Lack of financial accountability still gnaws at Govt
Auditor-General Edward Ouko speaks during the 2017 Financial Reporting Conference at Crowne Plaza Hotel, Nairobi, on November 16, 2017. PHOTO | DIANA NGILA | NATION MEDIA GROUP
What you need to know:
- The Department of Agriculture also had a huge hole in its books, failing to account for Sh8.9 billion.
- The Auditor-General says of the Sh1.3 trillion spent in the 2015/16 year, only 3.45 per cent or Sh43.5 billion was incurred lawfully and spent effectively.
The government failed to account for more than Sh40 billion in the 2015/16 financial year, Auditor-General Edward Ouko has said in his latest report on the combined accounts of departments and ministries.
However, Mr Ouko says there has been a general improvement in maintenance of records compared to previous years.
He attributes the improvement to the adoption of international public sector accounting standards and other initiatives of the Treasury.
The improvement has been gradual, he says, noting that in the 2011/12 financial year, only six per cent of the financial statements were clean.
“This has improved over the years to stand at 27 per cent in the 2015/16 financial year,” he says.
ACCOUNTABILITY
The statements that had a few issues, to which the auditor attaches the term “qualified”, reduced from 52 per cent in 2011/12 financial year to 47 per cent in 2015/16. Still, the performance is less than satisfactory. “Accounting for public funds is still wanting,” Mr Ouko adds.
Of the 109 statements by the ministries, departments and agencies that were scrutinised, only 30 per cent - less than a third - were clean.
The remaining 82 contained misstatements that led auditors to doubt their veracity.
Given that the accounting officers are usually given time to provide statements and documents backing their use of the allocated money, failure to provide the material is taken as a lack of evidence.
SCRUTINY
Accounting officers are also informed of the issues in the ministries or departments they oversee, given the chance to correct them by providing the documents and if they do not, the report is then published pointing out the problems.
The latest report is yet to be tabled in Parliament but was submitted two weeks ago and has since been uploaded on the website of the Office of the Auditor-General (www.oagkenya.go.ke).
It will be scrutinised by the Public Accounts Committee, which is yet to finish finish scrutiny of the 2014/15 audit report.
Leading the ranks of ministries and departments that did not provide adequate documents to support their spending was the Department of Planning under the Devolution ministry, which failed to account for Sh10.5 billion.
The Department of Devolution also failed to account for Sh3.6 billion, meaning the ministry failed to account for Sh14.1 billion.
PARASTATALS
The Department of Agriculture also had a huge hole in its books, failing to account for Sh8.9 billion.
The Strategic Grain Reserve Trust Fund was similarly unable to adequately support its expenditure of Sh4.1 billion.
Other departments that reported major problems were Agriculture Settlement Fund Trustees (Sh3.6 billion), Teachers Service Commission (Sh2.1 billion), the National Exchequer Account at Treasury (Sh1.9 billion), the Department of Water and Irrigation (Sh1.3 billion) and the Department of Infrastructure (Sh1.1 billion).
The Sh40.3 billion that could not be accounted for in 2015/16 is significantly higher than the amount in the previous financial year, which was Sh7.3 billion.
It is however less than the Sh66.7 billion that the government could not account for in the first full financial year of the Jubilee administration, 2013/14.
PROCUREMENT
In the report of the 2014/15 financial year, the Auditor-General said Sh14.4 billion was wasted by various government entities, mostly through procurement. He however did not analyse the latest report.
The report comes about 13 months late as the Constitution requires that the Auditor-General audits and reports to Parliament on the accounts of the county and national governments within six months of the end of the financial year.
Because of a variety of issues such as late submission of financial statements, lack of adequate staff and red tape, among others, the Auditor-General usually submits his report to Parliament in June, a year after the end of the financial year he audited.
Mr Ouko was last year under pressure in Parliament in the form of a petition for his removal after the procurement of a Sh100 million software used by his office was found to have been riddled with corruption.
With the Jubilee administration spending the better part of last year campaigning, some in its ranks were keen on having submission of the report of the Auditor-General delayed to avoid handing the opposition a political tool to beat the ruling party with.
Politics aside, the latest report shows that accounting for taxpayers’ money is still a problem.
SPENDING
The Auditor-General says of the Sh1.3 trillion spent in the 2015/16 year, only 3.45 per cent or Sh43.5 billion was incurred lawfully and spent effectively.
State officers could not properly account for Sh1 trillion, and statements relating to an additional Sh112.4 billion or 8.93 per cent, were misleading or incomplete.
Mr Ouko said statements on Sh94.4 billion were in such a bad state and were so misleading that he could not confirm if the amount was spent properly.
This Sh94.4 billion would include the Sh40.2 billion whose spending was not supported.
Like counties, the national government was also grappling with pending bills in the 2015/16 financial year. The bills amounted to Sh20.5 billion.
DEBT
This was an improvement on the previous year, he said, where Sh43.2 billion was owed to suppliers and service providers.
The biggest debtors in the 2015/16 financial year were the Interior and National Coordination ministry (Sh6.3 billion), Devolution ministry (Sh2.9 billion), Health ministry (Sh2.5 billion), the Lands ministry (Sh1.7 billion) and the Treasury (Sh1.4 billion).
Mr Ouko also pointed out problems in the statements of revenue provided by the Treasury.
Of the Sh1.2 trillion collected in the 2015/16 year, only Sh33 billion was properly recorded.
This was the money collected by the Treasury as development revenue, the Department for Coordination of National Government and the East African Community, commerce and tourism.
“Revenue amounting to Sh1.1 trillion or 96.25 per cent though also fairly recorded had issues resulting to a qualified opinion while revenue amounting to Sh11.7 billion or 0.98 per cent had no proper records and could not therefore be confirmed as accurately reported,” he said.
The Sh1.1 trillion was collected by Treasury as recurrent revenue.
The Pensions Department, the Department of Interior, the Lands, Housing and Urban Development and the Department for Fisheries did not keep proper records of the revenue collected.
