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Economy

Kinyua seeks to rein in Auditor-General office with new rules

Auditor-General Edward Ouko. PHOTO | FILE
Auditor-General Edward Ouko. PHOTO | FILE 

The Jubilee government has hatched yet another plot targeting the independence of the Auditor-General’s office as provided for in the Constitution.

President Uhuru Kenyatta’s chief of staff Joseph Kinyua has issued a directive requiring the Kenya National Audit Office to give ministries access to its reports before submitting them to Parliament – a directive which if followed would be in violation of the law.

“The Auditor-General’s reports shall be availed to ministries at least seven days before tabling in Parliament,” Mr Kinyua says in a circular to Cabinet secretaries issued last November.

The Constitution requires audits of public funds to be reported to Parliament or the relevant county assemblies, which have the mandate to interrogate the reports and take appropriate actions.

It is not clear why the government is keen on giving ministries, departments and agencies — which are the subjects of the mandatory audits — access to the reports ahead of legislators.

But the directive came in the wake of a heated debate that followed the release of last year’s report indicating that more than Sh66.7 billion was spent without supporting documentation.

The report drew a hostile reaction from government officials, including Treasury secretary Henry Rotich, who bought space in local dailies to publish a statement discrediting it.

The Auditor-General, an independent office holder, said there is no legal process through which Mr Kinyua’s directive can be implemented.

“I report to Parliament. We do our work, finalise reports and send them to Parliament as provided for in the constitution,” the Auditor-General Edward Ouko said in reference to the seven-day directive.

“I don’t know which reports they are talking about.”

Kennedy Kihara, the Principal Administrative Secretary in Mr Kinyua’s office, did not explain the origins of the directive, its rationale or even why the Presidency is keen on front-running the established process.

“To avail does not mean it is being given out to take action. The report goes to Parliament with a copy to the Treasury,” he said, suggesting that the directive seeks to establish extra-constitutional processes for publication of audit reports.

Besides the Constitution, the move also runs afoul of the Public Finance Management Act, which lists a number of offences including where a public officer “intentionally or recklessly obstructs or hinders a person while that person is acting in the performance or exercise of the person’s functions or powers under the Act.”

Such a breach carries the risk of a five-year jail term and/or a fine not exceeding Sh10 million.

The peculiar directive could be an attempt to give the ministries a last-minute chance to prepare responses to questionable spending, potentially altering the Auditor-General’s opinion on the same.

It could also be aimed at giving ministries ample time to mount their defence in Parliament when it raises questions on their spending based on the audit reports.

The government’s manoeuvre in public finances’ accountability comes at a time when ministries have been accused of spending billions of shillings without proper documentation.

Loose accountability

The Auditor-General reported that 17 ministries and departments spent a total of Sh66.7 billion in the fiscal year 2013/14 without availing any documents to authenticate how the money was used.

The amount was part of a total of Sh450 billion in unsupported expenditures in the public sector, underlining the lack of rigour in accounting for taxpayers’ money.

Mr Ouko said some of the money could have been spent illegally in the absence of documents showing their actual use.

It is this loose accountability as well as outright corruption and theft that the Constitution mandated the Auditor-General and Parliament to scrutinise the books and act.

The Auditor-General’s and the Controller of Budget’s are established as independent offices whose operations are subject only to the Constitution and are “not subject to direction or control by any person or authority”.

That provision expressly makes Mr Kinyua’s directive to the Cabinet secretaries illegal and so would be Mr Ouko’s compliance with the same.

The Auditor-General is mandated to audit and report on the government’s accounts within six months after the end of each financial year.

The reports include the accounts of national and county governments, authorities of the two levels of governments, the National Assembly, the Senate and the county assemblies. Any entity that receives public funding, including State-owned corporations like KenGen, are also audited by Mr Ouko’s office.

The law requires the audit office to “confirm whether or not public money has been applied lawfully and in an effective way.” The audit reports are submitted to Parliament or the relevant county assembly which must, within three months after receiving them, debate and take appropriate action.

Over the years, the audit reports have exposed numerous cases of corruption, waste and mismanagement of public funds in various arms of government.

It is expected that those found culpable should be held accountable for their actions, including removal from office and prosecution as provided for in law.

This is, however, rarely done and cases of mismanagement of public funds continue to pile up unresolved.

The Public Finance Management Act also empowers Cabinet secretaries to sanction institutions in their dockets that fail to satisfactorily address issues raised by the Auditor-General.

These include suspending such an institution’s ability to reallocate funds and withholding funds it would otherwise be entitled to.

The Act envisages that the Auditor-General’s opinion is final, further raising questions on the objectives of Mr Kinyua’s directive.

Government entities are required to have accountants and internal auditors, who get to prepare and hand over their financial statements to the Auditor-General within three months after the end of each fiscal year.

The Auditor-General then conducts his review and submits his report to Parliament.

The Act identifies a list of issues that may indicate mismanagement of public funds, including the Auditor-General withholding an opinion, issuing a disclaimer due to inadequacies in the financial statements or identifies “a serious financial problem in the State organ or public entity.”

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