The Public Finance Management (Amendment) ( No. 3) Bill ( National Assembly Bills No. 44 of 2024)

REPUBLIC OFKENYA

PARLIAMENT

NATIONALASSEMBLYBILLS (No. 44 of 2024)

THEPUBLICFINANCEMANAGEMENT (AMENDMENT) (NO. 3) BILL, 2024

(A Bill published in the Kenya Gazette Supplement No. 189 (National Assembly Bills No. 44 of 1st November, 2024 and passed by the National Assembly, with amendments, on 28th November, 2024)

N.A./B/No.44/2024

THEPUBLICFINANCEMANAGEMENT (AMENDMENT)(NO.3)BILL,2024

ABillfor

ANACTofParliament toamendthePublicFinance ManagementActtoprovideforfinancial managementinthetransferoffunctionsbetween thetwolevelsofgovernmentpursuanttoArticle 187oftheConstitutionandforconnectedpurposes

ENACTEDby theParliament ofKenya asfollows-

PARTIPRELIMINARYPROVISIONS

• 1.ThisActmaybecitedasthePublicFinance Management(Amendment) (No.3) Act,2024.
• 2.Section94ofthePublicFinanceManagementAct is amendedinsubsection(1)(a) byinsertingthefollowing newsub-paragraphimmediatelyaftersubparagraph(ii)
• (ia)has persistentlydelayedor failed toremit employeesalariesstatutorydeductionsincludingtaxes, pension,social health insurance and cooperative societies deductions;
• 3.Section109of thePublicFinanceManagement Actisamendedbyinsertingthefollowingnew subsectionsimmediatelyaftersubsection(7)—
• (7A)TheControllerofBudgetshallnotapproveany withdrawalsfromtheCountyRevenueFundif
• (a)acountygovernmenthascommittedpersistent materialbreachasdefinedinsection96ofthis Act;
• (b)haspersistentlydelayedorfailedtoremit statutory deductionsincluding taxes,pension contributions,social health insurance,and cooperativesocietydeductions.
• (7B) A county shall, every quarter, submit the followingadditionaldocumentstotheControllerof Budget and theNational Treasury—
• (a)a statement of statutory deductions status;

Short title.

Amendmentof section94of Cap412.

Amendmentof section109of Cap412A.

• (b)astatement onthecountygovernment's progress in implementing thepreviousyear's plan for paying its outstanding statutory deductions;
• ()a certificationofpayment ofprevious statutory deductionsissuedbytherelevantstatutory institutions;and
• (d)a statementof thecountygovernment'splan forrepaying the statutorydeductionswhich shallbeaccompanied byan agreementsigned by therelevantstatutoryinstitution accepting therepaymentplan.
• 4.Section117of thePublicFinanceManagement Actisamended
• (a) in subsection (l) by deleting the expression "by the28"February"appearingimmediately after the words "county assembly,"and substituting therefor the expression"by the 7th March."
• (b)in subsection (6)by deleting the word "fourteen"appearing immediatelyafter the words"not laterthan"and substituting therefore the word"twenty-one."
• 5.ThePublicFinance Management Actis amended byinsertingthefollowingnewPartimmediatelyafter section186—

PARTIVA-FINANCIALMANAGEMENTIN TRANSFEROFFUNCTIONS

Interpretationof this Part.

186A.In this Part,unless the context otherwiserequires-

Cap.265F.

Application of the Part to transfer of functions.

"transferagreement" means the agreementon transferordelegation ofpowers,functions orcompetencies asprovidedforunder section26of the Intergovernmental RelationsAct.

186B.ThisPartappliestotransferof functions asprovidedfor underArticle 187oftheConstitutionandsections24to Amendmentof section117Cap 412A.

Insertion ofnew Part into Cap. 412A.

Cap.265F.

Financing transferred functions.

Costoftransferred functions.

28oftheIntergovernmentalRelations Act.

186C.(1)Subject to theConstitution, thisActand anyotherActofParliament, andwith theapprovalof theNational Assemblyandtheconcernedcounty assembly,transferred functions shall continue tobefunded from previous sources as contained in the approved budgetsofthetransferringlevelof government.

(2)Wherethereisneedforadditional financialresourcesforatransferred function—

• (a)bothpartiesshall consult and agree ontheneedfortheadditional financial resources; and
• (b) the transferring level of governmentshall provide the additionalfinancialresources.

(3)The process of approvaland disbursementof theadditionalfinancial resources in subsection (2) shall be providedforinthetransferagreement betweenthetwolevelsofgovernment.

186D.(1) The cost of the transferred functions shallbe basedon the costing frameworkprovidedinthenationaland countygovernmentbudgetmanuals.

(2)The costof transferred functions as determinedunder subsection(1)shall formthebasisfortheadditionalfinancial resourcesforthetransferredfunctions.

(3)The additional financial resources fortransferredfunctions

• (a)inthecaseof a county governmentto the national government for a financial year, shallbeprovidedasaseparate

Managementof assets and liabilities.

schedulein thebudgetestimates, identifyingallocationsfromthe countygovernmentrevenueand clearlyspecifyingappropriationsin-aid,additionalallocations and proceeds from loans and grants; and

• (b)inthecaseofthe national government to a county government for a financial year, shallbeprovidedasaseparate schedulein thebudgetestimates, identifyingallocationsfromthe nationalgovernmentrevenueand clearly specifying appropriationsin-aid,additional allocations and proceeds from loans and grants.
• (4)The allocations under subsection (3)shallbeincludedinthebudget estimatesofboththecountyandnational governmentandshallbesubmitted to Parliamentandtherespectivecounty assemblyforapproval.

186E.(1)A transferagreementbetween the two levels of government shall,in additiontotherequirementsundersection 26of theIntergovernmental Relations Act,include a provision on acquisition, disposalandtransferofassetsand liabilities.

• (2)Where assets are acquired and liabilitiesincurredinthedurationofa transferofafunctiontoeitherlevelof government, the level of government receivingthefunctionsshall—
• (a)keep,maintain and update the registerofassets andliabilitiesin accordancewiththeapplicable law;and
• (b) takeappropriatemeasures to ensurethatattheendofthe

Cashflow projectionsin relationto the transferred functions.

Quarterly and annualfinancialand non-financial reports.

transfer period,the assets and liabilitiesaretransferredtothe transferringlevelofgovernment.

(3)Theprocess of transfer ofassets and liabilitiesupon the expiryof the transferperiodshallbeinaccordancewith thetransfer agreementorasmaybe prescribed by the Cabinet Secretary in regulations.

186F.(1) The transferring level of governmentshallpreparecashflow projections based onrevenueprojections fromvarioussourcesofrevenue.

(2) Thetransferring levelof governmentshallpublish andpublicizethe cashflowprojectionswithinfifteendaysof thecommencementofthetransferperiod.

186G.(1) The accounting officer ina countygovernment,incaseofatransfer of afunctionfromthenationalgovernmentto a county government,shall prepare and submitquarterlyandannualfinancialand non-financial reports tothe Controller of Budget;the National Treasuryandthe responsiblenationalgovernmententity.

(2)The accounting officer inthe nationalgovernmentincaseofatransferof a functionfrom a countygovernment to the nationalgovernmentshall prepare and submitquarterlyand annual financial and non-financial reportsto the Controllerof Budget; the County Treasury; and the responsiblecountygovernmententity.

(3) The copies of the reports prepared under sub sections (1)and (2) shall be submittedtotheSenate,the National Assembly,the Auditor Generaland the respectivecountyassemblyinaccordance with theAct.

I certifythat thisprintedimpressionis a truecopy of theBill passed by theNationalAssemblyonthe28thNovember,2024

EndorsedforpresentationtotheSenateinaccordancewiththe provisionsofStandingOrder142of theNationalAssemblyStanding Orders

etamala

Speakerey

AheNatlonalAssembly