(Nairobi) – Kenyan taxpayers are losing billions of shillings due to mismanagement, irregular payments, and a lack of qualified personnel in county governments, according to a new report by the Auditor General. The findings highlight systemic weaknesses in financial accountability, resulting in unsupported expenditures and inefficiencies across multiple counties.
Deputy Auditor General Isaac Kamau noted that weak internal controls, unqualified staff, and inconsistent accounting practices are common issues in county assemblies and executives. Counties continue to struggle with financial mismanagement, including irregular payments, failure to adopt modern accrual accounting, and unresolved pending bills.
Kamau criticized counties for failing to improve despite recurrent issues flagged in successive audit reports. “From planning to processing transactions, there are glaring gaps that lead to unsupported expenditures,” he said.
A key concern is the lack of certified accountants in senior county finance roles, a problem identified by the Institute of Certified Public Accountants of Kenya (ICPAK). Counties without qualified professionals struggle with subpar financial statements, delayed reports, and weak oversight. ICPAK Director of Public Policy and Research, Hillary Onami, emphasized the urgent need for reforms, including adherence to the Public Finance Management Act’s deadlines for financial reporting.
The findings revealed alarming figures:
| County | Unsupported Amounts (KSh) | Issues Identified |
|---|---|---|
| Nairobi | 1.07 billion | Irregular salary payments, procurement expenses, and undocumented utilities and contracts. |
| Mombasa | 5.4 billion | Unsubstantiated bank balances, retention amounts, and voided transactions. |
| Kisumu | 44.6 million | Unsupported legal fees. |
| Nakuru | 383.3 million | Employee compensation, imprests, and advances lacking proper documentation. |
| Turkana | Not quantified | Qualified audit opinion due to unresolved financial anomalies over three years. |
| Elgeyo Marakwet | 88.1 million | Payments for staff arrears and goods unaccounted for. |
In addition, Nairobi recorded unsupported expenditures of KSh 7.6 billion in 2021/2022, including procurement and scholarships. Kisumu’s 2022 accounts revealed unsupported receipts exceeding KSh 10.1 billion, while salaries and other expenses added KSh 5.6 billion in unverified costs.
ICPAK Chief Executive Grace Kamau underscored the importance of transitioning from cash-based accounting to accrual accounting. This modern method records financial transactions when they occur rather than when cash is exchanged, offering a clearer picture of liabilities, revenues, and assets. However, many counties lack the capacity to implement this approach.
Counties also face challenges in managing their human resources. High wage bills, unstructured payroll systems, and frequent staff changes disrupt governance and financial stability. Without clear expenditure limits for salaries and approved staffing structures, counties overspend on wages, further straining budgets.
The report highlighted a significant gap in service delivery despite these financial losses. Public services such as healthcare, infrastructure development, and sanitation remain underfunded and poorly executed. Citizens, already burdened by high taxes, face a lack of critical services.
Prime examples of inefficiencies include Nairobi’s KSh 620.6 million payments to Nairobi Metropolitan Services contracts without proper documentation and Mombasa’s unexplained voided transactions totaling billions.
ICPAK and the Auditor General’s Office have called for urgent reforms to address these persistent issues. They recommend adopting modern accounting practices, hiring qualified professionals, and strengthening financial oversight to reduce waste and corruption.