Government Plans to Remove Auditor-General as Head of National Audit Office
The present leader and financial administrator of the national audit office is the Auditor-General.
A proposed legislation, backed by the government, is currently in front of parliament. It aims to authorize the Audit Advisory Board to take charge of offering guidance on budget proposals, human resource management, and any other issues referred to the board by the Auditor-General.
The government has put forward a comprehensive set of alterations for the Office of the Auditor-General. If these changes are approved and implemented, they will significantly impact the functioning of the national audit office.
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This aims to advocate for audit reports of institutions that receive public funds without any identified faults.
The proposed Public Audit (Amendment) Bill 2024, backed by the government and currently under review in parliament, aims to grant the Audit Advisory Board the authority to offer guidance on budget proposals, staffing strategies, and any other issues referred to it by the Auditor-General.
The Auditor-General presently serves as the chief executive and financial officer of the national audit office.
“The office shall comprise the Auditor-General, who shall be the accounting officer and the staff appointed by the Auditor-General,” the Bill reads adding; “in the performance of administrative functions, the Auditor-General may, where he or she deems fit, seek the advice of the Audit Advisory Board.”
The legislation bears the title of Kikuyu MP Kimani Ichung’wah, who, in his capacity as the majority leader in the National Assembly, endorses government bills before their presentation in the legislative body.
Section 4 (2) of the Public Audit Act that is earmarked for repeal states; “the office shall comprise of the Auditor-General as its statutory head and all other staff appointed by the Auditor-General as may be delegated by Article 234 of the Constitution.”
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The Audit Advisory Board will comprise the Auditor-General, serving as the chairperson, the Attorney-General or their designate, and a delegate from the Institute of Certified Public Accountants of Kenya (ICPAK).
Additionally, there’s the chairperson of the Budget and Appropriations Committee of the National Assembly or their chosen representative, along with two parliament representatives—one from the National Assembly and the other from Senate committees overseeing public finance and audit.
This implies that if the Bill is enacted as suggested, individuals nominated by the Association of Professional Societies of East Africa, the Law Society of Kenya (LSK), and the chairperson of the Public Service Commission (PSC), who currently serve on the board, will not have representation.
If the Bill is enacted, the Auditor-General will be directed by the provisions outlined in Article 47 (1) and (2) of the constitution when carrying out administrative duties concerning the audit subjects.
Section 1 of this Article stipulates that all individuals are entitled to administrative procedures that are prompt, effective, legal, fair, and conducted with due process.
Sect’n 2 asserts that in cases where an individual’s basic rights or freedoms have been or are likely to be negatively impacted by administrative measures, the individual is entitled to receive written explanations for such actions.
Section 7(1) of the Public Audit Act mandates the Auditor-General to ensure the efficiency of internal controls, risk management, and overall governance in both national and county government entities.
Nevertheless, there’s a suggestion to substitute it with “the Auditor-General must ensure that public resources are utilized economically, efficiently, effectively, transparently, and sustainably.”
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The legislation restricts the eligibility for the position of Auditor-General to someone who is a practicing member in good standing of an accountant professional body recognized by the Accountants Act.
This is likely to pave the way for the selection of individuals from other countries to lead an important department responsible for scrutinizing the spending of State security bodies such as the Kenya Defense Forces (KDF), National Intelligence Service (NIS), and other key security facilities in Kenya.
According to the legislation, individuals eligible for the position of Auditor-General must be Kenyan citizens, possess the necessary qualifications for the role, and hold a finance, accounting, or economics degree from a recognized university in Kenya.
The individual must show a clear and coherent advancement in acquiring their educational credentials. Additionally, they must fulfill criteria related to leadership and integrity and be an active member in good standing of a legally recognized professional accounting organization.
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The proposed legislation also aims to establish the position of Deputy Auditor-General, who will serve as the primary aide to the Auditor-General and as the secretary of the Audit Advisory Board.
“The Deputy Auditor-General shall deputize the Auditor-General in the execution of functions save for the express powers provided under the constitution,” the Bill reads.
The legislation states that there must be a Senior Deputy Auditor-General, who will undergo a competitive recruitment process led by the Advisory Board and subsequently appointed by the Auditor General.
While Mr. Felix Koskei, the Head of Public Service (HoPS), has requested that all government accounting officers strive for flawless audit reports from the Office of the Auditor-General as a measure of Kenya Kwanza’s performance, Auditor-General Ms. Nancy Gathungu expresses unease about this expectation.
During her appearance before the Public Accounts Committee (PAC) of the National Assembly late last year, Ms. Gathungu emphasized that she wouldn’t accept instructions on how to perform her duties.
“There is nothing in the auditing standards that requires the office of the Auditor-General to issue clearance certificates on audit reports. That is the work of parliament,” said Ms Gathungu.
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“What they need to do is to spend the public funds within the law, prepare the financial statements well and you will not have audit queries. Those are the standards. I will issue audit opinions based on the financial statements submitted to us,” she added.
The audit report regarding the national government’s spending during the 2022/23 fiscal year suggests that Ms. Gathungu has adhered to auditing standards in providing her audit opinions, rather than simply complying with directives from the Head of Public Service (HoPS).
However, while addressing the PAC, Ms. Gathungu admitted that her office is overwhelmed with “documents required for audit queries that should have been provided earlier,” as these queries have already been addressed in reports previously approved by parliament.
“Once they submit the documents, they claim the matters have been resolved. But you cannot clear this at the entry level,” she said, noting that her desire to stick to the law and the auditing standards has seen the government accounting officers “become mad with me.”
Government Plans to Remove Auditor-General as Head of National Audit Office
More proposed changes
With a firm intention to advocate for faultless audits, the Bill aims to revise the auditing procedure so that the Auditor-General notifies the accounting officer of an entity to be audited or investigated before the audit’s initiation, ensuring transparency and accountability.
The proposed legislation mandates that before commencing an audit of a governmental body or public institution, must be a meeting convened to discuss the audit scope, involving both the Auditor-General and the accountable officer.
The Auditor-General will subsequently draft and distribute a report to both parliament and the corresponding county assembly.
Within two weeks of receiving an audit report, the accounting officer must respond to the Auditor-General, detailing the corrective measures taken to resolve the audit findings. This process could potentially encroach upon the authority of the audit committees in both national and county legislatures.
“Where an accounting officer fails to address issues raised by the Auditor-General to the satisfaction of the Auditor-General, the accounting officer is liable to disciplinary action by the terms and conditions of that accounting officer’s appointment or employment,” the Bill says.
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The 2012 Public Finance Management (PFM) Act mandates that all accounting officers must create and deliver financial statements to the Auditor-General within three months following the conclusion of each fiscal year.
The Auditor-General is required to examine and provide a report to the parliament or county assembly regarding the use of public funds within three months of receiving the financial statement for audit.
Within three months of receiving an audit report, Parliament or the county assembly is mandated to discuss and review the report, subsequently implementing suitable measures as necessary.
The remaining three months are designated for the executive, either at the national or county level, to execute the directives provided by the parliament or county assembly regarding the reports issued by the Auditor-General.
Government Plans to Remove Auditor-General as Head of National Audit Office
