Asset and Liability Management represents one of three core, non-payroll processes that combine into “budget execution”. As with exchequer and cash management, and procurement, asset and liability management is a year-round activity, working as an integrated life-cycle rather than individual steps or processes. The cycle covers four phases (including planning) – Planning, Acquisition, Operations & Maintenance and Disposal. Every department manages its non-financial and financial assets and relevant liabilities, with Finance and Economic Planning providing technical support.
Upstream: Budget Estimates, Budget Appropriation, Budget Implementation Circular, Work Plan, Procurement Plan, Cash Flow Forecast, Commitment Control
Downstream: Quarterly Reports, Annual Report(s)
Under the planning phase (Phase One), assets forecasts are linked to broader county long and medium-term plans, capital (development) and operating (recurrent) budgets and asset management plans with respect to registries and other forms of record keeping. Asset planning must reflect the effectiveness, efficiency and economy in the commitment of country resources. The second phase (Acquisition) is principled around (a) ensuring all acquisition is based on approved procurement plans and budgets (b) donated assets must be approved prior to acceptance (c) all acquired assets must be evaluated for future operational costs and the effect they might have on future tariffs and taxes (d) no development or improvements can be made on assets before transfer of ownership is completed and (e) all PPP related decisions require consultation with the National Treasury for technical guidance and financial implications, especially with respect to potential contingent liabilities. Operations and maintenance is the third phase. Important policy principles that guide this phase include the following (a) assets must be well controlled, utilized and maintained to optimize their useful economic lives (b) asset identification and tagging shall be implemented in line with National Treasury guidance (c) adequate arrangements are developed, implemented and maintained for the security and control of all assets (d) accurate, current and complete register of assets shall be maintained (e) regular reconciliations between the asset register and accounting records shall be performed (f) comprehensive verification and condition assessment of all fixed assets controlled or used shall be done annually (g) Initial valuation of assets for purposes of maintaining asset records shall be carried out either by management estimates or by the government valuer (h) Asset insurance cover shall be guided by risk exposure and cost-benefit criteria (j) all project assets and liabilities should be reported to the National Treasury on quarterly and annual basis.
Disposal represents the final phase in the cycle. Selected policy principles in this area include the following: (a) there shall be annual reporting on idle and unserviceable assets to the National Treasury (b) asset disposal plans shall be based on approved budgets and integrated with strategic and operational plans (c) assets should be disposed of preferably, on ‘”as is, where is” basis (d) no asset shall be disposed if it is needed to provide the minimum levels of key services (e) land and buildings shall only be disposed of after approval by the National Treasury, in consultation with the National Land Commission and or the Ministry responsible for housing, as applicable (f) Only the Cabinet Secretary to the Treasury, may approve an asset to be used as a donation from one public entity to another, and to private entities and individuals