(2) A county government shall submit a supplementary budget in support of the additional expenditure for authority for spending under subsection (1). (3) In complying with subsection (2), a county government shall describe how the additional expenditure relates to the fiscal responsibility principles and financial objectives. (4) Except as provided by subsection (5), the approval of the county assembly for any spending under this section shall be sought within two months after the first withdrawal of the money. (5) If the county assembly is not sitting during the time contemplated in subsection (4), or is sitting but adjourns before approval has been sought, approval shall be sought within fourteen days after it next sits.

(6) When the county assembly has approved spending under subsection (2), a supplementary Appropriation Bill shall be introduced for the appropriation of the money spent. (7) In any financial year, the county government may not spend under this section more than ten percent of the amount appropriated by the county assembly for that year unless that county assembly has, in special circumstances, approved a higher percentage. The Public Finance Management Act, 2012 135 Appropriation of money for county government purpose to lapse if unspent. 136. (1) Subject to any other legislation, an appropriation that has not been spent at the end of the financial year for which it was appropriated lapses immediately at the end of that financial year.

(2) If, at the end of a financial year, a county government entity is holding appropriated money that was withdrawn from the County Exchequer Account but has not been spent, it shall repay the unspent money to the County Exchequer Account and prepare a refund statement which shall be forwarded to the Controller of Budget. Establishment of Forum for consultation by county governments Establishment of county budget and economic forum for county budget consultation process. 137. (1) As soon as practicable after the commencement of this Act, a county government shall establish a forum to be known as the (Name of the County) County Budget and Economic Forum.

(2) The County Budget and Economic Forum shall consist of— (a) the Governor of the county who shall be the chairperson; (b) other members of the county executive committee; (c) a number of representatives, not being county public officers, equal to the number of executive committee members appointed by the Governor from persons nominated by organisations representing professionals, business, labour issues, women, persons with disabilities, the elderly and faith based groups at the county level. (3) The purpose of the Forum is to provide a means for consultation by the county government on— (a) preparation of county plans, the County Fiscal Strategy Paper and the Budget Review and Outlook Paper for the county; and The Public Finance Management Act, 2012 136 (b) matters relating to budgeting, the economy and financial management at the county level.

(4) In addition to the above, consultations shall be in accordance with the consultation process provided in the law relating to county governments. Responsibilities of County Executive Committee Member for finance and functions of the county government in respect to public finances Conditions for receiving grants and donations by county government or its entities or third parties. 138. (1) In this section and section 139 — (a) “donation” means a gift or a contribution; (b) “grant” means the provision of financial or other assistance by a development partner which is not repayable and — (i) where public money is paid to or used by a grant recipient; (ii) which is intended to finance the development of projects or delivery of services or otherwise assist the grant recipient to achieve goals that are consistent with the policy objectives of the county government; and (iii) where the grant recipient is required to act in accordance with any terms or conditions specified in a grant agreement. (d) “grant recipient” means the county government or a county government entity authorised to control or spend money under this Act or an incorporated or unincorporated body not otherwise authorised to control or spend money under this Act; (e) “intended beneficiaries” means the people of the county whom the projects or public services financed by a grant are intended to benefit; (e) “third party” means any other person other than a public officer. The Public Finance Management Act, 2012 137

(2) Subsections (3) to (9) apply to the county government and county government entities. (3) A county government or county government entity may receive a grant or donation from a development partner with the approval of the County Executive Committee member for finance and only as provided by this section. (4) As soon as practicable after receiving the grant or donation, the recipient shall notify the County Executive Committee member for finance and the Cabinet Secretary of the receipt. (5) Funds received in the form of grants or donations shall only be spent in accordance with Article 224 of the Constitution.

(6) If a project that is being financed by a grant or donation from a development partner requires county government funding, the project may only be started when— (a) the required funding has been appropriated in accordance with this Act or is otherwise authorised by legislation; or (b) the County Executive Committee member for finance has given a written authorisation for the project to begin. (7) The County Executive Committee member for finance shall inform the county assembly of the authorisation given under subsection (6)(b).

(8) The recipient of a grant or donation from a development partner shall record the amount or value of the grant or donation in its books of accounts. (9) Subject to audit in terms of Article 229(4) of the Constitution, the recipient of a grant or donation from a development partner shall administer and account for the grant or donation by using government – (a) financial and accounting practices laid down under an Act of Parliament, rules and regulations; and (b) administrative, accounting and auditing procedures, including financial accounting rules and procedures for accounting for the receipt or expenditure of money specified or referred to, in any agreement between the recipient and The Public Finance Management Act, 2012 138 the development partner. Regulations on grant administration. 139. (1) Regulations approved by the county assembly shall provide for the administration, control and management of grants, including— (a) procedures for the allocation and disbursement of grants, including requiring the publication of transparent criteria for the allocation of grants; (b) requirements for grant agreements binding on grant recipients that specify the terms and conditions to which the grant is subject; (c) procedures for the budgeting, financial management, accounting and reporting of grants by grants recipients; (d) procedures under which a third party may be authorised to receive, control or pay public money as a grant; and (e) measures to ensure that any third party that is authorised to receive, control or pay public money as a grant, or is responsible for any other aspect of administration of a grant, is subject to the same obligations as a public officer under this Act.

(2) Regulations under subsection (1) shall include measures to ensure public disclosure, accountability and participation in relation to grants including— (a) timely public disclosure to intended beneficiaries of the allocation and disbursement of grants to grant recipients; (b) timely public disclosure by grant recipients to intended beneficiaries of expenditure and performance achieved in relation to the grant; (c) measures that allow the intended beneficiaries to participate in the design and management of the projects or public services financed by the grant; (d) measures that allow the intended beneficiaries to report instances of non-compliance with the regulations or grant agreement; The Public Finance Management Act, 2012 139 (e) sanctions that may be imposed on grant recipients in response to instances of non-compliance by one or more grant recipients; and (f) the obligations of any public officer or third party authorized to receive, control or pay public money as grants.

(3) A third party shall not receive, have custody of, or pay public money otherwise than in accordance with an authorisation given in accordance with regulations made under subsection (1). (4) A third party who contravenes subsection (3) commits an offence and on conviction is liable to a term of imprisonment not exceeding two years or to a fine not exceeding one million shillings, or to both and shall make good any loss arising from the use of public funds contrary to the law. Authority for borrowing by county governments.