February 23, 2025, NYAMIRA, Kenya – The Auditor General has issued a qualified opinion on the financial statements of the County Executive of Nyamira (County No. 46) for the fiscal year ending June 30, 2024, spotlighting significant financial discrepancies, legal violations, and governance lapses totaling over Kshs.3.7 billion.
The report details irregularities in employee compensation, unsupported expenditures, unremitted pensions, stalled projects, and weak internal controls, raising serious concerns about the county’s financial management and service delivery capabilities.
Financial Statement Irregularities
The audit revealed a troubling variance in employee compensation, with the statement of receipts and payments reflecting Kshs.3,038,348,148 as disclosed in Note 3.
However, a review of bank remittance records versus the Integrated Payroll and Personnel Database (IPPD) payroll showed unexplained discrepancies across five sampled months in 2023/2024.
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For September 2023, bank remittances totaled Kshs.83,725,988 against an IPPD net pay of Kshs.83,015,265, a variance of Kshs.710,723.
May 2023 showed Kshs.82,413,418 remitted against Kshs.80,537,720, a Kshs.1,875,698 difference.
November 2023 recorded Kshs.70,751,050 against Kshs.80,373,127, a negative variance of Kshs.9,622,077.
December 2023 had Kshs.79,319,587 versus Kshs.89,987,016, a negative Kshs.10,667,429, and March 2024 showed Kshs.76,313,131 against Kshs.85,601,117, a negative Kshs.9,287,986.
These variances, aggregating to Kshs.392,523,174 across sampled months, could not be reconciled, casting doubt on the accuracy and completeness of employee remittances.
Expenditure on asset acquisition, reported at Kshs.471,057,068 under Note 8, included Kshs.30,887,200 for research, studies, project preparation, design, and supervision.
Within this, Kshs.13,487,200 was issued as imprest for feasibility studies, but the funds were irregularly disbursed to officers on behalf of others, lacking individual accountability or recipient acknowledgments.
The absence of explanations for this practice left the regularity and accuracy of this expenditure unconfirmed.
The statement of assets and liabilities reported cash and cash equivalents of Kshs.564,648,152 across 30 bank accounts per Note 9A.
However, Kshs.124,722,994 held in 11 accounts lacked supporting bank reconciliation statements, cashbooks, bank balance certificates, or board of survey reports, undermining the verifiability of this balance.
Budget and Pending Liabilities
The county’s budget performance showed a final receipts budget of Kshs.7,282,175,903 against actual receipts of Kshs.5,884,949,781, resulting in an underfunding of Kshs.1,397,226,122 (19%).
This shortfall, noted under the Emphasis of Matter, likely hampered planned activities and service delivery, though the auditor’s opinion remained unmodified on this point.
Pending accounts payable totaled Kshs.776,379,157 as per Annex 2, but excluded Kshs.310,956,550 in unremitted pension contributions to LAPFUND from four defunct local authorities: Town Council of Keroka (Kshs.59,846,049, including Kshs.20,997,297 principal and Kshs.38,848,752 interest), County Council of Nyamira (Kshs.52,066,589, with Kshs.20,045,275 principal and Kshs.32,021,314 interest), Town Council of Nyamira (Kshs.181,911,413, with Kshs.64,433,140 principal and Kshs.117,478,272 interest), and Town Council of Nyansiongo (Kshs.17,132,497, with Kshs.6,111,298 principal and Kshs.11,021,198 interest).
Management cited a court adjudication, but no judgment copy was provided. Additionally, Kshs.191,936,374 in recurrent and development bills from prior years remained unpaid, distorting subsequent budgets and risking penalties.
Unresolved prior-year audit issues, flagged under the Other Matter section, persisted as of June 30, 2024, with management offering no satisfactory reasons for the delay.
Lawfulness and Resource Use
The county’s development expenditure of Kshs.1,423,755,264 was only 25% of the total Kshs.5,745,164,842, falling short of the mandated 30% under Regulation 25(1)(g) of the Public Finance Management (County Governments) Regulations, 2015, constituting a legal breach. Compensation of employees at Kshs.3,038,348,148 consumed 53% of the Kshs.5,690,166,473 total revenue, exceeding the 35% cap set by Regulation 25(1)(a) and (b).
Human resource management revealed multiple violations. Of 3,941 employees, 3,734 (94%) were from one ethnic community, breaching Section 7(2) of the National Cohesion and Integration Act, 2008, which limits any ethnic group to one-third of staff.
In June 2024, 48 officers received net salaries below one-third of their basic pay, contravening Section 19(3) of the Employment Act, 2007, and Section C.1(3) of the Human Resource Policies Manual.
Additionally, 1,779 employees (45%) remained on probation beyond six months without confirmation, violating Section 42(2) of the Employment Act, 2007.
Transfers to the County Assembly amounted to Kshs.838,858,168 (15% of total revenue), exceeding the 7% limit under Regulation 25(1)(f), while training expenses of Kshs.39,689,755, including Kshs.2,257,800 for catering and full board services, lacked training needs assessments, breaching Section H.3(1) and (3) of the Public Service Commission Human Resource Manual.
Delayed and Abandoned Projects
The report detailed extensive delays and terminations across multiple projects:
Nyamira County Headquarters: Contracted on July 11, 2018, for Kshs.382,970,401, with 61% (Kshs.233,282,357) paid by June 30, 2024, the project’s completion date shifted from December 31, 2021, to December 31, 2025, due to poor feasibility studies.
Nyamira Referral Hospital COVID-19 Complex: Awarded on September 25, 2020, for Kshs.95,860,834, with Kshs.38,867,928 (41%) paid, the contract was terminated after the contractor abandoned the site and settled a Kshs.6,001,142 dispute out of court.
Twin Staff Houses: Contracts for Motagara (Kshs.3,990,155, 55% paid), Nyakeore (Kshs.3,441,671, 55% paid), Kahawa (Kshs.3,600,986, 55% paid), and Emenyenche (Kshs.3,687,645, 53% paid) health facilities were abandoned, with no compensation measures despite expired timelines.
Ekerenyo Sub-County Hospital: Awarded August 12, 2020, for Kshs.34,589,321, with Kshs.12,480,341 (36%) paid, the project stalled post-April 30, 2024, with no explanation.
Nyamwetureko Eye Hospital: Contracted August 12, 2020, for Kshs.35,104,864, with Kshs.15,127,212 (43%) paid, works stalled after a December 30, 2023, extension.
Manga Sub-County Inpatient Block: Awarded June 28, 2018, for Kshs.34,237,845, with Kshs.11,510,480 (37%) paid, terminated March 4, 2024, after abandonment.
Nyamira County Spatial Plan: Awarded July 15, 2020, for Kshs.74,999,973, with Kshs.58,699,974 (78%) paid, the draft plan awaits County Assembly approval post-December 15, 2023.
Nyamira County Valuation Roll: Awarded July 21, 2023, for Kshs.58,000,000, with Kshs.17,400,000 (30%) paid, the project stalled due to insufficient Kshs.11,600,000 budget.
Tinga Ekoro Water Supply: Completed June 20, 2019, for Kshs.6,814,051, but unused by September 19, 2024, due to missing power connections and solar pump installation.
Seventy-four grounded motor vehicles remain undisposed, breaching Regulation 176(1) of the Public Procurement and Asset Disposal Regulations, 2020, requiring an annual disposal plan.
Internal Controls and Governance
The audit committee held only two meetings, violating Regulation 172(1) requiring quarterly meetings, limiting oversight and advisory functions.
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