REVEALED! How Kiambu County Embezzled Ksh. 895 Million In OneYear.

Kiambu County has been named by the Auditor General over the loss of millions of shillings through unsupported expenditure on goods and services, duplicate payments, undeclared bank accounts and undocumented payment of staff.

In his audit report for the year ended 30th June 2015, Auditor General Edward Ouko noted that Kiambu County Government had an unexplained variance of Ksh. 894,983,404.65 in payments for the year ended 30th June 2015.

The report also revealed a variance of Ksh. 328,958,363.50 in the IPPD and manual payroll system for the compensation of employees whose accuracy of compensation (Ksh. 4,323,636,541) could not be confirmed. Notwithstanding, there was no percentage of expenditure on wages and benefits against total revenue prescribed in a regulation by the County Executive Member for Finance and approved by the County Assembly as required by Section 107(2) of the Public Finance Management Act of 2012.

In their statement of receipts and payments for the year ended 30th June 2015, KCG records reflected and expenditure of Ksh. Ksh. 1,432,376,857 compared to the supporting schedules provided to the auditor amounting to 1,405,688,546, resulting to an explained difference of Ksh. 26,688,311.
The auditor notes that it was not possible to confirm the accuracy of the use of these goods and services.

Purchase of a non-existent land.
The financial statements reflects acquisition of assets amounting to Ksh. 2,470,919,818, a figure that includes Ksh. 30,000,000 that the Kiambu Government claims was spent to purchase a parcel of land. However, there was no evidence of any land that KCG had bought during that year. Further, the county government did not have any register that showed their fixed assets nor the non-financial assets they had acquired during the year.

“In the circumstances, the accuracy and completeness of the acquisition of assets figure              could not be confirmed,” said the audit report.

The Auditor General notes that the audit exercise was unable to ascertain the accuracy and validity of the cash and cash equivalents balance of Ksh. 32,961,607 reflected by the KCG records which had also omitted, from their statement of assets, Ksh. 11,086,600 that is held in Co-operative Bank.

Account Receivables.
KCG omitted an outstanding imprest to the tune of Ksh. 123,500 with no explanation given for this omission. They have also not provided reasons for long delay in accounting for the funds or whether the recoveries have been made from the imprest holders.

“Consequently, the accuracy and validity of the accounts receivable balance of Ksh 4,388,633 as at 30th June 2015 could not be ascertained,” said the report.

In the breakdown of accounts payables figure, Ksh. 2,487,517 was not disclosed in the notes to the financial statements notwithstanding that nothing was availed to the auditor to verify the deposits and retention balance of Ksh. 2,487,517, thus the auditor is unable to confirm the authenticity of these figures.

The auditor further queries the statement of assets valued at Ksh. 189,857,753 whose journal voucher was unavailable for audit.

KCG’s financial statements reflect pending bill totaling to Ksh. 608,992,518.54 relating to recurrent and development accounts. However, the movement schedules, suppliers’ statements, invoices and the ledger for the pending bills were not provided for audit review. The county government further failed to disclose pending bills amounting to Ksh. 44,968,873.44 as part of these financial statements.

Assets and Liabilities Inherited from The Defunct Local Authorities.
KCG financial statements reflect an asset balance of Ksh. 1,745,493,576 as a 30th June 2015. However, their records exclude the opening balances for assets and liabilities inherited from the defunct local authorities. In the circumstances, the accuracy and completeness of the fixed assets owned by the county government cannot be verified.

KGC could not also explain the reasons that led to them underspending in their recurrent expenditure by Ksh. 469,280,673. Further still, the Auditor General could not ascertain whether the budgeted funds for developments (Ksh. 2,607,452,379) was actually used for the intended 256 projects.

Diversion of Funds.
Records in the county government indicated that funds totaling to Ksh. 149,185,035 voted for various departments were relocated from one sub-head/item to another without any approval by the Controller of Budget.

Revenue Analysis.
KCG total revenue for the year was Ksh. 8,727,10732, out of which Ksh. 6,616,244,176 came from the exchequer (National Government) and the remaining Ksh. 2,110,856,556 was what the county government collected as revenue from local sources.

The amount collected by KCG reflected a shortfall of Ksh. 1,130,378,029 that may have been a result of duplicated receipts. An analysis of the transaction files revealed duplicated 88,864 receipts amounting to sh.359,572,490 with Thika Sub-County leading the park with 54,549 duplicated receipts valued at Ksh. 323,758,433.

The county government did not maintain an audit trail in its revenue collection systems, something that exposed it to manipulation of the revenue records and other unauthorised system actions such as inputting, deleting or modifying sensitive data.

Outdated Valuation Roll.
The county government was also accused of using an outdated valuation roll for rating property that may have caused it to loss substantial revenue. It was also accused of making little effort to recover Ksh. 2,652,790,527.06 in accumulated ground rent and land rates arrears and penalties on properties. 544 other properties were neither charged nor had land rates, with another 30,053 properties valued at zero shillings despite being located in prime areas within the county.

Residents living in county government the 413 rental houses owed them Ksh. 78,364,911 in rent arrears with 168 houses in Thika and Kiambu Towns not being charged rent at all.

Irregular award of tenders and procurement anomalies.
Records submitted to the auditor showed that on various occasions, KCG failed to award tenders to the lowest bidders as in the case of the construction of the Nderi and Dagoreti bus parks where the tenders were awarded to the 2nd highest bidders.  A visit to the same in October 2015 revealed that the project had not been commissioned, more than one year after its completion.

Other anomalies included suppliers being awarded tenders without being subjected through competitive bidding, irregular payments to contractors/ suppliers without clear evidence of work done, contractors being paid without the bill of quantities being itemised to indicate the specific deliverables, not indicating specifications of items bought, excess procurement of goods, not configuring bank accounts in IFMIS thus making it impossible for central bank to track the transactions related to those accounts and irregular employment of workers and their terms of service.

Get the full auditor’s report via this link

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