The Auditor General in his report gave Wajir County a Disclaimer Opinion after a close scrutiny of the County’s Financial Statements. Auditors give a disclaimer opinion when they are unable to express a definite opinion. This can be due to the lack of properly maintained financial records or the absence or insufficient support from the management. For instance, an auditor may not have had the opportunity to fulfill tasks that they deem to be crucial to the audit, such as observing operational procedures or reviewing particular procedures. In his opening statement the Auditor Genreal wrote, “I do not express an opinion on the accompanying financial statements. Because of the significance of the matters described in the Basis for Disclaimer of Opinion section of my report, I have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these financial statements.” In simple terms a Disclaimer Opinion is an E grade.
Basis for Disclaimer of Opinion
The Auditor General notes that the County Executive of Wajir did not prepare and submit financial statements accompanied by supporting ledgers for audit within the statutory deadline of 30 September. The late submission of documents was in breach of the law and the County also failed to provide financial statements for the Emergency Fund, Revolving Fund and Bursary Fund accounts which it operated. The statement of receipts and payments in the financial statements presented for audit reflected total payments of Kshs. 6,496,683,838. The Executive presented financial ledgers supporting the payments for the same. However, an audit scrutiny of the ledgers revealed that similar payments amounting to Kshs. 1,840,636,876 reflecting the same payment vouchers, the same payees and the same amounts were used to support the financial statements balances. In view of these anomalies, the accuracy, validity and completeness of the balances of Kshs. 6,496,683,838 reflected in the statement of receipts and payments as expenditure could not be ascertained.
Revenue spent at source and Unaccounted for Funds
A close scrutiny of the statements revealed that from a total of Kshs. 21,000,000 deposited to Wajir County Deposit Account, Kshs. 17,100,000 was withdrawn by the County Chief Officer Finance on 24 May 2018. No cheque was used to withdraw the money and there was no payment voucher availed to support the withdrawal. In the said period the County Government also returned an amount of Kshs. 98,981,636 as unspent balance at the end of the Financial Year. As at 30 September 2018 the total amount of expenditure totaled Kshs. 678,458,587 which remained unaccounted for as there were no payment documents availed to support the expenditure. Consequently, the probity of the expenditure could not be ascertained. The statement also revealed that the Executive budgeted for Kshs. 2,923,296,587 on compensation of employees. The Executive however, spent an aount of Kshs. 3,273,351,044 on the same component resulting to an over expenditure of Kshs. 350,054,457. Under the circumstances, the property of Kshs. 3,273,351,044 expenditure in respect of compensation of employees could not be confirmed.
Irregularities in Compensation of Employees
The examination of payment records and other supporting documents availed for audit review revealed that the Executive spent an amount of Kshs. 3,344,544,974 on compensation of employees for both permanent and casual employees which was supported by IPPD records and manual payroll. However, the following unsatisfactory matters were observed;
The payment vouchers for the payroll were not properly authorized and they did not indicate the payment voucher numbers, vote head and expenditure item against which the expenditure was charged.
Some of the payment vouchers were not authorized by the AIE holder and accounting officers while others were not examined to confirm they were properly processed and supported.
The total gross salaries paid to staff (from the IPPD and manual payroll) according to the payments vouchers availed for audit review is Kshs. 3,344,544,974.16. However, the IPPD by-products and manual payroll reflected Kshs. 2,900,592,942.95 resulting to an unexplained difference of Kshs. 443,952,031.21. No reconciliation was carried out between records from the payroll section and the accounts section.
Illegal Procurement of Goods and Services
Payment vouchers, bills of quantities, minutes and other supporting documents availed revealed that the Executive procured goods, works and services amounting to Kshs. 173 Million (172,751,776) without raising quotations as required by section 105 and 106 of the Public Procurement and Assets Disposal Act, 2015 but rather used standard forms to procure goods, works and services. It was noted that some of the contracts were awarded to suppliers who did not meet the mandatory requirements as indicated in the evaluation report. It was further noted that some of the suppliers who were awarded the contracts were not in the list of prequalified contractors for the year under review. It was therefore not clear how they were identified for the award of the contract.
Irregular Award of Contracts
According to the Financial Statements Kshs. 158 Million (158,295,105.40) was spent on construction of various roads. It was however observed that the contracts were awarded to contractors who did not satisfy the mandatory requirements as they lacked valid business permits and tax compliance certificate. Further, the tender evaluation documents and minutes did not have any engineer’s estimate provided and there were no accosted bill of quantities.
The contract for the construction of mega pan at Shimbirey was unfairly awarded to Ms FATCO Construction and Transporters Ltd at a contract sum of Kshs. 35 Million (34,747,105.27). According to the tender documents, a tenderer was required to show proof of 3 similar works. Scrutiny of the company profiles showed that FATCO, the winning bidder had previously constructed only one water pan while Ms Yarrow Construction Company had previously constructed four, drilled two boreholes among other water works. It was therefore not clear why the evaluation committee awarded the contract to FATCO who had lesser experience in water pan construction than Yarrow Construction Company.