A report by the Auditor General’s office has unveiled damning corruption, financial impropriety and mismanagement at the Kisumu county government headed by Jack Ranguma. Governor Ranguma, the report says, failed to close all bank accounts run by the defunct local authorities within the county.
The report reads: All defunct Local Authorities were to close all operating bank accounts and transfer all funds to the county government revenue account and obtain a closure of accounts certificate from the banks stating the amount so transferred.
Contrary to the above directive, the defunct councils continued operating the accounts, some of them up to the time of audit exercise, thus defeating the purpose of the circular from the Transition Authority.
Bank statements for the defunct Municipal Council of Kisumu were not made available except for Bank A/c No 1103954520, 1116010941 and 1126763950 held at KCB Kisumu A/c 01120013012802 held at Co-operative Bank Kisumu. We were not able to verify the balances in the previous accounts held by the council as no statements were made available and no bank reconciliations were done and availed to us for verifications.
During the period under review, it was observed that the county government of Kisumu re-allocated Sh340,645 meant for infrastructure development funds to recurrent expenditure.
During the period under review, the county government started paying salary to all the county executive committee members at the maximum ceiling salary point of the salary scale band, contrary to the Salaries and Remuneration Commission circular dated May 27 2013 on remuneration and benefits of state officers in the county government under A 1 stipulating that all persons joining county government shall adopt the minimum entry point of the respective remuneration scale. Under the circumstances it was not possible to confirm the approval of maximum ceiling salary entry point paid to the county executive committee members.
During the period under review, the county government purchased assets amounting to Sh15,105,495. There were no records to show that these items were in the county assets register. In addition, they were not marked or labeled for control and ease of reference on the assets’ location.
The county government account indicated that from the council account No 01100013012801, only Sh675,635 was transferred instead of the amount of Sh3,047,102 resulting to a difference of Sh2,371,466 which was not reconciled or explained. No documents were availed to confirm that account No 0112001302802 with Sh16,185,448 had been transferred to the county government revenue account. Under the circumstances, the accuracy of the bank balances could not be confirmed.
The council purchased items amounting to Sh4,137,335 during the period under review but goods received notes were not raised. Under the circumstance, the propriety of the expenditure could not be confirmed.
The council recruited 11 new staff without following the council’s human resource procedure for different cadres, and no documentary evidence was availed on the process which was followed. The staff has also been handed over to the county government.
During the period under review, the council entered into overdraft facility of Sh30 million to enable the council manage its salary issues and the security for the facility granted was daily cash or fixed deposit of Sh500,000 per day through standing order. The overdraft was granted for a period of six months from the date of limit loading, but no approval from the parent ministry or the board was availed to support the transaction.
The creditors balances amounting to Sh1,069,694,818 handed over to the county government by the defunct Municipal Council of Kisumu were not supported by registers, original contract agreements, invoices, delivery notes, statements, schedules and payrolls while the creditors’ ledger was not updated since 2011.
The ownership of the five vehicles the council has been using and maintaining is under third party names. It is not clear why the council has taken long to transfer ownership of the motor vehicles and under the circumstances, the value and existence of the council’s vehicles could not be determined.
The defunct Municipal Council of Kisumu handed over debtors figure amounting to Sh4,604,688,706 to the county government of Kisumu. However, outstanding debtors’ balances were not supported by debtors’ registers, copies of invoices and demand notices and the figure also did not include amounts owing from imprest, single business permits, advances to councillors and staff. There were also cases of tenants defaulters mainly senior council employees.
The council has outstanding imprest of Sh4,528,742 as at June 30 2013 which has been outstanding since February 2011. Under the circumstances, it could not be confirmed if the imprest was used for the intended purpose and whether the council got value for money.
At the County Council of Nyando, during the period under review, expenses to maintain the council markets and properties amounting to Sh778,500 was incurred and the payments were made to the council engineer and the cashier who are council employees. Under the circumstances, the propriety of the maintenance expenses could not be confirmed.
During the period under review, the cashier of the County Council of Nyando encashed third party cheques amounting to Sh2,307,603 without taking into account who would bear the bank charges, contrary to the financial regulations.
The creditors’ balances amounting to Sh8,590,992 handed over to the county government by the defunct County Council of Nyando were not supported by creditors’ registers, original contract agreements, invoices, delivery notes, statements, schedules and payrolls. Consequently, the accuracy of the creditors figure as at June 30 2013 could not be confirmed.
The defunct County Council of Nyando handed over debtors amounting to Sh161,816,472 to the county government of Kisumu. However, outstanding debtors’ balances were not supported by listings, debtors’ registers, copies of invoices and demand notices.
During the year under review, the defunct County Council of Nyando had several projects undertaken amounting to Sh12,226,053. The projects were: Street Lighting for Sh4,734,958 paid to a contractor for phase III and IV on Chemelil-Awasi Road and Awasi-Nairobi road; Construction of Mbega Footbridge for Sh349,200. The footbridge was not put up and the money was not refunded; Construction of Rangul Dispensary for Sh948,660; Construction of male and female wards at Katito Health Centre for Sh1,255,074. Full payment was made but the project stalled at the roof level; Construction of Oren Dispensary for Sh1,311,978; Completion of Community Hall - Central Nyakach for Sh918,210; Construction of maternity at Yawo Phase II for Sh1,257,047; Construction of chief’s office at Bolo for Sh662,607 paid to a firm which was notone of the bidders; Construction of Kadhiambo Dispensary Phase II for Sh788,319.
In all these contracts, procurement procedures were not followed. Documents like; quotations, letter of award, letter of acceptance, contract agreement and bill of quantities were not availed.
During the period under review, the council made payment amounting to Sh295,000 for drainage works without supporting documents. Under the circumstance the propriety of the expenditure could not be ascertained.
During the period under review, the defunct County Council of Kisumu as at June 2013 had an outstanding imprest of Sh6,758,027 which date back to July 2011. Out of the outstanding imprest, 64pc is held by only four officers of the council totaling Sh4,351,799
During the period under review, the council’s revenue collecting staff had not accounted for miscellaneous receipts books with a face value of Sh2,395 which date back to October 2009. Under the circumstance, the revenue figure could not be confirmed.
During the period under review, the defunct County Council of Kisumu collected revenue of Sh41,037,123 while an amount of Sh105,269,549 was collected between January to June 2012 thereby resulting to a difference of Sh64,223,426. No explanation was offered as to why far much less was collected.
Recommendation
The defunct County Council of Kisumu handed over debtors amounting to Sh35,314,375 to the county government of Kisumu. However, outstanding debtors’ balances were not supported by debtors’ registers, copies of invoices and demand notices. The figure of Sh35,314,375 did not include imprest, single business permit, advances to councillors and other staff.
The creditors’ balance amounting to Sh13,641,056 handed over to the county government by the defunct County Council of Kisumu was not supported by creditors’ registers, original contract agreements, invoices, delivery notes, statements, schedules and payrolls while the creditor ledger had not been updated. Consequently the accuracy of the creditors figure as at June 30 2013 could not be confirmed.
During the period under review, the defunct County Council of Kisumu made withdrawals from Renewals Fund Account totaling Sh21,858,358 for other activities contrary to the Local Government Act Cap 265 which stipulates that the Renewals Funds Account should be maintained and used for the purposes of renewals of obsolete asset only. Under the circumstance the council was in breach of the law.
The defunct County Council of Kisumu incurred expenditure totaling Sh10,002,448 on LATF and Projects Accounts. However, the payment vouchers relating to these expenditures were not availed for audit verification. Under the circumstances, the propriety of the expenditure could not be confirmed.
During the period under review, a council cashier withdrew retention money of a contractor totaling Sh345,590 vide cheque No 000555 of March 6 2013 for Sh141,405 and cheque No 000562 of April 5 2013 for Sh204,185 but this was not supported by the contract. Under the circumstance, it could not be confirmed if the retention money was paid to the contractor.
The council paid a contractor Sh450,000 through payment voucher No 1304-0030 being mobilisation fees for opening of Maseno access roads. Verification of the project revealed that the access road was not opened. Under the circumstance, the propriety of the expenditure could not be confirmed.
At the Town Council of Ahero, during the period under review, the cashier of Town Council of Ahero encashed third party cheques amounting to Sh6,671,620 contrary to the financial regulations.
The council, on August 30 2012 made a transfer of Sh460,000 from Kenya Commercial Bank, Kisumu, General Rate Account No 1114635278 to Equity Bank - Kisumu salaries account. On the same date, August 30 2012 an amount of Sh430,000 was transferred to individual accounts of two former employees of the council without any supporting documents.
The creditors’ list figure as at March 27 2013 was Sh64,723,339 from a figure of Sh41,238,464 as at June 30 2012 resulting to a difference of Sh23,484,875. However, no supporting document was made available to reconcile the difference. Consequently the accuracy of the creditors figure as at June 30 2013 could not be confirmed.
The debtors list figure decreased to Sh3,649,134 as at March 27 2013, from a figure Sh6,987,595 as at June 30 2012. The figure of Sh3,649,134 not supported and no reconciliation or explanation provided for the reduction. Under the circumstance, the accuracy of the debtors as at June 30 2013 could not be confirmed.
During the period under review, the defunct council spent Sh6,089,800 receipts from LATF to procure various items and services without supporting documents. This is contrary to the public procurement Act 2005, which stipulates that procurement procedure should be followed and supporting documents attached.
Further, a company was paid Sh700,000 through payment voucher no 6215 dated February 22 2013 to carry out repairs, stone pitching and drainage works within the Town Council of Ahero but no engineers certificate of completion was made available. Under the circumstance, the propriety of the expenditure could not be ascertained.
At the Town Council of Muhoroni the creditor’s figure of Sh16,538,215 were not reconciled with supporting documents. The contract agreements, invoices, delivery notes and third party confirmation from statutory bodies were not made available for audit.
During the period under review, the Town Council of Muhoroni revenue collection was Sh8,687,909 but only Sh7,097,264 was banked intact, resulting to under banking of Sh1,590,645. This is contrary to the provisions of the public financial management Act, 2012 which stipulates that all revenue collected should be banked intact. Under the circumstances, the accuracy of the revenue figure as at June 30 2013 could not be confirmed.
The county had received two computers from the National Treasury which are dedicated for G-Pay. Training for G-Pay had been undertaken for five officers. All payments in the county were being made through G-Pay. The county has fully installed the IPPD system and the payroll beginning July 2013 was processed using the system. There are six users who have been trained on the use of the system.
The report reads: All defunct Local Authorities were to close all operating bank accounts and transfer all funds to the county government revenue account and obtain a closure of accounts certificate from the banks stating the amount so transferred.
Contrary to the above directive, the defunct councils continued operating the accounts, some of them up to the time of audit exercise, thus defeating the purpose of the circular from the Transition Authority.
Bank statements for the defunct Municipal Council of Kisumu were not made available except for Bank A/c No 1103954520, 1116010941 and 1126763950 held at KCB Kisumu A/c 01120013012802 held at Co-operative Bank Kisumu. We were not able to verify the balances in the previous accounts held by the council as no statements were made available and no bank reconciliations were done and availed to us for verifications.
During the period under review, it was observed that the county government of Kisumu re-allocated Sh340,645 meant for infrastructure development funds to recurrent expenditure.
During the period under review, the county government started paying salary to all the county executive committee members at the maximum ceiling salary point of the salary scale band, contrary to the Salaries and Remuneration Commission circular dated May 27 2013 on remuneration and benefits of state officers in the county government under A 1 stipulating that all persons joining county government shall adopt the minimum entry point of the respective remuneration scale. Under the circumstances it was not possible to confirm the approval of maximum ceiling salary entry point paid to the county executive committee members.
During the period under review, the county government purchased assets amounting to Sh15,105,495. There were no records to show that these items were in the county assets register. In addition, they were not marked or labeled for control and ease of reference on the assets’ location.
The county government account indicated that from the council account No 01100013012801, only Sh675,635 was transferred instead of the amount of Sh3,047,102 resulting to a difference of Sh2,371,466 which was not reconciled or explained. No documents were availed to confirm that account No 0112001302802 with Sh16,185,448 had been transferred to the county government revenue account. Under the circumstances, the accuracy of the bank balances could not be confirmed.
The council purchased items amounting to Sh4,137,335 during the period under review but goods received notes were not raised. Under the circumstance, the propriety of the expenditure could not be confirmed.
The council recruited 11 new staff without following the council’s human resource procedure for different cadres, and no documentary evidence was availed on the process which was followed. The staff has also been handed over to the county government.
During the period under review, the council entered into overdraft facility of Sh30 million to enable the council manage its salary issues and the security for the facility granted was daily cash or fixed deposit of Sh500,000 per day through standing order. The overdraft was granted for a period of six months from the date of limit loading, but no approval from the parent ministry or the board was availed to support the transaction.
The creditors balances amounting to Sh1,069,694,818 handed over to the county government by the defunct Municipal Council of Kisumu were not supported by registers, original contract agreements, invoices, delivery notes, statements, schedules and payrolls while the creditors’ ledger was not updated since 2011.
The ownership of the five vehicles the council has been using and maintaining is under third party names. It is not clear why the council has taken long to transfer ownership of the motor vehicles and under the circumstances, the value and existence of the council’s vehicles could not be determined.
The defunct Municipal Council of Kisumu handed over debtors figure amounting to Sh4,604,688,706 to the county government of Kisumu. However, outstanding debtors’ balances were not supported by debtors’ registers, copies of invoices and demand notices and the figure also did not include amounts owing from imprest, single business permits, advances to councillors and staff. There were also cases of tenants defaulters mainly senior council employees.
The council has outstanding imprest of Sh4,528,742 as at June 30 2013 which has been outstanding since February 2011. Under the circumstances, it could not be confirmed if the imprest was used for the intended purpose and whether the council got value for money.
At the County Council of Nyando, during the period under review, expenses to maintain the council markets and properties amounting to Sh778,500 was incurred and the payments were made to the council engineer and the cashier who are council employees. Under the circumstances, the propriety of the maintenance expenses could not be confirmed.
During the period under review, the cashier of the County Council of Nyando encashed third party cheques amounting to Sh2,307,603 without taking into account who would bear the bank charges, contrary to the financial regulations.
The creditors’ balances amounting to Sh8,590,992 handed over to the county government by the defunct County Council of Nyando were not supported by creditors’ registers, original contract agreements, invoices, delivery notes, statements, schedules and payrolls. Consequently, the accuracy of the creditors figure as at June 30 2013 could not be confirmed.
The defunct County Council of Nyando handed over debtors amounting to Sh161,816,472 to the county government of Kisumu. However, outstanding debtors’ balances were not supported by listings, debtors’ registers, copies of invoices and demand notices.
During the year under review, the defunct County Council of Nyando had several projects undertaken amounting to Sh12,226,053. The projects were: Street Lighting for Sh4,734,958 paid to a contractor for phase III and IV on Chemelil-Awasi Road and Awasi-Nairobi road; Construction of Mbega Footbridge for Sh349,200. The footbridge was not put up and the money was not refunded; Construction of Rangul Dispensary for Sh948,660; Construction of male and female wards at Katito Health Centre for Sh1,255,074. Full payment was made but the project stalled at the roof level; Construction of Oren Dispensary for Sh1,311,978; Completion of Community Hall - Central Nyakach for Sh918,210; Construction of maternity at Yawo Phase II for Sh1,257,047; Construction of chief’s office at Bolo for Sh662,607 paid to a firm which was notone of the bidders; Construction of Kadhiambo Dispensary Phase II for Sh788,319.
In all these contracts, procurement procedures were not followed. Documents like; quotations, letter of award, letter of acceptance, contract agreement and bill of quantities were not availed.
During the period under review, the council made payment amounting to Sh295,000 for drainage works without supporting documents. Under the circumstance the propriety of the expenditure could not be ascertained.
During the period under review, the defunct County Council of Kisumu as at June 2013 had an outstanding imprest of Sh6,758,027 which date back to July 2011. Out of the outstanding imprest, 64pc is held by only four officers of the council totaling Sh4,351,799
During the period under review, the council’s revenue collecting staff had not accounted for miscellaneous receipts books with a face value of Sh2,395 which date back to October 2009. Under the circumstance, the revenue figure could not be confirmed.
During the period under review, the defunct County Council of Kisumu collected revenue of Sh41,037,123 while an amount of Sh105,269,549 was collected between January to June 2012 thereby resulting to a difference of Sh64,223,426. No explanation was offered as to why far much less was collected.
Recommendation
The defunct County Council of Kisumu handed over debtors amounting to Sh35,314,375 to the county government of Kisumu. However, outstanding debtors’ balances were not supported by debtors’ registers, copies of invoices and demand notices. The figure of Sh35,314,375 did not include imprest, single business permit, advances to councillors and other staff.
The creditors’ balance amounting to Sh13,641,056 handed over to the county government by the defunct County Council of Kisumu was not supported by creditors’ registers, original contract agreements, invoices, delivery notes, statements, schedules and payrolls while the creditor ledger had not been updated. Consequently the accuracy of the creditors figure as at June 30 2013 could not be confirmed.
During the period under review, the defunct County Council of Kisumu made withdrawals from Renewals Fund Account totaling Sh21,858,358 for other activities contrary to the Local Government Act Cap 265 which stipulates that the Renewals Funds Account should be maintained and used for the purposes of renewals of obsolete asset only. Under the circumstance the council was in breach of the law.
The defunct County Council of Kisumu incurred expenditure totaling Sh10,002,448 on LATF and Projects Accounts. However, the payment vouchers relating to these expenditures were not availed for audit verification. Under the circumstances, the propriety of the expenditure could not be confirmed.
During the period under review, a council cashier withdrew retention money of a contractor totaling Sh345,590 vide cheque No 000555 of March 6 2013 for Sh141,405 and cheque No 000562 of April 5 2013 for Sh204,185 but this was not supported by the contract. Under the circumstance, it could not be confirmed if the retention money was paid to the contractor.
The council paid a contractor Sh450,000 through payment voucher No 1304-0030 being mobilisation fees for opening of Maseno access roads. Verification of the project revealed that the access road was not opened. Under the circumstance, the propriety of the expenditure could not be confirmed.
At the Town Council of Ahero, during the period under review, the cashier of Town Council of Ahero encashed third party cheques amounting to Sh6,671,620 contrary to the financial regulations.
The council, on August 30 2012 made a transfer of Sh460,000 from Kenya Commercial Bank, Kisumu, General Rate Account No 1114635278 to Equity Bank - Kisumu salaries account. On the same date, August 30 2012 an amount of Sh430,000 was transferred to individual accounts of two former employees of the council without any supporting documents.
The creditors’ list figure as at March 27 2013 was Sh64,723,339 from a figure of Sh41,238,464 as at June 30 2012 resulting to a difference of Sh23,484,875. However, no supporting document was made available to reconcile the difference. Consequently the accuracy of the creditors figure as at June 30 2013 could not be confirmed.
The debtors list figure decreased to Sh3,649,134 as at March 27 2013, from a figure Sh6,987,595 as at June 30 2012. The figure of Sh3,649,134 not supported and no reconciliation or explanation provided for the reduction. Under the circumstance, the accuracy of the debtors as at June 30 2013 could not be confirmed.
During the period under review, the defunct council spent Sh6,089,800 receipts from LATF to procure various items and services without supporting documents. This is contrary to the public procurement Act 2005, which stipulates that procurement procedure should be followed and supporting documents attached.
Further, a company was paid Sh700,000 through payment voucher no 6215 dated February 22 2013 to carry out repairs, stone pitching and drainage works within the Town Council of Ahero but no engineers certificate of completion was made available. Under the circumstance, the propriety of the expenditure could not be ascertained.
At the Town Council of Muhoroni the creditor’s figure of Sh16,538,215 were not reconciled with supporting documents. The contract agreements, invoices, delivery notes and third party confirmation from statutory bodies were not made available for audit.
During the period under review, the Town Council of Muhoroni revenue collection was Sh8,687,909 but only Sh7,097,264 was banked intact, resulting to under banking of Sh1,590,645. This is contrary to the provisions of the public financial management Act, 2012 which stipulates that all revenue collected should be banked intact. Under the circumstances, the accuracy of the revenue figure as at June 30 2013 could not be confirmed.
The county had received two computers from the National Treasury which are dedicated for G-Pay. Training for G-Pay had been undertaken for five officers. All payments in the county were being made through G-Pay. The county has fully installed the IPPD system and the payroll beginning July 2013 was processed using the system. There are six users who have been trained on the use of the system.
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