At the apex of an organization’s structure is the Board of Directors (BOD). BOD is usually non-executive in that it is not involved in the day to day activities of an organization.
The daily activities are usually delegated to the Executive Management led by the Chief Executive Officer (CEO), in the case of Central Bank, the Governor.
To ensure conformance by the Executive Management of the policies, procedures and internal controls as set out by the BOD, on a day to day basis, is the Internal Audit department. This therefore explains the need for audit independence from the Executive Management.
The independence accords the Internal Audit department an opportunity to objectively, without fear or favour appraise the Executive Management activities. This explains why the International Auditing Standards and other best practices such as the Sarbanes Oxley Act advice that the Head of an Internal Audit function should be recruited by the Board, an activity normally delegated to the Board Audit Committee. The recruitment should also be competitive as enshrined in the constitution.
Flawed appointment
The recent recruitment of the Director of Internal Audit at CBK is worrisome in that it goes against the tenets of best practice and against the constitution.
Firstly, the recruitment was not competitive in that no advertisement was done and no interviews were held.
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Secondly, the recruitment was done by the Executive Management, specifically the Governor, Patrick Njoroge.
Three months prior to the retirement of the previous Director of Internal Audit, February 2021, the Njoroge picked one of the unsuccessful candidates interviewed for the position of Director Finance, to be his Advisor.
The Governor is allowed to recruit his Advisor’s uncompetitively.
When the then Director of Internal Audit retired in May 2021, the Governor transferred this Advisor to head the Internal Audit Department. Whereas the qualifications of this individual may not be necessarily be wanting, there are serious doubts as to whether an individual recruited in such a manner can objectively appraise the recruiter and confidant, having been his Advisor.
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It also brings into question CBK’s Human Resource practices, in that a new employee who has not cleared probation period, appraised and confirmed, can get transferred to head a department that is not only crucial to the Organization but the Country at large.
