The Senate committee on Public Accounts and Investments raised a storm days ago regarding Kiambu County Executive audited financial statements for the year ended June 30, 2018.
The highly publicised issue had to do with the committee demanding to know from Kiambu governor why the county had spent funds on South Sudan Advisory as well as paying pension for retired presidents, activities which fall within national government’s mandate.
As expected the matter elicited immediate condemnation from the public; some considered the governor’s response to Senate as inadequate, insinuating that he had not familiarised himself with the contents of the report; then there was the angle that possibly the embarrassment caused by the ‘grilling’ was politically motivated.
Whatever the motivations, it is important that all organs charged with upholding transparency and accountability in public financial management exhibit a focused approach in discharging their duties. This includes the Senate.
A look at the June 30 2018 Kiambu County Executive report which was signed by the auditor-general on February 18 2019 reveals no findings related to the above expenditure. Since the amounts in question are significant, could it be that the auditor-general did not see this irregular expenditure?
Auditors are always alive to the possibility of missing significant irregular expenditure, especially because audits are conducted on a sample basis. Still, for this to have been missed out in 10 other counties raises question marks as to whether this specific issue relates to financial irregularity. Since then of course, the National Treasury has clarified this was nothing more than a report extraction error affecting 11 counties according, to their press release of May 9, 2019.
Media reports have also quoted the auditor-general clarifying that the issue is nothing more than ‘bad reporting’ where wrong budget templates were used and that the affected counties did not make payments towards these national government functions.
The process of preparing financial statements for audit required counties to compare actual expenditure to approved budgets both by economic classification and by programme/sub-programme.
The economic budget comparison was okay. It was the programme budget execution report which classifies expenditure by objectives, for example education, health, agriculture that had erroneous budget lines.
The public indignation ignited by the Senate finding highlights the attention wananchi are giving to corruption and public finance mismanagement in general. This is a major national topic, with citizens wanting the government to do more in this fight.
Therefore, any issue raised by a public finance watchdog must be weighty enough to deserve this attention. Whilst it is understandable that most members of the public would not, on their own, be expected to critically analyse audit reports, through their taxes they have employed experts in the name of auditor-general, controller of budget as well as Parliament.
The writer is a Partner in Audit-Public Sector, KPMG Kenya.