure debt financing meets needs at lowest market cost consistent with prudent risk; borrowing is subject to statutory thresholds (55% of GDP in present value) with a possible 5% exceptional allowance; the Cabinet Secretary must take measures within five years to ensure compliance and report breaches to Parliament; borrowing only for Parliament-approved budget and allocations; guarantees, charges on funds, uses of external loans, sinking funds, advisers, and reporting obligations are specified.

National government entities may borrow under this Act or other Acts; they must obtain Cabinet Secretary approval before changing borrowing/refinancing/repayment programs during a financial year; the national government is not liable for an entity's debts unless it has guaranteed them.

The Cabinet Secretary (or a person they designate) and certain officers of entities are authorised to execute loan documents for national government borrowing.

The national government and the Cabinet Secretary have specified powers and duties regarding issuance, amendment, form, and handling of national government securities, including limits, required naming, duplicate issuance, and handling uncollected proceeds.

The national government may issue external government securities only where authorised; the Cabinet Secretary may raise external loans or issue such securities on behalf of the national government and must ensure they are issued in the name of the Republic of Kenya.

Stamp duty is not chargeable for the issue of a national government security.

Creates the Registrar of National Government Securities, requires the Registrar to keep a register of national government securities, allows holders to request amendments in writing, requires the Registrar to amend entries if requests follow Cabinet Secretary guidelines, and to provide statements on request; excludes most provisions for external government securities except for notifications of outstanding external debt.

The national government may enter into derivative transactions within the Budget Policy Statement and as prescribed by regulations; the Cabinet Secretary may in exceptional circumstances and on behalf of the national government enter into such transactions under specified conditions; expenses from such transactions are to be charged on the Consolidated Fund.

The national government may lend money subject to regulations; national government entities may lend only if authorised by an Act and under regulations; the Cabinet Secretary has powers related to currency, security revisions, and must ensure securities are in the national government's name.

The Cabinet Secretary may guarantee loans on behalf of the national government subject to specified conditions, and such guaranteed loans must be approved by Parliament.

The Cabinet Secretary must submit to Parliament a statement on a loan guarantee stating that a guarantee is entered into.

The Cabinet Secretary must prepare and submit to Parliament a statement of credit guarantees granted under section 58(5) and a summary, including specified data items (a)–(g).

When money is paid from the Consolidated Fund on a government guarantee, the Cabinet Secretary must report to Parliament with specified details.

Section 61 lets the Cabinet Secretary, when Cabinet thinks allowing payment over time will aid recovery, enter into a repayment agreement with the borrower; the Cabinet Secretary must not impose terms inconsistent with the guarantee and must ensure recovered money is paid into the Consolidated Fund.

An office called the Public Debt Management Office is established within the National Treasury. The Head of that Office must be recruited by the Public Service Commission through a competitive process. The section lists objectives including minimising long-term public debt costs, promoting development of market institutions for government debt securities, and ensuring sharing of public debt costs between current and future generations.

The Public Debt Management Office must carry out the government’s debt management policy to minimise financing cost over the long term, taking account of risk.

The Cabinet Secretary must set the policy and financial framework, delegate operational borrowing decisions to the Head of the Public Debt Management Office, ensure the Office has necessary resources and skills, and be accountable to Parliament; the Public Debt Management Office may appoint agents while control remains with the Cabinet Secretary.

Section 65 requires the Public Debt Management Office to assist a county government in debt management and borrowing when requested by a County Treasury, and requires a County Treasury to supply the Public Debt Management Office with information when requested.

Accounting officers of Judiciary, Parliament, constitutional commissions and independent offices

The Cabinet Secretary must in writing designate accounting officers for national government entities; the Cabinet Secretary must ensure each national government entity has an accounting officer; and the administrator of a Constitutional Commission, institution or Independent Office is to be the accounting officer for that body (subject to other legislation).

Accounting officers of national government entities, Parliament and the Judiciary must perform specific financial management responsibilities including ensuring lawful, efficient and transparent expenditure; maintaining and protecting records; ensuring lawful contracts and procurement controls; preparing plans, estimates and audited financial statements; reporting and acting on audit issues and fraud; and reporting to Ministers, Parliament or other bodies as required.

Accounting officers may write off losses within prescribed limits and conditions; larger write-offs require approval (Cabinet Secretary or Cabinet), and accounting officers must record written-off losses in financial statements.

When a national government entity has expenditures charged to the Consolidated Fund, the accounting officer may spend the money for the legislative purposes specified and may do so without an appropriation.

Accounting officers for national government entities may authorise cash advances to public officers; recipients must account for them within a reasonable period, and unaccounted amounts become debts subject to interest and recovery by salary deduction.

Section 72 requires accounting officers to manage and protect an entity's assets and liabilities, to seek value for money, allows disposal of assets only in accordance with an Act of Parliament and requires disposal proceeds to be deposited into the entity's bank account; it also prohibits entities from lending or transferring assets except as authorised by an Act, and allows regulations to provide rules for management, disposal and monitoring in accordance with such an Act.

National government entities must ensure internal audits follow international best practices; every national government public entity must establish an audit committee as prescribed by regulations.

Section 74 sets out possible disciplinary measures and referral options regarding public officers and accounting officers, including taking measures under regulations, referring matters to the relevant office or body under appointment or employment conditions, and (for accounting officers) measures that may include revoking the position; such measures may not be taken under certain subsections unless the officer has been given an opportunity to be heard.

The Cabinet Secretary must designate, in writing, persons as receivers of national government revenue; those receivers must collect and separately account for the revenue and are responsible to the Cabinet Secretary.

A receiver may authorise a public officer to collect and remit national government revenue; public officers (except receivers or collectors) who collect revenue must deliver it within three days; receivers must provide monthly statements to the National Treasury and the Commission on Revenue Allocation.

The Cabinet Secretary has the power to waive or vary taxes, fees or charges; the National Treasury must keep a public record of each waiver with reasons and must report on each waiver in accordance with Section 82.

Kenya Revenue Authority is the collector of national government revenue.

Public officers employed in national government bodies must comply with the Constitution and all laws relating to the conduct of public officers when performing responsibilities or exercising powers under this Act.

The National Treasury must prepare consolidated, clear and comprehensible annual financial statements for the national government at the end of each financial year, ensure they comply with Accounting Standards Board formats, submit them to the Auditor‑General with copies to the Controller of Budget and the Commission on Revenue Allocation, and publish them.

Accounting officers must prepare annual financial statements for the entity at the end of each financial year and include specified content, comply with Accounting Standards Board prescriptions, submit the statements to the Auditor‑General with copies to named bodies, publish them, and follow special submission steps for state corporations.

Receivers of national revenue must prepare annual accounts, include specified statements, submit accounts to the Auditor-General and certain bodies, publish financial statements, report waived or varied taxes within three months after year end with specified details, and publish those reports.

Accounting officers for national government entities must prepare quarterly reports and submit them within fifteen days after each quarter to the Cabinet Secretary responsible for the entity and the National Treasury; the Cabinet Secretary shall forward copies to the Cabinet Secretary and Controller of Budget; state corporation accounting officers submit to their Cabinet Secretary who, after approval, forwards copies.

Administrators of national public funds must prepare annual financial statements in the form prescribed by the Accounting Standards Board, include financial and non-financial performance information, submit the statements to the Auditor-General within three months after each financial year, and send a copy to the Cabinet Secretary responsible for the fund.

Administrators of national public funds must submit quarterly reports.

A state corporation can only be established or dissolved with prior approval of the Cabinet, and the Cabinet must take into account recommendations from the National Treasury about financial implications.

Section 87. Restrictions on national government investing in government-linked corporations

The Cabinet Secretary in charge of state corporations must monitor their financial and operational performance, analyse required reports, report financial performance to Cabinet, and make recommendations to improve performance.

The Cabinet Secretary responsible for public investments must prepare and submit to the National Assembly, within four months after each financial year, a consolidated report on national government involvement in state and government-linked corporations; include specified financial and performance details; prepare a triennial assessment; and submit copies of the reports to specified offices.

Parliament or any House of Parliament may, by resolution, extend time limits (except time limits set in the Constitution) for submitting statements or other documents required under this Act.

Defines terms for the purposes of sections 86, 87, 88 and 89.

State organs and other public entities are primarily responsible for foreseeing, identifying, avoiding and resolving financial problems, and must ensure financial management complies with the Constitution and this Act.

The Cabinet Secretary must consider whether to take action under Article 225(3) when a State organ or public entity has financial problems or fails obligations, and must consider all relevant facts before stopping transfers of funds.

Lists additional indicators that a State organ or public entity has committed a serious or persistent material breach, including failure to pay when due, defaulting on obligations, operating deficits above a prescribed percentage, late submission of annual financial statements by more than sixty days, other payments exceeding prescribed amounts or two percent of budgeted operating expenditure, material issues raised by the Controller of Budget, Auditor‑General withholding or disclaiming opinion, and recurring failure impairing procurement; with exceptions for disputed obligations subject to litigation (if not instituted to avoid intervention) and obligations waived by creditors.

Stoppage of funds process in national government entity: determine the reasons for the breach

The Cabinet Secretary must immediately stop transfers of funds to a county government entity found to be in serious or persistent material breach of its obligations or financial commitments; the Cabinet Secretary may also prescribe regulations for the stoppage process.

Sets the procedure for stopping transfers of funds: the Cabinet Secretary must seek Parliament's approval within seven days, the Controller of Budget must investigate and report within fourteen days, Parliament must decide within thirty days and the Cabinet Secretary must follow Parliament's decision; the Cabinet Secretary may not stop more than fifty percent of funds to a county government; any person may petition Parliament under Article 119.

If the Cabinet Secretary applies to renew a decision to stop transfers beyond the sixty days, the Controller of Budget must prepare a report to Parliament within 14 days; that report must provide an independent opinion to allow Parliament to decide within 30 days whether to approve the renewal.

Specifies the contents required in a county recovery plan (identifying financial problems; objectives; budget parameters; revenue measures including tariffs; strategies to reduce waste and increase revenue; human resources and sources; timeframe and milestones; implementation actions distinguishing entity and other parties; liquidation of assets excluding those needed for minimum basic services; measures to prevent unauthorised irregular and wasteful expenditure; identify actual and potential revenue sources). States that the approved recovery plan by the Joint Committee shall form the basis for releasing funds withheld and subsequent transfers.

The County Executive Committee must observe collective-responsibility principles when exercising their functions; a county assembly must take cognisance of Article 216(2) of the Constitution when making decisions.

Each county must have a County Treasury; the County Treasury includes the County Executive Committee member for finance, the Chief Officer, and the Treasury departments, and the County Executive Committee member for finance shall be head of the County Treasury.

The County Treasury must carry out the listed general responsibilities including policy development, budget preparation and coordination, resource mobilisation, debt management, consolidation of accounts, custodianship of assets, ensuring accounting standards compliance, financial management and control, record-keeping, monitoring and assistance to county entities, providing information to National Treasury, issuing financial circulars, advising county bodies, strengthening intergovernmental fiscal relations, regular reporting to the county assembly, and other actions to implement the Act.

Section 105 grants the County Treasury a set of powers over county public financial management (access systems and premises with prior notice; stop funds; require accounting standards and information from officers; issue guidelines; ensure compliance with national standards) and allows the County Treasury to authorise officers in writing and to revoke or vary such authorisations; authorised officers must produce written authorisation on request.

County Treasuries may second officers to the National Treasury on request; officers so seconded are deemed officers of the National Treasury and are subject only to its direction and control.

A County Treasury must manage its public finances according to the fiscal responsibility principles in subsection (2) and must not exceed regulatory limits.

County governments may deviate from financial objectives with county assembly approval, only temporarily and only if required by a major natural disaster or other significant unforeseen event; a new county government may also deviate but may not deviate from fiscal responsibility objectives; the County Treasury must publish the report within fifteen days of submission to the county assembly.

Establishes a County Revenue Fund for each county; the County Treasury must administer the Fund, ensure compliance with Article 207 and prevent the County Exchequer Account being overdrawn; certain receipts may be retained by county government entities; Controller of Budget approval plus County Treasury instructions authorise the approved bank to pay amounts; unutilised balances do not lapse.

A County Executive Committee may establish a County Emergency Fund with the approval of the county assembly; the fund is to consist of money appropriated by the county assembly and its purpose is to enable payments for urgent and unforeseen county expenditure lacking specific legislative authority.

The County Executive Committee member for finance must administer the county government Emergency Fund and must establish and maintain a separate account for money appropriated to the Fund.

The County Executive Committee member for Finance may make payments from the county Emergency Fund when satisfied there is an urgent, unforeseen need without legislative authority, following operational guidelines and disaster law; criteria in subsections (2) and (3) specify conditions such as public interest harm, alleviating damage limited to the county, and threats to life, welfare or the environment.

The County Executive Committee member for finance may not, in a financial year, make a payment from the Emergency Fund under section 112 that exceeds two per cent of the county government's total revenue for the previous financial year, except in the first year.

The County Executive Committee member for finance must seek county assembly approval for payments made from the Emergency Fund and introduce an appropriation Bill to reimburse the fund.

The County Treasury must, within three months after the end of each financial year, prepare and submit to the Auditor-General financial statements for the county Emergency Fund that include specified details (date and amount of each payment; recipient; purpose; whether funds were spent and a statement; if not spent, reasons; and conformity with section 112).

A county finance executive may establish county public funds with approvals; the finance member must designate an administrator for each fund and that administrator must retain earnings in and spend money from the fund only for its purposes, prepare accounts and submit financial statements (within three months after year-end) to the Auditor‑General and present them to the county assembly; winding up and certain payments involve approvals and payments to/from the County Exchequer Account.

The County Treasury must prepare a County Fiscal Strategy Paper, submit it for approval and to the county assembly by 28 February each year, align it with national Budget Policy Statement objectives, include strategic priorities and a financial outlook, consider county assembly recommendations when finalising the budget, and publish it within seven days of submission; the county assembly must consider it within fourteen days and may adopt it with or without amendments.

County Treasury must prepare a County Budget Review and Outlook Paper each financial year and submit it to the County Executive Committee by 30th September; the County Executive Committee must consider it within 14 days, lay it before the County Assembly, and publish and publicise it as soon as practicable.

County Treasury authorises the opening, operation and closing of county government bank accounts and must establish and record a Treasury Single Account; accounting officers must not overdraw accounts beyond authorised limits.

Requires County Treasury to manage county cash within an assembly-established framework; requires county government entities to submit annual cash flow plans and forecasts to County Treasury and send a copy to the Controller of Budget; allows County Treasury to invest county banked money (subject to regulations) and to incur related costs.

Procurement and disposal of assets for county government purposes must be carried out in accordance with Article 227 of the Constitution and the Public Procurement and Disposal Act (Cap. 412C).

The County Treasury must keep a record of all loans to the county government and make it available to the county assembly within seven days of request; it must also submit quarterly and annual reports of those loans to the county assembly.

County Treasury must submit an annual county government debt management strategy statement to the county assembly on or before 28th February each year; the County Executive Committee member for finance must then publish and publicise the statement and submit copies to the Commission on Revenue Allocation and the Intergovernmental Budget and Economic Council as soon as practicable after submission.

County Treasury must provide the county assembly with additional reports when required.

The County Executive Committee member for finance must ensure public participation in the county budget process.

The County Executive Committee member responsible for planning must prepare the development plan in the prescribed format, submit it to the county assembly by 1st September each year and send copies to the Commission on Revenue Allocation and the National Treasury, and publish and publicise the plan within seven days after submission.

Every county government must prepare and submit an annual cash flow projection for the next financial year by 15 June each financial year; regulations will prescribe the format and content.

The County Executive Committee member for finance must manage the county's budget process, must issue an annual circular by 30th August setting out budget guidelines, and county government entities must comply with those guidelines and the schedule dates.

Members of the County Executive Committee (and county assembly clerks for assembly estimates) must prepare, submit and, where required, publish budget estimates and related Bills, follow assembly resolutions, and the County Executive Committee member for finance must prepare comments and the County Appropriation Bill.

The County Executive Committee member for finance must submit specified budget documents to the county assembly (including budget policy summaries, explanations on fiscal responsibility, memoranda on assembly resolutions, lists of recipients of appropriations, revenue and expenditure estimates, loan information, liabilities, and statements on implementation of prior recommendations).

The county assembly must consider and approve the county government budget estimates so they can be passed into law by 30th June each year; committees, the County Treasury and the County Executive Committee member for finance have specified roles in review, consolidation, publication and ensuring clarity.

Each financial year the County Executive member for finance must, with approval of the County Executive Committee, pronounce the county's revenue raising measures; on the same date the County Executive Committee member for finance must submit the County Finance Bill and a policy statement to the county assembly.

The county assembly must consider and approve the Finance Bill not later than ninety days after passing the Appropriation Bill; it may do so with or without amendments.

If the County Appropriation Bill will not be assented to by the start of the financial year, a county assembly may authorise withdrawing money from the County Revenue Fund (subject to subsection (2)); the Speaker must communicate that authorisation within seven days to the County Executive Committee member for finance; money withdrawn must be included in the appropriation law under separate Votes for the services.

Allows a county government to spend unappropriated money in specified circumstances, requires it to submit a supplementary budget and to explain how the spending relates to fiscal responsibility, and limits such spending to 10% of the year's appropriations unless a higher percentage is approved by the county assembly.

If a county government entity still holds appropriated money withdrawn from the County Exchequer Account at the end of a financial year, it must repay the unspent money to the County Exchequer Account and prepare a refund statement to be sent to the Controller of Budget.

A county government must establish a County Budget and Economic Forum, and the Governor shall be the chairperson.

County governments and county government entities may receive grants or donations from development partners with approval from the County Executive Committee member for finance; recipients must notify finance and the Cabinet Secretary, record the amount in their books, and comply with specified accounting practices, and funds must be spent in accordance with Article 224.

Third parties must not receive, hold, or pay public money except under an authorization made under the regulations; contravention is an offence punishable on conviction by up to two years' imprisonment or a fine not exceeding one million shillings, or both, and requires making good any loss.

A loan may be raised either within Kenya or outside Kenya.

Rules on county borrowing: a county government must ensure borrowing meets financing needs at lowest market cost consistent with prudent risk and sustainable public debt; it may borrow only under legislation and within assembly limits; the County Executive Committee member for finance must pay loan proceeds into specified public funds and may establish sinking funds and appoint advisers/agents.

County Assemblies may authorise short-term borrowing by county government entities for cash management; such borrowing must be repaid within a year.

Certain county officials are authorised to execute loan documents for county government borrowing.

County governments may issue securities only as authorised by the Act and regulations; the County Executive Committee member for finance has specified powers and duties related to issuing, replacing, naming, trading, and accounting for county government securities.

A county government entity may lend money; the County Executive Committee member for finance must ensure loan security is in the county's name and may act on behalf of the county to secure loans.

Counties must carry out joint infrastructure investments in accordance with regulations; the Intergovernmental Budget and Economic Council may agree regulations with guidelines for such investments.

Role of accounting officers in management of public finances

Specifies which officers must be designated as accounting officers for county entities and permits counties to adopt a centralised financial management service subject to assembly approval.

Accounting officers of county government entities must ensure lawful, efficient financial management, keep and protect accounting records, manage assets, prepare plans and estimates, submit annual financial statements within three months after the financial year, report on audit issues, and provide reports to the county assembly and County Treasury; the County Treasury must submit the accounting officer’s report to the county assembly within one month of receipt.

Accounting officers may write off losses within limits and with required approvals; the County Executive Committee member for finance may authorise write-offs above higher thresholds; accounting officers must record written-off losses and include them in annual financial statements; loan write-offs must follow regulations.

The accounting officer responsible for a county government entity may spend money charged to the County Revenue Fund for the entity's purposes without an appropriation.

An accounting officer for a county government entity may authorise cash advances to public officers; those officers must account for the use of the advance within a reasonable time; unaccounted amounts become a debt, attract interest as prescribed by regulations, and are recoverable by deduction from salary.

The accounting officer of a county government entity must manage the entity’s assets and liabilities, ensure value for money in acquiring/using/disposing assets, dispose assets only under an Act of Parliament (Article 227), and ensure proceeds are credited to the entity’s bank account.

Limits on the accounting officer's power to reallocate appropriated funds and conditions under which reallocations within a program or Sub-Vote may occur.

County government entities must maintain internal audit arrangements, follow international best practices, comply with any applicable regulations, and establish an internal auditing committee.

Section 156 sets out disciplinary measures relating to public officers and accounting officers, lists examples of misconduct, and requires an opportunity to be heard before disciplinary measures under this section may be taken.

The County Executive Committee member for finance must, in writing, designate persons to collect, receive and account for specified county government revenue; receivers must ensure that the revenue they are responsible for is collected or recovered and accounted for.

Receivers of revenue may authorise county public officers to collect revenue; other public officers who collect revenue must deliver it within three days; receivers must provide quarterly statements to County Treasury and copy National Treasury and the Commission on Revenue Allocation.

The County Treasury must keep a public record of every waiver, record the reason for each waiver, and report each waiver in accordance with section 164 of this Act.

The County Executive Committee member for finance may authorise the Kenya Revenue Authority or appoint a collection agent to collect county government revenue on agreed written terms in accordance with regulations.

County government must ensure its revenue-raising measures conform to Article 209(5) of the Constitution.

Public officers employed in or by county government must comply with the Constitution and all laws relating to conduct of public officers when performing responsibilities or exercising powers under this Act, must ensure actions are lawful and authorised, must arrange for proper custody and maintenance of public property, and must use their best efforts to prevent damage to the county government's financial interests.

The County Treasury must consolidate the county government's annual financial statements each financial year, ensure they follow Accounting Standards Board formats and standards, submit them to the Auditor‑General, and deliver copies to specified national bodies.

Accounting officers of county government entities must prepare annual financial statements in prescribed formats, include specified information, comply with accounting standards, submit them to the Auditor-General and deliver copies to specified bodies; special submission and approval steps apply for county corporations.

Receivers of revenue for a county government must prepare annual accounts of revenue collected and submit them to the Auditor-General and copies to specified authorities; they must also submit, within two months of year end, a report to the county assembly on all waivers and variations including specified details.

Accounting officers for county government entities must prepare quarterly reports and submit them, with corporate entities following additional submission and approval steps.

Administrators of county public funds must prepare annual financial statements in the form prescribed by the Accounting Standards Board, submit them to the Auditor General within three months after each financial year ends, and provide a copy to the County Executive Committee member responsible for the fund.

Administrators of county public funds must prepare quarterly financial statements in the form prescribed by the Accounting Standards Board, ensure the report includes financial and non-financial performance information, and submit the quarterly report to the County Treasury with a copy to the Controller of Budget within fifteen days after the end of each quarter.

This part of the Act applies to urban areas and cities; provisions of the Act that apply to county government entities also apply to urban areas and cities unless expressly stated otherwise.

The Accounting Officer of an urban area or city must exercise the functions and powers assigned to an accounting officer under this Act.

The accounting officer of an urban area or city must manage the urban area's or city's revenue, including credit control and debt collection, inform the County Executive Committee member for finance of regularly arrears over thirty days, and transfer funds collected for another organ of state within three days without using them for city purposes.

Urban areas or cities retain revenue from rates, fees, levies, charges and other revenue-raising measures to defray the costs of providing services.

The county government must use objective criteria reflecting service demand and responsibilities when allocating funds to urban areas or cities.

Urban areas or cities must not let personnel expenditure exceed a percentage of their allocation set by the County Assembly.

Section 175 sets out budget and budget process rules for urban areas or cities, including that urban areas or cities must develop a strategic plan; the County Treasury must issue budget instructions by 30th August each year; urban areas or cities must prepare and submit budget requests (including current services and new services requests) for approval; and the County Treasury must evaluate proposals and make recommendations.

If the County Appropriation Act is not assented to (or likely to be) by the start of the financial year, the relevant county assembly may authorise withdrawal of funds from the County Revenue Fund to meet expenditure of an urban area or city in accordance with subsection (2).

Any borrowing by an urban area or city must be subject to terms and conditions that the county assembly may impose; paragraph (b) is subject to section 140.

Urban areas or cities may accept grants from development partners only with approval from the County Executive Committee member for finance and as provided under section 138; recipients must notify finance and the Cabinet Secretary, record the grant, and account for it under applicable accounting rules; the finance member may permit donor audits.

Urban areas or cities must open and maintain a bank account in their name with approval from the County Executive Committee member for finance; all money received must be paid promptly into those account(s) in accordance with the Act and any prescribed requirements.

The Board of an urban area or city must ensure the urban area follows guidelines prescribed by the Accounting Standards Board; the Accounting Officer of an urban area or city must prepare an annual report including accounts in accordance with the Urban Areas and Cities Act, 2011 and other reports required by this Act.

Section title: "Transitional arrangements".

A county corporation can only be established or dissolved with prior approval of the County Executive Committee; that approval may be given only after the County Executive Committee takes into account any recommendations of the County Treasury about the financial implications.

The section places restrictions on county government investing in county government-linked corporations.

Section 184 sets out responsibility for monitoring the financial performance of county corporations and county government-linked corporations, and for functions affecting that performance; it also specifies analysing required financial and other reports, reporting to the County Executive Committee, and making recommendations to that Committee on improving performance.

The County Treasury must, within four months after each financial year ends, prepare and submit to the county assembly a consolidated report on county government involvement in county corporations, including specified financial and non-financial information; a County Executive Committee member must prepare a review every three years.

Defines “county government-linked corporation” as a county corporation in which the county government is a shareholder with less than fifty percent of the share capital of the corporation.

Section 187 establishes the Intergovernmental Budget and Economic Council, lists its membership, sets its agenda and meeting requirements, provides that the National Treasury supplies secretariat and staff, and prescribes terms of appointment for appointed members.

Vacation of office by a member

The process of sharing revenue raised by the national government between the national and county governments, and among the county governments, must follow the Constitution and this Act.

The Commission shall take into account the criteria listed in Article 203(1) of the Constitution when making its recommendations.

The Cabinet Secretary must each year, when the Budget Policy Statement is introduced, submit to Parliament three Bills prepared by the National Treasury: a Division of Revenue Bill, a County Allocation of Revenue Bill and a County Governments Additional Allocations Bill for the relevant financial year.

The National Treasury must enter into agreements with county governments to transfer conditional allocations; county executive committee members must submit such agreements to County Assemblies; County Assemblies must approve or reject within fourteen days (or agreements are deemed approved); and approved agreements must be forwarded to the Controller of Budget within seven days.

The county executive committee member must facilitate public participation on any agreement made pursuant to section 191A.

Execution of an agreement for conditional allocation: signed by an authorized person or officer.

The National Treasury must, within seven days of entering into an agreement under section 191A, submit that agreement and any related documents to the Senate and the Controller of Budget; it must also publish and publicize all such agreements.

A requisition of funds from the county revenue fund for a conditional grant must be supported by an intergovernmental agreement approved under section 191A.

A Public Sector Accounting Standards Board is established and must perform the functions set out in this Part.

Section 193 sets out composition of the Board, requires the Cabinet Secretary to appoint the chairperson and appoint members (except ex‑officio), requires nominating organisations to ensure nominees are certified accounting or finance professionals, sets member terms (three years, renewable once), requires the National Treasury to provide secretariat and staff, and permits the Board to establish its own procedures.

Section 194 assigns functions to the Public Sector Accounting Standards Board, including setting accounting and financial standards, prescribing bookkeeping and audit procedures, prescribing reporting formats, publishing standards, gazetting application dates in consultation with the Cabinet Secretary, and promoting transparency through those standards.

Members of the Board may resign in writing to the chairperson; various specified events cause a member to vacate office; remuneration for Board members is determined by the Salaries and Remuneration Commission.

Public officers are prohibited from unauthorized spending, raising revenues, entering obligations affecting government budgets, borrowing or guaranteeing obligations, and directing others to contravene the law; contraventions are offences with penalties up to two years' imprisonment or a fine up to one million shillings.

Offences of financial misconduct are described and include issuing public government securities or varying their terms and conditions.

Section 198 lists offences by public officers: taking possession of public funds or assets without lawful authority; misappropriating public funds or assets; concealing information on public finances to obtain a financial benefit for the officer or another person; and engaging in a corrupt act.

If a person is found guilty of an offence under this Act for which no other punishment is given, they are liable on conviction to up to five years' imprisonment or a fine up to ten million shillings, or both.

When the Principal Secretary suspects an offence under the Act, the Principal Secretary must report the matter to the relevant law enforcement authority so it can investigate; if evidence is found, the Principal Secretary must institute prosecution proceedings.

If the County Chief Officer suspects an offence under the Act, they must notify the County Executive Committee member for finance and take all practicable steps to report the matter to the relevant law enforcement authority.

The National Treasury may recover damages by civil proceedings from a public officer for losses for which the officer is liable under subsection (1).

Public officers are liable for losses to the county caused by their fraudulent or corrupt conduct, negligence, or acts prohibited by sections 196–198; the County Treasury may recover damages by civil proceedings for such losses.

The Cabinet Secretary may impose institutional sanctions on national government entities for specified financial and audit-related failures and may require or enact measures such as additional reporting requirements, suspension of fund reallocations, withholding funds, suspension of borrowing authority, treating liabilities as charges on future revenues, or appointing administrators.

The Cabinet Secretary may make regulations under this Act and must consult the Intergovernmental Budget and Economic Council; regulations raising money by Sukuk must specify the purpose.

Authorised persons or public officers acting under instructions of the National Treasury or County Treasury, when acting in good faith to carry out the Treasury’s powers, functions or duties under the Constitution or this Act, are not personally liable for any action, claim or demand.

Regulations may provide for participatory governance for purposes of this Act.

Repeals the Fiscal Management Act (No. 5 of 2009).

The savings and transitional provisions specified in the Second Schedule have effect.