Private entities receiving public funds must be audited, court rules

A High Court sitting in Machakos has ruled that the Auditor General should audit any private entity that receives public funds and other State resources.

Justice George Odunga (pictured) ruled that the private entity is obliged to account for utilisation of public funds and the Auditor General is mandated to investigate the same and report to Parliament for appropriate action.

Judge made the ruling in a case filed by activist Okiya Omtatah, who wanted the Agricultural Society of Kenya declared a private entity and is, therefore not eligible to receive public funds and other State resources.

Judge, however, ruled that though ASK is a private entity, it is in certain circumstances eligible to receive public funds and other State resources in the performance of duties, public functions or purposes.

“I find that the Agricultural Society of Kenya, is a private society but from the material placed before this court, I have no doubt in my mind that ASK offers services for the benefit of the general public,” ruled Odunga.

Judge declared that pursuant to the provisions of sections 47 and 48 of the Public Finance Management Act, 2012, Parliament is obligated to formulate a legislative framework to guide such donations and grants by National government or its entities or third parties.

Any organ Justice Odunga dismissed Omtatah’s arguments that the county government had funded the society, saying no evidence had been placed on record to determine so.

“I have gone through the records of these proceedings and I have not been able to find any evidence of funding of the society by the county governments,” ruled the judge. Judge further stated that though the society is eligible for funding from the National Government, it should account for the same.

“The discourse above clearly underscores the need by any organ that receives money from the National government to account for the same and the society is not an exception,” Odunga ruled.

He noted that ASK had appreciated that the Auditor General is entitled to investigate the manner in which public funds and resources allocated to third parties have been used.