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Review of Kisumu County Executive Audit Reports 2015/2016:  Part 1

The Office of the Auditor General released audit reports on how our 47 counties spent the taxpayers’ money. Today, we will review the audit reports for Kisumu County. The year under focus ranges from 1st July 2015 to 30th June, 2016. Come along.

The Office of the Auditor General (OAG) is a constitutional office created under article 229 of the Constitution of Kenya 2010.

During the year under focus Kisumu County had an approved budget amounting to Ksh. 9.4 billion. That’s quite an amount. The county did not spent all the money approved in the budget. It managed to spend Ksh. 7.9 billion or 84 per cent of the approved budget.

After auditing the financial statements for the year, the Office of the Auditor General (Edward Ouko) gave the county a Disclaimer Opinion. This means that his office did not have access to enough evidence to make any opinion. In other words, Ranguma’s administration was too opaque for him to say whether the financial statements were accurate or not.

During the year under review, Kisumu County government was able to raise Ksh. 984.7 million from local revenue. These are resources collected from Single Business Permits, parking fees and cess among other sources.

Many counties do well in spending recurrent expenditure as compared to development budget. The lakeside county is not an exception. It was able to spend just 43% of its development budget. This is a clear sign that sometimes the problem may not be lack of resources but how and where to spend it. This may be caused by incompetence of delays in remitting money to the counties from the national treasury.

In comparison, Kisumu score an A+ in terms of recurrent expenditure. What do I mean? Kisumu County spent more than what was approved by county assembly at 105%. This is illegal.

Numerous bank accounts

During the year under focus (2015/2016), Kisumu County was operating 118 bank accounts. The problem was that not all bank accounts were disclosed for auditing. In fact Kenya Commercial Banks is the leading destination for Kisumu County executive where they operated 99 bank accounts. This is followed at a far distance by Cooperative Bank of Kenya which hosts 10 banks accounts for Kisumu County. The least is Standard Chartered bank, Kisumu branch where the lakeside city operates 1 bank account.

If bank accounts remain undisclosed, the auditor finds it difficult to determine the amount of money held in those accounts.

Under banking

During the year under focus, Kisumu County collected Ksh. 984.7 million but only Ksh. 959 million made it to the County Revenue Fund as required by the law (PFM Act). This means Ksh. 25.7 million was spent at source. Illegal.

Wage Bill

Many counties have been struggling with a bloated wage bill. Kisumu is not an exception. The county spent 44% of the total budget (Ksh. 7.2 billion) of paying workers’ salaries and wages. Illegal. The Public Finance Management Regulations puts a threshold of 35% of the total budget for the year.

Irregular Payment of Legal Fees

Kisumu County paid Ksh .3 million as legal fees for conveyance services on a land purchased for Ksh. 27 million. This is not in line with what is provided by the advocates’ remuneration (Amendment) Order of 2014. The auditors revealed that the firm should have been paid Ksh. 430,000 only. Meaning that the residents of Kisumu did not receive value for their money.

Purchase of Dumpsite Land

During the first year under devolution, Kisumu county paid Ksh. 27 million to acquire land parcel number 3087/14 to be used as a new dumpsite. The auditors from the OAG dived into the county financial statements and revealed shocking facts. One, the land was leasehold where you hold land for 999 years. This was changed by the new constitution. Now you can hold land for 99 years. What was shocking was that the county spent a whopping Ksh. 27 million on a land whose lease will expire on 1 July 2018 and revert back to the county.

The Public Finance Management Act 2o12 and Article 201 of the Constitution of Kenya 2010 demands for prudent use of taxpayers’ money. Buying a land parcel whose lease is expiring next year makes no economic sense. So, in one sentence, people of Kisumu County did not get value for their money on this transaction.

On the same issue of land for dumpsite, when the auditors contacted the Ministry of lands, Housing and Urban Development, it was revealed that land valuation reports the value of that land as Ksh. 12 million. This means that Kisumu County executive paid Ksh. 15 million more than the market prices at that time. Immoral. To make matters worse, the dumpsite was not in use as at 30th June 2016.

Take action now, report irregular use of Taxpayer’s money to the Office of the Auditor General for action before it is too late.




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