Twelve counties were unable to account for Sh81 billion they received from the National Treasury during the 2016/17 financial year, a report by Auditor-General Edward Ouko has revealed.
Mr Ouko did not give an opinion on the financial activities of the 12 counties during that year, meaning there was little or no documents backing the devolved function's expenditures. This is technically known as disclaimer opinion.
According to the report, more than half of the counties were in a bad financial state in the year that ended June 30, a month to the August general election where many incumbent governors lost their seats.
The report exposes huge variances between financial statements and the Integrated Financial Management System reports, resulting in the auditor expressing an adverse and disclaimer opinion.
The disclaimer opinion issued on financial statements of the 12 counties could be a signal of either the bookkeeping nightmare that the devolved governments find themselves in or misappropriation of taxpayers’ money.
The auditor is usually unable to offer an opinion when he encounters numerous errors and where information is not made available to him, making it difficult for him to finish the audit.
The counties are Nairobi, Nandi, Tana River, Vihiga, West Pokot, Bomet and Homa Bay. Others are Kericho, Kitui, Lamu, Machakos and Migori.
At the same time, 12 other counties were issued with an adverse opinion indicating massive inaccuracies in the Sh73 billion they received in the same fiscal year.
Mr Ouko issues an adverse opinion, which is the worst report an institution can get, when he finds so many anomalies that he lacks confidence in the financial health of an institution.
Some of the counties that were issued with an adverse opinion are Nyamira, Samburu, Kirinyaga, Murang’a, Tharaka Nithi, Kwale and Kisumu. Others are Siaya, Turkana, Garissa, Isiolo and Embu.
Nairobi was found to have irregularly spent Sh8 billion out of Sh10 billion it collected as revenue after the county executive failed to bank it as required by law.
The report also revealed that out of the over one million cars parked in the city, only 402,401 were compliant, resulting in the loss of Sh270 million in revenue.
The county was put on the spot for releasing clamped vehicles without payment of the penalties
The report also revealed that the county failed to disburse Sh281 million to various hospitals, including Pumwani and Mbagathi, as reimbursement for free maternity.
Embu was operating 19 main bank accounts contrary to the Public Finance and Management Act. The accounts had Sh521 million.
The county was also found to be using multiple revenue collection systems despite acquiring a digital platform at a cost of Sh18 million.
In Murang’a, Mr Ouko dismissed the budget figures reflected in the statements as misleading and erroneous, faulting the county executive for failing to post the original document.
The devolved unit also recorded a decline in revenue after it dropped to Sh535 million from Sh641 million collected in the 2015-2016 financial year.
In Kiambu, the auditor found that 19 employees were not taxed while 262 were undertaxed, resulting in non-remittance of Sh434,431 and Sh5 million respectively.
At the same time, the construction of a talent academy and amphitheatre had stalled despite payment of Sh18 million to the contractor.
The project estimated to cost Sh81 million had been started in 2015 and was estimated to be complete in two years.
“ … the financial statements do not present fairly the financial position of the county executive of Kirinyaga as at 30 June 2017, and its financial performance and cash flows for the year then ended,” the report read.
In Baringo, the auditor found that the county paid Sh1.4 million to Kenya Power for the installation of electricity but at the time of the audit in December 2017, the facility was yet to be connected to the power grid.
In Bomet, the auditor observed that the devolved unit had undercharged tea companies land rates at 1.3 percent instead of 2.5 percent.
At least 839 county staff were found to have been irregularly hired during that financial year. They received Sh27 million in salaries per month.
The county also spent Sh55 million in printing and advertising against a budget of Sh45 million, resulting in an over expenditure of Sh10 million.
An integrated short text message system acquired by Bungoma at a cost of Sh4.9 million was not functioning despite having been handed over to the county in 2015.
In the same county, a chicken slaughterhouse that gobbled up Sh35 million is lying idle despite its completion.
Mt Elgon High Altitude Training Centre is not operational despite the county spending Sh33 million on it.
In Busia, the auditor found that the digital health village at Amukura was yet to receive medical equipment despite payment of Sh9.9 million to a local firm for the delivery.
In Elgeyo-Marakwet, the auditor found that the county had made fraudulent salary payments resulting in the loss of Sh12 million, even as the devolved unit made an attempt to cover-up.
In Turkana, the auditor could not verify expenses amounting to Sh3 billion incurred in the purchase of vehicles, certified seeds and other assets after the county failed to produce supporting schedule.