The Auditor-General has raised concerns over the recoverability of Sh4.6 billion advanced to various groups through the constituency Uwezo Fund offices.
Auditor-General Nancy Gathungu said several internal control weaknesses in fund administration at the constituency level were noted during an audit of Uwezo Fund books of accounts.
She said several constituencies did not update loan registers, bank reconciliation statements and loan repayments.
The Uwezo Fund was aimed at enabling women, youth and persons with disabilities access finances to promote businesses and enterprises at the constituency level.
The fund was established through Legal Notice No. 21 of February 21, 2014, and implemented under the Public Finance Management (Uwezo Fund) Regulations, 2014.
Ms Gathungu says the statement of financial position reflects a balance of Sh4,640,480,509 under long-term receivables or outstanding loans.
She said the balance relates to outstanding loans to various groups issued since the inception of the fund.
Ms Gathungu said a review of records maintained at sampled Constituency Uwezo Fund offices revealed a failure to institute measures for effective follow-up of beneficiaries of loans leading to high loan defaulters.
“The fund management did not carry out reconciliations of loan records. As a result, repayments in bank statements were not reconciled to the loan registers leading to uncleared suspense ledger balances in Kasipul-Kabondo and Khwisero constituencies,” she said.
Ms Gathungu said the records further revealed deficiencies in documentation, authorisation and approvals of loans to prevent irregular loans.
“Individual loan accounts and details of loan beneficiaries were not maintained in Muhoroni and Khwisero constituencies,” she said.
“Further, some groups were given loans yet there was no evidence of approval and completed application forms.”
Ms Gathungu said Uwezo Fund operations in Bureti Constituency appear to have been dormant since 2016 and as a result, outstanding loans may not be recovered.
“In view of the above, the effective management and recoverability of the loans may not be achieved. This raises doubt on the internal controls put in place to implement the activities of the Fund to achieve the intended purpose,” she said.
The auditor said there were no debtors’ ledgers detailing loans issued by the Fund since inception and repayment made over the years on account of loan recoveries.
Ms Gathungu said there were no comprehensive loan listings or ageing analyses in support of the loans.
“In the circumstances, the accuracy and completeness of the reported receivables-outstanding balance of Sh4,640,480,509 could not be confirmed,” Ms Gathungu said.
She also raised the red flag over unsupported constituencies’ administration costs of Sh173.1 million.
Ms Gathungu said out of the 290 constituencies, only 213 constituencies submitted their respective expenditure returns totalling Sh130,468,263 leaving a balance of Sh42,645,156 in respect of 77 constituencies which was not supported by comprehensive expenditure returns.
She said an examination of the submitted returns from Turkana Central Constituency revealed unsupported expenditure of Sh293,000 during the year to June 2021.
Cash sale receipts were also not supported with electronic tax receipts as required.
“In the circumstances, the accuracy and completeness of the constituencies’ administration costs of Sh173,113,419 could not be confirmed,” Ms Gathungu said.