Kenyans have been outraged by the recent Auditor General’s report on corruption and misuse of funds in various public institutions but perhaps nothing concrete, in terms of prosecutions will come out of it, giving credence to calls for a shift in how auditing process is done. In audits for the period 2013 to 2014, the financial records of the institutions were spotlighted, some having grave issues while others it was largely failure to provide documentation.
Indeed the main issue raised of the sh66.7 billion of unsupported expenditures in the national government was because of failure to provide evidence of the expenditures. This will certainly be cleared soon when Parliament sits to deliberate on the matter.
First things first, the Auditor General Edward Ouko is expected in Article 229 (4) to provide the report six months after the financial year. He has done so seven months after the deadline.
Secondly, Parliament is expected or supposed to deliberate on the report and recommend actions taken within three months of receipt of the report. Going back past reports, from the Public Accounts Committee (PAC) nothing concrete may come out of their discussions hence the statement the reports may gather dust.
A look at the PAC report of the 2012-2013 audit from the Auditor General provides snippets into how PAC works and expectations of the report they produce.
One thing that stands out is that it is a copy paste of the Auditor’s report where the first parts of it are the exact same.
Secondly, sweeping or general statements are made that paint a gloomy picture to Kenyans who expect the August House to raise to the occasion and stamp out corruption.
Thirdly, deadlines made have no mechanisms for counter-checking or rather Kenyans have no way of knowing whether they were met and if not what was done afterwards. This is something the Access to Information legislation should help unearth but which citizens should take up to do some follow-ups.
On the Ministry of State for Defence in the basis for a disclaimer opinion on the failure to prepare financial statement by the KDF, PAC report says
The Accounting Officer admitted the audit query and attributed the occurrence to lack of format for preparing the statement.
The committee was not persuaded by the Accounting Officer’s response and recommends that he must engage the National Treasury with a view to agreeing on a format for preparation of the accounts after which she should prepare the statements and submit them for audit verification not later than 31st December 2014.
As at today, no information is public as to whether she actually provided that information to PAC or took up the recommendation to engage in Parliament. The Accounting Officer was actually Nancy Kirui. A disclaimer audit opinion letter is the worst audit report an institution can receive. Auditors issue the disclaimer letter to indicate they cannot form an opinion regarding the institutions’ financial statements.
On a different issue in which PAC made a substantive decision regarding the same KDF and Accounting Officer, nothing has been done, or has been provided to the public.
The Auditor General raised concerns regarding the illegal transfer of funds totaling to sh6,684,970,958.00 and PAC agreed with the findings of the Auditor. It therefore stated that
Whereas the Accounting Officer argued that the transfer was legal because it was sanctioned by the National Treasury, the Auditor General maintained that it contravened Section 5.2.10 of the Public Financial Management Act 2012 which prohibits reallocation of funds from one entity to another.
The committee (PAC) finds the Accounting Officer to have breached government financial regulations and procedures and recommends that the Appointing Authority should hold him personally liable pursuant to section 68 (1) and (2) of the Public Finance Management Act.
There was a change in government and the previous Accounting Officer, is out there and nothing happened.
In the Ministry of Education, on the basis of a disclaimer opinion on the accuracy of the appropriation account regarding a variance of sh184,924,488.79, the Auditor General flagged this as amounts that could not be explained or reconciled. PAC report said
The committee heard evidence that this matter had been resolved as the Accounting Officer had explained and reconciled the differences in question and the Auditor General was satisfied.
Te Committee noted that had the Accounting Officer ensured timely action on the Auditor General’s management letter, this matter would not have been an audit query.
The committee recommends that the Accounting Officer should institute measures to ensure that the Ministry always acts promptly on the Auditor General’s management letter to forestall audit queries.
The above, in paper, indicate that the Auditor General agreed or was able to reconcile the figures. However it is not clear whether the Auditor provides to PAC a list or institutions and amounts reconciled and which ones have not. Such a list would help cement a belief that indeed this was done.
The above comment is copy paste on all of the issues raised in other institutions like Ministry of Roads, IEBC and Ministry of Defense.
On the basis of qualified opinion raised to the Independent Electoral and Boundaries Commission (IEBC) on un-Vouched expenditure totaling to sh4,690,168,908.00 raised by the Auditor General, PAC report states
The Accounting Officer informed the Committee that the expenditure of sh4,690,168,908.00 was incurred at the Regional Offices relating to hire of transport services for various activities such as the general election and voter registration.
The Committee recommends that the Accounting Officer should ensure that the vouchers are submitted for audit verification not later than 31st December 2014 failure to which the Appointing Authority should hold him personally liable pursuant to Section 68 (1) and (2) of the Public Finance Management Act 2012.
A qualified audit opinion letter indicates that auditors found issues in an institution’s financial information. These issues prevent the auditors from issuing a clean opinion on the institutions operations.
It should be remembered that PAC has had wrangles and the current one just took office a few months ago. Certainly the previous PAC did not inform Kenyans of whether these deadlines were met and if not what was done thereafter as they recommended.
Where a similar issue or that of unsupported expenditure comes up, the response is as above, word for word and only specific details like amount changes.
Perhaps Kenyans should observe what the current PAC does with the latest report. It is hoped that they will not wait until next year to release their report which will also be toothless.
Critically also, the Auditor General needs to be producing these reports in time so that future audits be used as a basis for budget allocations and those who failed to undertake proper accounts management and expenditure be punished so as to serve as a lesson.