A fresh audit has cast doubt over the handling of Sh24 billion in county funds after 13 devolved governments cancelled thousands of payments that had already been cleared by the Controller of Budget but failed to explain why the transactions were reversed or where the money eventually ended up.
The findings have opened fresh questions over financial controls in counties and the effectiveness of the government's Integrated Financial Management Information System (Ifmis).
Auditor-General Nancy Gathungu found that the counties cancelled 13,979 transactions during the 2024/25 financial year after they had already received approval from the Controller of Budget.
However, county officials did not provide payment vouchers, cancellation requests, approval records or proof that the Controller of Budget had been notified before the reversals were made.
Without the required documents, auditors said they could not establish whether the funds were eventually paid to the intended recipients or diverted elsewhere.
“They did not provide explanations or documents to justify why the payments were cancelled... it was not possible to verify where the public funds actually went,” Gathungu says.
The audit paints a worrying picture of continued weaknesses in Ifmis, a system introduced to strengthen oversight and accountability in the management of public money.
Kwale County was among those flagged after auditors found Sh1.9 billion in transactions had been cancelled without approvals or supporting documents.
“Voided payment vouchers, cancellation requests, National Treasury approvals and exchequer requisitions to the Controller of Budget were not submitted for audit review,” the report states.
In Tana River County, auditors questioned Sh1.1 billion in payments said to have been processed outside Ifmis. The county failed to explain which bank accounts handled the transactions or how they were captured in its financial statements.
The audit further found that the county cancelled 1,229 transactions worth Sh1 billion after they had already been approved by the Controller of Budget, yet no supporting documents were provided.
Auditors also questioned Sh80 million spent on activities that had not been budgeted for and highlighted an unexplained difference of Sh391 million between Ifmis records and actual payments.
Kilifi County cancelled 651 transactions worth Sh3.2 billion without providing any justification. Auditors also identified 181 Local Purchase Orders (LPOs) that did not indicate their values, while another 54 invoices worth Sh705 million exceeded the amounts approved under the corresponding LPOs.
The report also found that 2,653 transactions worth Sh5.4 billion had already been paid but did not appear in Ifmis payment records by June 30, 2025. Although county officials blamed system synchronisation and timing differences, they did not provide evidence to support the explanation or show that the transactions had been reconciled.
In Wajir County, auditors found that 75 transactions worth Sh38.7 million had been cancelled before the final payment stage without supporting records, approvals or proof that the Controller of Budget had been informed.
Meru County also came under scrutiny after cancelling 496 transactions worth Sh766.8 million without providing reconciliations to show whether the payments were later processed or whether the Controller of Budget had been notified.
Tharaka Nithi County reversed 546 transactions valued at Sh441.5 million without evidence that the Controller of Budget had been informed, according to the audit.
In Embu County, auditors questioned the cancellation of 62 transactions worth Sh313.7 million after county officials failed to justify the reversals.
Nyandarua County voided 1,998 transactions worth Sh1.2 billion but did not provide payment vouchers, cancellation requests, approvals or any other documents to support the transactions.
Nyeri County cancelled 283 transactions worth Sh230.4 million without evidence that the Controller of Budget had been notified to facilitate the necessary adjustments.
Auditors also flagged Samburu County after finding that 1,955 transactions worth Sh1.6 billion had been reversed after receiving approval from the Controller of Budget. However, no records were submitted to show who approved the cancellations or why they were made.
Nakuru County was cited after auditors found 708 transactions worth Sh787.4 million that appeared as paid in Ifmis but could not be traced in the system's payment details report as of June 30, 2025. County officials did not explain the inconsistency.
Siaya County recorded the largest value of cancelled transactions among the counties reviewed after reversing 2,323 transactions worth Sh4 billion. Kisii County also cancelled 693 transactions worth Sh1 billion without providing explanations or documents to support the reversals.
The latest findings add to earlier concerns raised by the Auditor-General about the credibility of Ifmis as the government's main financial management platform.
In the 2023/24 Popular Report on the National Government released last year, the Auditor-General reported that numerous transactions had been cancelled in Ifmis without evidence of approval. The report also found that some payments processed through the system could not be traced in financial statements, while other payments appearing in financial records had not been captured in Ifmis.
The Auditor-General further reported inconsistencies between balances reflected in financial statements and those contained in Ifmis supporting schedules, raising further concerns over the reliability of the government's financial management system.