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New audit report exposes financial rot in counties

Tuesday March 19 2019

Auditor-General, Mr Edward Ouko

Auditor-General, Mr Edward Ouko has raised questions about the financial prudence of devolved governments, saying it is slowing down development. PHOTO | FILE | NATION MEDIA GROUP 

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Governors have been on a tender-awarding spree even in situations where there is no guarantee of budgetary allocations, accruing pending bills of Sh108 billion by the close of the 2017/18 financial year.

Auditor-General Edward Ouko has raised questions about the financial prudence of devolved governments, saying it is slowing down development.


As a result, doing business with county governments has become risky for contractors, suppliers and entrepreneurs because of delayed payments.

This has resulted in bankruptcy suits and social conflicts, Mr Ouko’s reports on county governments say.

The reports expose massive corruption and a careless planning and spending culture that disregards procurement guidelines.


Additionally, the authenticity of some bills is being questioned as the reports point to fictitious claims made by some devolved governments.

The audit, for example, flags Tana-River County for its outstanding bill of Sh1.6 billion as at June 30, 2018.

There were no proper documents to show the opening balance, additions, amounts settled during the year and the closing balance.

Key details of projects like contract numbers were not provided in the review, making it difficult to reconcile payments against outstanding balances.

“The huge amount of outstanding pending bills implies that the executive irregularly entered into commitments without approved budgets or funds budgeted for goods, works and services,” Mr Ouko said.

In Tharaka-Nithi County, there were inaccuracies in the Sh417,114,546 development and recurrent expenditure bills.


Although the county formed a committee to verify the debts, payment vouchers and original documents relied on were not made available for the audit.

In these circumstances, the accuracy and validity of the bills could not be confirmed.

Mr Ouko was clear that the Taita-Taveta County government did not confirm the availability of money before signing supply contracts with third parties.

The audit indicates that pending bills for the period totalled Sh542,570,414.

However, an additional Sh251,436,927 in pending accounts payable to the Youth and Sports Department was omitted from the total amount.

“The pending bills are as a result of non-adherence to the Government Financial Regulations and Procedures which provide that no expenditure for which there is no budgetary allocation may be incurred,” the audit said.

Thousands of service providers have shunned county governments on account of non-payment of bills.

Contractors are oblivious of the risks of non-payment occasioned by the law barring accounting officers from making payments in the absence of requisite budgetary provisions.


It is therefore important that they understand the budgets and financial dealings of their counties of interest.

In Siaya County, the audit showed that Sh190,632,802 out of a total Sh739,868,991 in development expenditure bills was not supported by local purchase orders, invoices, delivery notes and works completion certificates.

In total, the county recorded Sh759,702,185 as the cumulative pending bills, whose accuracy and validity could not be verified.

And in Meru County, where documents reflected pending bills of Sh2 billion, some Sh1.7 billion claimed to have been spent on the construction of buildings and other civil works was not supported by payment vouchers.

“No certificate of work done was made available for audit verification,” Mr Ouko said.