The National Treasury will lose authority of the Public Sector Accounting Standards Board (PSASB), which ensures independent reviews on the quality of accounting and financial reporting by public enterprises if parliament passes proposed changes to the law.
The Public Finance Management (Amendment)Bill,2022 by Butula MP Joseph Oyula seeks to make the PSASB a corporate entity with a secretariat run by independently appointed Full-time employees.
“The establishment of the public Sector Accounting board as a corporation will give independence and allow for the employment of the staff of the board,” the proposed law reads in part.
Over the course of the year, the Auditor-office General’s has found a number of financial scandals, some of which have been tied to poor accounting and financial bookkeeping at state-owned businesses.
Although the PSASB was established to ensure that state agencies adhere to minimal accounting and financial book-keeping requirements, its job has been hampered by a lack of independence and proper budget, putting billions of dollars in taxpayer cash at risk.
Funding for the PSASB would be decided directly by Parliament under the proposed bill, eliminating the current dilemma of inconsistent treasury funding.
The board’s chief executive would be chosen through a competitive process and would be hired for a four-year term that could be renewed.
“Further, the bill provides for the establishment and implementation of a framework for accrual accounting in the government.
East African countries such as Rwanda and Tanzania have already implemented accrual accounting,” the Bill stated.
Accounting standards ensure that the financial statements of numerous public companies are similar, according to analysts.
Since all entities follow the same rules, accounting standards make the financial statements credible and allow for better economic decisions based on accurate and consistent information.