The Accountant-May-June 2017

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Public Policy We must appreciate the Legislature recognizing ICPAK as a key player in financial oversight and accountability. The choice of discussants: ICPAK, Senate, Office of the Auditor General (OAG) and the County Assembly was a clear recognition that financial oversight and accountability is indeed a collaborative role. • In collaboration with OAG, we have developed capacity to private audit firms to enable them audit the public sector. OAG is now able to out-source audits of county agencies leading to timely audit reports for timely oversight review. ICPAK has, in collaboration with the Parliamentary Initiatives Network also developed a simplified reader’s guide on understanding the Auditor General’s report. The guide is meant to aid the oversight committees in reading through and understanding the Auditor General’s reports • ICPAK played a key role on establishment of Audit Committees at the Counties. The Institute did a survey on the effectiveness of Audit Committees which aided the development and subsequent gazettement of the guidelines. ICPAK continuously advocates for strengthening of the internal audit function and constantly lobbies for all Audit Committees to include an accountant who is also a member of ICPAK. • Through the Financial Reporting Excellence (FiRE) Awards, ICPAK in collaboration with PSASB, CMA & NSE, are able to do a joint financial reporting compliance review on counties. FiRe Awards recognise the best performers in terms of compliance with the standards and creates a third-party scrutiny of the compliance levels. It plays a complimentary role to the review exercise by the assemblies’ oversight structures. • ICPAK has also continuously partnered with a number of county governments in capacity building of accountants on technical matters. We do this at in-house level or through our externally provided CPD events. Is the oversight role of county assemblies inhibited or limited by the fact that they too are performing poorly with respect to prudent financial management in their respective institutions? The question is whether the firstgeneration county legislator (the MCA) has effectively delivered on the county financial oversight and accountability role. All over the world, it is increasingly being recognized that legislatures, both national and sub-national, have a critical role to play to strengthen economic governance, improve transparency in public finances 34 MAY - JUNE 2017
Public Policy and ensure government accountability. It is fair to say that generally County Assemblies have tried but could have done better in discharging the oversight role on counties. County Assemblies have not effectively played the oversight role owing to legal, systemic as well as professional weaknesses. We have tried as a country to create fiscal parity among the three arms of government at the national level, and between the County Executive and County Assembly at the County Level. The law however, provides for a limiting funding structure by sitting the role of overall county budget under the County Executive thus creating a situation of financial dependency of all the county entities at the mercies of the county executive. It has been the case of many county executives applying budget and budgeting powers to curtail the operations of the County Assembly with a view to weakening the oversight function. Closely related is the aspect of separation of powers between the County Executive and the County Assemblies. Separation of powers principle is an important tenet of democracy. Montesquieu gave one of clearest statements of the separation of powers in 1748: When the legislative and executive powers are united in the same person, or in the same body of magistrates, there can be no liberty… there is no liberty if the powers of judging is not separated from the legislative and executive… there would be an end to everything, if the same man or the same body… were to exercise those three powers. In Kenya, separation of power is manifested horizontally through the relationships between and among the legislature, executive and the judiciary. Similarly, one of the objects of devolution, Article.174 of the Constitution, is to enhance checks and balances and the separation of powers. How do we make County Assemblies independent to enable them effectively play their oversight role and have the County Assemblies observe the principles of separation of power in order to entrench effectiveness in the discharge of the oversight role? It is therefore justifiable to state that the county assemblies have made subtle effort to oversight the affairs of the counties. The situation of the inadequacy of assembly oversight role has thus given rise to oversighting at the Senate level which in our view though a legal process, may not be timely and adequate. Oversight at the Senate level should be complimentary, not the primary oversight as is the case now. In my opinion, for effectiveness of the oversight role, the assemblies must entrench themselves as centres of oversight which would then dictate that they operate within a structure that respects the principles of independence. As such, there is need to rethink this area and create functional independence of the assemblies by ring-fencing their funding from control of the county executive. We need to continuously develop the capacity of the County Assemblies, specifically to bridge the knowledge gap on public financial management by oversight committees. The first step would for the electorate to appreciate the magnitude of the role of over sighting at the county and proactively assess the competence of the people they elect to the assemblies. There will also be need for continuous capacity building of the assembly members by equipping them with appropriate knowledge on matters of public sector management in general and in specific terms, public financial management. The role to capacity build the assemblies can be achieved through collaboration with stakeholders including professional bodies like ICPAK. The county assemblies must be made to understand that their effectiveness as oversight institutions is driven by observance of the principles of separation of powers. It is thus incumbent upon the County Assemblies to focus on their core roles of legislation, representation and oversight and limit to the extent possible, the desire to team up with the executive in discharging the executive role by engaging in any form of policy or programme implementation. By doing this, County Assemblies will fulfil their rightful mandate of being the legislative and oversight authority at the counties. How well are county assemblies performing in relation to protecting public resources, overseeing the utilization of public funds and value for money? This can be subjective, but we can say the performance of county assemblies have been both good and bad. Good because the assemblies have made good inroads; mainly in ensuring public participation and representation in budgetary approvals. There is at least some attempt. Also, holding executive officers in counties accountable, marked by impeachment motions or refusing to approve county budgets is not necessarily wrong; these actions, though unpopular, reinforce governance awareness and sound decisions in counties, especially if they are not politically instigated. The bad part is the visible compromise on the oversight role. There are blatant cases of conflicts of interest, with Members of County Assemblies’ (MCAs) getting involved in budget implementation instead of monitoring. MCAs have also been involved in graft cases across counties. In conclusion, it is worth noting that: • Some counties both at the executive and assembly levels have not established Audit Committees even after the gazettement of guidelines by the National Treasury on 15th April 2016. Relevant oversight bodies need to urgently take this one up. • Effective oversight is easily achievable if we work together as partners. We encourage collaboration between equivalent bodies or committees in the Houses (County Assemblies, National Assembly and Senate) and other levels oversight – ICPAK, OAG and the Office of the Controller of Budget. • County Assemblies will administer their oversight role if they are appropriately supported by the right professionals. We advocate recruitment of professional accountants – CPA(K)s and members of ICPAK. • Charity begins at home; MCAs will need to oversight themselves to be able to oversight others. MAY - JUNE 2017 35
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Page 64 and 65: BOOK REVIEW Reviewed by Angela Muti
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Page 72 and 73: ACCOUNTABLE RECIPES By Sharon Gaton
Page 74 and 75: PEN OFF questions effectively open

The Accountant-May-June 2017

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