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

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AUDITING GOVERNMENT PROJECTS: COMMON ISSUES AND CONSIDERATIONS

PRESENTSTION BY HUMPHREY WANYAMA

DEPUTY AUDITOR GENERALOFFICE OF THE AUDITOR GENERAL, KENYA

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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 FORWARD04/21/23 Promoting Accountability in the Public

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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.

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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

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(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

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.

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

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

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

• 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

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

• 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

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

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

THANK YOU FOR YOUR ATTENTION

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