Senate calls for audit of counties revenue amid corruption claims

Senate Investments and Special Funds committee chair Ledama ole Kina. [File, Standard]

The Senate has called on the Office of the Auditor General to audit entities engaged by counties to collect own-source revenue, a process that involves billions of shillings. Currently, the Senate noted, only the revenue declared by the 47 county governments is scrutinised.

Narok Senator Ledama ole Kina inquired of the Auditor General how the auditing of own-source revenue for counties is conducted.

He further questioned whether the Auditor General's office relies solely on the counties' reports or conducts independent audits, given that many counties tend to understate or overestimate their revenue collection.

Auditor General Nancy Gathungu, addressing the Senate County Public Investment and Special Funds Committee, revealed that her office is responsible for auditing 12,000 public entities across the country.

However, she highlighted the challenges posed by an insufficient budget and a limited number of officers tasked with auditing financial statements.

"My office is responsible for auditing 12,000 public entities across the country with an insufficient budget. We will do our best to audit the own-source revenue collected by counties, which amounts to billions of shillings, to ensure fiscal discipline," Gathungu stated.

Speaking to the committee chaired by Vihiga Senator Godfrey Osotsi, Gathungu emphasised that counties should clear all pending bills within the fiscal year. She warned that partial payments would be considered fiscal indiscipline.

Senator Ledama advocated for an amendment to the Public Finance Management Act, citing numerous cases of corruption among revenue collectors contracted by counties. Gathungu, however, disagreed, arguing that such an amendment would perpetuate illegality.

Ledama further noted that "briefcase" revenue collectors emerged with the onset of devolution, creating discrepancies in commission rates paid by counties. He cited that County A might pay a 30 percent commission, while County B pays 75 percent, pointing to potential embezzlement of county funds.

"The law does not allow service providers to deduct their commission at source. However, because counties often fail to pay them, they are forced to pay themselves. The Auditor General needs to audit what service providers collect rather than relying solely on what counties declare," Ledama argued.

He also highlighted the recurring issue of late document submissions by Governors during committee appearances, questioning where the bottleneck lies. Gathungu responded that all documents should be ready for audit by the end of the financial year and that there should be no reason for their delay or disappearance.

Senator Osotsi raised concerns about counties' failure to submit documents to the Auditor General on time, only to produce them when summoned by the Senate. He speculated whether this could be a tactic to evade financial scrutiny.

He also pointed out the lack of timely responses from the Ethics and Anti-Corruption Commission (EACC) on various recommendations for investigations into county activities. Gathungu advised the committee to seek status updates from the EACC regarding these issues.

She reiterated that her office depends on available documents to determine whether county funds have been spent prudently. She also noted that 41 County Assemblies have been trained to handle audit queries.

Migori Senator Eddy Oketch questioned the necessity of some counties operating over 200 bank accounts, while others manage similar services with just 10 accounts. Gathungu responded that it is unnecessary for counties to have such a large number of accounts.

"I am glad that we are having a national conversation about the duplication of funds at both the national and county levels, particularly bursaries, as this has been a loophole for siphoning public funds that fail to serve their intended purpose," Gathungu remarked.

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