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Some terminologies and expressions have been used in the Auditor General’s report to explain the discrepancies in the financial records of between 1 June 2013 to 30 June 2014, the period under review. These expressions or terminologies may mean failures in one way or another which could be corruption or not. It is important to understand that in most of the issues raised, the concern is failure to provide documents to substantiate the relevant expenditures. This could mean the lack of the documents all together, lack of accurate documents or feeling cornered, deciding not to provide the documents.

The Constitution in article 229 (4 and 6) requires the Auditor General to report and confirm whether or not public money has been applied lawfully and in an effective way. He has done so by publishing audits of state corporations, government ministries, county executives and county assemblies. Do note that it is about being lawfully used and also effectively used.

a) Unqualified Opinion

An unqualified opinion is expressed when the Auditor has concluded that the financial statements give a true and fair view or are presented fairly, in all material respects, in accordance with the Government Financial Regulations and Procedures and Public Finance Management Act, 2012 and public funds Summary of the Report of the Auditor-General for the Year 2013/2014 13 have been applied lawfully and in an effective manner.

b) Qualified Opinion

The Auditor gives a qualified opinion when the misstatement or limitation on his audit is not as material and pervasive as to require an adverse opinion or a disclaimer of opinion. He thus expressed an ‘except for’ opinion based on the effects of the matter(s) to which the qualification relates.

c) Adverse Opinion

The Auditor expresses adverse opinion when audit matters on the financial statements are so material and pervasive that he has concluded the financial statements are misleading or incomplete.

d) Disclaimer of Opinion

The Auditor was not able to express an opinion where the possible effects of limitations on his audit were so material and pervasive that he was unable to obtain sufficient appropriate audit evidence and accordingly unable to express any meaningful audit opinion on the financial statements. He was also not able to establish whether expenditure reflected in the nine (9) financial statements with disclaimer of opinions were incurred lawfully and in an effective way as required by Article 229(6) of the Constitution.


Statements with Qualified Opinion

  • Unsupported expenditures
  • Non surrender of imprests
  • Unauthorized expenditures
  • Long outstanding reconciling items in bank reconciliation statements
  • Excess expenditure
  • Misallocation of expenditure items
  • Lack of adequate disclosures

Statements with Adverse Opinion

  • Discrepancies between the financial statements and the respective ledgers and the trial balance
  • Differences between 2012/2013 closing audited balances and opening balances for 2013/2014
  • Unsupported balances in the financial statements
  • Failure to prepare financial statements in accordance to International Public Sector Accounting Standards and Treasury instructions

In the audits, the following issues were prevalent

  • Unsupported Expenditure
  • Excess Expenditure
  • Pending Bills
  • Management of Imprests
  • Maintenance of Bank and Cash Accounts
  • Maintenance of Accounting Records

The 2013/2014 gross budget of sh1,557,192,721,388 was shared between the National Government and the County Governments at the ratio of 87.5 percent and 12.5 percent respectively.

The auditor notes that only 1.2 percent of national government expenditure for the period under review was incurred in a lawful manner, 60 percent had issues and 38.5 percent could not be explained. The remaining 0.3 percent is the Auditor General’s budget which is audited independently by an independent auditor appointed by Parliament.

The Auditor General Edward Ouko noted that with the new accounting framework the percentage of unqualified statements improved from 12 percent in 2012/2013 to 26 percent in 2013/2014. There was no change in the percentage of statements with qualified opinion in the two years which remained at 50 percent. The percentage of financial statements with disclaimer of opinion improved from 25 percent in 2012/2013 to 9 percent in 2013/2014. The proportion of financial statements with Adverse Opinion, however increased from 13 percent in 2012/2013 to 16 percent in 2013/2014.