Kenya’s National Treasury will start valuing assets owned by the public from July 1 marking the last part of its transition to a new financial reporting standard that recognises income after it is earned and expenses, which have already been incurred, irrespective of the actual cash movement.

This is after completion of public participation on two crucial sets of rules —the asset valuation policy and the accounting policy—which sets a legal framework for assessment of the assets.

The policies are expected to be enacted into law in the next two weeks laying the groundwork for valuation of assets owned by government ministries, departments and agencies (MDAs) on behalf of the taxpayers.

Jonah Wala, Kenya’s National Treasury’s director-in-charge of Accounting Services says the asset register in the Integrated Financial Management Information System (IFMIS) has already been concluded and the national assets and liabilities have been grouped into 17 and nine categories respectively.

IFMIS is National Treasury’s automated platform designed to streamline public financial management across national and county governments.“We finished public participation on asset valuation policy so that will be gazetted to be law. At the moment we are doing public participation for accounting policies which I think was completed on Friday (April 24). So together with the valuation policy we are going to publish them to be law. The asset valuation policy will be broader but then the accounting policy will be very specific on which assets are going to be valued,” Mr Wala told The EastAfrican in an interview.“These assets are coming in from the July 1 so that accounting officers are supposed to recognise and measure them. We have 17 categories of assets and nine categories of liabilities whose valuation which will go live from first of July.”Among these assets include huge tracts of land owned by the government, primary schools and secondary schools while liabilities include the public debt, leases, pending bills, guarantees and social benefits such as Inua Jamii.

State corporations have already shifted to accrual accounting from cash-based accounting and the assets in these corporations have already been accounted“What we are trying to bring in is the assets owned by the ministries Departments and agencies (MDAs) such as land , primary schools, secondary schools and then the county governments. These are the assets which we have not brought into the books. The other assets of state corporations are already in the books,” says Wala.

The Cabinet approved the government’s transition to accrual accounting from cash accounting on March 7, 2024 and in August the same year, the National Treasury assembled a steering committee to oversee the transition. In February last year (2025) the National Treasury approved valuation of all assets that Kenya owns as part of the move to shift the government’s operations to a new reporting plan by 2027.

Kenya has set a three-year road map (July 1 2024 to June 30 2027) to consolidate all government assets and liabilities into a single balance sheet that will show the State’s true financial position and help save on the cost of foreign borrowing.

Treasury says the policy shift will improve transparency, in the management of public debt and pending bills, and help the government negotiate cheaper loans from foreign lenders.

The idea is to provide full disclosures on public debt whose legitimacy and usage of the proceeds have become a matter of great public concern.

Under the plan which is set for full implementation in the 2027/2028 financial year, the National Treasury will record all borrowings by the State in government books and provide full disclosures on key details including linking the proceeds of the loans to particular projects.

Currently, pending bills, pension liabilities, and public debt are not recorded in government books but in separate government registers, a move that has, for instance, made it difficult to relate public debt to particular projects.

Kenya’s cash accounting system which has been in force for the last 10 years exclusively focuses on cash that has been received meaning that only transactions where cash been received are recorded in government books.

This is opposed to the accrual accounting system which paints a more comprehensive picture of the government’s financial health.

Accrual accounting recognises revenues which have already been earned and expenses which have already been incurred, irrespective of the actual cash movement.

By disclosing the assets and liabilities of the government the National Treasury says the policy shift will help bolster transparency in the management of public debt and pending bills and help the government negotiate for cheaper loans from foreign lenders to support the country’s budgetary operations.

The project whose total cost is estimated at Ksh3.1 billion ($24.03 million) is supported and supervised by the World Bank and the International Monetary Fund.

Treasury principal secretary Chris Kiptoo in a circular dated April 14 2025 also instructed the accounting officers to appoint project managers and establish cash-to-accrual transition committees at entity level to oversee the switch.

Members of the cash-to-accrual transition committees will be drawn from various departments or directorates of the implementing entities and should include accounts, finance, public works, human resources, and international audit, ICT and asset management departments.

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