Unaudited state firms, ministries up threefold

The number of unaudited ministries, departments, and agencies (MDAs) has nearly tripled, the Public Service Commission (PSC) has revealed, raising questions on the safety of billions of shillings in taxpayers’ money.

A newly published report by the PSC shows that there has been a steady rise in the number of unaudited public organisations from the 2018/2019 to 2019/2020 financial years – leaving gaps in the state of utilisation of public funds.

In 2018/2019, there were 26 unaudited MDAs but that number shot up to 72 in the 2019/2020 financial year, representing a 177 per cent jump.

“Across the public service, there was a steady rise in the number of unaudited organisations from 2018/2019 to 2019/2020 financial years and this puts into question the safety of public funds and levels of efficiency with regard to prudent utilisation of public funds,” the PSC said.

Probe recommended

Following the sharp rise in unaudited MDAs, the PSC has recommended a probe into the matter.

“Government (should) constitute a multi-agency forum composed of oversight institutions in the public finance management sector to review the underperformance in the public finance sector by June 2022,” the commission recommended.

Financial audits of organisations are critical because they ensure that the financial records are a fair and accurate representation of the transactions they claim to represent.

The PSC report further shows that 19 percent of evaluated MDAs had a positive opinion by the Auditor-General for the financial year 2019/2020 down from 31 per cent the previous year — an indication of rising doubts on the true state of the financial accounts of the MDAs. Usually, auditors present a positive opinion when they believe something is true or correct.

New Auditor-General

It was not immediately clear what has resulted in the sharp rise in audited MDAs. The operations of the Auditor-General’s office were disrupted for newly a year following delays in the replacement of Edward Ouko whose eight-year non-renewable term expired on August 27, 2019.

The process to replace Mr Ouko began immediately after his retirement but the Sammy Onyango-led panel opted to re-advertise the position saying none of the 17 candidates shortlisted after the first interviews met the criteria for the job. This was challenged in court by activist Okiya Omtatah saying some of the considerations imposed by the panel were outside the eligibility threshold set in law.

However, the court in March 2020 asked President Kenyatta to either extend the mandate of the selection panel or constitute a fresh one as current one “lacks legal competence and validity.”

President Kenyatta then appointed a new team headed by Mutua Kilaka to search for the auditor-general, a process that has now been concluded with the nomination and eventual appointment of the current Auditor-General Nancy Gathungu.