Mombasa: The Senate Committee on Devolution and Intergovernmental Relations has raised concern over counties operating unauthorized commercial bank accounts in violation of the Public Finance Management (PFM) Act. The committee, chaired by Wajir Senator Mohamed Abbas, held a joint meeting at a Mombasa hotel with Auditor General Dr. Nancy Gathungu, Controller of Budget Dr. Margaret Nyakang’o, and the Council of Governors (CoG), represented by Kakamega Governor Fernandes Barasa.
According to Kenya News Agency, the meeting aimed to address growing concerns over counties flouting Section 82(1)(b) of the PFM Act, which stipulates that all county bank accounts must be approved by the National Treasury Cabinet Secretary and preferably operated through the Central Bank of Kenya. Senator Karung’o Thang’wa of Kiambu noted that some counties are managing commercial bank accounts without proper authorization. He acknowledged the necessity of some accounts for specific entities but emphasized the need for formal approval from the National Treasury.
Thang’wa explained that the committee had instructed the Auditor General and the Controller of Budget to issue a circular requesting full disclosure of all commercial bank accounts from county governments. This includes details such as account numbers, purposes, and balances. He warned that unauthorized accounts could be used to divert public funds to unbudgeted projects and highlighted discrepancies in reported data across oversight agencies.
The committee cited inconsistencies in account records, with figures differing significantly between counties like Kiambu and Baringo, underscoring the need for harmonized reporting. Senator Peris Tobiko of Kajiado stressed the importance of transparency and compliance, noting a concerning discovery by the Auditor General of an undeclared account with Sh1.2 billion.
Governor Barasa acknowledged the concerns raised but clarified that counties are permitted to operate commercial accounts under specific conditions outlined in Regulation 76, which allows for special purpose accounts at the Central Bank. He emphasized the necessity of adhering to the approval process and expressed commitment to strengthening internal controls and enhancing disclosure and audit committee empowerment.
The Devolution Committee plans to meet with National Treasury Cabinet Secretary John Mbadi for a comprehensive briefing on the issue before issuing formal recommendations.