Controller of Budget and Margaret Nyakang’o and Auditor-General Nancy Gathungu.
Details of financial transactions in the multiple bank accounts operated by counties will soon be revealed in a special audit by the Auditor-General and Controller of Budget.
Ms Nancy Gathungu and Margaret Nyakang’o told senators during the mid-term assessment retreat they will put their resources together for the special audit on the multiple bank accounts operated by counties which they all say are illegal.
The two say the multiple bank accounts run by the county chiefs are an avenue for siphoning off billions of taxpayer money.
Ms Gathungu told Senators that her office will next month begin the audit which will focus on the multiple accounts.
Dr Nyakang’o also told the same forum that her office is reviewing several accounts of the counties.
The Controller of Budget Margaret Nyakang'o.
In her report for the first quarter of the 2024/2025 financial year covering July to October, Dr Nyakang’o revealed the 47 counties operate 2,421 bank accounts.
According to the report, some of the counties with the highest number of bank accounts include Bungoma (321), Baringo (292), Migori County (208), and Kwale (165).
Others are Elgeyo Marakwet County (155 bank accounts), Migori (76), Kwale (64), Kajiado (50), Embu (46) and Kakamega (44).
The Controller of Budget authorises withdrawals from public funds which include Consolidated Fund, Equalization Fund and the county revenue fund.
In authorising withdrawals, the Controller of Budget must be satisfied that the withdrawal is legal and permitted as stipulated under Article 228 (5) of the constitution.
“We can have a joint program and share resources towards this or we can go to the Senate and ask for money for a special audit and unpack this issue of multiple bank accounts. Let us agree that there are too many bank accounts that these entities operate,” Ms Gathungu said.
Ms Gathungu admitted that it’s not possible to keep track of 100 or 200 bank accounts being operated by one county.
“Some of these accounts are used for inter-agency transfers, you find that this month Sh2 million is transferred, the next month Sh3 million but you cannot see what this account is used for or why it is operating,” Ms Gathungu said.
Ms Gathungu says the law only permits counties to open accounts at the Central Bank of Kenya but pointed out that most counties have opened the accounts at commercial banks making it difficult for the auditors to track the transactions.
Public finance laws and attendant regulations require that county government bank accounts must be opened and maintained at the Central Bank of Kenya.
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Counties, however, were found to be operating the kitties in breach of Regulations 82(1) (b) of the PFM (County Governments) Regulations, 2015.
The Auditor General pointed out that while the law allowing counties to operate multiple accounts was enacted in 2023, some counties had opened the accounts as early as 2010.
“What were these accounts in 2010? Because the law came into effect in 2023,” asked Ms Gathungu.
Dr Nyakang’o said her focus will be on who opened the accounts and who operated them before the law on multiple accounts was passed.
“We will revisit the issue of bank accounts and bring a report so that we see where the rain started beating us,” Dr Nyakang’o said.
15 targeted counties
She however said due to budgetary constraints, she will conduct an audit for only 15 counties.
“I can only visit 15 counties because of lack of budget, I will do the rest in the next financial year,” Dr Nyakang’o said.
She said in the current financial year, she requested for Sh1.6 billion but was only given Sh702 million an amount she said cannot help her undertake all her activities.
“I have a staff establishment of 158 so that budget cannot do much as far as her functions are concerned,” Dr Nyakang’o said.
Council of Governors chairman Ahmed Abdullahi defended counties over the multiple accounts saying they are within the law since the devolved units run separate entities that are required to have their own accounts.
He cited the Facility Improvement Financing Act, 2023 as the basis for which counties are operating the otherwise deemed illegal accounts.
“In accordance with Section 5(2) of the Facility Improvement Financing Act, 2023, all county health facilities have been declared entities of County Governments and are required to open and operate bank accounts in commercial banks for purposes of revenue retention and expenditure,” Mr Ahmed said
“Pursuant to Regulation 82(1) (b) of the PFM (County Governments) Regulations, 2015, County governments are required to open accounts in commercial banks for purposes of revenue collection,” he added.
Most of the accounts belong to vocational training centres, health facilities and dispensaries in the county
