Auditor red-flags national misuse of emergency cash

The Auditor General has raised serious concerns over management of Kenya’s Contingencies Fund, citing irregular disbursements and lack of accountability in spending public funds meant for emergencies.

The audit revealed that three ministries, Defence, Internal Security and National Administration and Irrigation, failed to provide expenditure returns of the stated amounts advanced from the fund. Irregular use by other departments was also cited.

In a new report seen by the Star, Auditor General Nancy Gathungu flagged unsupported expenditures and misuse of funds intended for “urgent and unforeseen” needs.

As a result, she issued a qualified opinion on the Contingencies Fund’s books for the period covering June 30, 2024. At the top of the list are unsupported refunds totalling Sh1.07 billion from the fund.

Expenditure returns are essential to verify how public funds are spent.

“In the circumstances, the validity of the amount disbursed from the fund of Sh1,070,000,000 could not be confirmed,” the report reads, indicating a significant lapse in transparency and accountability.

Gathungu further flagged irregular use of emergency funds.

This follows the finding that Sh130 million disbursed to the State Departments for Public Works, Crop Development, and Livestock was used for goods and services that did not meet the legal threshold.

The department reported the spending had been used for “urgent and unforeseen” needs as provided by the Public Finance Management (PFM) Act, 2012.

“A review of the respective expenditure returns revealed that the expenditure was in respect of goods and services that could not meet the legal threshold,” Gathungu said.

Additionally, Sh3.83 billion was advanced to the State Department for Arid and Semi-Arid Lands (Asals) and Regional Development between December 2023 and June 2024.

The Auditor General said the department had already included these activities in its approved supplementary budget, raising questions about the urgency of the expenditure.

“No explanation was provided to justify the funding of the expenditure from the fund, yet the department had included the activities in the approved supplementary budget,” the report noted, casting doubt on the propriety of the spending.

The Contingencies Fund was established under Article 208 of the Constitution and is designed to address emergency needs where no other budgetary provision exists.

It is managed by the National Treasury, with permanent capital capped at Sh10 billion, although the amount fluctuates based on the prevailing fiscal space. Sh5 billion is the projected spend for the next financial year.

It emerged that during the 2023-24 financial year, a total of Sh6.53 billion was advanced from the fund, more than double the Sh3.11 billion disbursed the previous year.

The funds were primarily allocated for drought and flood mitigation, including El Niño response measures.

The audit findings come at a time when the National Treasury is grappling with revenue shortfalls and increasing pending bills, which stood at Sh526 billion in June 2025.

Despite these challenges, the Treasury reported a 79.76 per cent budget absorption rate for the year, an improvement from the previous year.

However, the Auditor General’s report suggests that improvements in spending efficiency have not been matched by corresponding gains in accountability.

In its management report, the National Treasury acknowledged challenges such as resource constraints, technical staff shortages and the need for better monitoring and evaluation systems.

It also highlighted efforts to enhance revenue mobilisation and strengthen tax administration.

The Treasury, however, did not specifically address the audit queries related to the Contingencies Fund in the published statements.

The audit opinion underscores weaknesses in the system used to manage emergency funds.

It also raises questions about adherence to legal and procedural safeguards designed to prevent misuse of public resources.