Showdown looms between senators, governors over county bank accounts

Bungoma Governor Ken Lusaka (second left) and Busia Governor Paul Otioma (second right) during Senate Mashinani sitting in Busia County Assembly, on October 7, 2025. [Elvis Ogina, Standard] Senators want the Controller of Budget, the Auditor General and the Central Bank of Kenya granted access to unauthorised bank accounts operated by county governments. This comes at a time when the Senate has directed the Auditor General to audit all commercial bank accounts run by counties, close inactive ones and transfer the balances to the County Revenue Fund within six months. There have been concerns over the swelling number of unauthorised county accounts held in commercial banks with the latest report by the Office of the Controller of Budget revealing that counties are operating more than 5,400 such accounts, raising fears of illegal transactions that could put public funds at risk. The Senate Devolution and Intergovernmental Relations Committee recommends that, within six months of the adoption of its report, the Office of the Auditor-General shall conduct a comprehensive audit of all commercial bank accounts operated by county governments. "The committee recommended a review of the Public Finance Management (National Government) Regulations, 2015, to grant the CBK, CoB, and the Auditor-General real-time access to all county-operated commercial bank accounts," states the Senate Committee report. The Senate Committee chaired by Wajir Senator Mohamed Abass further proposed that the revised law include clear sanctions for non-compliance to strengthen oversight, transparency and safeguard public resources. The inquiry was prompted by Auditor-General reports citing discrepancies, non-disclosure, and weak regulation of county commercial accounts-issues that have long cast doubt on the completeness and accuracy of county financial records. The Senate Committee said that inconsistencies in the existing legal framework-combined with donor requirements for separate project accounts-have contributed to the proliferation of unauthorised accounts. A key conflict, the Senators noted, lies between Regulation 82(1)(a) of the PFM (National Government) Regulations, 2015 and Regulation 82(1)(b) of the PFM (County Governments) Regulations, 2015, which govern the opening and operation of commercial bank accounts. The national regulations grant explicit exemptions for donor-funded projects that require special accounts, areas where the CBK lacks branches, and certain revenue collection activities in approved banks. In contrast, county regulations provide limited flexibility-allowing only petty cash imprest accounts in commercial banks- disadvantaging counties in managing donor funds and operational needs. Siaya Senator Oburu Odinga said that the inconsistencies in the Public Finance Management regulations disadvantage counties, particularly in managing donor funds and operational needs The Report further cited Sections 119(1) and 119(2) of the Public Finance Management (PFM) Act, 2012, which mandate county treasuries to authorise the opening, operation, and closure of county government bank accounts. "The law also requires the establishment of a County Treasury Single Account at the CBK or another approved bank, through which all county payments are to be made-creating an avenue for legitimate commercial accounts under strict Treasury supervision," states the report. The committee found that counties have opened multiple commercial bank accounts to facilitate the operations of public funds, health facilities, Technical and Vocational Education and Training (TVET) centres, municipalities, and donor-funded projects. However, the Senate Devolution and Intergovernmental Relations Committee raised an alarm over discrepancies between the number of accounts declared by counties and those reported by the Controller of Budget and Auditor-General. It warned that this discrepancy indicates instances of non-disclosure of bank accounts to the Auditor-General and the Controller of Budget, thereby posing a risk to the existence of a reliable and verified inventory of all commercial bank accounts held by county governments. The committee reiterated that Regulation 82(4) of the PFM (County Governments) Regulations, 2015 requires counties to open commercial bank accounts only with the explicit approval of the County Treasury. "Such approvals must be exercised cautiously, with all accounts disclosed to the Controller of Budget, Auditor-General and other oversight agencies and consolidated into county financial reporting frameworks," states the report. The Senators further directed the National Treasury and county treasuries to prescribe clear banking rules and maximum balance limits for all authorised commercial accounts, in line with Regulation 82(5) of the same law. The Report says that where such balances appear likely to be exceeded, the responsible officer shall promptly consult the County Treasury on the appropriate action to be taken-thereby enhancing cash management, minimising idle balances, reducing wasteful expenditure, and promoting accountability. In her budget implementation report for the year ending June 2025, the Controller of Budget Margaret Nyakang'o revealed that counties continue to open accounts in commercial banks without her office's approval, in breach of the PFM Act. Dr Nyakang'o said county treasuries are required to seek authorisation and register all commercial bank accounts with her office-a legal requirement many have ignored. "As of June 30, county governments were running 5,476 accounts with commercial banks with most treasuries having failed to submit authorisation letters for these accounts as mandated by the PFM Act, exposing public funds to mismanagement and theft," Nyakang'o reported. The report revealed significant disparities across counties with Kitui leading with 350 unauthorised accounts, followed by Bungoma and Nakuru (over 300 each), Baringo (280), Kwale (240), Machakos (231), and Embu (222). Other Counties with multiple included Kericho (245), Kisumu (190), Nairobi (174), Uasin Gishu (160), Nyamira (157), Elgeyo Marakwet (160), Kirinyaga (140), Trans Nzoia (135), Marsabit (120), and Vihiga (121). Counties with smaller figures included Kiambu (75), Meru (71), Isiolo (68), Busia (57), Kajiado (52), Makueni (45), Nyeri (32), Laikipia (32), Taita Taveta and Lamu (37 each), Mandera (30), Samburu (24), West Pokot (24), Garissa (26), and Turkana (26). Tharaka Nithi and Tana River each had 16, Siaya 15, Murang'a 20, and Nandi 10 while data was unavailable for Kilifi and Narok. Nyakang'o warned that the proliferation of unapproved accounts left devolved funds highly vulnerable and undermines fiscal discipline reminding counties that regulation 82(1)(b) of the PFM (County Governments) Regulations, 2015 requires county accounts to be opened and maintained at the CBK-except for imprest, petty cash, and revenue collection accounts. Regulation 82(4) demands written authorisation from the County Treasury before opening any commercial account, while Regulation 82(5) requires that copies of authorisation letters be forwarded to her office.

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