Public Audit Act

Section 1. Short title Section This Act may be cited as the Public Audit Act.

Section 2. Interpretation Section an Accounting Officer of the Office of the Auditor-General referred to under section 16 (1)(b);

Section 3. Guiding values and principles Section 3(1)(a) the national values and principles provided for under Article 10 of the Constitution; Section 3(1)(b) the equality and freedom from discrimination provided for under Article 27 of the Constitution; Section 3(1)(c) the responsibilities of leadership provided for under Article 73 of the Constitution; Section 3(1)(d) the principles governing the conduct of State officers provided for under Article 75 of the Constitution; Section 3(1)(e) the principles of public finance under Article 201 of the Constitution; and Section 3(1)(f) the values and principles of Public Service as provided for under Article 232 of the Constitution. Section 3(2) In addition to the values and principles in subsection (1), the Auditor-General shall promote efficiency, accountability, effectiveness and transparency on use of public resources.

Section 4. Establishment of the Office of the Auditor-General Section 4(1)(a) suing and being sued; Section 4(1)(b) acquiring, safeguarding, holding, charging and disposing of moveable and immoveable property; and Section 4(1)(c) doing or performing all such other duties or acts for the proper discharge of its functions under this Act, which may be lawfully done by a body corporate. Section 4(2) The office shall comprise the Auditor-General as its statutory head and all other staff appointed by the Auditor-General as may be delegated in accordance with Article 234 of the Constitution.* Section 4(3) The Office of the Auditor-General shall ensure reasonable access to its services in all parts of the Republic. Section 4(4) The headquarters of office of the Auditor-General shall be in the capital city but the office may establish branches at any place in Kenya.

Section 5. Qualification for appointment as the Auditor-General Section is a citizen of Kenya;

Section 6. Common Seal Section 6(1) The Common seal of the Office shall be kept in the custody of the Auditor-General or in the custody of such other person as the Auditor-General may direct. Section 6(2) The Common Seal of the Office when affixed to a document and duly authenticated shall be judicially and officially noticed, and unless and until the contrary is provided any necessary order or authorization by the Office under this section shall be presumed to have been duly given provided that express authority of the Auditor-General is procured.

Section 7. Functions and powers of the Auditor-General Section 7(1)(a) give assurance on the effectiveness of internal controls, risk management and overall governance at national and county government; Section 7(1)(b) undertake audit activities in state organs and public entities to confirm whether or not public money has been applied lawfully and in an effective way; Section 7(1)(c) satisfy himself or herself that all public money has been used and applied to the purposes intended and that the expenditure conforms to the authority for such expenditure; Section 7(1)(d) all reasonable precautions have been taken to safeguard the collection of revenue and the acquisition, receipt, issuance and proper use of assets and liabilities; and Section 7(1)(d)(i) all reasonable precautions have been taken to safeguard the collection of revenue and the acquisition, receipt, issuance and proper use of assets and liabilities; and Section 7(1)(d)(ii) collection of revenue and acquisition, receipt, issuance and proper use of assets and liabilities conforms to the authority; Section 7(1)(e) issue an audit report in accordance with Article 229 of the Constitution; Section 7(1)(f) provide any other r...

Section 8. Administrative powers of the office of the Auditor-General Section develop an organisational structure and staffing establishment for the Office of the Auditor-General subject to Article 234(5) of the Constitution;

Section 9. General powers of the Auditor-General Section 9(1)(a) to conduct investigations on his or her own initiative, or on the basis of a complaint made by a third party; Section 9(1)(b) to obtain professional assistance, consultancy or advice from such persons or organizations whether within or outside public service as he/she considers appropriate; Section 9(1)(c) of conciliation, mediation and negotiation; Section 9(1)(d) to issue summons to a witness for the purposes of his or her investigation; Section 9(1)(e) all books, records, returns, reports, electronic or otherwise and other documents of entities listed under Article 229(4) of the Constitution; Section 9(1)(e)(i) all books, records, returns, reports, electronic or otherwise and other documents of entities listed under Article 229(4) of the Constitution; Section 9(1)(e)(ii) any property or premises used or held by State organs or public entities covered by Article 229(4) of the Constitution and subject to audit under this Act, Section 9(1)(f) to request any public officer that is subject to this Act to provide explanations, information and assistance in person and in writing; Section 9(1)(g) to locate any of his or he...

Section 10. Independence of the Auditor-General Section 10(1) The Auditor-General shall not be subject to direction or control by any person or authority in carrying out his or her functions under the Constitution or under this Act. Section 10(2) Without prejudice to the generality of subsection (1), the Auditor-General and his or her staff shall perform their functions impartially, without fear, favour or prejudice and shall exercise their powers independently subject to the provisions of the Article 249 (2) of the Constitution, the provision of this Act and any other written law.

Section 11. Vacancy in office Section 11(1)(a) dies; Section 11(1)(b) by a notice in writing addressed to the President, resigns from office; or Section 11(1)(c) is removed from office under any of the circumstances specified in Article 251 or Chapter Six of the Constitution. Section 11(2) Where a vacancy occurs under subsection (1), the President shall within seven days, by notice in the Gazette , in at least two newspapers of national circulation and in at least two national radio and television stations, declare vacancies in the office of the Auditor-General and invite applications. Section 11(3)(a) qualified person; Section 11(3)(b) person, organisation or group of persons proposing the nomination of any qualified person. Section 11(4) The names of all applicants under subsection (2) shall be published in the Gazette . Section 11(5)(a) the Ministry for the time being responsible for matters relating to finance; Section 11(5)(b) the Office of the Attorney-General; Section 11(5)(c) the Ministry for the time being responsible for matters relating to the public service; Section 11(5)(d) the Institute of Certified Public Accountants of Kenya; Section 11(5)(e) the Association of Prof...

Section 12. Acting Auditor-General Section 12(1)(a) the office of the Auditor-General becomes vacant; Section 12(1)(b) the Auditor-General has been suspended in accordance with the Constitution; Section 12(1)(c) the appointment of a person as Auditor-General is pending; or Section 12(1)(d) the Auditor-General is for any reason unable to perform the function of his or her office, Section 12(2) A person designated under subsection (1) shall meet the minimum qualifications for appointment to the office of the Auditor-General and shall serve for a period not exceeding ninety days. Section 12(3) When acting in terms of subsection (1), the acting Auditor-General shall have all the powers of the Auditor-General.

Section 13. Oath of Office Section The Auditor-General shall, before assuming office, make and subscribe to the oath or affirmation set out in the Schedule before the Chief Justice.

Section 14. Development and approval of organisational structure Section The Office of the Auditor-General shall develop an organizational structure for consideration and approval by the Audit Advisory Board.

Section 15. Recruitment of the Senior Deputy Auditor-General Section 15(1) There shall be a Senior Deputy Auditor-General who shall be competitively recruited by the Advisory Board and appointed by the Auditor-General. Section 15(2) A person shall be qualified for appointment as the Senior Deputy Auditor-General, if that person meets all the qualifications for appointment as outlined in section 5 of this Act.

Section 16. Responsibilities of the Senior Deputy Auditor-General Section 16(1)(a) be the head of administration and management of the office of the Auditor-General; Section 16(1)(b) be the accounting officer of the Office of the Auditor-General; and Section 16(1)(c) perform such duties and exercise such other powers as the Auditor-General may delegate to him or her or perform other duties as spelt out by the office of the Auditor-General. Section 16(2) In performance of his or her responsibilities under subsection (1) (a), the Senior Deputy Auditor-General shall report to the Auditor-General.

Section 17. Recruitment of other Staff Section 17(1) The office of the Auditor-General may recruit such other staff as may be necessary for proper discharge of his or her functions under the Constitution, this Act and any other written law, upon such terms and conditions as he/ she may determine in consultation with the Salaries and Remuneration Commission and subject to Articles 230 and 234(5) of the Constitution. Section 17(2) The remuneration of such staff should reflect prevailing remuneration of staff performing similar duties in the audit profession in other public and private institutions. Section 17(3) The staff of the Office of the Auditor-General shall be competitively recruited in accordance to the organisation structure developed by the office of the Auditor-General. Section 17(4) The recruitment and appointment of staff shall take cognisance of regional, ethnic and gender balance including equal opportunities to persons with disabilities and marginalized groups and shall comply with the value and principles of public service as contemplated in Article 232 of the Constitution.

Section 18. Secondment of officers Section 18(1) A State organ or public entity may upon such request by the Auditor-General, second to the office such number of public officers as may be necessary for proper performance of the functions of the Office. Section 18(2) A public officer seconded to the office shall, during the period of secondment, be deemed to be an officer of the office and be subject to the policies and regulations of the office of the Auditor-General. Section 18(3) The Auditor-General may, upon the request of a State organ or public entity second his or her staff who shall, for the period of such secondment, be under the direction and control of the concerned State organ or public entity and such an officer shall not audit that State organ or public entity within a period of twenty-four months after the expiry of the secondment.

Section 19. Delegation of powers Section 19(1) The Auditor-General may, subject to such conditions as he or she may impose in writing, delegate any power and assign any duty conferred on him or her in terms of this Act or any other written law to a subordinate officer. Section 19(2) A delegation or instruction in terms of subsection (1) shall not absolve the Auditor-General of the responsibility concerning the exercise of his or her power or the performance of the duty. Section 19(3) The Auditor-General may confirm, vary or revoke any decision taken by a member of staff in consequence of a delegation or instruction under this section.

Section 20. Budget estimates and plans of the office of the Auditor-General Section 20(1) The accounting officer shall prepare annually budget estimates of revenue and expenditure and work plans for the next financial year for consideration. Section 20(2) The budget estimates of revenue and expenditure referred to under sub- section (1) shall be submitted to the Cabinet Secretary responsible for finance not later than the 30th March each year for review and submission to the National Assembly in accordance with Article 221 of the Constitution, and the National Assembly shall, pursuant to Article 249 (3) of the Constitution, allocate adequate funds to the office of the Auditor-General. Section 20(3)(a) estimates of revenue and recurrent expenditure for the coming fiscal year; Section 20(3)(b) estimates for the development expenditure for the coming fiscal year; and Section 20(3)(c) any other matter considered relevant by the Auditor-General in the consideration of the budget and plans of the Office.

Section 21. Power to obtain information from others Section 21(1)(a) to produce any official document in the body's or person's custody, care or control; and Section 21(1)(b) to provide the Auditor-General with information or an explanation about any official information, system or asset. Section 21(2)(a) advise the person in writing of the nature of the information and why it is needed; Section 21(2)(b) state that the information is required under this Act; Section 21(2)(c) ask for further information where necessary; Section 21(2)(d) summon the person, if necessary; or Section 21(2)(e) reimburse the person for any reasonable costs incurred in travelling where such person is summoned to appear, as may be determined by the Office. Section 21(3) Where the information required is not official, then the Auditor-General will have to apply to the courts to obtain such information. Section 21(4) In cases where the Auditor-General suspects fraud or corruption, he or she may invite the relevant organs for their appropriate action.

Section 22. Power to examine bank accounts Section 22(1) The Auditor-General may in the course of exercising his or her functions, duties or powers, track a transaction into the account of any person in any bank through an order of the courts, if the Auditor-General has reason to believe that the money belonging to a public body has been fraudulently or wrongfully paid into such person's account. Section 22(2) When required under this section, the bank shall produce any documents or provide requested information relating to the account in the bank's custody or control. Section 22(3) In exercising the authority under this section, the Auditor-General shall ensure that any information obtained is not used for any other purpose other than that legally intended and the Auditor-General shall keep in safe custody all the documents and information so obtained. Section 22(4) The Auditor-General may make copies of any documents so produced.

Section 23. Outsourcing audit services Section 23(1) For purposes of carrying out his or her functions under this Act, the Auditor-General may outsource audit services from duly registered audit firms whose partners and staff are not employees of the Office of the Auditor-General and the public service to assist in an examination and audit of accounts. Section 23(2) Only a person registered and practising as an accountant under the Accountants Act (Cap. 531) shall be qualified for the purpose of provision of a financial audit opinion under this section. Section 23(3) An auditor appointed under this section shall comply with any lawful directions given by the Auditor-General and shall report to the Auditor-General. Section 23(4) For purposes of his or her appointment, an auditor appointed under this section exercises delegated powers of the Auditor-General relating to examinations and audit. Section 23(5) An auditor appointed under this section shall not certify the results of the examination and audit and shall not submit any report required under this Act other than the report under subsection (2). Section 23(6) During the period of performing the work outsourced, the staff of the...

Section 24. Professional assistance and consultancy Section 24(1) The Auditor-General may, in the performance of his or her duties and functions under this Act, engage the services of or work in consultation with professional or technical experts or consultants, whether in the public service or not, to enhance the performance of the Auditor-General. Section 24(2) The engagement of service under sub-section (1) shall be for purposes of ensuring effectiveness in the application of public funds.

Section 25. Establishment and composition of the Audit Advisory Board Section 25(1)(a) the Auditor-General or a person nominated by him or her; Section 25(1)(b) the Attorney-General or a person nominated by him or her; Section 25(1)(c) a nominee of the Institute of Certified Public Accountants of Kenya; Section 25(1)(d) a nominee of the Association of Professional Societies of East Africa; Section 25(1)(e) a nominee of the Law Society of Kenya; Section 25(1)(f) the Chairperson of the Public Service Commission or his or her nominee: Section 25(2)(a) has a degree from a university recognised in Kenya; Section 25(2)(b) has a minimum of fifteen years' experience in matters relating to public finance, auditing, accounts, law, governance or public management; and Section 25(2)(c) meets the requirements of Chapter Six of the Constitution. Section 25(3) The Auditor-General may co-opt two other members with the necessary expertise. Section 25(4) The members of the Audit Advisory Board shall elect a chairperson from among themselves, who shall not be the Auditor-General. Section 25(5) The nomination and appointment of members under this section shall take cognisance of regional, ethnic, and...

Section 26. Meetings and procedure of the Audit Advisory Board Section 26(1) The Audit Advisory Board shall meet at least four times in every financial year and not more than twelve times in every financial year and not more than four months shall elapse between one meeting and the next meeting. Section 26(2) The quorum at the meeting of the Audit Advisory Board is five members of the Board or a greater number determined by the Audit Advisory Board in respect of an important matter. Section 26(3) The Senior Deputy Auditor-General of the office of the Auditor-General shall be the Secretary of the Audit Advisory Board. Section 26(4) The Chairperson shall convene and preside at meetings of the Board. Section 26(5) The proceedings of the Audit Advisory Board shall not be invalidated by reason of a vacancy among the members.

Section 27. Functions of the Audit Advisory Board Section 27(1) Subject to section 10 , the principal function of the Audit Advisory Board shall be to advise the Auditor-General on the exercise of his or her powers and the performance of his or her functions under the Constitution and this Act. Section 27(2)(a) the recruitment of senior managers into the Office of the Auditor-General; Section 27(2)(b) the development and review of organizational development issues; Section 27(2)(c) the budget estimates and plans of the office of the Auditor-General; Section 27(2)(d) the remuneration and other terms of appointment of the staff of the Office of the Auditor-General in consultation with the Salaries and Remuneration Commission; and Section 27(2)(e) any other matter that the Auditor-General may refer to the Board from time to time.

Section 28. Allowances and expenses of the Audit Advisory Board members Section The members of the Audit Advisory Board shall be paid such allowances and expenses as are provided by the Salaries and Remuneration Commission from monies appropriated to the Office of the Auditor-General.

Section 29. Guiding principles, practices and standards of auditing Section Subject to the Constitution and any written law, the Office of the Auditor-General shall apply the applicable international standards, principles and practices in their audits.

Section 30. Scope of Audit Section Subject to the provisions of Articles 201 and 232 of the Constitution, the Auditor-General shall determine the scope and extent of the examination or inspection of accounts and any other documents or information related to public expenditures or any audits under this Act, which he considers necessary in carrying out his or her responsibilities and functions specified under this Act.

Section 31. Certification audit process steps Section 31(1)(a) within three months after Parliament or the County Assembly has debated and considered the final report of the Auditor-General and made recommendations, a State organ or a public entity that had been audited shall, as a preliminary step, submit a report on how it has addressed the recommendations and findings of the previous year's audit. Section 31(1)(b) at the beginning of the audit examination of the financial statements of a State organ or public entity, an inception meeting shall be held to deliberate on the scope of the financial audit, between the Auditor-General and the accounting officer and the financial statements to be audited should have been signed by the accounting officer and the substantive head of that entity, if different from the accounting officer and the Chairperson of the governing body, where applicable; Section 31(1)(c) at the conclusion of the audit examination of the financial statements of each State organ, an exit meeting shall be held at which the Auditor-General shall submit a draft management letter which shall include findings and recommendations to the accounting officer and comments of...

Section 32. Audit reports to be submitted to Parliament and the relevant county assembly Section 32(1) All reports of an audit shall be submitted to Parliament or the relevant county assembly. Section 32(2) Within seven days of receiving the report, Parliament shall publicize it on its official website and other public spaces. Section 32(3) Within fourteen days after submitting the report to Parliament or the relevant county assembly, the Auditor-General shall publicize the report on the official website and other public spaces

Section 33. Use of work of internal auditor Section 33(1) The final report by an internal auditor which has been deliberated on and adopted by an audit committee of a State organ or public entity, may be copied to the Auditor-General. Section 33(2) The Auditor-General shall have unhindered access to all internal audit reports of a State organ or any public entity, under subsection (1) above, which is subject to audit by the Auditor-General as provided for under Article 229 (4) of the Constitution.

Section 34. Periodic Audits Section The Auditor-General may, upon request or at his or her own initiative conduct periodic audits which shall be proactive, preventive, and deterrent to fraud and corrupt practices, systemic and shall be determined with a view to evaluating the effectiveness of risk management, control and governance processes in State Organs and public entities.

Section 35. Annual financial audits Section The Auditor-General shall conduct audits of financial statements under Article 229 of the Constitution for State Organs and public entities and report annually to Parliament and relevant county assembly.

Section 36. Performance Audit Section 36(1) The Auditor-General shall conduct performance audit to examine the economy, efficiency and effectiveness with which public money has been expended pursuant to Article 229 of the Constitution. Section 36(2) The Auditor-General may undertake a comprehensive performance audit within six months after the completion of any National or County project to evaluate, whether the citizen has gotten value for money in the project and submit the report to Parliament or County Assembly for tabling and debate.

Section 37. Forensic Audit Section The Auditor-General may, upon request by Parliament, conduct forensic audits to establish fraud, corruption or other financial improprieties.

Section 38. Procurement audits Section The Auditor-General may examine the public procurement and asset disposal process of a state organ or a public entity with a view to confirm as to whether procurements were done lawfully and in an effective way.

Section 39. Audit reports to be submitted to Parliament and the relevant county assembly Section 39(1) All reports of an audit shall be submitted to Parliament or the relevant county assembly. Section 39(2) Within seven days of receiving the report, Parliament or the relevant county assembly shall publicise it on their official website and other public spaces. Section 39(3) Within fourteen days after the expiry of seven days upon submitting the report to Parliament or the relevant county assembly, the Auditor-General shall publicise the report on their official website and other public spaces.

Section 40. Auditing of national security organs Section 40(1) In auditing national security organs, the Auditor-General and his or her representatives shall hold an inception meeting at the highest level, pursuant to section 31 (1) (b), to agree on areas which may touch on national security and determine the appropriate audit approach that shall ensure confidentiality of information. Section 40(2) The audit reports on national security organs may be redacted to shield identities of persons as well as assets and liabilities as the case may be. Section 40(3) All staff of the Auditor-General carrying out audit under this section shall be vetted by the authorised government vetting agency.

Section 68. Power to make Regulations Section The Cabinet Secretary responsible for matters relating to finance may make Regulations not inconsistent with this Act respecting any matter that is necessary or convenient to be prescribed under this Act or for the carrying out or giving effect to this Act.

Section 69. Legal opinions and advice by the Attorney-General Section The Auditor-General may make a written request to the Attorney-General seeking a legal opinion or advice on matters of law or fact, as the case may be.

Section 70. Supremacy of this Act Section This Act shall prevail in case of any inconsistency between this Act and any other legislation relating to the functions and powers of the Auditor-General.

Section 71. Protection from personal liability Section The Auditor-General and his or her staff, or a person acting on the directions of the Auditor-General shall not be personally liable for any act or omission done or omitted in good faith in carrying out any duty, or exercising any power or function of the Auditor-General under this Act or the Constitution.

Section 72. Public right of access to official audits reports Section The Public shall have right of access to official reports of the Auditor-General in line with Article 35 of the Constitution for transparency and accountability, except where such access may unduly jeopardize state security.

Section 41. Sources of funds of the Office of the Auditor-General Section 41(1)(a) monies appropriated by Parliament for the purposes of the Office of the Auditor-General; Section 41(1)(b) such monies or assets as may accrue to the office of the Auditor-General in the course of the exercise of the Auditor-General's powers or the performance of his functions under this Act; Section 41(1)(c) audit fees charged at the rates prescribed by the Auditor-General; Section 41(1)(d) investment income subject to annual approval by Parliament; and Section 41(1)(e) all monies from any other source provided or donated or lent to the office of the Auditor-General and such monies shall be disclosed to Parliament. Section 41(2) The receipts, earnings or accruals of the office of the Auditor-General shall not be paid into the Consolidated Fund but shall be retained for purposes of this Act in accordance with Article 206 (1) of the Constitution. Section 41(3) The Auditor-General may open and maintain such bank accounts in accordance with section 28 of the Public Finance Management Act (Cap. 412A), as are necessary for the exercise of the functions of the office of the Auditor-General and shall pay int...

Section 42. Auditor-General not to question Government policy objectives* Section Notwithstanding the provisions of this Act, in an examination under this Act, the Auditor-General shall not question the merits of a policy objective of the national government or county government or any other public entity. * This section was declared unconstitutional by Petition No. 388 of 2016: High Court at Nairobi.

Section 43. Accounts of the Office of the Auditor-General Section 43(1) For each financial year, the Accounting Officer of the office of the Auditor-General shall prepare and submit upon approval by the Auditor-General, for audit the financial statements of the office of the Auditor-General to an external auditor appointed by the National Assembly in accordance with Article 226(4) of the Constitution. Section 43(2)(a) a statement of financial performance; Section 43(2)(b) a statement of financial position; Section 43(2)(c) a statement of changes in net assets; Section 43(2)(d) a statement of accounting policies and notes to the financial statements; and Section 43(2)(e) a statement of performance of the Office of the Auditor-General including statements on processes and systems audit against predetermined objectives. Section 43(3) Without prejudice to subsection (2), the Accounting Officer shall prepare the financial statements in a form that complies with the relevant accounting standards prescribed and published by the Public Sector Accounting Standards Board in accordance with the Public Finance Management Act (Cap. 412A).

Section 44. Audit of accounts Section 44(1) The accounting officer of the office of the Auditor-General shall submit accounts of the office to the appointed auditor under section 43 , within three months after the end of the financial year to which the accounts relate. Section 44(2) The appointed auditor shall examine and audit the submitted accounts of the office of the Auditor-General within six months after the end of the financial year in accordance with the provisions of Part IV of this Act, express an opinion and certify the result of that examination and audit. Section 44(3) The appointed auditor shall examine whether or not public money has been applied lawfully and in an effective way.

Section 45. Reporting by the appointed auditor Section 45(1) The appointed auditor shall prepare a report on the examination and audit and submit the report to each relevant Clerk of Parliament, with a copy to the Cabinet Secretary responsible for finance and the Auditor-General. Section 45(2) Subject to Article 35 of the Constitution, Parliament shall publicise it on their official website and other public spaces. Section 45(3) Within fourteen days after the expiry of seven days upon submitting the report to Parliament, the Auditor-General shall publicise the report on their official website and other public spaces. Section 45(4)(a) the information and explanations that were required to perform the examination and audit were received; Section 45(4)(a)(i) the information and explanations that were required to perform the examination and audit were received; Section 45(4)(a)(ii) proper books of accounts have been kept and the accounts are in agreement therewith; and Section 45(4)(a)(iii) the accounts present a true and fair view of the financial position of the office of the Auditor-General; Section 45(4)(b) money has been spent in a way that was not lawful, economical, efficient an...