Or is it a case of misreporting by the media?
A report tabled by the Public Accounts and Investment committee of the Senate threw the media into a frenzy. The report incriminated 10 county governments with various budget irregularities, especially on the lack of accountability for public funds.
The irregularities ranged from unsupported expenditure, non-surrendered imprests, irregular payments, violation of procurement laws, among others.
The media utilized the Senate findings to report about how the county governments were on a “massive looting” spree. An example is this headline by NTV, which said that the Senate had revealed massive theft of county funds.
This is not the first time that the media has reported about looting in the counties. It does not seem to be the last either.
The media reports about the looting, theft or misappropriation of county funds usually occasions the release of the reports by the Controller of Budget and the Auditor General.
The Controller of Budget releases consolidated quarterly budget implementation reports for the County Governments and an annual report. The Auditor General Reports should be annual reports that come out by December of every year. Yet, neither of these offices delivers their reports within the set timelines.
When these reports become public, the media becomes picky. It focuses on the stories that will create the most sensation. Particularly, the focus is on the stories that feed into the ‘looting’ narrative. For example, this article by the Star claims governors looted millions of shillings by refusing to declare the amounts collected in local revenue, which the newspaper termed as an attempt to “fleece the public”.
Looking through the web for such stories, you will find many of them. Most local media houses carry such stories, either in the past or in the present. Nevertheless, are the counties always on a looting spree? Or is it a case of misreporting by the media?
Not every penny that is unaccounted for is always looted
Dr. Jason Lakin, the Kenya country director for the International Budget Partnership, says the media should know that money that is unaccounted for is not always looted.
While acknowledging without doubt that there is theft happening at the counties, Dr. Lakin gives three scenarios that the media mistakenly reports as theft in the counties. They are — poor forecasting, budget indiscipline and poor accounting.
Poor forecasting is simply making budget priorities, projections, targets, or estimates that are (too) ambitious or not well thought-out that the county government is unable to meet at the end of the financial year.
An example of poor forecasting, though not implicitly related, is the claim by Kiambu Governor William Kabogo that the county had doubled its revenue collection to Kshs. 4.7 Billion. The county had only managed to collect Kshs. 2.2 billion in the previous financial year.
When a county government fails to meet its revenue targets, the media may attribute the shortfall to theft. This may not be the case.
It is the failure (in this case) by the county governments to stick to the spending plans set to achieve the target priorities or goals. Most of the cases concerning excess expenditure and pending bills fall under this category.
Excess expenditure is the instance where a county government overspends its budget without authorization while pending bills are expenses (or unpaid bills) carried over from the previous financial year to the new fiscal year.
Excess expenditure violates Section 154 of the Public Finance Management Act (2012). This law limits the power of an accounting officer to reallocate appropriated funds.
For pending bills, they are a bad budget practice. There is no basis for carrying forward commitments from the previous financial year.
The county government operates on a single year budget, which must be accompanied by cash and book expenditure. A county department should return any unspent money to the county treasury. The latter then budgets the money afresh for the next financial year.
It relates to poor record keeping and poor management of expenditure. Unsupported expenditure where county governments report about an expenditure but fail to provide supporting documents, demonstrates poor accounting.
Most times, media reports concerning ‘looting’ and ‘massive theft’ of public funds borrow heavily on the reports concerning this kind of expenditure.
Instances where theft of county funds may occur
Two items that can lead to loss of funds are unsupported expenditure and non-surrender of imprests.
For unsupported expenditure, a county department may fail to provide paperwork to show that they actually ordered and received for goods and services even though there is indication of money being spent.
For non-surrender of imprests, county officials may receive cash advances to perform their duties, such as attend meetings, but fail to return the money or provide documentation to show how they used the money.
Article 154 of the Public Finance Management Act empowers the county accounting officers to grant cash advances to public officers employed by the county. If the public officers fail to account for the money, they are at liability to pay the debt with interest.
Therefore, when reporting about looting in the counties, the media should take a keen interest to distinguish between errors and fraud.
Errors and Fraud
Errors may be due to negligence or innocence from those tasked with preparing the accounts. Fraud is intention to gain from manipulating the accounts. Errors may be out of omission or commission.
Fraud arises from misstatements arising from fraudulent financial reporting or due to misappropriation of funds. Fraud can also present itself in the form of falsification or alteration of financial records.
Accounting errors are not necessarily a sign of theft. Audit and budget implementation documents report about them extensively. Fraud, in itself, is a sign of something sinister that may signify theft.
An article screaming “massive theft” or “looting’ in the counties, most times, lacks the evidence to back it. That is why the media must be extra careful on how they report budget findings. This will enable the public to address the findings appropriately on the basis of facts. It is false to indicate that the counties are always on a lootin spree. This is just a case of misreporting by the media.
Despite that, there is theft happening at the counties and institutions like EACC and Kenyans need to be vigilant.