Treasury Upgrades IFMIS as State Shifts from Cash to Accrual Accounting

The National Treasury has stepped up plans to transition Kenya from a cash-based accounting system to an accrual-based system in a move aimed at improving transparency and accountability in public finances.

The shift is expected to give a clearer and more complete picture of the country’s financial position.

Under the current cash-based system, transactions are recorded only when money is received or paid out. The new accrual-based approach will record financial activities when they occur, even if payment has not yet been made, allowing the government to better track assets, liabilities and pending obligations.

Treasury Principal Secretary Chris Kiptoo shared an update on Thursday, saying the reform is progressing under a structured roadmap.

“The transition to accrual accounting is a critical reform that strengthens transparency, accountability, and comprehensive financial reporting, in line with the Public Finance Management Act, 2012,” Kiptoo said.

He highlighted the role of the Integrated Financial Management Information System (IFMIS), noting that it is being upgraded to support the transition and ensure accurate and timely reporting across government departments.

“I received an update from the technical working group on the status of the IFMIS Readiness Assessment, including our preparedness for transitioning from cash-based to accrual-based reporting. The engagement highlighted the rationale for the reform, ongoing IFMIS re-engineering initiatives, and the system enhancements required to support the transition,” he explained.

Kiptoo added that the system will serve as the main platform for managing accrual-based financial data across the government.

“The IFMIS system will be re-engineered to accommodate all financial management reforms and serve as the single source of truth for accrual-based accounting across the Government,” he said.

The reform, approved by Cabinet in March 2024, is being rolled out in phases with full adoption expected by June 30, 2027. Public institutions are required to align with International Public Sector Accounting Standards (IPSAS) as part of the transition.

Once fully implemented, the new system is expected to improve financial reporting, strengthen oversight and align Kenya’s public finance management with global standards.