Auditor General: Public servants pilfering taxpayers' millions through petty cash

Auditor General Edward Ouko (left) says most Government ministries failed to recover outstanding imprests from employees. Taxpayers are losing millions of shillings annually through an inefficient imprest system. (PHOTO: FILE/ STANDARD)

Taxpayers are losing millions of shillings annually through an inefficient imprest system.

Over half of Government ministries failed to collect cash that they gave State officers with Ministry of Lands, Housing and Urban Development being the major culprits.

The revelations contained in the 2014-2015 audit report prepared by Auditor General Edward Ouko also reveals the Charles Nyachae-led Commission for Implementation of Constitution folded up with Sh32.9 million imprests.

By June last year, Sh11.2 million remained unpaid. Recovering the amount from a defunct body may now be a tall order, Mr Ouko says.

Imprest fund, which is sometimes called imprest account, petty cash account or petty cash fund, is supposed to be a self-checking account where a fixed balance is maintained through regular replenishment and is used for paying small and routine operating expenses.

However, it appears to have opened room for theft.

The Ministry of Lands, Housing and Urban Development, has Sh304.1 million as outstanding imprests and advances. Of this, Sh8.5 million due from various staff and other public officers as at June 30, 2015 was yet to be returned.

According to Ouko, the ministry failed to offer any satisfactory explanation why the imprests were not recovered from the State officers contrary to Section 71(2) of Public Financial Management Act, 2012.

Further, the report notes, imprests totalling Sh1.14 million are due from senior officers of Kenya Municipal Programme and dates back to the 2012-13 financial year. Surprisingly, the imprest was even extended to public staff who were not employees of the programme.

"Failure to surrender imprest is contrary to the National Treasury circular which requires imprest to be surrendered or accounted for within 48 hours following return from official journey.The management was therefore in breach of the law," said Ouko in his report.

The Ministry of Sports, Culture and Arts even went ahead to give two MPs Sh586,080 in unclear circumstances.

"Management has not explained the circumstances under which the imprests were advanced to the two members of Parliament. In the circumstances, the accuracy and recoverability of the outstanding imprest is doubtful," Ouko said.

The ministry was also unable to explain to the Auditor General how it had two different figures of imprest balances in its books. While the 2013-14 financial statements reflected a balance of Sh290,000, notes to the account put the figure at Sh1.33 million.

The rot extends to the Ministry of Foreign Affairs, whose books contain temporary and outstanding imprests totalling Sh37.7 million and Sh269,320 respectively.

A total of Sh38 million, the report notes, ought to have been surrendered or otherwise accounted for, on or before 30 June 2015.

"Analysis of the outstanding imprest shows that outstanding imprest is a common trend in the ministry's financial statement," Ouko notes. Imprests have been piling with Sh22.6 million coming in 2013-14 Financial Year alone.

Surrender imprest

Although it is a requirement that imprest holders should account or surrender imprest within seven working days after return to duty station, Ouko says the ministry did not explain why the imprests were outstanding for so long.

In addition, the accounting officer has not recovered the outstanding imprest from the defaulting officer's salary at an interest. This is in breach of the regulations on imprest.

In the Health ministry, where outstanding imprest as at June last year was Sh26.8 million, various officers were even issued with new imprest before accounting for the previous ones.

Sh14.9 million that was given out as imprest in the Ministry of Education, Science and Technology is also yet to be recovered. The financial books of the ministry could not even hold to accounting principles.

The trial balance of the ministry refused to reconcile with its accounts receivable balance, instead resulting in an unreconciled variance of Sh950,640.

Examination of imprest records, the report says, revealed that various staff had not surrendered or accounted for imprests after completion of various activities for which the imprests were given.

"Three institutes had outstanding imprests of Sh4.5 million, which remained unsurrendered as at the date of this report. It is not clear and management has not explained when and if the outstanding imprest will be recovered," Ouko observes.