President Ruto orders PSs, parastatal heads to account for tax billions

Principal secretaries (PSs) and other accounting officers in government ministries, departments, and agencies (MDAs) are in a race against time to beat a deadline set by President William Ruto for them to address all queries raised by Auditor-General Nancy Gathungu.

A circular by the Executive Office of the President said that the accounting officers have until October 2, 2023, to clear up all pending audit queries arising from the Auditor-General’s reports for the financial years 2021/2022 and 2022/2023.

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“All pending audit queries or issues arising from the OAG (Office of the Auditor-General) reports of the financial year 2021/22 and 2022/23 must be closed off by Monday, October 2, 2023, with a notification to this office by Monday, October 9, 2023,” said the memo signed by the Chief of Staff and Head of the Public Service, Felix Koskei.

An audit query means that an auditor has questions or doubts about the genuineness, validity, or accuracy of transactions carried out by an entity that has been audited.

“Where an audit query is not capable of being closed off for any reason, the same must be fully explained in writing by Monday, October 9, 2023.No MDA shall attract a new audit query in the entire financial year 2023/24,” the Executive Office of the President said.

The President’s directive follows a survey of MDAs’ transaction books by his office which revealed that less than 30 percent of audit queries for the financial years 2021/2022 and 2022/2023 had fully been addressed.

“The types of audit queries arising from the aforesaid Auditor General’s reports were avoidable in the first place and recurred in many cases,” the Presidency said.

Dr Ruto’s office said a pile-up of unresolved audit queries had over the years fanned misuse of taxpayers’ funds.

“Audit queries and issues from the basis, or lay the basis, for vices that undermine the objectives of government to be a responsive, responsible, efficient and effective custodian and manager of public resources,” the circular said.

“In fact, the conditions that promote corruption and disastrous effects are fermented through the failure to avoid audit queries and/or close them off, and worse repeat the same mistakes.”

On Tuesday, Treasury Principal Secretary Chris Kiptoo and Solicitor-General Shadrack Mose were dispatched to Ms Gathungu’s office where they discussed the status of compliance with the Presidential directive and upcoming audits for the present financial year.

The President’s directive is a major boost for the Auditor-General who has repeatedly protested inaction by MDAs on queries on unexplained expenditures or transactions totalling billions of shillings every year.

For example, in the 2021/2022 financial year, the Auditor-General’s office had flagged transactions in various State agencies, including some Sh8.6 billion in unremitted contributions to the National Social Security Fund (NSSF).

In her latest audit on NSSF books for the year ended June 2022, Ms Gathungu revealed that Sh1.96 billion mandatory contributions deducted from contributors are yet to reach the fund in addition to Sh6.68 billion late payment penalties.

“In the circumstances, the effectiveness of the internal controls system with regard to debt recovery and management could not be confirmed,” she said in the report.

In a bid to compel action on audit queries, Ms Gathungu last year tabled in Parliament a proposal to review the Public Finance Management Act, 2012 to impose sanctions on principal secretaries and parastatal bosses who fail to implement the audit recommendations.

The proposals further seek to introduce and enforce sanctions on accounting officers in MDAs who fail to comply.

The Public Audit Act, of 2015 requires the Auditor-General to state in audit reports how responsive a State organ or public entity has been in implementing past audit findings.

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The Auditor-General has cited the lack of an effective mechanism for follow-up on the implementation of audit recommendations and the lack of consequences or requisite sanctions for non-adherence as some of the reasons accounting officers do not implement audit recommendations.

“This has led to perennial failure by some accounting officers to adequately account for the management and use of public resources entrusted in their care,” she told a forum of constitutional commissions and independent offices in October.

“It has also led to fiscal indiscipline, including misallocations, wastage of resources, theft, and corruption which in turn has affected development programmes thereby threatening the sustainability of service delivery and the wellbeing of the citizens.”

Mr Koskei said no MDA would be allowed to carry forward any unresolved audit queries for the current 2023/24 financial year to curb misuse of taxpayer funds.

“No MDA shall attract a new audit query in the entire financial year 2023/24. Where an MDA anticipates that an audit will arise for reasons beyond their capability or control, the same must be escalated to the relevant principal secretary for further guidance and assistance with a copy issued to the OAG for their advice and assistance” he said.

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