More than Sh1.3 billion from Nairobi County set for payment of workers cannot be traced to the country’s salary account, the Auditor-General has revealed.
In the audit for the year to June 2023, Ms Nancy Gathungu notes that the reported employee wages did not reflect in the county’s salary bank account.
“The amount of compensation of employees’ expense for the year totaling Sh11,185,475,652 differs with the total payments traced to the salaries bank statement amount of Sh9,793,541,055 resulting in an unreconciled variance of Sh1,391,934,597,” Ms Gathungu notes.
The public auditor did not provide details of the Sh1.3 billion but Nairobi County in a response to the Business Daily linked it to payment for staff inherited from the defunct Nairobi Metropolitan Services (NMS) and not absorbed in the payroll.
The county attributes the untraced salaries to three-month payments for staff returned from the NMS, which ended in October 2022.
Nairobi declined to absorb 1,700 staff hired by the defunct NMS to its payroll.
“The variance of Sh1,391,394,597 related to third-party salary deductions for NMS staff paid by Nairobi City County for October, November and December 2022.
“The Nairobi County has not absorbed the staff recruited by NMS through Public Service Commission but rather allowed them continue to serve the remainder of the respective contracts majority of whom ended in early 2024,” Nairobi’s Finance Minister Charles Kerich said.
When the Nairobi City County signed the deed of transfer of some services to the NMS in 2020, the county seconded 6,604 staff to work under the now defunct State House-run agency.
Ms Gathungu, however, observes that when the NMS mandate lapsed in the end of September 2022, the agency had recruited an extra 1,700 workers, which was against the contract it entered with the county.
“At the end of the Deed of Transfer tenure, NMS returned 7,526 staff to City County. Out of the 7,526 staff, 1,700 were not part of the staff seconded to NMS in the year 2020, which implies that they were recruited by NMS contrary to Section 5.6 and 5.7 of the Gazette Notice No. 1609 dated 25 February 2020 on Deed of Transfer,” the Auditor-General notes.
In responses to the Business Daily on Friday, Mr Kerich said the county executive declined absorbing the NMS-hired workers following a county assembly resolution, during an inquiry regarding absorption of Inspectorate officers employed by the defunct NMS.
“For the ones whose contracts expired, the County advertised the positions as per county-approved establishment and the County Public Service Board has now appointed the majority on probationary terms of service,” the county finance minister said.
The audit also noted that the county reported spending Sh161 million in payment of basic wages to temporary employees and Sh92.8 million as personal allowances paid in kind, but failed to provide documents to support payments.
The county says the Sh161 million payments were made to casuals hired to capture revenue data, as community health promoters, drainage clearing and sweeping the CBD.
The county also claims to have remitted Sh1.7 billion in statutory deductions the Auditor-General flagged as having been deducted from employees in the 2022/23 fiscal year but not remitted.
“Analysis of the payroll data provided for audit revealed that the County Executive deducted staff Paye, NSSF and NHIF statutory dues totaling Sh1,715,817,035. However, no evidence was provided for audit to show that the deductions were remitted to relevant authorities as required,” Ms Gathungu stated.
Mr Kerich said that during the year the county processed and remitted the total net salaries, third parties and statutory deductions.
“The payments were processed through a system called jumbo link provided by Cooperative Bank where gross salaries are submitted electronically through a secure link to Cooperative Bank as one consolidated file where the bank then prepares EFTs and RTGS to respective recipients,” he said.
