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ROLES AND FUNCTIONS OF TREASURY

The stability of the countrys economy for sustainable development is anchored


on the pillar of a stable macroeconomic framework. The National treasury will
therefore be responsible for developing and managing the macroeconomic
policies of the country. This ministry will also be responsible for supervision and
monitoring of the constitutional, legal and responsible management of the
economy and public financial operations.
The National Treasury will also be responsible for providing oversight of all
financial institutions including Cooperatives and Saccos dealing with financial
functions.
Institutions:
Group Personal Accidents
IFMIS
Central Bank of Kenya
Internal Audit Department
PPPUnit
Kenya Revenue Authority
PFMR
PPOA
Business Licensing E-registry
Insurance Regulatory Authority
Competition Authority of Kenya

Agricultural Finance Corporation


Capital Markets Authority
CBK Board
Consolidated Bank of Kenya
Deposit Protection Fund Board
Industrial Development Bank
Kenya Competition Authority
Kenya Institute of Supplies Management
Kenya National Assurance Co.
Kenya Post Office Savings Bank
Kenya Reinsurance Corporation
Kenya Trade Network Agency
Local Authorities Provident Fund
National Bank of Kenya
Policy Holders Compensation Fund
Privatization Commission
Public Enterprises (shareholding)
Public Sector Accounting Standards Board
Retirement Benefits Authority

Functions:
Anti-Money Laundering
Bilateral and Multilateral Financial Relations
Competition Policy Management
Custodian of National Government Assets and Property
Design and Prescription of National and County Government Financial
Management System and Standards
Development of Kenya as an International Finance Centre
Economic Policy Analysis and Management
Financial and Economic Affairs
Financial Institutions Oversight
Financial Sector Analysis and Management
Insurance Policy and Regulation
Management of Public Procurement and Disposal
National Employment Policy Management
National Pensions Policy Management
Preparation of National Budget and Management of Governments
Finances
Promotion of Economic and Financial Governance
Public Debt Management

Public Finance Management

Sources of government revenue


Taxes

The most important source of revenue for the government that is


gotten by citizens paying for some of the goods and services they get
and acquire from the public. The tax can be directly or indirectly
imposed on the people being taxed. The rate of taxation in the country
will keep changing depending on the reasons provoking the
government to charge people taxes.

Fees

Refers to the amounts received from the various direct services that
are offered by the public. The services are provided by the local
authority farms a good example being the parking fees charged daily
in the city centers. The government should however, avoid charging
high price sfor commodities to continue staying and offering better
services that can be affordable by many of its citizens.

Prices

The money collected by the central or local authority firms due to the
many number of commercial activities that take place in the country.
The above include railway fee and telephone services. The government
should also be elastic so as to collect money from people when
demand shows that need be for collecting money from it.

Fines and Penalties

The event will take place hen the respective individuals continually fail
to cope up with the rules provided by the nation hence they go ahead
to pay up for their mistakes. Citizens will be expected to pay heavy
fines to the government when they continually break rules and affect
innocent parties by their unhealthy and inhuman behaviors making it
hard for them to cope up with progress.

State Property

Some property belongs to the government and can be used as a


channel for making more money in return. The income that comes
from such projects is considered to be public revenue.

Public Investment Policy Management


Public Investments Oversight
Public Resources Mobilization

Roles and functions of Kenya revenue


authority
Role of KRA in the economy

To administer and to enforce written laws or specified provisions of written laws pertaining to
assessment, collection and accounting for all revenues in accordance with these laws.

Advise on matters pertaining to the administration or and the collection of revenue under written
laws.

Enhance efficiency and effectiveness of tax administration by eliminating Bureaucracy, Procurement,


Promotion, Training and Discipline.

Eliminate tax evasion by simplifying and streamlining procedures and improving tax payer service
and education thereby increasing the rate of compliance.

Promote professionalism and eradicate corruption amongst K.R.A. employee by paying adequate
salaries that enables the institution to attract and retain competent professionals of integrity and
sound ethical morals.

Restore Economic Independence and Sovereign pride of Kenya by eventually eliminating the
perennial budget deficits by creating organizational structures that maximize revenue collection.

Ensure protection of local Industries and facilitate economic growth through effective administration
of tax laws relating to trade.

Ensure effective allocation of scarce resources in the economy by effectively enforcing tax policies
thereby sending the desired incentives and shift signals throughout the country.

Facilitate distribution of income in socially acceptable ways by effectively enforcing tax laws
affecting income in various ways.

Facilitate economic stability and moderate cyclic fluctuations in the economy by providing effective
tax administration as an implementation instrument of the fiscal and stabilization policies.

Be a 'watchdog' for the Government agencies ( such as Ministries of Health, Finance, etc ) by
controlling exit and entry points to the country to ensure that prohibited and illegal goods do not
pass through Kenyan borders.

he Kenya revenue authority is responsible for all the operations that govern
the paying and collection of taxes in the country. It is good that the
government gets the right type of people to work in the organization so as to
get better ways of improving the tax system in the country. The following list
comprises some of the major duties of the KRA.

Collection of taxes
The body is responsible for tax collection through a variety of procedures.
The body has employed several people to cater for the process. Money is
collected in the various business institutions and continues to be important
for the government to achieve stable growth in its economic sector. Tax
collection is the greatest source of revenue for the country.

Training Officials
New officials in the organization are well trained by the body to have well
and various techniques on how they can operate and earn money for the
country. Well trained officials make it easy for the country to achieve stable
economic growth hence benefiting the tax system. Good experts are found
by getting the right type of training upon joining a particular firm.

Determining taxation rates


The body is responsible for determining the amount of taxes to be paid by
each body in the country. When the government notes some fluctuation in
business, it will try to get the help of KRA officials and calculate the rates
that can apply to various business operations and find a stable and
convenient way of having a flexible tax system.

Allocation of licenses
Businesses cannot operate without licenses and hence they need to get
reliable licenses from the body to be allowed to get and be allowed to
venture into business. It is important for one to have the document to be
allowed to carry out trade and earn money by have legal businesses.

Types of borrowing
1. External borrowing: Money borrowed by a country from foreign
(usually European, North American, or Japanese)
lenders. Interest on this debt must be paid in the currency in
which the loan was made. Thus the borrowing country may have
to export its goods to the lender's country to earn that currency.
The infamous 'debt crisis' occurs when some weak economy is
unable to do so, or can only do it at unacceptably high social and
environmental costs.
2. iNternal borrowing: Internal debt or domestic debt is the part of the total
government debt in a country that is owed to lenders within the
country. Internal debt's complement is external debt. Commercial banks, other
financial institutions
3. Grants: a sum of money given by an organization, especially a government, for
a particular purpose.

Roles and functions of central bank of Kenya

. SERVICES TO THE GOVERNMENT


(a)

Manage the Treasury Exchequer Account

The Central Bank of Kenya is the banker to the government and is mandated
by law to maintain the Exchequer Account. The Exchequer Account is
where all government revenue is deposited before being spent. This account
is then used to fund government ministries recurrent and development
votes, and constitutional offices to the extent of voted amount by
parliament.
(b)

Manage Government Ministries and Departments Accounts

The Central Bank of Kenya maintains various accounts for Government


ministries which include: Recurrent accounts Development accounts Projects
accounts Donor funds accounts Treasury accounts Public entities accounts
i.e., Parastatals Government departments that hold accounts in the Central
Bank for purposes of funding by the Exchequer Accounts include the
Judiciary, Public Prosecution, Kenya Anti-Corruption Commission (KACC),
Independent Electoral and Boundaries Commission (IEBC), Teachers Service
Commission (TSC), Public Service Commission of Kenya, Commission on
Revenue Allocation (CRA), Truth, Justice and Reconciliation Commission
(TJRC) and Parliamentary Service Commission (PSC).
(c)

Government payment through G-Pay System

The G-pay is an electronic payment system used by the government and


CBK clients to effect payments. To facilitate the electronic payments, Central
Bank is linked to Ministry of Finance via fiber cable then the Government
ministries and departments are linked to the Ministry of Finance platform. All
government payments from accounts held in Central Bank are made through
an electronics payment method known as Real Time Gross Settlement
System (RTGS) irrespective of amount involved whether a small or large
payment.
From the government side, payments are processed through an electronic
payment system known as IFMIS (Integrated Financial Management
Information System) that is interfaced with the Central Banks GPay system to facilitate payments directly into customers accounts in local
commercial banks.
(d)

Government inter-account funds movement

This service enables account holders to transfer funds from one account to
another account in the Central Bank systems without having to instruct the
bank to effect the transfer using the G-pay system. The inter-account
transfer of funds is real time and unlike the RTGS, the instruction is effected
immediately the customer sends the instruction to the bank.
(e)

Confirmation of balances in customer accounts

The Central Bank of Kenya customer can obtain confirmation on their


account balances upon request. Independent confirmation of balances is also
given to auditors of customers directly on customer request. Special Project
financiers or Bilateral Donors may also request confirmation of their Account
balances directly.
2. SERVICE TO KENYA REVENUE AUTHORITY
The Central Bank of Kenya holds main tax collection accounts for Kenya
Revenue Authority (KRA) who is the principal collector of tax revenue for the

Government of Kenya. KRA also holds collection accounts in selected


commercial banks on agency basis.
All tax collection by agency banks must be remitted to Central Bank the
same day it is collected or as soon as possible. Management of Kenya
Revenue Authority Accounts The Central Bank holds the following categories
of accounts for Kenya Revenue Authority:
o Tax Collection Accounts These accounts contain all main tax
collection accounts
o Tax Refunds Accounts These accounts are used by KRA to make
refunds to tax payers who either have overpaid tax, or have paid while
they are exempted from paying.
o Agency Collection Accounts the KRA Act allows the authority to act
as an agent for body corporate, including parastatals to collect revenue
on their behalf for purpose of achieving economies of scale.
For this reason a number of government agencies have appointed KRA their
agent for collecting revenue due to them. Periodically, balances in the tax
collection accounts are given to Treasury to enable them make timely
decisions on revenue allocations for voted expenditure.
3. SERVICES TO THE COMMERCIAL BANKS
The Central Bank provides the following services to Commercial Banks:o Maintenance of Clearing and Settlement Accounts for Kenya Shillings &
Domestic Foreign Currency Cheques
o Provision of Specimen Signature Mandate cards for nomination and
authorization of A/C Authorizers & Signatories
o Intra-bank Lending Facility These are loans backed by Governments
Securities Provision of Overnight Lending - to enable commercial banks
to borrow cash to meet Cash Ratio Requirements (CRR)
o Confirmation of balances in their accounts in our books T24
Information on Cash Reserves Ratios. Commercial Banks are required
to maintain statutory Daily Cash Ratio of 3% and Monthly 5.25% of
customer deposits
o Provision of Daily Money Market Report - These are Interbank Rates
for the Banking Industry Housing of Kenya Bankers Associations
Automated Clearing House (ACH) Housing of Kenya Bankers
Associations Disaster Recovery Site (DRS)
4. SERVICES TO THE EAST AFRICAN COMMUNITY CENTRAL BANKS
The Central Bank of Kenya provides the following services for the EAC
Central banks:-

o Maintenance of E.A.C. Central Banks A/Cs Facilitating of payment


instructions
o Confirmation of balances in their accounts in our books - T24
o Provision of Specimen Signature Mandate cards for nomination and
authorization of A/C
5. SERVICES TO FOREIGN CORRESPONDENT BANKS
The Central Bank maintenance of Accounts, does verification of transaction
documents and confirmation of balances in their accounts in our books - T24
for foreign correspondent banks.
What is the role of Internal Audit?

The Institute of Internal Auditors (IIA) defines Internal Auditing as:


An independent, objective assurance and consulting activity designed to add value and improve an
organizations operations. The internal audit activity helps an organization accomplish its objectives by
bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management,
control and governance processes.
Consistent with its mission, the Internal Audit Department provides management with information,
appraisals, recommendations, and counsel regarding the activities examined and other significant issues.
The department executes an approved audit plan and will perform the following tasks in accordance with its
overall strategy:

Verify the existence of assets and recommend proper safeguards for their protection;

Evaluate the adequacy of the system of internal controls;

Recommend improvements in controls;

Assess compliance with policies and procedures and sound business practices;

Assess compliance with state and federal laws and contractual obligations.

Review operations/programs to ascertain whether results are consistent with established objectives
and whether the operations/programs are being carried out as planned;
Investigate reported occurrences of fraud, embezzlement, theft, waste, etc.

What is the internal audit?


Internal audit is a dynamic profession involved in helping organisations achieve their
objectives. It is concerned with evaluating and improving the effectiveness of risk
management, control and governance processes in an organisation.

What is accounting and auditing?


Auditing refers to a systematic and independent examination of books, accounts,
documents and vouchers of an organization to ascertain how far the financial
statements present a true and fair view of the concern.

What is the difference between internal and external auditors?

Internal auditors will examine issues related to company business practices and risks,
while external auditors examine the financial records and issue an opinion regarding
the financial statements of the company. Internal audits are conducted throughout the
year, while external auditors conduct a single annual audit.
Public Accounts Committee
The Public Accounts Committee is established pursuant to the provisions of S.O. No. 205. It consists of a chairperson
and not more than sixteen other Members.
The Public Accounts Committee is responsible for the examination of the accounts showing the appropriations of the
sum voted by the House to meet the public expenditure and of such other accounts laid before the House as the
Committee may think fit.
The Public Accounts Committee constituted immediately following the general election shall serve for a period of
three calendar years and that constituted thereafter shall serve for the remainder of the parliamentary term.
The Public Accounts Committee elects a chairperson and vice-chairperson from amongst its members.
Public Investments Committee
The Public Investments Committee is constituted pursuant to the provisions of S.O. No 206 and is responsible for the
examination of the working of the public investments.
It consists of a chairperson and not more than sixteen other Members.
The Public Investments Committee elects a chairperson and vice-chairperson from amongst its members.
The Public Investments Committee constituted immediately following the general elections shall serve for a period of
three calendar years and that constituted thereafter shall serve for the remainder of the parliamentary term.
The functions of the Committee shall be to

examine the reports and accounts of the public investments;


examine the reports, if any, of the Auditor General on the public investments; and
examine, in the context of the autonomy and efficiency of the public investments, whether the affairs of the
public investments, are being managed in accordance with sound financial or business principles and prudent
commercial practices.
The Committee is excluded from dealing with the following: -

matters of major Government policy as distinct from business or commercial functions of the public
investments;
matters of day-to-day administration; and,
matters for the consideration of which machinery is established by any special statute under which a
particular public investment is established.
Budget and Appropriations Committee
The Budget and Appropriations Committee is established pursuant to the provisions of S.O. No. 207. It consists of a
chairperson, and not more than fifty other Members.
(3) The functions of the Committee shall be to-

investigate, inquire into and report on all matters related to coordination, control and monitoring of the of the
national budget,
discuss and review the estimates and make recommendations to the House;
examine the Budget Policy Statement presented to the House;
examine Bills related to the national budget, including Appropriations Bills; and

evaluate tax estimates, economic and budgetary policies and programmes with direct budget outlays.
The Budget Committee constituted by the House immediately following the general election shall serve for a period of
three calendar years and that constituted thereafter shall serve for the remainder of the parliamentary term.
Seventeen members of the Budget Committee shall constitute a quorum.
The Committee shall invite chairpersons of all Departmental Committees to make presentations during the
consideration of the budget.

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