Single account nightmare for banks as State starts audit

The Treasury has launched an audit of the bank accounts held by national and county government entities to pave the way for the rollout of a Treasury Single Account (TSA) that the Cabinet approved in January.

The exercise is targeting government ministries, agencies and departments (MDAs), corporations and semi-autonomous government agencies (SAGAs), public funds and projects, county governments and their entities.

In a letter dated March 26, Treasury Principal Secretary Chris Kiptoo directed the entities to provide details of the accounts, including the name of the bank, branch, account number and the identities of the signatories.

Other details include the currency designation of the account, the balance as of February 29, 2024 and whether the account is active or dormant.

According to the Treasury, public entities held more than 33,000 bank accounts locally as at January 2023.

Read: Single account a game-changer

“As part of the implementation process, the National Treasury is updating the record of all the bank accounts held by public entities, at National and County Governments levels, pursuant to Section 28 (6) of the PFM Act 2012,” said the PS in the letter.

“The purpose of this communication therefore is to request you to submit information on all bank accounts held by yourselves, as at close of business on February 29, 2024…. Please provide the information by April 15, 2024.”

A TSA is either one or a set of interlinked accounts that a government handles for the financial transactions of its MDAs.

Kenya has opted for a hybrid model that allows entities to maintain separate accounts that are linked to a central account. All funds in these accounts must, however, be transferred to the primary TSA account at the end of each day.

Number of accounts

Identifying the number of accounts the entities hold and the money is the first step to operationalising the TSA, which was mooted a decade ago as one of the solutions to the leakage of public resources.

Although the Treasury promised in budget statements since 2016 to put in place the TSA, it did not take off, revealing the amount of legal and regulatory work required to underpin a successful transition.

It would also require investment in a system to interlink the various government agencies, oversight bodies and the Treasury to allow for real-time payments between accounts.

In January this year, the Cabinet finally gave its nod to implement the system, eyeing the billions in commercial bank deposits by the national government and other public sector entities.

By June 2023, these accounts held Sh509.8 billion, which was equivalent to 10.4 percent of the banking sector’s total deposits in the period.

Read: How will the Treasury single account work?

Through the consolidated account, the government hopes to gain full visibility and control of public finances to improve the speed and transparency of budget execution.

Cash management

In addition to efficiency in cash management, a TSA also cuts administrative costs by eliminating the various fees and charges.

Implementation of a TSA will also help the government to deal with the headache of pending bills, given that agencies will be required to pay suppliers and contractors within 24 hours of receiving funds from the Exchequer to eliminate idle cash in bank accounts.

The Treasury has adopted a phased approach over a three-year period for implementation of the TSA, starting with MDAs.

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