HomeNewsAudit Uncovers Illicit County Bank Accounts

Audit Uncovers Illicit County Bank Accounts

Audit Uncovers Illicit County Bank Accounts

Controller of Budget Margaret Nyakang’o has issued a warning that taxpayers may be losing millions due to the operation of hundreds of illegal bank accounts by the 47 county governments.

From June 2023 to January 2024, counties opened over 600 new accounts, sparking concerns about their intended use according to an audit by Dr. Nyakang’o.

The recent report indicates that counties managed a total of 2,000 bank accounts in commercial banks during the first nine months of the 2023/2024 financial year.

This surge in account numbers hinders the Controller of Budget’s ability to monitor public spending effectively.

Legally, county government bank accounts must be opened and maintained at the Central Bank of Kenya (CBK) to facilitate tracking, with exceptions only for imprest, petty cash, and revenue collection accounts.

“The increasing number of bank accounts operated by counties in commercial banks has complicated the office of the Controller of Budget’s ability to monitor public expenditure,” states part of the report.

Private Dealings

“County Executive Committee Members must take responsibility and ensure compliance with the law by maintaining bank accounts at the Central Bank of Kenya for accountable spending,” notes Dr. Nyakang’o in the report.

There are concerns that some accounts are being used for private transactions, posing significant risks to taxpayers. Bungoma County tops the list with 352 commercial bank accounts, followed by Baringo with 304, Migori with 208, and Nyandarua with 86.

In Bungoma County, Governor Ken Lusaka’s administration uses 352 commercial bank accounts for operations, contrary to Regulations 82(1)(b) of the Public Finance Management (County Governments) Regulations, 2015.

The county’s records submitted to the CoB show accounts designated for vocational training centres (152), health facilities and dispensaries (146), local revenue accounts (4), level 4 and 5 hospitals (21), and fund accounts (29).

Migori County operates 208 commercial bank accounts, mainly for county health facilities, dispensaries, and various departments.

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Siaya County has over 10 commercial bank accounts for activities including the Siaya County Assembly Imprest Account, the Siaya County Assembly Service Board Mortgage Car Loan (for MCAs and staff), and the Siaya County Bursary Fund, among others.

Meru County manages 26 commercial bank accounts for various purposes such as the County Assembly Members Fund Account, County Assembly Staff Car Loan and Mortgage Fund Account, Retention Account, and Meru Hospital Revenue Account.

Other counties with numerous commercial bank accounts include Nyandarua (86), Kwale (63), Kiambu (52), Embu (37), Taita Taveta (37), Murang’a (36), Tana River (34), Machakos (31), Narok (27), Kajiado (27), Kericho (25), West Pokot (24), Nyamira (22), and Uasin Gishu (20).

According to the law, devolved units are required to open and maintain bank accounts at the Central Bank of Kenya (CBK) for accountability, with exemptions only for imprest accounts for petty cash and revenue collection.

Prone to Abuse

The number of questionable accounts managed by the 47 counties could be higher as Nairobi, Mombasa, and Busia did not disclose the number of accounts they operate.

The CoB has frequently flagged these accounts as vulnerable to abuse and, without proper oversight, they can be used for dubious transactions involving taxpayers’ money.

The CoB has been advocating for real-time access to county accounts to prevent misuse, but these efforts have encountered obstacles.

The lack of transparency and the high number of questionable accounts underscore the need for stricter oversight and adherence to financial regulations to safeguard taxpayers’ money.

Audit Uncovers Illicit County Bank Accounts

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