Background Information on The Office of the Controller of Budget
The Office of the Controller of Budget (OCOB) was established by the Constitution of Kenya 2010, under Article 228(1) and became operational upon the appointment of the Controller of budget on 27th August 2011.
Prior to this, some of the functions of the Office of the Controller of Budget were performed by the Controller and Auditor General and the Treasury while others did not exist. Two new independent constitutional offices were therefore created by splitting the control function of the Controller and Auditor General into the Office of the Controller of Budget and the Auditor General under Articles 228 and 229. The role of the Controller of budget has further been extended to include monitoring budget execution and reporting to Parliament every four months.
There shall be a Controller of Budget who shall be nominated by the President and, with the approval of the National Assembly, appointed by the President. [Constitution of Kenya – Article 228(1)]
The rationale for the creation of the Office of the Controller of Budget as an independent office under the Constitution of Kenya was to address the demand by the public for separation of financial management functions, that is; controlling and reporting on budget implementation from the auditing function. The OCOB seeks among other issues, to promote fiscal discipline and equitable allocation of available resources and improve transparency and accountability in the budget implementation process, particularly with the inception of the devolved system of government, which introduces an urgent need for strong expenditure control.
The need for strong expenditure controls has become even more critical as the country moves towards a devolved governance system. The devolved system establishes 47 county governments and the national government. This implies there will be many more centers of authority since the 47 county governments are distinct, interdependent and will operate on the basis of consultation and mutual respect .These aspects can easily lead to run away expenditure and unsustainable debt.
Article 228 of the Constitution of Kenya, 2010 that established the office of the Controller of Budget envisages OCOB as the anchor for prudent public financial management in the country. Prudent financial management will ensure that the country fast tracks the implementation of the programs and flagship projects envisaged in the Kenya vision 2030 that will efficiently and effectively attain the country’s development agenda.
228. (1) There shall be a Controller of Budget who shall be nominated by the President and, with the approval of the National Assembly, appointed by the President.
(2) To be qualified to be the Controller, a person shall have extensive knowledge of public finance or at least ten years experience in auditing public finance management.
(3) The Controller shall, subject to Article 251, hold office for a term of eight years and shall not be eligible for re-appointment.
(4) The Controller of Budget shall oversee the implementation of the budgets of the national and county governments by authorising withdrawals from public funds under Articles 204, 206 and 207.
(5) The Controller shall not approve any withdrawal from a public fund unless satisfied that the withdrawal is authorised by law.
(6) Every four months, the Controller shall submit to each House of Parliament a report on the implementation of the budgets of the national and county governments. [Constitution of Kenya – Article 228]
Despite the initial constitutional authority granted to Parliament to scrutinize and approve the national budget, it was effectively elbowed aside by the Executive who took the leading role. By the time of promulgating of the new Constitution in August 2010, the original independence Constitution had been amended over 30 times, in the process reducing the powers of the National Assembly in public financial management.
The other challenge was the transfer of key officers of the Controller and Auditor General. This undermined the capacity to perform essential functions and led to accumulated audit arrears. The situation deteriorated so much that at one time, Parliament was more than five years behind in the examination of annual public accounts. This meant that by the time the audit was being discussed in Parliament, many of the key witnesses were not available for questioning to validate information necessary for decision making.
In addition the Controller and Auditor General concentrated on auditing expenditures of MDAs and could not monitor expenditures due to conflict of interest.
In the old constitution of Kenya, the Controller and Auditor General’s duties were limited to approving withdrawals from the Consolidated Fund. The functions of monitoring and reporting on the budget implementation in-year were not being performed regularly resulting into misuse of budgeted resources. There was thus no report for Parliament to properly exercise its mandate of budget oversight while it was being implemented and hence correct this misuse of resources in good time.
This culminated in mega scandals. Well documented incidents of abuse indicate that the government lost billions of shillings to corruption and wastage arising from fiscal indiscipline. There was an urgent need for a different approach to financial control, transparency and accountability mechanisms.
The introduction of the Office of Controller of Budget has therefore transferred some of the key public finance management responsibilities from the Executive to some of the oversight institutions as reorganized by the Constitution of Kenya 2010, including the Office of the Controller and Auditor General.