Friday, October 11, 2013

Kenya: Sh300 Billion Govt Expenses Unaccounted in 2011-12

Kenya: Sh300 Billion Govt Expenses Unaccounted in 2011-12

Photo: Anthony Morland/IRIN
Kenyan government unable to account for Sh300 billion in the 2011-2012 financial year (file photo).
Nairobi — A report from the Auditor General's office shows that Sh338 billion of money spent by the government in the financial year 2011/2012 cannot be accounted for.
According to the document, only Sh55.2 billion of the Sh920 billion the government spent can be accounted for.
Auditor General Edward Ouko said that more than half of the statement errors were due to unsupported expenditure, failure by civil servants to surrender imprests, unauthorised spending and uncleared balances.
"A total of 252 financial statements were audited and only six percent had clean (unqualified) audit reports, 51 percent had qualified opinion reports, 10 percent had disclaimer of opinion reports and 33 percent had disclaimer of opinion reports. A trend that is worrying is that 33 percent of the financial statements or 83 financial statements cannot be regarded as having been properly accounted hence a disclaimer of opinion," he stated.
In the report, Ouko explained that there were no supporting documents for Sh561 billion which could have resulted in the misuse of the funds.
"Of major concern is the poor maintenance of accounting records. As in the previous years and as also indicated in my report, there is weak and inadequate maintenance of accounting records observed across a number of ministries and departments during the year," he said.
He said that in the 2011/2012 year, many ministries and departments prepared their statements on cash basis, making it impossible to tell what the government owns and owes.
"In addition, the ministries and departments continued to prepare their respective financial statements on Cash Basis of accounting as instructed by the Treasury. This implies that capital assets are expensed as a result of which Statements of Assets and Liabilities as at the end of each financial year do not show a complete and true and fair view of the ministry's or department's assets and liabilities," he said.
The Auditor General further explained that he was not able to establish whether expenditures reflected in these statements were incurred lawfully and in an effective way as required by Article 229(6) of the Constitution.
"This hence means that were the accounts with disclaimer of opinion be treated as accounts with no proper justification, then by implication 33pc of the total actual expenditure for 2011/2012 of Sh920bn can be regarded as having not been properly accounted for,"
He also indicated a shortfall in development revenue for the year under review.
"The revenue accounts demonstrate a shortfall of development revenue by 49 percent which translated to approximately Sh26 billion. This under collection was due to non-release of funds by development partners and low absorption of funds by projects and programmes," he said.
He stated that the revenue statements showed substantial balances of revenue amounting to approximately Sh900 million not having been received at the Exchequer Account.
"The discrepancies are due to unexplained and unreconciled differences between the statements balances and the exchequer records maintained at Treasury," he said.
Ouko said that the exchequer account showed a balance of Sh1.1 billion as at 30 June 2012 and an over issue of Sh6 billion to the Ministry of Education (recurrent vote).
He observed that the over issue arose due to the withdrawal of Sh7 billion from the Consolidated Fund on 21 June 2012, for Free Primary and Free Day Secondary Education.
"However, no evidence has been provided for audit confirmation that Parliamentary approval for the additional expenditure was granted as required under article 223 of the Constitution," he said.


Kenya: Corruption Killing Job Creation in Kenya, Says New World Bank Report

Photo: Lauren Everett/AllAfrica
Corruption report box in Kenya.

Corruption accounts for loss of resources enough to create 250,000 jobs in Kenya annually, the World Bank has said.
In its latest economic update titled 'Kenya at Work', the report says an enterprise survey found out that firms pay up to 12 per cent of value of government contracts to win them and four per cent value of their sales is directed towards bribe payment.
Total kickbacks paid on government contracts are approximated at Sh36 billion and another Sh69 billion is paid in form other related bribes.
"Kenya stands out for it's business related corruption than any other country in the world," the report says.
Currently only about 50,000 out of an estimated 800,000 youths leaving school annually get employment.
"Nepotism, tribalism, sexual harassment and corruption determine who gets these jobs leaving the rest to find their own means of survival," said World Bank country director Johannes Zutt.
Zutt said in Kenya the main barriers to creation of jobs through investments are corruption, access to electricity, and poor infrastructure. The World Bank downgraded its earlier prediction of a 5 per cent GDP growth for Kenya to 4.3 per cent, one per cent lower that 2011, but maintained its 2013 projection at 5 per cent.
The report shows Kenya's economy is stable but vulnerable due to the expected general election shocks, transition to a new governance system and the Euro crisis.
"Kenya's economy is out of balance and the external position has become even more vulnerable as the country's current account deficit has skyrocketed and could reach 15 per cent of GDP in 2012," the survey notes "This is among the worst external balances in the world and poses a significant risk to Kenya's economic stability."
Kenya's growth remains below the African average and substantially below that of its East Africa Community partners with an average of 6 per cent annual growth.
Over the last decade, Kenya's imports have grown faster than its exports since mid-2011, with earnings from top four exports not enough to pay for oil imports.
The survey recommends that Kenya should increase its manufacturing capacity and help the high number of people leaving family farming activities to create agricultural processing for export, in order to increase employment opportunities.

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