18th Report Of The Special Funds Accounts Committee On Its Consideration Of 2 Funds

REPUBLIC OF KENYA THE NATIONAL ASSEMBLY

THIRTEENTH PARLIAMENTFOURTH SESSION

SPECIALFUNDSACCOUNTSCOMMITTEE

18TH REPORT ON THE CONSIDERATION OF THE AUDITED ACCOUNTS FOR THE FOLLOWING FUNDS-;

• 1.CO-OPERATIVE SOCIETIES LIQUIDATION ACCOUNT FUND FOR THE FINANCIALYEARS 2018/19 TO2022/2023;
• 2.MANAGEMENT AND SUPERVISION FUND FOR THE FINANCIALYEARS2018/19 TO 2022/2023.

DIRECTORATEOFAUDITAPPROPRIATIONS

&GENERALPURPOSECOMMITTEES NATIONALASSEMBLY PARLIAMENTBUILDINGS NAIROBI

REPUBLIC OF KENYA

THE NATIONAL ASSEMBLY

THIRTEENTH PARLIAMENT-

FOURTH SESSION

SPECIALFUNDS ACCOUNTSCOMMITTEE

18TH REPORT ON THE CONSIDERATION OF THE AUDITED ACCOUNTS FOR THE FOLLOWING FUNDS-;

• 1.CO-OPERATIVE SOCIETIES LIQUIDATION ACCOUNT FUND FOR THE FINANCIAL YEARS 2018/19 TO 2022/2023;
• 2.MANAGEMENTAND SUPERVISION FUND FOR THE FINANCIAL YEARS 2018/19 TO 2022/2023

DIRECTORATEOFAUDITAPPROPRIATIONS &GENERALPURPOSECOMMITTEES, NATIONALASSEMBLY PARLIAMENT BUILDINGS NAIROBI

Tableof Contents

SPECIALFUNDACCOUNTSCOMMITTEE-FUNDS

| CHAPTERONE. | CHAPTERONE. | |--------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------| | 1.0PREFACE | 1.0PREFACE | | 1.1 Establishment and Mandate of Special Funds Accounts Committee | 1.1 Establishment and Mandate of Special Funds Accounts Committee | | 1.2 | Committee Membership.. | | 1.3 | CommitteeSecretariat | | EXAMINATIONOFTHEAUDITED FINANCIALSTATEMENTSFORTHECO- 2018/2019 TO 2022/2023. | EXAMINATIONOFTHEAUDITED FINANCIALSTATEMENTSFORTHECO- 2018/2019 TO 2022/2023. | | Financial Year 2018/2019 | Financial Year 2018/2019 | | Financial Year 2019/2020. | Financial Year 2019/2020. | | TheFinancialYear2020/2021 | TheFinancialYear2020/2021 | | The Financial Year 2021/2022 | The Financial Year 2021/2022 | | The Financial Year 2022/2023 | The Financial Year 2022/2023 | | EXAMINATIONOFTHEAUDITEDFINANCIALSTATEMENTSFORMANAGEMENT ANDSUPERVISIONFUNDFORTHEFINANCIALYEAR2018/2019TO2022/2023.. ..10 | EXAMINATIONOFTHEAUDITEDFINANCIALSTATEMENTSFORMANAGEMENT ANDSUPERVISIONFUNDFORTHEFINANCIALYEAR2018/2019TO2022/2023.. ..10 | | FinancialYear2018/2019 10 | FinancialYear2018/2019 10 | | Financial year 2019/2020. 13 | Financial year 2019/2020. 13 | | Financialyear 2022/2023 18 | Financialyear 2022/2023 18 |

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List of Abbreviations and Acronyms

| CoK | Constitution of Kenya, 2010 | |-------|--------------------------------------| | FY | Financial Year | | MDAs | Ministries, Departments and Agencies | | MOU | Memorandum of Understanding | | PFM | PublicFinanceManagement | | OAG | Officeof theAuditor-General | | PSASB | PublicSectorAccountingStandardsBoard |

CHAIRPERSON'SFOREWORD

Hon.Speaker,on behalf of the Special Funds Accounts Committee and under Standing Order 199, it is my pleasant duty and honour to present to the House the 18th Report of the Committee on consideration of the reports of the Auditor-General on the audited financial statements for the followingFunds--

• a)Co-operativeSocieties LiquidationAccount Fundfor theFinancial Years 2018/19 to 2022/2023;
• b)Management and Supervision Fund for the Financial Years 2018/19 to 2022/2023.

Oversight over national revenue and expenditure is amongst the roles of the National Assembly as stipulated under Article 95(4) (c)of the Constitution of Kenya,2010.Further,Article 226 of the CoKprovides that anAct of Parliament shallprovidefor the designation of anAccounting Officer in every public entity at the national level who is accountable to the National Assembly for its financial management. In addition, Article 229(8) mandates this House to debate and take appropriateactiononauditreportsfromtheAuditor-General.

In fulfilment of these constitutional provisions, the National Assembly established various Committees to examine reports of the Auditor-General to ascertain whether public funds are utilized in a lawful, authorized,effective,efficient, economical,and transparent manner. The Special FundsAccounts Committee is one of the Committees thatwas established in theFifth Session of the Eleventh Parliament following the review of the National Assembly's Standing Orders.

The Committee received both oralandwritten submissions from the respective Accounting Officers onthe auditedfinancial statementsfor thefollowingFunds:

• a)Co-operativeSocieties LiquidationAccount Fundfor theFinancialYears 2018/19to 2022/2023;
• b)Management and Supervision Fund for the Financial Years 2018/19 to 2022/2023

The submissions formed the basis of the Committee's observations, findings, and recommendations.These are also contained in the Minutes and Hansard Reports of Committee proceedings.

Hon.Speaker,I wish to express appreciation to the Honourable Members of the Committee,the Office of theSpeaker,the Clerk of theNational Assembly,theParliamentary Liaison Offices oi theAuditor-General and theNational Treasury and the CommitteeSecretariatforfacilitating the Committee in the production of this report.

HON.FATUMAZAINABMOHAMMED,M.P. CHAIRPERSON,SPECIALFUNDSACCOUNTSCOMMITTEE

CHAPTER ONE 1.0PREFACE

1.1 Establishment and Mandate of Special Funds Accounts Committee

• 1.TheSpecial Funds Accounts Committee is one of the six Watchdog Committees of the NationalAssemblyestablished under Standing Order 205.It ismandated toexamine the reports of theAuditor-General on thefollowing:
• i. Fundsestablishedby statuteor bysubsidiarylegislation,exceptFundsunderStanding Order 205B(Decentralized FundsAccounts Committee)
• ii. The Equalization Fund;
• iii. The Equalization Fund Advisory Board;
• iv. The Political Parties Fund; and
• V. Otherfunds as may be communicated by the Honourable Speaker

1.2 Committee Membership

• 2.The Committee comprises the following members:

| S/ N | Name | Constituency | Party | |--------|-----------------------------------------------------|------------------|-------------| | 1 | Hon. Fatuma Zainab Mohammed, MP (Chairperson) | Migori (CWR) | Independent | | 2 | Hon. Dawood Abdul Rahim, HSC, MP (Vice Chairperson) | North Imenti | Independent | | 3 | Hon.Mary Emaase Otucho,MP | Teso South (CWR) | UDA | | 4 | Hon. Charles Ngusya Nguna | Mwingi West | Wiper | | 5 | Hon. Dr. Christine Ombaka Oduor, MP | Siaya (CWR) | ODM | | 6 | Hon.ErastusKivasu Nzioka,MP | Mbooni | Wiper | | 7 | Hon. Eve Akinyi Obara, MP | Kabondo Kasipul | ODM | | 8 | Hon. Joseph Majimbo Kalasinga, MP | Kabuchai | FORD-K | | 9 | Hon. Tom Mboya Odege, MP | Nyatike | ODM | | 10 | Hon. Catherine Nakhabi Omanyo, MP | Busia (CWR) | ODM | | 11 | Hon. Cecilia Asinyen Ngitit, MP | Turkana (CWR) | UDA |

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| 12 | Hon.Erick Kahugu Wamumbi, MP | Mathira | UDA | |------|---------------------------------|----------------|-------| | 13 | Hon.Joseph Kimutai Cherorot,MP | Kipkelion East | UDA | | 14 | Hon.Onchoke Charles Mamwacha,MP | Bonchari | UPA | | 15 | Hon. Paul Kibichi Biego, MP | Chesumei | UDA |

1.3 Committee Secretariat

3. The Secretariat facilitating the Committee comprises the following staff:

| S/ N | NAME | DESIGNATION | |--------|----------------------|-----------------------------------| | 1 | Mr.Erick Nyambati | Senior ClerkAssistant | | 2. | Ms. Comfort Achieng | ClerkAssistantIII | | 3 | Mr. Nimrod Mate | Clerk Assistant III | | 4 | Mr. Robert Ngetich | Fiscal Analyst II | | 5 | Ms. Judith Kanyoko | Legal Counsel II | | 6 | Ms. Bevaline Mosoti | Research OfficerIII | | 7. | Mr.Derrick Kathurima | MediaRelations OfficerIII | | 9 | Ms.Felistus Muiya | Public Communications Officer IIl | | 10 | Mr.Peter Mutethia | Hansard Audio OfficerIII | | 11 | Mr.Joshua Lenambet | Serjeant At Arms |

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EXAMINATIONOFTHEAUDITEDFINANCIALSTATEMENTSFORTHECOOPERATIVESOCIETIESLIQUIDATIONACCOUNTFUNDFORFINANCIAL YEARS2018/2019TO2022/2023

4. Mr. Patrick K. Kilemi, the Principal Secretary, State department of Cooperatives appeared before theCommitteeonTuesday 22nd July2025to adduce evidenceon the audited financial statements for the, Co-operative Societies Liquidation Account Fund for the FinancialYears 2018/19 to2022/2023.During the meeting,theAccounting Officer was accompanied by: 1. Mr. David K Obonyo 3. 2.Mr. Javel M. Murira 3. Mr. Judah Mukoji

FinancialYear2018/2019

• 1)Failure to submitFinancial Statements
• 5.The management of the Fund did not prepare and submit for audit the financial statements and did not maintain the books of accountsfor the co-operative society's liquidation fund for nine(9)years ended30June,2004 to30June,2012.Thiswas contrary to therequirements ofsection19(3)ofco-operativessocietiesActwhichrequires thefundtobe auditedannually by the Auditor General. Under the circumstances, the accuracy of the opening balances could not be confirmed.

Submissionsby theAccounting Officer

• 6.TheAccounting Officersubmitted that—

Itwas true that thefinancialstatementswerenotsubmitted.NoseparateAccount was maintained for theLiquidationAccount anditwas reported as anattachment tothe Department's mainfinancials.The anomalyhas since beencorrected andseparate account andbooksmaintained.HealsonotedthattheliquidationFundaccountin theState Department was established in 2018/19

ObservationsoftheCommittee

• 7.The Committeeobserved that
• i.The Management of the Fund did not maintain the books of accounts for the cooperative society's liquidation fund for nine (9)years ended 30 June,2004 to30 June,2012
• ii. The Accounting Officer was in breach of section 68(k) and 84(3) of the Public Finance Management Act, Cap. 412A and
• ii. The Matter is unresolved.
• Commissioner for Cooperatives
• Directorof CooperativesAudit
• :AssistantAccountantGeneral

Recommendations of the Committee

• 8.The Committeerecommends that
• (i) Within three monthsof the adoption of this report,theAccounting Officer to submit the financial statements for the co-operative society's liquidation fund for nine (9) years ended 30 June, 2004 to 30 June, 2012 to the Auditor general for audit verification;
• (i) The Cabinet Secretary to take appropriate disciplinary measures against the Accounting Officerinaccordancewiththeprovisions ofsection74 of thePublic Finance ManagementAct.

2)LateSubmission of Financial Statements

• 9.The financial statements of the fund for the financial years ended 30 June,2013 to30 June, 2019 were submitted for audit on 24th February, 2020 contrary to the provisions of section 68(2)(K) ofthePublicFinanceManagement Act,2012whichrequires anAccounting Officer toprepare annualfinancialstatementsfor eachfinancialyearwithin threemonths after the end of thefinancial year.

Submissionsby theAccountingOfficer

• 10.TheAccounting Officer submitted that—

Management acknowledged thelatesubmission of thefinancialstatements.According to the records available at State Department for cooperatives, Ministry of Industrialization and Enterprise Development did not maintain separate books of accounts for the Liquidation Account but rather reported it together with management and supervision fund and as an attachment to department'smainfinancials.Anextract from the mainFinancials of The MinistryofIndustrializationdubbedhasbeenattached in theManagementResponses.

ObservationsoftheCommittee

• 11.The Committeeobserved that
• i.TheAccounting Officerwas inbreachof Section 47(1)of thePublicAuditAct, 2015and
• ii.The Matter is unresolved.

RecommendationsoftheCommittee

12. The Accounting Officer should ensure timely submission of financial statements as per theprovisionsof Section 47(1) of thePublicAuditAct,2015. 13. The Cabinet Secretary to take appropriate disciplinary action against the Accounting Officer in accordance with the provisions of section 74 of thePublic Finance Management Act.

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3)Unresolved Prior Year Matters

3.1 Unsupported Balances

14. The Statement of financial position of the Fund submitted for the year ended 30 June, 2019 reflected NIL balances for cash and cash equivalents and liquidation fund-capital and all the other balances. No supporting documents including the cash book, ledgers, trial balance and bank confirmation certificates were provided by the management for audit verification. In the circumstances, the accuracy of the financial statements could not be confirmed.

Submissions by the Accounting Officer

15. The Accounting Officer submitted that

The LiquidationFund accountin theStateDepartmentwas established inthefinancialyear 2018/19

ObservationsoftheCommittee

16.TheCommitteeobservedthat

• i。 No supporting documents including the cash book, ledgers, trial balance and bank confirmation certificates were provided by the management and
• ii. TheMatteris not resolved.

RecommendationsoftheCommittee.

17.TheCommitteerecommendedthat

Within threemonthsof adoption of thisreport,

• The accounting officer to submit supporting documents to the Auditor General for audit verification.
• The Cabinet Secretary to take disciplinary action against the accounting oficer in line withSection74of thePFMAct.

3.2IncompleteSet of Financial Statements

18. Paragraph 21(d) of international Public Sector Accounting Standards No.1 provides that a completesetoffinancial statements includes a cashflowstatement.However,thefinancial statementsfor theyear ended30June,2019 providedfor audit did notinclude a cashflow statement.Under the circumstances,the set of financial statementspresentedfor audit was incomplete.

Submissions by the Accounting Officer

19. The Accounting Officer submitted that

On page16of the co-operative societies LiquidationAccount financials attached tothe Report of the Auditor-General,cash flow statement was availed.The extract of the Report wasattachedintheManagementResponses.

SPECIALFUNDACCOUNTSCOMMITTEE-FUNDS

ObservationsoftheCommittee

• 20.TheCommitteeobserved that
• i.The Cashflow statement was part of the certified Financial statements and
• ii.The Matter is resolved.

FinancialYear2019/2020

1.Failure toSubmitFinancial Statements

21. The management of the Fund did not prepare and submit for audit the financial statements and did not maintain the books of accounts for the Fund for nine (9) years ended 30 June, 2004 to 30 June, 2012.This was contrary to the requirements of Section 19(3) of CooperativesSocietiesActwhichrequiresthattheFundshallbe audited annuallybythe Auditor -General. In the circumstances, the accuracy of the opening balances could not be confirmed.

Submissions by the Accounting Officer

22. The Accounting Officer submitted that-It was true that the financial statements were not submitted.No separateAccount was maintainedfor the LiquidationAccountand itwas reported as anattachment tothe Department's main financials.The anomaly has since been corrected and separate account and books maintained.

Observations of the Committee

The Committeeobserved that

• (ii) The Management of the Fund did not maintain the books of accounts for the co-operative society's liquidation fund for nine (9) years ended 30 June, 2004 to 30 June, 2012
• (iii) TheAccounting Officer was inbreachof section68(k) and 84(3) of the Public Finance Management Act, Cap.412A and
• (iv) TheMatterisunresolved.

Recommendationsofthe Committee

• 23.The Committee recommends that
• (ili) Within three months of the adoption of this report, the Accounting Officer to submit thefinancial statementsforthe co-operative society's liquidationfund for nine (9) years ended 30June,2004 to30 June,2012 to theAuditor general for audit verification;
• (iv) The Cabinet Secretary to take appropriate disciplinary measures against the Accounting Officerinaccordancewith theprovisions of section74of thePublic Finance Management Act.

SPECIALFUNDACCOUNTSCOMMITTEE-FUNDS

1.UnresolvedPriorYearAuditmatters

24. The following prior year audit matters remained unresolved as at 30 June, 2020:

2.1LateSubmissionofFinancialStatements

25. The Financial statements of the Fund for the financialyears ended 30June, 2013 to 30 June, 2019,were submitted for audit on 24 February,2020 contrary to the provisions of sections 68(2) (k) of the Public Finance Management Act, 2012 which requires an Accounting Officer to prepare annualfinancial statements for each financial year within three months after the end of thefinancial year.

Submissions by theAccounting Officer

• 26.TheAccountingOfficersubmittedthat

Management acknowledged thelatesubmissionof thefinancialstatements.Accordingtothe records available at State Department for cooperatives, Ministry of Industrialization and EnterpriseDevelopmentdidnotmaintainseparatebooksof accountsfor theLiquidation Account but rather reported it together with management and supervision fund and as an attachment todepartment's main financials.Attachedwas anextract from the main Financialsof TheMinistryof Industrialization totheManagementResponses.The liquidationFund account in theStateDepartmentwas establishedin2018/19 FY.

ObservationsoftheCommittee

• 27.TheCommitteeobservedthat
• The Accounting Officer was in breach of Section 47(1) of the Public Audit Act, 2015.
• ii. The Matter is unresolved.

RecommendationsoftheCommittee

• 28.TheCommitteerecommendsthat
• (i) The Accounting Officer should ensure timely submission of for financial statements as per theprovisions of Section 47(1) of thePublic Audit Act,2015
• (ii) Accounting Officer in accordance with the provisions of section 74 of the Public FinanceManagementAct.

2.2UnsupportedBalances

29. As reported in the previous year. Supporting documents including cash books, ledgers trial balances and bankconfirmation certificatesin support of the cash and cash equivalents and liquidationfund capital balances reflected in the statement of financial position as at 30 June, 2013 to 30June,2018 were not provided for audit.Consequently,the accuracy of the reportedbalances could not beconfirmed

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Submissionsby theAccounting Officer

• 30.The Accounting Officer submitted that—

In 2013, Ministry of Co-operative Development and Marketing was merged with State Department of Industry and Trade to form The Ministry of Industrialization and Enterprise Development. At the time, the Deposit account was reported as an attachment to the main Ministry's financials and composed of both Management, supervision and Liquidation funds andwas auditedunder it.The Liquidationfund established under the former Ministrywas combined with other deposit funds operated by the other two departments under one vote. Consequently,the fund was managed by theMinistryforIndustrialization and Enterprise Development, as a general deposits account in the financial years 2012/13, 2013/14, 2014/15 and 2015/16 until 2016/17 when the State Department for Cooperatives was formed and allocated a separate vote. The extract from the main Financials of The Ministry of Industrialization was attached in theManagement Responses.

ObservationsoftheCommittee

• 31.The Committeeobserved that
• i. Supporting documents including cash books, ledgers trial balances and bank confirmationcertificatesinsupport of thecashand cashequivalents and liquidation fund capital balances were not provided for audit and
• ii. The Matter is unresolved.

Recommendationsby the Committee

• 32.The Committeerecommendsthat

Within three months of the adoption of this report, the Accounting Officer to submit the Supporting documents in support of the cash and cash equivalents and liquidation fund capital balances to theAuditor-General forverification.

2.3IncompleteSet ofFinancial Statements

33. Paragraph 21 (d) of international Public Sector Accounting Standards No 1 provides that a completeset of financial statements includes acashflowstatement.However,thefinancial statementsfor theyearended 30June,2013 to30June,2018submittedfor audit did not include the cashflow statement.In the Circumstances,the sets of financial statements presentedfor auditfor the six(6)yearswere incomplete.

Submissionsby theAccounting Officer

34. The Accounting Officer submitted thatIn 2013, Ministry of Co-operative Development and Marketing was merged with State Department of Industryand Trade toformTheMinistry of Industrialization and Enterprise Development. At the time, the Deposit account was reported as an attachment to the main Ministry's financials and composed of both Management and Liquidation funds and was

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audited under it.Henoted that theyhad attachedan extractfrom the main Financials of The Ministry of Industrializationin theManagementResponses.

ObservationsoftheCommittee

• 35.TheCommitteeobservedthat-
• i.The Cashflow statement was part of the certified Financial statements.
• ii.The Matter is resolved.

TheFinancialYear2020/2021

Report of the Financial statements

36. There were no material issues noted during the audit of the financial statements of the Fund

Report of lawfulness and effectiveness in use of public resources

37. There were no material issues relating to lawfulness and effectiveness in use of public resources.

Report on effectiveness of internal controls, risk management and governance.

• 38.There were nomaterial issues relatingto effectiveness of internal controls,risk management andgovernance.

TheFinancialYear2021/2022

Report of theFinancial statements

• 39.Therewere nomaterialissues noted during the audit of thefinancial statements oftheFund

Report of lawfulness and effectiveness in use of public resources

• 40.Therewerenomaterialissuesrelating tolawfulnessand effectivenessin use ofpublic resources.

Report on effectiveness of internal controls, risk management and governance.

• 41.Therewerenomaterialissuesrelatingto effectiveness ofinternalcontrols,riskmanagement and governance.

TheFinancialYear2022/2023

1)Inaccuracy of Cash and Cash EquivalentsBalance.

42. The statement of financial position reflects cash and cash equivalents balance of Kshs.27, 031,912asdisclosedinNote3othefinancialstatements.However,disclosurenote3reflects a balance of Kshs.23, 214,792 resulting in unreconciled variance of Kshs.3, 817,120. Although management explained the variance to be as a result of payments made from the liquidation account thatought tohavebeenpaidfromtherecurrent account,documentation

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to support the explanation was provided for audit.In the circumstances,the completeness and accuracy of cash and cash equivalents balance of Kshs.27,037,912 could not be confirmed.

Submissions by the Accounting Officer

43. The Accounting Officer submitted that The Support Documentations including the Historical payment vouchers from the then Ministry of Agriculture where the State Department for Cooperatives was domiciled were retrieved andsubmittedforauditreview.

Observations by the Committee

The Committeeobserved that

• (i) There was an unreconciled variance of Kshs.3,817,120 and
• (i) The matterisunresolved.

RecommendationsbytheCommittee

• 44.The Committee recommends that

Within three months of the adoption of this report, the Accounting Officer to submit the to submit the reconciliation to support the unreconciled variance of Kshs.3, 817,120 to theAuditor-Generalforverification.

2)Late submissionofFinancial Statements

45. The management submitted the financial statements for audit on 26 October, 2023 which was twenty-seven(27) days after the statutory deadline of30September,2023contrary to Section 81(4) (a) of the Public Finance Management Act,2012which requires accounting officers to submit financial statements to the Auditor-General within three (3) months after the end of each financial year.In the circumstances.the management was in breach of the law

Submissions by the Accounting Officer

46. The Accounting Officer submitted that—

They acknowledged and regretted the Late submission,and noted that it will not happen again.

Observations of the Committee

• 47.The Committeeobserved that
• i. The Accounting Officer was inbreach of Section 47(1) of thePublic Audit Act, 2015and
• ii. TheMatteris unresolved.

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Recommendationsofthe Committee

48. The Committee recommends that

• (i The Accounting Officer should ensure timely submission of financial statements as per the provisions of Section 47(1) of the Public Audit Act, 2015
• (i) The Cabinet Secretary to take appropriate disciplinary measures against the Accounting Officer in accordance with the provisions of section 74 of the Public FinanceManagementAct.

EXAMINATIONOFTHEAUDITED FINANCIALSTATEMENTS FOR MANAGEMENTANDSUPERVISIONFUNDFORTHEFINANCIALYEAR 2018/2019T02022/2023

1. Mr. Patrick K. Kilemi, the Principal Secretary, State department of Cooperatives appeared before the Committee on Tuesday 22nd July 2025 to adduce evidence on the audited financial statements for the, Management and Supervision Fund for the Financial Years 2018/19 to 2022/2023. During the meeting, the Accounting Officer was accompanied by:

• i.Mr. David K Obonyo

• Commissioner for Cooperatives

• ii.Mr. Javel M. Murira

• Director of CooperativesAudit

• ii. Mr. Judah Mukoji

• -AssistantAccountantGeneral

FinancialYear2018/2019

1)LateSubmissionofFinancialStatements

• 2.TheFinancial Statements for the year ended 30th June,2019were submitted for audit on 20 February, 2020 contrary to section 68(2)(k) of the Public Finance Management Act, 2012 which requires Accounting Officers to prepare annual financial statements for each financial year within three months after the end of the financial year, Management was in breach of the law.Late submission of financial statements affects the audit programme.

Submissions of the Accounting Officer

• 3.The Accounting Officer submitted that—

The State Department from the records available the financial statement was submitted for year2019 on 30th sept 2019 as per Public Finance Act 2012.

Observationsof the Committee

• 4.The Committeeobserved that
• i. The Committee established that the Financial Statements were submitted on time.
• ii. TheMatterisresolved.
• 2)Unsupported Balances
• 1.1 Statement of Financial Performance
• 5.The statement of financial performancefor theYearended30june,2019 reflects and amount of Kshs. 14,035,091 in respect of general expenses. However, no supporting documentation has been provided to support the above balance.

Submissions of theAccounting Officer

• 6.The Accounting Officer submitted that-

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The financial statements for the year ended 30th June, 2019 reflects an amount of Kshs.14,035,091 in respect of general expenses. The State Department had submitted all the paymentvouchers together with cashbookfor audit.However,thepayment vouchers forthesameamountareavailableforverification.

ObservationsoftheCommittee

• 7.The Committeeobserved that
• i.The payment vouchers and the cashbook have since been provided
• ii.The matter is resolved.

1.2StatementofFinancialPosition

• 8.The'Statement of financial position as at 30th June, 2019 reflects a balance of Kshs.7,758,732 under cash and cash equivalents and Kshs. 10,219,347 as management and Supervision feesdebtors. However, no supporting documentation has been provided for the balances.

Submissions of theAccounting Officer

• 9.The Accounting Officer submitted that

Thecash andcashequivalentbalanceKsh7,758,732wasthe reconciledcashbook balance as at 30th June, 2019. The balance is further supported by the cash book extract, bankcertificateof balancesas at 30thJune2019.Theamountof Kshs.10,219,347 represents debts owedtotheDepartmentinrespect of audit and supervisionfeefor the previous years.The amount relates to audit and supervision fees not paid in the years prior to 2016. attached Is the schedule in support of management and supervision feesdebtors.TheState Department have initiated writing off an collected debtors.

Observationsofthe Committee

• 10.The Committeeobserved that
• i.No supporting documentation has been provided to support the balances of Kshs.7,758,732 under cash and cash equivalents and Kshs. 10,219,347 as management and Supervisionfees-debtors.
• ii.The Matter is unresolved.

Recommendations ofthe Committee

11.TheCommitteerecommendedthat-

• i。 Within three months upon adoption of this report, the Accounting officer to submit a supporting documentation to support the balances of Kshs.7,758,732 under cash and cash equivalents and Kshs. 10,219,347 as management and Supervision fees- debtors to the Auditor General for Auditverification.

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• ii. The Cabinet Secretary forNational Treasury and EconomicPlanning to institute dicplinary measures against the Accounting Officer in line with section74 of thePFMAct.
• ili. The Accounting Officer ensures that all applicable accounting and financial controls,systems,standards,laws,and procedures arefollowed in thepreparation ofAnnual Reports and financial statements and in accordancewiththestandardsprescribedbythePublicSector AccountingStandardsBoard and in compliance withregulation 101 (4) of thepublic finance management(National Government) Regulations

3)InaccuraciesintheFinancial Statements

12. The statement of changes in net assets reflects a balance of Kshs, 18,760,263 as net fund balance as at 30"h June ,2019 which differs with the balances of Kshs.18,894,544 reflected in the statement of financial position resulting to an unexplained difference of Kshs. 134,281, Further, the deficit for the period of Kshs. 2,765,651 is reflected as Kshs. 2,815,604 resulting to difference of Kshs.49.953 which has not been explained.

Submissions of theAccounting Officer

13. The Accounting Officer submitted that We acknowledge there was an error in preparation of financial report. The error has been correctedinsubsequentFinancialStatement.

Observationsofthe Committee

14.TheCommitteeobserved that

• a.The statement of changes in net assets and deficit reflected an unexplained difference of Kshs. 134,281 and Kshs.49,953 respectively.
• b.The Matter is unresolved.

Recommendationsofthe Committee

15. The Committee recommended that-

• i. Within three months on adoption of this report the accounting Officer to provide supporting documentation to reconcile thevariance of Kshs.134,281 and Kshs.49,953 to theAuditor General for auditverification.
• ii. TheAccountingOfficerensures thatallapplicableaccountingand financia! controls, systems, standards,laws, and procedures are followed in the preparation of Annual Reports and financial statements and in accordance with the standards prescribed by thePublic Sector Accounting Standards Board and in compliance with regulation 101 (4) of the public finance management (National Government) Regulations

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Financialyear2019/2020

1.Inaccuracies in the Financial Statements.

• 16.Thestatement of financial position reflects a balance of Kshs.728,671 under property plant and equipment. However, the balance was not supported with schedules and register for audit verification purposes,further,the statement reflects a balance of Kshs.1,732,278in respect of cash equivalents which differs with cash book balance of Kshs. 4,292,758 resulting to unreconciled difference of Kshs. 2,560,480 which has not been explained.

17. In addition, the statement reflects an amount of Kshs, 6,214,248 as the deficit drawn from operations for the year, which differs by Kshs.45,041 with the balance of Kshs. 6,169,207 reflected on the statement of financial performance. No explanation has been given for unreconciled difference.

Submissions of the Accounting officer

TheStateDepartmentfor Cooperative maintains an Assetsregister under propertyplant and Equipment,which is available for verification.TheManagement acknowledged that therewas an error in preparation of financial report and that movingforward thiswill be

• 18.TheAccountingOfficersubmitted that rectified.

ObservationsoftheCommittee

19.TheCommitteeobservedthat

• i. The statement of financial position balance was not supported with schedules and the asset register.

2. ii.The statement of financial position in respect of cash equivalents and deficit reflected an unexplained difference of Kshs. 2,560,480 and Kshs.45,041 respectively.

• iii. The matter is unresolved

RecommendationsoftheCommittee

20. The Committee recommends that

• i.within three months upon the adoption of this report theAccounting Officer provides
• a)schedules and the asset register to the Auditor General for audit verification.
• b) supporting documentation to reconcile the variance of Kshs. 2,560,480 and Kshs.45,041 to the Auditor General for audit verification.
• ii. The Accounting Officer ensures that all applicable accounting and financial controls, systems, standards, laws, and procedures are followed in the preparation of Annual Reports and financial statements and in accordance with the standards prescribed by the Public Sector Accounting Standards Board and

SPECIALFUNDACCOUNTSCOMMITTEE-FUNDS

in compliance with regulation 101(4)of the public finance management (National Government) Regulations

2.LateSubmissionof Financial Statements

21. The financial statements for the years ended 30 June, 2013 up to 30 June 2019 were submitted for audit on 20 February 2020 contrary to Section 68(2) (k) of the Public Finance Managements Act, 2012 which requires accounting Officers to prepare annual financial statements for eachfinancialyear withinthreemonths after the endof the financial year. Management was in breach of the law. Late submission of financial statements affects the audit programme.

Submissions of the Accounting Officer

• 22.TheAccounting Officer submitted that-

TheAccoutingofficer confirmed that fromthe records availablethe financial statements 2019 inAuditor Generals office Ref:SDC/ACCOUNTS/FIN/00105 and for year ended 2019 wasreceivedon30thSept2019SDC/ACCOUNTS/FIN/00102asperPublicFinanceAct 2012.

ObservationsoftheCommittee

23.The Committeeobserved that

• i. The Committeeestablished thattheFinancial Statementsweresubmitted ontime.
• ii. The Matter is resolved.

3.Unsupported Balances.

24. The statement of financial performance for the year ended 30 June, 2019 reflects and amount of Kshs.14,035,091 in respect of general expenses, However, no supporting documentation has been provided to support the above balance. The statement of financial position as at 30 June, 2019 reflects a balance of Ksh.7,758,732 under cash and cash equivalents and Kshs.10,219,347 as management and Supervision fees - debtors. 25. However, no supporting documentation has been provided for the balances. In absence of relevant information,documents and records for audit verification,it was not possible to confirm the accuracy and completeness of thebalances reflected in thefinancial statements.

Submissions of theAccounting Officer

• 26.TheAccountingOfficersubmitted that The Accounting officer confirmed that the financial statements for the year ended 3oh June, 2019 reflects an amount of Kshs.14,035,091 in respect of general expenses. The State Department had submitted all the payment vouchers together with cashbook for audit.

SPECIALFUNDACCOUNTSCOMMITTEE-FUNDS

27. The cash and cash equivalent balance was the bank balance as at 30th June, 2019.The balance is further supported by the bank certificate of balances as at 30th June 2019. The amount of Kshs.10,219,347 represents debts owed to the Department in respect of audit and supervisionfeefor thepreviousyears.The amount relates to audit and supervisionfeesnot paid in the years prior to 2016.

ObservationsoftheCommittee

28.TheCommitteeobservedthat

• i。. The payment vouchers and the cashbook have since been provided.
• ii. The matter is resolved.

Financialyear2020/2021.

1)Under-Payment of Appropriations-In-Aid (AIA)

• 29.The statement of financial performance reflects revenue fromnon-exchange transactions Satotaling Kshs.16,401,646 and transfer of Appropriations-In-Aid (A.1.A) of Kshs. 4,000,000 under expenses for the year ended 30June. 2021. The Fund apparently transferred an amount of Kshs.4,000,000totheStateDepartment insteadof Kshs8,200,823 resultinginan underpayment by Kshs.4,200,823 or 24%of the total revenue collected.
• 30.This is contrary to Section 19(1) of the Cooperative Societies Rules,2004,which states that fifty(50)per cent of the annualreceiptsreceived by theFund shall bepayablehalfyearly to the Government as Appropriations-In-Aid. In the circumstances, the validity, accuracy and completeness of the transfer of AIA of Kshs. 4,000,000 for the year ended 30 June. 2021 couldnotbeconfirmed.

Submissions of theAccounting Officer

• 31.TheAccountingOfficersubmitted that

TheAccounting officer acknowledged that the amountin thementionedaccount constituted an audit Fee,retention and enquiry fees of Ksh.16,401,646 as indicated in the statement of Financial Performance.However,the transfer toAIA for the year ended 2021 was Ksh.4,0oo,0o0 which was remitted and the balance was remitted in the Financial year ended June 2022.

ObservationsoftheCommittee

32.TheCommitteeobservedthat

• i。 The Fund did not transfer 4,0oo,0oo to the State Department contrary to Section 19(1) of the Cooperative Societies Rules,2004, which provides that fifty (50) per cent of the annual receipts received by the Fund shall be payable half yearly to the Government asAppropriations-In-Aid
• ii.The matteris unresolved

Recommendationsofthecommittee

• 33.Within three months of adoption of this report the fund to submit evidence of transfer of the balance amounting to Kshs. 4,00o,000 to the Auditor General for audit verification.

2)Failure tofollowlegal Provisions forwriting-off Debts.

34. Examination of debtor ledgers revealed that the Management wrote-off debts amounting to Ksh.24,022,267 owed to the Fund without submitting relevant loss and write-off authorization reports to The National Treasury and the Auditor-General or applying the provisions of Regulations 145(b) and 148(5), (6) and (7) of the Public Finance Management (National Government ) Regulations, 2015. 35. According to the Regulations, the term losses include non-collection of any moneys due or belonging to National Government and, if the loss falls within the Accounting Officer's powers under section 69(1) of the Public Finance management Act, 2012, he shall authorize the write-off of the loss up to an amount not exceeding Hundred Thousand (Ksh.100.000) shillings in any one incidence. 36. Further, if the loss falls within the Cabinet Secretary's powers under section 69(2) of the Act, the Accounting Officer shall seek the approval of the Cabinet Secretary to authorize him to write-off the loss of an amount exceeding one hundred thousand (Ksh.100,0o0) shillings but exceeding one percent of the National Government's entity's approved estimates excluding the Consolidated Fund Services in any one incidence. 37. Although it was explained that the Management wrote-off the debts by invoking Rule 18(1) of the Co-operatives Societies Rules,2004 under Co-operative Societies Act,1997,where everyregistered societyshallunless exempt inwritingbytheCommissioner payinto it annually an audit and supervisionfee,theManagementwasnevertheless inbreach of thelaw because a write offis not the same an exemption.

Submissions of theAccounting Officer

• 38.The Accounting Officer submitted thatThere was an authorization of writing off debts (Waiver) which was authorized by.the Commissioner for Co-operative on 10thSeptember, 2013 pursuant to the provision of the Cooperative Societies Rule 18(1) of the Cooperative Society Rule, 2004.

39. The write-off was done for dormant and liquidated societies by raising credit notes to the to the respective individual societies amounting to Ksh.24,022,267.00 with the net effect of reducing the debts to nil balances in the ledgers of the respective societies. 40. During the period when the write-offs were authorized and effected the Public Finance Management Act, 2012 was not fully in effect and the Public Finance Management Regulations, 2015 had not been passed and gazetted into law.

ObservationsoftheCommittee

• 41.The Committee observed that

SPECIALFUNDACCOUNTSCOMMITTEE-FUNDS

• Management wrote-off debts amounting to Ksh.24,022,267 owed to the Fund without submitting relevant loss and write-off authorization reports to The National Treasury and the Auditor-General or applying the provisions of Regulations 145(b) and 148(5), (6) and (7) of the Public Finance Management (National Government) Regulations, 2015.
• ii.The Matter is unresolved

RecommendationsoftheCommittee

• 42.Thecommitteerecommendedthat
• i.Within three months of the adoption of this report the Accounting Officer reinstates the irregular write off into the books of accounts and seek authority from the National Treasury in accordance with section 69 of thePublic Finance Management Act Cap 412A.
• ii. The Cabinet Secretary to institute dicplinary measures against the Accounting Officerinlinewithsection74ofthePFMAct.

Financialyear2021/2022

1)Unsupported Cash and Cash Equivalents.

• 43.Thestatement of financial position and Note 4 to the financial statements reflects cash and cash equivalents balance of Kshs.2, 536,230. The balance was not supported with a cash book andabankreconciliation statement asManagement didnot opena separatebank accountforthefundbutinsteadoperatedtheFundfromtheStateDepartmentfor CooperativesDepositAccount.In the circumstances,the accuracy and completeness of the cash and cash equivalents balance of Kshs.2, 536,230 could not be confirmed.

Submissions of theAccounting Officer

• 44.TheAccounting Officer submitted that

The Accounting officer noted that following changes in Government and establishment of theStateDepartment for Co-operatives,the department wasgranted authority to open three accounts namely Recurrent,Development and Deposit Account.All other revenues collectable inthe department that does not fall in the above stated accounts was deposited in DepositAccount.

45. TheManagement and supervisionfund does not have a separate bank account and a separate cash book as required under Regulation 90(1)&(3)of thePublicFinance Management (National Government) Regulations. The management had written a letter to The National Treasury to seek authority to open a bank account for the fund.

ObservationsoftheCommittee

• 46.TheCommitteeobservedthat

SPECIALFUNDACCOUNTSCOMMITTEE-FUNDS

• i. The Management and supervision fund did not have a separate bank account and a separatecashbook thus inbreachof Regulation 90(1)&(3)of thePublic Finance Management(National Government)Regulations.
• ii. Therequest to open a bank account had not been acted upon by The National Treasury.
• ii. Matter is unresolved

Recommendations by the Committee

for theFund to operate a separatebank account and cashbook

• 47.The Committeerecommended that Within three months of adoption of this report the National Treasury to give authority
• 2)Long Outstanding Debts.
• 48.The statement of financial position and Note 7 to the financial statements reflects management andsupervisionfees-debtorsbalanceof Kshs.10,219,347.A reviewof the schedulesprovidedfor audit revealed thatthese debtsremained un-recovered formore than ten (10)years.It is not clear why these debts have remained uncollected and no evidence of the Management's effort to recover the debts was provided. In the circumstances. the accuracy and recoverabilityof the debtor's balance of Kshs.10,219.347could not be confirmed.

Submissions of the Accounting Officer

49. The Accounting Officer submitted that According to the record available in the department they indicate lists of dormiant

societies that resulted to debts amounting toKsh.10.219.347 owed to the Department. The amount relates to audit and supervision fees not paid in the years prior to 2016. The Department have initiated a process of reviewing these debts with a view to seek authorityfrom theNationalTreasury to write off.

ObservationsoftheCommittee

50. The Committee observed that 2. i.The accuracy and recoverability of the supervision fee debtor's balance of Kshs.10, 219,347 could not be confirmed. 3. ii.The matter is unresolved.

RecommendationsoftheCommittee

51. The Committee recommended that Within three months upon the adoption of this report the Accounting Officer to seek authorityfrom theNational Treasury to write off the debt in accordance with section 69 ofthePublicFinanceManagementActCap412A.

Financialyear2022/2023

SPECIALFUNDACCOUNTSCOMMITTEE-FUNDS

1)Inaccuracy of Cash and Cash Equivalents Balance

52. The statement of financial position and as disclosed and Note 4 to the financial statements reflects cash and cash equivalents balance of Kshs 3,296,598. However, the balance differs from the trial balance amount of Kshs. 7,966,439 resulting in unreconciled balance of Kshs. 4,669,841. Further, the cash and cash equivalent opening balance is reflected as negative Kshs. 2,133,610 against the audited balance of Kshs. 2,536,210 resulting in unreconciled variance of Kshs.4,669,840. 53. In addition, the balance is maintained in the State Department for Co-operatives Deposit account contrary to Section 68(2)(b) of the Public Finance Management Act, 2012 which requires an accounting officer to ensure that the entity keeps financial and accounting records that comply with the Act. In the circumstances, the completeness and accuracy of the reported cash and cash equivalent balance of Kshs. 3,296,598 could not be confirmed.

Submissions of the Accounting Officer

54. The Accounting Officer submitted that—

The management acknowledged that there was an error in preparation of financial report and that moving forward there will be no such mistake.

ObservationsoftheCommittee

• 55.TheCommitteeobservedthat
• i.The completeness and accuracy of the reported cash and cash equivalent balance of Kshs. 3,296,598 could not be confirmed.
• ii.The Matter is unresolved.

Recommendations by the Committee

56. The Committee recommended that 2. i.within three months upon adoption of this report, the accounting officer to subr documents to support the balance of reconciling the balance of Kshs. 3,296.5 theauditorGeneral forauditverification.

• ii. The Accounting Officer ensures that all applicable accounting ar controls, systems, standards, laws, and procedures are followed in * of Annual Reports and financial statements and in accordance ' prescribed by the Public Sector Accounting Standards Bo? with regulation 101 (4) of the public finance managemer Regulations

2) Unsupported Debtors Balance.

57. The statement of financial position and as disclosed in However, the balance has not been supported by detaile under current assets contrary to the provisions of para

SPECIALFUNDACCOUNTSCOMMITTEE-FUNDS

currentwhenit is expected toberealizedwithin twelvemonths after the collected andwhat effort is doing to ensure full recovery of the debts. Further no debt analysis was provided to support the debt balance.

Submissions of the Accounting Officer

TheAccounting Officer submitted that-

• 58.The amount of Kshs.10.219.347represents debts owed to the Department in respect of audit and supervision fee for the previous years. The amount relates to audit and supervision fees not paid in the years prior to 2016.

ObservationsoftheCommittee

59.TheCommitteeobservedthat-

• i.The balance of Kshs.10,219,347 had not been supported by detailed analysis of the debtors
• ii.Matter is unresolved.

Recommendations by the Committee

• 60.The Committeerecommendedthat-
• i. within three months upon adoption of this report, the accounting officer to submit detailed analysis of the debtors to support the balance Kshs.10,219,347.
• i. The Accounting Officer ensures that all applicable accounting and financial controls,systems,standards,laws,andprocedures arefollowed inthepreparation ofAnnual Reportsandfinancial statementsandin accordancewiththestandards prescribed by the Public Sector Accounting Standards Board and in compliance with regulation 101 (4) of the public finance management (National Government) Regulations

THIRTEENTHPARLIAMENT-SECONDSESSION THENATIONALASSEMBLY SPECIALFUNDSACCOUNTSCOMMITTEE.

ADOPTIONLISTFORTHE REPORTONAUDITEDFINANCIALSTATEMENTSFOR THE:

Co-operative Societies Liquidation Account for the Financial years 2018/19to2023/24

| No. | NAME | SIGNATURE | |-------|------------------------------------------------------|-------------| | 1. | Hon.Fatuma Zainab Mohammed, MP -Chairperson | | | 2. | Hon. Dawood Abdul Rahim, HSC, MP - Vice- Chairperson | | | 3. | Hon. Otucho Mary Emaase Mp | | | 4. | Hon. Charles Ngusya Nguna, MP | | | 5. | Hon. Dr. Christine Ombaka Oduor, MP | | | 6. | Hon. Erastus Kivasu Nzioka, MP | | | 7. | Hon. Eve Akinyi Obara, MP | | | 8. | Hon. Joseph Majimbo Kalasinga, MP | | | 9. | Hon. Tom Mboya Odege, MP | | | 10. | Hon. Catherine Nakhabi Omanyo, MP | | | I1. | Hon. Cecilia Asinyen Ngitit, MP | | | 12. | Hon. Erick Kahugu Mwangi MP | | | 13. | Hon. Joseph Kimutai Cherorot, MP | | | 14. | Hon. Paul Biego Kibichy, MP | | | 15. | Hon. Onchoke Charles Mamwacha, MP | |

THIRTEENTHPARLIAMENT-SECONDSESSION THENATIONALASSEMBLY SPECIALFUNDSACCOUNTSCOMMITTEE.

ADOPTIONLISTFORTHE REPORTONAUDITEDFINANCIALSTATEMENTSFOR THE:

ManagementandSupervisionFundfortheFinancialyears20l8/l9to 2023/24.

| NO. | NAME | SIGNATURE | |-------|------------------------------------------------------|-------------| | 1. | Hon.Fatuma Zainab Mohammed, MP-Chairperson | | | 2. | Hon. Dawood Abdul Rahim, HSC, MP - Vice- Chairperson | | | 3. | Hon. Otucho Mary Emaase Mp | | | 4. | Hon. Charles Ngusya Nguna, MP | | | 5. | Hon. Dr. Christine Ombaka Oduor, MP | | | 6. | Hon. Erastus Kivasu Nzioka, MP | | | 7. | Hon. Eve Akinyi Obara, MP | | | 8. | Hon. Joseph Majimbo Kalasinga, MP | | | 9. | Hon. Tom Mboya Odege, MP | | | 10. | Hon. Catherine Nakhabi Omanyo,MP | | | 11. | Hon. Cecilia Asinyen Ngitit, MP | | | 12. | Hon. Erick Kahugu Mwangi MP | | | 13. | Hon. Joseph Kimutai Cherorot, MP | | | 14. | Hon. Paul Biego Kibichy, MP | | | 15. | Hon.Onchoke Charles Mamwacha,MP | |

MINUTESOFTHE12THSITTINGINTHEFOURTHSESSIONOFSPECIALFUNDS ROOM12,2NDFLOOR,BUNGETOWERSAT10.00AM.

PRESENT

• 1.Hon.Fatuma Zainab Mohammed, MP- Chairperson

2. Hon. Charles Ngusya Nguna, MP

• Hon. Otuocho Mary Emaase, MP
• Hon.ErastusKivasu Nzioka,MP

5. Hon. Tom Mboya Odege, MP 6. Hon. Cecilia Asinyen Ngitit, MP 7. Hon Onchoke CharlesMamwacha,MP

• Hon. Joseph Kimutai Cherorot, MP

9. Hon. Paul Kibichi Biego, MP

APOLOGIES

1. Hon. Eve Akinyi Obara, MP 2. 32: Hon. Dawood Abdul Rahim, HSC, MP - Vice Chairperson 3. Hon. Dr. Christine Ombaka Oduor, MP 4. Hon. Catherine Nakhabi Omanyo, MP 5. Hon. Joseph Majimbo Kalasinga, MP 6. Hon. Kahugu Erick Mwangi, MP

INATTENDANCE NATIONALASSEMBLYSECRETARIAT

1. Ms. Comfort Achieng

-Clerk Assistant III

2. Mr. Nimrod Mate

-Clerk Assistant III

• 3.Mr.Robert Ngetich

• Fiscal Analyst II

• 4.Ms.Penninah Simirea

• Legal Counsel II

5. Ms.BevalineMosoti

• Research Officer II

6. Mr.Derrick Kathurima

-MediaRelations Officer

7. Ms.Felistus Muiya

• Protocol Officer

8. Mr.PeterMutethia

-Audio Officer III

9. Mr. Joshua Lenambeti

-SAAII

• 10.Mr.PatrickMatipe

• Attachee.

MANAGEMENT SUPERVISION FUND AND CO-OPERATIVESOCIETIES LIQUIDATIONFUND.

The Permanent Secretary, State Department for Co-operatives Mr. Patrick Kilemi appeared beforethecommitteeaccompanied bythefollowingofficers;

1. Mr. David K Obonyo

SDC -CCD

2. Mr. Javel M. Murira

DirectorofAdministration

3. Mr. Joel MkigiJudah

AAG

OFFICEOFTHEAUDITOR-GENERAL

1. Mr. David Osiemo

Liaison Officer.

2. Mr. Sammy M. Ng'ati

Deputy Director, Audit

• 3.Ms.Phanice Gekonge

Liason Officer

4. Dr. Jackson Ndungo

• NationalTreasury

MIN.NA/AA&GPC-SFAC/2025/032

PRELIMINARIES

The Chairperson called the meeting to order at 10.00 am, followed by a word of prayer and introductions. The following agenda was adopted as circulated:

• 1.Prayers.
• 2.Preliminaries/Introductions.
• 3.Examination of the Auditor General Reports on Accounts of Management and Supervision Fund and Cooperatives Societies Liquidation Fund for financial Years 2018/2019 to 2022/23.
• 4.Any Other Business.
• 5.Adjournment Date of the next meeting.

The Permanent Secretary who is the Accounting Officer for the two funds took the oath of witness and testified as follows.

MIN.NA/AA&GPC-SFAC/2025/0033

Management Brief.

The Management and Supervision Fund and the Co-operative Societies Liquidation Account are statutory mechanisms under the Co-operative Societies Act (Cap 490) and Co-operative Societies Rules (2004), designed to regulate and support Kenya's co-operative sector.

Management and Supervision Fund was established in 2004, under Rule 18 of the Co-operative Societies Rules, pursuant to the Co-operative Societies Act (Cap 490), revised 2012.

Purpose: To finance the administration, audit, and supervision of co-operative societies, ensuring compliance and operational efficiency. It covers expenses like equipment repairs, clerical assistance, professional audit fees, liquidation costs, and other Treasury-approved expenditures.

Every registered co-operative society, unless exempted in writing by the Commissioner, must pay an annual audit and supervisionfee into theFund.

MIN.NA/AA&GPC-SFAC/2025/034

1.COOPERATIVESSOCIETIESLIQUIDATIONACCOUNTFORFINANCIALYEAR 2018/2019

FailuretosubmitFinancialStatements.

Management of the fund failed to prepare and keep separate books of accounts for nine years from30thJune2004to30thJune2012.

Managementfailed to prepare and submit financial statementsfor audit for the same period.

ManagementResponse.

Separate books of accounts had not been maintained for the period quoted as the account was reported as an attachment to the Department's main financial statements.

The liquidationfund Account was established in the state department in the 2018/2019 FY.

CommitteeObservation.

Separate Liquidation Account's Financial records and statements for period from 2018/2019 havebeenprepared,submitted and audited.

2. Unsupported Balances.

The Statement of financial position reflected NILbalances for cash and cash equivalents and liquidation fund - capital and all the other balances

There was no supporting documents including the cash book, ledgers, trial balance and bank confirmationcertificatesprovidedbythemanagementforauditverification

Management Response

The Liquidation Fund account in the State Department was established in 2018/19 FY.

CommitteeObservation.

The2018/2019Financialstatementswerethefirststatementsprepared andsubmittedfor the Liquidation Fund.

The Committee gave the agency 14 days to submit audited accounts for the period 2004 - 2012 Financialperiod.

2019/2020FinancialYear.

Theissueswere thesame as thoseof 2018/2019whereasin2020/2021to2021/2022therewere nomaterielauditissuesraised.

The committeedirected thesecretariattotakewrittensubmissionsfortheperiod2022/2023and 2023/2024for report writing.

NA/AA&GPC-SFAC/2025/035 ADJOURNMENT/DATEOFNEXTMEETING

There being no other business, the meeting was adjourned at 12.30 p.m.

SIGNED..

DATE.

0812S

HON.FATUMAZAINABMOHAMMED,MP (CHAIRPERSON)

SPECIALFUNDSACCOUNTSCOMMITTEE

MINUTES OF THE 25TH SITTING IN THE FOURTH SESSION OF SPECIAL FUNDSACCOUNTSCOMMITTEEHELDONWEDNESDAY,I2THNOVEMBER 2025, IN COMMITTEE ROOM I2 ON 2ND FLOOR, BUNGE TOWERS AT 10.00AM.

PRESENT

• 1.Hon.Fatuma Zainab Mohammed, MP- Chairperson

2. Hon.Dawood Abdul Rahim,HSC,MP-Vice Chairperson 3. Hon.Erastus Kivasu Nzioka,MP 4. Hon. Charles Ngusya Nguna, MP 5. Hon. Tom Mboya Odege, MP 6. Hon. Cecilia Asinyen Ngitit, MP 7. Hon. Joseph Majimbo Kalasinga, MP 8. Hon. Joseph Kimutai Cherorot, MP 9. Hon.Catherine Nakhabi Omanyo,MP

APOLOGIES

• 1.Hon. Otuocho Mary Emaase, MP

2. Hon.Paul Kibichi Biego, MP 3. Hon. Eve Akinyi Obara, MP 4. Hon.Dr.Christine Ombaka Oduor, MP 5. Hon Onchoke Charles Mamwacha,MP 6. Hon. Kahugu Erick Mwangi, MP

INATTENDANCE NATIONALASSEMBLYSECRETARIAT

• 1.Mr. Erick Nyambati

-SeniorClerkAssitant

2. Ms. Comfort Achieng

• Clerk Assistant III

3. Ms. Mercy Kinyua

• Legal Counsel Il

4. Ms.Bevaline Mosoti

-Research Officer Ill

5. Mr.DerrickKathurima

-Media Relations Officer IlI

6. Mr.Joshua Lenambet

-Sergeant-at-arms

7. Ms. Felistus Muiya

-PublicCommunicationsOfficerIll

8. Mr.Peter Mutethia

• Audio Officer III

MIN.NA/AA&GPC-SFAC/2025/074 PRELIMINARIES

The Chairpersoncalled the meeting to order at 9.58 am,followed by a word of prayer and introductions. The following agenda was adopted as circulated:

• I.Prayers.
• 2.Preliminaries/lntroductions.

3. Consideration and adoption of the following reports on the audited financialstatements—

• a)Kenya Universities and Colleges Central Placement Staff Car loan and Mortgage scheme Fund for the Financial Years 2018/19 to 2021/2022
• b) National Land Commission Car loan and Mortgage scheme fund
• 4.AnyOtherBusiness.
• 5.Adjournment Date of the next meeting.

MIN.NA/AA&GPC-SFAC/2025/075CONSIDERATIONANDADOPTIONOFREPORTS.

• I. Kenya Universities and Colleges Central Placement Staff Car loan and MortgageschemeFundfor theFinancialYears2018/19 to2021/2022

The Committee unanimously adopted the report on the consideration of the audited accounts of the Kenya Universities and Colleges Central Placement Staff Car loan and report was proposed by Hon. Erastus Kivasu, MP. and seconded by Hon.Tom Odege, MP

2.National Land Commission Car loan and Mortgage Scheme Fund for the FinancialYears2020/2021and2021/2022.

The Committee unanimously adopted the report on the consideration of the audited accounts of the National Land Commission Car loan and Mortgage Scheme Fund for the FinancialYears2020/2021and2021/2022.Theadoptionof thereportwasproposedbyHon. Erastus Kivasu, MP. and seconded by Hon. Charles Nguna Ngusya, MP

MIN.NA/AA&GPC-SFAC/2025/076 ANYOTHERBUSINESS

Retreatwith the State Departmentof Petroleum

• i) TheCommitteewasinformedthatStateDepartmentforPetroleumhadproposed a two-dayretreatfrom13thto16thNovember,2025toexaminetheaudited accounts of Petroleum Development Levy Fund andPetroleum Training Fund for theFinancialYears2018/2019to2023/2024.
• i) The Committee resolved to postpone the retreat to the week of 2oth - 23rd November2025sincemostMemberswillbeunavailableduringthisperiod

NA/AA&GPC-SFAC/2025/77ADJOURNMENT/DATEOFNEXTMEETING

willbeheldonnotice.

SIGNED.

..DATE...

HON.FATUMAZAINABMOHAMMED,MP

(CHAIRPERSON)

SPECIALFUNDSACCOUNTSCOMMITTEE

MINUTES OF THE 29TH SITTING IN THE FOURTH SESSION OF SPECIAL FUNDS ACCOUNTS COMMITTEE HELD ON TUESDAY,25TH NOVEMBER 2025,IN COMMITTEE ROOM I2 ON 2ND FLOOR,BUNGE TOWERS AT 10.00AM.

PRESENT

• 1.Hon.Fatuma Zainab Mohammed,MP-Chairperson

2. Hon. Charles Ngusya Nguna, MP 3. Hon.Otuocho Mary Emaase, MP 4. Hon. Tom Mboya Odege, MP 5. Hon Onchoke Charles Mamwacha,MP 6. Hon.Catherine Nakhabi Omanyo,MP

APOLOGIES

• 1.Hon.Dawood Abdul Rahim,HSC, MP -Vice Chairperson

2. Hon.Eve Akinyi Obara,MP

• Hon. Joseph Majimbo Kalasinga, MP
• 4.Hon.Erastus Kivasu Nzioka,MP

5. Hon. Paul Kibichi Biego, MP 6. Hon.Dr. Christine Ombaka Oduor,MP 7. Hon.Joseph Kimutai Cherorot,MP 8. Hon.Cecilia Asinyen Ngitit, MP 9. Hon. Kahugu Erick Mwangi, MP

IN ATTENDANCE NATIONALASSEMBLYSECRETARIAT

• 1.Mr.ErickNyambati

• -SeniorClerkAssitant

2. Ms. Mercy Kinyua

• Legal Counsel Il

• Ms.BevalineMosoti

-ResearchOfficerI

4. Mr.DerrickKathurima

-Media Relations Officer Ill

• Mr.Joshua Lenambet

• -Sergeant-at-arms

• Ms. Felistus Muiya

• -PublicCommunications Officer Ill

• 7.Mr.Peter Mutethia

• Audio Officer IIl

MIN.NA/AA&GPC-SFAC/2025/094 PRELIMINARIES

The Chairperson called the meeting to order at 9.50 am, followed by a word of prayer and introductions. The following agenda was adopted as circulated:

• 1.Prayers.

2. Preliminaries/lntroductions. 3. Consideration and adoption of the following reports on the audited financial statements --

• a) Public Service Commission Staff Car loan and Mortgage scheme Fund fortheFinancialYears2018/19to2021/2022.

AT

• b) The Office of the Director of Public Prosecutions Car Loan and Mortgage Scheme Fund For Financial Years 2018/2019 to 2021/2022.

2. c)State Officers and Public Officers Motor Car Loan Scheme Fund for FinancialYears2019/2020To2021/2022.

• d) Cooperative Societies Liquidation Account Fund for Financial Years 2018/2019To2022/2023.
• e) Management and Supervision Fund for Financial Years 2018/2019 To 2022/2023.

5. 4.Any Other Business. 6. 5.Adjournment Date of the next meeting.

MIN.NA/AA&GPC-SFAC/2025/095CONSIDERATIONANDADOPTIONOFREPORTS.

I.Public Service Commission Staff Car loan and Mortgage scheme Fund for the FinancialYears2018/19to2021/2022.

The Committee unanimously adopted the report on the consideration of the audited accounts of the Public Service Commission Staff Car loan and Mortgage scheme Fund for the Charles Nguna Ngusya, MP. and seconded by Hon.Tom Odege, MP.

2. The Office of the Director of Public Prosecutions Car Loan and Mortgage SchemeFundForFinancialYears2018/2019to2021/2022.

The Committee unanimously adopted the report on the consideration of the audited accounts of The Office of the Director of Public Prosecutions Car Loan and Mortgage SchemeFundForFinancialYears2018/2019to2021/2022.

The adoption of the report was proposed by Hon. Otucho Mary Emaase, MP. and seconded by Hon. Onchoke Charles Mamwacha, MP.

3.State Officers and Public Officers Motor Car LoanScheme Fund for Financial Years2019/2020To2021/2022.

The Committee unanimously adopted the report on the consideration of the audited accountsofStateOfficersandPublicOfficersMotorCarLoanSchemeFundforFinancial Years2019/2020To2021/2022.

The adoption of the report was proposed by Hon. Otucho Mary Emaase, MP. and seconded by Hon. Charles Nguna Ngusya, MP.

4. Cooperative Societies Liquidation Account Fund for Financial Years 2018/2019To2022/2023.

The Committee unanimously adopted the report on the consideration of the audited accounts of Cooperative Societies Liquidation Account Fund for Financial Years 2018/2019 To2022/2023.

The adoption of the report was proposed by Hon. Tom mboya Ondege, MP. and seconded by Hon.Onchoke Charles Mamwacha,MP.

5 ManagementandSupervisionFund forFinancialYears2018/2019 To2022/ 2023.

The Committee unanimously adopted the report on Management and Supervision Fund for FinancialYears2018/2019To2022/2023.

The adoption of the report was proposed by Hon. Otucho Mary Emaase, MP. and seconded by Hon. Charles Nguna Ngusya, MP.

NA/AA&GPC-SFAC/2025/96ADJOURNMENT/DATEOFNEXTMEETING

There being no other business, the meeting was adjourned at 12.00 Noon. The next meeting will beheldonnotice.

27

SIGNED...

...DATE...

HON.FATUMAZAINABMOHAMMED,MP (CHAIRPERSON) SPECIALFUNDSACCOUNTSCOMMITTEE