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Economy

Counties fail to account for Sh81bn

Edward Ouko
Auditor-General Edward Ouko. FILE PHOTO | NMG 

Twelve counties were unable to account for Sh81 billion they received from the National Treasury during the electioneering year, a latest report by Auditor-General Edward Ouko has revealed.

Mr Ouko did not give an opinion on the financial activities of the 12 counties for the financial year 2016/17, meaning there was little or no documents backing the devolved function's expenditure. This is technically known as disclaimer opinion.

According to the report, more than half the counties were in a bad financial state in the year that ended June 30, which was just a month to the August General Election where most incumbent governors lost their seats.

The report exposes huge variances between the financial statements and the Integrated Financial Management System (Ifmis) reports resulting in the auditor expressing adverse and disclaimer opinion.

The disclaimer opinion issued on financial statements of the 12 counties could be a signal of either the book-keeping nightmare that the devolved governments find themselves in or misappropriation of taxpayers’ money.

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The auditor is usually unable to offer an opinion when he encounters numerous errors and where information is not made available to him, making it difficult for him to finish the audit.

Mr Ouko was therefore unable to render any opinion on Nairobi, Nandi, Tana River, Vihiga, West Pokot, Bomet and Homa Bay. Others are Kericho, Kitui, Lamu, Machakos and Migori.

At the same time, 12 other counties were issued with an adverse opinion indicating massive inaccuracies in the Sh73 billion they received in the same fiscal year.

Mr Ouko issues an adverse opinion, which is the worst report an institution can get, when he finds so many anomalies that he lacks confidence in the financial health of an institution.

Some of the counties that were issued with an adverse opinion include Nyamira, Samburu, Kirinyaga, Murang’a, Tharaka Nithi, Kwale and Kisumu.

Others are Siaya, Turkana, Garissa, Isiolo and Embu counties.

Nairobi County was found to have irregularly spent Sh8 billion out of the Sh10 billion it collected as revenue after the county executive failed to bank it as required by law.

The report also revealed that out of the over one million cars parked, only 402,401 were compliant, resulting in the loss of Sh270 million in revenue. The county was put on the spot for releasing clamped vehicles without payment of the penalties

The county also failed to disburse Sh281 million to various hospitals including Pumwani and Mbagathi hospitals as reimbursement for free maternity care, therefore adversely affecting the delivery of services at the public facilities. Embu County was for instance operating 19 main bank accounts contrary to the Public Finance and Management Act. The accounts had a total of Sh521 million. The county was also found to be using multiple revenue collection systems despite acquiring a digital platform at a cost of Sh18 million resulting in its underutilisation.

In Murang’a, Mr Ouko dismissed the budget figures reflecting in the statements as misleading and erroneous faulting the county executive for failing to post the original document.

The devolved unit also recorded a decline in revenue after it dropped to Sh535 million from Sh641 million collected in the 2015-2016 financial year.

In Kiambu, the auditor found that 19 employees were not taxed while 262 employees were undertaxed, resulting in non-remittance of PAYE of Sh434, 431 and Sh5 million respectively.

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