(7) The County Executive Committee member for finance may in addition to the audit above, permit a donor of a grant to audit such funds on the basis of its own financial accounting rules. The Public Finance Management Act, 2012 165 Urban areas or cities bank accounts. 179. (1) An urban area or city shall open and maintain a bank account in the name of the Urban Area or City, and with the approval of the respective County Executive Committee member for finance. (2) All money received by an urban area or city shall be paid into its bank account or accounts, and this shall be done promptly and in accordance with this Act and any requirements that may be prescribed. Reporting by urban areas or cities. 180. (1) The Board of an urban area or city shall ensure that the urban area or city follows the guidelines prescribed by the Accounting Standards Board.

(2) The Accounting Officer of an urban area or city shall prepare an annual report including accounts in accordance with the provisions of the Urban Areas and Cities Act, 2011 and other reports as required by this Act. (3) The annual report of an urban area or city shall contain such additional information as is necessary to enable an informed assessment of the activities of the urban area or city. Transitional arrangements. Cap. 265. 181. All directions, resolutions, orders and authorizations on financial management given or issued by local authorities established under the Local Government Act and subsisting or valid immediately before the commencement of this Act shall be deemed to have been given, issued or made pursuant to the Urban Areas and Cities Act, 2011, and this Act as the case may be, until the expiry, amendment or repeal of these Acts. Establishment and dissolution of County Corporations and additional requirements for County Corporations and county government-linked Corporations Establishment and dissolution of county corporations.

182. (1) A County corporation may be established or dissolved only with the prior approval of the County Executive Committee, which may be given only after taking into account any recommendations of the County Treasury regarding the financial implications of establishing or dissolving the county corporation. (2) The regulations shall prescribe the criteria to be used in establishing or dissolving county corporations and the regulations shall be tabled in the county assembly for approval. The Public Finance Management Act, 2012 166 Restrictions on county government investing in county government-linked corporations.

183. (1) The county government or county government entity may not invest— (a) in a county corporation; or (b) in a county government-linked company, without the prior approval of the County Executive Committee, which may be given only after taking into account any recommendations of the County Treasury regarding the financial implications of the investment. Responsibility for monitoring financial performance of county corporations. 184. (1) The County Executive Committee member for that entity is responsible for monitoring— (a) the financial performance of County corporations and county government-linked corporation; and (b) the performance of any functions or activities that affect the financial performance of those county corporations.

(2) The responsibilities of the County Executive Committee member for that entity under subsection (1) shall include in particular— (a) analysing financial and other reports that are required to be prepared by a county corporation under any Act or county legislation; (b) reporting to the County Executive Committee on the performance of those county corporations; and (c) making recommendations to the County Executive Committee as to how a particular county corporation or county government-linked corporation could improve its performance. Annual reporting by the County Treasury on county corporations.

185. (1) Not later than four months after the end of each financial year, the County Treasury shall prepare and submit to the county assembly a consolidated report summarising the extent of county government involvement or investment in, or funding of, all county corporations and county government-linked corporations for the financial year. (2) The report in subsection(1) shall include information on— (a) the date of incorporation and objects of the county corporation; (b) the amount of county government shareholding, The Public Finance Management Act, 2012 167 directly or indirectly, in the county corporation; (c) any changes in the shareholding of the county corporation during the financial year; (d) the amount of any funding in the form of grants or subsidies provided by the county government to the county corporation or public entity, excluding profit making entities, during the financial year; (e) the amount of any loans made by the government to the county corporation, during the financial year; (f) the cumulative amount of undischarged loans in respect of the corporation; (g) the amount of profit or loss of the County corporation for the financial year; (h) the amount of any revenue received by the county government from the county corporation during the financial year, including dividends, interest and proceeds from any divestiture of assets of the county corporation; (i) the payments made, or losses incurred, by the county government to meet contingent liabilities as a result of loans during the financial year, including payments made in respect of loan write- offs or waiver of interest on loans; and (j) an assessment of the financial and related non- financial performance of the county corporation for the financial year.

(3) Once every three years, the County Executive Committee member responsible for matters relating to public investments shall prepare a report on the need for the county government continued involvement in, or funding of, the County Corporation or county government-linked company. (4) Copies of the reports prepared in subsections (1) and (3) shall be submitted to the Controller of Budget, the Commission on Revenue Allocation and the Auditor-General. The Public Finance Management Act, 2012 168 Definitions for purpose of sections 182, 183 and 184. 186. For the purposes of sections 182,183 and 184- (a) “county government-linked corporation” means a county corporation in which the county government is a shareholder with less than fifty percent of the share capital of the corporation; and (b) “invest” means any form of funding, or potential funding, provided to a County corporation, including providing share capital, loans, grants or subsidies.

PART V —RELATIONS BETWEEN NATIONAL AND COUNTY GOVERNMENTS ON BUDGET AND ECONOMIC MATTERS Establishment of the Intergovernmental Budget and Economic Council Establishment, purpose and composition of the Intergovernmental Budget and Economic Council. 187. (1) There is established a council to be known as the Intergovernmental Budget and Economic Council comprising— (a) the Deputy President who shall be the Chairperson; (b) the Cabinet Secretary; (c) a representative of the Parliamentary Service Commission; (d) a representative of the Judicial Service Commission; (e) the Chairperson of the Commission on Revenue Allocation or a person designated by the Chairperson; (f) the Chairperson of the Council of County Governors; (g) every County Executive Committee member for finance; and (h) the Cabinet Secretary responsible for intergovernmental relations.

(2) The purpose of the Council is to provide a forum for consultation and cooperation between the national government and county governments on— (a) the contents of the Budget Policy Statement, The Public Finance Management Act, 2012 169 the Budget Review and Outlook Paper and the Medium-Term Debt Management Strategy; (b) matters relating to budgeting, the economy and financial management and integrated development at the national and county level; (c) matters relating to borrowing and the framework for national government loan guarantees, criteria for guarantees and eligibility for guarantees; (d) agree on the schedule for the disbursement of available cash from the Consolidated Fund on the basis of cash flow projections; (e) any proposed legislation or policy which has a financial implication for the counties, or for any specific county or counties; (f) any proposed regulations to this Act; and (g) recommendations on the equitable distribution of revenue between the national and county governments and amongst the county governments as provided in section 190; and (h) any other matter which the Deputy President in consultation with other Council members may decide.

(3) An appointed member of the Council holds office for two years and is eligible for re-nomination and re- appointment at the end of a term of office for another term not exceeding two years. (4) The National Treasury shall provide secretariat services to the Council and assign or appoint such support staff as may be necessary for the Council to effectively perform its functions. (5) The Council shall meet at least twice a year and the Deputy President shall decide the time and agenda for meetings of the Council in consultation with the other members of the Council.