A taxpayers association wants Treasury Cabinet Secretary Henry Rotich to stop funding State institutions whose audits reveal suspicious and unexplained expenditure.
Irine Otieno of the National Taxpayers Association asked the Cabinet Secretary not to disburse funds to institutions whose audit reports bear a disclaimer opinion.
Auditor General Edward Ouko puts a disclaimer opinion on the expenditure of a public entity when there are unexplained discrepancies and lack of supporting documents.
Omitting expenditure from the accounts and the accounting officer's failure to give information necessary for auditors to do their work also leads to a disclaimer opinion.
This makes it difficult for auditors to get sufficient and reliable evidence regarding millions of public money spent.
"Treasury should stop the transfer of funds to any public entity that receives a disclaimer opinion from the office of the auditor general as stipulated in Article 225 of the Constitution,” Otieno says.
The recommendation is part of a latest report scrutinising expenditure of public funds by public entities.
Article 225 of the Constitution which ensures proper use of public funds provides grounds where the exchequer can stop disbursements but Parliament has to approve.
The grounds include serious breach of Public Finance Management laws by the institutions.
However, stopping the transfer of money should not take more than 60 days and the amount to be stopped for a county government should not be over 50 per cent of the sum allocated.
The move can be reversed after the institution proves the spending or upon approval by the office of Controller of Budget.
"A decision to stop the transfer of funds may be enforced immediately, but will lapse retrospectively unless, within thirty days after the date of the decision, Parliament approves it by resolution passed by both Houses," part of the Article reads.
The auditor, in his latest 2015-16 reports for the national government released in January, placed a disclaimer opinion on 15 State institutions from expenditure worth Sh40 billion.
For instance, the Devolution ministry's two departments had an unsupported expenditure of Sh13.9 billion - NYS Mechanical and Transport Fund (Sh266 million) and Fisheries department (Sh324 million).
Other institutions are Agriculture and Interior ministries, Rural Enterprise Fund, Prisons Industries Fund, Kenya Local Loans Support Fund, Government Clearing Agency Fund and State Officers House Mortgage Scheme Fund, among others.
Senate in 2015 passed a motion directing Treasury not to disburse funds to some four counties including Murang'a and Kisumu but Rotich did not act on the senators' decision.
"We did that due to pilferage of public funds in these counties as a result of the transition from local authorities. However, the Cabinet Secretary did not stop transfer funds for various reasons," Makueni Senator Mutula Kilonzo Jnr told Star on Thursday.
The National Taxpayers Association head asked anti-corruption agencies to move with speed and address serious misuse of public funds, especially in counties through illegal and untaxed allowances, false domestic and foreign travels.
"This unfettered wastage threatens to shatter our shared hopes in devolution and its attendant institutions," Otieno said.
She called upon anti-graft agencies to swing into action in response to the 2016-17 audit reports for counties which reveals wanton wastage and embezzlement of funds through dubious ways such as allowances.
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