Gathungu puts counties on the spot over stalled projects, unauthorised expenditure

All the 47 counties are facing questions over their expenditures, as none of them got their financial books right, according to Auditor General Nancy Gathungu.

In her 2023/24 financial year report, Gathungu noted areas of uncertainty in the financial statements of the counties, which led to all of them being awarded a qualified opinion.

Gathungu said the devolved units are still grappling with unauthorised payments and out-of-budget expenditures.

From stalled projects, most of which the contractors had already been paid to irregular procurements and unauthorised expenditure outside the payroll, county governments were found to have flouted regulations governing public procurement and expenditure.

In Nairobi, for instance, the County executive could not explain the 55 per cent increase in the compensation of employees’ expenditures.

Gathungu stated that there was a variation of  Ksh 839,933,289 between the integrated payroll and the personnel database for basic salary, which was unexplained.

“The accuracy and completeness of the compensation of employee’s amount of Sh17,290,337,584 could not be confirmed as there was unexplained variance of Sh839,933,289 from the Integrated Payroll and Personnel Database basic salary with an increase in the compensation of employees’ expenditure from Sh11,185,475,652 in the 2022/2023 financial year to Sh17,290,337,584 in 2023/2024 by Sh6,104,861, which was not explained,” Gathungu explained in her report.

The Governor Johnson Sakaja-led administration failed to explain why some suppliers received double payment for the same transactions totaling to Ksh 140,994,662, with some of the payees being send money to two bank accounts while others had several accounts for the same payments.

Inaccuracies of payments and undisclosed pending bills dating from back in the 1980s also haunt the city county as the Auditor General added that the completeness and accuracy of Sh118.7B pending bills cannot be substantiated.

With City Hall having committed Ksh 42.2 billion budget in the financial year under review, Gathungu shockingly revealed that it overspent Ksh 12.3 billion that had not approved.

“The actual total expenditure during the financial year amounted to Sh31,537,870,129 and additional commitments of Sh23,073,505,916 disclosed in the statement of receipts and payments totaling Sh54,611,376,045. The County Executive overspent/overcommitted a total amount of Sh12,324,439,212 above the approved budget,” the report reveals.

With the Public Finance Management (County Governments) Regulations, 2015, requiring counties to spend at least 30 per cent of the actual expenditure on development purposes, Nairobi only spent 9 per cent, totaling to Ksh 2,733,867,951.

In Busia County, which is also in the red, the Auditor General was unable to confirm the accuracy and completeness of domestic travel and subsistence amounting to Ksh 16.5 million. In addition, ksh 18.4 million for domestic travel could not be accounted for.

Gathungu noted that even though the border county purchased tractors last year, during physical verification, the county government did not provide the ownership documents of the tractors, which even lacked number plates.

The report also reveals that Busia owes the Kenya Power and the Local Authorities Provident Fund a total of Ksh 140.1 million dating back to 2018/19.

In her report, Gathungu stated that failure to settle during the year to which they relate distorts the financial statements of the specific year and adversely affects the provisions of the subsequent year.

During the year under review, Ksh 2.1 billion relating to development and recurrent expenditure was voided by Busia, with the Paul Otwoma-led county government unable to explain why the payments were voided without informing the Controller of Budget.

“Further, no evidence was provided to confirm that the Controller of Budget was informed of the voiding of the payments to make necessary adjustments contrary to Section 92(3) (c) of the Public Finance Management Act, 2012 which states that if a State Organ or other public entity encounters a serious financial problem or anticipates serious challenges in performing its financial function or meeting its financial commitments, it shall immediately notify the Controller of Budget and the Commission on Revenue Allocation,” Gathungu stated in her report.

Payment of items that had not been budgeted for negatively impacted service delivery in  Busia, as Gathungu indicated that Ksh 7.9 million was paid for specific line items that had not been budgeted for after her analysis of the Integrated Financial Management System (IFMIS).

The strategically bordering county, which according to many should be well developed, is marred with cases of incomplete projects, failure to implement the set out projects, incomplete constructions, and many stalled projects.

Likewise, in Kisumu, an analysis of IFMIS by Gathungu indicated voided payments amounting to Ksh 2.6 billion for the year under review.

This is even as the Anyang’ Nyong’o government struggles with unsupported legal expenses, like many other devolved units in the country.

Kisumu’s legal expenditure stood at Ksh 93.6 million, with anomalies being spotted in half of the payments made.

With Ksh 46 million having been paid for legal services to the County executive, an expenditure of Ksh 22.4 million was not supported, with documents indicating the pending legal cases, outstanding legal fees, and the amount paid per case to date.

There was no approval by the County executive to engage the legal consultants, which is contrary to section 16 (1) of the Office of the County Attorney Act.

Gathungu also noted irregularities in the payment of pending bills by Kisumu County.

“Payments totaling Sh10,917,576 paid during the year under review were not listed or disclosed as part of the pending bills in the audited financial statements for the prior years. In addition, pending bills totaling Sh20,263,671 were overpaid by Sh3,853,727. Management has not analysed pending accounts payable. In the circumstances, the Management was in breach of the law, and the continued accumulation of pending bills exposes the County Executive to potential losses and adversely affects the budgetary provisions,” Gathungu said in her report.