The Office of the Auditor General, which draws its mandate from Article 229 of the Constitution, has proved itself up to task in providing oversight over government ministries, State corporations, county governments and other public entities.

The office is categorised as an independent office by Article 248(3a) of the Constitution. It is tasked with ensuring that public funds are used lawfully and effectively towards service delivery and generates regular audit reports, which detail whether public entities adhere to this principle.  

In addition, Articles 229(6) and 229(7) of the Constitution and Section 7 of the Public Audit Act, 2015, require that the Office of Auditor General confirm and report to Parliament and relevant county assemblies on the lawfulness and effectiveness of the use and management of public resources.  

It is worth noting that for the Auditor General’s office to effectively discharge its duties and mandate, it has to be independent. However, currently, the office’s budget is negotiated with officials of the National Treasury. Although this has not yet done any harm, it could lead to unwanted pressure on the office and result in the withholding of necessary funds, thus compromising its independence.

Financial Autonomy

The Institute of Certified Public Accountants of Kenya (ICPAK) points out that the nature of the Auditor General’s functions requires guaranteed independence. This aspect has been recognised by the International Organisation of Supreme Audit Institutions (INTOSAI).

In its XIX Congress meeting in Mexico, dubbed the “Mexico Declaration on SAI Independence”, INTOSAI recognised eight core principles as essential requirements for proper public sector auditing.

These are the existence of an appropriate and effective constitutional or statutory or even legal framework and of de facto application provisions of this framework; the independence of SAI heads and members (of collegial institutions), including the security of tenure and legal immunity in the normal discharge of their duties.

Others include a sufficiently broad mandate and full discretion in the discharge of SAI functions; unrestricted access to information; the right and obligation to report on their work; the freedom to decide the content and timing of audit reports and publish and disseminate them; the existence of effective follow-up mechanisms on SAI recommendations; financial and managerial as well as administrative autonomy and the availability of appropriate human, material, and monetary resources.  

According to ICPAK, Kenya has adopted and implemented some of these principles. Nevertheless, there is still a long way to go in realising the freedom to decide the content and timing of audit reports and to publish and disseminate them.  

The Auditor General office’s annual budget estimates are prepared and submitted to the Cabinet Secretary (CS) responsible for finance who then submits to the National Assembly estimates of the revenue and expenditure of the National Government.

In the present set-up, under Article 221(3) of the Constitution, the National Assembly considers the estimates of revenue and expenditure of the National Government together with the estimates submitted by the Parliamentary Service Commission (PSC) and the Chief Registrar of the Judiciary.

This arrangement undermines the Office of Auditor General’s absolute independence, given that the National Treasury is an entity subject to its statutory audit. To assure independence, ICPAK argues that there is a need for the Public Audit law to provide for direct submission of the Auditor General’s annual budget estimates to the National Assembly. This model has been implemented in Canada and the United Kingdom (UK) successfully.       

Canada

In Canada, the Office of the Auditor General operates as a department of the Public Service under the Public Sector Management Act (1994), thus receiving an annual appropriation from the Treasury.

The Public Accounts and Expenditure Review Committee, in its 1992 Report, recommended that the Office of the Auditor General should not be constituted as a department of the Public Service. Opinions from other sources went further to suggest that the office should be established as a statutory authority to provide more autonomy and independence.

Subsequently, the office’s budget for each financial year is determined in consultation with the parliamentary committee concurrently with the annual plan.

The United Kingdom

In the UK, the United Kingdom Audit Office (NAO) presents its budget to an all-party Public Accounts Commission. The membership of the commission includes the chairman of the Public Accounts Committee, the leader of the House of Commons, and seven other members of the House appointed by it. None of the seven is a minister.

The NAO prepares an estimate of its expenses annually. The commission examines this estimate and lays it before the House of Commons with such modifications as it sees fit. The commission is required to take into consideration any advice given by the Public Accounts Committee and the Treasury.

Auditor General’s Role

Following the recent Gazette Notice No. 8261 of 2024, forming a Presidential Taskforce on Forensic Audit of Public Debt, the said taskforce is required to audit the public debt within 90 days and report back to the President.

The Law Society of Kenya (LSK) disapproved of the establishment of the taskforce, stating that the move amounted to a usurpation of power by the head of state as the mandate rests with the Auditor General’s office.

It’s also worth noting the recent High Court decision, which underscores the Auditor General’s role in public audit matters. A High Court ruling in the case of Ondago v Natembeya & 15 others (2023) KEHC 22268 (19 September 2023) (Judgement), the Court, while nullifying a taskforce created to audit County Government of Trans Nzoia debts, asserted that the Governor, George Natembeya, could have requested the Auditor General to conduct a forensic audit.

LSK said that taking cognisance of the provisions of Article 229 of the Constitution and the interpretation of the said provisions by the court, the establishment of the presidential task force is unconstitutional.

“The LSK, under its statutory mandate, advises the President to refrain from usurping the constitutional powers of the Auditor General through Executive Orders and allow the Auditor General to perform her constitutional duties,” a statement from LSK Secretary and CEO Florence Muturi stated. LSK added that the mandate to audit public debt rests with the Office of the Auditor General.

The accountants body-ICPAK, recommends that, to assure absolute independence of the Office of the Auditor General, The Public Audit law should provide for the full financial autonomy of the office.

This, according to ICPAK, will be achieved by instituting mechanisms that provide for direct submission of the Auditor General’s annual budget estimated to the National Assembly and not through the National Treasury.