The Ministry of Health cannot account for Sh11 billion ($109 million), according to the Auditor General Edward Ouko.
The disclosure will likely increase disquiet among international donors who spend hundreds of millions on development programmes.
Corruption in East Africa’s richest economy is a major concern for investors. Kenya ranked 143 out 180 countries in Transparency Internationals' 2017 Corruption Perception Index.
The revelations came from Ouko’s latest report, covering the 2015/16 (July-June) fiscal year, published on the organisation’s website.
The report documented discrepancies in other government departments, alleging that several failed to provide supporting documents for expenditures totaling Sh40 billion.
Kenya’s budget is Sh2.6 trillion this fiscal year.
Health Cabinet Secretary Sicily Kariuki said the issue in her ministry was an accounting matter and that the finance department would respond to the auditor general.
"The team assures me there is no money lost. It’s a matter of documentation going back to 2012/13," she told Reuters.
The missing cash had been held at some departments that were merged in 2013 but did not move into the new department’s accounts, the auditor general said in the report.
The US suspended $21 million (Sh2.1 billion) in direct aid to the health ministry last year over corruption concerns.
The US invests more than $650 million (Sh65 billion) on health in Kenya annually.
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