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Public audit is key to enhancing accountability of resources

By Billow Kerrow | January 10th 2016

The Opposition has gone to court to challenge the Public Audit Act 2015. Their contention is that part of the Act limits the scope of audit of security agencies, and undermines the independence of the Auditor General by placing his staff under the Public Service Commission. I will not delve into the merits or otherwise of these issues as it would be prejudicial to the case before the court.

But the case highlights the significance of the Office of Auditor General (OAG) in public financial management. The passage of this law was not easy, and was subjected to a mediation committee of both Houses twice. It was therefore not wholly unexpected that CORD will go to court to challenge sections of it. But whichever way the court rules, disagreements over the outcome of annual audits of public institutions will continue to generate heated arguments across the political divide as we have seen in recent years.

The objective of an audit is to provide an independent opinion on the activities of an institution to shareholders, or in the case of public entities to Parliament that represents the people. OAG does so by examining the documents of the entity for the period under review, and by examining and evaluating the evidence gathered before making an opinion from their observations and findings.

The most critical stage in an audit is often the planning stage, long before auditors appear on site. It is at this stage the auditor and his client discuss the scope of work, their preparedness for the audit, information and documents required and the approach the auditor intends to use. It would be expensive and waste of time to commence an audit if the client is not ready with all relevant financial statements and documents. The level of preparedness also determines the outcome of the audit, and the timeliness of the audit report. In the public sector, audit timelines are predicated on the submission of his report to Parliament, which is within six months after the financial year-end.

Equally critical is the level of engagement with the auditors by the client at the time of the audit, and explanations given on queries raised. Where adequate explanations and evidence is not forthcoming, the auditor is likely to give a qualified opinion. The challenge in the public sector audit, at national and county levels, is the lack of seriousness by the accounting officers in working with auditors. This is reflected in the high degree of unpreparedness that often leads to failure to provide audit evidence and explanations sought such as supporting documentations for transactions. Similarly, the accounting officers do not take time to engage with the auditors, often leaving junior accountants to deal with them. The consequence is that the kind of reports we have seen last year where the auditor qualified his reports in respect of more than two thirds of the ministries, departments and agencies.

Rather than demand the auditor discusses his audit opinion with accounting officers before publishing them, the Head of Public Service should demand that institutions plan for audits properly and adequately with seriousness, including having all relevant documentation in place well before the audit begins. Accounting officers should also find time to engage with the auditor at the end of the site visit to discuss key audit findings. Public bashing of the auditors after qualified reports are tabled in the Houses will erode public confidence in audit reports. These reports provide an independent and objective assessment of how effectively public resources have been utilised. It is the only avenue the public have in holding their government to account, and represents a key antidote against the creeping vice of corruption.

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