An audit on the defunct Kitui local authorities and the county government records between January and June 2013 has revealed embezzlement of about Sh500 million.
The Public Investment and Accounts Committee audited the defunct authorities' books of account after the Auditor General raised queries.
In its report, the committee called upon the Ethics and Anti-Corruption Commission to carry out extensive and conclusive investigations into the fraudulent financial dealings at the defunct authorities during the transition period and surcharge the culprits.
Committee chairman Robison Mativo told the assembly that astonishing and suspect financial transactions riddled the handing and taking over process when authorities transited into the county government.
The committee also questioned the suitanability of the county secretary to hold office.
It warned that Stanslaous Nyamai risks impeachment if he does not step up his performance.
Mr Mativo said the assembly was privileged to invoke provisions of the County Government Act to discipline inept officers.
The committee faults Mr Nyamai for failing to verify the legitimacy of documents he submitted for scrutiny.
Mativo said most of the documents failed the admissibility criteria for lacking simple things like signatures.
He said the committee found out that the defunct authorities had not prepared and submitted for audit the financial statements from 1983 to 1995, which is against the law.
The chairman said the process of sharing of assets and liabilities between the municipal and county councils had not been completed as at June 30, 2013.
Consequently, Mativo said accuracy of the balances reflected in the councils' financial statements for the year ended June 30, 2012 could not be confirmed.
"Preparations of reliable and accurate financial statements, which was not being done for many years, were important in providing the council with a sound basis for analysing results of its operations," he said.
He nevertheless said the committee acknowledged the challenges, which made the council to operate without the financial statements and poor accounting systems for the 13 years.
The committee noted that lack of inventory further complicated the transition process where the number and value of assets owned by the larger County Council of Kitui before it was split could not be accounted for.
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The committee recommended that former clerk to the defunct County Council of Kitui, Samuel Owande, be held responsible for presiding over "financial scandals" which made him afraid of being questioned by the committee.
The chairman said former treasurer to the defunct body, Daniel Twala, should also be pursued and made to account.
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