Auditor-General Nancy Gathungu.
Accounting officers who fail to implement recommendations of Parliament will face a five-year jail term or Sh10 million fine if MPs approve a Bill that also seeks to cut the period of submitting financial statements to the auditor-general from three months to one month for audit.
Auditor-General Nancy Gathungu wants the Finance and National Planning Committee to make further changes to the Public Finance Management (Amendment) Bill, 2023 to introduce the punitive sanctions on non-compliance with the House's recommendations on public entities' audited accounts.
Ms Gathungu told the National Assembly’s Finance and National Planning Committee which sponsored the Bill that further amendments to section 199 of the Public Finance Management Act, 2012 will compel accounting officers to take Parliament’s recommendations seriously and ensure they are implemented.
Section 199 of the Public Finance Management Act, 2012 stipulates that a person found guilty of committing an offence under the Act for which no other punishment is given is liable on conviction to a term of imprisonment not exceeding five years or to a fine not exceeding Sh10 million.
“I, therefore, recommend as follows with regard to the subsection on non-compliance-introduce a clause to amend section 149 of the Principal Act by inserting—an accounting officer who does not implement the recommendations made under sub-section (3) shall be liable to the penalty provided for under section 199,” Ms Gathungu said.
“Clause 4(c) of the Bill proposes to amend section 68 of the Public Finance Management Act, 2012 to penalise any accounting officer who does not implement the recommendations of Parliament.”
Personal responsibility
Appearing before the committee chaired by Molo MP Kuria Kimani to present views on the Bill currently undergoing public participation, Ms Gathungu said there is no personal responsibility on the part of the accounting officers for failure to implement audit and Parliament recommendations.
Ms Gathungu said clause 4 of the Bill proposes to amend section 68 of the Act by introducing sanctions for non-compliance by accounting officers or Principal Secretaries concerning the implementation of recommendations made by a committee of the National Assembly in respect of a report submitted by the Controller of Budget under Article 228(6) of the Constitution.
She said accounting officers for a national government entity, the Parliamentary Service Commission, and the Judiciary are accountable to the National Assembly while those of a county government entity are accountable to the County Assembly.
“One of the accountability requirements as provided under section 68(2)(l) and (m) and 149(2(l) of the Public Finance Management Act, 2012 is to resolve any issues that arise from audit which may ionremain outstanding and provide information on any fraud, losses or any unlawful or unauthorised use of resources and an explanation for the act taken to prevent similar problems in the future,” Ms Gathungu said.
“As such, implementation of audit and Parliament’s recommendations is critical if such recommendations are to be impactful and lead to required change,” Ms Gathungu said.
Ms Gathungu said lack of implementation of Parliament’s recommendations is not one of the offences identified in sections 196, 197, and 198 of the PFM Act, 2012.
Ms Gathungu said section 204(1)(g) of the Act only assigns institutional sanctions to a national government entity that fails to address issues raised by the Auditor General to the satisfaction of the Auditor General.
“There is no responsibility on the part of the accounting officers who are responsible officers,” Ms Gathungu said.
The Bill, sponsored by the National Assembly’s Finance and National Planning Committee seeks to reduce the time required to submit annual financial statements by the National and County Treasuries, accounting officers, and administrators of national and county funds from the current three months to within one month after the end of the financial year.
The Bill, sponsored by Molo MP Kuria Kimani on behalf of the committee, also proposes to reduce the time required to submit consolidated annual financial statements by the National and County Treasuries from four months to two months after the close of the financial year.
Ms Gathungu has backed the Bill saying legislative timelines for submitting financial statements should be reviewed as a minimum standard rather than as an ideal objective.
“I submit that my office supports the proposed amendments with regards to reducing the timeline for submitting the financial statements to the Auditor General,” Ms Gathungu said.
“Public sector entities have the ability to report in a timely manner and indeed earlier than the currently stipulated timelines.”
Ms Gathungu revealed that only 82 entities, out of over 12,000 public sector entities had submitted financial statements for audit with less than a week to the deadline for submission of September 30, 2024.
