Weak financial systems and failure
by officers to safeguard public resources has put Sh532.67 billion at
a potential risk of loss in the counties.
A report by the Senate County
Public Accounts Committee exposes the worrying levels of fiduciary risk exposure by the counties.
The committee, chaired by Homa
Bay Senator Moses Kajwang’, tabled its report after scrutinising the
Auditor General’s report for the
county executives for the financial
year ending June 30, 2024.
“This rigorous examination revealed systemic weaknesses in public financial management across
county governments, with a staggering cumulative fiduciary risk
exposure of Sh532.67 billion,” the
report states.
Fiduciary risk exposure refers to
the potential for funds or assets entrusted to someone to be lost, misused, misappropriated, or not used
for their intended purpose, often
due to weak governance, control
systems, or corruption.
“This was assessed based on the
extent of misapplication and misappropriation of resources,” the report
states.
Nairobi county had the highest
exposure at Sh157.36 billion, followed by Kakamega (Sh41.52 billion) and Machakos Sh28.27 billion).
The potential losses are manifested in the financial reporting deficiencies, including inaccurate financial record; procurement violations,
non-compliance with the budget,
nugatory (avoidable expenses and
losses), questionable pending bills
and ‘ghost’ workers fueling wage
bills.
“Rampant irregular recruitment
practices leading to ghost workers, excessive casual employment
beyond legal limits and improper
compensation, including overpayment of allowances,” the report says.
Others are lack of asset registers
that expose them to risk of loss and
revenue leakages leading to perennial shortfalls.
“Persistent failure to collect outstanding revenues (property rates,
land rates, mineral royalties) due to
ineffective enforcement and outdated valuation rolls based on historical rather than current market values,” the report says.
Cumulatively,
the 47 county executives could not
account for Sh39.09 billion in irregular expenditures, Sh4.97 billion
in unsupported expenditures and
Sh13,93 billion in excess/unbudgeted expenditures in the 2023-24
financial year.
Others are stalled projects
(Sh7.59 billion) and value-for-money concerns (Sh9.57 billion).
Kajiado has a fiduciary risk exposure of Sh22.65 billion, Embu
could lose Sh20.17 billion, Kiambu
(Sh15.22 billion), Kisumu (Sh15.09
billion) and Sh14.54 billion in Lamu.
Some Sh12.42 billion is at risk of
loss in Kisii, Sh12.10 billion Kilifi, Kitui risks losing Sh9.58 billion,
Nyeri Sh8.10 billion and Tana River
Sh7.57 billion.
Mombasa’s fiduciary risk exposure stands at Sh7.64 billion, Busia
(Sh6.25 billion), Bungoma (Sh5.83
billion), Kericho (Sh6.79 billion),
Elgeyo Marakwet (Sh6.30 billion),
Murang’a (Sh6.70 billion) and
Nyandarua (Sh6.79 billion).
