February 23, 2025,KISII, Kenya – The Auditor General has issued a qualified opinion on the financial statements of the County Executive of Kisii for the fiscal year ending June 30, 2024, highlighting significant irregularities totaling over Kshs.2 billion.
The report, covering County No. 45, details unexplained transactions, legal breaches, procurement failures, and weak internal controls, casting doubt on the accuracy and effectiveness of the county’s financial management.
Financial Statement Concerns
The audit identified 604 voided transactions worth Kshs.232,358,841 in the Integrated Financial Management Information System (IFMIS), approved by the Controller of Budget but canceled without explanation or evidence of subsequent payment.
Additionally, Kshs.574,699,955 in payments, recorded between July 1-15, 2024, were included in the 2023/2024 financials, despite the cash-basis accounting policy requiring expenses to be recognized when paid. Management claimed these cleared prior commitments with National Treasury authorization, but their accuracy remains unconfirmed.
Expenditure on goods and services totaling Kshs.11,202,532—including Kshs.4,595,248 for printing, Kshs.6,000,000 for utilities, and Kshs.607,284 for communication—lacked payment vouchers or supporting documents.
Legal expenses of Kshs.29,135,024, including Kshs.15,000,000 paid to a construction company for a 2007 case against the defunct Kisii Municipal Council, were also unsupported.
The case, finalized by the Supreme Court on July 16, 2021, awarded the contractor Kshs.7,173,473 plus Kshs.31,007,434 in interest, but no case files, contracts, or County Attorney advisories were provided.
The county faced a Kshs.3,588,181,135 (30%) budget shortfall, receiving Kshs.8,284,558,775 against a Kshs.11,872,739,910 target, and underutilized Kshs.155,121,667 (4%) of available funds.
Pending bills rose to Kshs.2,178,167,188 from Kshs.1,190,913,975, with only Kshs.43,638,305 paid, contravening regulations prioritizing debt payments. No schedules supported these balances, and prior year audit issues remain unresolved as of June 30, 2024, with no explanation from management.
Lawfulness and Resource Use
The county spent Kshs.2,171,180 on COVID-19 emergency items outside its established Emergency Fund, breaching Section 110(2) of the Public Finance Management Act, 2012. Development expenditure was Kshs.1,598,955,980, just 19% of the Kshs.8,439,680,442 total, below the mandated 30%, while the wage bill of Kshs.5,647,519,423 consumed 60% of revenue, exceeding the 35% limit.
Employee compensation irregularities included 904 staff earning below the Kshs.14,025 minimum wage, 94% of 5,570 employees from one ethnic community (violating the National Cohesion and Integration Act, 2008), and 28 staff with net pay below one-third of basic salary.
The County Attorney, sacked by court on January 24, 2024, received Kshs.3,384,632 through August 2024.
Recruitment for four Quantity Surveyor posts saw only the 2nd and 7th-ranked candidates hired, with no justification, and five disciplinary cases lingered beyond six months, breaching county HR rules.
Procurement issues were rife. Kshs.30,000,000 was prepaid for fuel, with Kshs.10,000,000 unconsumed by October 23, 2024, violating the Public Procurement and Asset Disposal Act, 2015. Market facilities costing Kshs.6,202,806, including pit latrines at Kionyo and Nyamaiya and sheds at Ochodororo, were completed but unused due to poor design.
Suneka Market’s Kshs.5,771,846 retention payment lacked contracts or completion certificates, and the project remains incomplete. Printing contracts saw a Kshs.698,000 overpayment, from Kshs.2,298,500 to Kshs.2,997,000, without documentation.
Road projects worth Kshs.26,641,662 in Bonchari and Kshs.62,415,692 in Bobasi were incomplete or poorly executed, with only one of 11 Bonchari roads finished and a 1.7km Bobasi section ungravveled despite payment.
Cleaning services (Kshs.14,100,000) and medical insurance (Kshs.202,421,473) contracts lacked competitive tender evidence, with the latter failing to settle hospital claims. Health centre upgrades (Kshs.36,439,523), stadium generators (Kshs.9,375,400), and dispensaries (Kshs.5,157,390) were either unused or incomplete, with missing documentation.
A Kshs.151,000,000 banana plant’s investor, appointed irregularly in 2022, paid no rent (reduced from Kshs.150,000 to Kshs.90,000 monthly), and lacked required qualifications.
The County Headquarters (Kshs.499,995,565) and Aggregation Park (Kshs.477,941,470) saw advance payments of Kshs.99,999,113 and Kshs.95,588,294, respectively, without justification or approvals. Delayed Governor’s office renovations (Kshs.24,921,817) and unstarted optical cable installation (Kshs.8,998,713) added to the tally of stalled projects.
Pension arrears totaled Kshs.1,605,562,651 to LAPFUND and Kshs.137,530,132 to CPF, with no repayment plan.
A Kshs.751,850,064 loan, including Kshs.77,696,792 for the County Assembly, lacked Assembly approval or terms. Revenue collection lagged, with Kshs.546,132,152 in uncollected property rates and Kshs.1,680,000 in unpaid land lease rent, while a Kshs.24,902,063 revenue system gave the vendor undue control.
Internal Controls and Governance
The county lacks IT continuity plans, disaster recovery, and an IT steering committee, with server rooms missing climate controls. Internal audits were underfunded, with no committee since July 2023, and prior recommendations unaddressed.
No staff establishment or organogram exists, four departments lack Chief Officers, and Kshs.1,879,905,409 for 700 projects was reallocated in supplementary budgets. Financial statements for Ogembo Municipality and nine sub-county hospitals were not submitted, breaching legal requirements.
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