SPECIAL ISSUE
THE KENYA GAZETTE
Published by Authority of the Republic of Kenya
(Registered as a Newspaperat the G.P.O.)
Vol. CXVILTI—No.40 NAIROBI, 15th April, 2016 Price Sh. 60
GAZETTE NOTICE NO. 2690 missions and purposes. The National Treasury should be consulted on
governance issues whenever questions arise as to what is the preferred
THE PUBLIC FINANCE MANAGEMENT ACT practice or when practical problems arise on the application of the
(No. 18 of2012) guidance provided in this document. It should be noted that not all
entities are board-governed agencies and the National Treasury should
THE PUBLIC FINANCE MANAGEMENT REGULATIONS, 2015 be consulted whenever more clarity is required on whether a specific
entity is board-governed.
The function of an Audit Committee is to support the Executive
AUDIT COMMITTEE GUIDELINES FOR COUNTY GOVERNMENTS Management, Accounting Officers, Boards, and Board Chairs by
FOREWORD monitoring and reviewing the risk, control and governance processes
that have been established in the entity pursuant to Board policies. This
The Public Finance Management Act, 2012 and Public Finance is achieved by introducing an independent perspective and a process of
Management Regulation, 2015 requires that each public entity shall constructive challenge, not to undermine the actions of the Board or
establish an Audit Committee. The Audit Committee form a key management, but to help the Executive Management, Accounting
element in the governance process by providing an independent expert Officers, and the Boards be fully assured that the most cost-effective
assessment of the activities of top management, the quality of the risk control and governance processes are in place. The governance
management, financial reporting, financial management and internal processes enhance the performance of the entity and the Audit
audit, to the board of directors or a supervisory board or executive Committee takes an independent view ofthese processes. It is therefore
management. important to draw the membership of the Audit Committee from those
who are not management or board members who perform executive
Another important role is to ensure that external audit functions.
recommendations are fully addressed, that the quality of internal audit
is of an appropriate standard and that line management has full regard The role of the Audit Committee has been carefully defined in
to internal audit recommendations. Properly exercised, their role is these Guidelines where the Audit Committee also includes a finance
vital in being the watchdog for the independence of internal audit and role, a risk function or other functions, as these may encompass
in ensuring that the information made available to the owners (the managementroles.
stakeholders) is reliable thereby enabling them to make judgements
about the quality of the management and the future prospects for the Care should be taken to distinguish between any roles that have a
public entity. management function and the role of the Audit Committee. Audit
Committee members should have no management or executive
The purpose of this guidance is to provide those responsible for functions.
establishing, appointing and overseeing Audit Committees with HENRYK. ROTICH,
information on discharging their respective roles within the Public Cabinet Secretary, National Treasury.
Service Sector
ACKNOWLEDGEMENT
The guidance in this documentis to help:
The four pillars of good corporate governance are the board of
e Executive Management, Accounting Officers, Boards, and directors (management), the internal auditors, the audit committee and
Board Chairs work out the best arrangements for their agencies. the external auditors. The audit committee’s principle role is that of
providing oversight of financial reporting, risk management, internal
e Audit Committees and individual members of Audit
control, and governance processes.
Committees understand their role and the ways in which they
should function. Establishment and operationalisation of audit committees in the
e The National Treasury officials to oversee an entity’s board and public sector marks a major milestone in the Government’s endeavour
Audit Committee practices. to improve and strengthen public financial management and
governance process. The Guidelines will enable audit committees and
This guidance is intended to offer “best practices’ on Audit other stakeholders reflect on their mandate, roles and responsibilities in
Committee operations, capable of implementation into the public risk management, internal controls and governance.
sector governance entities responsible for a wide range of differing
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