State moves to protect auditors who expose graft in ministries, counties

They seek to shield internal auditors from dismissal, demotion, suspension, harassment or discrimination for reporting fraud, financial irregularities and misuse of public funds.

Treasury seeks to bring an end to a long-standing culture in government where auditors who uncover corruption are often transferred, sidelined or pushed out of office.

Under the proposed Regulation 163 of the Public Finance Management (National Government) Regulations, internal auditors acting in good faith will be legally protected from any form of retaliation for performing their duties or reporting misconduct.

“No internal auditor shall be dismissed, demoted, suspended, harassed, discriminated against, intimidated, or experience any other form of retaliation” the proposed regulation states.

As such, no auditor would be punished for carrying out audit duties or reporting irregularities at the state entities.

The reforms come as a response to high-profile cases involving whistleblowers within government agencies.

One of the most prominent cases involved former Ministry of Health head of internal audit Bernard Muchere, who exposed the multi-billion-shilling Afya House scandal in 2016.

Muchere flagged irregular procurement deals, including the controversial payment of about Sh800 million for 100 portable clinics that were never installed despite payment being made.

The clinics were later found abandoned at a National Youth Service yard in Mombasa.

Soon after exposing the scandal, Muchere was redeployed from his audit position in what was widely perceived as retaliation.

He later recounted how, on his final day in office, his supervisors allegedly arrived with an armed Administration Police officer and a technician to change the locks to his office as he prepared handover notes.

Another similar case involved forensic auditor Andrew Rotich, who helped uncover an alleged Sh21 billion fraud scheme at the now-defunct National Health Insurance Fund.

Rotich reportedly faced career setbacks after exposing fraudulent insurance claims and irregular medical billing involving more than 1,300 health facilities.

Treasury now says the proposed amendments are intended to encourage transparency and strengthen accountability by protecting auditors from reprisals.

Beyond whistleblower protection, Treasury has also drafted a bill that seeks to overhaul internal audit systems across government.

It proposes the creation of a centralised Internal Auditor-General Office within the National Treasury to coordinate internal audit functions across ministries, departments, agencies and counties.

“The head of the Internal Auditor-General Office shall be recruited through a competitive process by the Public Service Commission,” the draft bill reads.

The proposed bill spells the functions of the office to include advising the Treasury Cabinet Secretary and the principal secretary on emerging issues in internal auditing.

It would also designate internal auditors within ministries, departments, and agencies and conduct risk-based audit reviews to identify loopholes.

“Every national government entity shall establish an internal audit function which shall form part of the entity,” the bill reads.

While this may be the case for any agencies, numerous audit queries have flagged the functionality of the audit committees, in some cases, their total absence, creating room for misapplication of funds.

The system would be replicated in all the counties. “Every county government public entity shall establish an audit committee and a risk management committee.”

The office will oversee audit standards, conduct risk-based audits and consolidate reports from public institutions.

The proposed bill also enhances operational independence for internal auditors. Under the proposal, auditors will report administratively to accounting officers but functionally to independent audit committees.

The aim, according to the bill’s memorandum, is to reduce the risk of interference from senior officials under investigation.

Public entities will also be required to respond to audit findings within 14 days.

In addition, financial statements from ministries, state agencies and county governments must first be reviewed internally by audit units and audit committees before being submitted to the Auditor-General.

Treasury says the reforms are aimed at curing weak oversight systems that have allowed corruption, ignored audit queries and poor financial management to persist in public institutions.

The proposed changes complement the pending Whistleblower Protection Bill, 2023, which seeks to introduce financial rewards and criminal penalties for retaliation against whistleblowers.

INSTANT ANALYSIS

If approved by Parliament, the reforms could significantly change how corruption is reported and handled within government by giving auditors stronger legal protection to expose wrongdoing without fear of reprisals.