Kenya making strides in streamlining financial reporting standards

Kenya is on the path to significant changes in its public sector governance, with a focus on streamlining financial reporting standards. The Institute of Certified Public Accountants of Kenya (ICPAK) has been advocating for good governance, particularly through the adoption of open financial reporting standards. In a recent interview with CNBC Africa, CPA Philip Kakai, National Chairman of ICPAK, shared insights on the country's progress and the key areas of focus to stabilize the economy. Kenya has made substantial strides in enhancing financial transparency and accountability. One noteworthy development is the approval of accrual accounting by the cabinet, moving away from cash accounting. This shift is expected to address challenges related to pending bills and improve financial management. Additionally, efforts are underway to implement the treasury single account, consolidating cash holdings to provide a clearer overview of the country's financial position. Moreover, the government has embraced digital payment solutions through the e-citizen platform, aiming to streamline service delivery and enhance efficiency. Despite economic challenges like currency fluctuations, notably the strengthening of the shilling, Kenya anticipates a positive impact on various sectors. The appreciation of the shilling is projected to reduce living costs, including fuel and inflation rates, while also decreasing foreign currency-denominated debt levels. In terms of economic stabilization from an accounting perspective, Kakai highlighted key priority areas. Combatting corruption remains a crucial focus, as integrity is fundamental to a robust financial system. Effectively managing the country's substantial debt burden is another pressing concern. Kakai emphasized the importance of reducing domestic borrowing to alleviate pressure on the industry and stimulate economic growth. Furthermore, revisiting the tax regime to support disposable income growth is imperative. Kakai pointed out that heavy taxation on gross income limits disposable income, hindering economic expansion. By optimizing expenditure and focusing on essential sectors like agriculture, Kenya aims to steer the economy towards a more sustainable path. Enhancing the financial systems within the government, particularly the Integrated Financial Management Information System (IFMIS), is crucial. Transitioning to accrual accounting allows for better matching of income and expenses, providing a comprehensive view of government liabilities. Kakai stressed the significance of implementing audit reports to identify areas of weakness and improve the overall financial and accounting systems in Kenya. Kenya's commitment to advancing financial reporting standards underscores its dedication to promoting transparency, accountability, and good governance. With ongoing reforms and strategic initiatives, the country is poised to strengthen its economic foundation and pave the way for sustainable growth and development.