{"count":1608389,"next":"http://info.mzalendo.com/api/v0.1/hansard/entries/?format=json&page=153185","previous":"http://info.mzalendo.com/api/v0.1/hansard/entries/?format=json&page=153183","results":[{"id":1550032,"url":"http://info.mzalendo.com/api/v0.1/hansard/entries/1550032/?format=json","text_counter":311,"type":"speech","speaker_name":"Butere, ODM","speaker_title":"Hon. Nicholas Mwale","speaker":null,"content":" Hon. Temporary Speaker, I beg to move the following Motion: THAT, this House adopts the Report of the Public Accounts Committee on its examination of the Report of the Auditor-General on the financial statements for the National Government Ministries, Departments and Agencies for the Financial Year 2021/2022 laid on the Table of the House on Friday, 14th March 2025. This is the second Report that this Committee has brought in this 13th Parliament. It is the first Report to be tabled after the reconstitution of the committees. I thank Hon. Members of the Committee for making it a priority. They perused through the Report which had been done by the other Committee before the reconstitution of the committees. They largely supported it by appending their signatures. They also adopted the Report to be brought to this House. Before I delve so much into the Committee’s observations and recommendations, I would like to bring a correlation between prudent use of public resources, and how it can spur economic growth and bring better living standards to the common Kenyan. This Committee is mandated, under Standing Order 205, to scrutinise and examine all the expenditure that is appropriated to State departments by this House. Therefore, if we do not get it right on the prudent use of resources in this country, then we will not get it right in the economic growth of the country. When you talk about economy, you look at the Gross Domestic Product (GDP). You not only talk about nominal GDP but also real GDP. The formula of GDP is consumption plus investment plus government spending plus net export (C+ I + G + (X – M), where (X - M) is The electronic version of the Official Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Hansard Editor."},{"id":1550033,"url":"http://info.mzalendo.com/api/v0.1/hansard/entries/1550033/?format=json","text_counter":312,"type":"speech","speaker_name":"Butere, ODM","speaker_title":"Hon. Nicholas Mwale","speaker":null,"content":"the net export. The component which I will pay a lot of respect to, before I go to the recommendation of the Committee, is component G, which is Government investments. Much of Government investments are done and appropriated by this House. They are given to State Departments and Agencies. Much of them are the ones that the Auditor-General audits to find out if we have prudent use of these funds. Therefore, if we do not get it right on prudent use of government resources and taxpayers' money, then there is no way the economy will grow. It will be affected, and the common mwananchi will have difficulty in affording essential goods and services. I will narrow down GDP and talk about real GDP because it is the one that gives us the true standards of living of the common mwananchi . For us to get it, we have to factor in the GDP deflector which we compare with inflation. If we are not careful about inflation or we have mismanagement of public funds which brings about corruption and illicit trade, it will affect the prices of commodities and services. In the long run, this affects the consumer price index, which is used to gauge the inflation rate of an economy. Therefore, I assure this House that the Committee has prepared a good Report that is going to address many of the issues that have been raised by the Auditor-General in terms of looking at the financial statements of State Corporations, Agencies and other State Departments. Hon. Temporary Speaker, this Report has highlighted the legal frameworks pertaining to public finance. One of them is Chapter 12 of the Constitution of Kenya, which deals with the Principles and Framework of Public Finance. The second one is the Public Finance Management Act 2012, which stipulates how accounting officers are supposed to utilise and manage State resources. The other one is the Public Procurement and Asset Disposal Act 2015. As we are aware, all Government resources are spent through procurement. Therefore, if those laws and regulations under the Public Procurement and Asset Disposal Act 2015 are not followed, we will have a problem when it comes to ensuring prudent use of public resources or having value for money. We also have the Accounts Act, 2008, and the International Public Sector Accounting Standards (IPSAS), among other provisions of the law that empower Parliament to oversee public institutions. This Report has 1,116 pages. It has all the State agencies and Votes that get disbursement from this honourable House. The Auditor-General has brought forward 326 audit opinions. I want to refer Members to Page 13 of the Audit Report. This Report stipulates that on donor projects, we have 216 audit opinions. On Revenue Statements, we have 13 audit opinions. On Ministries, Departments and Agencies (MDAs), we have 71 audit opinions. We note that we have a lot of audit opinions on donor projects. Therefore, as much as we talk of forming the Africa Finance Corporation, which I know the end game is to borrow money to invest in this country, we need to emphasise on proper management of those funds so that we do not get a lot of qualified opinion from the Auditor-General. Further, to give my colleagues a glimpse of the terms used by the Auditor-General, when I refer to ‘Unqualified Audit Opinion’ from the Auditor-General, that is considered to be a clean report. When I talk about ‘Qualified Audit Opinion’, it means that despite the financial statements having been submitted, there is some veracity on certain expenditures in respect of which the auditor wants the State Department to furnish more information. In the interest of time, because I know the House is going to rise at 7.00 p.m, and I have my Vice-Chairperson to second, and Members have been waiting to contribute, I want to summarise the Report. We have the observations and recommendations. The first observation and recommendation is on poor accounting standards and general incapacity of some accounting units. Sometimes you might find qualified staff in a State Department. The staff are there and they are qualified, but some of them are not conversant with the laws and the regulations. This recommendation reads as follows: The electronic version of the Official Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Hansard Editor."},{"id":1550034,"url":"http://info.mzalendo.com/api/v0.1/hansard/entries/1550034/?format=json","text_counter":313,"type":"speech","speaker_name":"Butere, ODM","speaker_title":"Hon. Nicholas Mwale","speaker":null,"content":"‘The Committee recommends that the National Treasury conducts periodic sensitisation and capacity building of all accounting officers, finance staff and procurement officers across the Government on their responsibilities during the audit cycle and adherence to International Public Sector Accounting Standards Board (IPSASB)’ The second recommendation is on late submission of supporting documents. For the Office of the Auditor-General to come up with an unqualified opinion, it has to be furnished with relevant supporting documentation to prove what the funds were used for. We have seen in many of the audit opinions that the Office of the Auditor-General was not furnished with the requisite documents as requested. Therefore, we are recommending that Section 68(2)(k) of the Public Finance Act be adhered to by State agencies so that information is provided on time for the Auditor-General to do the scrutiny. The other observation is non-existent or weak internal audit functions. As you are aware, every State agency is supposed to have an internal audit function. However, the audit opinions have shown clearly that many of those State agencies lack internal audit committees. So, the function is not practiced in many State agencies. The Committee reiterates its previous recommendation that the National Treasury should submit a proposal to the National Assembly within three months of adoption of this Report, delinking internal audit function in terms of appointment, facilitation and reporting from accounting officers to an independent office. The other issue, which is an observation and a recommendation under number four, is the long outstanding construction works and stalled projects. In many cases in this country, we see many projects stalling and they end up wasting public funds because of harsh climate conditions. Some of them are subjected to inflation. The variations that are done actually end up making the projects very costly. Therefore, the Committee recommends that the National Treasury should only approve projects for which it can guarantee funding and completion within the medium-term expenditure framework. No new projects should be commenced by an agency before all existing ones are completed and fully funded. We have the issue of budgetary control and performance. This arose from all Ministries and State departments. Under budgetary control and performance, the issues raised are predominantly about late exchequer issues, supplementary budgets and incapacity to collect targeted revenues. The Committee recommends that the National Treasury, the Budget and Appropriation Committee, and the Departmental Committee on Finance and National Planning make realistic revenue projections and attainable expenditure estimates. The elephant in the room is pending bills. We have seen so many companies and so many Kenyans who are suffering because of the Government not paying for goods supplied and services rendered to Government institutions and projects. Pending bills are a major issue when you talk about the economy being revived and surviving. Therefore, the Committee recommends that the Treasury only rationalises budgets that have not been committed. Further, the Committee recommends that borrowing by the National Treasury to plug budget deficits should be done uniformly across the financial year to avoid the end-year rush of disbursement and procurement in an effort to beat the deadline. Hon. Temporary Speaker, there is the issue of accrual and cash basis of accounting. I am very sure that many Members are familiar with it. It is a basic principle of accounting. Many national Government institutions and State agencies use the cash basis principle, and this has a lot of disadvantages and drawbacks when it comes to accountability and keeping of financial records. The Committee recommends that the National Treasury expedites the full rollout of accrual basis of accounting as this is going to give the true picture of the financial state of our State departments and agencies. The time is almost 7.00 p.m. That is why I am summarising so that I give my Vice- Chairperson ample time to second the Motion and pave way for Members to contribute. The electronic version of the Official Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Hansard Editor."},{"id":1550035,"url":"http://info.mzalendo.com/api/v0.1/hansard/entries/1550035/?format=json","text_counter":314,"type":"speech","speaker_name":"Butere, ODM","speaker_title":"Hon. Nicholas Mwale","speaker":null,"content":"The ninth issue under our ‘Observation and Recommendation’ is the dual implementation of projects between county and the national Government. For instance, you find the county government implementing a project that is also being implemented by the national Government. The Committee reiterates its recommendation that such funds be wholly issued to the implementing agency as conditional grants rather than stick to the mongrel arrangement that currently subsists. We have failure or delays in compensating land owners. We have had this issue all along, especially in the Ministry of Energy and Petroleum, where a State agency wants to build a power line but compensating the land owner’s way leave becomes an issue. The Committee notes, for example, with respect to the State Department of Energy in paragraph 1337 and 1363, and with respect to the State Department for Roads in paragraphs 55, 84, 603, 612, 695 and 808; that, projects had been undertaken without due compensation of the land owners persons. The Committee recommends that the implementing agencies prioritise compensation for land earmarked for acquisition before the acquisition is actualised as provided for under Sections 111, 115 and 117 of the Land Act. In a nutshell, the Committee wants to assure this House that this Report will address major issues that have led to the mismanagement of public resources. In furtherance of its recommendations, the Committee has not shied away from prescribing punitive sanctions to gross violation of the law. For instance, with reference to paragraphs 216, 222, 294, 1476, 1471 of the Ethics and Anti-Corruption Commission, the Committee has recommended investigations of certain cases. As I mentioned earlier, the centrality of this Report in the Division of Revenue Bill during Financial Year 2021/2022 is that the total revenue recorded under various revenue statements as received by the national Government amounted to Ksh2,028,236,839,950, representing an increase of Ksh314,593,858,437 or about 18 per cent when compared to actual collection of Khs1,713,642,981,513 realised in the Financial Year 2020/2021. The total revenue of Ksh2,028,236,839,950 comprised of Ksh1,920,434,085,078 as shareable revenue, Ksh46,756,750,697 as receipts from Government investments and public enterprises and Ksh61,046,004,175 from development revenue. In the 2021/2022 Financial Year, the total shareable revenue of Ksh1,920,434,085,078 increased by 22 per cent compared to the shareable revenue of Ksh1,570,562,945,014 in the 2020/2021 Financial Year. I am giving these figures because the Committee recommends that the total nationally collected revenue amount of Ksh1,920,434,085,078 forms the basis of the sharing revenue between the national and the county governments as contemplated in Article 203(3) of the Constitution. I want to stop there in the interest of time. I assure Members that this Committee has done a good job and they should support and adopt the Report. We will endeavour to make sure that public resources are utilised in accordance with the Constitution and the Public Finance Management Act. The Committee shall continue to execute its oversight mandate of State agencies as recommended by the Office of the Auditor-General through audit opinions that are presented to the National Assembly. With those few remarks, I move and invite the Vice-Chairlady of the Committee, Hon. Amina Udgoon, to second the Motion."},{"id":1550036,"url":"http://info.mzalendo.com/api/v0.1/hansard/entries/1550036/?format=json","text_counter":315,"type":"speech","speaker_name":"Hon. Farah Maalim","speaker_title":"The Temporary Speaker","speaker":{"id":16,"legal_name":"Farah Maalim Mohamed","slug":"farah-maalim"},"content":" Proceed, Hon. Udgoon."},{"id":1550037,"url":"http://info.mzalendo.com/api/v0.1/hansard/entries/1550037/?format=json","text_counter":316,"type":"speech","speaker_name":"Garissa County, JP","speaker_title":"Hon. Amina Siyad","speaker":null,"content":" Thank you, Hon. Temporary Speaker, for giving me this opportunity. I rise to second the Motion. In addition to the general observations and recommendations highlighted by the Chairman, who is the Mover, allow me to expound on a few others. The Chairman spoke of pending bills. As already mentioned, pending bills are a thorn in the flesh of Government records. Other than the already stated budget cuts, some MDAs lack proper documentation, leading to accumulation of bills. It is unbelievable that a Government agency could procure a product or service but fail to document it. That is an The electronic version of the Official Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Hansard Editor."},{"id":1550038,"url":"http://info.mzalendo.com/api/v0.1/hansard/entries/1550038/?format=json","text_counter":317,"type":"speech","speaker_name":"Garissa County, JP","speaker_title":"Hon. Amina Siyad","speaker":null,"content":"avenue for corruption. All procurement officers holding incomplete documentation must be put on notice, as this has the effect of frustrating genuine suppliers. We all know the frustrations that Kenyans go through because of pending bills. Many people fell into depression because of pending bills. The secondly recommendation I would like to highlight is on donor funding to non- priority areas. The Committee has seen instances where the country commits to loans whose outcomes and outputs are not a priority for the country. You find components of those loans including items such as capacity building of Government officials, workshops and other recurrent expenditures. The National Treasury must only commit the country to loans that have direct benefit to the people of Kenya. Allow me to also highlight a few challenges that were witnessed by the Committee in the execution of its mandate and that delayed the production of this Report. One of the challenges is the perpetual request for reschedules. Some accounting officers have a habit of requesting rescheduling of their appearances, and hence hampering the Committee's calendar. It is instructive to note that the same accounting officers never miss meetings for appropriation of the budget, which also have strict timelines. Accounting officers are, therefore, put on notice that failure to appear will lead to a recommendation like “carried as it is”. In the interest of time, the honourable Members of this noble House will find the Report enriched with the recommendations on each audit query. Therefore, I second the Motion for adoption of the Committee's Report."},{"id":1550039,"url":"http://info.mzalendo.com/api/v0.1/hansard/entries/1550039/?format=json","text_counter":318,"type":"scene","speaker_name":"","speaker_title":"","speaker":null,"content":"(Question proposed)"},{"id":1550040,"url":"http://info.mzalendo.com/api/v0.1/hansard/entries/1550040/?format=json","text_counter":319,"type":"speech","speaker_name":"Hon. Farah Maalim","speaker_title":"The Temporary Speaker","speaker":{"id":16,"legal_name":"Farah Maalim Mohamed","slug":"farah-maalim"},"content":" I will, first, give a chance to the Chairman of the Departmental Committee on Finance and National Planning."},{"id":1550041,"url":"http://info.mzalendo.com/api/v0.1/hansard/entries/1550041/?format=json","text_counter":320,"type":"speech","speaker_name":"Molo, UDA","speaker_title":"Hon. Kuria Kimani","speaker":null,"content":" Thank you very much, Hon. Temporary Speaker. First of all, I would like to congratulate the Public Accounts Committee (PAC) for the good work they have done on this Report under the able leadership of another young man from this country, Hon. Tindi Mwale. I served in the PAC in the last Parliament, and I can say that it is one of the busiest committees as it does a lot of work based on the Report of the Auditor- General. It takes tremendous work for the Committee to table such a Report. Thank you for a job well done. Even as we discuss the Report of the Financial Year 2021/2022, one of the key issues we need to ask ourselves is how we can expedite the time taken to discuss such reports. One of the challenges that we encountered when I was serving in the Committee was that by the time we got to the core matter, it would be water under the bridge. You would want to interview the accounting officers who were in office during the period under review, and we would be told that some of them had died and others were in different countries. We need to find a way of making sure that we are more up to date on the audit of the financial reports. The Report highlights critical deficiencies in financial management, procurement, irregularities and weak internal controls. One of the best authors on financial accounting called Warren Buffett says that accounting is a “language” of business, and if you do not speak that “language”, it is difficult to win the game. Therefore, this accounting report is a language of business and governance. If accounting is not properly done by that State agency, we will lose. Proper financial management is not just about compliance. It is also about ensuring that there is fiscal discipline, resource use optimisation and economic stability. Some of the key findings of the Committee include poor accounting standards and compliance issues. Despite those Ministries, Departments and Agencies (MDAs) being staffed by professional accountants in every State department, there were very many irregularities. For example, in the Ministry of Agriculture, Livestock and Fisheries, there were unconfirmed receipts of Ksh96 million. The The electronic version of the Official Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Hansard Editor."}]}