Kenya’s private sector is always cited as the perfect example of how to conduct business transparently by promotion of meticulous financial reporting and corporate governance practices.
The sector has continuously affirmed that high standards in financial reporting as part of corporate governance practices are fundamental in positioning Kenya as the pre-eminent regional financing and investment hub. It is also held that this is the only way to attract investors, through a firm assurance that their investments will not be diverted.
In the United States, private companies are not required to disclose financial information to the public. This is in stark contrast to public entities, which have to publicly file quarterly financial statements.
The Financial Reporting (FiRe) Awards, established 18 years ago in Kenya, are aimed at promoting integrated reporting through enhancing accountability, transparency and integrity in compliance with appropriate financial reporting framework and disclosures on governance, social and environmental reporting by private, public and other entities domiciled in East Africa.
The promoters of the Award are the Public Sector Accounting Standards Board (PSASB), Capital Markets Authority (CMA), Nairobi Securities Exchange (NSE) and the Institute of Certified Public Accountants of Kenya (ICPAK).
This year’s FiRe envisages inclusion of ministries, departments and agencies, state corporations, semi-autonomous government agencies and the county governments.
With audit reports for all the counties released, more than 600 public entities, cutting across the national and county governments, are expected to participate in this year’s FiRe.
In his Madaraka Day speech, President Uhuru Kenyatta directed the National Treasury to clear all pending bills by suppliers to the national and county governments that did not have audit queries. But less than a week later, it emerged that a significant amount of the bills was fictitious, as was revealed by the Auditor-General.
That points to the importance of sound financial reporting for public entities if they are to earn the confidence of investors, donors and other partners. With no sound financial reporting mechanisms, even implementation of the grand ‘Big Four Agenda’ and its eventual envisaged benefits will remain a mirage.
While the attainment of the larger development agenda for the country in the next four years is principally hinged on the success of the Big Four, government entities have to take cognisance of the fact that well-prepared financial statements provide information that the public use to evaluate progress and fiscal performance.
In other words, it is an effective monitoring tool for implementation of activities, programmes and projects undertaken towards attainment of a bigger development goal.
Should public sector entities embrace open financial reporting and stick to the international best practices, then achievement of the Big Four will become a reality. This is because of the enhanced accountability, transparency and integrity in compliance with International Financial Reporting Standards (IFRS) and other disclosures on governance, social and environmental reporting.
Mr Mwangi is the principal corporate communications officer, Public Sector Accounting Standards Board (PSASB). [email protected]
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