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December 09, 2018

Lifestyle audit can prove one's innocence

A group of MPs at Parliament Buildings. /FILE
A group of MPs at Parliament Buildings. /FILE

Recently President Uhuru Kenyatta stated that all senior government officers, starting with himself, would undergo a lifestyle audit. The President made this decision as part of his ongoing fight against corruption. This decision was supported strongly by the public.

But what is a lifestyle audit?

A simple definition is that it is the analysis of a person's living standards to see if it is consistent with his reported income. Steven Powell explains that lifestyle audit is a term commonly used by forensic auditors to describe the tests performed to determine if the lifestyle of an employee is commensurate with their known income stream.

He explains that fraud is very difficult to detect because it is usually committed by means of “off book” transactions or manipulated accounting records. Another reason is dishonestly inclined professionals are able to conceal their frauds with disturbing alacrity and ease, particular in work environments with weak controls or limited segregation of duty. So sometimes the only clue to corruption is a sudden unexplained change in an employee’s lifestyle. Lifestyle audits are therefore legitimate fraud prevention and detection mechanisms.

A lifestyle audit can be used to flag an employee who could be engaged in corruption. It is actually very simple. If an employee earns ‘x’ but lives a lifestyle that is ‘x + y’, then unless the employee can explain where they got the ‘y’, they have stolen it from their employer (or somewhere else). So a lifestyle audit is simple basic arithmetic.

In government, conducting a lifestyle audit on a public servant is even easier because a public servant’s life is supposed to be open and transparent. This is because they have been employed to manage public resources and like the proverbial ‘Caesar’s wife’ they are supposed to be clear of any suspicion, especially as regards how they manage these public resources. They cannot be suspected of stealing from the public. A lifestyle audit is the tool that clears them of such suspicions, or finds them guilty and opens more detailed investigations.

To conduct a lifestyle audit, the auditor first looks at the employee’s declared income, whether from salary or businesses. The employee should also declare any other financial sources they use to support their lifestyle. The auditor then compares the total money available to the employee, and the lifestyle the employee lives. They will look at how much school fees they pay for their children, the rent or mortgage (or purchase price) of the house(s) they own, the value of the vehicles they drive, costs of holidays, food budget and general upkeep of their families. They will also look at charities they support, etc. Only when there is a glaring discrepancy between the lifestyle someone lives and their declared income is there cause for alarm, and calls for further investigations.

Undergoing a lifestyle audit is therefore not a sign that one is corrupt. In fact, undergoing this audit could be what confirms that one is not corrupt. For example, we might assume you are corrupt because your lifestyle does not match your salary but maybe you inherited a large sum of money, or you have businesses we do not know about, or your spouse earns a lot more than we think, etc. A lifestyle audit is therefore something anyone who knows they are not corrupt but thinks they are suspected to be, should welcome.

So, to the group of MPs and senators who believe that calls for a lifestyle audit are targeted at stopping someone from becoming President in 2022, why not turn the lifestyle audit around? Why not use the lifestyle audit to show Kenyans how hard your preferred candidate has worked to acquire what they have? Why not use the lifestyle audit to shame all those who are always pointing accusing fingers at your candidate on corruption?

This is what I would do.

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