Tough balancing act for parastatals as PIC seeks disclosure on books

The Public Investments Committee led by chairman Adan Keynan (far left) during a past inquiry on August 4, 2016. PHOTO | DIANA NGILA | NMG
The Public Investments Committee led by chairman Adan Keynan (far left) during a past inquiry on August 4, 2016. PHOTO | DIANA NGILA | NMG 

A parliamentary watchdog committee now wants the office of the Auditor-General to disclose the names of State corporations that fail to submit their financial statements within the set timelines.

The Public Investments Committee (PIC) further wants the State's chief auditor - Edward Ouko - to reject books from parastatals that submit them six months after the end of financial year and instead table his report to the National Assembly on time as required by law.

The proposals, which are aimed at curbing chronic delays in availing documents for audit, are contained in the 21st PIC report which was tabled in the House by chairman Adan Keynan on Thursday.

“At the end of three months after the end of the financial year, the Auditor General should publish and publicise the names of all state corporations that have submitted their complete financial statement for audit,” the report states.

The 16-member PIC team is mandated with examining reports and accounts of public investments and whether they are being managed with sound financial practices.

Forced delays

Mr Ouko has in the past complained that State corporations do not submit their audit documents on time, forcing his office to delay publishing of reports.

This has in turn pitted the Auditor-General with parliament and other oversight institutions that have accused his office of undermining efforts to fight corruption.

Some of the reasons commonly cited by parastatals for their delays include poor record keeping - while in some extreme cases no record kept - and the inability of the firm being audited to trace documents at the time of appraisal.

PIC says late submissions have resulted in unnecessary audit queries while creating time for unscrupulous staff to cook books.

The committee noted in the report that there are several cases where accounting officers failed to act or acted late, leading to audit queries that would have otherwise been avoided.

“This delay provides an opportunity for manipulation of documents by rogue officers, encourages creative accounting practices in public sector and delays the finalisation of audit reports at the expense of the public,” PIC says.

“The accounting officers who submit or delay the submission of the audit documents should be held personally liable and be surcharged for such delays,” it adds.

Strain on agencies

The Keynan-led team says it also affects the ability of other watchdog institutions tackling accountability issues since they can't effectively interrogate anomalies flagged by audits.

Auditor-General Edward Ouko. FILE PHOTO | NMG

Auditor-General Edward Ouko. FILE PHOTO | NMG

Sometimes the burden leaves investigative agencies like the Ethics and Anti Corruption Commission (EACC) overwhelmed by backlogs of cases while some are lost because parliamentary watchdog teams start probing matters many years after they occurred.

The law mandates accounting officers in parastatals to avail annual financial statements within three months after the end of the financial year.

This means that all State firms must submit their books to the Auditor-General’s office by the end of September.

The statements are then submitted to the Controller of Budget and Mr Ouko for audit, after which the Auditor-General has three months to consider the financials and deliver them to parliament by end of December.

Currently, Mr Ouko's office averages 22,500 clients against a technical staff of 900 people.