A new audit by Auditor General Nancy Gathungu has exposed deep financial irregularities at the National Health Insurance Fund, revealing questionable transactions amounting to Sh22.5 billion and raising fresh concerns over the fund's accountability.

The audit for the financial year ending June 30, 2024, points to long-standing weaknesses in NHIF’s financial controls, with issues ranging from duplicated claims and unverified payments to overpayments and missing contribution records.

Most notably, Gathungu’s audit team was denied access to critical transaction logs within NHIF’s electronic claims system, a move that severely limited the audit’s scope and raised questions about transparency at the state-run insurer.

“These log files are crucial for audit verification of transactional data, but could not be accessed, as administrative privileges, including full access to these critical files, are exclusively managed by the system vendor,” Gathungu said.

The audit found that the e-claims system is outsourced and that the system administrator restricted access to log files—echoing concerns first raised in 2020 about the lack of visibility in the system’s operations.

According to the report, this restriction hindered auditors from confirming whether submitted claims were genuine or had been tampered with.

“In the circumstances, the effectiveness of internal controls on the e-claim system on access rights could not be confirmed,” the report, which was tabled in Parliament, states.

This lack of access to key system files follows a familiar pattern, as previous audits have flagged similar obstacles when investigating digital systems operated by government institutions.

The current audit identifies a worrying mismatch between amounts billed by hospitals and payments disbursed by NHIF, with a Sh22.5 billion variance.

Alarmingly, Sh16.8 billion of this amount, nearly 75 percent, relates to claims filed outside NHIF’s required 30-day window.

This loophole has appeared in previous audits, including in 2023, where delayed submissions accounted for Sh12.1 billion in questionable payments.

The audit also highlights Sh3.1 billion that was paid even before claims were officially submitted, Sh1.2 billion in hospital overpayments, and Sh990 million processed without prior authorisation.

Further scrutiny of NHIF’s financial records found that out of Sh40.2 billion declared as contributions, Sh7.5 billion could not be accounted for. This echoes a 2021 finding in which Sh4.8 billion in contributions was untraceable due to missing records.

Gathungu’s report additionally revealed Sh1.9 billion in duplicated records and Sh1.7 billion in transactions that lacked valid dates, pointing to serious flaws in data management.

The audit also raised the alarm over the ongoing transition from NHIF to the newly formed Social Health Authority.

The Transition Committee was criticised for failing to provide a proper handover plan detailing assets and liabilities, despite previous similar failures in 2023 when Sh2.1 billion in medical equipment purchases went unaccounted for due to lack of coordination between NHIF and the Ministry of Health.

Overpayments in salaries and allowances also featured in the latest report, with auditors flagging Sh4.4 million in excess basic salaries and Sh458,000 paid as house allowances without justification.

Despite numerous red flags raised in past audits—including Sh5.2 billion in unsupported payments in 2022 and Sh3.6 billion in irregular spending flagged in 2023—the latest findings indicate that little progress has been made in sealing the loopholes.