THE IMPACT OF IPSAS ACCRUAL ACCOUNTING ON PUBLIC HOSPITALS
IPSAS Accrual Accounting

Level 4 and 5 hospitals are devolved units operated by the County Governments in Kenya. Previously the county hospitals, level 4 and 5 were presenting financial records as a single line within the IPSAS Cash template. Reporting under the Cash Accounting did not provide adequate disclosure of financial information that is relevant for decision-making.

Benefits of adoption of IPSAS accrual Accounting

This led to the adoption of IPSAS Accrual to address the above challenges. There has been increased demand for transparency on public funds by oversight authorities and members of the public in Kenya over time.

Benefits of IPSAS accrual accounting

  1. Adoption of IPSAS accrual will enhance the realization of the principles of public finance as enshrined in Article 201 of the constitution of Kenya 2010. Consequently, this will strengthen accountability and transparency in level 4&5 hospitals and improve clarity on fiscal reporting.
  2. The adoption of IPSAS will allow level 4&5 hospitals to fully disclose all financial information critical for decision-making in the healthcare sector.
  3. Level 4&5 hospitals will be required to disclose assets, liabilities, revenues and expenditures.
  4. Adopting IPSAS Accrual accounting will enhance compliance with the relevant regulatory framework as follows:
    i) Level 4&5 hospitals will prepare financial statements in the format prescribed by PSAAB in accordance with the public finance management act.
    ii) Level 4&5 hospitals shall submit financial statements to the office of the auditor general in line with the Public audit act 2015.
  5. Adoption of IPSAS Accrual will enable users to compare the performance of level 4&5 hospitals periodically and come up with necessary interventions and control mechanisms.
    i) Comparability will also be achieved for the same facilities across different accounting periods.
    ii) Comparability of different healthcare facilities at a given point in time.
  6. Adoption of IPSAAS Accrual will enhance standardization in reporting of level 4&5 health facilities.
  7. The IPSAS accrual reporting framework will provide for linkage between financial and non-financial information in level 4 and 5 healthcare facilities. This will enhance understandability by users on how funds received by hospitals are used to ensure the set objectives are met.
  8. Harmonization of reporting through IPSAS accrual and presented reporting template will allow the key stakeholders that will include the national and county governments treasuries to prepare consolidated financial statements and other information for level 4&5 hospitals.

Now that you have a grasp of the impact of IPSAS on public hospitals learn more on how our team can help you.

Comment (1)

  1. CPA Mohamed A. Ali
    October 24, 2023

    The article contains useful informative informatio

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