Third Eye

Need for forensic audit in counties

Wednesday, September 2nd, 2020 00:00 |
National Treasury. Photo/File

Revelations that counties could be losing an estimated Sh140 billion annually through looting and systemic loopholes in the revenue collection structures are disturbing.

A report commissioned by the World Bank for Kenya’s National Treasury established that the country’s 47 counties collect a paltry Sh35 billion annually instead of the projected Sh125 billion.

In fact, the report, compiled by Adam Smith International, says counties should be collecting Sh173 billion a year in an uninterrupted business environment and Sh143 billion on average.

Elsewhere, a probe conducted by the Finance and Economic Planning Committee of the Kiambu County government found that the populous devolved unit loses Sh5 billion a year through pilferage.

Both the World Bank report titled Own-Source Revenue Potential and Tax Gap Study of Kenya’s County Governments and the one from Kiambu County point to deliberate looting of public resources and management gaps that need to be sealed to improve tax collection systems in counties. 

For example, the Adam Smith findings in a top-down analysis of revenue collection shows that counties lose between Sh55 billion and Sh185 billion as unrealised potential while the more urbane ones lose millions of shillings daily in unrealised revenue from parking fees.

The report identifies the most notorious counties in revenue losses as Nairobi, Kiambu, Mombasa, Turkana, Kisumu, Machakos, Kakamega, Kajiado and Uasin Gishu.

It also shows that marginalised counties in the arid and semi-arid regions of Northern, North-Eastern and Central Rift Valley regions lose billions of shillings through a litany of improprieties at collection stage.

This plunder and oversight should not be allowed to continue. The State should institute measures to stem the looting, through legislative and administrative processes.

Meanwhile, a thorough forensic audit is required to establish the numerous crevices through which funds are lost or looted.

Devolution is a people-centred approach to development that must be encouraged.

That is why we are asking both the National Assembly and the Senate to come up with legal structures to safeguard county resources that can soon be embedded in our Statute Book.

Indeed counties should not be perceived as a looter’s paradise for a few greedy individuals.

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