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' � ±у RS 'С� � � � Г'� •у'1.Vj �' � у - а. � . г � C,�,Q � �G о cn . � � rt .� � W н � � � � q � U �"7 ✓� -�': ,� ': j � � N т � сб "� F i� ' ..� . ,v-� U 'д сб ¢, � � -б '� С � r. � у.�, N � г'� с�С � V� � `n 'U и � � � � ^� ..`,� "� � � � � а� � °� U • � °� о °� с � .� _ � '�% � А " �= ; :� �,iy. � .-- +-, � (i, � � �, � Е U � � и }' +� �;, � .Г, �--� +.� и +-+ р �,C � С3 л � �Уач',;� � . � � � � ,� '�-� .�., �" � `� � � � и +�.� � � � � �Q ��,�ь ° � � ° � °_ � о ° с� ° а р F-+ °: � о� �, � �. � � Р�-� С� Н р й У�"; • W С� СЛ W Р-� Р-i W L'-+ �'-а � � �, � � ���, �w THE NATIONAL TREASURY Reports and Financial Statements For the year ended June 30, 2018 XI. SIGNIFICANT ACCOUNTING POLICIES The principle accounting policies adopted in the preparation of these financial statements are set out below: 1. Statement of Compliance and Basis of Preparation The financial statements have been prepared in accordance with Cash-basis International Public Sector Accounting Standards (IPSAS) as prescribed by the Public Sector Accounting Standards Board (PSASB) and set out in the accounting policy note below. This cash basis of accounting has been supplemented with accounting for; a) receivables that include imprests and salary advances and b) payables that include deposits and retentions. The financial statements comply with and conform to the form of presentation prescribed by the PSASB. The accounting policies adopted have been consistently applied to all the years presented. 2. Reporting Entity The financial statements are for The National Treasury. The financial statements encompass the reporting entity as specified under section 81 of the PFM Act 2012 and also comprise of the following development projects implemented by the entity: (See Annex 5) 3. Reporting Currency The financial statements are presented in Kenya Shillings (KShs), which is the functional and reporting currency of the Government and all values are rounded to the nearest Kenya Shilling. 4. Significant Accounting Policies The accounting policies set out in this section have been consistently applied by the Entity for all the yean presented. a) Recognition of Receipts The Entity recognises all receipts from the various sources when the event occurs and the related cash has actually been received by the Entity. . Tax Receipts Tax receipts are recognized in the books of accounts when cash is received. Cash is considered a received when notification of tax remittance is received. } { 弋r { 厂 } 「－ } } { 1 1 写 } { l THE NATIONAL TREASURY keports and Financial Statements -For the year ended June 30, 2018 SIGNIFICANT ACCOUNTING POLICIES a Transfers from the Exchequer Transfers from the exchequer are recognized in the books of accounts when cash is received. Cash is cons d notified to the receivi idered as received when payment instruction is issued to the bank an ing entity. External Assistance External assistance is received through grants and loans from multilateral and bilateral developmeni partners. Grants and loans shall be recognized in the books of accounts when cash is received. Cash is considered as received when a payment advice is received by the recipient entity or by the beneficiary. In case of grant/loan in kind, such grants are recorded upon receipt of the grant item and upon determination of the value. The date of the transaction is the value date indicated on the payment advice, A similar recognition criteria is applied for loans received in the form of a direct payment. During the year ended 3 01h June 2018, there were no instances of non-compliance with tenns and conditions which have resulted in cancellation of external assistance loans. Other receipts These include Appropriation-m-Aid and relates to receipts such as proceeds from disposal of assets an' sale of tender documents. These are recognised in the financial statements the time associated cash i,, received. b) Recognition of payments The Entity recog ses all payments when the event occurs and the related cash has actually been paid out by the Entity. Compensation of Employees Salaries and wages, allowances, statutory contribution for employees ar e recognized in the period wher the compensation is paid. 0 Use of Goods and Services Goods and services are recognized as payments in the period when the goods/services are paid for. Sucl expenses, if not paid during the period where goods/services are consumed, shall be disclosed a! pending bills. Interest on Borrowino, Borrowing costs that include interest are recognized as payment 'n the period in which they are paid for. 24 * - i i- v r THE NATIONAL TREASURY R,ep6rts and Financial Statements For the year ended June 30, 2018 SIGNIFICANT ACCOUNTING POLICIES Repayment of Borrowing (Principal Amount) The repayment of principal amount of borrowing is recognized as payment in the period in which the repayment is made. * Acquisition of Fixed Assets The payment on acquisition of property plant and equipment items is not capitalized. The cost of acquisition and proceeds from disposal of these items are treated as payments and receipts items respectively. Where an asset is acquired in a non-exchange transaction for nil or nominal consideration and the fair value of the asset can be reliably established, a contra transaction is recorded as receipt and as a payment. A fixed asset register is maintained by each public entity and a summary provided for purposes of consolidation. This summary is disclosed as an annexure to the financial statements. 5. In-kind contributions In-kind contributions are donations that are made to the Entity in the form of actual goods and/or services rather than in money or cash terms. These donations may include vehicles, equipment or personnel services. Where the financial value received for in-kind contributions can be reliably determined, the Entity includes such value in the statement of receipts and payments both as receipts and as payments in equal and opposite amounts; otherwise, the contribution is not recorded. 6. Third Party Payments Included in the receipts and payments, are payments made on its behalf to third parties in form of loans and grants. These payments do not constitute cash receipts and payments and are disclosed in the payment to third parties in the statement of receipts and payments as proceeds from foreign borrowings. 7. Cash and Cash Equivalents Cash and cash equivalents comprise cash on hand and cash at bank, short-term deposits on call and highly liquid investments with an original maturity of three months or less, which are readily convertible to known amounts of cash and are subject to insignificant risk of changes in value. Bank account balances include amounts held at the Central Bank of Kenya and at various commercial banks at the end of the financial year. Restriction on Cash Restricted cash represents amounts that are limited/restricted from being used to settle a liability for at leasi twelve months after the reporting period. This cash is limited for direct use as required by stipulation. Amounts maintained in deposit bank accounts are restricted for use in refunding third party deposits. As at 30th June 2018, this amounted to Kshs 146,481,242 compared to Kshs 98,634,492 in prior period as indicated on note 15. There were no other restrictions on cash during the year. 25 . ( ' (. � 1 f 1_ i г � i i j i З ! г 1 � � I THE NATIONAL TREASURY k6ports and Financial Statements For the year ended June 30, 2018 SIGNIFICANT ACCOUNTING POLICIES J. Accounts Receivable For the purposes of these financial statements, imprests and advances to authorised public officers and/or institutions which were not s=endered or accounted for at the end of the financial year are treated as receivables. This is in recognition of the government practice where the imprest payments are recognized as payments when fully accounted for by the imprest or AIE holders. This is an enhancement to the cash accounting policy. Other accounts receivables are disclosed in the financial statements. 9. Accounts Payable For the purposes of these financial statements, deposits and retentions held on behalf of third parties have been recognized on an accrual basis (as accounts payables). This is in recognition of the government practice ol retaining a portion of contracted services and works pending fulfilment of obligations by the contractor and to hold deposits on behalf of third par-ties. This is an enhancement to the cash accounting policy adopted by National Gove=ent Mi'stries and Agencies. Other liabilities including pending bills are disclosed in the financial statements. 10. Pending Bills Pending bills consist of unpaid liabilities at the end of the financial year arising from contracted goods oi ID ZD services during the year or in past years. As pending bills do not involve the payment of cash 'n the reportino period, they recorded as 'memorandum' or 'off-balance' items to provide a sense of the overall net cash position of the Entity at the end of the year. When the pendig bills are finally settled, such payments are included in the Statement of Receipts and Payments in the year in which the payments axe made. 11. Budget The budget is developed on a comparable accounting basis (cash basis except for imprest and deposits, which are accounted for on an accrual basis), the same accounts classification basis, and for the same period as the financial statements. The original budget was approved by Parliament on June 2017 for the period I't July 2017 to 3 01h June 2018 as required by Law and there were two supplementary adjustments to the original budgel during the year. A comparison of the actual performance against the comparable budget for the financial year under review ha,, been included in the financial statements. Government Development Projects are budgeted for under the MDAs but receive budgeted funds as transfen and account for them separately. These transfers are recognised as inter-entity transfers. 12. Comparative Figures Where necessary, comparative figures for the previous financial year have been amended or reconfigured tc conform to the required changes in presentation. 26 f � = Г- l г � �- : ;. 1 1 � 1 i , 1 7 I t ' 1 THE NATIONAL TREASURY Reports and Financial Statements For the year ended June 30, 2018 SIGNIFICANT ACCOUNTING POLICIES I , Subsequent Events here have been no events subsequent to the financial year end with a significant on the financial statements for the year ended Oth June 2018. 14. Errors Material prior period errors shall be corrected retrospectively in the first set of financial statements authorized for issue after their discovery by: 1. restating the comparative amounts for prior period(s) presented in which the error occurred; or ii. If the error occurred before the earliest prior period presented, restating the opening balances of assets, liabilities and net assets/equity for the earliest prior period presented. During the year, errors that have been corrected are disclosed under note 26 explaining the nature and amounts. 15. Related Party Transactions Related party relationships are a normal feature of commerce. Specific information with regards to related party transactions is included in the disclosure notes. 27 L. THEIfNAIlUiNA-L IX-EA,'UKY Reports and Financial Statements For the year ended June 30, 2018 -I. NOTES TO THE FINANCIAL STATEMENTS 1 PROCEEDS FROM DOMESTIC AND FOREIGN GRANTS Amt Name of Donor Foreign received b Currency 2017-2018 2016-2017 Kshs Kshs Grants Received from Bilateral Donors (Foreign Governments) Grants from Danida - 3,420,000 Global Fund-HIV/AIDS 6,468,270,965 6,309,081,877 Global Fund and -TB 292,598,006 505,177,238 Global Fund and -Malaria 2,427,478,341 933,213,937 Technical Support Programme 48,832,274 23,332,433 Study and Capacity Building 4,472,100 - Totals 9,241,651,686 7,774,225,484 2 EXCHQUER RELEASES DESCRIPTION RECURRENT DEVELOPMENT TOTALS TOTALS 2017-2018 2017-2018 2017-2018 2016-2017 Kshs Kshs Kshs Kshs Total Exchequer Releases for quarter 1 5,187,917,703 1,575,780,771 6,763,698,474 7,967,156,200 Total Exchequer Releases for quarter 2 6,501,838,000 2,770,069,500 9,271,907,500 9,838,891,400 Total Exchequer Releases for quarter 3 5,247,800,000 2,282,130,735 7,529,930,735 7,157,348,597 Total Exchequer Releases for quarter 4 22,528,027,200 2,861,939,765 25,389,966,965 27,933,078,011 Total 39,465,582,903 9,489,920,771 48,955,503,674 52,896,474,028 28 r- THE NATIONAL TREASURY Reports and Financial Statements For the year ended June 30, 2018 VOTES TO THE FINANCIAL STATEMENTS (Continued) 3 PROCEEDS FROM FOREIGN BORROWINGS 2017-2018 2016-2017 Kshs Kshs Foreign Borrowing - Draw-downs Through Exchequer Foreign Borrowing - Direct Payments 391,414,899 702,453,080 Foreign Currency and Foreign Deposits Total 391,414,899 702,453,080 4 OTHER REVENUES 2017-2018 2016-2017 Kshs Kshs Other Receipts Not Classified Elsewhere( Annex XIX) N/A Total ___________ ___________ 5 COMPENSATION OF EMPLOYEES 2017-2018 2016-2017 Kshs Kshs Basic salaries of permanent employees 1,406,449,487 1,345,997,337 Basic wages of temporary employees 129,995,454 143,776,966 Personal allowances paid as part of salary 772,367,672 683,901,162 Total 2,308,812,613 2,173,675,464 29 � 1 �- � � �_. I I 4 ; 1 i 1 г 1 1 ! THE TNA'_1`1(_KNALTFEA6UKY P.qports and Financial Statements F r the year ended June 30, 2018 NOTES TO THE FINANCIAL STATEMENTS (Continued) 6 USE OF GOODS AND SERVICES 2017-2018 2016-2017 Kshs Kshs Utilities, supplies and services 120,216,825 132,186,166 -Communication, supplies and services 26,390,451 59,146,954 Domestic travel and subsistence 103,364,523 104,850,944 Foreign travel and subsistence 31,415,083 91,349,140 -Printing, advertising and infon-nation supplies & services 1,528,302 1,990,044 Rentals of produced assets 53,089,394 40,676,125 Training expenses 180,839,621 155,364,565 Hospitality supplies and services 210,697,113 398,007,376 Insurance costs 422,593,844 1,072,725,926 Specialized materials and -services 8,663,943,446 71458,489,316 Office and general supplies and services 28,848,721 107,797,594 Other operating expenses 10,475,401,554 12,031,669,830 -Routine maintenance - vehicles and other transport equipment 33,921,857 42,652,814 -Routine maintenance - other assets 12,883,308 47,137,096 Exchange Rate Losses Fuel,oil and lubricants 31,861,233 26,730,673 Total 20,396,995,275 21,770,774,561 7 SUBSIDIES Description 2017-2018 2016-2017 Kshs Kshs Agricultural Finance Corporation 1, I-D7,078,335 500,000,000 300,000,000 250,000,000 rT-otal 1,137,078,335 1,050,000,000 30 v THE NATIONAL TREASURY RPports and Financial Statements For the year ended June 30, 2018 NOTES TO THE FINANCIAL STATEMENTS (Continued) 8 GRANTS AND TRANSFERS TO OTHER GOVERNMENT ENTITIES Description 2017-2018 2016-2017 Kshs Kshs Transfers to National Government entities (SCOA Codes 2630100, 2630200, 2640400, 2640500, 2649900, 2820100, 2820200, 2820300) 28,070,205,786 See ANNEX XIX 1 TOTAL 28,852,301,349 28,070,205,786 9 OTHER GRANTS AND TRANSFERS Explanation 2017-2018 2016-2017 Kshs Kshs Membership dues and subscriptions to international organizations Membership dues and subscriptions to international organizations( Continued) 48,779,790.00 African Capacity Building Foundation 42,333,304 41,200,000 Shelter Afrique 355,000,000 1,000,000,000 United Nations Development Fund 20,059,268 Common Wealth 45,094,633 ESAAMILG 6,946,725 African Economic Research Consortium 36,542,000 MEFMI 81,363,501 IBRD 542,000,000 Total 1,069,476,595 1,149,842,626 31 i � I -. � i- I � I 1 ь i г i � 1 I � г THE NA-310NALTREAS UK Y -P.epo.rts and Financial Statements For the year ended June 30, 2018 NOTES TO THE FINANCIAL STATEMENTS (Continued) 10 ACQUISITION OF ASSETS Non Financial Assets 2017-2018 2016-2017 Kshs Kshs Construction of Buildings 37,000,000 83,088,238 Refurbishment of Buildings 102,625,495 274,168,513 Construction and Civil Works Overhaul and Refurbishment of Construction and Civil Works 29,784,377 20,080,750 Purchase of Vehicles and Other Transport Equipment 60,220,000 99,542,550 Purchase of Household Fumiture and Institutional Equipment 252,400 Purchase of Office Fumiture and General Equipment 66,734,575 140,566,533 Purchase of ICT Eg ipment, Software and Other ICT Assets Purchase of Specialized Plant, Equipment and Machinery 448,698,433 252,377,378 Research, Studies, Project Preparation, Design & Supervision 647,191,753 681,154,420 Sub-total 1,392,254,633 1,551,230,782 Financial Assets Domestic Public Non-Financial Enterprises 1,100,656,025 2,597,785,681 Domestic Public Financial Institutions 1,279,642,441 600,000,000 Foreign financial Institutions operating Abroad 883,500,363 1,782,536,43 8 Sub-total 3,263,798,829 4,980,3223119 Total 4,656,053,462 6,531,552,901 32 � „ l l- г- 1 � � � г 1 1 � . , t 1 � I � t THE NATIONAL TREASURY _77) kPports and Financial Statements For the year ended June 30, 2018 NOTES TO THE FINANCL4L STATEMENTS (Continued) 11. SOCIAL SECURITY BENEFITS Explanation 2017-2018 2016-2017 Kshs Kshs Government pension and retirement benefits NIL NIL Social security benefits in cash and in kind NIL NEL Employer Social Benefits in cash and in kind NIL NEL Social Benefits to the aged(above 70 years) NIL NH, Total NU_ NIL 12. OTHER EXPENSES 2017-2018 2016-2017 Kshs Kshs Budget Reserves NIL NIL Civil Contingency Reserves NH, NIL Other expenses NIL NIL Total NIL NIL 13A: Bank Accounts Amou Indicate nt in whether bank recurrent, accou Developmen Exc rate nt' t, deposit if in Name of Bank, Account curre e.t.c foreign No. & currency nc currency 2017-2018 2016-2017 Kshs Kshs MINIS TRY OF Recurrent 309,116,798 FINANCE OLD AIC 309,116,798 NATIONAL TRE,4SURY Recurrent (Annex xii) 1,007,235 219,493,671 MINIS TRY OF Development -32 -FINANCE OLD AIC 10,677,332 10,677,-) NA TION,L Development TREASURY(Annex xiib) _20,436,76 _ 266,991,907 MINIS TRY OF Deposit FINANCE OLD AIC 677,758,270 677,758,270 NA TIOIVAL Deposit _TREASURY(Annex xiic) __371,762,523 297,208,815 Total 1,390,758,926 1,781,246,794 3 3 �__. ,. { �: � �- i � ; i г � ' _. t ! . ' ! THE NATIONALTREASURY ',Pports and Financial Statements 'For the year ended June 30, 2018 NOTES TO THE FINANCIAL STATEMENTS (Continued) 13B: CASH IN EIAND 2017-2018 2016-2017 Kshs Kshs CASH BOOK RECURRENT 741,626 1,490,696_ CASH BOOK OLD/AC DEPOSIT Total 741,626 1,490,696 Cash in hand should also be analysed as follows: 2017-2018 2016-2017 Kshs Kshs Location I National Treasury Cash Office 741,626 1,490,696 Total 741,626 1,490,696 14: ACCOUNTS RECEIVABLE Description 2017-2018 2016-2017 Kshs Kshs Advance to NIDAs and Projects (Annex viii) 818,256,370 637,937,358 Govemment linprests (Annex ix) 1,136,445 65,256 Salary advances (Annex x) 677,826 393,843 District suspense (Annex xi) 53,555 163,537 Total 820,124,196 638,559,994 15. ACCOUNTS PAYABLE Description 2017-2018 2016-2017 Kshs Kshs Deposits (Annex XIV a-j) 146,481,242 98,634,493 Recur-rent (Annex X-V a-c) 7,913,637 10,601,866 Development(Annex XVI a-b) 541,716 7,096,650 Total 154,936,594 1 [Provide short appropriate explanations as necessag 34 �-.. i � 1 д г , #_ . � 1 ;, �. у_ . � г i г I � � г L ; ; THE NATIONAL TREASURY Peports and Financial Statements F r & year ended June 30, 2018 NOTES TO THE FINANCL4L STATEMENTS (Continued) FUND BALANCE BROUGHT FORWARD Description 2017-2018 2016-20 Kshs Ks Bank accounts 1,781,246,794 2,267,285,7 Cash in hand 1,490,6961 1,946.1 Accounts Receivables 63 8,559,994 592,37873) Accounts Payables (116,333,009) (1,078,469,5( Total 2,304,964,475 1,783,140,7 17. PRIOR YEAR ADJUSTMENTS Description of the error 2017-2018 2016-2017 Kshs Kshs Adjustments on receivables (Annex XV111) 416,128,952 105,277,500 TOTALS 416,128,952 105,277,500 3 5 1 1 � I l^ 1- �� ; 1 i ч � .� � г ! THE NATIONAL TREASURY Rq.po,rts and Financial Statements For the year ended June 30, 2018 NOTES TO THE FINANCIAL STAT&WENTS (Continued) 16. RELATED PARTY DISCLOSURES '?-elated party disclosure is encouraged under non-mandatory section of the Cash Basis IPSAS. fhe following comprise of related parties to the (The National Treasury) Key management personnel that include the Cabinet Secretaries and Accounting Officers Other Ministries Departments and Agencies and Development Projects; County Governments; and State Corporations and Semi-Autonomous Government Agencies. Related party transactions: 2017/2018 2016/2017 Kshs Kshs Key Management compensation 2,308,812,613) 2,173,675,464 Transfers to the Other Ministries Departments and Agencies 28,852,301,349 28,070,205,786 Transfers to other State Corporations and Semi-Autonomous Government Agencies Transfers to Government Development Projects 19,518,158,236 17,616,873,234 Transfers from other Ministries Departments and Agencies 48,955,503,674 52,896,474,028 36 � ._ � + й /, 1 г � i �. � � ; { � г i �. ; 1' 1 � 1 � I XI -I-lj I I.-& X A 'k-li - Ieporfs and Financial Statements or the year ended June 30, 2018 VOTES TO THE FINANCL4L STATEMENTS (Continued) 18. OTHER LNrPORTANT DISCLOSURES 18.1: PENDING ACCOUNTS PAYABLE (See Annex 1) Description 2017-2018 2016-2017 Kshs Kshs Construction of buildings Construction of civil works Supply of goods Supply of services Annex 1 563,474,302.95 80,450,956.55 i i � i ; ' + Э f � Iв. . ' i ,