Payroll fraud deepens as counties manipulate salary payments - audit
In Homa Bay, 52 county officers were found to be sharing bank accounts, a practice that points to serious payroll irregularities.
Auditor General Nancy Gathungu has exposed widespread payroll fraud in county governments, revealing cases of shared bank accounts, irregular hiring, and payment of salaries through manual systems that allow for manipulation.
The latest audit, covering the financial year ending June 30, 2024, paints a grim picture of financial mismanagement across multiple counties.
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In Homa Bay, 52 county officers were found to be sharing bank accounts, a practice that points to serious payroll irregularities.
“Review of the payrolls revealed that various officers shared bank accounts during the year under review,” the report states.
The situation worsened in December 2022, when 22 officers were using the same bank details, before dropping to 14 in March 2023.
A similar problem was found in Bomet, where 12 officers received salaries amounting to Sh8.64 million in shared bank accounts, violating public service payroll regulations.
“This was contrary to section C.I (2) of the Human Resource Policies and Procedures Manual for the Public Service,” the report states.
Illegally retaining retirees
Counties are also illegally retaining retirees on the payroll, adding to the burden. In Kisumu, 79 officers who had reached the mandatory retirement age of 60 were still receiving salaries in June 2024.
The report highlights that this goes against the Human Resource Policies and Procedures Manual, which requires employees to retire at 60 or 65 for persons with disabilities.
In Nakuru, 77 retired officers remained on the payroll, receiving Sh36.16 million during the year.
Mombasa retained 96 retirees, Kilifi had 26, and Vihiga was flagged for excessive hiring, with 670 casual workers and 672 employees stuck on probation for as long as 16 years.
Several counties have abandoned the mandatory Integrated Payroll and Personnel Database (IPPD), opting for manual payroll systems that are easier to manipulate.
In Nyeri, Sh268.58 million in salaries was paid through a manual system, ignoring Treasury directives to use IPPD.
The same issue was flagged in Machakos, where the county paid Sh487 million manually. Samburu also paid 350 officers outside the IPPD system.
Counties have also failed to remit statutory deductions despite making salary deductions from employees. Embu was found to have withheld Sh431.8 million over two years without forwarding the money to pension funds, banks, unions, and other agencies. The report warns that this violates employment laws.
Meanwhile, irregular recruitment remains a concern. Trans Nzoia hired 258 employees without vacancy declarations or an approved staff establishment.
Narok recruited 73 officers, including enforcement and clerical staff, without conducting interviews.
“The county public service board recruited the above employees without conducting any interviews to assess the suitability of the candidates,” the audit states.
The report also flags counties for excessive spending on salaries. In Laikipia, the county overshot its budget for temporary employees by Sh17.31 million without explanation.
In Vihiga, the wage bill now consumes 47 per cent of the county’s revenue, while in Lamu, it stands at 39 per cent, surpassing the legal limit of 35 per cent.
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