Audit shock at Sh304 billion that cannot be explained

A third of the money spent by the government slightly more than a year ago cannot be accounted for, auditor- general Edward Ouko has said.

In the 2011/12 financial year report tabled in Parliament on Tuesday, Mr Ouko said accounting officers did not properly explain how Sh304 billion or 33 per cent of the Sh920 billion was used.

“Consequently, I was not able to establish whether expenditures reflected in these statements were incurred lawfully and in an effective way as required by Article 229 (6) of the Constitution,” he said.

Of 252 financial statements scrutinised, only six per cent got a clean report while 51 per cent were qualified and another 10 per cent got disclaimers.

In his summary of audit results for the financial year under review tabled by Majority Leader Aden Duale, Mr Ouko said unqualified opinion improved from nil in the 2010/11 financial year to 15 statements last year.

However, statements with qualified opinions rose from 60 to 130 statements or 51 per cent while statements with adverse and disclaimer of opinions (combined) declined from 121 in 2010/11 to 107 statements in 2011/12.

Mr Ouko said the qualifications of audit opinions arose largely from unsupported expenditures, non-surrender of imprests, unauthorised expenditures, misallocation of expenditure and lack of disclosures.

“I would like to detail the following issues prevalent in accounts; unsupported expenditure, excess expenditure, pending bills, management of imprest, maintenance of bank and cash accounts and maintenance of accounting records,” he said.

The auditor said 21 ministries, including Internal Security, State House, Cabinet Office and Education, failed to provide documents in support of expenditure totalling Sh5.2 billion.

“In the absence of records and documentation, the propriety of expenditure of Sh5.2 billion could not therefore be ascertained,” he said. Mr Ouko said five ministries - roads, justice and constitutional affairs, education, TSC and forestry and wildlife - incurred excess expenditure of Sh7 billion without the approval of Parliament.

He said the excess expenditure does not include pending bills amounting to Sh4.5 billion, which, though not relating to 2011/12 were not settled during the year. Mr Ouko the audit revealed huge imprest balances that ought to have been recovered from public servants amounting to Sh2.1 billion.

On the maintenance of bank and cash accounts, he said cashbooks across all ministries was noted to be weak.

He recommended that the government adopts either accrual or modified accrual basis of international public sector accounting standards as opposed to the current cash basis of accounting.

Mr Ouko said there was a net under-expenditure of Sh36.7 billion made up of under-expenditure of Sh11.2 million and Sh31.3 billion under recurrent and development votes respectively and an over-expenditure of Sh5.8 billion under the consolidated fund services.

The auditor-general said there was a discrepancy of Sh911 million in revenue collected and what was shown to have been received by the Exchequer. He said the revenue reflected as having been paid to the Exchequer account was Sh761.3 billion while that shown to have been received was Sh762.2 billion.

He said the discrepancies were mainly due to unexplained and unreconciled differences between statement balances and the exchequer records maintained at the Treasury.

“It is apparent that there are persistent problems in accounting for revenue,,” Mr Ouko told the Public Accounts Committee at the plenary of the House.

Mr Ouko said most revenue accounts prepared by the ministry of finance had material differences between the statements balances and the Kenya Revenue Authority records.

He said Sh2 billion was not remitted to the Exchequer.