Former Auditor General Edward Ouko, in his 2017/2018 audit report for Bomet County revealed the county paid Sh32.3 million to clear debts owed by four co-operative societies to Agricultural Finance Corporation and FMD East Africa. However, it was unclear why the county government paid debts.
The devolved unit explained it had taken ownership of eight tractors belonging to the cooperatives societies but no logbooks were provided for the audit verification.
The audit also revealed that a total of 213 new employees with a monthly gross salary of Sh11.1 million were employed in the year under review but the vacancies were not advertised. Neither was their recruitment done by the County Public Service Board, contrary to the requirements of county Government, Act 2012.
Section 65 (e) of the County Government Act, 2012 states that one-third of county staff at entry-level should be recruited from communities other than the one dominant in the county. However, the county hired 95 per cent of staff from the dominant ethnic community.
The county incurred an expenditure of Sh233.4 million under various sub-items but was not supported by payment vouchers and other documentary evidence such as contracts and completion certificates.
Bomet had outstanding pending bills amounting to Sh267.7 million which has not been supported by authentic documents.
“As a result, the validity and accuracy of the pending bills cannot be fully confirmed,” the Auditor General noted in his report for the financial year 2017/2018.
A supplier was paid Sh 2.4 million for the supply of three batch pasteurizers but physical verification revealed the supplier only delivered one batch pasteurizer and two milk dispensers instead of the three batch pasteurizer for which the orders had been placed. No explanation was given during the audit.
SH 33 MILLION
The county paid Kenya Red Cross society Sh33 million for the implementation of the project that was meant to improve the quality of life of the residents. However, a list of the programmes to be undertaken and their status was not provided for audit.
Sh 102.2 million was paid to National Lands Commission during the year under review for the procurement of land for water treatment plant but no land title deed was presented for audit despite the full payment.
The county had pending bills amounting to Sh1.1 billion but documents like local purchase orders/ Local service orders, invoices, delivery notes and approved claim documents were not presented for audit.
In 2017/2018 the county purchased vehicles and other transport equipment which were paid for in full an amount of Sh48.5 million however no logbooks were produced for audit.
The audit revealed rent arrears amounting to Sh13 million from county house, kiosks and stalls, in some cases, some tenants had not paid for close to 80 months arrears.
The county paid Sh21.9 million for the construction of data centre at the county headquarters. The project was to be completed by February 2017 however site visit revealed that the project was 55 per cent complete.
“The project completion delayed by over 20 months despite being stated as a critical county support automation system.
Construction of Chebululu conservancy at Kaplelartet, a market shed at Kamasian and charcoal briquette house have stalled since the financial year 2013 despite a total of Sh9.3 million having been paid.
The verification showed work was abandoned and the contractor was not on site.
Further, the department of Agriculture had four stalled projects amounting to Sh18 million. The projects were awarded to new contractors but no documentary evidence was produced to confirm the same.
The department of Trade and Industrialisation spent Sh660,675 on the construction of Kapsuser market in the financial year 2015/2016 but physical verification carried out during the year under review revealed that the market shed was complete but not in use. Further, the department paid Sh1.8 million for the drilling and equipping of the borehole that did not yield water.
The Roads and Transport department awarded contracts amounting to Sh13.9 million to various contractors and the audit revealed the contractors were not registered with the National Construction Authority.
“It was, therefore, not possible to confirm if the contractors had the necessary experience, machinery and working capital to undertake the road works,” the auditor noted.
The county does not have an approved staff establishment contrary to the requirements of Section B5 (2) of the county Public Service Human Resource Manual.
Further, the audit report noted 86 per cent of the employees were from the dominant community in the county contrary to section 65 (e) of the county government Act 2012 which requires that at least 30 per cent of county staff at entry-level should be recruited from other communities other than the one dominant one in the county.
The report revealed the county government of Kajiado owned a cattle ranch but the value of the ranch and the livestock were not disclosed in the financial statements present for the audit for the financial year 2017/2018.
The county has a pending bill of Sh766.8 million but the county has not maintained updated creditor’s register/ledger with full details of the creditor’s regarding work done or services rendered.
The County Executive made payments amounting to Sh23.5 million to casual workers but according to the audit report, it was not clear how these workers were recruited since there was no evidence of recruitment documents, muster roll, and register, approved terms of service and returns from the supervisors.
The county spent Sh36.9 million for the construction of a dining hall at Olekejuado High School. Mr Ouko noted the construction of schools is not the function that is devolved under scheduled 4 of the constitution of Kenya 2010.
There were no tender documents and minutes of evaluation made available during the audit to show the contractor was identified and whether procurement procedures were followed.
An amount of Sh34.3 million was paid to a firm for the construction of a Modern Sports Complex in Ngong town. The construction was meant to be undertaken in four phases from 2014 and the completion date was meant to be July 2019.
The audit revealed the complex was only 17 per cent complete and for the year under review, no work was carried out implying that, either the project had been abandoned or works had stalled with physical verification confirming the same.
Further, an amount of Sh3 million was made to the architects for consultancy services in respect of the sports complex even though no works had been carried out during the year under review.
The audit revealed that a total of 28 flagship projects with a budget of Sh239.2 million were started without going through the full cycle of the budget process including public participation and validation.
“This is contrary to provisions of regulation 221(5) of the Public Finance Management (County Governments) Regulations, 2015 which provides that, the county treasuries shall arrange for effective public partition during the development of their annual budget estimates including the publication of Citizens’ budgets which shall explain and summarize the budget proposals.
Kajiado County executive lacked a Risk Management Policy contrary to the requirements of Regulation 158(1) of the Public Finance Management (County Government Regulations) 2015 which states that the county Government entity should develop risk management strategies.
The county employed 195 staff in various departments. This included recruitment of a Director-Supply Chain, Deputy Director of Budget and an Accountant General. The audit revealed that the personnel files for the above individuals availed for audit did not contain necessary documents to show whether the employees’ had the requisite skills, qualifications, and competence as advertised.
Mr Ouko noticed that the county executive did not have an approved human resource establishment and job evaluation mechanism to guide in the management and utilization of the human resource and to establish the required and optimal number of staff and skills in each department.
An amount of Sh12.1 million was paid to casuals in the county Department of Health however the expenditure was not supported by approval letters from the County Public Service Board as required by clause B.16 of the county Public Service Human Resource Manual.
Various officers from the county were given Sh12.9 million for domestic travel and subsistence but no supporting documents have been provided to confirm that the funds were spent for the intended purposes. The county used Sh4.1 million in respect of refurbishment of buildings but supporting documents for the expenditure were not provided for audit.
The county had outstanding imprest of Sh12.9 million as of June 30, 2018, but the audit revealed that the imprest register did not reflect vital details such as the personal numbers of the staff who held imprest and the reference numbers of payment voucher for cases that had been surrendered. Pending bills amounting to Sh758.2 million were not supported by local procurement orders, invoices, fee notes, and delivery notes. The county deducted Sh7 million from their staff who occupy the county houses.
However, the amount was not remitted to the County Revenue Fund Account as required by section 109(2) of the Public Finance Management Act, 2012 which provides that all money raised or received by or on behalf of the County Government is paid into that account.
There were instances where the financial statements and the IFMIS records were different and remained reconciled or unexplained thus the completeness and accuracy of the financial statements ended 30 June 2018 could not be ascertained.
The Auditor-General reported unaccounted receipt books. 109 receipt books issued to officers for collection of revenue from markets and car parks had not been surrendered at the time of the audit.
The county remitted Sh605.2 million to primary schools, early childhood learning centers and secondary school for the constructions of classroom, laboratories, dominatrices and other school infrastructures.
Physical verification is done on 8 November 2018 revealed that the structures were not complete and there was no work going on.
The County Executive of Narok on 29 July 2016, invited applications for membership to the county audit committee. However, at the time of audit in October 2018, no committee had been established as required by clause 167 (1) of the Public Finance Management. Mr Ouko found out the county government of Nakuru had a pending bill of Sh1.9 million.
“Failure to settle current year’s bills affect the budget of the succeeding year and its operations,” Ouko noted.
The Department of Education had budgeted to spend Sh4.7 million on Foreign travel. The ledgers presented for audit indicated that Sh2.3 million was spent on foreign travel. Scrutiny of payment records showed that the fund was not used for foreign travel, instead, they were used for various votes across the department. No authorisation for the reallocation was provided for audit verification.
The market stalls fees arrears from four sampled sub counties with the biggest and busiest market activities revealed arrears of revenue amounting to Sh11.8 million as of 30 June 2018. However, no explanation was given for the non-collection of the arrears from traders.
Records provided for the year under review showed that liquor license arrears amounted to Sh 66.9 million; however, the county executive was not collecting the arrears and has not been issuing demand notices to traders to clear the outstanding balances.
The county management was in breach of law after the audit report revealed that expenditure in respect to salaries of permanent and temporary employees was 44 per cent of the total revenue exceeding the 35 per cent required by law as per section 25(1) (b) of the Public Finance Management (County Government) Regulations, 2015.
The Department of Finance and Economic planning over spent Sh93.5 million as legal fees and examination of vouchers revealed that the payments were not adequately supported with relevant documentation as no information was provided to show initial fee not, amounts paid to date, outstanding balance, the cases being handled and status of those cases to authenticate the payments.
A motor vehicle was purchased under the Department of Finance at a cost of Sh13.8 million but the audit revealed the purchase was not factored in the procurement plan for the year under review. Further, no records were produced to confirm how the procurement was initiated and if the law was followed.
The Ministry of Finance made payments of Sh 44.5 million being loan repayments during the year however, loan statements to support the balance were not provided for verification.
Sh 3.8 million was paid for the construction of market stalls and ADC fence in Molo Central sub county however there was no inspection and acceptance report for the work done.
“It was not possible to establish whether value for money was realised and if the payments made were accurate,” the audit report read.
The county paid night out allowances of Sh4.5 million to 78 members of the county assembly but there was no evidence provided to show that the members travelled to Machakos for the KICOSCA games.
The county disbursed Sh26 million for polytechnics and vocational training centres but there was no acknowledgment was done by the institutions.
The county government paid legal fees to an advocate of Sh4 million through two payment vouchers Sh2.3 million and Sh1.7 million.
The audit, however, revealed that the photocopies of the certificates of costs were attached to support the payments. The attached copies of the certificates of the cost were both issued by the Deputy Registrar of the High Court of Nakuru on the same date, both bear similar signatures but different names of the Deputy Registrars.
A sum of Sh 237.7 Million was paid for the preparation of the Nakuru Spatial development plan. The scope of the consultancy services was digital topographical mapping and preparation of 2014 to 2014 spatial development plan. The audit revealed that “no substantial work has been carried out and the submitted draft report has not been tabled, discussed and adopted by the County Assembly".
Mr. Ouko noted the intended benefits from the project may not be achieved within the set timelines.
In 2016 a contractor was paid Sh24.6 million for Land Information Management System for Nakuru and Naivasha Municipality areas but during the audit, for the years under review, it was noted that no land Information Management System as a deliverable has been realised.
Sh 2.5 million was spent for the supply of X-Ray machine to Elburgon hospital but the audit revealed that it was supplied without a processing unit. The machine has not functioned since it was delivered.
“The machine was also received without any documentation such as user guidelines, warranty period and payment was made before delivery,” the audit report noted.
The Ministry of Environment, Water and Natural Resources awarded a contract for the completion of borehole and construction of tank at Oljorai borehole in Eburruk Mbaruk ward at Sh2.9 million during the year 2016/2017.
Site visit in October 2018 revealed the borehole had been drilled but the water tank was incomplete and the contractor had abandoned the site leaving incomplete work.
An over the expenditure of Sh29.4 million was incurred against the approved budget in the department of roads, infrastructure and public works as electricity expenses.
However, no evidence was provided during the audit to show that the excess expenditure was approved as required by Section 39(3) of Public Finance Management (County Government) Regulations, 2015.
The county paid Sh3.8 million for routine maintenance and spot patching of Kenyatta Avenue in the Biashara Ward. The audit revealed that the project was not budgeted for under the development budget for the Ministry of roads.
The county awarded various contractors to supply and install street lights in wards in Nakuru county worth Sh53 million but physical verification carried out in November 2018 revealed that the lights were not labelled. This, according to the Auditor General, made it impossible to ascertain the actual number of street lights installed and paid for.
“There are no records to differentiate the street lights installed in the prior years and the current year,” the OAG noted.
Nakuru County failed to submit to the Auditor-General financial statements relating to the car loan and bursary fund, contrary to the provisions of section 116(7) of the Public Finance Management Act, 2012. The county did not give Mr Ouko any reason for failure to submit the financial statements.
The audit report revealed the county executive installed and implemented the ZIZI revenue collection system and LAIFOMS information systems that had not been integrated with the integrated Financial Management system (IFMIS).
The report revealed that the county of Laikipia misallocated expenditure amounting to Sh22.1 million to unrelated items.
For instance, casual wages money was misallocated to domestic travel and subsistence and an amount of Sh4,9 million meant for domestic travel and subsistence was misallocated to foreign travel and subsistence.
Sh 11 million was paid to various Laikipia county staff and three firms for revenue operation within the county, flight charges and subsistence during the National Music Festival held in Kakamega but the payment vouchers were not supported by the required documents like air tickets.
The members of the county assembly were paid Sh3.1 million for attending various consultative meetings during the year under review but the payment was not supported by relevant documents such as signed attendance schedules or even minutes from the meetings. Members of the staff were paid Sh6.3 million for attending KICOSCA games in Machakos county and each member was paid transport allowance but no bus fare tickets were provided for audit. The payment was not supported by a signed attendance list at the events.
“The propriety and validity of the expenditure in respect of KICOSCA games could not be confirmed, “the OAG noted.
Included in the expenditure, is an amount of Sh23.9 million paid to Kenya Medical Supplies Agency for supply and delivery of drugs to dispensaries and health centers in the county.
However, requisitions, triplicate copies of local Purchase Orders, goods received notes from health facilities and inspection and acceptance reports of the supplies were not presented for audit review.
The county incurred an expense of Sh30.5 million for fuel, oil, and lubricants. The Auditor General noted they were issued with fuel cards from Vivo Energy and Total Kenya Ltd service.
However, fuel worth Sh11.1 million was drawn and paid for cash despite the fact the fuel cards had been issued for use.
Further Sh407,210, Sh 320,000 and Sh87,210 were refunded to staff for fuel but the county could not explain why the fuel cards were not used.
In the audit report, the county reported pending bills amounting to Sh675.1 million however tender documents, contract agreement, local purchase/service orders, invoices, certificates of work and schedules detailing names of the contractors/ suppliers or work was done were not provided for audit.
The executive transferred Sh172.1 million to various health facilities though facility improvement fund but the county failed to prepare and submits for audit financial statements in respect of the fund.
“This is contrary to section 167 of the Public Finance Management Act, 2012. The law requires an administrator of the fund to prepare and Submit for audit financial statements in respect of the fund within three (3) months after the end of the financial year that is, on or before 30 September of every year,” the Auditor General noted.
The executive indicated during the audit that arrears of revenue about property rates and rent were amounting to Sh4.1 billion as of 30 June 2018. The Auditor-General noted the county had not indicated any effort by the management to recover the amount.
Included in the financial statement is an expenditure of Sh3.4 million for the purchase of various furniture and equipment. However, a review of records revealed inconsistencies between the dates when the tender was initiated and awarded.
For instance, a quotation was raised on 22/2/2018 and returned and awarded on 26/2/2018 while the evaluation committee was appointed on 6/3/2018 after the award breaching the procurement laws, regulations and procedures.
The county paid Sh23.8 million in June 2018 for the implementation of the Solio Water Project but the project had not commenced as of November 2018. The audit report noted there was no satisfactory explanation was provided for the delay in commencing the project.
The county paid Sh26.8 million for casual in all health facilities within the county on renewable contracts.
The contracts were being renewed on a continuous basis contrary to the provisions section 37 of Employment Act, 2012, which requires that a casual employee whose contract has been converted and who works continuously for two months or more from the date of employment as a casual shall be entitled to the same terms and conditions of service as the other non- casual employees.
The county spent Sh40.8 million for the supply and commissioning of Revenue Automation System but it was noted during the audit the systems have not been utilised or were not functional after the roll-out except parking fee collection.
An amount of Sh9.1 million was incurred on drugs and non-pharmaceuticals from non- prequalified suppliers contrary to Section 95(3) of the Public Procurement and Asset Disposal Act, 2015 Act that requires that a Public Procuring entity shall invite tenders from only the approved persons who have been pre-qualified.
Further, an amount of Sh1.2 million was irregularly charged to specialised materials and services accounts.
The county spent Sh12.4 million on airtime allowances which were cash payment to employees but the allowances were not taxed hence PAYE was not paid to Kenya Revenue Authority as required by law.
In compensation of employees, the county spent 48 per cent of its total receipts contrary to the law which requires the expenditure not to exceed the set limit of 35 per cent.
For the year under review, 67 employees recruited by the county public service Board to fill various positions, 88 per cent were recruited from one dominant community in the county.
This was contrary to the provisions of section 65(e) of the county government Act, 2012 which requires that at least 30 per cent of the employees be from other communities.
According to the audit report, the executive did not have a risk management policy to guide the management in risk assessment and formation of risk mitigation strategies.