alexa Shocking audit report how counties inflated pending bills by Sh60bn - Daily Nation

Shocking audit report how counties inflated pending bills by Sh60bn

Sunday June 30 2019

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Controller of Budget Agnes Odhiambo. PHOTO | FILE | NATION MEDIA GROUP 

 NYAMBEGA GISESA
By NYAMBEGA GISESA
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County government officials inflated the amount of pending bills owed to suppliers and contractors by almost Sh60 billion, a new special audit report has revealed.

The report which was handed over to the National Treasury and to governors last week, reveals shocking details on how counties procured services and went on to pay even when the services were not delivered.

ASTRONOMICAL

It also indicates how county officials have been holding suppliers and contractors at ransom by withholding their payments even when the procured goods and services were budgeted for.

Shockingly, a number of counties understated the amounts they owed contractors and suppliers

In some of the cases, county officials inflated amounts to be paid.

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According to our investigations, the Controller of Budget got suspicious after counties submitted astronomical figures owed to suppliers and contractors requesting for authorisation for payment.

The figures prompted Ms Agnes Odhiambo, the Controller of Budget to write to all governors on October 25 last year requesting for a status report of pending bills owed by county governments as of June 30, 2018.

“As you are aware, counties have been accumulating pending bills since the advent of devolved governments in March, 2013. The pending bills have increased significantly and stood at Sh108.41 billion by June 30, 2018 based on figures submitted by the counties to the office of the Controller of Budget,” a letter sent by Mrs Odhiambo reads.

“The pending bills should exclude liabilities inherited from the defunct Local Authorities,” she added requesting for the information to be handed in by October 30, 2018.

On October 30, Treasury Cabinet Secretary Henry Rotich directed the Auditor General to carry out special audits on pending bills that counties owe suppliers and contractors.

The Sunday Nation has learnt that the Treasury provided Sh273 million which was paid to various certified public accountants who carried out the exercise on behalf of the Auditor General.

But interestingly, when the exercise started, counties presented pending bills amounting to Sh88, 984, 628, 752 to the Auditor General, a whole Sh19,426,841,248 less than what they had demanded for authorisation to pay from the Controller of Budget.

More shocking details could emerge later as the exercise progressed.

ACTUAL LIST

Out of the actual list of pending bills, auditors established that only pending bills amounting to Sh51,284,830,129 were eligible with others amounting to Sh37,701,100,378 were found to be ineligible.

The special audit report has saved taxpayers from the payment of Sh57,126,639,871 in pending bills that are irregular or fraudulent.

The Sunday Nation has learnt that the issue of the pending bills was extensively covered during an Inter-Governmental Budget and Economic Council (IBEC) meeting held on June 18 this year under the leadership of Deputy President William Ruto.

The meeting provided a framework for resolution of the ineligible pending bills.

Consequently on June 19, this year, Mrs Odhiambo wrote to governors asking for the establishment of county pending bills committees, which will comprise an independent person who shall serve as the chairperson and county officials from the departments of internal audit, finance, procurement and the department responsible for infrastructure.

“Please ensure that the committees are established and gazetted by July 15, 2019,” the letter by Ms Odhiambo reads.

Acording to the special audit reports, the county with the highest amounts of legible pending bills is Nairobi City (Sh10.8 billion), followed by Mombasa (Sh3.3 billion), Garissa (Sh1.92 billion), Wajir (Sh1.7 billion), Turkana (Sh1.71 billion), Kisumu (Sh1.7 billion), Narok (Sh1.55 billion), Meru (Sh1.53 billion), Kiambu (Sh1.16 billion) and Isiolo (Sh1.06 billion).

LEAST DEBT

According to the report, only Kajiado County has managed to pay all its legible pending bills.

Counties with the least amount of pending bills are Makueni (Sh375, 360), Baringo (Sh13.4 million), Kwale (Sh14.6 million), Homa Bay (Sh40 million), Lamu (Sh48.9 million), Laikipia (Sh59 million), Uasin Gishu (Sh76.6 million), Nyeri (Sh100 million), Elgeyo Marakwet (Sh126.7 million) and Nyamira which owes suppliers and contractors Sh165 million.

While most of the counties paid some of the legible pending bills between June 2018 and February 15, 2019, some counties have not paid the debts.

Counties that failed to pay legible pending bills are Machakos, Mandera, Nyandarua, Uasin Gishu and Homabay.

Kikuyu MP Kimani Ichungwa who is the chairperson of the National Assembly Budget and Appropriation Committee in the N says that pending bills are mostly as a result of poor budgeting especially in the areas of projected own source revenue.

“They include in their budgets unrealistic figures of own source revenues which they are not able to raise and since the law allows for procurement on the basis of an approved budget, they make commitments on the basis of their approved budgets which they cannot meet as they do not raise the revenues they projected,” he says.