Auditor General Nancy Gathungu during a Senate committee meeting in Mombasa on May 2, 2025.
Up to Sh955.8 million worth of revenue collected from 19 hospitals, which are run by the county government, was never banked to the official county accounts during the year ended June 2024, freshly published audit findings reveal.
This lifts the lid on continued violation of rules governing management of public finances by the devolved units.
A fresh report by Auditor General Nancy Gathungu shows the amount related to revenue from exchange transactions, with the culprits comprising 18 Level Four hospitals and one Level Five hospital.
The funds, mostly collected through user fees, laboratory services, pharmaceutical sales, outpatient consultations, and inpatient services, are supposed to be centrally accounted for in the County Revenue Fund (CRF) before being appropriated for expenditure.
Bungoma and Naivasha county referral hospitals had the biggest chunk of unbanked revenue at Sh363.6 million and Sh299.5 million respectively, followed by Kajiado county referral hospital, which failed to remit Sh91 million.
Others in the list included Bahati sub-county Level Four, which failed to transfer Sh58.7 million of collected revenue, Kangundo Level Four (Sh26.1 million), Lamu county referral (Sh18.7 million), Miathene hospital (Sh16 million), Kiandege Level Four (Sh15.3 million), and Kilungu sub-county hospital (Sh14.9 million).
Also in the group were Langalanga Level Four (Sh12.2 million), Tawa sub-county hospital (Sh10.7 million), Marindi Level Four (Sh8.5 million), Ikutha sub-county (Sh7.8 million), Kabazi sub-county (Sh4.7 million), Matuu Level Four (Sh4.7 million), and Soin sub-county hospital (Sh1.3 million).
Nyamaraga Level Four, as well as Suba and Wesu sub-county hospitals, had the least unremitted dues during the period at Sh990,000, Sh861,563, and Sh233,126, respectively.
The Public Finance Management (PFM) Act, 2012, requires that all revenues raised or received by county entities be paid into the CRF before any withdrawals can be made.
Failure to comply translates into a legal breach as it limits oversight, undermines transparency, and raises the risk of misappropriation.
“Audit review revealed that revenue from exchange transactions amounting to Sh955.8 million from 18 Level Four hospitals and one Level Five hospital, was not paid into their respective County Revenue Fund accounts,” wrote Ms Gathungu in her latest audit report.
Auditor-General Nancy Gathungu.
“This is contrary to Section 109(2) of the Public Finance Management Act, 2012, which requires the County Treasury for each County Government to ensure all money raised or received by or on behalf of the County Government is paid into the County Revenue Fund account.”
Millions of unaccounted revenue
The audit, which assessed a total of 250 hospitals countrywide, revealed that six health facilities had unaccounted revenue amounting to Sh214.3 million.
These were Nyahururu county referral hospital, Mpeketoni sub-county hospital, Ruiru Level Four hospital, Rumuruti District hospital, Mwingi Level Four county hospital, and Ojola sub-county Level Four hospital.
The disclosures come amid heightened scrutiny of the county governments over financial mismanagement, particularly in the health sector, which consumes a significant portion of devolved funds.
Despite increased allocations over the years, many county hospitals remain underfunded, understaffed, and poorly equipped, pointing to inefficiencies in the management of the resources.
The audit assessment on the hospitals forms part of Ms Gathungu’s annual review of county government finances, which evaluates compliance, budget implementation, and financial reporting across all 47 devolved units.
