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Value for Money Audit

1. The Mandate for Value-for-Money Audits

Public Audit Act, 2003 in Part V Sections 29-33 provides for carrying out of Value-For-Money examinations. It states ‘'the Controller and Auditor General may examine the economy, efficiency and effectiveness with which the Government, a State Corporation or a Local Authority uses its resources'' .

2. The establishment of Value-For-Money Auditing Division in KENAO

The Value for Money Division of the Kenya National Audit Office was established in August 2005 when two teams made up of five officers each were constituted by the Controller and Auditor General. In September 2006 the Controller and Auditor General constituted one more team, thus increasing to three the number of Value for Money auditing units in the Division.

3 . What value- for- money auditing is all about

Value-For-Money Auditing examines whether public organizations or programmes have attained economy, efficiency and effectiveness in the management of resources at their disposal. It is commonly referred to as the audit of the three ‘Es' which are defined as follows:

  • Economy - acquiring resources at the lowest cost while having due regard to quality; in short, keeping the costs low.
  • Efficiency - the rate at which resources used (inputs) are converted to goods and services (outputs). The goal is to attain the highest possible quantity of goods or services of acceptable quality from given inputs, or looked at differently, minimize the inputs used to produce a given quantity of acceptable output; in short making the most out of the available resources. 
  • Effectiveness - the extent to which objectives have been achieved and the relationship between the intended and actual impacts of activities; in short, achieving the stipulated aims and objectives. 

In view of its involvement in measuring how well agencies carry out their activities, value-for-money auditing is often referred to as Performance Auditing. Performance auditing is concerned with accountability of the government for results and outcomes in its programmes.
Public accountability means that those put in charge of government, programme or Ministry are held responsible for the economic, efficient and effective running of that programme.

Value for Money or Performance Auditing is an important way for tax payers, financiers, members of Parliament, ordinary citizens and the Media to obtain insight into the running and outcomes of different public activities.

 

4. What the Kenya National Audit Office intends to achieve through Value- for- Money audits

In establishing the Value-for Money Audit Division, the Controller and Auditor General aims to enable the Office fulfill its role and responsibilities stipulated in the national Constitution and in the Public Audit Act, 2003. Through audit reports arising from work carried out by the Division, the Office intends to:

  • Provide Parliament and the public at large with independent, timely and objective information on the performance of activities and programmes funded from public resources.
  • Promote accountability in the management of public resources by reporting whether managers of public organizations, in addition to fulfilling their obligation to answer for the discharge of responsibilities conferred to them by Parliament , demonstrate and take responsibility for performance in light of agreed targets or expectations. 
  • Promote cost-effective and better use of public resources by highlighting opportunities for public organizations to spend less without reducing the extent and impact of their programs or lowering their quality.
  • Promote better service delivery to the public by pointing out for rectification by agency managers systems , procedures and practices that hinder the delivery by the agencies of timely high quality services that meet or surpass the expectations of the public. 
  • Confirm and report to Parliament, the government and the public at large whether executed public programmes attain their objectives. 
  • Fulfill the need by stakeholders for information showing whether public managers entrusted with public resources have used them for the intended purposes and to ensure that the programme managers attain the goals of the public projects.
  • Provide accurate reliable and timely performance information to agency managers for use in decision-making and in control of programme activities

5. What the Division has accomplished so far

The Value for Money audit unit has successfully carried out two (2) audits. The study on Repairs and Maintenance of National roads network is in the final stages while fieldwork has been finalised on the second study which is on Crop Seed and Livestock Development. The unit has further completed three (3) pre-studies in readiness for the full studies on usage of CDF Funds, utilization of Sugar Development Levy Fund and the operations of the Public Pensions Fund.

How the Office intends to grow its value-for money auditing work

The passing of the Public Audit Act, 2003 and the subsequent creation of the Value-For-Money Auditing Division in the Kenya National Audit Office has come at a time of increasing expectations for better performance of public agencies not only by Parliament but the government, the general public and other stakeholders.

The Kenya National Audit Office is committed to providing all stakeholders with accurate and reliable information on levels of performance attained by the agencies by;

  • Steadily increasing the proportion of its resources dedicated to Value-for-Money auditing.
  • Setting up reliable quality control systems ensure the accuracy, reliability, timeliness and integrity of its reports. 
  • Continuously improving its work methods and processes so as to measure up to established international standards for Value -for- Money Auditing through training and consultations with more developed SAIs.

 

 

 

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