Media highlights on Auditor General’s report misleading

The Auditor General's report on the National Government expenditure is finally out. After much publicity on the counties' "looting" of public funds, it's now the turn of National Government departments to squirm. With headlines screaming, "Massive cash rip off", asking for "action against those looting public funds", everyone in the public sector looks suspicious. A BBC programme on the audit report this week analysed this "massive corruption" in the public service, which "continues unabated despite President Obama's pronouncements".

The huge figures bandied about by the report leaves the average Kenyan disillusioned and cynical about government since it appears there is a looting spree. How can a whole Sh67 billion be "stolen"! How can government only spend 1.2 per cent of its expenditure legitimately, they wonder. The unfortunate reality is that whereas there is theft in Government, Auditor General's report and the media analysis thereon is unduly alarmist and unhelpful in the fight against looting of public monies. Let me give an example. In the year 2013-2014 media reported how a government department had squandered Sh30 million meant for fuel. However, a reading of the audit report discloses that the Auditor General had refused to accept as legitimate the expenditure of the Sh30 million shillings spent on fuel for the institutions' vehicles notwithstanding presence of invoices, payment vouchers and receipts. This was because, though it was clear the money had been spent for the Department's purposes, the Department had failed to have the Work Tickets (the government log of a vehicle's travels) properly signed by an authorised officer. Audit being what it is this immediately translated to unsupported expenditure.

In the media report on that institution, the report was that the Sh30 million had been stolen! If you read this year's report, it is clear that most of the complaints relate to lack of proper documentation, as opposed to allegation of outright theft. That would explain why the Attorney General's office and the Ministry of Health appears unable to account for nearly their entire budgets. Clearly those offices paid salaries, and carried out their normal operations; it cannot be that all the money was stolen.

Let me be clear that proper documentation is critical for all expenditure particularly of public funds. In any event, some failure to keep proper records is an avenue for, or evidence of looting. The problem with the failure by the report and the media to make a clear distinction between what are procedural defects and what is outright fraud is that it obfuscates the issues and enables the ones responsible for actual looting to hide under the general condemnation. When the numbers quoted appear ludicrous, the temptation is to assume total rot in government, leading to unhealthy apathy and a loss of faith in government generally.

And yet everyone who does any analysis knows that public finance management in Government has improved over time. The other option is for people to assume that the entire report is in error. In that situation the fraudsters benefit along with those with procedural defects. I believe that time has come for the Auditor General to release a summary of his findings clearly distinguishing between procedural defects where the expenditure is otherwise validateable and those where on the face of it, theft occurred.

On a related point, if it is true the Auditor General cannot confirm expenditure of Sh390 billion then there is a severe problem with the accounting processes in government. Anyone in government knows it is unduly difficult to spend GOK money due to numerous procedural requirements. This is why many Government Departments return money to the Treasury every year and yet exhaust all donor money whose expenditure is less onerous. If despite all this the Auditor General still gives qualified opinions on one third of government expenditure, we need to go back to the drawing board.

We need to remove those procedures that add little value but cause undue delays in expenditure and also raise numerous nuisance audit queries. If we don't rethink our accounting, audit and reporting, this critical report is going to become an annual circus that no one takes seriously other than for its political and headline value.