Third of govt's 2011/12 expenditure unaccounted for: audit

A third of the government’s expenditure for the 2011/2012 financial year cannot be accounted for, the independent Auditor General has declared in his yearly report of public spending.

Edward Ouko told the National Assembly at a specially organised session last evening that of the Sh920 billion spent by government in that financial year, Sh303 billion “can be regarded as not having been properly accounted for.”

In a presentation like that of the Budget Statement by the Treasury Cabinet Secretary, Mr Ouko said that of the 252 financial statements examined, only 15 (six per cent) could be deemed clean.
This was however an improvement from the previous year, where there were no clean accounts.

More than half of the statements examined had errors attributed to unsupported expenditure, failure by civil servants to surrender imprests, unauthorised spending and uncleared balances.

They also had excess expenditure, misallocation of expenditure items and lack of adequate disclosures.

Mr Ouko warned that if not checked, this bad management of the government’s accounts could continue into the 47 county governments formed after the General Election in March.

“The situation will definitely be more complicated and intricate when county governments come on board as this problem will be devolved to all the 47 of them,” he said.

Overall, said Mr Ouko, “there is weak and inadequate maintenance of accounting records observed across a number and ministries throughout the year.”

He said a number of financial statements from the ministries differed with the actual records.

That year, a lot of the ministries and government departments prepared their statements on cash basis, the result of which it was impossible to tell what the government owns and owes.

“As at June 30 2012 we do not, as such, know what each ministry or department owns and consequently the net worth of the Government of Kenya as a whole cannot be determined,” said Mr Ouko.

The Transition Authority has not made much progress in establishing the assets and liabilities of the national and county governments so that it can be decided what each ought to end up with.
Mr Ouko said the Sh303 billion that cannot be accounted for because of six main reasons.

These are: unsupported expenditure, excess expenditure, pending bills, management of imprests, and maintenance of bank and cash accounts and the maintenance of accounting records.
20 ministries and departments couldn’t produce documents to support the expenditure of some Sh5.2 billion.

Sh7 billion was spent in excess of the amounts approved by Parliament in four ministries and one commission; Roads, Justice and Constitutional Affairs, Education, the Teachers Service Commission and the Forestry and Wildlife ministry.

Some 32 ministries had pending bills of Sh4.4 billion.

Mr Ouko also pointed out that with Sh2 billion owed by civil servants as imprest, the government had effectively handed out unauthorised loans worth that amount to individuals.

The presentation of the report also gave the MPs an opportunity to discuss the highlights of the report, which will now be discussed by the Public Accounts Committee with accounting officers called to testify.

A bemused Ferdinand Wanyonyi (Kwanza, Ford-Kenya) said that with the Sh2 billion owed as imprest alone, it was half the budget of some counties.

Public Accounts Committee chairman Ababu Namwamba suggested that in future, Principal Secretaries who cannot account for expenditure in their ministries should be made to do so before the allocation of funds.

“Accounting officers who cannot demonstrate that they can absorb their full budgets, have really no reason to ask for more,” said Mr Namwamba.

He challenged the Finance and Budget Committees to ensure the Auditor-General’s office gets more money in the Supplementary Budget Estimates prepared to top up allocations.

Finance Committee chairman Benjamin Lang’at said it is a shame that only 6 per cent, 15 of the 282 statements examined by the Auditor General, had clean opinion reports.