Auditor-General Nancy Gathungu has flagged suspicious expenditures and budget irregularities in Baringo, Nakuru and Samburu counties that possibly led to loss of billions of shillings.
The counties are under scrutiny for making unexplained expenditures and committing irregularities during the financial year 2018/2019.
For instance, the auditor-general has revealed that Baringo County has been operating more than 192 bank accounts, possibly leading to misuse of Sh2.1 billion in 2018-2019.
Governor Stanley Kiptis’ administration is on the spot for running illegal commercial bank accounts, some which were used to disburse funds to health facilities.
“The county executive operates 192 commercial bank accounts that it uses to disburse funds to dispensaries. However, the closing balances in the accounts have not been incorporated in the financial statements by the county. In addition, when the audit sought to confirm the balances, the respective banks did not respond to letter sent to them,” reads the auditor-general’s report.
The report reveals that absence of sufficient and reliable information may have led to loss of part of Sh2.1 billion.
“In the absence of sufficient and reliable information, the accuracy of the cash and the cash equivalents balance totalling to Sh2.1 billion reflected in the statements of assets and liabilities as at June 30, 2019 was not confirmed," the auditor-general states.
The report further revealed that the aggregate bank balances included Sh128.3 million held in 44 bank accounts operated contrary to regulations of the Public Finance Management Act, 2015.
“Therefore, in operating the accounts with commercial banks, the county executive was acting contrary to government banking regulations. The regulations require that all bank accounts of county governments, other than imprest accounts, be operated at the Central Bank of Kenya," the audit report further reads.
In Baringo County, verification of 12 projects for which payments of Sh71.8 million had been made as of June 30, 2019 revealed several issues including poor workmanship, location on private lands and ineligible expenditures.
The report further states that as a result, there was no value for money for the expenditures incurred in the projects.
Scrutiny of expenditure records for the years 2017,2018 and 2019 reflects payments of Sh391,489,362 on account of Leased Medical Equipment Scheme items supported by the national government and put to use in the county.
However, the county did not present the scheme's financing agreement for audit review and there was no evidence showing that operational and maintenance costs for the equipment were budgeted for.
During the year under review, the county had a total budget of Sh8.1 billion but used Sh5.5 billion, resulting in under absorption of Sh2.5 billion, which was 32 per cent of the budget.
Baringo County inherited fixed assets valued at about Sh2.5 billion including land and buildings from the defunct county councils of Baringo and Koibatek and the Municipal Council of Kabarnet. However, no reports on verification of the assets was presented for audit.
The county floated 460 quotations for procurement of various items from suppliers. However, examination of the quotations register indicated that several quotations that were not collected or returned by bidders were nonetheless used to procure items worth Sh10 million.
It was not clear how the procurement department obtained the bids from the vendors. The anomaly suggested that there was fraudulent activity in the procurement and that the process was not competitive.
The county spent Sh2.7 to pay salaries to employees. The sum was equivalent to 36 per cent of the total county revenue of Sh7.6 billion.
It therefore was in excess of the threshold of 35 per cent and as a result, the county breached the law on control of personal emoluments.
The audit report also says that Baringo County irregularly paid Sh15,496,000 legal fees, out of which Sh7 million was a partial payment against Sh17.5 million demanded by a law firm.
In Nakuru, the county government made irregular payments to the Nakuru Level Five Hospital during the year under review.
Receipts and payments reflected a total payment of Sh16.9 million, which comprised of transfers made to the hospital being Sh9 million and Sh7.9 million from the office of the governor and that of the department of public service training and development respectively.
No explanation was given why the referral hospital was paid the amount from the two sources, despite having its own allocation under the department of health.
Although the county explained that the payments were inter-departmental transfers, the basis of the transfer and intended purposes for the amounts remains mysterious.
During the financial year Sh30,013,120 was collected at the Bahati Sub-County Hospital under the Facility Improvement Fund.
But examination of records indicates that Sh8.2 million, though collected, was not banked and therefore not accounted for.
The report, however, reveals that at the time of the audit, the matter had been reported to the police for action and is therefore under investigation.
The report says the county purchased vehicles and other transport equipment worth Sh254 million. Out of the amount the county spent Sh47.6 million on procurement of six ambulances.
The report shows that the county was grappling with rent arrears totalling to Sh291 million as at June 30, 2019. The county had not put in place measures to ensure full collection of the outstanding rent.
Analysis of the Nakuru County payroll revealed that two employees who had attained the mandatory retirement age of 60 years in 2017 and 2018 continued receiving salaries up to June 30, 2019 totalling Sh4,744,680.
Nakuru also made irregular payments of allowances to Members of County Assembly (MCAs) amounting to Sh9 million.
In Samburu, the county irregularly paid Sh5.6 million to the Council of Governors (CoG) to help defray its expenses during the year under review.
"The payment was made contrary to Section 37 of the Inter-Governmental Relations Act, 2021, which provides that all operational expenses of the Council of Governors should be met by the national government," stated the report.
Out of 24 projects valued at Sh1.2billion that were contracted for implementation during the year, only projects valued at Sh549,591,920 — about 44 per cent — were implemented.
Failure to complete the projects may have constrained service delivery to the residents of Samburu County.
During the year under review the county government maintained two payroll systems — the integrated and personal database payroll for 1,468 permanent staff and manual system for 687 non-permanent staff. No explanation was given for the use of two payrolls.
The report revealed that Samburu County had accumulated land rates and penalties on properties totalling Sh58,576,623 as at June 30, 2019.
Failure to collect the revenue constrains the capacity of the county government to deliver services and implement projects
The report further says Samburu County's public service board is not properly constituted and, therefore, cannot discharge its oversight role in the affairs of the executive. It has five members as two of the seven nominated members are being investigated by the Ethics and Anti-Corruption Commission.
This the auditor-general said this is likely to constrain the effectiveness of the county executive.
In the year under review, the county government made transfers totalling to Sh544 million to the county assembly. The transfers were an equivalent of 19.6 per cent, exceeding the legal threshold for the year amounting to Sh356 million.
