By The Weekly Vision Reporter
The Office of the Auditor-General (OAG) has spent much of 2026 making the same argument to Parliament: it cannot effectively fulfil its constitutional mandate to audit public spending while its own budget remains subject to the Treasury-led process that determines funding for the very institutions it is mandated to scrutinise.
That argument came to a head in May during a session of the National Assembly’s Budget and Appropriations Committee. Months later, the underlying funding question remains unresolved, even as the OAG reports modest progress in tackling its growing audit backlog.
The Committee, chaired by Alego Usonga MP Samuel Atandi, engaged Deputy Auditor-General for Corporate Services Isaac Ng’ang’a and senior OAG officials during scrutiny of the 2026/27 Budget Estimates. The session exposed the scale of the challenge confronting the audit office and gave MPs a clearer basis for considering a financing model that would give the OAG greater independence from the annual budget cycle.
Ng’ang’a told MPs that the OAG’s audit universe, the total number of public entities it is required to audit, had grown to more than 12,000, while the office was grappling with a backlog of more than 8,150 unaudited financial statements. The scale of the shortfall has already forced the OAG to scale back planned work. The office had intended to audit 5,476 financial reports and conduct 88 specialised audits during the financial year. However, resource constraints have curtailed those plans, with audits of public schools among the areas hardest hit.
The OAG had requested an additional KSh420 million to support audits of public secondary schools and in-year reviews, but the request was not included in the approved budget. Officials warned that the funding gap could deepen arrears and push unfinished work into the 2026/27 financial cycle.
Atandi was blunt about the structural problem behind the funding shortfall. He told the session that the Auditor-General was effectively being forced to compete for resources alongside the very institutions whose spending the office is constitutionally required to examine.
“The fact that you have to fight for resources within Sector Working Groups alongside the very agencies you are supposed to audit is fundamentally flawed,” he said. The Committee indicated that it would explore a financing model based on a fixed proportion of audited national revenue. Such a formula would reduce the OAG’s dependence on annual exchequer allocations and, in theory, strengthen its institutional independence.
The proposal goes to the heart of a problem the Auditor-General, Nancy Gathungu, has raised previously. Gathungu has told parliamentary committees that Kenya’s poor ranking on the World Bank’s Supreme Audit Institutions Independence Index is linked directly to the OAG’s lack of financial autonomy. Without a guaranteed funding mechanism, she has argued, the office has limited recourse when its budgetary requirements are not fully met.
International best practice recommends that supreme audit institutions receive at least 0.5 per cent of national revenue. Kenya’s OAG has historically received roughly 0.2 per cent. Its operational allocation increased from about KSh5.5 billion in 2020/21 to KSh8.35 billion in 2025/26. But the increase has not kept pace with the expansion of the audit universe, while budget reductions during the 2024/25 cycle placed additional pressure on the office.
For 2026/27, Parliament’s Budget Policy Statement provisionally allocated the OAG roughly KSh9 billion, against a proposed national spending ceiling of KSh2.878 trillion. Although the allocation represents an increase on previous years, it remains below the level implied by the 0.5 per cent benchmark cited as international best practice.
The May session also exposed wider weaknesses in Kenya’s public financial management system. MPs questioned the OAG about weak enforcement of audit recommendations and persistent revenue leakages, particularly in county governments that continue to rely heavily on cash-based collection systems.
The concern is not simply whether counties are collecting revenue, but whether the Government has an accurate picture of the revenue they could potentially collect. Repeated audit findings have pointed to under-collection, prompting questions over how much revenue is being lost through inefficient systems, weak controls and inadequate oversight.
OAG officials told MPs that the office had begun conducting systems-based audits of county revenue collection. The office is also pushing for greater digitisation of county billing and collection systems, including for services such as parking and water, where cash-based transactions can create opportunities for leakages and weak accountability.
The OAG has further proposed amendments to the Public Finance Management framework to introduce administrative and legal sanctions against accounting officers who fail to act on audit recommendations. Another proposal concerns public schools and TVET institutions, whose financial reporting cycles do not neatly align with the Government’s financial year. The OAG wants their reporting timelines aligned more closely with the academic calendar to simplify reconciliation and reduce the accumulation of outstanding financial statements.
The funding question is only one part of the OAG’s structural problem. In December 2025, the National Assembly’s Constitutional Implementation Oversight Committee recommended amendments to the Public Finance Management Act to align statutory reporting deadlines with the stricter timelines provided for under the Constitution.
The OAG has argued that such changes are necessary to prevent new backlogs from developing even after the existing one has been cleared. The proposed amendment, however, has yet to become law. At the operational level, the OAG has reported some improvement in its turnaround times. The office has pointed to increased use of technology and more timely submission of financial statements by audited entities as factors contributing to faster completion of some audits.
In August 2026, the OAG signed off its first audit report for the 2025/26 financial year several months ahead of the constitutional deadline. The office attributed the achievement partly to the timely submission of financial statements by the entity concerned.
But isolated improvements do not resolve the deeper problem. The OAG is dealing with thousands of outstanding financial statements accumulated over several years, while simultaneously receiving new reports that must be audited within constitutional deadlines.
That means the office needs enough resources not merely to keep up with new submissions, but also to work through the historical backlog. For now, the parliamentary push for greater financial independence remains largely at the policy-discussion stage.
No Bill establishing a fixed-revenue financing formula for the OAG has been tabled. The office’s budget therefore remains subject to the ordinary Treasury-led allocation process. The additional KSh420 million sought for school audits has also not been restored, leaving the OAG to manage competing demands within its existing allocation.
This leaves Parliament facing a fundamental question: can an institution charged with auditing the use of public resources be truly independent if its own financial capacity depends on a budget process dominated by the institutions whose spending it scrutinises? For MPs pushing for reform, the answer appears increasingly to be no.
But until Parliament legislates a new financing framework, and addresses the reporting and enforcement weaknesses that continue to generate fresh audit arrears, the Auditor-General’s ability to clear Kenya’s accumulated audit backlog will remain constrained by the very budgetary system the office has repeatedly warned is undermining its independence.
