Economy

Counties could lose billions over huge variations in Ifmis, manual entries - auditor

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Auditor-General Edward Ouko. FILE PHOTO | NMG

Billions of taxpayers’ money is at risk of being lost at the counties due to the huge variations between amounts on the electronic system Ifmis and on manual documents.

The counties' statements of their financial transactions differ from records on the Integrated Financial Management and Information System, according to a report by the auditor-general.

In the 2016 county audit reports, Auditor-General Edward Ouko noted that the variations in majority of the 47 county governments could not confirm the accuracy and completeness of the expenditures incurred.
“Documents were not presented for audit verification contrary to the law,” Mr Ouko said in the reports tabled in the Senate.

The Public Procurement and Disposal Act requires county accounting officers to maintain a filing system with clear links between procurement and expenditure files to facilitate an audit trail.

Government institutions are required to carry out manual transactions and update the Ifmis accordingly but this has not been the case as expenditures at the counties have always been done manually under the guise that the “system is slow or not working.”

Sh5 billion discrepancy

For instance, Lamu County government had discrepancies amounting to Sh5 billion in financial statements and Ifmis.

The county also failed to prepare Ifmis bank reconciliation statements, the basis for disclaimer of opinion by the auditor-general.

“The management did not prepare bank reconciliation statements for all the bank accounts under the Ifmis system as required by the National Treasury and the public sector accounting standards board,” the auditor said of Lamu government.

The auditor further states; “Instead, bank reconciliations were prepared from balances recorded in the manual cash books which did not capture all the payment transactions in both recurrent and development vote.”

Siaya, Baringo, Kajiado, Tharaka Nithi, Nandi, Narok were also cited among those that recorded discrepancies.

Ifmis director Jerome Ochieng’ said the system's use should be made mandatory at the national and county level before any transaction is approved and made.

Currently, national and county government transactions, including salaries, various payments and procurements, are done and approved on paper before updating Ifmis.

“I would not know under what circumstances they failed to capture in the Ifmis because from our end, we expect everything transacted in the system,” Mr Ochieng’ said.

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Parallel systems

Kericho county government was cited as one of the counties that kept two parallel systems- Ifmis and manual system.

According to the county’s Ifmis vote book, the total outstanding commitments amounted to Sh121.2 million over the period under review, with an unreconciled variance of Sh25.4 million.

This variance therefore means the accuracy and completeness of the financial statements cannot be confirmed, according to the auditor-general.

Marakwet West's Mr Kangogo Bowen, an Ifmis expert, said the national government should consider devolving Ifmis servers to make it more effective.

He said the fact that it is not an online live system makes it open to abuse through corruption and other “improper accounting regimes.”

“During my time in the Public Accounts Committee of the National Assembly, we recommended that Ifmis be decentralised to the counties so that, as opposed to a centralised server at the Treasury, each county will have its own server,” Mr Bowen said.

The legislator explained that the server at the county will then be required to send information to the main server at the National Treasury on a monthly basis.

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Pending approvals

He said that the backlog of approvals pending at the National Treasury is the reason why the system is slow, opening up to abuse of the manual system.

In Elgeyo Marakwet County, where Mr Kangogo comes from, the variance between Ifmis records and financial statements stood at Sh2.8 billion.

The variance was recorded in receipts, payments, cash and bank, receivables and payables.

Mr Kangogo said that the auditor-general should consider giving recommendations to be forwarded to the Treasury for purposes of reducing budgets of counties abusing the system.