1. PUBLIC FINANCE MANAGEMENT CONFERENCE 24 TO 26 SEPTEMBER 2014 AT SAROVA WHITESANDS BEACH RESORT, MOMBASA THEME: SOUND PUBLIC FINANCE MANAGEMENT FOR AFRICA’S ECONOMIC GROWTH 12/17/2015 Promoting Accountability in the Public Sector 1

2. AUDITING GOVERNMENT PROJECTS: COMMON ISSUES AND CONSIDERATIONS PRESENTSTION BY HUMPHREY WANYAMA DEPUTY AUDITOR GENERAL OFFICE OF THE AUDITOR GENERAL, KENYA 12/17/2015 Promoting Accountability in the Public Sector 2

3. OUTLINE OF THE PRESENTATION OVERVIEW OF GOVERNMENT PROJECTS MANDATE OF THE OFFICE OF THE AUDITOR GENERAL OAG REFORMS AUDIT REPORTING REQUIREMENTS COMMON AUDIT ISSUES KEY CONSIDERATIONS CHALLENGES WAY FORWARD 12/17/2015 Promoting Accountability in the Public Sector 3

4. OVERVIEW OF GOVERNMENT PROJECTS Donor Funded – fully funded with loans and grants or with GOK counterpart funding. G O K Funded under voted provisions or through devolved funds such as CDF. All sectors of the Government are beneficiaries of project funding. The management of the Projects are required to prepare financial statements at the end of every financial for audit by the Auditor General. 12/17/2015 Promoting Accountability in the Public Sector 4

5. MANDATE OF THE OFFICE OF THE AUDITOR GENERAL Within six months after the end of each financial year, the Auditor general shall audit and report on the accounts of ; (a)National and County Governments (b)All funds and Authorities of the NG and CG (c)All courts (d)Every commission and Independent Office (e)National Assembly, Senate and County Assemblies 12/17/2015 Promoting Accountability in the Public Sector 5

6. (f) Political Parties funded from public funds (g) Public debt (h) Any other entity that legislation requires the Auditor General to audit (i)Any entity funded by public funds An audit report shall confirm whether or not public money has been applied lawfully and in an effective way Audit reports shall be submitted to Parliament or the relevant County Assembly

7. GENERAL FUNCTIONS AND POWERS Article 252 Conduct investigations Conciliation, mediation and negotiation Issue summons for the purpose of investigations. Perform any functions and exercise any powers prescribed by legislation.

8. OAG REFORMS Constitutional and Legal (a)Article 229 and Chapter 15 (b) The independent Offices (Appointment) Act, 2011 (c)Public Audit Bill Institutional (a)Application of ISSAIs and RAM (b) OAG Structure – Sectors and Regional Hubs (c)Strategic Pillars – Certification, Continuous and Value for Money Audits

9. AUDIT REPORTING REQUIREMENTS Preparation and Submission of auditable Financial Statements by 30 Sept of every year Financial Reporting Framework as provided by the PSASB. Reports by the Auditor General to be signed and issued by 31 December of every year Copies of reports sent to clients audited and ERD. Any key/material findings included in the main client reports to Parliament/ County Assembly

10. COMMON AUDIT ISSUES Inaccurate Financial Statements Unvouched/Unsupported Expenditure Excluded /ineligible Expenditure Un-reconciled Balances Irregular Expenditure Unverified Assets Non-submission of Special Accounts Use of Unauthorized Format of Financial Statements

11. Cash Balances differ with BOS Report Unremitted deductions e.g. Withholding Tax Non-compliance with Loan Agreements Omission of Counterpart funds from Financial Statements Operating costs not well documented Outstanding Prior Year items Inability to absorb budget allocations, especially on Development budget Pending bills

12. KEY CONSIDERATIONS Projects Management Legal/Regulatory Framework Proper Project Design and Planning Preparation and Implementation of Project Budgets Procurement procedures including no objections Counterpart Funding

13. Use of Project Funds for Intended purpose Possible suspension of Project Funding leading to stalled/sub-standard/uncompleted Projects Monitoring and Evaluation of Projects Disbursement procedures Internal Control System Capacity of Project Implementation Units Contract agreements and Protocols Priority given to Audit of Projects

14. CHALLENGES Submission of Incomplete and Inaccurate financial statements Late submission of financial statements Delays in responding to audit queries/issues Inadequate capacity to audit all Government Projects by OAG Use of FMAs to disburse Project Funds to NGOs, CBOs, FBOs Management of Logistics for OAG

15. WAY FORWARD Build capacity for Government Projects Management and audit Accountant General’s Office to provide Guidance and Supervision to those charged with Government Projects financial reporting Government needs to review the FMA arrangement to use GOK systems

16. THANK YOU FOR YOUR ATTENTION 12/17/2015 Promoting Accountability in the Public Sector 16