Unexplained. Inaccurate. Unaccounted for. Auditor General Nancy Gathungu has used these words in a new scathing audit that has uncovered questionable transactions in the Women Enterprise Fund.
In an adverse opinion, the auditor general has put the fund managers on the spot for failing to account for millions and inflating expenses.
The audit for the financial year ending June 30, 2024, reveals that Sh212 million transacted through unauthorised mobile paybills was not accounted for.
Another Sh34 million was paid as gratuities without documentation.
Some Sh20 million was transferred from the paybill in August 2023 but no details were provided to show which account the funds were moved to.
The fund, the review revealed, operated three mobile paybills for loan repayments and loan disbursement to women’s groups.
Auditors established that the board had irregularly recommended that the Sh212 million be recalled to the fund’s main account.
The finance committee of the board resolved that the money be invested in call deposits, contrary to President William Ruto’s order.
The Executive Order of August 2023 directed the transition of all payments to government agencies to a single payment platform.
The monies were to be channeled to the paybill number 222222 and all non-designated paybills were to be closed by August 10, 2023.
“In the circumstances, the mobile money balances of Sh212 million could not be accounted for,” Gathungu says in the report obtained by the Star.
The Sh34 million gratuity payments, as per the report, were not supported with details of the payees and the employment contracts.
“In the circumstances, the accuracy and completeness of the gratuity payments could not be confirmed,” the auditor general says.
Financial statements and ledger entries did not equally match, pointing to possible loss of taxpayers’ cash.
Ledger entries should ideally balance off with financial statements but this was not the case for several expenditure lines.
Variances totaling Sh1.2 billion were reported in the review of the expenditure lines.
There were unexplained variances in Sh70 million travel expenses and Sh29 million board costs.
Gathungu has also flagged a variance of Sh118 million in loans to women’s groups and Sh59 million in respect of computer maintenance.
Whereas the fund’s financial statement showed it spent Sh68 million on maintaining computers, only Sh9 million was recorded in the general ledger.
The auditor is concerned that Sh678 million was not recorded in the ledger, casting doubt on its accuracy in the financial statements.
Further, the statements revealed the fund spent Sh374 million on staff costs but payroll records showed Sh369 million, being a variance of Sh5 million.
“In the circumstances, the accuracy and completeness of the financial statements could not be confirmed,” the report reads.
Gathungu has further warned that the fund may lose Sh71 million from defaulted loans due to lax follow-up.
The fund’s legal office failed to provide evidence to show whether it as succeeding in recovering the cash as assigned.
“It was not possible to confirm whether the legal office was actively following up the cases. The recoverability of the Sh71.3 million couldn’t be confirmed,” the report said.
Women Fund’s losses also grew to Sh330 million during the year under review, with the auditor warning that the fund is nearing insolvency.
The fund reported a 49 per cent decline in profitability from the previous year’s Sh220 million.
“The fund continued to operate at a loss which if not managed may affect its future operations and sustainability of services.”
“In the circumstances, the fund may be unable to meet its financial obligations as and when they fall due and there is risk of the fund being technically insolvent,” Gathungu said.
Undisclosed income of Sh5 million that the fund earned as interest from fixed deposits has compounded the queries.
The auditor also derided the fund’s management for failing to disclose assets and property worth Sh4 million.
Management has further been put on the spot for failing to prepare financial statements for the fund’s loans and mortgage scheme.
Further, there was no movement in the account balance, pointing to a possibility that the scheme had been shunned by the intended beneficiaries.
Also flagged is the irregular share of employee costs as compared to revenue, which was at 94 per cent against the required 35 per cent.
The fund board also held excess meetings during the year under review. A total 43 meetings were held.
by MOSES ODHIAMBO
