Auditor questions why counties spent millions in irregular deals


Auditor General Nancy Gathungu when she appeared before National Assembly Public Accounts Committee at Parliament on Wednesday, December 7, 2021. [David Njaaga, Standard]

The Auditor-General has flagged a decision by the Narok County government to pay suppliers Sh370 million from Sh3.5 billion set aside for salaries and allowances.

According to her 2019-2020 report, Nancy Gathungu noted that the county violated the Public Finance Management (County Governments) Regulations, 2015.

The county also spent Sh13 million on payment of wages to 101 casual employees.

“No details were provided on the need assessment and how they were identified and recruited to support the engagement of the casuals was provided,” the report shows. The auditor further noted that the casual employees were continuously engaged for periods longer than three months as required by law.

The report also queries the recruitment of county public service board members, noting that one member who had served for six years was given a five-year extension.

The law provides that a member serves for a non-renewable term of six years.

Another member, appointed in April 2020, did not have a degree and had no work experience as required.

In Uasin Gishu, Gathungu questioned the integrity of the payroll system as monthly bank remittances and monthly payroll data had duplicate account numbers.

“The bank account numbers in monthly payroll data and bank remittance were different from those in the master payroll. Consequently, the integrity of the information process through the payroll system could not be confirmed,” says the audit.

According to the report, Bomet, Elgeyo Marakwet, West Pokot and Kericho counties paid staff outside the Integrated Payroll and Personnel Database (IPPD) system prescribed by the National Treasury.

Elgeyo Marakwet maintained two sets of payrolls, one in the IPPD system and another in manual form.

It was found that Sh142 million for 74 staff members not in the IPPD was processed in spreadsheets, which were prone to error and other forms of misstatement.

“Management has not provided a plausible explanation for use of manual payrolls in place of the prescribed system,” says the auditor.

The county is also reported to have spent Sh6.4 million on wages for temporary employees, but the money was spent on reimbursement of medical expenses incurred through the National Hospital Insurance Fund.

In Bomet, 1,960 employees were paid Sh642 million in salaries  through a separate electronic payroll.

The payroll lacks details of dates of appointment, date of birth, paying bank account, work station and date of retirement.

The audit also flagged procurement of revenue collection software, which was not integrated with Ifmis, Laifoms and IPPD as provided for in the contract agreement.

She further revealed that the county incurred Sh19.7 million on operating expenses annually compared to Sh23 million revenues collected on average through the system.

“Therefore, purchase of the software may have been a bad investment given its initial costs totaling Sh45,356,203 and outflow of cash totaling Sh19,654,355 it causes every year,” she noted.

West Pokot county, the report shows, paid Sh94.5 million in salaries, allowances and arrears outside the IPPD.

A review showed the county executive had outstanding deductions amounting to Sh19 million as of June 30, 2020, which were due to NHIF, NSSF, Laptrust, Lapfund and Saccos.

“No explanation was given on why the amounts remained unremitted to the relevant authorities against the requirements of Section 19(4) of the Employment Act, 2007,”

In Baringo, the audit showed that Sh171 million was paid outside IPPD against the regulations by the national treasury.

The audit also found Sh38 million was paid as salary arrears during the year under review. However, staff files sampled during the audit did not indicate the nature and causes of the arrears.

“The payroll changes contravened Regulation 119(1) of Public Finance Management (County Governments) Regulations, 2015, which prescribes segregation of duties in recording and authorising payments, among other internal control requirements,” the report says.

In Kericho, 1,955 employees had not been allocated personal numbers and were paid outside the IPPD system.

The lack of payroll numbers, according to the Auditor General, may lead to loss of funds through ghost employees.

Some counties like Laikipia were found to have spent Sh2.6 billion, or 55 per cent of its total expenditure, on salaries and allowances.

In the neighbouring Samburu, the administration spent Sh1.8 billion with unexplained variances of Sh110 million on basic salaries of permanent employees, personal allowances paid as part of the salary, and pension and other social security contributions.

In Trans Nzoia, compensation of employees, the audit revealed, totalled to Sh2.4 Billion, or 37 per cent of the county executive’s total receipts for the year.

“In addition to being irregular, excessive use of limited funds on payment of personnel emoluments constrained funding for the provision of services to the residents of Trans Nzoia County,” notes the audit.

The report also notes that West Pokot spent Sh43 per cent, or Sh2.3 billion, on compensation of employees.

The neighbouring county of Turkana was found to have recruited 228 officers without an approved staff establishment.

The Auditor-General noted that there was no evidence by the county that all vacancies were declared, including the number of vacancies, date of occurrence and other relevant details as required by law.