Audit: NYS Unable to Account for Over Sh1 Billion Amid Financial Mismanagement
The National Youth Service (NYS) is unable to account for over Sh1 billion, potentially lost due to irregular expenditures and payments to contractors and employees, as per Auditor-General Nancy Gathungu’s latest report up to June 30, 2023.
The report highlights irregular expenditures totaling Sh303 million and unexplained payments of millions of shillings.
It identifies more than Sh300 million paid to contractors for projects that have been stalled for years, with some projects deemed substandard, failing to deliver value for money.
One example is a 12-unit flat project at Nairobi’s Industrial Area Vocational Training Institute, originally contracted for Sh49,105,721. The contractor abandoned the site after receiving an initial payment of Sh7,111,432.
Despite a re-advertised completion contract awarded at Sh61,098,319, with a 52-week timeline starting November 26, 2019, a March 2024 inspection revealed the project remained incomplete, despite Sh23,000,000 already disbursed.
Similarly, a contract for water tanks and booster pumps at the same institute, worth Sh11,715,396 for 16 weeks, ended due to non-payment issues totaling Sh5,770,669, stalling works.
At the NYS Engineering Institute in Ruaraka, a contract for a four-story classroom block and workshops costing Sh88,794,355 was initially set for 52 weeks and extended to 83 weeks.
Construction ceased in 2017 after paying Sh81,884,550, leaving electrical, plumbing, and drainage incomplete.
Another project, a double-span kitchen, dining, and barracks at the same institute contracted for Sh192,000,000, saw the contractor abandon the site after receiving Sh186,248,573, with visible deterioration noted in March 2024.
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Management cited delayed payments to contractors for project delays but failed to enforce contract clauses for penalties, continuing to undermine value for money.
The audit also revealed that Sh99 million was paid in salaries outside the Integrated Personnel and Payroll Database (IPPD) system, lacking supporting documentation and proper hiring procedures, potentially involving ghost workers.
Further scrutiny revealed unsupported outstanding payments totaling Sh740 million, raising concerns over manual revenue collection processes, impacting efficiency and risking revenue loss.
The audit highlighted discrepancies in revenue management, with manual systems for farming, security services, and machinery hire yet to be digitized, compromising invoicing, collections, reconciliations, and banking, potentially resulting in undetected revenue loss.
NYS failed to meet revenue targets, achieving Sh400 million against a Sh723 million target, without adequate explanations, affecting planned activities.
The audit flagged excess senior management staff—14 assistant directors instead of the authorized 14, 52 senior superintendents instead of 36, and 62 superintendents against an approved 57, indicating irregular appointments.
Additionally, inadequate asset register maintenance and undisclosed pending bills of Sh15 billion further compounded financial accountability concerns, including Sh378 million unpaid to contractors, including those engaged in slum clean-ups initiated in 2015.
Audit: NYS Unable to Account for Over Sh1 Billion Amid Financial Mismanagement
