Audit unmasks irregularities, poor internal control at NCA
By Patrick Kibet | April 1st 2021
A senior accountant at the National Construction Authority (NCA) who misappropriated Sh22.7 million was given 18 years to pay back the money, a report by the Auditor General has revealed.
This was one of several red flags raised after a special audit conducted by Auditor General Nancy Gathungu following a request by the NCA board of directors in December 2017 for an investigation into the authority’s revenue, receivables and expenditure management for 2014/2015, 2015/2016 and 2016/2017 financial years.
According to the audit report, the officer was first employed as a data entry officer in May 2013. Three years later, on May 23, 2016, his request for re-designation as a senior finance officer was accepted under unclear circumstances.
One year later, he was re-designated as assistant manager finance – a position he held until he resigned on January 15, 2018. This was despite the recommendation of a disciplinary committee that the lost funds recovered from his salary over 216 months.
“There was no evidence the matter was reported to either the Directorate of Criminal Investigations or the Ethics and Anti-Corruption Commission (EACC) for investigations and prosecution,” the report stated.
By the time the officer left, the NCA had only recovered Sh1.1 million. “The EACC should further investigate NCA management for their individual and/or collective roles in the loss of Sh22.7 million, If found culpable, the Director of Public Prosecutions should take appropriate actions, including prosecuting the culprits,” the report recommended.
The audit found that billions of shillings may have been lost at the agency due to weak internal controls. It revealed that Sh3.6 billion was recorded as a construction levy but only Sh1.8 billion could be accounted for.
The board was also found to have contravened the Mwongozo Guidelines by having 14 members instead of the recommended maximum of nine.
According to the audit, there was no evidence the agency’s budget had been approved in compliance with Section 11 (1) of the State Corporations Act. The NCA also disclosed Sh123 million as earned interest from investments, but failed to provide the source of the funds.
A total of 2,213 project registration files with contract sums totalling Sh50 billion were reviewed. Out of these, the audit found that only files with contract sums totalling Sh31 billion were properly maintained and recorded.
According to the report, Sh1.6 billion was found to be an outstanding construction levy from developers that should be recovered from the owners as a civil debt.
It was established that project developers were allowed to continue with construction even when the levy had not been fully paid.
“The special audit established that officers would give interim certificates to developers, which eventually led to the loss of revenue from levies,” the report found.
On staff recruitment, the audit revealed that 44 staff members were hired on two-year contracts without suitability interviews. Later, 41 employees were confirmed to permanent and pensionable positions without the approval of the board or the National Treasury.
Their appointments were also backdated to 2016 when they were first employed.
The audit concluded that the NCA had weak budgetary controls that could not provide efficient and effective monitoring and oversight of public funds.
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