Are Kenyan County Governments Always on a Looting Spree?

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Are Kenyan County Governments Always on a Looting Spree?

Or is it a case of misreporting by the media?

A report tabled by the Public Accounts and Investment committee of the Senate on 10 counties threw the media into a frenzy. The report incriminates the 10 county governments with various budget irregularities, especially on the lack of accountability for public funds. The irregularities range from unsupported expenditure, non-surrendered imprests, irregular payments, violation of procurement laws, among others.

See Also: How to Read and interpret the Reports by the Auditor General

The media has utilized the Senate findings to report about how the county governments are on a “massive looting” spree. An example is this headline by NTV, which says that the Senate has revealed massive theft of county funds. This is not the first time that the media has reported about county governments or county officials stealing public funds (and it does not seem to be the last).

The media reports about the looting, theft or misappropriation of county funds usually occasions the release of the reports by the Controller of Budget and the Auditor General. The Controller of Budget releases consolidated quarterly budget implementation reports for the County Governments and an annual report. The Auditor General Reports are supposed to be annual reports released by December of every year, even though neither of these offices has been delivering their reports within the set timelines.

When these reports are released, the media focuses on the stories that will create the most sensation and particularly those stories that feed into the ‘looting’ narrative. For example, this article by the Star claims governors are looting millions of shillings by refusing to declare the amounts collected in local revenue, which the newspaper terms as an attempt to “fleece the public”. Looking through the web for such stories, you will find many of them and most local media houses carry such stories, either in the past or in the present.

Nevertheless, are the counties always on a looting spree? Or is it a case of misreporting by the media?

Not every penny that is unaccounted for is always looted

Dr. Jason Lakin, the Kenya country director for the International Budget Partnership, says the media should know that money that is unaccounted for is not always looted. While acknowledging without doubt that there is theft happening at the counties, Dr. Lakin gives three scenarios that the media mistakenly reports as theft in the counties, and which are — poor forecasting, budget indiscipline and poor accounting.

Poor forecasting is simply making budget priorities, projections, targets, or estimates that are (too) ambitious or not well thought-out that the county government is unable to meet at the end of the financial year. An example of poor forecasting, though not implicitly related, is the claim by Kiambu Governor William Kabogo that the county had doubled its revenue collection to Kshs. 4.7 Billion. The county had only managed to collect Kshs. 2.2 billion in the last financial year.

When a county government fails to meet its revenue targets, the media may attribute the shortfall to theft, which may not be the case.

Budget indiscipline is the failure (in this case) by the county governments to stick to the spending plans set to achieve the target priorities or goals. Most of the cases concerning excess expenditure and pending bills fall under this category. Excess expenditure is the instance where a county government overspends its budget without authorization while pending bills are expenses (or unpaid bills) carried over from the previous financial year to the new fiscal year.

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Excess expenditure violates Section 154 of the Public Finance Management Act (2012) which limits the power of an accounting officer to reallocate appropriated funds.

For pending bills, they are a bad budget practice because there is no basis for carrying forward commitments from the previous financial year. The county government operates on a single year budget, which must be accompanied by cash and book expenditure. Any amount of money that is not spent by a county department should be returned to the county treasury to be budgeted afresh in the next financial year.

Poor accounting relates to poor record keeping and poor management of expenditure. Unsupported expenditure where county governments report about an expenditure but fail to provide supporting documents, demonstrates poor accounting. Most times, media reports concerning ‘looting’ and ‘massive theft’ of public funds borrow heavily on the reports concerning this kind of expenditure.

Instances where theft of county funds may occur

Two items that are likely to be associated with loss of funds are unsupported expenditure and non-surrender of imprests.

See Also: How to Interpret the Reports by the Auditor General (Part 2)

For unsupported expenditure, a county department may fail to provide paperwork to show that they actually ordered and received for goods and services even though there is indication of money being spent. For non-surrender of imprests, county officials may receive cash advances to perform their duties, such as attend meetings, but fail to return the money or provide documentation to show how they used the money.

Article 154 of the Public Finance Management Act empowers the county accounting officers to grant cash advances to public officers employed by the county. If the public officers fail to account for the money, they are at liability to pay the debt with interest.

Therefore, when reporting about looting in the counties, the media should take a keen interest to distinguish between errors and fraud. Errors may be due to negligence or innocence from those tasked with preparing the accounts, while fraud is intention to gain from manipulating the accounts. Errors may be out of omission or commission while fraud arises from misstatements arising from fraudulent financial reporting or due to misappropriation of funds. Fraud can also present itself in the form of falsification or alteration of financial records.

Accounting errors are not necessarily a sign of theft and these are normally reported extensively in the audit or budget implementation reports. Fraud, in itself, is a sign of something sinister that may signify theft.

A headline screaming “massive theft” or “looting’ in the counties, most of the time, lacks the evidence to back up the claim. That is why the media must be extra careful on how they report budget findings to enable the public to address the findings appropriately. It is false to indicate that the counties are always on a lootin spree. This is just a case of misreporting by the media.

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George Gĩthĩnji comments on current political and social issues in Kenya. He is also passionate about devolved governance and public finance. He runs the @UgatuziKenya Twitter platform.

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