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Auditor General queries altered bank records

By Alphonce Shiundu | March 26th 2016

A ministry official altered bank records “by hand”, indicating to the Auditor General that the Government still held Sh1 billion in its accounts, but did not bother to get the document countersigned by a bank manager.

When auditor asked why the careless alteration was made, he got no response, and therefore he raised doubts over the balance in accounts of the civil servants housing scheme held in the commercial bank. The official is from the Ministry of Lands, Housing and Urban development and the amount was earmarked for the housing scheme of civil servants.

In a report filed with the National Assembly, the Auditor General said the official changed a bank record “by hand” and submitted it to the auditor, without the accompanying signature of a bank manager as required by law and government financial regulations.

Reluctant to clear

“...a balance of Sh1 billion at the Kenya Commercial Bank whose bank balance confirmation certificate has been altered by hand and this change had not been counter-signed by the bank manager,” reads the report of Auditor General Edward Ouko.

That change made the auditor reluctant to clear the managers of the Civil Servants Housing Scheme Fund as having spent public money prudently.

The managers of the fund had declared Sh1.8 billion as the “cash and cash equivalents” at the end of the 2014-15 financial year, but the auditor said the fiddling with bank records and the gaps in the bank statements had made it impossible to “confirm the accuracy and validity of the cash... balance as at June 30, 2015”. The auditor also queried why another Sh950,000 was missing from bank records.

The amount was “recorded in cashbook but not credited in the bank statement”. “Although the receipts are over six months old, they still appear as reconciling items in the bank reconciliation statement,” said the auditor. The fund exists to give cheap loans to civil servants to either buy or build houses, and also for the Government to build houses and then sell them to civil servants. It is the job of the managers to look for the money.

According to the brief by Cabinet Secretary Jacob Kaimenyi attached to the Auditor General’s report, civil servants can access a loan of between Sh4 million and Sh25 million depending on their job groups, and they have up to 20 years to pay back the money. The civil servants are also required to pay 10 per cent of the construction costs to access housing loans.

Kaimenyi and the accounting officer of the ministry, Principal Secretary Mariam El Maawy together with the top managers, will have to explain the colossal anomalies to the Public Investments Committee which reviews the books of accounts. El Maawy’s brief attached to the report says the ministry issued Sh600 million for the purchase of residential houses. The Government also provided a grant of Sh500 million through the National Treasury to add onto the Sh164 million held as part of the revenue reserves for the fund, but still that was not enough.

The PS said the delay in release of allocated cash was one of the reasons for delay in project planning and execution. The PS is the administrator of the fund.

“There is need to make use of public private partnerships to ensure more houses are constructed. There is also need to use cheaper and faster technologies in order to achieve adequate housing for civil servants,” said the PS.

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