NAIROBI, Kenya – The Auditor General, Nancy Gathungu, has raised alarms over the cancellation of more than 15,000 supplier payment transactions, amounting to a staggering Sh13.26 billion, by 15 counties.
The cancellations, which were approved for payment by the Controller of Budget (COB) and the National Treasury, have sparked concerns about the diversion of public funds that were originally allocated for verified contractors.
The audit reveals that while the funds were withdrawn from county revenue accounts and approved for payment, they were later cancelled without sufficient explanation, despite the legitimacy of the suppliers being confirmed.
Gathungu’s report suggests that the cancellations, which largely occurred towards the end of the financial year, were partly due to delays in disbursements from Treasury but also pointed to a deeper issue of funds being diverted for unapproved transactions.
Kisumu County led the pack with 4,127 cancelled transactions worth Sh2.67 billion, followed by Kajiado County with 1,922 transactions valued at Sh2.28 billion, and Busia County, where transactions worth Sh2.16 billion were voided.
Nyandarua and Siaya counties also saw significant cancellations, together accounting for 71% of all the cancelled transactions by both value and volume.
The audit further highlights that a considerable portion of these cancellations occurred in June 2024.
For instance, Busia County reported that 36% of its voided transactions, amounting to Sh772 million, were cancelled in the final month of the financial year.
Despite these funds being approved for payment, no clear explanation was given for the cancellations.
One of the key concerns raised in the report is the failure to disclose the voided payments as pending accounts payable.
Furthermore, the utilization of funds that were initially meant for these transactions was not explained, raising suspicions about the potential misdirection of public resources.
The Controller of Budget (COB), Margaret Nyakang’o, expressed deep concern over the ongoing diversion of funds, noting that many legitimate suppliers, who had been approved for payment, remained unpaid as counties redirected funds for other unapproved expenses.
She emphasized the lack of transparency and the difficulty in tracking these cancellations, as once payments are approved by the COB, her office has no way of knowing whether they are voided unless suppliers lodge complaints.
To address these issues, Nyakang’o revealed that a new system is being developed by the COB and the Central Bank of Kenya (CBK) to track all public transactions on the Integrated Financial Management Information System (IFMIS).
Set to roll out on April 22, 2025, this system aims to enhance transparency by ensuring that funds are only allocated to verified suppliers and contractors.
