County governments diverted funds meant for service delivery, failed to bank locally collected revenue and made irregular payments to contractors and staff, leading to the loss of billions of taxpayers’ funds, according to the latest report by Auditor-General Nancy Gathungu.
The report shows that financial impropriety remains the biggest threat to devolution close to 10 years after counties became operational.
The report–tabled in Parliament last month–shows that a number of county governments are fraught with irregular payments and procurements, are unable to keep and maintain cashbooks and lacked fixed asset registers.
The devolved units, the 2019/20 audit report shows, also failed to complete projects within their timelines, despite receiving billions of shillings for their completion. They also recruited staff irregularly while others did not bank their revenues.
Some of the most affected counties, according to the report, are Nairobi, Turkana, Kwale, Machakos, Narok, Migori and Kilifi, which either failed to account for the billions of shillings that they received, broke the law on expenditure, or even failed to show how they spent some of the funds.
The Nairobi county government, for instance, failed to bank some revenue received from the Mama Lucy Kibaki Hospital. The audit report shows that the county collected Sh111.38 million but only banked Sh104.65 million, leaving a shortfall of about Sh6.73 million.
“This was not explained. The cashbook provided for audit also did not reflect details of the payments on record. The county also failed to maintain cashbook examination of accounting records maintained by Waithaka Technical Training College,” the report says.
The county also failed to complete projects worth about Sh6.9 billion, despite receiving funds from the exchequer. These included roads, public works and ward development projects which had either stalled or were terminated without reasons or explanations.
The county also awarded contracts worth Sh248.89 million for the collection, transportation and disposal of solid waste, but at different rates to various firms, against the law, meaning value for public funds used may not have been obtained.
“Delayed roads accounted for Sh4.68 billion, delayed ward development projects (roads and drainage) Sh418.68 million and abandoned, suspended or terminated projects Sh1.83 billion,” Ms Gathungu says in the report.
In Machakos, the county government spent Sh48.48 million on procurement of construction materials and motor vehicle spare parts, without providing evidence of the materials it had purchased.
“Curiously, the supplies were not recorded in the stores ledger to confirm their receipt and issuance for use, meaning the expenditure cannot be confirmed,” the report says.
Similarly, the county also failed to pay pending bills amounting to over Sh2 billion, some dating back to 2013, an amount the report shows was part of staff salaries and other payments meant for suppliers within the county. This, Ms Gathungu says, adversely affected the funding of programmes in subsequent years, as the county used most of the resources it received, to settle its debts.
“In addition, it denies local businesses capital to fund their operations and investments and may discourage them from trading with public entities,” the audit report warns.
The county is also yet to explain why the construction of the Sh49.05 million Masii Stadium and the Sh44.62 million Mavoko Stadium stalled, despite receiving substantial funding from the national government for the projects. The contracts of the two projects were awarded in January 2019 to a local firm, but works have since stalled with the contractor abandoning them.
The Turkana county government, on the other hand, is accused of operating six unauthorised bank accounts at Kenya Commercial Bank (KCB). The county also lacked a fixed assets register.
It was also noted that the Ministry of Health had paid salaries of Sh155.88 million to staff of the county in the 2013/14 financial year. However, upon review, only Sh87.37 million had been paid back to the ministry, leaving a balance of about Sh68.51 million.
Further, the county paid another Sh11.1 million to various officers without giving reasons. The county also paid some Sh3 million to the Frontier Counties Development Council (FCDC) and another Sh6.53 million to the Council of Governors, contrary to the Intergovernmental Relations Act.
In Turkana, the county failed to complete projects such as the construction of modern business centre in Lodwar, installation of lighting within Lodwar municipality, construction of the Nakwamoru Irrigation Scheme and rehabilitation of the Sh47.1 million Kaputir Irrigation Scheme among others, all running into hundreds of millions of shillings.
“The delay in completion of the projects affects service delivery to the residents of Turkana County and value for money may not be achieved,” the audit report says.
In Kwale, the county government is accused of paying about Sh121.74 million as subsistence allowances to various officers outside the imprest system.
The county also spent Sh245.19 million under National Agriculture and Rural Inclusive Growth Project (NARIG) outside the Ifmis system, awarded a Sh105.13 million for the construction of the governor’s residence without proof of work and failed to complete projects worth Sh3.59 billion despite receiving funds from the exchequer.
“Although about 51 per cent of the 265 projects were completed as at June 30, 2020, 154 projects, about 30 per cent were still ongoing. About 145 projects of the planned projects had not while 11 projects had stalled.”
“An audit inspection undertaken in November 2020 on some of the sampled projects implemented during the year under audit revealed the various anomalies,” adds the report.
The county had also failed to complete the construction of various projects, including the 18-bed capacity hostel at Ukunda Youth Polytechnic, supply and delivery of ICT equipment for the county data recovery site as well as the construction of paved road, market sheds, prayer room, public toilets and the installation of street lighting.
And in Migori, the county government was put on the spot over the irregular payment to staff amounting to Sh2.6 billion, and another unexplained expenditure of Sh105 million said to have been paid as salaries but without evidence on who was paid.
The county also incurred payments amounting to about Sh2.2 billion for the rehabilitation of Bondo Dam in Wasweta whose construction had not been completed at the time of the audit.
In Narok, the county government spent revenue at source, amounting to about Sh2.3 billion. This figure included Sh15.3 million in respect of hospital revenue, drugs and vaccines among other sources.
The county also hired 101 casual employees without providing needs assessment reports, details on how the casuals were identified and recruited, records of work done by the casuals, staff rationalization reports, and master rolls.
“Further, the casual employees were continuously engaged for periods longer than the mandatory three months,” the report shows.
In Kilifi, the county government incurred pending bills amounting to Sh1.2 billion that had serious anomalies. These anomalies included un-budgeted pending bills amounting to Sh133 million which was incurred on a vote whose budget had been exhausted.
Records from the Ministry of Health also showed that the county government of Kilifi had unpaid debts owed to the ministry totalling Sh157 million, dating back to 2014.
The county also made deductions from the payroll amounting to Sh27 million without an explanation on why the amounts remained un-remitted to the relevant authorities against the Employment Act.
