State agencies chided for poor financial reporting

CEO Mr. Charles Macharia, ICPAK CEO CPA Edwin Makori, NSE CEO Geoffrey Odundo, PSASB CEO FCPA Fredrick Riaga, and CMA Director Market Operations Mr. Abubakar Hassan during the launch of the 20th Edition of FiRe Award 2022. [File, Standard]

The government is planning to sanction public entities yet to fully comply with international best practices in financial reporting.

Public Sector Accounting Standards Board (PSASB) chief executive Fredrick Riaga yesterday said that a significant number of state agencies risked removal from office of their leaders and withholding of funds as per the Public Finance Management Act (PFMA) of 2012.

"The PFM Act requires public sector entities to report on the achievement of their predetermined objectives. The public sector is service oriented and therefore reporting on service delivery parameters becomes imperative," said Riaga.

This comes as the deadline for new financial reporting guidelines nears including those supporting the shift from cash to accrual accounting as well as integrated financial reporting as contemplated in the International Public Sector Accounting Standards (IPSAS) and International Financial Reporting Standards (IFRS).

Riaga made the remarks during the launch of the annual Financial Reporting (Fire) award call for entries jointly promoted by PSASB, the Capital Markets Authority (CMA), Nairobi Securities Exchange (NSE) as well as the Retirement Benefits Authority (RBA).

ICPAK Chief Executive Edwin Makori noted the awards happening for the twenty-second year in a row are seeking to reward organisations that have distinguished themselves with outstanding management practices to champion innovation, bring out the best in employees, and deliver superior performance in their financial reporting according to the best practices on the international scene.

CMA Chief Executive Wycliffe Shammiah noted that the need for integrated reporting (capturing financial and non-financial information) is rapidly shifting from a nice-to-have to a must-have requirement for listed entities.

"Within the capital markets, promoting excellence in financial reporting is fundamental in positioning Kenya as an investment hub in the region," he added.