Government embarks on accrual accounting reform to boost transparency

Godfrey Isiye -PCO

The government is transitioning from cash-based to accrual accounting, marking a historic shift in public financial management aimed at enhancing transparency, accountability, and long-term fiscal sustainability.

The Principal Secretary for the National Treasury, Dr. Chris Kiptoo, in a statement delivered on his behalf during the opening of a high-level training course for senior public finance officers in Mombasa, Dr. Kiptoo described the reform as a bold and necessary step to address long-standing weaknesses in how the government accounts for public resources.

“We are not just updating systems, we are transforming how Kenya understands, allocates, and reports on public resources. This is about building public trust and making government finances more transparent and accountable,” he said.

The accrual accounting reform, approved by Cabinet in March 2024 and formalized through Gazette Notice No. 11033, will be rolled out across national government ministries, counties, and state corporations over the next three years.

It involves the adoption of International Public Sector Accounting Standards (IPSAS), which require recording all financial transactions, commitments, liabilities, and assets regardless of when cash is exchanged.

Under the current cash-based system, transactions are only recorded when money physically changes hands, often masking unpaid bills, hidden liabilities, and unaccounted-for public assets. This has contributed to persistent issues such as ballooning pending bills and ghost projects.

“Under accrual accounting, if a supplier delivers desks to a school, that invoice is immediately recorded as a liability. This makes planning more predictable and improves the timeliness of payments,” Dr. Kiptoo’s noted.

The Mombasa training, facilitated by the African Association of Accountants General (AAAG), kick-starts the implementation phase of the reform.

The team of experts is led by Dr. Mac_Effort Adadey of Ghana and includes seasoned practitioners from countries that have already transitioned to accrual accounting, such as Ghana, Rwanda and Tanzania.

The curriculum is designed to provide both strategic orientation and practical tools for successful implementation. Kenya’s delegation is led by Mr. Jonah Wala, Director of Accounting Services at the National Treasury and chair of the AAAG technical committee.

The reform builds on earlier milestones, including a national roadmap, a revised chart of accounts, and a comprehensive national training strategy. Dr. Kiptoo, who chairs the National Steering Committee, said five technical teams have already been established to address systems integration, legal frameworks, capacity building, financial reporting, and change management.

AAAG CEO Mr. Fredrick Riaga underscored the impact of the reform, noting that better visibility into government finances will not only improve budgeting and reduce corruption but also enhance service delivery and public trust.

While acknowledging the challenges ahead such as data quality and system upgrades, Dr. Kiptoo expressed confidence in the government’s readiness. He noted that funding has already been secured under the Integrated Financial Management Information System (IFMIS) to support the rollout.

Kenya now joins a growing list of countries embracing modern financial reporting standards, aligning itself with global expectations from development partners, investors, and credit rating agencies.

“This reform is not just for today; it is an investment in the future. We are laying the foundation for a public finance system that is transparent, credible, and resilient for generations to come,” Dr. Kiptoo said.