An internal audit report of the Siaya County Government payroll for the period July 2022 – June 2023 indicates that more than Ksh.100 million may have been lost due to existing irregularities and fraud.
According to the report, the loss could have been caused by unsupported payments from the Salaries Control Account and unexplained withdrawals from the Suspense Account at Equity Bank.
The audit, which was commissioned by Finance and Economic Planning County Executive Committee Member (CECM) Benedict Omollo, notes that the loss could also have been caused by improper promotion of some county government employees.
The report, prepared by the Director of the Internal Audit Department William Ooko, indicates that it was forwarded to the Cabinet sub-committee on Payroll Audit via the Governance and Administration CECM Agunda Ochanda.
Both the Integrated Payroll and Personnel Database (IPPD) and the manual payroll were examined.
The IPPD records staff identified by personal file numbers, such as State officers, permanent and pensionable employees, and contract employees.
Manual payroll, on the other hand, captures staff without personal file numbers, such as ECD teachers, casuals, economic stimulus programme employees, and newly hired staff in the process of acquiring file numbers.
The audit discovered that some Ksh.86,235,013.35 in salaries were debited to the Suspense Account at Equity Bank and were most likely lost.
“The payment was made from a chequeless salaries account and the bank has failed to provide instructions or any other form of documents to support the payment,” the report reads in part.
According to the report, Equity Bank claimed that the suspended amounts were for IPPD Sacco remittances that it allegedly paid to Cooperative Bank, but provided no evidence to support this claim.
Mr. Ooko notes that payments totaling Ksh.9,098,000 were made from the Salaries Control Account, but the vouchers were not available for audit.
“Salaries account is a chequeless account and the unaccounted-for payments could have only been under instructions. The payments are foreign to the County Treasury and Equity Bank has not provided the instruction and payment schedules to support the payments,” he said.
According to the report, some crooks are still causing the Siaya county government sleepless nights by manipulating and introducing fake payment schedules for casual workers during the period under review.
However, they were unable to swindle the Ksh.5.4 million and Ksh.2.5 million that they had set aside for December 2022 and March 2023, respectively, according to the report.
“An interview with the payroll manager and salaries accountant revealed that the attempted fraud of Ksh.2.5 million was as a result of overstatement of Equity bank loans and understatement of Lapfund contributions by the same amount,” the report notes.
Consequently, the report says, the wage bill went up by the same amount and exceeded the original wage bill.
“We (the audit team) have confirmed that the correct payments were made, however, the incorrect schedules were requested but not provided for audit review,” Mr. Ooko stated.
When reached for comment, the county’s Finance and Economic Planning boss Mr. Omollo said he could not comment on “an illegal report that should not be in your possession.”
Irregular promotions
On the matter of staff promotions, the internal auditor notes that the CGS may have lost over Ksh.10 million due to selective and/or irregular promotions.
“The promotions are deemed to be irregular because they were not supported by minutes from the County Public Service Board (CPSB), or any communication by the board to the Directorate of Human Resources,” the audit report shows.
There exists no data capture sheets that affected the promotions and payment of arrears in the personal files of the promoted employees, reads the report.
“We requested for the minutes supporting the promotions from the Acting Chief Executive Officer of the CPSB but were not availed even after further intervention by the Chief Executive Committee Member for Governance and Administration,” indicates the report.
The minutes cited for the promotions were similar to those cited for the promotion of health staff in 2021, confounding how the most recent promotions were affected in the IPPD system.
According to the report, an officer in the governance department was promoted five levels higher from Job Group E to J, earning over Ksh.700,000 as a result.
In a rejoinder, Siaya CPSB Acting CEO Wilfred Nyagudi dismissed accusations levelled against the board, claiming that Mr Ooko’s report is “half-baked and that the issues he has raised only exist in his fertile imagination.”
Mr. Nyagudi stated that the internal auditor did not raise any audit questions and did not conduct any interviews.
“There are no audit queries that have been brought before me that I have refused to answer. The internal auditor did not even come to our department during the alleged investigations,” he said.
Mr. Nyagudi, on the other hand, defended the promotions, claiming that the board’s regulations allow it to promote an officer to a maximum of two job groups.
Furthermore, the audit discovered that the CGS had improperly paid Ksh.180,190 towards some employees’ pensions.
For example, at least Ksh.80,000 was paid to two top county officials in May and June 2023, but the voluntary gratuity was never deducted from their pay, as it should have been.
According to the report, because pension plans are voluntary, employer contributions should be avoided.
Ghost workers
The payment by cheque report, which is reportedly in the possession of Governance executive Mr. Ochanda, could not be located to help determine whether some 111 suspected ghost workers are still on the payroll or not.
The 111 suspected ghost workers were discovered in January 2023 by the FCPA William Ouko-led audit taskforce into the Siaya County Government’s systems.
Mr. Ooko reports a lack of monthly payroll audit and reconciliation, a lack of segregation of duties in the IPPD system by officers with access rights, and incomplete personal files, resulting in the absence of mandatory staff documents that are critical in decision making.
According to the report, some IPPD employees’ data is incorrect.
The audit reveals that an officer whose actual age is 52 is recorded as 44, putting the officer at risk of receiving county funds for an additional eight years after retirement.
The report identified key governance and compliance issues such as a lack of policy on the management of casuals and a weak internal structure of the payroll section due to understaffing and a skills gap.
Mr. Ooko suggests that the Cabinet conduct a head count to help clean up the payroll.
Mr. Ochanda confirmed the report’s veracity during a media briefing.
Mr. Ooko submits in his forwarding letter to the Cabinet’s subcommittee that some audit gaps could not be closed due to a lack of cooperation by some officers in providing requested documents.
“Also forwarded are audit findings which we have not included in the final report because of their nature or immateriality however should be discussed with the committee for direction,” reads the letter.
