Gathungu said in her 2023-24 Popular Report on the national government that a review of transactions in IFMIS revealed cases where numerous transactions were cancelled in the system.
She said, however, no evidence was provided to confirm that the cancellation was approved.
Auditor General Nancy Gathungu/FILE
Benefits from the deployment of the Integrated Financial Management Information System (IFMIS) have not been realised due to inadequacies of the system, Auditor General Nancy Gathungu has said.
The government introduced the system—designed to provide accurate, reliable and timely financial information—to improve how finances are controlled, recorded, accounted for and reported.
Gathungu said in her 2023-24 Popular Report on national government that a review of transactions in IFMIS revealed cases where numerous transactions were cancelled in the system, but no evidence was provided to confirm that the cancellation was approved.
The report showed some payments were made in IFMIS but could not be traced in the financial statements, while some payments in the financial records were not posted in the system.
“Override of internal controls was noted where an account was created in IFMIS under an individual's name which occasioned loss of funds, an indication that the internal controls in IFMIS were not effective,” read the report.
It further showed balances reflected in the financial statements or ledgers were at variance with balances in the IFMIS supporting schedules.
The report also revealed an expenditure of Sh10.2 billion, Sh4 billion incurred on maize flour subsidy programme and Sh6.2 billion on acquisition of Telkom (K) shares were not approved by the National Assembly as required under Article 223 of the constitution.
The report showed there are no guidelines in place on how unapproved withdrawals from the Consolidated Fund under Article 223 should be dealt with.
“The Public Finance Management Act, 2012 should therefore be amended to provide guidelines on the actions to be taken where expenditure incurred under Article 223 is not approved by the National Assembly,” it reads.
The report showed that Kenya Airways owed the National Treasury Sh55.3 billion as at June 30, 2023, made up of Sh43 billion and Sh12.3 billion loan and Guaranteed Debt respectively, but there was no formal agreement between the two entities on how the guaranteed loans repayments would be recovered.
“The airline had not provided any security to the government as a fall back,” the report read.
Out of the 336 entities audited, the Auditor General returned 248 unqualified opinions, 85 qualified opinions, two adverse opinions and one disclaimer.
Gathungu said review of the e-Citizen platform and the revenue statements revealed variances between balances reflected in the revenue statements, e-Portal system and the ledger.
She said this cast doubt on the completeness and accuracy of receipts reported by the receivers of revenue amounting to Sh44.8 billion out of the Sh100.8 billion the government collected through the platform.
“The government did not have full control of the system and was relying significantly on the supplier for some critical functions to perform onboarding, system configuration and changes to support system growth including new government services,” she said.
The report showed the government had outstanding bills amounting to Sh194.7 billion made up of Sh130.3 billion and Sh64.4 billion for MDAs and donor-funded projects, respectively.
The Ministry of Defence had the highest outstanding payments of Sh22.9 billion, out of the amount Sh130.3 billion was owed by Ministries, Departments and Agencies (MDAs) while Kenya National Highways Authority had the highest outstanding payments of Sh49.99 billion, Sh64.4 billion for its donor-funded projects.
It showed the pending bills led to supply of expensive goods and services, closure of business and losses especially small and micro enterprises, negative effects on liquidity in the private sector and delayed payment of taxes by suppliers and staff salaries.
The report recommends introduction of sanctions against accounting officers who fail to pay suppliers or contractors within the stipulated timelines.
It also recommended sanctions on accounting officers who fail to provide documents in accordance with Section 62 (b) and (c) of the Public Audit Act, 2015.
It also recommends that any expenditure that was known at the time the original budget was finalised, should not be considered unforeseen and that accounting officers should strive to execute their budgets according to the plan approved by the legislature at aggregate and detailed allocations.
It recommends that accounting officers should take appropriate measures to resolve any issues arising from audit and ensure implementation of the recommendations of Parliament on the report of the Auditor General.
