OPED

Let the auditor general be financially independent

As a result, Kenya’s essential public finance safeguard mechanism is presently too weak to do its job properly.

In Summary

•Worth noting that the OAG has to negotiate its funding with two of its primary.

•Because this limits the OAG’s operational independence, it is a further challenge to its independence.

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James Muragur, chair i FILE
Image: COURTESY

Proper scrutiny of our government’s public spending is essential to a healthy, functioning democracy.

Having a fully independent public audit office means that it must have the financial, administrative and operational authority that allows it to review and analyse where the government spends our money.

The Office of the Auditor General in Kenya is a very important link when it comes to the checks and balances of the public finance management system.

 

But when an audit office is not independent financially, as is currently the case in Kenya, it is much harder for it to hold government accountable on how it spends taxpayers’ resources and how services are delivered.

As a result, Kenya’s essential public finance safeguard mechanism is presently too weak to do its job properly.

Constitutionally provided as a safeguard mechanism for taxpayers’ resources, Kenya’s Office of the Auditor General therefore finds itself at a crossroads.

Will it be able to deliver the budgetary scrutiny we expect of it, especially in the current uncertain economic conditions in the wake of the global Covid-19 pandemic?

In the 2018-2021 strategic plan for the Office of the Auditor General, inadequate funding and budgetary constraint are listed as “operational risks”, which highlights the extent to which the OAG is aware of its vulnerability in an environment where so much is demanded of it.

The strategic plan also acknowledges the four key expectations that Kenyans have of it in this period: providing assurance that public resources are accounted for and utilized for citizens’ benefit; providing timely and user-friendly audit reports; making audit reports publicly available and easy to access; and, finally, focusing on audit areas that are of significant impact on the lives of citizens.

It is worth noting that the OAG has to negotiate its funding with two of its primary “auditees”, the National Treasury and the Parliament. So how do we ensure that this financial independence of the Office of the Auditor General is secured, not only according to the legal provision, but in practice?

 

Section 20 of the Public Audit 2015 requires that the accounting officer in the Office of the Auditor General submit the budget estimates to the Cabinet Secretary, National Treasury for review and submission to the National Assembly.

However, article 249 of the constitution requires the involvement of Parliament (National Assembly and Senate) to allocate adequate funds for the Auditor General to perform its functions.

The National Treasury’s control over the OAG funding means it has direct control over the audit scope of the OAG, in terms of how much it can audit and how effective it can be when doing so. Because this limits the OAG’s operational independence, it is a further challenge to its independence.

While the National Treasury is the guardian of Kenya’s public funds, and it can present a strong argument that the Office of the Auditor General has sufficient independence to undertake its work, it is also clear that there is considerable conflict of interest when it comes to reviewing the OAG budget, which in 2019 was Sh5.22 billion or just 0.19 per cent of Kenya’s annual public budget of Ksh 2.7 trillion .

How can this be addressed? This could be amended by Office of the Auditor General assuring the public on the adequacy of accountability mechanisms despite lack of financial independence and this could include the level of  oversight arrangements put in place by the OAG with regards to the governance processes and procedures of how its performance will be assessed. Further, to ensure that financial independence of the OAG is secured, the responsibility of funding the OAG should be left with both houses of Parliament, and specifically the Public Accounts Committees, which should consult the National Treasury on budget levels but not be bound by the advice provided.

With governments being accountable to Parliament on the way it executes the budget, it remains then that the Office of the Auditor General should be financially secured by parliament as it is a credible component of accountability of government.

Finally, Kenyans need to secure the financial independence of the Office of the Auditor General by all means possible.

The cost of this essential watchdog’s work is already being repaid many times over in making the public purse more accountable, more effective and more responsive to Kenya’s and its citizens’ needs.

When the OAG is truly independent, we can demand even more of it, and it will be in a position to deliver.

The writer is the CEO at the Institute of Public Finance Kenya