Red flag raised over county pending bills and manual payroll

Controller of Budget (CoB) Margaret Nyakang'o warned that the manual payroll is prone to abuse and may lead to loss of public funds where there is a lack of proper controls. [David Njaaga, Standard]

The Controller of Budget has raised concerns over high pending bills in Mt Kenya counties and use of manual payrolls during the first quarter of 2022/2023 financial year.

Controller of Budget (CoB) Margaret Nyakang'o noted that in the first quarter County Budget Implementation Report for 2022/2023, as of September 30, 2022, all 47 counties reported pending bills amounting to Sh161.36 billion.

These comprise Sh33.98 billion for development expenditure and Sh127.38 billion for recurrent expenditure.

"Nairobi City County accounted for 62.2 per cent of pending bills at Sh100.36 billion. Other counties with high pending bills are Wajir at Sh5.50 billion, Mombasa at Sh4.51 billion and Kiambu at Sh4.81 billion," she said.

Murang'a County reported the highest pending bills at Sh2.69 billion.

"This is despite the availability of cash in the County Revenue Fund (CRF), which stood at Sh477.86 million as of the end of the First Quarter of financial year2022/23," Dr Nyakang'o said.

Meru County also reported pending bills of Sh1.16 billion in the period under review.

Kirinyaga County reported pending bills of Sh780.43 million despite the availability of cash which stood at Sh651.07 million.

Nyeri County's pending bills amounted to Sh449.17 million yet it had Sh472 million cash available during the period under review.

Embu and Tharaka Nithi counties reported Sh.1.99 billion and Sh689.2 million pending bills respectively.

Dr Nyakang'o recommended that counties leadership take charge of the pending bills and ensure genuine ones are paid in the remaining period of the financial year.

"The Controller of Budget advises county governments to settle all eligible pending bills as a first charge in the FY 2022/23," she said.

The CoB also raised concern over high number of counties that used manual payroll during the period under review.

In Kirinyaga, Dr Nyakang'o noted the use of manual payroll to pay out personnel emoluments amounting to Sh50.33 million which accounted for 7.8 per cent of total payroll cost.

Nyeri paid out Sh62.69 million manually which was 7 per cent of the total payroll cost. Tharaka Nithi, Meru and Murang'a also used manual payrolls.

Murang'a paid out Sh80.94 million through manual payroll while Meru and Tharaka Nithi counties spent Sh60 million and 73 million respectively.

Nyakang'o warned that the manual payroll is prone to abuse and may lead to the loss of public funds where there is a lack of proper controls.

The CoB also identified other challenges to effective budget execution, including low uptake of the development budget.

According to the report, the 47 counties only spent Sh2.22 billion, representing an absorption rate of 1.4 per cent of the county governments' cumulative annual development expenditure budget of Sh160.58 billion.

Nyeri only spent Sh4.81 million on development which was an absorption of 0.2 per cent of their annual budget allocation.

Conditional grants accounted for a significant amount of money spent on a development projects in other Mt Kenya region counties.

The CoB also reported that Meru, in the First Quarter of FY 2022/23, incurred Sh49.48 million on development programmes representing a decrease of 65.1 per cent compared to a similar period in FY 2021/22.

"The expenditure was on a transfer of a conditional grant under the Department of Agriculture, Livestock and Fisheries Development," Nyakang'o said.

Muranga spent Sh181.23 million on development programmes, representing a decrease of 54.1 per cent compared to a similar period in FY 2021/22.

"The development expenditures related to three conditional grants, which included the National Agricultural and Rural Inclusive Growth Project (NAGRIP), Transforming Health Systems for Universal care grant, and the Agricultural Sector Deepening Support Program amounting," she said.

Nyakang'o also noted other challenges as under-performance in own-source revenue collection, high level of outstanding pending bills reported by the county governments, delays by the National Treasury to disburse the Equitable Share of Revenue, and failure by several fund administrators to submit quarterly financial statements to the Controller of Budget.