•The variances were in respect of recurrent expenses to the tune of Sh179 million and Sh5.6 billion in respect of development.
•Also queried is a variance of Sh4.3 billion from transfers arising out of income generated by the ministry.
The Ministry of Water cannot account for Sh10 billion meant for parastatals but was never disbursed, according to the Auditor General.
The cash cannot be accounted for at Maji House, audit for the June 30, 2021, reveals.
Whereas the ministry claimed to have sent Sh59 billion to parastatals and projects under its purview, Auditor General Nancy Gathungu says not all the billions hit the respective agencies’ accounts.
“Third-party confirmations from the entities which received funding during the year under review differed with the transfers reflected in the financial statements,” Gathungu said.
The variances were in respect of recurrent expenses to the tune of Sh179 million, Sh5.6 billion in respect of development and Sh4.3 billion for income generated by the ministry.
“Consequently, the accuracy and completeness of the transfers to the other government units of Sh59,624,597,538 could not be confirmed,” the auditor said in the report tabled in Parliament.
The ministry reported that it transferred Sh19.8 billion to Athi Water Services Board during the year under review, being the highest amount of the queried transfers.
The second highest was to the National Irrigation Authority – formerly National Irrigation Board – at Sh8.8 billion followed by Sh6 billion to the Water Sector Development Programme.
Maji House also reported transfers of Sh3.9 billion to the water storage authority and Sh2.7 billion to the Tana Water Services Board.
Also queried is Sh1.6 billion the ministry claimed to have transferred to the Lake Victoria South Water Services Board and Sh1.75 billion to the Water Services Trust Fund.
Gathungu has also questioned the accuracy of Sh2.2 billion the ministry reported to have transferred to Kenya Water Security and Climate Resilience Project.
Also in doubt is Sh3.1 billion the ministry said was transferred to the Central Rift Valley Water Services Board and Sh1.14 billion to the Northern Water Services Board.
The auditor further revealed that Maji House’s audit committee held no meetings during the year under review as required by the Public Finance Management Act, 2012.
“The audit committee forms a key component in the governance process by providing an independent expert opinion to the ministry by assessment of the activities of top management.”
Audit committees also assess the quality of the risk management, financial reporting, financial management, and reviewing the internal audit reports to the top management.
Gathungu has also queried why the audit committee’s terms of service were not renewed by January 31, 2021 having been appointed three years earlier.
“By January 31, 2021, the audit committee members were eligible for reappointment. No evidence has been provided by management to confirm whether these members were reappointed for another term of three years.”
The calendar of activities of the audit committee during the financial year under audit was also not provided for review.
“Consequently, the effectiveness and quality of the internal controls and risk management provided by the audit committees could not be confirmed,” Gathungu said.
The audit flagged inconsistencies on how the projects were budgeted and reported in the financial statements.
Gathungu cited Thwake Multipurpose Development Project which was budgeted for and reported under acquisition of assets.
Other similar projects were budgeted for and reported under transfers to other government agencies.
“As a result of the inconsistent budget procedures and reporting for similar projects, it may not be possible to obtain comparable project information from the ministry’s financial statements as presented.”
The Water ministry, whose leaders – former CS Sicily Kariuki and PS Joseph Irungu, resigned to pursue political ambitions, also failed to disclose Sh5.6 million pending bills.
“The difference of pending bills Sh5.6 million was not disclosed in the financial statements. Further, no ageing analysis of the pending bills was not provided for audit verification,” the auditor said.
Gathungu also flagged a Sh8.2 million pending bill which was not supported with the relevant documents – invoice numbers, LPOs, LSOs, nature of goods or service supplied and delivery notes.
Also flagged is an unsettled Sh42.5 million which relates to long outstanding compensation claims and legal fees, the auditor warning the figures could go higher.
“The management has not explained why the claims and legal fees have not been settled. Non-payment of these claims may attract litigations, interest, and penalty charges,” the auditor said.
The pending bills totaling Sh78 million, the audit shows, were carried forward from the financial year to June 2020.
“Failure to settle pending bills in the year which they relate to adversely affects the subsequent year’s provisions, since the bills form the first charge of that year’s budget provisions.”
Gathungu also flagged delayed release of funds by the National Treasury to the Water ministry saying a total of Sh10.6 billion of development exchequer were received this financial year.
“The delay in exchequer releases may have resulted in low absorption of the budget and this may have adversely affected the development programmes of the ministry and service provision to the public,” the auditor said.