Economy

Treasury orders repeat special audit of unpaid bills in counties

cog

County governors after a Council of Governors meeting. FILE PHOTO | NMG

BDgeneric_logo

Summary

  • Office of the Auditor-General (OAG) last year conducted a special audit that revealed that as at June 30, 2018 only Sh51.2 billion pending bills by counties were payable, while the rest totalling Sh37.7 billion were found to be ineligible for payment due to lack of supporting documents.
  • A number of county governments, however, wrote to the OAG disputing the eligibility of some of the pending bills.
  • A pile-up of pending bills among counties and State corporations has dealt small businesses a major blow.

The Treasury has ordered a repeat special audit of county pending bills following complaints about the authenticity of some supply contracts.

The Office of the Auditor-General (OAG) last year conducted a special audit that revealed that as at June 30, 2018 only Sh51.2 billion pending bills by counties were payable, while the rest totalling Sh37.7 billion were found to be ineligible for payment due to lack of supporting documents.

A number of county governments, however, wrote to the OAG disputing the eligibility of some of the pending bills.

“In this regard, the National Treasury wrote to the OAG seeking advice on mechanisms and/or arrangements the office has put in place to address the issue of disputed pending bills” Treasury Cabinet Secretary Ukuru Yatani said in his newly released draft Budget Policy Statement (BPS) for the fiscal year 2021/2022.

“In addition, the National Treasury requested the OAG to conduct a special audit of the county governments’ pending bills for the financial years 2018/2019 and 2019/2020.”

A report by the Controller of Budget (CoB) indicates that as at November 10, 2020, the counties had settled Sh39.07 billion —an equivalent of 76.2 per cent of the eligible pending bills — leaving an outstanding balance of Sh12.22 billion.

As at the end of the 2019/20 fiscal year, counties’ total pending bills—both historical and current — stood at Sh113.85 billion, which was equivalent to 27.5 percent of their total revenues.

While releasing Sh24 billion to the counties, being part of their equitable share, last Thursday, Mr Yatani once again urged the devolved units to prioritise payment of all monies owed to suppliers. “It is our hope that county governments will prioritise the settlement of pending bills to suppliers as well as other statutory dues to enable the concerned institutions discharge their mandates effectively,” he said.

A pile-up of pending bills among counties and State corporations has dealt small businesses a major blow. Some contractors and suppliers have linked the non-payments to the collapse of their businesses and auction by banks over loan defaults.

State firms and agencies still owe suppliers billions of shillings in pending bills, adding to the woes of the traders already hit by the effects of Covid-19.

As at September 2020, the total pending bills by ministries, departments and agencies stood at Sh346.2 billion, having risen from Sh334.2 billion in June, Treasury data shows. Parastatals accounted for Sh284 billion of the unpaid bills while ministries had Sh61.7 billion, up from Sh48.3 billion in June.