More than Sh300b unaccounted for in 2011/2012 budget

Updated Saturday, July 13th 2013 at 22:15 GMT +3

Interview: More than 33 per cent of the Sh900 billion budget expenditure was either irregularly spent or lost as the audit figures are unsupported or unexplained. There are also huge discrepancies between reports issued by the KRA, Central Bank and the Treasury. In a bare knuckled interview, Edward Ouko who in 2011 quit a well paying job at the African Development Bank to become Auditor-General, talks on many financial issues including why ministries’ failure to spend billions of shillings allocated to them.  He spoke to Lilian Kiare, about the upcoming 2011/2012 annual audit report, challenges, laptop project among other issues.

Q: When did the independent office of the Auditor-General come up and what is its mandate?

A: Previously, the Office of the Auditor General was referred to as the Exchequer & Audit Department. The public Audit Act 2003, which became effective on January 9, 2004 established an independent Office of the Controller and Auditor-General and renamed it Kenya National Audit Office. It function is to audit and report on the accounts of any entity that is funded from public funds to ensure that it has been used lawfully and in an effective way.

Q: What are the key areas that the 2012 audit report reveals where government is wasting money?

A: I have just signed the 2012 audit and in this report, over 33 per cent of the 900 billion in the budget expenditure is unsupported or unexplained. Most of the reports issued by the banks and those given by the ministries cannot explain some pertinent issues, raising serious management and corruption issues.

There are major discrepancies between reports issued by the KRA, Central Bank and the Treasury. A lot of wastage is going on with departments revealing imprest that have not been returned, poor accounting and unattended reconciliations.

Q: Can you pinpoint key areas?

A:  The reports will soon be revealed to the public, so I do not want to be quoted as picking on one. I can pinpoint discrepancies in health, education and many areas where big monies were allocated. Statements of accounts given reveal unattended projects, procurement flaws and unsupportedexpenditure.

Q: Past reports reveal a crafty practice of departments returning unspent budgeted funds back to the treasury pool. What is the main reason for this?

A:  Most individuals responsible for budgetary allocation are shrouded with corruption. Some of the ‘big fish’ set to allocate the funds are usually thinking about procurement and friends to fix a specific tender or deal and how to benefit from an agreement with contractors.

If they have not networked well, they hoard it hoping to buy more time. As the year-ends, they have no option but to return the money back. I do not find a reason why funds should be refunded with the many societal needs.

Q: How has the enactment of the new Constitution affected operations of the Office of the Auditor General in carrying out its duties?

A:  In the previous Constitution Act, the level of its effectiveness, independence and profile has somehow been subordinated. The hunger for strong checks and balances to counter impunity and marginalisation in the system by Kenyans honed the creation of an independent arm of this whole framework

The mandate of the office was crafted with the context of the  national assembly, Senate and the county assembly. Before, the audits were only carried on the central government. However, now everything is in one pot. The Auditor General is also tasked with auditing the judiciary and the budgetary office.

Q: To ensure that the audit reports are unbiased, who audits the Auditor-General?

A:  A professionally qualified accountant appointed by the National Assembly is given this responsibility and is expected to make a report and take it back to Parliament.

Q: Kenyans are not particularly keen on fiscal reporting but on managerial accountability. How is your office working to meet their expectations?

A: Issuing timely reports, proper budgeting and accounting of expenditure and putting law-breakers on notice. Kenyans interest lays on whether the public money allocated to various departments has been effectively managed to make a difference in the society and  by avoiding wastage .This office is more concerned with what the figures mean on the ground

Q: You have highlighted underfunding of your office as one of the challenges facing your office, what other issues are derailing performance?

A: The office has a challenge of re-orienting the right expertise to the field and more people are needed at the national and county level. There is also need for change in mental culture about the approach of what auditing entails.

Q: What is your recommendations to ensure efficiency in public offices?

A: The country should invest in up-stream institutions, which work in combating corruption, change approach to detecting crime rather than acting when something happens and continuous work should be made available in the national and county level.  With devolution, a lot of resources and responsibility has been pushed in the counties. There is a risk of corruption spreading to counties as the guys set to be in charge deem that they are outside the public eyes and especially the media

Q: Last year, top political parties spend millions in their campaigns, has this been captured in the report?

 A: This has been very problematic since some of the accounts I am receiving are incomplete and there is no basis to start auditing. They are reducing their expenditure yet the media highlighted of their luxurious spending. To properly audit them, we have to go to the drawing board. We need to have an agreement forcing them to reveal their income.

Q: What happens if political parties fail to disclose their expenditure?

A: The legislature clearly outlines that any political party registering must be ready and willing to be transparent in its dealings. I will report back to the political registrar who takes this in account and effectively deals with this.

Q: How will reports of auditing counties determine the amount of funds allocated in the budget of the next fiscal year?

A:  More funds will be allocated as counties show maturity and capacity. There is no point giving a lump sum of money to a county that has no expertise or staff. Governors should be realistic about the absorption of funds and the capacity of their counties to deliver. The emerging budget proposals by governors reveal misplaced priorities. I will begin carrying out audits in counties from July 15 to aid proper execution of funds.

Q: Sh15.5 billion has been set aside for the implementation of the grand laptop project. Who is getting the laptop tender?

 A: This is an open tendering system and the negotiations are on-going, so I do not want to interfere with it. However, I am worried about the potential risks that might crop up in handling this. We need to have a pre-determined approach and a robust system of stock control.

Critical parties need to sit down and look at the planning of procurement, stocking, distribution and independent verification of use.