To beat corruption networks, we must strengthen our financial management
What you need to know:
- Corruption is on the upsurge in this country because public financial management and accountability has historically not been a high priority.
- Mr Martin Oduor Otieno is the only professional accountant to have served as permanent secretary at the Treasury. The rest were either former district commissioners or economists.
- Why is the government finding it difficult to institute a system that centralises procurement of common user items? Considering its size, the government should be purchasing common user items way below market rates
The other day, the Cabinet decided that internal auditors will now report to the Cabinet secretaries of their specific ministries. This is a glaring manifestation of lack of appreciation of the proper place and role of auditing in an organisation.
Is it not the height of irony that we have been shouting about corruption, then refuse to allow auditors to operate independently? Even in the corporate world, the internal audit function ultimately reports to the board’s audit committee.
Why are we changing from the system where all internal auditors in the civil service reported to the National Treasury? Where is the evidence that the current system, where all economists report to the Ministry of Planning and Devolution and all procurement officers to the National Treasury, has failed? Where is the research and analytics to justify these haphazard changes?
I have always maintained that the war against corruption will not be won by merely locking up all the big fish in jail. We live in a society where corruption is related to political patronage.
One of the major things that bestows political legitimacy is how one shares the proceeds of corruption with cronies and supporters on activities such as harambees.
Thus, although an anti-corruption strategy based on throwing people into jail is good at giving the populace emotional gratification and a sense of closure, in reality, it cannot take us very far.
Considering that corruption in this country is systemic, we may find ourselves staggering under the weight of packed jails. Imagine having to throw in all members of parliamentary committees!
Instead, we must concentrate on strengthening and modernising institutions of accountability — procurement procedures, internal audit systems, parliamentary oversight institutions, the Judiciary, the Ombudsman, the Directorate of Public Prosecutions, and the Office of the Attorney General.
HIGH PRIORITY
Corruption is on the upsurge in this country because public financial management and accountability has historically not been a high priority. There was a time when the person in charge of public financial management carried the designation “principal finance and establishment officer”. These people had no training in finance and accounting.
On the advice of the World Bank and the International Monetary Fund, the position was abolished and replaced by the cadre known as “finance officers”, most of whom were former district commissioners with no professional training in accounting and finance.
Today, the National Treasury is basically run by economists. There are very few qualified accountants in the employ of the institution charged with running our public financial management systems.
Mr Martin Oduor Otieno is the only professional accountant to have served as permanent secretary at the Treasury. The rest were either former district commissioners or economists.
Truth be told, public financial management in Kenya is weak. Why do I say so? Because public financial management is about recording, classifying, analysing, and reporting. In South Africa, every ministry is required to produce audited accounts three months after year-end.
In Kenya, you would be lucky to see a ledger of all assets owned by a government ministry. How often do we come across the consolidated accounts of the whole government? Yet we all know that financial reporting is the heart of financial management.
Today, the government touts the Integrated Financial Management Information System (IFMIS) as a major success. Yet it is well known that in terms of generating information critical to financial management, IFMIS is way inferior when compared to core banking systems which most banks use or enterprise resource planning (ERP), which many corporate companies use.
Why is the government finding it difficult to institute a system that centralises procurement of common user items? Considering its size, the government should be purchasing common user items way below market rates.
I read that in the United States, the General Service Administration purchases common user items for the government at 30 per cent below market rate. Our supplies branch at the department of Public Works became moribund several years ago.
Let us put public finance management at the top of the agenda.
