CPA SECTION 6
ADVANCED PUBLIC FINANCE
STUDY NOTES
, ii
SYLLABUS: PAPER NO 16 ADVANCED PUBLIC FINANCE AND TAXATION
GENERAL OBJECTIVE
This paper is intended to equip the candidate with knowledge, skills and attitudes that
will enable him/her to address advanced public finance and taxation matters in public
and private sector entities
16.0 LEARNING OUTCOMES
A candidate who passes this paper should be able to:
• Design a tax policy
• Manage Public Private Partnerships arrangements
• Compute tax for complex aspects of companies and specialised entities
• Apply tax laws in mitigating tax costs for various tax payers
• Analyse the taxation issues associated with international transactions
• Apply advanced public financial management principles in practice
• Evaluate the effectiveness of the public finance, tax systems and policies in economic
growth of a country
• Manage public investments
CONTENT
16.1 External Resource Financing………………………………………………………1
- Establishment of External Resource Department in the National Treasury
structure
- Role played by External Resource Department in raising of external finances
Book keeping and management of donor funds
- Monitoring of public projects through clients connections and EPROM1S
Development partners and contractual agreements
- Role played by Ambassadors, High Commissioners and other Diplomats in
initiation of external funding
16.2 Public Investments…………………………………………………………….......10
- Establishment of government investment departments
- Mandate of government investment departments
- Establishment of State Corporations (State Corporation ActCap446)
- Role of Public Investment Board (Kenlnvest)
- Role of Public Investment Committee
- Other players in public investment
16.3 Public Private Partnerships Arrangements………………………………….......17
- Establishment of Public Private Partnership (PPP) Unit in the National
Treasury Legal framework for PPP (PPPAct,2013)
- Contract/project agreements, guidelines and standards
- Composition and role of PPP petition committee
- Establishment and role of PPP project facilitation fund
- Applicable case studies for PPP’S
, iii
16.4 Public debt management…………………………………………………..………28
- Establishment of debt management office
- Objectives of debt management in public sector
- Sources of public debt in Kenya
- Debt management strategy paper
- Relationship between debt management and budget process
- Comparative study of debt management strategy in East Africa Community
- Management of debts -by county governments and other public entities
- Role of cabinet secretary of the National Treasury in public debt management
, CHAPTER 1
NATURE OF PUBLIC FINANCE
SYNOPSIS
Introduction .. ............. ......... ....... ...... .................... ..... ..................... 1
Nature of public finance ....... ..................................................................... 1
Distinction between public and private finance ............................................. 2
Functions of the public sector finance ...................................... ................ 6
INTRODUCTION
Public finance can be defined as the collection of revenue by the government and all the
expenditure of revenue in the provision of public utilities.
Public finance is a theory of government economic functions in an economy i.e. the proper role
of government in an economy provides a starting point for the analysis of public finance. Under
certain circumstances, private markets will allocate goods and services among individuals
efficiently (in the sense that no waste occurs and that individual tastes are matching with the
economy's productive abilities). If private markets were able to provide efficient outcomes and if
the distribution of income were socially acceptable, then there would be little or no scope for
government. In many cases, however, conditions for private market efficiency are violated for
example, if many people can enjoy the same good at the same time (non-rival, non-excludable
consumption), then private markets may supply too little of that good. National defense is one
example of non-rival consumption, or of a public good.
NATURE OF PUBLIC FINANCE
The scope of public finance can be divided into four categories namely:-
• Public income/ revenue
• Public expenditure
• Public debt
• Financial administration
1
ADVANCED PUBLIC FINANCE
STUDY NOTES
, ii
SYLLABUS: PAPER NO 16 ADVANCED PUBLIC FINANCE AND TAXATION
GENERAL OBJECTIVE
This paper is intended to equip the candidate with knowledge, skills and attitudes that
will enable him/her to address advanced public finance and taxation matters in public
and private sector entities
16.0 LEARNING OUTCOMES
A candidate who passes this paper should be able to:
• Design a tax policy
• Manage Public Private Partnerships arrangements
• Compute tax for complex aspects of companies and specialised entities
• Apply tax laws in mitigating tax costs for various tax payers
• Analyse the taxation issues associated with international transactions
• Apply advanced public financial management principles in practice
• Evaluate the effectiveness of the public finance, tax systems and policies in economic
growth of a country
• Manage public investments
CONTENT
16.1 External Resource Financing………………………………………………………1
- Establishment of External Resource Department in the National Treasury
structure
- Role played by External Resource Department in raising of external finances
Book keeping and management of donor funds
- Monitoring of public projects through clients connections and EPROM1S
Development partners and contractual agreements
- Role played by Ambassadors, High Commissioners and other Diplomats in
initiation of external funding
16.2 Public Investments…………………………………………………………….......10
- Establishment of government investment departments
- Mandate of government investment departments
- Establishment of State Corporations (State Corporation ActCap446)
- Role of Public Investment Board (Kenlnvest)
- Role of Public Investment Committee
- Other players in public investment
16.3 Public Private Partnerships Arrangements………………………………….......17
- Establishment of Public Private Partnership (PPP) Unit in the National
Treasury Legal framework for PPP (PPPAct,2013)
- Contract/project agreements, guidelines and standards
- Composition and role of PPP petition committee
- Establishment and role of PPP project facilitation fund
- Applicable case studies for PPP’S
, iii
16.4 Public debt management…………………………………………………..………28
- Establishment of debt management office
- Objectives of debt management in public sector
- Sources of public debt in Kenya
- Debt management strategy paper
- Relationship between debt management and budget process
- Comparative study of debt management strategy in East Africa Community
- Management of debts -by county governments and other public entities
- Role of cabinet secretary of the National Treasury in public debt management
, CHAPTER 1
NATURE OF PUBLIC FINANCE
SYNOPSIS
Introduction .. ............. ......... ....... ...... .................... ..... ..................... 1
Nature of public finance ....... ..................................................................... 1
Distinction between public and private finance ............................................. 2
Functions of the public sector finance ...................................... ................ 6
INTRODUCTION
Public finance can be defined as the collection of revenue by the government and all the
expenditure of revenue in the provision of public utilities.
Public finance is a theory of government economic functions in an economy i.e. the proper role
of government in an economy provides a starting point for the analysis of public finance. Under
certain circumstances, private markets will allocate goods and services among individuals
efficiently (in the sense that no waste occurs and that individual tastes are matching with the
economy's productive abilities). If private markets were able to provide efficient outcomes and if
the distribution of income were socially acceptable, then there would be little or no scope for
government. In many cases, however, conditions for private market efficiency are violated for
example, if many people can enjoy the same good at the same time (non-rival, non-excludable
consumption), then private markets may supply too little of that good. National defense is one
example of non-rival consumption, or of a public good.
NATURE OF PUBLIC FINANCE
The scope of public finance can be divided into four categories namely:-
• Public income/ revenue
• Public expenditure
• Public debt
• Financial administration
1
