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TOPIC 1

INTRODUCTION TO PUBLIC FINANCIAL MANAGEMENT

QUESTION 1

April 2024 Question One B

Highlight FOUR documents that are prepared in the process of county government budget preparation clearly indicating their timelines as envisaged by the provisions of Public Financial Management Act. (4 marks)

Answer

Documents that are prepared in the process of county government budget preparation

County Fiscal Strategy Paper (CFSP): This document outlines the county’s budget priorities and resource envelope for the medium term. It is prepared by April 30th of the preceding financial year.
County Budget Review and Outlook Paper (CBROP): This paper reviews the county’s economic and fiscal performance and presents the county’s budget proposals for the upcoming financial year. The County Treasury prepares the CBROP by November 30th of the preceding financial year.
Budget Estimates (BE): These are detailed proposals for spending by each county department for the upcoming financial year. Sector Committees within the county government submit their Budget Estimates by October 31st of the preceding financial year.
County Assembly Budget Bill (CABB): This bill formalizes the county’s budget proposals and requires approval by the County Assembly by April 30th of the financial year.

QUESTION 2

December 2023 Question One B

The Cabinet Secretary for the National Treasury or the state officer responsible for finance in your country is mandated by law to manage the national budget process. One of the task is to issue circulars for setting guidelines to be followed to all government entities.

With reference to the above statement, highlight FOUR contents of such a circular. (4 marks)

Answer

Contents of the circular issued by Cabinet Secretary

A schedule for preparation of the budget indicating key dates by which various exercises are to be completed
The procedures for the review and projection of revenues and expenditures
Key policy areas and issues that are to be taken into consideration when preparing the budget
Procedures setting out the manner in which members of the public shall participate in the budget process;
The format in which budget information and documents shall be submitted; and
Any other information that, in the opinion of the Cabinet Secretary, may assist the budget process.

QUESTION 3

August 2023 Question One B

The societal needs of most developing countries are mostly greater than the resources available to the government. The countries must therefore develop a public financial management framework to act as a tool for guiding formulation and implementation of public policies so as to improve the welfare of the citizens.

In relation to the above statement, outline FOUR principles of public financial management regulations that govern all aspects of public finance in your country. (4 marks)

Answer

Principles of public financial management regulations that govern all aspects of public finance in Kenya

According to Article 201 of the Constitution of Kenya, The following principles shall guide all aspects of public finance in the Republic:-

(a) There shall be openness and accountability, including public participation in financial matters;

(b) The public finance system shall promote an equitable society, and in particular—

The burden of taxation shall be shared fairly;
Revenue raised nationally shall be shared equitably among national and county governments; and
Expenditure shall promote the equitable development of the country, including by making special provision for marginalised groups and areas;

(c) The burdens and benefits of the use of resources and public borrowing shall be shared equitably between present and future generations;

(d) Public money shall be used in a prudent and responsible way; and

(e) Financial management shall be responsible, and fiscal reporting shall be clear.

QUESTION 4

April 2023 Question One C

Identify FIVE matters that are included in the budget estimates submitted to the County Assemblies by the County Executive Committee members for finance in respect of the budget for every financial year. (5 marks)

Answer

Under Section 130(b) Public Financial Management Act 2012 the following matters are included in the budget estimates submitted to the County Assemblies by the County Executive Committee members for finance in respect of the budget for every financial year

A list of all county government entities that are to receive funds appropriated from the budget of the county government;
Estimates of revenue projected from the Equalisation Fund over the medium term;
All revenue allocations from the national government over the medium term, including conditional and unconditional grants;
All other estimated revenue by broad economic classification;
All estimated expenditure, by Vote, and by programme, clearly identifying both recurrent and development expenditures;
Information regarding loans made to the county government, including an estimate of principal, interest and other charges to be paid by that county government in the financial year in respect of those loans;

QUESTION 5

December 2022 Question One C

Outline SIX contents that should be included in development plan prepared by every county government as specified under Section 126 (1) of the Public Finance Management Act, 2012. (6 marks)

Answer

Contents that should be included in development plan prepared by every county government as specified under Section 126 (1) of the Public Finance Management Act, 2012

Strategic priorities for the medium term that reflect the county government’s priorities and plans
A description of how the county government is responding to changes in the financial and economic environment
Programmes to be delivered with details for each programme of:
- The strategic priorities to which the programme will contribute;
- The services or goods to be provided
- Measurable indicators of performance where feasible and
The budget allocated to the programme
Payments to be made on behalf of the county government, including details of any grants, benefits and subsidies that are to be paid
A description of significant capital developments
A detailed description of proposals with respect to the development of physical, intellectual, human and other resources of the county, including measurable indicators where those are feasible
A summary budget in the format required by regulations

END

Revision is the process by which you remind yourself of the material you have studied during your course, clarify any problem areas and bring your knowledge to a state where you can retrieve it and present it in a way that will satisfy the examiners. The paragraph herein-above captures the essence of revision. It is implicit that revision is nothing short of “fine tuning” the knowledge acquired in the course or making it more digestible for usage in an examination. Revision is an integral part of examination preparation. It is not a substitute for a sustained preparation earlier in the course. The syllabus for Public Finance and Taxation is expansive and cannot be “hastily crammed” for purposes of the examination. A deliberate attempt must be made to study and appreciate the basic principles and concepts and their application. Revision must therefore be seen as a final stage in the study of any topic. Its utility is therefore undermined if earlier stages have not been completed. As an integral part of the course revision must be commenced shortly after the commencement of the course. Initially this could take the form of a review of what has been covered in a week or two not a month as this may be inordinately long. Ideally, revision is necessary after every topic. Coverage of the topics must be incisive and indiscriminate. The main purpose of this booklet is to help candidates preparing for the Public Finance and Taxation KASNEB examination to make the best use of the last few weeks before the examination.