Sh600m budget hole stalls TA audit of local authority assets

Efforts to audit the assets and liabilities of the defunct local authorities have stalled after the Transition Authority (TA) failed to raise Sh600 million for the exercise.

TA had invited bids for firms to undertake the audit to determine correctness, truthfulness, authenticity and credibility of the data collected.

“The bids received put the cost of auditing at approximately Sh600 million. TA could not mobilise the resources required to undertake the exercise leading to cancellation of the bids,” said Bakari Omara, chairman of the Technical Committee on Transfer of Assets and Liabilities at TA.

“Fair values of the assets should be determined before allocation to avoid having financial statements which are not reflective of the true financial position and liquidity of the counties. This can only be done by expert valuation,” he added.

Mr Omara said the lack of funds poses a great risk to the work of the authority as it is likely to delay the completion of its work, with only a few months before its mandate comes to an end.

The transition period ends three years after the first General Election under the current constitution that took effect in 2010. This means that TA has the mandate over transfer of government assets until next March. 

Mr Omara says it is important for the authority to audit the assets and liabilities in order to enable county governments to open their books of accounts and for the Auditor General to report on the right financial status of the country in accordance with the International Financial Accounting Standards.

“Without auditing these assets and liabilities, it would be a big challenge transferring the same to either level of government,” he said.

An audit report by the authority in some of the devolved units revealed that 12 counties lost billions of shillings in land, vehicles and other properties ahead of the 2013 General Election.

The special audit by a team of experts from TA exposed blatant looting by public officials of property that once belonged to local authorities.

The full extent of the theft across the country will be known once results from all the 47 counties are released.
Mr Omara noted that there is also a likelihood of TA distributing assets whose existence has not been confirmed beyond reasonable doubt.

This comes at a time when the authority has locked horns with the Privatisation Commission over the sale of five sugar mills to strategic investors arguing that they it was not involved in the process.

Section 35 of the Transition Authority Act says that government assets and liabilities should not be transferred during the transition period without the approval of TA.