PAPER NO. 6: ELEMENTS OF PUBLIC FINANCE AND ADMINISTRATION
GENERAL OBJECTIVE
This paper is intended to equip the candidate with the requisite knowledge, skills and attitudes to apply the principles of public finance and administration and perform basic tax computations.
LEARNING OUTCOMES
A candidate who passes this paper should be able to:
- Explain the nature and operations of public financial management (PFM)
- Apply basic principles of public finance and administration
- Comply with basic legislative provisions in procurement of supplies and services
- Compute simple taxes and prepare basic tax returns for individuals and small entities
CONTENT
Role of various arms of Government
- The Executive: The President, Deputy President, Cabinet, Director of Public Prosecutions, Principal Secretaries, Chief Administrative Secretaries
- The Judiciary
- The Legislature (including oversight committees on public finance)
- National and County Governments and their relationship
- Constitutional Commissions and Independent Offices
- Public Service Commission (PSC) and County public service
Legal framework on public financial management
- General overview of public financial management as envisaged by the Constitution
- Overview of the Public Financial Management Act (elementary knowledge only):
- The National Treasury: Responsibilities, powers, relationship with County Treasuries, management of the Consolidated Fund, Contingencies Fund, Equalisation Fund, other funds
- County governments: County treasuries, Revenue funds, the County Executive Committee members for Finance
- Budget preparation process at national and county levels
- Role of other officers at national and county levels; accounting officers, receivers and collectors of revenue
- Annual financial reports at national and county levels (nature and content only, excluding preparation)
- Public Sector Accounting Standards Board (PSASB) (establishment and functions only)
Role of other institutions in PFM
- The Auditor General
- Controller of Budget
- Council of Governors
- Kenya Revenue Authority (KRA) – structure, mandate and functions
- Other State Corporations
- Commission on Revenue Allocation (CRA)
- Public Debt Management office
Supply chain management in public entities (elementary knowledge)
- Definitions and terminologies
- General overview of Public Procurement and Disposal (PPD) Act:
- Bodies involved in the regulation of public procurement and asset disposal
- Responsibilities of County governments in public procurement and asset disposal
- Compliance by procuring entities; Role of accounting officers, procurement committees
- General procurement principles
- Methods of procurement
- Offences and penalties
- The concept of e-procurement
Introduction to taxation
- Purposes of taxation
- Principles of an optimal tax system
- Single versus multiple tax systems
- Classification of taxes and tax rates
- Types of taxes
Tax computations (basic level)
– Taxable and non taxable persons
- Sources of taxable income
- Tax on employment income, PAYE, personal reliefs, other reliefs
- Business income:
- Sole proprietorships
- Partnerships (excluding realignments and conversions)
- Incorporated entities
- NGOs
- Farming income
- Types of capital deductions (without computations)
Administration of income tax
- Types of assessments and returns
- Notices, objections, appeals and relief of mistake
- Appellant bodies
- Collection, recovery and refund of taxes
- Offences, fines, penalties and interest
- Application of ICT in taxation: iTax, other tax management systems
Administration of value added tax (basic level)
- Registration and deregistration of businesses for VAT
- Taxable and non taxable supplies
- Privileged persons and institutions
- VAT rates and computations
- VAT records
- VAT returns
- Remission, rebate and refund of VAT
- Rights and obligations of VAT registered person
- Offences, fines, penalties and interest
- Enforcement
- Objection and appeals: Requirements and procedure
Emerging issues and trends