The National Assembly is considering major changes that would boost the financial independence and enforcement powers of two key budget oversight offices—those of the Auditor-General and the Controller of Budget—under a new proposal by the Constitutional Implementation Oversight Committee.

The proposals, contained in a report already adopted by the Committee and now tabled in the National Assembly, seek to equip the two offices with the legal ability to take punitive action against government institutions that fail to comply with audit and budgetary regulations.

The report also calls for enhanced and guaranteed funding to ensure that both institutions operate with greater independence and effectiveness.

Among the main recommendations is a proposed amendment to the Public Finance Management Act, Cap 421A, to align statutory deadlines with Article 229(4) of the Constitution.

If passed, the change would compel all public entities to submit financial statements within one month after the close of each financial year. Non-compliant accounting officers would face direct penalties.

“This amendment should require all public entities to submit financial statements within one month after the financial year-end, with clear penalties imposed on accounting officers for non-compliance,” the Committee recommends in its report. “The legislative alignment is critical to eliminate reporting backlogs and restore effective parliamentary oversight.”

To support this shift, the Committee has also proposed the creation of the Auditor-General Fund through the Public Audit (Amendment) Bill, 2024. In the meantime, the National Treasury has been asked to increase the office’s budget allocation from 0.20 per cent to 0.50 per cent of national revenue, to bridge existing funding shortfalls.

According to the Committee, the Auditor-General’s Office currently operates with reduced autonomy and trails behind peer oversight bodies in South Africa and Uganda in terms of institutional independence.

“Concurrently, Parliament should prioritise enactment of the Bill to constitutionally guarantee minimum funding, establish the Office of the Auditor-General Fund for operational flexibility, and clarify jurisdictional mandates,” the report adds.

On the side of the Controller of Budget, the Committee—chaired by MP Eric Muchangi—is also pushing for the amendment of the Controller of Budget Act.

This would grant the office enforcement powers to follow through on its recommendations, remove reporting limitations, and introduce penalties for violations.

“The National Treasury should implement the Office of the Controller of Budget–Central Bank of Kenya integrated payment system in order to track funds from approval to expenditure and ensure accountability,” said Muchangi while presenting the report to the House.

Additionally, the Salaries and Remuneration Commission has been asked to review the compensation of the Controller of Budget’s staff to strengthen capacity and stop staff attrition, which has affected institutional performance.

The Committee argued that oversight efforts by both offices continue to be undermined by lack of enforcement mechanisms and chronic underfunding—allowing misuse of public funds to continue unchecked across various levels of government.

In the 2023/24 financial year, for instance, Controller of Budget Margaret Nyakang’o reported that 47 county governments spent Sh284 million on travel while they still had outstanding pending bills.

At the national level, 23 ministries purchased luxury vehicles even as suppliers remained unpaid. Meanwhile, 12 counties spent over Sh1.2 billion on office renovations, despite defaulting on payments to medical suppliers.

Muchangi, while tabling the report in Parliament, warned that the underfunding of the two oversight institutions poses the most serious risk to the country’s constitutional order.