A bombshell audit by Auditor General Nancy Gathungu has sent shockwaves through Kenya’s public finance system, exposing systemic failures in the Integrated Financial Management Information System (IFMIS) and revealing Ksh10.2 billion in government spending that lacked parliamentary approval.
In an explosive report covering FY 2023/24, Gathungu detailed how funds totaling Ksh10.2 billion—allocated via IFMIS—were disbursed without endorsement by the National Assembly as required under Article 223 of the Constitution. This included Ksh4 billion in maize flour subsidies and a staggering Ksh6.2 billion used to acquire Telkom Kenya shares.
Critical System Flaws
The Auditor General highlighted alarming shortcomings: transactions cancelled within IFMIS without documentation, payments reflected in ledgers but absent from the system, and even funds diverted through ghost accounts linked to individual names.
“Override of internal controls was noted where an account was created in IFMIS under an individual’s name which occasioned loss of funds,” Gathungu warned, revealing serious breaches in financial integrity.
Discrepancies between IFMIS and official ledger balances further erode confidence in state accounting. The report also flagged missing controls on unapproved withdrawals, urging the Public Finance Management Act to be amended to guide remedial actions in such cases.
The review of e-Citizen revenue collections also exposed weaknesses. Of Ksh100.8 billion collected, only Ksh56 billion had matching records in the ledgers, casting doubt on the accuracy and completeness of digital revenue accounting .
Mounting Government Debt
The audit painted a grim picture: Ksh194.7 billion in unpaid bills—Ksh130.3 billion owed by ministries and agencies, and Ksh64.4 billion for donor-funded works—have piled up, undermining small businesses and delaying public services. Kenya Airways alone owes the treasury Ksh55.3 billion, with no repayment agreement or collateral in place .
Recommendations and Fallout
Gathungu’s report demands sweeping reforms:
- Amend PFM laws to regulate unapproved withdrawals.
- Impose sanctions on accounting officers for irregular payments or failure to produce records.
- Require public entities to deliver projected expenditures within approved budgets.
- Strengthen internal controls and reconciliation processes, especially for digital platforms like e-Citizen.
As 248 of 336 audited entities received unqualified opinions, 85 were qualified, two adverse, and one disclaimer—suggesting that recognition of these issues spans nearly a quarter of audited institutions.
Public and Political Backlash
Opposition MPs and anti-corruption advocates have seized on the report, demanding immediate action. Parliament’s Public Accounts Committee is expected to convene urgent hearings, with potential implications for top officials in Treasury and IFMIS management.
Amid growing economic uncertainty, Gathungu’s findings may intensify scrutiny of government spending ahead of critical budget debates. As cash-strapped counties and citizens face delayed payments and reduced services, this exposé threatens to derail public trust just as the nation heads into an election year.
Urgent Pressing Questions
- Will Treasury implement legislative and procedural reforms swiftly?
- Who will be held accountable for the Ksh10.2 billion in unapproved expenditures?
- Can IFMIS be strengthened, or will these weaknesses cost taxpayers dearly?
Kenya is at a crossroads. The Auditor General’s striking revelations put the government on notice—either it acts decisively to restore fiscal discipline and transparency or risks deepening financial crisis and eroded public confidence.
