Sh500b State funds cannot be accounted for, says Auditor General Edward Ouko

Auditor General Edward Ouko. During the 2011/12 financial year, taxpayers lost more than Sh300 billion, but the latest estimates indicate the figure could rise to nearly Sh500 billion.

By Lillian Kiarie

Kenya: As much as Sh500 billion State cash could have been squandered or cannot be accounted for since 2012.

That was the shocking revelation by the Auditor-General Edward Ouko, whose work is to keep track of Government spending to ensure taxes and other revenues the State generates is neither stolen nor misused, and that the spenders account for it to the last penny.

Dr Ouko raised the red flag over continued plunder and discrepancies in the national book in his yet-to-be-released report for the fiscal year 2012/13.

Even before the storm over the catalogue of mismanagement highlighted in earlier report settles, the auditor warns that preliminary findings of the latest audit show massive misappropriation of taxpayers’ funds.

During the 2011/12 financial year, taxpayers lost more than Sh300 billion, but the latest estimates indicate the figure could rise to nearly Sh500 billion. This is close to half of what Government projects to collect in ordinary tax revenue in the current financial year.


This is also the amount the Government is expected to use to fund its ballooning wage bill. This, in simple terms, is the cost of unauthorised, irregular, fruitless and wasteful spending by State departments and ministries.

“Not much has changed. But I can point out that in our ongoing audit process, we are coming across similar cases of questionable unaccountability just like last year. The same ministries that were pointed out to be misappropriating funds are the same ones giving auditors wanting financial statements for auditing,” reckons Ouko in an exclusive interview with The Standard.

The auditor warned that this misuse of public funds has “become the norm” and the biggest offenders were the same players.

The wastage continues to soar even as the Government appears keen to cut down on runaway expenditure by introducing austerity measures, part of which is the move to have President Uhuru Kenyatta his Deputy William Ruto and Cabinet and Principal Secretaries taking a pay cut.

Ouko estimates that up to 30 per cent of the Government’s total budget in any financial year is wasted. Last year, Sh338 billion of the total government expenditure for 2011/2012 was unaccounted-for. The total budget for the 2012/2013 financial year stood at Sh1.45 trillion, of which 30 per cent or Sh483 billion is likely to be misappropriated, he reckons.

“The Sh338 billion plundered in 2011/2012 is more than enough to cater for the Nairobi-Mombasa Standard Gauge Railway,” Ouko explained.

Airtime, flowers and tea were reported to account for Sh338 billion.

The Auditor General, who is expected to release the 2012/2013 audit report mid next month also suggested the pay cut agreed on by the Executive should be channeled to strengthen the offices of the Ethics and Anti-Corruption, Controller of Budget and the Kenya Office of the Auditor General in order to curb this massive wastage of public funds.

Ouko cited lax internal controls and disregard for procurement rules as major contributors to the excessive spending.

Experts say wasteful spending in public offices is fueled by lack of consequences.

Wasteful spending

“If people continue to think they have done it before and nothing happened to them, then I guess the temptation is to continue to do it because nothing is done about it anyway,” said a Treasury source who declined to be named.

Our Treasury source added that no lessons seem to have been learnt as no clear example has been sent out on what will happen if people break the rules.

“The extent of questionable expenditure items and noncompliance by the accounting officers is indicative of an environment where incurring unauthorised and irregular expenditure has become the norm, and not the exception,” lamented Ouko.

He, however, noted the recent Government commitments to do more about poor audit outcomes and wastage were reassuring, but were clearly not enough.

Ouko emphasised the need for timely audits and proper Information Technology tools to seal financial misappropriation loopholes.

“There is need for timely and continuous audits by independent bodies. Most Kenyans do not have the mental value of the magnitude of change this wasted money can do for the country. If you picture how much money is lost, you will see how much development funds we are throwing away,” Ouko added.

Nairobi County

He pointed out that Nairobi City County led the list of the units that failed to issue receipts for some services they rendered and to account for the financial operations in their departments.

“Some of the departments in the Nairobi County, among other counties, fail to issue receipts for services they have rendered such as parking fees or they collect money from the public, notably hawking fees, without consent. When they do not give you the receipt that means that money is not accounted for. Where do you think it goes? To their pockets of course!” he said.

 “County governors have a tendency of making themselves unavailable when my team demands financial statements from them. They love to play cat and mouse games with my team and only react when their financial statements are made public,” he said.

Ouko said releasing the reports was not a personal vendetta against any public official, but his office was merely performing its duties as expected of it by Kenyans.

Ouko disputed claims that his office was not adequately performing its task and instead pointed out lack of adequate funding as one of the greatest challenges to performance.

“My office is not the problem. Last year we requested for Sh3.6 billion as recurrent expenditure and Sh1billion for development expenditure, but we only received Sh2.1 billion for recurrent expenditure and Sh500 million for development,” he said.

On development expenditure, Ouko’s team wanted to purchase land to set up new offices that would offer a good working environment.

His team is currently occupying several floors at Anniversary Towers.