A number of county governments are under investigation by the Treasury for falsifying their revenue collection figures after an audit revealed a mismatch between expenditure and cash generated.
An audit of bank statements and expenditure returns by the Controller of Budget Office revealed that spending in the past three years exceeded their total own-source revenue (OSR) as well as exchequer releases from the County Revenue Fund (CRF) to operational accounts.
“Such violations suggest that OSR is being spent at source. The Controller of Budget has analysed counties and identified those where not all OSR is ‘swept’ into respective CRF accounts” the Treasury said in its Budget Policy Outlook statement for 2017.
The law stipulates that the total revenue collected by all counties be distributed equitably in accordance with a resolution approved by Parliament.
Several counties were, however, found to have directly spent revenue without approval.
Several counties were, however, found to have directly spent revenue without approval.
“The Treasury is investigating these violations, and legal and intergovernmental mechanisms will be pursued to help resolve challenges in specific counties,” the Treasury said without providing details on affected counties.
This came as Treasury data showed that revenue collection by counties dropped by Sh1.2 billion in the nine months to March compared to a similar period last year, pointing to possible borrowing by the devolved units to finance some of their operations.
The 47 counties collected Sh24.7 billion between July 2016 and March this year compared to Sh25.9 billion realised over a similar period a year earlier.
Only 20 counties posted a growth in revenue collections underlining the massive revenue generation and collection challenges facing the units.
Despite the violations by some counties in the previous years, the Treasury said all counties in the nine months to March complied with the provisions of Article 107(2) of the Public Finance Management Act, which prohibits the devolved units from spending more than the revenue generated.
