Billions of shillings have been lost or mismanaged across various ministries, departments and agencies, with the Auditor General’s latest report exposing stalled projects, ghost beneficiaries and unaccounted expenditures that point to widespread financial indiscipline in government.

The Auditor General’s report for the 2023/2024 financial year reveals that development projects worth Sh37.92 billion, initiated by at least 24 ministries and state departments, have stalled.

The report accuses accounting officers of failing to properly manage and account for public funds, despite repeated concerns about insufficient documentation and questionable use of resources.

According to the Auditor General Nancy Gathungu, failure by accounting officers to act on audit recommendations has led to wastage, misallocation, and projects that deliver no value to the public.

She warned that this conduct is undermining national development goals.

“There are instances where some Accounting Officers are in breach of Section 62 of the Public Audit Act, 2015 by failing to adequately prepare for audit which is exhibited by inaccuracies in financial statements presented for audit, lack of requisite supporting documents, several revisions of financial statements and, in some cases, lack of cooperation with the auditors during the audit process,” Gathungu said.

One of the major concerns raised in the report is the use of Article 223 of the Constitution to withdraw Sh23.6 billion by various government entities.

Of this, Sh10.2 billion was spent in the 2022/2023 financial year—Sh4 billion on the maize flour subsidy and Sh6.2 billion on the acquisition of Telkom Kenya shares.

These expenditures, by the State Department for Crop Development and the National Treasury respectively, were neither approved nor appropriated by Parliament.

The report recommends amending the Public Finance Management Act, 2012 to introduce clear penalties where spending under Article 223 is not subsequently approved by the National Assembly.

“The Public Finance Management Act, 2012 should therefore be amended to provide guidelines on the action to be taken where expenditure incurred under Article 223 is not approved by the National Assembly,” it states.

The audit also scrutinized confidential expenditures by State House, raising concerns over the lack of clarity and accountability.

Funds had been transferred to a government agency for confidential security operations, yet no proper framework exists to monitor how the money was used.

“The measures will strengthen governance, foster trust, and ensure funds are utilised responsibly without compromising State security,” the report adds.

In the security sector, the report uncovered anomalies in a Sh5 billion insurance contract covering 141,961 officers from the National Police Service and Kenya Prisons Service.

The contract, which included group life, work injury and personal accident cover, had irregularities even after a three-month extension costing Sh1.2 billion.

“However, a review of insurance records revealed anomalies in various premiums,” the report noted.

Eight stalled projects under the State Department for Internal Security and National Administration, valued at Sh1.15 billion, had already consumed Sh833.65 million.

In Parliament, the Parliamentary Joint Services’ Sh4.3 billion project for the Centre for Parliamentary Studies and Training had stalled, with Sh934.5 million already spent by June 30, 2024.

The Ministry of Defence was cited for its Sh21.9 billion infrastructure modernisation plan, with only Sh3.2 billion paid out by the same date.

In the education sector, a special audit showed that capitation funds had been sent to ghost schools and learners between 2020 and 2024. Thirty-three non-existent schools among 83 sampled received Sh28.59 million in capitation.

Additionally, 723 of 1,039 sampled schools reported student populations higher than actual figures in the National Education Management Information System, leading to overfunding worth Ksh3.7 billion.

Of this, Sh3.5 billion went to secondary schools, Sh30.8 million to junior secondary schools and Sh79.4 million to primary schools.

“The special audit concluded that the current allocation per learner, based on the funding model, does not factor in the varying needs and circumstances of the learners and schools. The capitation model, therefore, is not equitable,” it states.

In health, the report showed that the government flouted laws when procuring the Sh104.8 billion Social Health Authority (SHA) system, raising doubts about value for money.

“Ownership of the system, system components and all intellectual property rights shall remain in the ownership of the consortium except for the infrastructure, which is to be transferred to the procurement,” Gathungu noted.

The sports sector was flagged over the stalled construction of six stadiums—Kamariny, Kipchoge Keino, Karatu, Wote, Ruringu, and Kirubia—valued at Sh6.17 billion.

“The statement of financial position and Note 27 to the financial statements reflect a work in progress balance of Sh6,171,122,694. Review of projects implemented by Management revealed the following unsatisfactory matters,” the report states.

The agriculture sector also came under scrutiny.

The State Department for Water and Sanitation spent Sh96.95 million on boreholes, of which Sh49.7 million was on incomplete works and Sh47.2 million on boreholes that produced no water.

The Immigration Department could not account for Sh44.8 billion paid via the e-Citizen digital payments platform.

It also failed to provide records for Sh7.1 billion held across 21 bank accounts.

“Despite the strategic importance of e-Citizen, the audit of e-Citizen revenue accountability statements for the year ended June 30, 2024, revealed the following anomalies,” the report reads.

On housing, the report questioned Sh49.46 billion in contracts issued for Affordable Housing projects, as the Ministry failed to provide land ownership documents for audit.