Nakuru governor Susan Kihika was on Tuesday grilled by the Senate Committee on County Public Accounts over hundreds of millions alleged to have been misappropriated by former regime led by former governor Lee Kinyanjui.

The grilling follows a number of audit queries raised by the Auditor General for the fiscal year 2019/2020.

According to the report, the previous government could have misappropriated hundreds of millions meant for the development of the county.

“The audit report, which served as the backbone of the discussion, exposed a litany of fiscal irregularities leading to a qualified opinion. Among the issues highlighted were discrepancies between the county’s financial statements and balances recorded on the Integrated Financial Management Information System (IFMIS), inconsistencies in 59 bank balances, and misstatement of income derived from technical service fees,” the Senate said in a statement.

The report indicates that the funds were spent on unsupported foreign travel allowances and irregular fund transfers.

“Perhaps the most severe revelation in the report was the presence of financial risks including the irregular and unsupported expenditure of Ksh301.7 million, a sum equivalent to 3% of the County Government’s revenue allocation,” the statement added.

The report also flagged the Nakuru County government over late submission of financial reports, low absorption of development funds, the underperformance of own-source revenue, flawed budgeting practices, discrepancies in budget execution reports, and a mounting stack of pending bills.

The Senators also raised questions over huge transfers made to the Nakuru Alcoholic Drinks and Control Board.

“Several audit matters demanded the committee’s urgent attention, such as the substantial variances between the county’s financial statements and IFMIS balances, unsupported foreign travel allowances, and irregular fund transfers,” added the Senate.

Expenditures flagged in Nakuru

According to Auditor General’s report in our possession, Ksh63 million held in seven bank accounts were not supported by cashbooks and bank reconciliation statements of Nakuru county.

“The bank balances of Ksh4,638,229,643 included an amount of Ksh63,086,888 held in seven revenue bank accounts which were not supported by cashbooks and bank reconciliation statements. This is contrary to Regulation 100 of the Public Finance Management (County Governments) Regulations, 2015, which requires the Accounting Officers to keep a cashbook showing the receipts and payments for all the accounts,” the report reads in part.

The report also reveals that the bank balances of Ksh4,638,229,643 excluded an amount of Ksh961,929,503 held in six county bank accounts.

“Management attributed the exclusion to the fact that the bank accounts related to projects whose funds had been expensed in IFMIS on issuance. However, the project bank account balances have not been appropriately disclosed by way of annexures to the financial statements as required. Consequently, the accuracy and fair statement of the bank balances of Ksh4,638,229,643 as at 30 June, 2020, could not be confirmed,” the report added.

The statement of receipts and payments showed that the county own generated receipts amounting to Ksh2,440,666,697.

The auditor also flagged the Department of Trade, Industry, Marketing and Tourism which incurred Ksh10,498,945 as capital grants and transfers to the Alcoholic Drinks and Control Board. However, the establishment of the Board had not been approved by the County Executive Committee and the County Assembly.

Further, the transfer included Ksh2,745,400 and Ksh3,496,345 for payment of allowances and purchase of office furniture respectively, whose expenditure returns and supporting documents were not
provided for audit review.