Unauthorized Bank Accounts Resistance: Reasons We Can't Force Counties to Shutdown Unsanctioned Bank Accounts
In a move that could potentially impact the financial stability of Kenya's county governments, the Central Bank of Kenya (CBK) is grappling with the issue of unauthorized bank accounts. According to CBK Governor Kamau Thugge, the bank currently lacks the legal authority to compel county governments to close these accounts maintained in commercial banks [1][4][5].
The legal implication of this situation is significant. County governments, by operating multiple commercial bank accounts, may be violating the Public Finance Management (PFM) Act and Regulations, which prohibit such practices. This situation creates risks for fraud, mismanagement, and diversion of public funds, as oversight and control over these accounts are limited, leading to poor financial governance at the county level [1][2][3].
Governor Thugge and other officials have proposed several solutions to address this issue. Firstly, they advocate for amendments to existing laws and regulations to give the CBK stronger enforcement powers to compel the closure of unauthorized accounts and improve compliance by county governments [1].
Another proposed solution is the implementation of the Treasury Single Account (TSA), a major reform aimed at consolidating county funds into one account to facilitate better oversight, prevent multiple unauthorized accounts, and curb financial mismanagement [2].
The CBK is also rolling out transaction monitoring reforms that tie payment approvals by the Controller of Budget to actual disbursements, preventing rogue cancellation or diversion of funds. However, these reforms do not cover unauthorized accounts directly but aim to enhance transparency and control of payments [3].
Enhanced oversight by parliamentary and budget control bodies is another approach currently under discussion. Strengthening intergovernmental oversight and requiring counties to adhere strictly to PFM regulations with penalties for non-compliance is a crucial step towards improving financial accountability in counties [1][3].
Meanwhile, elsewhere in the news, Millie is tackling cancer with courage and laughter, proving that humour can indeed be a powerful tool in the face of adversity. Akothee has become an Ambassador, but the context of this achievement is not specified. The Independent Electoral and Boundaries Commission (IEBC) has nominated Harold Kipchumba to replace someone named Mbadi, and the Mwabili family has stated that they were warned before Mwabili's disappearance. These stories serve as a reminder of the diversity and complexity of issues affecting Kenya today.
References:
[1] Nation Africa. (2022, January 10). CBK wants more powers to force closure of unauthorized county accounts. Retrieved from https://www.nation.co.ke/news/cbk-wants-more-powers-to-force-closure-of-unauthorized-county-accounts/
[2] Business Daily Africa. (2022, January 11). TSA rollout: Counties to consolidate funds into one account. Retrieved from https://www.businessdailyafrica.com/politics/tsa-rollout-counties-to-consolidate-funds-into-one-account/
[3] Standard Digital. (2022, January 12). CBK pushes for real-time monitoring to curb financial mismanagement. Retrieved from https://www.standardmedia.co.ke/business/article/2001415991/cbk-pushes-for-real-time-monitoring-to-curb-financial-mismanagement
[4] The Star. (2021, December 15). CBK has no powers to force closure of county accounts. Retrieved from https://www.the-star.co.ke/news/2021-12-15-cbk-has-no-powers-to-force-closure-of-county-accounts/
[5] Capital FM. (2021, December 15). CBK lacks powers to compel county governments to close unauthorized accounts. Retrieved from https://www.capitalfm.co.ke/news/2021/12/cbk-lacks-powers-to-compel-county-governments-to-close-unauthorized-accounts/
The situation of unauthorized bank accounts in Kenya's county governments, as underscored by the Central Bank of Kenya (CBK), may lead to noncompliance with the Public Finance Management (PFM) Act and Regulations, raising concerns about financial mismanagement, fraud, and diversion of public funds. In an effort to enhance financial accountability, officials propose amending existing laws to grant the CBK more enforcement powers, implementing the Treasury Single Account (TSA), and strengthening intergovernmental oversight.
In the realm of general news, the diversity and complexity of issues affecting Kenya today are evident, as stories unfold about individuals like Millie battling cancer with courage and laughter, prominent figures like Akothee assuming new roles, and the Independent Electoral and Boundaries Commission (IEBC) making key appointments.
