Governors accuse oversight agencies of overstepping their mandate

CoG Finance, Planning and Economic Affairs Committee Chairman Fernandes Barasa. [Samson Wire, Standard]

The Council of Governors (CoG) has raised concern over what they describe as a prejudiced approach by oversight institutions when dealing with county governments.

The CoG singled out the Office of the Auditor General (OAG), Ethics and Anti-Corruption Commission (EACC), Controller of Budget (CoB) and Commission on Revenue Allocation(CRA) saying they portray devolved units as avenues of embezzlement of public funds.

The CoG Finance, Planning and Economic Affairs Committee Chairman Fernandes Barasa said the agencies paint devolution as a failed system of governance.

“The Auditor General and the Controller of Budget have repeatedly and theatrically claimed that county governments do not have audit committees and effective internal audit functions, they claim that the absence of strong and effective internal audit functions in counties has created loopholes in governance, thereby failing to avert some of the pilferage and mismanagement through which billions of shillings are embezzled,” said Barasa.

The Kakamega Governor said the Auditor General has also been quoted saying that county governments have not made any noteworthy efforts to move towards producing unmodified audit opinions, therefore putting to question the integrity of devolved units' accountability systems.

Barasa defended county governments saying they have functional audit committees established in accordance with Section 167 (1) of Public Finance Regulations (for County Governments), 2015 and as per the Audit Committee Guidelines developed by the Public Sector Accounting Standards Board (PSASB).

The CoG Finance, Planning and Economic Affairs Committee Chairman said that county audit committees provide oversight of the financial reporting process, the audit process, the county risk management and internal control systems as well as compliance with laws and regulations.

“The Controller of Budget has time and again occasioned delays in the release of funds to counties, for instance at the end of April, while about Sh58 billion released by the National Treasury in February was still sitting idle in the County Revenue Fund accounts at the Central Bank of Kenya pending approval by the Controller of Budget,” he said.

The Kakamega Governor said that counties were struggling with operations and running into the risks of facing fines and penalties from other national governments such as the Kenya Revenue Authority, National Hospital Insurance Fund and National Social Security Fund and that getting Exchequer releases to counties has become more difficult.

Barasa revealed that the CoB Margaret Nyakang'o has adopted a rule decreeing that all exchequer requisitions by counties must be signed by her to enhance prudence and curtail the voiding of payments or re-allocation of payments by counties without justifications.

He claimed that the CoB has been seeking to overstep her constitutional mandate of approving the release of money from the Consolidated Fund to counties by requesting access rights to monitor how they use the money, a decision that disrupts the flow of funds to the county exchequer.

“Article 207 of the 2010 Constitution and Section 109 of the Public Finance Management Act, 2012 gives autonomy to county governments to manage their own revenue administration, however, the National Treasury has announced that it shall acquire a single Enterprise Resource Planning system for administration of revenue for all the 47 county governments,” said Barasa.

The governor said the National Treasury has stated that all exchequer issues shall be collapsed into a system that will compel county treasuries to use funds in accordance with approvals by the CoB which is in disregard of efforts made by county governments to automate their processes, including acquiring of county revenue management systems.

The CoG accused the EACC of having a condescending attitude when dealing with the county government's leadership.

“The Ethics and Anti-Corruption Commission should rather work closely with the Council of Governors and counties to put corruption risk mitigation measures in place instead of the unpleasant media stunts that are skewed towards disrupting county activities and subjecting county governments leadership to unjustifiable embarrassment,” said Barasa.

Barasa assured that the CoG has always been willing, supportive and ready to collaborate to enable EACC to accomplish the corruption prevention mandate and counties have been working to establish effective governance systems that have not only enabled them to deliver good services to people but get recognition awards in governance and risk management.

“This year the Institute of Internal Auditors (IIA-Kenya) has recognised and awarded the Makueni county government for establishing effective risk management systems, including corruption prevention systems in compliance with Section 165 of the Public Finance Management Act,” he said.

He said that despite efforts made by counties, EACC has subjected them to corruption audit fatigue, sensationalised the fight against corruption and subjected them to unwarranted media attacks and public embarrassment, causing public mistrust in devolved units' governance systems.

“The Ethics and Anti-Corruption Commission should rather work closely with the Council of Governors and counties to put corruption risk mitigation measures in place instead of the unpleasant media stunts that are skewed towards disrupting county activities and subjecting county governments leadership to unjustifiable embarrassment,” said Barasa.

The CoG urged state agencies to respect the Constitution and comply with the laws that support devolution while the National Treasury and the CRA should use the latest audited financial statements when determining the amount of funds allocated vertically between the national and county governments.

The CoG asked the National Treasury to stop the plan to acquire an Enterprise Resource Planning system to manage revenue collection in counties with immediate effect, since that is a clear contravention of Article 207 of the Constitution and Section 109 of Public Finance Management Act on the autonomy of counties to manage the administration of their own revenue.