The document summarizes a presentation on financial statements and standards given at a regional workshop in Kenya. It discusses the Smallholder Horticulture Marketing Programme (SHoMaP) financial statements according to International Public Sector Accounting Standards (IPSAS) and Treasury guidelines. Key points included minimum disclosure requirements for accrual and cash-based financial statements, additional suggested disclosures, SHoMaP's financial statements overview, and efforts to improve audit and reporting processes through collaboration with auditors.

1. IFAD Regional Financial Management Workshop Monday 20- Wednesday 22 September 2010, Nairobi Kenya Financial Statements: Case Examples and Standards References Presentation by NJERU Michael Smallholder Horticulture Marketing Programme Loan Portfolio SDR 15,600,000 Ministry of Agriculture, Republic of Kenya mnjeru@treasury.go.ke 9/19/2010 8:55:18 PM 1

2. SHoMaP Ministry of Agriculture - Kenya SHoMaP produced their first financial statements as at 30th June 2008 and were in accordance to the IPSAS and the Treasury guidelines This session will therefore review SHoMaP reporting based on IPSAS and the Treasury guidelines. 9/19/2010 8:55:19 PM 2

3. Financial Statements: An IPSAS view Specific Objectives: Comparability to Previous periods performance Comparability of financial statements of other entities (similar?) 9/19/2010 8:55:21 PM 3

4. Why Financial Statements? A generic view Provide information about sources, allocation and uses of financial resources Provide information of how the entity financed its activities and met its cash requirements Providing aggregate information useful in evaluating the entity performance in terms of service costs, efficiency and accomplishments (procurement process?) 9/19/2010 8:55:22 PM 4

5. Why Financial Statements? A Specific (Public Sector) View Show whether resources were obtained and used in accordance with legally adopted budget Show the how resources were obtained and used. Was it in accordance with legal and contractual requirements(financing agreements), including financial limits established by appropriate legislative authorities. 9/19/2010 8:55:23 PM 5

6. Minimum Disclosure – Accrual Basis Statement of financial position (balance sheet) Statement of financial performance Statement of changes in net assets Cash flow statement A comparison of budget and actual amounts Notes to statements including significant accounting policies 9/19/2010 8:55:24 PM 6

7. Minimum Disclosure – Cash Basis Statement of cash receipts and payment. Separately identify payments made by 3rd parties on behalf of the entity (settlements made directly on behalf of entity) – {beneficiary contributions?}. ----------Beginning and closing cash balances ought to be given at the foot of this statement Accounting policies and explanatory notes Comparison of budget and actual amounts 9/19/2010 8:55:25 PM 7

8. Minimum Disclosure – Cash Basis Authorization Date Disclose date when financial statements are authorized for issue and who gave the authority. Disclose the fact whether another body has power to amend the financial statements after issuance 9/19/2010 8:55:26 PM 8

9. Additional Disclosure?: Cash Basis Suggested additional disclosures (‘modified cash basis’?) Cash Flow statement: This statement acts as your statements numerical accuracy check besides being an integral application of funds disclosure. Statement of Financial Position: Most projects are implemented on component based criteria. Should applications in these components be considered as Government investments? If yes, there is need to separately disclose them as such. This provides projects evaluation basis during reviews. 9/19/2010 8:55:26 PM 9

10. Additional Disclosure?: Cash Basis Suggested additional disclosures (‘modified cash basis’?) (iii) Statement of undrawn borrowing facility: Besides keeping the project statements at per with those of IFAD, this is a useful statement by the debt management department of the Governments 9/19/2010 8:55:27 PM 10

11. Additional Disclosure: The Treasury Guideline Treasury requires that activities in the projects special accounts be clearly shown in addition to the reconciliation of the same. This ensures that loan disbursements from the loan account are fully consolidated and accounted for. Sample a and b 9/19/2010 8:55:28 PM 11

12. Characteristic Requirement of Financial Statements Understandable Relevant for decision making and accountability Faithfully representative of entity operations Not biased reliable Complete in all material respects 9/19/2010 8:55:29 PM 12

13. SHoMaP: Financial Statements Overview Statement of Receipts and Expenditure Statement of Financial Position Statement of undrawn borrowing facility 9/19/2010 8:55:30 PM 13

15. SHoMaP endeavors an early submission and engagement with the auditors (KENAO). The auditors have continuously improved on their audit schedule through out their years of engagement. This year audit is expected to end by 31st September in comparison to November audit schedule for the previous year.

16. Audit entry and exit meetings have also been emphasized between the programme and the audit office. These meetings are geared to improve disclosure information as well as improving the financial systems.9/19/2010 8:55:31 PM 14

17. STATUTORY AUDIT: The SHoMaP story SHoMaP employs a listening ear to the Auditors advise and seeks clarification for unclear issues (collaboration and pro activeness) We think that’s why we have continuously improved on our reporting. 9/19/2010 8:55:31 PM 15

18. Finance and ProcurementThematic Group Individual projects in Kenya may face unique financial challenges during the implementation. As a ‘story’ ‘sharing session, finance and procurement thematic group made of projects finance specialists in Kenya and headed by a chairperson was formulated The group meets at least once in an year to discuss common, unique and emerging financial issues Projects learn a lot by avoiding shortcomings that have already been experienced by sister projects and by borrowing specific project strengths and strategies This also ensures uniformity of operations across the Kenyan portfolio 9/19/2010 8:55:32 PM 16

19. References IPSAS 1 IPSAS: Cash basis Ministry of finance, Accountant General Department; Kenya – Projects financial reporting IMF Government Finance Statistics Manual 2001 9/19/2010 8:55:33 PM 17

20. Thank You Je vous remercie obrigado Asante 9/19/2010 8:55:34 PM 18