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