The Treasury is set to redesign its Integrated Financial Management System (Ifmis) as it steps up measures for a shift to a new accounting system for public payments and expenditures.
In a latest development, the Treasury is recruiting a service firm to redesign the current Ifmis to accommodate new processes and more users.
The Treasury said the upgrade would also eliminate technology risk exposure associated with aged infrastructure, as well as cut down recurring system maintenance costs.
“It is anticipated a big increase in the number of system users once the accrual accounting system is adopted due to additional modules that will be incorporated to firm up the accrual accounting process and therefore, this will lead to an increase in capacity requirements for both computing and storage,” the Treasury said.
Ifmis is the system public agencies use for budget activities such as procurement of goods and services. Counties and agencies are also required to upload information regarding payments to contractors and suppliers in the system.
Treasury said the current Ifmis infrastructure reached end of life in May 2019, noting that aged infrastructure past the last ship date attracts a 23 percent surcharge on annual support.
“Once the equipment is past the last ship date, upgrades are only available for a very limited time extension,” it said.
The government is currently transitioning from the cash-based to the accrual accounting system, in a bid to enhance efficiency in the management of public funds.
Under accrual-based accounting, agencies will record revenues and expenditures at the point when they are earned or incurred, as opposed to the present case where they record when cash is actually received or paid.
Treasury has previously exuded hope that the accrual-based system will ease the management of pending bills and address delays in tax remittances.
“The move to accrual accounting is expected to significantly enhance transparency and accountability by ensuring that all financial obligations and resources are properly recorded and reported,” the National Assembly’s Finance and Planning Committee said last month.
The government has projected that the upgrade of the system will require at least Sh800 million.
Once effected, Kenya will join a host of countries that have undergone the transition including the United Kingdom, Canada, Australia, New Zealand, and Tanzania, among others.
According to the International Public Sector Financial Accountability Index, over 120 jurisdictions worldwide are expected to apply accrual accounting by 2030, up from 49 jurisdictions in 2020.
