Most of the conversation around IPSAS 45 has happened in accounting circles, in language that is not particularly useful if you are trying to understand what the standard actually requires your county or state corporation to do. This post tries to fix that.

We will cover what IPSAS 45 is, what changed from the standard it replaced, and why the compliance burden sits heavily on infrastructure assets specifically. We will also be direct about where Kenya currently stands, because the timeline is fast ending.

What is IPSAS 45, in plain terms?

IPSAS 45 is the public sector standard for Property, Plant, and Equipment. Its job is to tell government entities how to recognise, measure, depreciate, and disclose the physical assets they own and operate. That covers everything from a district hospital to a 300-kilometre road corridor.

It replaces IPSAS 17, which Kenya has been applying since devolution began in 2013. The International Public Sector Accounting Standards Board issued the updated standard in May 2023. Kenya’s Public Sector Accounting Standards Board set the local effective date at 1 July 2025, meaning financial years starting on or after that date must apply the new rules.

Four things changed materially between the two standards. Under IPSAS 17, heritage assets were explicitly excluded from scope; under IPSAS 45, they are fully in scope and must be either recognised on the balance sheet or at minimum disclosed. Infrastructure assets received no specific guidance under the old standard; they now have explicit characteristics and defined accounting treatment.

Measurement options for legacy assets were limited before; current operational value has been added as a formal measurement basis. And while componentisation was recommended under IPSAS 17, the requirements are now clearer and more enforceable.

Why infrastructure assets are the hardest part

The standard does not leave “infrastructure assets” undefined. It names them: road networks, bridges and culverts, water and sewerage systems, communication networks, power supply infrastructure, and heritage assets such as historical sites and monuments. These are not hypothetical categories. They are the physical assets that sit in every county government balance sheet, most of them unvalued, unregistered, and described in no document that an auditor could verify.

Road networks include national highways, county roads, access roads, and their associated drainage and furniture. Bridges and culverts break down further into superstructures, substructures, decks, and bearings — each a separate component with its own useful life. Water and sewerage systems cover treatment plants, distribution networks, dams, and pumping stations. Communication networks take in publicly owned transmission infrastructure and towers.

Power supply assets include rural electrification infrastructure, solar installations, and grid connections owned by public entities. Heritage assets encompass historical sites, monuments, archaeological sites, and scientific collections.

What makes infrastructure accounting genuinely difficult is not the standard itself. It is the nature of the assets. A road is not a standalone item you can appraise and sell. It is a system. A county cannot offload its road network on the open market, which means there is no market price to reference. Many of these assets were built in the 1970s and 1980s with no cost records that survive today. IPSAS 45 requires you to account for them anyway, and that is where the engineering comes in.

The recognition problem: IPSAS 45 only allows an asset onto the balance sheet when its cost or fair value can be reliably measured. For a bridge built in 1987 with no surviving construction records, there is one realistic path to a defensible carrying value: a current engineering cost estimation, supported by a site inspection and a qualified engineer’s report. A spreadsheet with a round number does not satisfy the standard.

The three requirements that create the most exposure

1. Componentization

Where an asset has significant parts with materially different useful lives, those parts must be depreciated separately. This is componentization, and it changes how infrastructure has to be recorded at a fundamental level.

Consider a county road. Under the old approach, it might sit in the fixed asset register as a single entry with a 20-year useful life. Under IPSAS 45, the pavement surface, base course, sub-base, drainage infrastructure, and road furniture are each distinct components. Each has a different technical lifespan. Each generates a different annual depreciation charge. A register that treats the road as one item is materially wrong, and the Auditor-General will say so.

2. Useful life estimates

Every item on the register needs a defensible useful life estimate, supported by evidence. The Auditor-General’s 2023/24 Green Book cited unexplained variances on fixed asset registers across multiple counties. The common thread was useful life assumptions that were either absent or had no technical basis behind them. If a finance officer writes “50 years” next to a bridge without a structural assessment to support it, that estimate will not survive audit. It is not a question of whether the auditors will look. They will.

3. Impairment testing

At each reporting date, entities must assess whether any asset shows signs that its service potential has declined. For a road, that assessment requires a Pavement Condition Index survey. For a bridge, it requires a structural integrity inspection. Finance teams are not equipped to conduct these assessments. They require engineers, and the results need to be documented in a form that can be produced to auditors on request.

Where Kenya stands today

The National Treasury gazetted the cash-to-accrual transition roadmap in August 2024. It runs in three phases through to June 2027. Non-financial assets, including all infrastructure PPE, sit in Phase Three. That means county governments are building their IPSAS 45-compliant asset registers now, in this financial year, under active audit scrutiny.

The Auditor-General’s most recent county government report confirmed that not a single county executive received a clean audit opinion for FY2023/24. Asset management failures were among the most common findings, cited across nearly all 47 counties. The underlying problems have not changed. The standard used to measure them has.

What this means practically

For a county finance officer, a state corporation CFO, or a director of engineering, IPSAS 45 compliance on infrastructure PPE follows a clear sequence: inventory the assets, define the components, establish carrying values, assign useful lives, schedule depreciation, and test for impairment. The first two steps require people on the ground with engineering qualifications. They cannot be done from Nairobi offices using figures from a previous year’s register.

The entities that begin this process now will produce credible financial statements for FY2026/27. Those that postpone will find themselves presenting the same categories of audit queries that have recurred in county government reports since 2013  except under IPSAS 45, the framework for identifying and reporting those failures is more precise and harder to argue against.The audit window is open. The question is whether your entity is ready for it?