17th Report Of The Special Funds Accounts Committee On Its Consideration Of The Audited Accounts Of 4 Funds

A report of Special Funds Account (National Assembly)

Published: March 2026 · 13th

Read the report (OCR extract)

SPECIAL FUNDS ACCOUNTS COMMITTEE

17TH REPORT ON THE CONSIDERATION OF THE AUDITED ACCOUNTS FOR THE FOLLOWING FUNDS-;

1. DIRECTOR OF PUBLIC PROSECUTIONS MORTGAGE AND CAR LOAN SCHEME FUND FOR THE FINANCIAL YEARS 2018/19 T0 2022/2023; 2. KENYA UNIVERSITIES AND COLLEGES CENTRAL PLACEMENT STAFF CAR LOAN AND MORTGAGE SCHEME 3. 3.PUBLIC SERVICE COMMISSION STAFF CAR LOAN AND MORTGAGE SCHEME FUND FOR THE FINANCIAL YEARS 2017/18 T0 2022/2023. 4. 4.NATIONAL LAND COMMISSION CAR LOAN AND MORTGAGE SCHEME FUND FOR THE FINANCIAL YEARS 2020/2021 AND 2021/2022

DIRECTORATEOFAUDITAPPROPRIATIONS &GENERALPURPOSECOMMITTEES, NATIONALASSEMBLY PARLIAMENTBUILDINGS NAIROBI

REPUBLIC OF KENYA THE NATIONAL ASSEMBLY

THIRTEENTH PARLIAMENTFOURTH SESSION

SPECIALFUNDSACCOUNTS COMMITTEE

17TH REPORT ON THE CONSIDERATION OF THE AUDITED ACCOUNTS FOR THE FOLLOWING FUNDS-;

1.DIRECTOR OF PUBLIC PROSECUTIONS MORTGAGE AND CAR LOAN SCHEME FUND FOR THE FINANCIAL YEARS 2018/19T02022/2023;
2.KENYA UNIVERSITIES AND COLLEGES CENTRAL PLACEMENT STAFF CAR LOAN AND MORTGAGE SCHEME FUND FORTHE FINANCIAL YEARS2018/19 TO2021/2022;
3.PUBLIC SERVICE COMMISSION STAFF CAR LOAN AND MORTGAGE SCHEME FUND FOR THE FINANCIALYEARS 2017/18TO2022/2023.
4.NATIONALLAND COMMISSION CAR LOAN AND MORTGAGE SCHEME FUND FOR THE FINANCIALYEARS 202O/2021 AND2021/2022

DIRECTORATEOFAUDITAPPROPRIATIONS

&GENERALPURPOSECOMMITTEES, NATIONALASSEMBLY PARLIAMENT BUILDINGS NAIROBI

SPECIALFUNDACCOUNTSCOMMITTEE-CARLOANANDMORTGAGESCHEMESFUND

| Table of Contents CHAPTERONE. | Table of Contents CHAPTERONE. | |----------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------| | 1.0 PREFACE. | 1.0 PREFACE. | | 1.1Establishment andMandate of Special FundsAccounts Committee | 1.1Establishment andMandate of Special FundsAccounts Committee | | 1.2 | Committee Membership.... | | 1.3 | CommitteeSecretariat... | | EXAMINATIONOFTHEAUDITEDFINANCIALSTATEMENTSFORTHE | EXAMINATIONOFTHEAUDITEDFINANCIALSTATEMENTSFORTHE | | OFFICETHEDIRECTOROFPUBLICPROSECUTIONSMORTGAGEANDCAR... | OFFICETHEDIRECTOROFPUBLICPROSECUTIONSMORTGAGEANDCAR... | | FinancialYear2018/2019 | FinancialYear2018/2019 | | FinancialYear2019/2020 | FinancialYear2019/2020 | | FinancialYear2020/2021. | FinancialYear2020/2021. | | FinancialYear 2021/2022 18 | FinancialYear 2021/2022 18 | | FinancialYear2018/2019. 22 | FinancialYear2018/2019. 22 | | FinancialYear2019/2020. 26 | FinancialYear2019/2020. 26 | | FinancialYear2020/2021. 31 | FinancialYear2020/2021. 31 | | FinancialYear2021/2022 37 | FinancialYear2021/2022 37 | | EXAMINATIONOFTHEAUDITEDFINANCIALSTATEMENTSFORPUBLICSERVICE COMMISSIONSTAFFCARLOANANDMORTGAGESCHEMEFUNDFORFINANCIAL | EXAMINATIONOFTHEAUDITEDFINANCIALSTATEMENTSFORPUBLICSERVICE COMMISSIONSTAFFCARLOANANDMORTGAGESCHEMEFUNDFORFINANCIAL | | YEARS2018/2019TO2021/2022. ...41 | YEARS2018/2019TO2021/2022. ...41 | | Financial Year2017/2018 41 | Financial Year2017/2018 41 | | FinancialYear2018/2019 48 | FinancialYear2018/2019 48 | | FinancialYear2019/2020 54 | FinancialYear2019/2020 54 | | FinancialYear2020/2021 60 | FinancialYear2020/2021 60 | | FinancialYear2021/2022 67 | FinancialYear2021/2022 67 | | FinancialYear2022/2023. .74 | FinancialYear2022/2023. .74 | | EXAMINATIONOFAUDITEDACCOUNTSFORTHENATIONALLAND..COMMISSION CARLOANANDMORTGAGESCHEMEFUNDFORTHE_FINANCIALYEAR2020/2021 | EXAMINATIONOFAUDITEDACCOUNTSFORTHENATIONALLAND..COMMISSION CARLOANANDMORTGAGESCHEMEFUNDFORTHE_FINANCIALYEAR2020/2021 | | AND 2021/2022.. ..80 | AND 2021/2022.. ..80 | | FinancialYear2020/2021 80 | FinancialYear2020/2021 80 | | FinancialYear2021/2022. .80 _FinancialYear2020/2021. .82 | FinancialYear2021/2022. .80 _FinancialYear2020/2021. .82 |

SPECIALFUNDACCOUNTSCOMMITTEE-CARLOANANDMORTGAGESCHEMESFUND

List of Abbreviations and Acronyms

| CoK | Constitution of Kenya, 2010 | |--------|-----------------------------------------------| | FY | Financial Year | | KUCCPS | KenyaUniversities andCollegesCentralPlacement | | MDAs | Ministries, Departments and Agencies | | MOU | Memorandum of Understanding | | PFM | PublicFinanceManagement | | OAG | Officeof theAuditor-General | | ODPP | OfficeDirectorofPublicProsecutions | | PSASB | PublicSectorAccountingStandardsBoard | | PSC | PublicServiceCommission |

SPECIALFUNDACCOUNTSCOMMITTEE-CARLOANANDMORTGAGESCHEMESFUND

CHAIRPERSON'SFOREWORD

Hon.Speaker,on behalf of the Special Funds Accounts Committee and underStanding Order 199, it ismypleasant duty andhonour topresent totheHouse the17thReport of the Committee on considerationof thereportsof theAuditor-Generalon the auditedfinancialstatementsfor the following Car loan and Mortgage Scheme Funds-

a)Director of Public Prosecutions Mortgage and Car Loan Scheme Fund for the Financial Years2018/19to2022/2023;
b)Kenya Universities and Colleges Central Placement Staff Car loan and Mortgage scheme Fund for the FinancialYears 2018/19 to 2021/2022;
? Public Service Commission Staff Car loan and Mortgage scheme Fund for the Financial Years2017/18to2022/2023.
d)National Land Commission Car loan and Mortgage Scheme Fund for the Financial Years 2020/2021and 2021/2022

Oversightovernationalrevenue andexpenditureis amongst therolesoftheNationalAssembly as stipulated underArticle 95(4) (c) of the Constitution of Kenya,2010.Further,Article 226of the CoKprovides that anAct ofParliamentshall providefor the designationof anAccountingOfficer ineverypublicentityatthenational levelwhois accountabletotheNationalAssemblyforits financial management. In addition, Article 229(8) mandates this House to debate and take appropriate action on audit reports from the Auditor-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 thatwasestablished in theFifth Session of the Eleventh Parliament following the review of the National Assembly's Standing Orders.

The Committee received both oral and written submissions from the respective Accounting Officers on theauditedfinancial statementsforthefollowingFunds:

a)Director of Public Prosecutions Mortgage and Car Loan Scheme Fund for the Financial Years2018/19to2021/2022;
b)Kenya Universities and Colleges Central PlacementStaff Car loan and Mortgage scheme Fund for the Financial Years 2018/19 to 2021/2022;
c)Public Service Commission Staff Car loan and Mortgage scheme Fund for the Financial Years2017/18to2022/2023.
d)National Land Commission Car loan andMortgageSchemeFundfor theFinancialYears 2020/2021and2021/2022

SPECIALFUNDACCOUNTSCOMMITTEE-CARLOANANDMORTGAGESCHEMESFUND

The submissions formed the basis of the Committee's observations,findings,and recommendations.Thesearealsocontainedin theMinutesandHansardReportsof Committee proceedings.

Hon. Speaker, I wish to express appreciation to the Honourable Members of the Committee, the Office of the Speaker, the Clerk of the National Assembly, the Parliamentary Liaison Offices of theAuditor-General and theNational Treasury and the CommitteeSecretariatforfacilitating the Committeein theproductionofthisreport.

HON.FATUMAZAINABMOHAMMED,M.P. CHAIRPERSON,SPECIALFUNDSACCOUNTSCOMMITTEE

CHAPTERONE 1.0PREFACE 1.1Establishment andMandateof Special FundsAccountsCommittee

1.The Special Funds Accounts Committee is one ofthe six Watchdog Committees of the National Assembly established under Standing Order 205.It is mandated to examine the reports of the Auditor-General on the following:
i. Funds established by statute or by subsidiary legislation, except Funds under Standing Order 205B(Decentralized Funds Accounts Committee)
ii. The Equalization Fund;
ili. TheEqualizationFund AdvisoryBoard;
iv. The Political Parties Fund;and
V. Other funds asmaybe 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. Erastus Kivasu 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 |

SPECIALFUNDACCOUNTSCOMMITTEE-CARLOANANDMORTGAGESCHEMESFUND

| 12 | Hon.ErickKahuguWamumbi,MP | Mathira | UDA | |------|-------------------------------|----------------|-------| | 13 | Hon.JosephKimutai Cherorot,MP | Kipkelion East | UDA | | 14 | Hon.OnchokeCharlesMamwacha,MP | Bonchari | UPA | | 15 | Hon. Paul Kibichi Biego, MP | Chesumei | UDA |

1.3 Committee Secretariat

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

| S/ N | NAME | DESIGNATION | |--------|-----------------------|-------------------------------| | 1 | Mr.Erick Nyambati | Senior ClerkAssistant | | 2. | Ms. Comfort Achieng | Clerk Assistant III | | 3 | Mr. Nimrod Mate | ClerkAssistantIII | | 4 | Mr.Robert Ngetich | Fiscal Analyst II | | 5 | Ms. Judith Kanyoko | Legal Counsel II | | 6 | Ms. Bevaline Mosoti | Research Officer III | | 7. | Mr. Derrick Kathurima | MediaRelationsOfficerIII | | 9 | Ms.Felistus Muiya | PublicCommunicationsOfficerII | | 10 | Mr.Peter Mutethia | HansardAudioOfficerIII | | 11 | Mr.JoshuaLenambet | Serjeant AtArms |

SPECIALFUNDACCOUNTSCOMMITTEE-CARLOANANDMORTGAGESCHEMESFUND

EXAMINATIONOFTHEAUDITEDFINANCIALSTATEMENTSFORTHE OFFICETHEDIRECTOROFPUBLICPROSECUTIONSMORTGAGEANDCAR LOANSCHEMEFUNDFORFINANCIALYEARS2018/2019TO2021/2022

4. Mr. Renson Ingonga, the Director of Public Prosecutions, appeared before the Committee on Tuesday22ndJuly2025toadduceevidenceonthe auditedfinancial statementsforthe,Office of Director of Public Prosecutions Mortgage and Car Loan Scheme Fund for the Financial Years 2018/19 to 2021/2022. During the meeting, the Accounting Officer was accompanied by:

1.Ms. Mediatrix Rapando

DHRM ODPP

2. Ms.ZuweneZainabu

Prosecutions CA.

3. Mr.Hassan Abdi

ODPP.

4. Mr. Alloys Kemo

ODPPPTI

5. Ms.Jacinta Nyamosi

Deputy Director.

6. Mr.NkadudaHiribae

Deputy Director, CFS.

7. Mr. Michael Sang

CA&RP

8. Ms.Christine Gakoso

PTI.

9. Ms. Irene Mobangi

ODPPFinance

10.Mr.Geoffrey Obiro

EI&OC

11.Mr.Kioko Maundu

SAODPP

12.Mr.Martin Aoko

ODPP

13.Mr.Frankword Dauddo

SAODPP

FinancialYear2018/2019

1)MisleadingDisclosures onBudget information in theFinancial Statements.

5.Part (b) on budget information of the disclosures under summary of significant accounting policies - paragraph three at page 12 indicates that, "a statement to reconcile the actual amounts on a comparable basis included in the statement of comparison budget and actual amounts andtheactuals asper thestatementoffinancialperformancehasbeenpresented under9ofthefinancial statements".However,noreconciliationstatement hasbeenpresented atpage9ofthefinancialstatements.

SubmissionsoftheAccountingOfficer

6.TheAccountingOfficer submitted that—

It a was typing error since the accounting policy was not applicable as the amounts in the financial performance agreed to thefiguresin thestatement of budget and actual amounts.

ObservationsoftheCommittee

7.TheCommitteeobserved that

SPECIALFUNDACCOUNTSCOMMITTEE-CARLOANANDMORTGAGESCHEMESFUND

i)The Fund did not provide the report containing reconciliation statements.
ii)The matter is unresolved.

RecommendationsoftheCommittee

8.The Committee recommended thatwithin threemonths upon the adoption of this report-
i)TheFund toproviderequisitereconciliations to the Office of theAuditor General for auditverification.
The Accounting Officer ensures that all applicableaccountingand financial controls,systems,standards,laws,andproceduresarefollowedinthepreparation ofAnnual Reports andfinancial statements and inaccordancewiththestandards prescribed by the Public Sector Accounting Standards Board and in compliance with regulation 101 (4) of the public finance management (National Government) Regulations.
2)Unexplainedvariancein CurrentAssets.
9.The statement of financial position reflects total current assets balance of Kshs.143,407,731 while the recomputed amount is Kshs.143,557,731 resulting to an unexplained variance of Kshs.150,000.00. Consequently, the accuracy of the current assets balance as at 30 June, 2019 couldnotbeconfirmed.

Submissions of theAccounting Officer

10.TheAccountingOfficersubmitted that

Theactualcorrectamountofcashandcashequivalent as at30June,2019was Kshs.131,888,808.A staff by the name JacobBartoney applied for a mortgageloan amount of Kshs.3,650,000 and was issued with a loan of Kshs.3,650,000. However, during capturingofthefigurein the cashbook andin the accountsreceivables the amountwas captured as Kshs.3,500,000. The error was corrected in the following year's financial statementsofthe2019/2020openingbalances.

ObservationsoftheCommittee

11.The Committeeobserved that
i)There was an unexplained variance of Kshs.150,000.00 between the current assets balanceandrecomputedamount
ii)The matter is unresolved.

RecommendationsoftheCommittee

12.TheCommitteerecommendedthat

i)Withinthreemonthsof adoptionof thisreport
a) The Accounting Officer to provide supporting documents to explain the variance of Kshs.150,000.
b) The Cabinet Secretary to institute disciplinary measures against the AccountingOfficer inlinewith section74of thePFMAct,CAP412A.
i)The Accounting Officer ensures that all applicable accounting and financial controls,systems,standards,laws,andproceduresarefollowed in the preparation of Annual Reports and financial statements and in accordance with the standards prescribed by thePublicSectorAccountingStandardsBoard andincompliance with regulation 101 (4) of the public finance management (National Government) Regulations.

3)Cash and Cash Equivalents

3.1 Failure to Support the balance with a board of survey report.

13.As disclosed in Note 3 to thefinancial statements,the statement offinancial position reflects cash and cash equivalents balance of Kshs.132,038,808.However, the balance was not supported with a board of survey report as at 30 June, 2019.

Submissions of theAccounting Officer

14. The Accounting Officer submitted that The cash and cash equivalents for the year ended 30th June, 2019 of Kshs.132,038,808 was supportedwithcashbook,bankreconciliations,bankstatements and certificate ofbalances. The board of survey was not conducted during the year. Subsequently the management ensuredcomplianceand thishassincebeenconductedbytheboardofsurveyfortheyear

ended 30th June, 2023.

ObservationsoftheCommittee

15.The Committee observed that
ii)The matter is unresolved.
i)The board of survey report was not provided as required by Regulation 90 of PFM (National Government) Regulations 2015.

RecommendationsoftheCommittee

16.TheCommitteerecommendsthat

i)Within threemonths upon the adoption of thisreport theAccounting Officer to provide the board of survey report as required by Regulation 90 of PFM (National Government)Regulations 2015.
The CabinetSecretary forNational Treasury and EconomicPlanningtoinstitute disciplinary measures against the Accounting Officer in line with section 74 of the PFM Act.
iii)The Accounting Officer ensures that all applicable accounting and financial controls,systems,standards,laws,andprocedures are ollowed in the preparation ofAnnual Reports and financial statements and in accordancewith thestandards prescribed by the Public Sector Accounting Standards Board and in compliance with regulation 101 (4) of the public finance management (National Government) Regulations.
4)IncompleteBankStatements

17. The scheme's staff housing mortgage and asset finance fund accounts had closing balances of Kshs.91,438,329andKshs.38,554,086,respectively according to thebank certificates. However,thebankstatementsprovidedfor auditreviewreflected lumpsumcashreceipts (credits)andloandisbursementstobeneficiaries(debits)withoutdetailsoninterestincome and individual borrower's principal amounts repayment.

18.Inaddition,individualborrowersloanstatementsfromthebankwerenotprovidedfor reconciliationwith schedulesprovided for auditby the SchemeManagement.In the circumstances,the accuracy and completeness of the cash and cashequivalents balances of Kshs.132,038,808couldnotbeconfirmed.

Submissions of the Accounting Officer

19. The Accounting Officer submitted that— citing confidentiality.However, the Fund requested consolidated bank to be crediting the

Initially,theConsolidatedBankofKenyadidnot avail individual accountsstatements principal amountstotheFund accountson a monthlybasis.Further,thebankwas requested to provide a breakdown of the lump sum amounts and interest income.

ObservationsoftheCommittee

20.TheCommitteeobservedthat
i)TheFunddidnotprovideindividualloanstatementsfromthebankforaudit verification.
ii)The matter is unresolved.

RecommendationsoftheCommittee

21.TheCommitteerecommendsthat

i)Within three months upon the adoption of this report the Accounting Officer to provide the individual bank statements from the bank to the Auditor General for auditverification.
i)The Cabinet Secretary to institute disciplinary measures against the Accounting Officerinlinewithsection74ofthePFMAct,CAP412A.
iiiThe AccountingOfficer ensures that all applicable accounting and financial controls,systems,standards,laws,andprocedures arefollowed in the preparation ofAnnualReportsandfinancial statements andinaccordancewiththestandards prescribed by thePublicSector AccountingStandards Board and incompliance with regulation 101 (4) of the public finance management (National Government) Regulations.

5)LateSubmissionofFinancial Statements

22. The Scheme's annual report and financial statements for the year ended 30 June, 2018 were submitted to theAuditor-Generalon18August2022whichwas thirtyeight(38)monthsafter the statutory deadline of 30 September, 2019. This is contrary to Section 84(3) of the Public FinanceManagementAct,2012whichrequires theAdministrator of a nationalpublicfund toprepare and submit thefinancialstatements thereof to theAuditor-General not later than three months after the end of each financial year.In the circumstances,Management was in breachofthelaw.

SubmissionsoftheAccountingOfficer

23.TheAccounting Officer submitted that— It was acknowledged,albeit regretfully that section 84(3)of PFM Act 2012 was not compliedwithbythemanagement in thefinancialyear2018/2019 until18thAugust2022.
24.However, from financial year 2021/2022 the fund management has complied. This can be confirmed as thefundmanagement submittedfinancial statementsforthefinancialyear 2021/2022 and 2022/2023 as required by Act.

ObservationsoftheCommittee

25.TheCommitteeobserved that

i)TheAccounting Officer wasinbreachof Section84(3)of thePublic Finance ManagementAct,CAP.412AwhichrequirestheAdministrator ofa national public fundtoprepareandsubmit thefinancialstatementsthereoftotheAuditor-General notlaterthanthreemonths aftertheendofeachfinancialyear
i)The Matter is unresolved.

RecommendationsoftheCommittee

26.TheCommitteerecommendsthat

i)TheAccountingOfficershould ensure timely submissionoffinancial statements as per the provisions of Section 84(3) of the Public Finance Management Act, CAP. 412A.
ii) The CabinetSecretary to institutedisciplinarymeasuresagainst the Accounting Officerinlinewithsection74ofthePFMAct,CAP.412A.
6)Unaccounted for Principal Amount Repaid.
27.Areviewof theloanrepaymentschedule andasdisclosedunderNote4 to thefinancial statementsrevealedthat amountsof Kshs.6,251,222 andKshs.3,036,282bothtotaling Kshs.9,287,504 in respect of car loan and mortgage loan were deducted as the principal amount recovered and remitted to the Consolidated Bank of Kenya.However, a review of the bank statements shows that a lump sum principal repayment of Kshs.6,537,415was Kshs.4,349,086 on 10th April, 2019 resulting to unaccounted for balance of Kshs.2, 750,089.
28.However,theManagementdidnotdiscloseanylienaccountwheretheremaining amount was held pending crediting to theScheme's accounts.In the circumstances,regularity in the use of the principal amount repaid could not be confirmed.

Submissions of theAccounting Officer

29.TheAccountingOfficersubmittedthat

Up until July2023,ConsolidatedBank of Kenyahad not beenhaving a clear way of crediting back the principal payments. They had been crediting ODPP's account without particulars of the amount and therefore difficult toreconcile the amounts.The Officevide a letterdated2ndAugust2022requestedconsolidatedbanktobecreditingtheprincipal amountstoourfundaccountsonamonthlybasis.

30.Further theyhadbeenrequestedtoprovide abreakdownofthelumpsum amountsThiswas evidentastheyhadstartedcreditingthebank accountsonmonthlybasisfromthemonthof July,2023.Inaddition,OfficeoftheDirectorofPublicProsecutionsmaintainedaLien accountinConsolidatedBankofKenyaor anyotherFinancialInstitution.

ObservationsoftheCommittee

31.TheCommitteeobserved that
i)The bank statements disclosed an unaccounted-for balance of Kshs.2, 750,089.
ii)The matteris unresolved.

RecommendationsoftheCommittee

32.TheCommitteerecommendedthat
i)Withinthreemonthsupontheadoptionofthisreport
a)theAccountingOfficertoreconcileandaccountforthebalanceof Kshs.2,750,089andsubmitevidencetotheAuditorGeneralforaudit verification
b)The Cabinet Secretary to institute disciplinarymeasures against the AccountingOfficerinline with section74of thePFMAct,CAP.412A.
i)The Accounting Officer ensures that all applicable accounting and financial controls,systems,standards,laws,and rocedures arefollowedinthepreparation ofAnnualReportsandfinancial statements andinaccordancewith thestandards prescribedbythePublicSectorAccountingStandardsBoardand incompliance with regulation 101 (4) of the public finance management (National Government) Regulations.

FinancialYear2019/2020

1.Inaccuracy of ComparativeFigures in Financial Statements.
a)cash andcash equivalents

33. The statement of financial position reflects cash and cash equivalents comparative figure of Kshs.131,888,808 instead of the balance of Kshs.132,038,808 reflected in the financial statementsfortheyearended30June,2019.

Submissions oftheAccounting Officer

34.TheAccountingOfficerSubmitted that— A loan for one beneficiary i.e. Jacob Bartoney was captured less Kshs.150,000.00 and this has since been corrected by a journal that was passed to effect the changes. The comparative figure of sh.150,000 which was the difference of shs.131,888,808 and shs132,038,808 has beenrectifiedintheJournalVoucher.

ObservationsoftheCommittee

35.TheCommitteeobservedthat
i)Therewas anunexplainedvariance of Kshs.150,000.00between the current assets balance and recomputed amount;and
ii)The matter is unresolved.

RecommendationsoftheCommittee

36.The Committeerecommended that
i)Within threemonthsupon theadoptionof thisreport
a) the Accounting Officer to provide supporting documentation to reconcile thevarianceofKshs.150,000totheAuditorGeneralforauditverification

b) The Cabinet Secretary to institute disciplinary measures against the Accounting Officer in line with section 74 of the PFM Act, CAP.412A.

2. ii)The Accounting Officer ensures that all applicable accounting and financial controls,systems,standards,laws,andproceduresarefollowedinthepreparation ofAnnual Reports and financial statements and in accordancewith the standards prescribed by the Public Sector Accounting Standards Board and in compliance with regulation 101 (4) of the public finance management (National Government) Regulations. 3. b)longtermreceivables 4. 37.The statement of financial position also reflects long term receivables-staff mortgage and carloan comparativefigure ofKshs.106,592,269instead ofthebalanceofKshs.106,442,269 reflectedinthefinancialstatementsfortheyearended30June,2019.

Submissions of theAccounting Officer

38.TheAccountingOfficerSubmitted that
A loan for one beneficiary i.e.JacobBartoney was captured lessKshs.150,000 and this has figure of Ksh.150,000 difference of kshs.106,592,269 and kshs.106,442,269 has been

since been corrected by a journal thatwaspassed to effect the changes.The comparative rectifiedinthejournalvoucher annexedintheManagementresponses.

ObservationsoftheCommittee

39.TheCommitteeobservedthat
i)The supporting documentation to reconcile the variance of Kshs. 150,0o0 were not provided for audit verification.
ii)The matter is unresolved.

RecommendationsoftheCommittee

40.TheCommitteerecommendedthat
i)Within threemonths upon the adoption of this report
a) Accounting Officer to provide supporting documentation to reconcile the varianceof Kshs.150,000 to theAuditor Generalfor auditverification.
b)The Cabinet Secretary to institute disciplinarymeasures against the AccountingOfficerinlinewithsection74ofthePFMAct,CAP.412A.
ii)The Accounting Officer ensures that all applicable accounting and financial controls,systems,standards,laws,and procedures arefollowedin thepreparation ofAnnual Reports andfinancial statements andin accordancewith the standards prescribed by the Public Sector Accounting Standards Board and in compliance with regulation 101 (4) of the public finance management (National Government) Regulations.

c)cash and cash equivalents

41.The statement of cashflows reflects cash and cashequivalents comparativefigure of Kshs. 131,888,808insteadofthebalanceofKshs.132,038,808reflectedinthefinancialstatements for the year ended 30 June, 2019. In addition, it reflects the reporting year end as 30 June, 2019 instead of 30 June, 2020.

Submissions of the Accounting Officer

42. The Accounting Officer Submitted that—

A loan for one beneficiary i.e. Jacob Bartoney was captured less Kshs. 150,000 and this has since been corrected by a journal thatwas passed to effect the changes.The comparative figure of Kshs.150,000 difference of kshs.132,038,808 and kshs.131,888,808 has been rectified in the journal voucher annexed in the Management responses. Further, the reference to the reporting year ending 2019 is a typographical error as the year ended on 30hJune2020.

ObservationsoftheCommittee

43.TheCommitteeobservedthat-
i)The supportingdocumentation toreconcile thevariance ofKshs.150,0o0werenot provided for audit verification.
ii)The matter is unresolved.

Recommendationsofthe Committee

44.TheCommitteerecommendedthat-
i)Withinthreemonthsupon the adoptionof thisreport
thevariance of Kshs.150,000 totheAuditorGeneralfor auditverification.
b)The Cabinet Secretary toinstitute disciplinarymeasures against the AccountingOfficer inline with section74of thePFMAct,CAP.412A.
i)The Accounting Officer ensures that all applicable accounting and financial controls,systems,standards,laws,andproceduresarefollowedinthepreparation ofAnnualReportsandfinancialstatements andinaccordancewiththestandards prescribed by thePublicSectorAccountingStandardsBoard and incompliance withregulation101(4)of thepublicfinancemanagement(National Government) Regulations.

d)statementofcashflows

45. The statement of cash flows in addition reflects the comparative figure for the loans issued asKshs.63,045,000 instead ofKshs.62,895,000 reflected in thefinancial statements for the year ended 30 June, 2019.

SubmissionsoftheAccountingOfficer

46.The Accounting Officer Submitted that— andKsh.62,895,000arises from a loan of one beneficiary i.e JacobBartoneywhich was captured less theKsh.150,000.This has since been corrected by a journal voucher that was

The difference in the statement of cash flows for theloans issued betweenKsh.63,045,000 passed to effect the changes.

ObservationsoftheCommittee

47.TheCommitteeobserved that
i)The supporting documentation to reconcile the variance of Kshs.150,0o0 were not providedfor auditverification;and
ii)Thematterisunresolved.

RecommendationsoftheCommittee

48.The Committeerecommended that
i)Within threemonthsupon the adoption of thisreport theAccounting Officer to provide supporting documentation to reconcile the variance of Kshs.150,0o0 to the AuditorGeneralforauditverification
The Accounting Officer ensures that allapplicable accounting and financial controls,systems,standards,laws,and procedures are followed in the preparation ofAnnual Reports and financial statements and in accordancewith the standards prescribed by the Public Sector Accounting Standards Board and in compliance with regulation 101 (4) of the publicfinance management (National Government) Regulations.

e)Netcashflows

49. The comparative figurefor net cashflowsfromfinancing activities is reflected asKshs. 11,955,000instead ofKshs.12,105,000while the net increase incash andcash equivalents reflected as Kshs.21,242,504instead ofKshs.21,392,504 contrary to thebalances reflected inthefinancialstatementsfortheyearended30June,2019.

Submissions of the Accounting Officer

50.TheAccountingOfficerSubmittedthat—

The differencein the statement ofcashflows for financing activities and netincrease in cash andcashequivalentsarisesfromaloanofonebeneficiaryi.eJacobBartoneywhichwas captured less theKsh.150,00o.This has since been corrected by a journal voucher that was passedtoeffectthechanges.

ObservationsoftheCommittee

51.TheCommitteeobservedthat
i)The supporting documentation to reconcile the variance of Kshs.150,0o0 were not provided for audit verification; and

SPECIALFUNDACCOUNTSCOMMITTEE-CARLOANANDMORTGAGESCHEMESFUND

ii)Thematteris unresolved.

RecommendationsoftheCommittee

52.TheCommitteerecommendedthat
i)Within threemonthsupon theadoption of thisreport
a)The Accounting Officer to provide supporting documentation to reconcile thevarianceofKshs.150,000 totheAuditorGeneralforauditverification
b)The Cabinet Secretary to institute disciplinarymeasures against the AccountingOfficerinline with section 74of thePFMAct,CAP.412A.
i)The Accounting Officer ensures that all applicable accounting and financial controls,systems,standards,laws,andproceduresarefollowed inthepreparation ofAnnualReports andfinancial statements and inaccordancewiththestandards prescribed bythePublicSectorAccountingStandardsBoard and incompliance with regulation 101 (4) of the public finance management (National Government) Regulations.

f) Disclosure on long termreceivables

53. Disclosure inNote 6 to thefinancial statements on longtermreceivables-staffmortgage reflects a comparative figure of Kshs.80,832,499 instead of Kshs.80,682,499 reflected in the financial statements for the year ended 30 June,2019.In the circumstances, the accuracyof the comparativefiguresreflected inthefinancial statementscouldnotbe confirmed.

Submissions of theAccounting Officer

54.TheAccountingOfficerSubmitted that— The differenceinthefinancial statements onlong termreceivables-staffMortgagebetween Ksh.80,682,499 and Ksh.80,682,499 is as a result of a loan for one beneficiary i.e Jacob Bartoney which was captured less theKsh.150,000.This has since been corrected by a journal voucher that waspassed toeffect the changes.

ObservationsoftheCommittee

55.TheCommitteeobservedthat
i)The supporting documentation to reconcile thevariance of Kshs.150,0o0 were not providedforauditverification.
ii)The matter is unresolved.

Recommendationsofthe Committee

56.TheCommitteerecommended that
i)Within three months upon the adoption of thisreport
a)The Accounting Officer toprovide supporting documentation to reconcile thevarianceofKshs.150,000totheAuditorGeneralforauditverification.
b)The Cabinet Secretary toinstitute disciplinarymeasures against the AccountingOfficerinlinewithsection74of thePFMAct,CAP.412A.

i)The Accounting Officer ensures that all applicable accounting and financial controls,systems,standards,laws,andprocedures arefollowedinthepreparation ofAnnual Reports andfinancial statements and in accordancewiththestandards prescribed by the PublicSector Accounting Standards Board and in compliance with regulation 101 (4) of the publicfinance management (National Government) Regulations.

2.Cash and Cash Equivalents

2.1 Failure to Support the Balance with a Board of Survey Report
57.AsdisclosedinNote3tothefinancialstatements,thestatementoffinancialpositionreflects cash and cash equivalents of Kshs.173,199,245.However, thebalance was not supported withaboardofsurveyreportasthatdate.

Submissions of theAccounting Officer

58.TheAccountingOfficerSubmitted that— The board of survey was not conducted during the year. However, the cash and cash

equivalent for the year ended 30th June, 2020 of Kshs.173,199,245 was supported with cashbook,certificate of balances,andbank reconciliations.Subsequently,themanagement has ensured compliance and a board of survey for the year ended 30th June, 2023was conducted.

ObservationsoftheCommittee

59.TheCommitteeobserved that
i)The board of survey report was not provided required by Regulation 90 of PFM (National Government) Regulations 2015.
ii)The matter is unresolved.

Recommendationsofthe Committee

60.TheCommitteerecommendsthat

i)Within threemonths upon the adoption of thisreport
a)TheAccounting Officer toprovide theboard of surveyreport asrequired byRegulation90 of PFM regulations 2015.
b)The Cabinet Secretary to institute disciplinary measures against the Accounting Officer in line with section 74 of the PFM Act, CAP.412A.
ii The Accounting Officer ensures that all applicable accounting and financial controls,systems,standards,laws,and procedures are followed in the preparation ofAnnual Reports andfinancial statements andin accordancewith thestandards prescribed by the Public Sector Accounting Standards Board and in compliance with regulation 101 (4) of the public finance management (National Government) Regulations.

2.2 IncompleteBankStatements

61. The scheme's staff mortgage and staff car loan accounts held at Consolidated Bank of Kenya had closing balances of Kshs.33,054,086 and Kshs.120,238,320 as at 30 June, 2020, respectively according to the bank certificates.However,the bank statements provided for audit review reflected lump sum cash receipts (credits) and loan disbursements to beneficiaries(Debits)without details on interestincome and individual borrower's principal amounts repaid.Further,individual loan statementsfrom the bankwerenotprovided for reconciliationwith schedulesprovidedfor audit.In the circumstances,the accuracyand completeness of the cash and cash equivalents balances of Kshs.173,349,245 could not be confirmed.

SubmissionsoftheAccountingOfficer

56.TheAccounting Officer Submitted that— Initially,the ConsolidatedBankofKenyadidnot availindividual accounts statements citing confidentiality. The Office vide a letter dated 2nd August 2022 requested consolidated bank to be crediting the principal amounts to their fund accounts on a monthly basis. Further they had been requested to provide a breakdown of the lump sum amounts and interest.Thiswas evident as theyhadstartedcrediting theirbank accounts on monthly basis from the month of July 2023.Further individualbank statements had alsobeen provided.

ObservationsoftheCommittee 57.TheCommitteeobserved that

i)TheFund didnotprovide individual loan statements from thebank for audit verification;and
ii)This matter is unresolved.

Recommendationsofthe Committee 58.TheCommitteerecommendsthat

i)Within threemonthsupon the adoption of thisreport theAccounting Officer to provide theindividual bank statementsfrom thebankfor auditverification.
i)The Accounting Officer ensures that all applicable accounting and financial controls,systems,standards,laws,andprocedures arefollowedinthepreparation ofAnnual Reportsandfinancialstatements andinaccordancewiththestandards prescribed bythePublicSectorAccountingStandardsBoard and in compliance

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

3.LateSubmissionofFinancial Statements

59.TheScheme's annual report andfinancial statements for theyear ended30June,2020were submitted to the Auditor-General on 12 August 2022which was twenty-two(22) months after the statutory deadline of 30 September,2020.This is contrary to Section 84(3) of the Public FinanceManagementAct,2012which requires theAdministrator ofa national publicfund to prepare andsubmit thefinancialstatements thereoftotheAuditor-Generalnot later than three months after the end ofeachfinancial year.In the circumstances,Management was inbreach of the law.

60.ObservationsoftheCommittee

i) The Accounting Officer was in breach of Section84(3)of the PublicFinance Management Act, Cap.412A which requires the Administrator of a national public fund toprepare and submit thefinancial statements thereof to theAuditor-General not later than three months after the end of each financial year; and

2. ii) TheMatter is unresolved.

RecommendationsoftheCommittee

62.The Committeerecommends that
i)The Accounting Officer should ensure timely submission of financial statements as per the provisions of Section 84(3) of the Public Finance Management Act, Cap. 412A
ii)The Cabinet Secretary to institute disciplinary measures against the Accounting Officerinlinewithsection74ofthePFMAct,CAP.412A.

4.Failure to Credit Scheme's Account with Principal Paid.

61. A review of the loan repayment schedule and as disclosed under Note 4 to the financial statementsrevealed that an amountofKshs.15,610,436wasdeducted astheprincipal amount and remitted to the bank during theyear ended30June,2020.However,a review ofthe bank statementsrevealedthattheprincipal repaymentwasnotcreditedtotheScheme's accounts as at30June,2020.Further,thebank didnotdisclose any alienaccountwhere thefundswere held pending crediting to the Scheme's accounts. In the circumstances, the regularity in use of the principal amount repaid could not be confirmed.

Submissions of theAccounting Officer

61. The Accounting Officer Submitted that Up until July 2023, Consolidated Bank of Kenya had not been having a clear way of crediting

back the principal payments to their account. They had been crediting ODPP's account without particulars ofthe amount and therefore making it difficult to reconcile the amounts.The Office

SPECIALFUNDACCOUNTSCOMMITTEE-CARLOANANDMORTGAGESCHEMESFUND

vide a letter dated 2nd August 2022 requested consolidated bank to be crediting the principal amountstotheirfundaccountsonamonthlybasis.

62. Further they had been requested to provide a breakdown of the lump sum amounts. This was evident as they had started crediting their bank accounts on monthly basis from the month of July2023.Furtherindividualbank statementshad alsobeen provided.In addition,he clarified that Office of theDirectorofPublicProsecutions doesnotmaintain anyLien account in Consolidated Bank of Kenya.

ObservationsoftheCommittee

63.TheCommitteeobserved that

i)The bank statements revealed that the principal repayment of Kshs.15,610,436 wasnotcreditedtotheScheme'saccountsasat30June,2020.
ii)The matteris unresolved.

RecommendationsoftheCommittee

64.TheCommitteerecommendedthat-

i)Within threemonths upon the adoption of thisreport
a)The Accounting Officer to reconcile and account for the principal repayment of Kshs.15,610,436 and submit evidence to theAuditor General for auditverification
b)The Cabinet Secretary to institute disciplinary measures against the Accounting Officer inline withsection74 of thePFMAct,CAP.412A.
ii) TheAccounting Officerensures that all applicable accounting andfinancial controls,systems,standards,laws,and procedures are followed in the preparation ofAnnualReportsand financial statementsand inaccordance with the standardsprescribed by thePublicSector AccountingStandards Boardand incompliance withregulation 101(4)of thepublicfinance management(National Government)Regulations.

FinancialYear2020/2021

1.Cash and Cash Equivalents

1.1 FailuretoSupport theBalancewithaBoard of SurveyReport

65.As disclosed inNote 3to thefinancial statements,the statement of financialposition reflects cash and cash equivalents balance of Kshs.145,526,311.However, the balance was not supportedby aboardof surveyreport asat thatdate.

Submissions of the Accounting Officer

66.TheAccountingOfficerSubmitted that

The board of survey was not conducted during the year. However, the cash and cash

SPECIALFUNDACCOUNTSCOMMITTEE-CARLOANANDMORTGAGESCHEMESFUND

cashbook,bankreconciliations,bankstatements and certificateofbalances.Subsequently themanagementensuredcompliance and thishadsincebeencorrectedwithaboardof survey for theyear ended 30th June,2023.

ObservationsoftheCommittee

67.TheCommitteeobservedthat

i)The board of survey report was not provided as required by Regulation 90 of PFM (National Government) Regulations 2015; and
ii)The matter is unresolved.

RecommendationsoftheCommittee 68.TheCommitteerecommendsthat

i Within three months upon the adoption of this report
a.the Accounting Officer toprovide theboardof surveyreport asrequired by Regulation90ofPFMregulations2015.
b. The Cabinet Secretary to institute disciplinary measures against the Accounting Officer in line with section 74 of thePFM Act, CAP.412A.
ii) The Accounting Officer ensures that all applicable accounting and financial controls, systems, standards, laws, and procedures are followed in the preparation ofAnnual Reports and financial statements and in accordance with thestandardsprescribedby thePublicSectorAccountingStandardsBoard and in compliance with regulation101(4) of thepublic finance management (National Government) Regulations.

1.2 IncompleteBankStatements.

69. The Scheme's staff mortgage and staff car loan accounts are held in Consolidated Bank of Kenya with closing balances of Kshs.98,799,622 and Kshs.32,850,888 respectively according to thebankcertificates.However,thebankstatementsprovided reflectlumpsumcashreceipts (credits)andloandisbursements tobeneficiaries(debits)withoutdetailsoninterestincome and individual borrowers? principal amount repaid. 2. 70.Further,individual loan statements from the bank were not provided for reconciliation with schedules provided for audit. In the circumstances,the accuracy and completeness ofthe cash and cash equivalents balance ofKshs.145,526,311 could not be confirmed.

Submissions oftheAccountingOfficer

71.TheAccountingOfficerSubmitted that Initially, Consolidated Bank of Kenya did not avail individual accounts statements citing confidentiality.However,theOfficevidealetterdated2ndAugust2022requestedconsolidated banktobe crediting theprincipal amounts to theirfund accounts on a monthlybasis.Further, theyhadbeenrequestedtoprovide a breakdownofthelumpsum amounts andinterest income.

SPECIALFUNDACCOUNTSCOMMITTEE-CARLOANANDMORTGAGESCHEMESFUND

This was evident as they had started crediting our bank accounts on monthly basis from the month of July,2023.Further individual bank statements had alsobeen provided.

ObservationsoftheCommittee 72.The Committee observed that

i)TheFund didnotprovideindividual loanstatementsfromthebankfor audit verification;and
ii)This matteris unresolved.

RecommendationsoftheCommittee 73.TheCommitteerecommendsthat

i)Within threemonths upon the adoption of thisreport theAccounting Officer toprovidetheloanstatementsandindividualborrowersstatementsfromthe bankforauditverification.
ii)The Accounting Officer ensures that all applicable accounting and financial controls,systems,standards,laws,and procedures are followed in the preparationofAnnualReportsandfinancialstatementsand inaccordance with the standardsprescribed by thePublicSectorAccountingStandards Board and in compliance with regulation 101 (4) of the public finance management (National Government) Regulations.

2. Unreconciled Principal Amount Credited to the Scheme's Accounts.

74. A review of the loan repayment schedule and as disclosed under Note 4 to the financial statements revealthat an amount ofKshs.26,406,511was deducted as theprincipalamount andremitted to thebankin theyear ended30thJune2021.However,areview of thebank statements revealed the principal repayment of Kshs.31,587,539 was credited to the Scheme's account during the year ended 30th June 2021 resulting in an unreconciled difference of Kshs. 5,181,028. In the circumstances, the accuracy and completeness of the principal amount paid ofKshs.26,406,511couldnotbeconfirmed.

Submissions of the Accounting Officer

75.TheAccountingOfficerSubmitted that— Up until July 2023, Consolidated Bank of Kenya had not been having a clear way of crediting back theprincipal payments back to our account. They had been crediting ODPP's account withoutparticulars ofthe amount and thereforedifficult toreconcile theamounts.TheOffice vide a letter dated 2nd August 2022 requested consolidated bank to be crediting the principal amounts totheirfund accounts on a monthly basis.Further they had been requested toprovide

a breakdown ofthelump sum amounts.Thiswas evident as theyhad started creditingourbank accounts on monthlybasisfrom themonth ofJuly,2023.Individual bankstatements had been provided.

ObservationsoftheCommittee

76.TheCommitteeobservedthat

i)The bank statements revealed that the principal repayment of Kshs. 31, 587, 539was credited to theScheme's account resulting in an unreconciled difference ofKshs.5,181,028;and
ii)The matter is unresolved.

RecommendationsoftheCommittee

77.TheCommitteerecommended that

i)Withinthreemonthsupon the adoption of thisreport
a.the Accounting Officer to reconcile and account for the principal repayment of Kshs.31,587,539 and submit evidence to the Auditor General for audit verification.
b.The Cabinet Secretarytoinstitute disciplinary measures againstthe Accounting Officer inlinewith section74 of thePFM Act, CAP.412A.
ii) The Accounting Officer ensures thatall 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 standardsprescribedbythePublicSectorAccountingStandardsBoard and in compliance with regulation 101 (4) ofthepublic finance management (National Government) Regulations.

FinancialYear2021/2022

1. Cash and Cash Equivalents

1.1 Unsupported Cash and Cash Equivalents.
78.Thestatement offinancialposition asdisclosed inNote3to thefinancial statements reflects the cash and cash equivalents balance of Kshs.253,450,166 as at 30June 2022.However, the balance was not supported with a board of survey report.

Submissions oftheAccountingOfficer

79.TheAccountingOfficerSubmitted that

Theboard of survey was not conducted during the year.However, the cash and cash equivalents for the year ended 30th June, 2022 of Kshs.253,450,166 was supported with cashbook,bankreconciliations,bankstatementsandcertificateofbalances.Themanagement had since ensured compliance as per the board of survey for the year ended 3oth June, 2023.

ObservationsoftheCommittee

SPECIALFUNDACCOUNTSCOMMITTEE-CARLOANANDMORTGAGESCHEMESFUND

80.TheCommitteeobserved that

i)Theboard of surveyreport was notprovided asrequired byRegulation90of PFM(National Government)Regulations2015;and
ii)The matter is unresolved.

RecommendationsoftheCommittee

81.TheCommitteerecommendsthat

i)Within threemonthsupon the adoptionof thisreport
a.TheAccountingOfficer toprovidetheboardofsurveyreport asrequiredby Regulation 90 of PFM regulations 2015.
b.The Cabinet Secretary to institute disciplinary measures against the AccountingOfficerinlinewithsection74of thePFMAct,CAP.412A.
ii) TheAccounting Officer ensures thatall applicable accounting and financial controls, systems, standards, laws, and procedures are followed in the preparationofAnnual Reports andfinancialstatements andin accordancewith the standards prescribed by the Public Sector Accounting Standards Board and in compliance with regulation 101 (4) of the public finance management (National Government) Regulations.

2.IncompleteBankStatements

82.Bank certificates provided for audit review indicated that the Scheme's staff Housing Mortgage and CarLoan accountsheld at Consolidated Kenya had closingbalancesof Kshs.89,373,122 and Kshs.48,872,102, respectively. Bank statements provided for audit review reflects lump sum cash receipts (credits)and loan disbursements to beneficiaries (debits)without details oninterest income andindividual borrowers'principal amount repaid.
83.Further,individual loanstatements from the bankwere not providedfor reconciliationwith schedules provided for audit. In the circumstances, the accuracy and completeness of the cash and cash equivalentsbalances ofKshs.253,450,160 could not be confirmed.

Submissions of theAccounting Officer

84. The Accounting Officer Submitted that Initially,Consolidated Bank of Kenya did not availindividual accounts statements citing confidentiality,however,theOfficevide a letter dated2ndAugust2022requested consolidated bank to be crediting the principal amounts to their fund accounts on a monthly basis. Further, they had been requested to provide a breakdown of the lump sum amounts and interest income. This was evident as they had started crediting their bank accounts on monthly basis from the month of July, 2023.Further individual bank statements have alsobeen provided.

ObservationsoftheCommittee

85.TheCommitteeobservedthat

i)TheFund didnotprovideindividual loanstatementsfrom thebankforaudit verification;and
ii)This matter is unresolved.

RecommendationsoftheCommittee 86.TheCommitteerecommendsthat

i)Within threemonthsupon the adoption of thisreport theAccountingOfficer toprovide theloanstatements and individual borrowersstatements from the bankfor auditverification.
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 standardsprescribed by thePublicSectorAccountingStandards Board and in compliance with regulation 101 (4) of the public finance management (National Government) Regulations

3.Unreconciled Difference in the Principal Paid.

87. A review of the loan repayment schedule and as disclosed under Note 4 to the financial statements revealed that a principal amount of Kshs.33,261,348while in theprioryear,the principal amount paidof Kshs.18,386,138 was unaccounted for resulting to a credit of Kshs.51,647,486.However,a reviewofthebank statements revealed that principal repayment ofKshs.44,860,819was credited to theScheme's accounts duringtheyearended30June, 2022 resulting to unreconciled difference of Kshs.6,786,667.In the circumstances,the 30June,2022 could notbe confirmed.

Submissions of the Accounting Officer

88.TheAccountingOfficerSubmitted that

Up until July 2023, Consolidated Bank of Kenya had not been having a clear way of crediting back theprincipal paymentsback to their account.They had been crediting ODPP's account without particulars of the amount and therefore difficult to reconcile the amounts.

TheOfficevide a letter dated 2ndAugust2022requested consolidated bank tobecrediting the principal amounts to their fund accounts on a monthly basis.Further they had been requested toprovide abreakdown of the lump sum amounts.This was evident as they had started crediting theirbank accounts on monthly basis from the month of July 2023.Further individual bankstatementshavealsobeenprovided.

ObservationsoftheCommittee

89.TheCommitteeobserved that

i)Thebank statementsrevealed thatthe principal repayment of Kshs. 44,860,819was creditedtotheScheme's account resultingin anunreconciled difference of Kshs.6,786,667; and
ii)The matter is unresolved.

RecommendationsoftheCommittee

90.TheCommitteerecommended that-

i)Withinthreemonthsupon the adoption of thisreport
a.theAccounting Officer toreconcile and accountfor theprincipal repayment ofKshs.6,786,667andsubmitevidencetotheAuditorGeneralforaudit verification.
b. The Cabinet Secretary to institute disciplinary measures against the Accounting Officer in line with section 74 of thePFMAct,CAP.412A.
ii) TheAccounting Officer ensures thatall applicable accounting and financial controls,systems, standards, laws, and procedures are followed in the preparationofAnnual Reports andfinancial statementsand in accordancewith the standards prescribed by the Public Sector Accounting Standards Board and in compliance with regulation 101 (4) of the public finance management (National Government) Regulations.

EXAMINATIONOFTHEAUDITEDFINANCIALSTATEMENTSFORTHEKENYA UNIVERSITIESANDCOLLEGESCENTRALPLACEMENTSTAFFCARLOAN ANDMORTGAGESCHEMEFUNDFORFINANCIALYEARS2018/2019TO 2021/2022

95. Ms.Agnes Mercy Wahome, the Chief Executive Officer, Kenya Universities and Colleges Central Placement appeared before the Committee on Tuesday2oth February and Wednesday5thNovember,2024toadduceevidenceon the auditedfinancial statementsfor the,KenyaUniversitiesand Colleges CentralPlacement Staff Car loan and Mortgage schemeFundfortheFinancialYears2018/19 to2021/2022.Duringthemeeting,the Accounting Officer was accompanied by:

1.Mr.MichaelKimani

Finance Manager

2.Mr.Eric Asande

SeniorAccountant

FinancialYear2018/2019

1.InaccuraciesinFinancial Statements

1.1StatementofCashFlow

96.ThestatementofcashflowreflectscashandcashequivalentofanamountofKshs 139,412,583. However, casting the accuracy and review of statements revealed that the cash equivalent as at 1 July, 2018 was not included resulting to understatements of an amount of Kshs 156,655,556 was not explained. In circumstances, the accuracy and completeness of the cash and cash equivalents of an amount of Kshs139,412,583 could not be confirmed.

SubmissionsbytheAccountingOfficer

97.TheAccountingOfficer submitted that

TheCashflowwasprepared underthedirectmethod as recommended bythePublicSector AccountingBoard,inwhich one startswith the openingbalance at thebeginningof the year,reflecting thecashflows to arrive at the cashposition as at the endof the period or year.The amount of Kshs156,655,583was thebalanceas at30June2018 and therefore the openingbalancefor theFinancialYear 2018/2019 as at1st July 2018.Theperiod had a net cash outflow of Kshs17,242,973 resulting toa reduced cashposition of Kshs 139,412,583as at30thJune2019 ascomputedbelow.

Cash and cash equivalent 1/7/2018

Kshs 156,655,556

Net decrease in cash andcash equivalent

Kshs (17,242,973)

Cashandcashequivalent30/6/2019

Kshs 139,412,583

SPECIALFUNDACCOUNTSCOMMITTEE-CARLOANANDMORTGAGESCHEMESFUND

ObservationsoftheCommittee

98.The Committeeobserved that

i) The accuracy and completenessof the cash and cash equivalents of anamount ofKshs139,412,583wasconfirmedand
i) The matter is resolved.

1.2StatementoffinancialPerformance

99.Reviewof thestatement offinancial performance revealed a nil balanceinrespectof 3% commission on serviceproviders.However,thestaff mortgage and car loansbankstatements reflect an amount of Kshs.329,644inrespect of tax on credit and other bank charges which are not included as expensesin the statement of financial performance.In the circumstances, the accuracy and completeness of the nil balance in respect of 3% commission on service providercouldnotbeconfirmed.

Submissionsby theAccountingOfficer

TheAccountingOfficer submitted that

100.The HFC bank account opened and operated as deposit account for advancing the house mortgage and car loansto thePlacementService staff.The account does not attractbank charges but management negotiated with the bank to earn some interest on unutilized funds. Thebankwithholds15%oninterestearnedand the sameis remitted toKenyaRevenue Authority as required by law.
101.The amount of Kshs 329,644 was part of the withheld tax on interest earned on the unutilized depositfund.ThePlacementServicetreated thewithheld tax as a prepaymentuntil the same is claimed while making annual returns after the year end. She explained that the Placement Service does not incur expenses to operate the HFC bank account instead the staff incur an administration expensewhichisdirectlyrecoveredfrom themandremittedwith monthly mortgage and car loan instalments.

ObservationsoftheCommittee

102.The Committeeobserved that
i)Thebankstatements reflect an amount ofKshs.329,644inrespectof taxoncredit andotherbankchargeswhicharenotincludedasexpensesin thestatementof financialperformance
ii)Managementtreated thewithheld tax as aprepayment however;the amountwasnot reflected inthestatementoffinancialposition.
iii)TheMatterisunresolved.

RecommendationsoftheCommittee

103.The Committeerecommends that
i)Within threemonthsupon adoption of thisreport,the Accounting Officer must provide areportwithsupportingDocumentation on theKshs.329,644 thatwas not

reflectedin thestatementoffinancialposition to the Committeeand totheOfficeof theAuditorGeneralforauditverification.

ii)The Accounting Officer should ensure that all applicable accounting and financial controls, systems,standards,laws, and procedures are followed in the preparation of the financial statements in compliance with Public Finance Management Act,2015 and inaccordancewith the standardsprescribed by thePublicSectorAccounting Standards Board as per Regulation 101(4) of the Public Finance Management (National Government) Regulations, 2015.

2.Latesubmissionoffinancialstatements

104.Thefinancialstatementsfor theKenyaUniversitiesandColleges Central Placement ServiceStaff Mortgage and Car LoanSchemefor theyear ended 30th June,2019were submitted totheAuditor-Generalon27March,2023,forty-five(45)months afterthestatutory deadline tosubmit of 30September,2019. Thiswas contrary tosection47(1)of the public ofKenya2010,thePublicFinance Management Act,CAP.412A and any other legislation shall be submitted to theAuditor-Generalwithin three(3)months after the endof the fiscalyear tom which the accounts relate.In the circumstances,Management was in breach of the law.

SubmissionsbytheAccountingOfficer

105.TheAccountingOfficersubmittedthat

The Placement Service prepared a consolidated annual report and financial statements for financial year ended 30June 2019,which were submitted by 30 September 2019 toAuditor General for audit as required.At that time,there were no guideline from Public Sector Accounting Standards Board that the Mortgage accounts should be submitted separately. The PlacementService therefore did notprepare separatefinancial statement forStaff Mortgage andCar loanscheme annualreport andfinancial statements and continuedpreparing

consolidatedfinancialstatements.
106.Upon the release of the guidelines and templates for preparation of separate financial statements,thePlacementServiceprepared theAnnualReports andFinancial Statementfor theyearended30June2022andsubmittedby30September2022asrequiredbythelaw.The Office of the Auditor General guided that we prepare the Financial Statements for the earlier years.

ObservationsoftheCommittee

107.TheCommitteeobserved that
i) TheAccountingOfficerwas inbreach of Section 47(1) of thePublicAuditAct, CAP.412Bwhichprovides that the financialstatementsrequiredunder the Constitution of Kenya 2010, the Public Finance Management Act, 2012 and any other legislation shall besubmitted to the Auditor-General within three(3) months after the endofthefiscalyeartowhichthe accountsrelate.

i)The Matter is unresolved.

RecommendationsoftheCommittee

108.The Committeerecommends that

TheAccountingOfficer should ensuretimelysubmission offinancial statementsasper theprovisions of Section 47(1) of thePublicAuditAct,CAP.412B.

3.Non-Compliancewith thePublicSector AccountingStandardsBoard Requirement on PresentationoftheFinancialStatements.

109.The Fund submitted thefinancial statements for audit during theyear the under review. However,inconsistencies on the preamble information revealed that the names of the chairperson,chief executive/schemeadministrator andmanager legaland corporation secretary asper the staff mortgage and car loan scheme committee profilepresentedwas different from persons who signed the Financial Statements, Chairman's Report and Staff Mortgage and Car LoanScheme Committee Report.In addition,theStatement of Change in Net Assets presented the balances of the previous year and not the year under review. In the circumstances,the Fund did not comply with the Public Sector Accounting Standards Board (PSASB) guidelines.

Submissions by the Accounting Officer

110.TheAccounting Officer submitted that— The chiefexecutive officerwhowas also the scheme administrator in officein2018/2019 wasJohnMuraguri and thefinancial statement werepreparedin2023whenDr.AgnesMercy Wahome was in office and therefore signed the annual report and financial statements. The chairman ofthe Car Loan and Mortgage Scheme in office in 2018/2019 was Michael Kimani and the financial statement were prepared in 2023 when Ms. Christine Mwaka was in office and thereforesigned the annual report andfinancial statements.

111.Michael Kimani signed the Financial Statements as the Accountant and not as the Chairman since he had ceased being the Chairman. The Legal Manager and the Corporation Secretaryin2018/2019wasMs.EdnaAdalawhohad sinceleft theinstitutionwhileMs.Faith Kaluai was in office in 2023when the statement was prepared and therefore signed. The above wasdisclosedinthenotestothefinancialstatementtoinformthereaders.

ObservationsoftheCommittee

112.TheCommitteeobserved that

i.Due to the changes inManagementfrom2018to2023,Managementhas clarified the positions of the officials signing thefinancial statements.
i.The current fund administration committee members were signing the annual report and financial statement asrequired in the subsequentyears.
iii.The matter is resolved.

FinancialYear2019/2020

1.InaccuraciesintheFinancial Statements

1.1 Cash and cash Equivalents

113.AsdisclosedinNote9tothefinancialstatementsoffinancialpositionreflectstwo(2)bank account balances of Kshs 111,233,937in respect of cash and cash equivalents.However, reviewofcertificateofbankbalancesforauditrevealed4(four)bankaccountsbalances totalling toKshs 176,307,448resulting tounexplained and unreconciledvariance of Kshs 65,073,511.

SubmissionsbytheAccountingOfficer

TheNational Treasuryrequired that allpublicinstitutionsseek andreceive approval from the National Treasury for operation of bank accounts.ThePlacement Service sought and was granted approval to open and operate bank accounts with the HFC Bank for its Car Loan and House Mortgage and the letters of approvals are annexed in the Management Responses. She explained that thebankoperatestwo other accountsfor tracking theloans advanced to the

114.TheAccountingOfficersubmittedthat PlacementServicestaff.
115.These accounts are called Back up accounts and whenever a staff loan is advanced, the backup is creditedwith equal amount and the account is adjusted periodically as the loan portfolio is increased or decreased by payments.TheBackup account is mirrored by the staff debtorswhichisreflectedintheStatementofFinancialPosition.In2019,thedebtorswere Kshs 64,406,935 as reportedin theStatement of FinancialPosition and reflected onnote11 to the Notes to theFinancial Statement while the backup accounts reflectedKshs 65,073,511. This was a temporary timing difference.
116.Kshs176,307,448was thetotal cashamount depositedwiththeHFC banktogetherwith theinterestsearned andreceivedfromtheunutilizeddepositbefore anyloansadvancedtostaff as at30June2020.

ObservationsoftheCommittee

117.The Committee observed that
i.Bankbalancesforauditrevealed 4(four)bankaccountsbalances totalling toKshs 176,307,448 resulting to unexplained and unreconciled variance of Kshs 65,073,511.
ii.Management only disclosed bank balances for two accounts,Mortgage Kshs. 81,550,074andCarloanKshs.29,683.863respectivelyand
ii.The Matter is unresolved.

Recommendationsofthe Committee

118.TheCommitteerecommendsthat

Within three months upon the adoption of this report the Accounting Officer must submit bank reconciliations to support the variance amounting toKshs 65,073,511 for auditverification
i)The Cabinet Secretary for National Treasury and Economic Planning to institute disciplinary action against the accunting officer in line with Section 74 of the PFM Act.
ili) TheAccounting Officer ensures that all applicable accounting and financial controls, systems, standards, laws,and procedures are followed in the preparation of Annual Reports andfinancial statements andin accordancewith thestandardsprescribedby the Public Sector Accounting Standards Board and in compliance with regulation 101 (4) of the public finance management (National Government) Regulations.

1.2StatementsofFinancialPosition

119.The statement of financial position reflects revenue reserve of an amount of Kshs 7,153,313 which is at variance with accumulated surplus of an amount of Kshs 25,640,873 reflected in the statement of changes in net asset resulting an amount of unexplained and unreconciled variance of Kshs 18,487,555.In the circumstances,the accuracy and completeness of the accumulatedofanamountofKShs.7,153,313couldnotbeconfirmed.

Submissionsby theAccountingOfficer

120.The Accounting Officer submitted that— The amount of Kshs 7,153,313posted in the statement of financialposition is the net revenue for theyear andnot the same as the accumulated revenuereserve ofKshs25,640,873 as reflected in the statement of changes in net assets. This reporting format was revised and the amountswerereportedas accumulatedsurplusinsteadofnetrevenuefortheperiod.

FindingsandObservationsoftheCommittee

TheCommitteeobserved that

i)Thestatement of changes innetassetindicates anamountofunexplained and unreconciledvarianceofKshs18,487,555.
ii)No correction had been made to have reserves,accumulated surplus and car loan and mortgagefundreportedseparatelyasperthetemplateissuedbythePublicSector AccountingStandard Board.
iii)The matter is unresolved.

RecommendationsoftheCommittee

121.The Committee recommends that
i) Within three months upon the adoption of this report the Accounting Officer must submit supporting information to reconcile the variance amounting toKshs 18,487,555 totheAuditorGeneralforauditverification.
i)The Cabinet Secretary to institute disciplinary measures against the Accounting Officerinline sectionwith74.

iii TheAccounting Officer ensures that all applicable accounting and financial controls, systems,standards,laws,and procedures arefollowed in the preparation of Annual Reportsandfinancial statementsandinaccordancewiththestandardsprescribedby thePublic Sector Accounting Standards Board and in compliance with regulation 101 (4) of the public finance management (National Government) Regulations.

1.3StatementofFinancialPerformance

122.Review of the statement of financial performance revealed a nil balance in respect of 3% commission on service provider. However, the staff mortgage and car loans bank statements reflect an amount of Kshs. 329,644 in respect of tax on credit and other bank charges which are not included as expenses in the statement of financial performance. In the circumstances, the accuracy and completeness of thenilbalancein respect of 3% commission onservice provider could not be confirmed.

Submissions by the Accounting Officer

123.The Accounting Officer submitted that—

TheHF bankwas opened and operated as deposit accountfor thepurposeof advancing the car loans and house mortgages to the Placement Service staff. The account does not attract bank charges but earns interest onunutilizedfunds.The bankwithholds15%on interest earnedand thesameisremitted toKenyaRevenueAuthorityasrequired bylaw.The Placement Service treats amount is treated as a prepayment until the same is claimed while making annualreturns after theyear end.ThePlacementService does not incur expenses to operate theHFbank account instead the staff incur anadministration expensewhichis directly recovered from them and remitted with monthly car loan and house mortgage instalments.

ObservationsoftheCommittee

124.The Committee observed that
i)The bank statements reflect an amount of Kshs.329,644 in respect of tax on credit andotherbank charges which are notincluded asexpenses inthe statement of financialperformance
ii) Management explained that they treated it as a prepayment however, the amount had not reflected in the statement of financial position.
ili)TheMatter is unresolved.

RecommendationsoftheCommittee

125.The Committeerecommendsthat
i) Within three monthsupon adoptionof this report,the Accounting Officermust provide a report with supporting Documentation on the Kshs. 329,644 that was not reflectedin thestatementoffinancialposition totheCommittee andto theOfficeof theAuditorGeneralforauditverification.

ii) TheCabinetSecretary toinstitute disciplinary measuresagainst the Accounting Officerinline sectionwith74.
ii) TheAccountingOfficershouldensure that all applicable accountingand financial controls,systems,standards,laws,andprocedures arefollowedinthepreparationof the financial statements in compliance with PublicFinanceManagementAct,2015 and inaccordancewith thestandardsprescribedbythePublicSector Accounting Standards Board as per Regulation 101(4) of the Public Finance Management (National Government) Regulations,2015.

2.UnsupportedDisbursedLoans

126.Statement of financial position reflects balances of Kshs 64,406,935 in respect of longterm receivable of thestaffmortgage andcar loans.However,review of theledgerschedules provided for audit review revealed that the management disbursed an amount of Kshs 39,055,435 which included an amount of Kshs 20,532,436not supported by schedules indicating the name of the beneficiaries.In the circumstances,the accuracy and completeness of thelong-term receivables fromstaff mortgage on car loanbalances of Kshs 20,532,436

SubmissionsbytheAccountingOfficer

127.TheAccountingOfficer submitted that Total loans issued to the staff during the year was Kshs 39,055,435 while cumulatively the loans issued as at 30 June 2020for the staff mortgage and car loan rose toKshs64,406,935.

Thescheduleofstaffwhobenefittedwiththeloanswasattachedin theManagement Responses.She stated that the Loans issued tofinancial year 2018/2019 was Kshs 29,074,976.

ObservationsoftheCommittee

128.The Committee observedthat
i)TheManagementhas sinceprovided thelistofbeneficiaries amountingtoKshs. 20,532,426.
ii)The matter is resolved.

3.Latesubmissionoffinancialstatements

129.The financial statements for the Kenya Universities and Colleges Central Placement Service Staff Mortgage and Car Loan Scheme for the year ended 30th 2020 were submitted to the Auditor-General on27March,2023,thirty-three(33) months after the statutory dateline to submit of30 September, 2019. This was contrary to section 47(1) of the public Audit Act,2015 which states that the financial statements required under the Constitution of Kenya 2010, the Public Finance Management Act,2012 and any other legislation shall be submitted to the Auditor-General within three (3) months aftertheend ofthefiscalyeartomwhich the accounts relate.In the circumstances,Managementwas in breach of the law.

Submissions by theAccounting Officer

ThePlacementServiceprepared aconsolidated annualreportandfinancialstatementsfor financialyear ended30June2020,whichwere submittedby30September2020toAuditor General for audit as required.At that time, there were no guideline from Public Sector AccountingStandardsBoardonpreparation ofseparate account and thetemplateto usefor

130. The Accounting Officer submitted the following; the Mortgage accounts. 2. 131.The Placement Service therefore did not prepare separate financial statement for Staff consolidatedfinancialstatements.TheOfficeoftheAuditorGeneralguidedthatthePlacement ServicepreparestheFinancialStatementsfortheearlieryears.

ObservationsoftheCommittee

132.The Committee observed that
i) TheAccountingOfficerwas inbreachofSection47(1)of thePublicAuditAct, CAP.412Bwhichprovides thatthe financialstatementsrequiredunder the Constitution of Kenya 2010, the Public Finance Management Act,2012 and any other legislation shall be submitted to the Auditor-General within three(3) months after the end of the fiscal year towhich the accounts relate.
i The Matter is unresolved.

RecommendationsoftheCommittee

133.The Committeerecommends that TheAccounting Officer should ensure timely submission of Financial Statements asper

theprovisionsofSection31(4)ofthePublicAuditAct,CAP.412B.

4.Non-Compliance with thePublicSectorAccountingStandardsBoard Requirement onPresentationoftheFinancialStatements.

134.TheFund submitted the financial statementsfor audit during theyear the under review. However,inconsistenciesonthepreambleinformationrevealedthat the namesof the chairperson,chief executive/schemeadministrator andmanager legalandcorporation secretary asper the staff mortgage andcarloan scheme committeeprofilepresentedwas different frompersons whosigned the financial statements,chairman'sreport andstaff mortgage andcar loan scheme committeereport.in addition,the statementof change in net assets presented thebalances of the previousyear and not theunder review.In the circumstances,theFund did not complywith thePublicSectorAccountingStandardsBoard (PSASB) guidelines.

SubmissionsbytheAccounting Officer

135.TheAccounting Officer submitted that-

After the year end, there were changes in the management of the Car Loan and Mortgage Scheme with new team taking over and were in office during the signing of the Financial Statements though they were not responsible for the period's operations. The offices being perpetual, they took over the office and responsibility and therefore signed the statements. Thisfact was disclosed in the notes tothe financial statement as events afterbalance sheet date.

ObservationsoftheCommittee

136.The Committee observed that

i)Due to thechanges in Management from 2018 to2023,Management has clarified thepositions of the officials signing thefinancial statements.
ii) The current fund administration committee members were signing the annual report andfinancial statement asrequiredin the subsequentyears.
ili)The matter is resolved.

FinancialYear2020/2021

1.1Variancebetween thefinancialstatementand comparativefigures

137.The Fund's statements of financial position reflect two (2) items that varies with 20192020comparativebalancesasshownbelow;

| Description | Audited financial statements (2019/2020) Kshs. | Financialstatements (2020/2021) Kshs. | Variance Kshs | |--------------------------------------------|--------------------------------------------------|-----------------------------------------|-----------------| | Accumulated Surplus | 7,153,313 | 25,640,873 | 18,487,560 | | Staff Mortgage &168,487,560 CarLoanreserve | | 150,000,000 | (18,487,560) |

138. In the circumstance, validity, accuracy and completeness of the balances in the statement of financial position in respect of receivables from non-exchange and receivables from exchange transactions could not be confirmed.

Submissions by the Accounting Officer

139.The Accounting Officer submitted that— The financial statements for the year ended 30 June 2020,the Surplus was reported for the year at Kshs 7,153,313 unlike in 2021 where it was reported cumulativelyKshs 25,640,873

and seedcapitalwas reported atKshs168,487,560 in2019/2020.In 2020/2021 the seed capital was retained atKshs150,000,000while the surpluswas accumulatedwith thesurplus for theyear as reported in the statement of financial performance.The cumulative effect is the same but for the users ease of understanding,it isbest reported cumulatively.TheStaff Mortgageand CarLoanReservein2019/2020reportedboth theinitial deposit and the previousyear's surpluses and the same have been separatedfor surplus tobe accumulated separately.as it appears in the statement of Changes inNet asset while the seed capital is separate.

140.The CommitteeObservation

TheCommitteeobservedthat-

i)Thefinancial statements fortheyearended30June 2020,theSurpluswasreported for theyear atKshs7,153,313unlike in2021where itwas reportedcumulatively at Kshs 25,640,873.
ii)The seed capital was reported at Kshs 168,487,560 in 2019/2020 and in 2020/2021 the seed capital was retained atKshs150,000,000 while the surpluswas accumulated with the surplusfortheyear asreportedinthestatement offinancialperformance.
ii)Thematterisresolved.

1.2Variancebetweenfinancial statement and supportedledgersbalances

141.The Fund's statements of financial position reflects two (2) items that varies with ledger schedule balances as shown below;

| Description | Audited financial statements Kshs. | ledgerSchedules Variance Kshs. | Kshs. | |--------------------------------------------------------|--------------------------------------|----------------------------------|------------| | Receivables from Non-150,000,000 Exchange Transactions | | 69,596,249 | 80,403,751 | | Receivables ExchangeTransactions | from 69,647,830 | 5,733,020 | 63,914,810 |

SubmissionsbytheAccountingOfficer

143.TheAccountingOfficer submitted that—

The amount ofKshs150 million,current receivablesfrom non-exchange transactions related to the additional funds committed by the Board towards the Staff Car Loan and Mortgage Scheme andwhichwasoutstandingasat30June2021inthebooksofthePlacementService main account.The money had been settled as per provided Board Minutes, transfer

SPECIALFUNDACCOUNTSCOMMITTEE-CARLOANANDMORTGAGESCHEMESFUND

documents andbankstatementfrombothKUCCPSmain account and theStaff Car Loan and Mortgage Scheme in the Management responses. On the other hand, Kshs 69,647,830 was the non-current receivablesfrom the exchange transactions (staff debtors)and a schedule of the debtors was attached in the Management responses. The two amounts of receivables are notcomparable and thereforereportedseparately.

144.Kshs 69,647,830 on the other hand was the Non-Current receivables from the exchange transactions staff debtors and withholding tax prepaid of Kshs 51,582. The amount of Kshs 5,733,020related tothe interestincome for theperiod ended30June2021as reported in the statementoffinancialperformanceanddisclosedinnote6ofthenotestothefinancial statementsthetwoamounts are different,properlyreported and arenot comparableonebeing in the statementofFinancialPerformance and the other in thestatement of financialposition.

ObservationsbytheCommittee

145.TheCommitteeobservedthat

i)Validity,accuracy and completeness of the balances in the statement of financial position in respect of receivables from non-exchange and receivables from exchange transactions was confirmed;and
ii)The matter is resolved.

1.3Cash and CashEquivalent

146.As disclosed in Note 9 to the financial statements, the statements of financial position reflect two (2) bank account balances of Kshs. 111,777,645 in respect of cash and cash equivalents.However,reviewof thecertificate ofbankbalanceprovidedfor auditrevealed 4 (four) bank accounts balances totalling toKshs.182,040,469 resulting to an unexplained and unreconciledvarianceofKshs.70,762,824.

SubmissionsbytheAccountingOfficer

147.The Accounting Officer submitted that— The Placement Service operated two bank accounts, Fixed Deposit Account Number 2211863401 andFixedDeposit CarLoan account number 2211863402 as approvedby the National Treasury Approval letters from the Treasury are attached in the Management

accounts in the name of KUCCPS totalling toKshs 182,040,469.

148.As indicated in the communication from the HFC bank Letter dated 21 February 2024 attached in the Management Responses, the additional accounts which appeared in their certificate dated 6th July2021 were not KUCCPS account butbanks operation account.This certificate included amountsof Kshs71,173,563fromback up accounts,which the bank had explained areitsownoperationaccountsforKUCCPS.KUCCPSmanagementarenot signatoryto thesebank accounts.

ObservationsbytheCommittee

149.TheCommitteeobservedthat

i) Management had supported the variance of Kshs.70,762,824 with approval letters from National Treasury on the account opening balances and letter from HFC bank.

2. ii) The matter is resolved.

1.4StatementofCashflows

150.Statements of cash flows reflects cash and cash equivalents balance of Kshs.111,777,645. However,reviewofthe statements ofchanges in net assets revealed receipt offunds amounting to Kshs.150,000,000 in respect of mortgage and car loan funds which were not included in respect of cash flows from financing activities.

SubmissionsbytheAccountingOfficer

151.The Accounting Officer submitted that— Kshs 150 millionwas a receivable reflected as such in note 11(a) ofthe Notes to theFinancial

Statement andwas not part ofthe cash inflows.The amount ofKshs 150million was a book entry to recognize theobligation of thePlacementServicetoitsStaff Mortgage and Car Loan Schemefollowing theresolution to transferKshs150million tothe scheme.Thereserve of theschemewasincreased byrecognizingdebtorsfromthemainPlacementService account while the Main account recognized a liability of the same amount. This amount of Kshs 150 millionwasreceived asfromKUCCPSasfollows:

·Kshs70million videPayment Voucher (PV) number 8222 dated 23 January 2023
Kshs30millionvidepaymentvoucher number8654 dated16August2023
Kshs50 millionvidepaymentvoucher number 8757dated9January 2024

ObservationsbytheCommittee

152.The Committee observed that-

i)Management explained thatKshs150 million was a receivable reflected in the Notes to theFinancial Statement and notpart of the cash inflow.
ii)The matter is resolved.

1.5Statementoffinancialperformance

153.Reviewofthe statement offinancialperformancerevealed anil balanceinrespect oftotal expenses.However,thestaff mortgage andcarloansbankstatementreflecttotal amountsof Kshs.599,269 in respect of tax on credit and other bank charges which are not included as expenses inthe statementoffinancialperformance.In thecircumstances,the accuracy and completenessofthenilbalanceinrespectoftotalexpensescouldnotbeconfirmed.

Submissions by the Accounting Officer

154.The Accounting Officer submitted that— The Placement Service opened and operated deposit account with HFC bank for advancing

mortgage and carloans tothePlacementService staffs.The account does not attractbank

SPECIALFUNDACCOUNTSCOMMITTEE-CARLOANANDMORTGAGESCHEMESFUND

chargesbut earnsinterest onunutilizedfunds.Thebankwithholds15%oninterestearned and thesame remitted toKenyaRevenueAuthority asrequiredby law.The amount ofKshs 599,269relatetothewithheldinterestearnedfromCarLoaninterestfortheperiod ended June30,2021.

155.This amount treated as a prepayment until the same claimed while making annual returns after the year-end. The Placement Service does not incur expenses to operate the HF bank account instead the staffs incur an administration expense which is directly recovered from the staff andremittedwithmonthlycarloanand housemortgageinstalments.

ObservationsbytheCommittee

156.TheCommitteeobserved that

i.The amount of Kshs599,269 related to thewithheld interestearnedfromCarLoan interest and was not yet claimed as at reporting period hence not an expense
ii.Matter is resolved.

5.UnsupportedIncrease inReceivablefromExchangeTransaction

157.As disclosed in Note 11(b) to the financial statements,the statement of financial position reflects balance of Kshs.69,647,830 and Kshs.64,406,935 in respect of receivables from exchange transactions and its comparativebalancesrespectivelyresulting toanincrease of Kshs.5,240,895 in respect of loans disbursed. However, the supporting documents including list of loan beneficiaries were not provided for audit review. In the circumstances, the accuracy and completeness of the receivables from exchange transactions balance of Kshs.69,596,248 could not be confirmed.

Submissionsby theAccountingOfficer

158.The Accounting Officer submitted that— The increase of Kshs5,240,894 in receivables from the staff loans was as a result of loans disbursed of Kshs 11,198,227 and the loan repayments of Kshs 5,957,333. The schedules of theloans issued and repaidwere attached in theManagement Responses.

ObservationsbytheCommittee

159.TheCommitteeobservedthat
i.The schedules of loan movement supporting the increase of Kshs.5,240,895 in respect of loansdisbursed had sincebeenbeenprovided.
ii.The matter is resolved.

6.LateSubmissionofFinancialStatement

160.The financial statements for the Kenya Universities and Colleges Central Placement Service Staff Mortgage and Car Loan Scheme for the year ended 30 June, 2021 were submitted to the Auditor-General on 27 March, 2023, twenty-one (21) months after the statutory deadline to submit of30September,2021.This was contrary toSection47(1) of thePublicAuditAct, CAP.412Bwhich states that thefinancial statementsrequired under theConstitution ofKenya 2010, the Public Finance Management Act, 2012 and any other legislation shall be submitted

SPECIALFUNDACCOUNTSCOMMITTEE-CARLOANANDMORTGAGESCHEMESFUND

to theAuditor-General within three (3) months after the end of the fiscal year towhich the accounts relate. In the circumstances, Management was in breach of the law.

Submissions by theAccounting Officer

161.TheAccountingOfficer submitted that

ThePlacement Service prepared a consolidated annual report and financial statements for financial yearended 30June 2021includingthestaff mortgage and car loan balances,which weresubmittedby30September2021toAuditorGeneralforauditasrequired.Thesame was audited as required.At that time,therewere noguidelinesfromPublicSectorAccounting StandardsBoardonpreparationofseparateaccountandthetemplatetousefortheMortgage accounts.ThePlacementService thereforedid notprepareseparatefinancial statementsfor StaffMortgageandCarloanschemeTheOfficeof theAuditorGeneralguided that the PlacementServicepreparestheFinancialStatementsfor the earlieryears.

ObservationsoftheCommittee

162.The Committeeobserved that
i TheAccountingOfficerwasinbreachofSection47(1)of thePublicAuditAct, CAP.412B whichprovides that thefinancial statementsrequired under the ConstitutionofKenya2010,thePublicFinanceManagementAct,2012andanyother legislationshallbesubmitted totheAuditor-Generalwithinthree(3)monthsafter the end of thefiscalyear towhich the accountsrelate.
ii) The Matter is unresolved.

RecommendationsoftheCommittee

163.The Committeerecommendsthat
i. The Accounting Officer should ensure timely submission of Financial Statements as per theprovisionsofSection31(4)of thePublicAuditAct,CAP.412B.
ii. The Cabinet Secretary for National Treasury and Economic Planning to institute disciplinary action against the accounting officer in line with Section 74 of the PFM Act.

7.Non-CompliancewithPSASB onpresentation of FS

164.The Fund submitted the financial statements for audit during the year under review. However,inconsistencies onpresentation ofthepreambleinformationrevealed that thenames ofthechairperson,chiefexecutive/schemeadministratorandmanagerlegalandcorporation secretary as per the staff mortgage and car loan scheme committee profile presented was different from persons who signed the financial statements,chairman's report and staff mortgage and car loan schemes committee reports.Further,Notes to the financial statements were not included.In addition,the statement of changes in net assets presented the balances of the previous year and not the year under review. In the circumstances, the Fund did not comply with the Public Sector Accounting Standards Board (PSASB) guidelines.

SPECIALFUNDACCOUNTSCOMMITTEE-CARLOANANDMORTGAGESCHEMESFUND

SubmissionsbytheAccountingOfficer

165.The Accounting Officer submitted that—

After the year end, there were changes in the management of the Car Loan and Mortgage Scheme with new team taking over and were responsible for the preparation and signing of the Financial Statements though they were not responsible for the period's operations. ChristineMwaka tookoverfromMichaelKimani astheChairmanwhileEdnaAdalaexited and Faith Kaluai took over as Corporation Secretary. The offices being perpetual, the officers tookover the offices andresponsibility and thereforesigned thestatementspreparedwhilein office.Thisfactwas disclosedin note14ofthenotesto thefinancial statement asevents after balance sheet.

ObservationsoftheCommittee

166.The Committee observed that

i)Due to thechanges inManagement from2018to2023,Management clarified the positions of the officials signingthefinancial statements.
ii) The current fund administration committeemembers were signing the annual report andfinancial statement asrequired.
ii)The matter is resolved.

FinancialYear2021/2022

1.1Variance between financial statement and supported ledgers balances

167.The Fund's statements of financial position reflect two (2) items that varies with ledger schedulebalances as shown below;

168. In the circumstance, validity, accuracy and completeness of the balances in the statement of financial position inrespectof receivablesfromnon-exchange and receivables from exchange transactionscouldnotbeconfirmed.

| Description | Audited financial ledger statements Kshs. | Schedules Kshs. | Variance Kshs. | |-------------------------------------------------------------|---------------------------------------------|-------------------|----------------------| | Receivables from|150,000,000 Non-Exchange Transactions | | 95,707,698 | 54,292,302 | | Receivables from 96,659,250 Exchange Transactions | | | 5,999,797 90,659,453 |

Submissions by the Accounting Officer

169.TheAccountingOfficersubmitted that—

TheamountofKshs150million,currentreceivablesfromnon-exchangetransactionsrelate to the additional funds committed by the Board (Board minutes attached) towards the Staff Car Loan and Mortgage Scheme and which had not been received as at 30 June 2022 from thePlacementServicemain account.The amount transferred atvaried dates as per the attachedpaymentsvouchers andbankstatementsfromKCBbank andHFCbank.

1.20 January 2023

Kshs 70,000,000

2. 16 August 2023

Kshs 30,000,000

3.9 January 2024

Kshs 50,000,000

170.Kshs 95,707,698 on the other hand was non-current receivables for the staff car loan and mortgageschemewith thebank.Thetwo amounts arenot comparable.The amountofKshs 96,659,250wasnon-currentreceivablesfrom theexchangetransactionsfortheactualloans advanced tothePlacementServicestaffCarLoanandMortgageSchemeasatJune302022 with areconciliation of Kshs951,552being the amount ofwithholding taxfrom interest earned treated as prepayment.
171.The amount ofKshs5,999,797ontheotherhand relatesto the interest incomefortheperiod asreportedinthestatementoffinancialperformance anddisclosedinnote7ofthenotestothe financial statements=Thenon-currentreceivables and interestincome arenot comparable.

ObservationsbytheCommittee

172.TheCommitteeobserved that

i) Thevalidity,accuracy and completenessof thebalancesin the statement of financialposition inrespect ofreceivables fromnon-exchange andreceivables Variancebetweenfinancial statement and supported ledgersbalances.

2. ii) Management supported thevariance which does not affect the audited figure. 3. iii) Thematterisresolved.

1.2 Cashand CashEquivalent

173.As disclosed in note9to thefinancial statements,the statements offinancial positionreflect balance of two (2) Kshs 90,766,022in respect of cash and cash equivalents.However,review of thecertificateofbankbalanceprovidedfor auditrevealed4(four)bank accountsbalances totalling toKshs.187,140,296 resulting to an unexplained and unreconciled variance of Kshs 90,766,022.

SubmissionsbytheAccountingOfficer

174.TheAccountingOfficersubmitted that—

Duringtheperiodended30June2022,thePlacementServiceoperates twobank accounts, FixedDepositAccountNumber2211863401andFixedDepositCar Loan account number 2211863402.The two accountswere approved by theNationalTreasuryvideletter dated 30

SPECIALFUNDACCOUNTSCOMMITTEE-CARLOANANDMORTGAGESCHEMESFUND

May2017.Bankbalanceconfirmationletterdated6thJuly2021indicatedfourbank accounts in the name of KUCCPS totalling toKshs182,040,469.As indicated in the communication from the HFC bank letter dated26February2024),the additional accounts which appeared intheir certificatedated 6thJuly2021werenotKUCCPSaccount butbanks operation account.This certificate included amounts ofKshs 97,285,013from backup accounts,which the bank has explained as its own operation accounts for KUCCPS. The KUCCPS management arenot signatoryto thesebank accounts.

ObservationsbytheCommittee

175.TheCommitteeobservedthat

i) Management supported the variance of Kshs 90,766,022 with approval letters from National Treasury on the account opening balances and letter fromHFC bank.
i) The matter is resolved.

1.3StatementofFinancialPerformance

176.Review of the statement of financial performance revealed a nil balance in respect of expenses.However,the staff mortgage and car loans bank statements reflect an amount of Kshs. 122,566 in respect of tax on credit and other bank charges are not included as expenses in the statement of financial performance. In the circumstances, the accuracy and completeness of thenilbalanceinrespectofexpensescouldnotbeconfirmed

Submissionsby theAccounting Officer

177.TheAccounting Officer submitted that The HFC bank opened and operated as deposit account for advancing the car loans and house

mortgagestothePlacement Service staff.The account does not attract bankchargesbut earns interestonunutilizedfunds.Thebankwithholds15%oninterestearnedandthesame remitted toKenyaRevenueAuthority as required by law.The amount of Kshs122,566was withheld taxfrom interest earnedfrom thestaff CarLoan depositfor theyear 2021/2022.

178.This amount treated as a prepayment until the same claimed while making annual returns after the year-end. The Placement Service does not incur expenses to operate the HF bank account instead thestaffsincuran administrationexpensewhichisdirectlyrecoveredfrom the staff and remitted with monthly car loan and house mortgage instalments.

ObservationsbytheCommittee

179.TheCommitteeobserved that

i.TheKshs.122,566related tothewithheldinterestearnedfromCarLoaninterest andwasnotyetclaimed asatreportingperiod hencenotan expense
ii.Matter is resolved.

1.Non-Compliance withPSASB onpresentation of FS

180.The Fund submitted the financial statements for audit during the year under review. However,inconsistenciesonpresentation ofthepreambleinformation revealed that the names of thechairperson,chief executive/scheme administrator andmanagerlegal and corporation secretaryasperthestaffmortgageandcarloanschemecommitteeprofilepresentedwas different from persons who signed the financial statements, chairman's report and staff mortgage and carloan schemes committeereports.Further,Notes to the financial statements werenotincluded.Inaddition,thestatementofchangesinnet assetspresented thebalances of thepreviousyear andnot theyear underreview.In the circumstances,theFund did not complywiththePublicSectorAccountingStandardsBoard(PSASB)guidelines.

Submissionsby theAccountingOfficer

181.The Accounting Officer submitted the following

After the year end, there were changes in the management of the Car Loan and Mortgage Scheme with new team taking over and were responsible for the preparation and signing of the Financial Statements though they were not responsible for the period's operations. ChristineMwaka tookoverfromMichael Kimani astheChairmanwhileEdnaAdalaexited and Faith Kaluai took over as Corporation Secretary.The offices being perpetual, the officers took over the offices and responsibility and therefore signed the statements prepared while in office.Thisfactwasdisclosedinnote14ofthenotestothefinancialstatementasevents after balance sheet date appearing onpages21 and 22.

ObservationsoftheCommittee

182.The Committeeobserved that
i)Due to the changes in Management from 2018 to 2023,Management has clarified thepositions of theofficials signingthefinancial statements.
ii)The current fund administration committee memberswere signing the annual report andfinancial statement asrequiredinsubsequentyears.
iii)Thematter isresolved.

EXAMINATIONOFTHEAUDITEDFINANCIALSTATEMENTSFORPUBLIC SERVICECOMMISSIONSTAFFCARLOANANDMORTGAGESCHEMEFUND FORFINANCIALYEARS2018/2019TO2021/2022

183.Mr.Paul Famba,the ChiefExecutive Officer,PublicService Commission appeared before theCommitteeonTuesday20thFebruaryandWednesday5thNovember,2024 toadduce evidenceontheauditedfinancial statementsforthe,PublicService CommissionStaff Carloan and Mortgage scheme Fund for the Financial Years 2017/18 to 2021/2022. During the meeting, theAccountingOfficerwas accompanied by:

1. Mr. Lemmy Mulati Deputy Commission Secretary, PSC.

2. Mr. Maina Njoroge Deputy Finance,Planning & RM.

3. Mr. Gerald G. Kuhaka - Director,Administration.

4. Mr. Joseph Njoroge DeputyDirector,Accounts.

5. Mr. William M. Migwi- Deputy Director, Planning.

6. Mr. Simiyu Njalale DeputyDirector,Finance.

7.Mr.Patrick Malakwen - Deputy Director, Supply Chain.

8. Ms.Caroline C. Kiget Deputy Director,HRM.

9. Ms.Naomi Sidi AssistantDirector,HRM.

FinancialYear2017/2018

1)LateSubmissionofFinancial Statements

184.Thefinancial statements oftheFund for the six-months period ended 30June,2018were submitted to the Auditor General on 30 October, 2023, approximately five (5) years after the end oftheperiod.This was contrary toSection84(3)of thePublic Finance Management Act, 2012whichrequiresanAdministratorofaNational PublicFund topreparefinancialstatements and submit them to theAuditor General within threemonths bythe end ofthefinancialyear. In the circumstances, Management was in breach of the law.

SubmissionsbytheAccountingOfficer

185.The Accounting Officer submitted that

ThePublicService Commissionenteredintoan agreementwithKenyaCommercialBank (KCB)on 27thFebruary,2018;where it was agreed thatKCBwill administer the employees Car Loan and Mortgage Scheme Fund. It was noted that the accounts for the six months period ended 30June,2018were not prepared on time.Section 21 (d)ofPublicService Commission Car LoanScheme Regulations2018and Section22(b)of PublicServiceCommission Mortgage Scheme regulations provide that administrator of the Scheme should prepare, sign and transmit theincomeandexpenditurestatement andstatementoffinancialposition of the schemein accordancewith the standards as maybeprescribed by theKenyaPublic Sector AccountingStandardsBoard.

186.Theguidelines and standard templatefor preparationoffinancial statementswereissued by theNational Treasuryfrom30thJune,2022.TheNational Treasury throughthe Circular REF:AG.4/16/3Vol.1I (66) dated 6th July,2022 communicated to all Accounting Officers on New and Revised Annual Financial Reporting Templatesfor all National and County Government Entities. Section 2.1.1 of the circular introduced guidelines on New Templates for Car Loan and Mortgage Funds under the National Government Entities However, the financialstatementsforPublicServiceCommissionforfinancialyear 2017/2018hada discloser on amount disbursed on Mortgage and Car Loan under Domestic Lending and OnLending on page 27; Financial Assets. They had since prepared the financial statements for financialyear 2017/2018 and audited by theOffice of theAuditor General.Hepromised that Managementiscommittedtoensuringcompliancewith thelaw onmattersofFinancial Reporting.

ObservationsoftheCommittee

187.TheCommitteeobserved that
TheAccountingOfficerwasinbreachofSection 47(1)of thePublicAuditAct, 2015whichprovidesthatthefinancial statementsrequired underthe Constitution ofKenya2010,thePublicFinanceManagementAct,2012andanyother legislationshall besubmitted totheAuditor-General withinthree(3)months after theendofthefiscalyeartowhichthe accountsrelate;and
ii) TheMatteris unresolved.

RecommendationsoftheCommittee

188.The Committee recommends that the Accounting Officer should ensure timely submissionoffinancial statementsaspertheprovisionsofsection47(1)ofthePublic AuditAct,CAP.412B.

2. Unconfirmed Procurement of an Institution to Manage Car and Mortgage Schemes

189.TheFund Management entered into anagreement on27February,2018with afinancial institution to manage the Car Loan and Mortgage Schemes.However, procurement records indicatinghow thebankwasidentified and awarded thetenderwerenotprovidedfor audit review.In the circumstances, it was not confirmed whether the procurement of the bank was competitiveandtransparent.

Submissionsby theAccountingOfficer

190.The Accounting Officer submitted that— PublicService Commission Car LoanScheme Regulation 2018(10)provides that"the officer administering theschememayappointareputablefinancialinstitution toadminister the scheme.Inaddition,Section10ofPublicServiceCommissionMortgageSchemeRegulations 2018givepowers totheAdministratortoconsultwithTheNationalTreasuryonareputable financialinstitutiontoadministerthescheme.

SPECIALFUNDACCOUNTSCOMMITTEE-CARLOANANDMORTGAGESCHEMESFUND

191.The Commission did engage the National Treasury for guidance on a suitable institution forFundAdministration.A letter addressed to thePrincipalSecretaryNational Treasury on 14th December 2017 on operationalization of the two (2) Funds forwarded the Regulations and alsoindicated the preferred serviceprovider.Kenya Commercial Bank(KCB)and HFCK had Treasury eventually granted authority for the Commission to engage Kenya Commercial Bank (KCB) as theFund Administrator to manage the Scheme.

ObservationsoftheCommittee

192.The Committee observed that
i) TheFundManagemententered intoanagreementwith a financial institution to manage the Car Loan and MortgageSchemeswithout competitivebidding.
ii) ManagementwasinbreachofSection103(1)ofthePublicProcurementandAsset Disposal Act, CAP.412C .
ili) ThePublicService Commission CarLoanSchemeRegulation2018relieduponbythe Fund when selecting theFund Manager are still in draftform.
iv)The matter is not resolved.

RecommendationsoftheCommittee

193.The Committeerecommendsthat
i) Within three months of adoption of this report, management must submit authorizationfrom theNational Treasuryallowing theFund toengage Kenya CommercialBankastheFund administrator to theAuditor General forAudit verification.
ii)The Cabinet Secretary to institute disciplinary measures against the Accounting Officerinlinewithsection74ofthePFMAct.

3.Unfavourable Clauses in ContractAgreementwith aFinancial Institution

194.The statement of financial position reflects car loan and mortgage revolving funds amounting toKshs.15,000,000 and Kshs.85,000,000,respectively.Review of theAgreement dated 27February,2018betweentheFunds and thefinancial institutionmanagingtheCar Loan and Mortgage Schemes revealed the following anomalies:

3.1IrregularLoanInterest

The agreement providesfor an interest rate of five(5)percent on theloans.This is contrary to Part 6 of theSalaries andRemunerationCommissionCircularNo.SRC/ADM/CIR/1/13/Vol.lll(128) dated17December,2014which approved aninterest rateof three(3)percent per annumfor the duration oftheloan.

SubmissionsbytheAccountingOfficer

195.The Accounting Officer submitted that— Article17(1)ofbothPublicServiceCommissionCarLoanSchemeandMortgageScheme Regulations 2018guide oninterest rate at5%per annum at reducingbalancebasis.However, reviewofthe interestratewasunderway to ensure it was not more than3%.In addition,Article 24ofthePublicServiceCommissionCarLoanRegulationsandArticle26ofPublicService CommissionMortgageSchemeRegulationsrequiretheofficer administering the scheme recommend to the Cabinet Secretary any amendment to the regulation.The review of interest rate is in progress.Draft Regulations are attached in the Management Responses.

ObservationsoftheCommittee

TheCommitteeobservedthat

i)The agreement stipulates an interest rate of five percent on the loans, in contravention of Part 6 of theSalaries and Remuneration Commission Circular,which approves a threepercentper annum ratefor theloan duration; and
i)The Matter is unresolved.

RecommendationsoftheCommittee

196.The Committee recommends that

i)Within three months upon the adoption of this report;
a)The issuance of new mortgage and car loans be suspended until the Regulations are approved byParliament.
b)The Cabinet Secretary to institute disciplinary measures against the Accounting Officerinlinewithsection74oftePFMAct.
ii)TheAccountingOfficermust ensurestrictadherence torelevantstatutoryprovisions and circulars.
iii) The2%differential interestchargedbasedon the agreementshouldberefunded to theFund.
iv)The agreement should bereviewed and alignedwith theprovisionsofPart6 of the SalariesandRemuneration Commission Circular.

3.2High Cost ofAdministrationFees

197.The agreement provides for charging of4% and 3.5% administrationfee on interest earned from car loans and mortgage loans, respectively. Further, the financial institution charges a negotiation fee of 1% on car and mortgage loans taken and a monthly ledger fee of Kshs.350.

Thesehaveincreased thecostoftheloans.

Submissions by the Accounting Officer

198.TheAccounting Officer submitted that

SPECIALFUNDACCOUNTSCOMMITTEE-CARLOANANDMORTGAGESCHEMESFUND

The Commissionis currentlyin the process of reviewingPublicService Commission Car Loan andMortgageRegulations2018in ordertomakethefacility affordableand attractivetostaff. Sofar,DraftRegulationshavebeen developed and circulated tostakeholdersincludingstaff awaiting tabling before the Commission Board for adoption. The proposed changes in the Draft Regulations that addresses high administrationfees will be addressed asfollows:

a) Administrationfeeof3.5%toberemoved;
b) Negotiation fee of 1% of mortgage loan principal tobe removed since the funds are not sourced from administering ban;.
c) Ledgerfee of Kshs 350per month to be removed; and
d) The interest charged shall be at a rate of not more than three(3)percent per annum for mortgage and car loans on a monthly reducing balance.

ObservationsoftheCommittee

199.The Committeeobserved that
i) The agreement imposes charges, including a 4% and 3.5% administration fee on interest earned from car and mortgage loans respectively, a 1% negotiation fee, and a monthly ledger fee of Kshs.350,thereby increasing the overall cost of the loans.
ii)The matter is unresolved.

RecommendationsoftheCommittee

200.The Committeerecommends that
i)within threemonths upontheadoptionof thisreport;
a)The issuance of new mortgage and car loans be suspended until the Regulations areapprovedbyParliament.
b) The Cabinet Secretary to institute disciplinary measures against the AccountingOfficerinlinewithsection74of thePFMAct,CAP.412A.
ii)The agreement should be reviewed to addressthehigh costof administrationfees.

3.3UnderUtilizedFunds

201.The agreement requires the Funds to maintain lien deposit account which should at all ties have a balance equivalent to the total aggregate disbursed Ioan principal amount which earns interest of 1.5%per annum.Review of records revealed that Kshs.85,000,0000 was held in the lien account. This has denied the beneficiaries from accessing the loans and denied the Funds optimal revenue due to the low interest rate on the lien amount. In the circumstances,the effectiveness and achievement ofvalueformoneyfortheFunds could notbe confirmed.

Submissions by theAccounting Officer

202. The Accounting Officer submitted that—

The agreement entered into with Kenya Commercial Bank (KICC Branch) was on 27th February,2018.After the signing of the Memorandum of Understanding (MOU), the Scheme Management Committee undertookstaffsensitizationinpreparationforissuance of Car Loan andMortgageScheme.The Mortgage and Car Loan Fund was held in afixed DepositAccount awaitingstafftoapplyforthe loan.Henoted thatSection6oftheMOUbetweenPublicService Commission Mortgage Scheme and Kenya Commercial Bank indicated that ""The client may revisethisrateofinterestfromtime totime andshalladviseKenyaCommercialBankin writing and give two (2) months' notice for Kenya Commercial Bank to effect. The review of theinterest ratewill bein the newMemorandum of Understanding(MOU)after the adoption of the new Car Loan and Mortgage Regulations by the Public Service Commission Board.

ObservationsoftheCommittee

203.TheCommitteeobserved that—
i)Kshs.85,0oo,0ooheld in alien account denied beneficiaries access to loans and reduced theFund'srevenueduetothelowinterestearnedonthelienamount.
ii)The Matter is unresolved.

RecommendationsoftheCommittee

204.TheCommitteerecommendsthat
i)Within threemonthsupon the adoption of thisreport
a)The issuance of newmortgage and carloans besuspended until the Regulations are approved byParliament.
b) The Cabinet Secretary to institute disciplinary measures against the AccountingOfficerinlinewithsection74of thePFMAct,CAP412A
ii)The Accounting Officer must at all times ensure 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 standardsprescribedby the PublicSector Accounting Standards Board and in compliance with regulation 101(4)of thepublic financemanagement (National Government) Regulations.

4.Irregular Consolidation of TwoSeparateFunds

205.Thefinancial statements are inrespect of PublicService Commission Car LoanScheme and the Public Service Commission Mortgage Scheme.However, the two schemes are establishedunderPublicServiceCommissionCarLoanSchemeRegulations,2018andthe Public Service Commission Mortgage Scheme Regulations, 2018, respectively.
206.No explanation was provided for the consolidating of the financial statements for the two Schemeswhicharedistinct.ThisiscontrarytoSection84(1)of thePublicFinance Management Act, 2012which requires anAdministratorofa National PublicFund established by the Constitution or anActof Parliament topreparefinancial statementsfor theFundfor

SPECIALFUNDACCOUNTSCOMMITTEE-CARLOANANDMORTGAGESCHEMESFUND

each financial year in a form prescribed by the Accounting Standards Board. In the circumstances,Managementwasinbreach of the law.

Submissions by theAccounting Officer

207.The Accounting Officer submitted that

The preparation of the Financial Statements for the six months period ended 3oth June 2018, wasinconsultationwithTheNational Treasury.The Commissionused thestandardtemplate issued byPublicSectorAccountingStandardsBoard.Thetemplateprovidefor disclosure of the two fund in statement of financial position as shown in page 2 of the Public Sector AccountingStandards Board template.In addition,He stated that the statement of cash-flow of the template provide for disclosure of Receipt into the Mortgage Revolving Fund and Receipts into the CarLoanRevolvingFund,both under cashflowfromfinancing activities During the audit of the financial statements, separate supporting schedules for both Mortgage and Car Loanwereissued to theAuditorswhichwere used topreparefinancialstatementsfor the six-month period ended 30th June 2018.However,He noted the matter and undertook to ensurepreparationofseparatefinancial statementsfrom thecurrentfinancialyear2023/2024 after consultationwithTheNationalTreasury andPublicSector.

ObservationsoftheCommittee

208.The Committee observed that
i) The Accounting Officer was in breach of Section 84(1) of the Public Finance ManagementAct,2012whichprovidethattheadministratorofanationalpublic fundestablishedbytheConstitution or anActofParliamentshallprepare financialstatementsforthefundforeachfinancialyearin aformprescribedby the Accounting StandardsBoard; and
ii) TheMatterisunresolved.

RecommendationsoftheCommittee

209.The Committee recommends that
i)That within three months upon the adoption of this report the Cabinet Secretary to institute disciplinary measures against the Accounting Officer in line section with 74 ofthePFMAct,CAP.412A.
ii)The Accounting Officer must at all times ensure that all applicable accounting and financial controls, systems, standards, laws, and procedures are followed in the preparation ofAnnualReports andfinancialstatements and inaccordancewith the standardsprescribedbythePublicSectorAccountingStandardsBoard and in compliance with regulation 101 (4) of the public finance management (National Government) Regulations.

FinancialYear2018/2019

1)LateSubmissionofFinancial Statements

210.The financial statements of the Fund for the year ended 30 June,2019 were submitted to the Auditor General on 30 October, 2023, approximately five (5) years afterthe end of the period.This was contrary to Section84(3)ofthePublicFinance Management Act,2012 which requires anAdministratorofa NationalPublicFund topreparefinancial statements and submit themto theAuditor Generalwithin threemonths after the endof thefinancialyear.Inthe circumstances, Management was in breach of the law.

SubmissionsbytheAccountingOfficer

211.TheAccountingOfficersubmitted that ThePublicService Commission entered intoan agreementwithKenyaCommercial Bank (KCB) on 27th February, 2018; where it was agreed that KCB will administer the employees Car Loan andMortgageSchemeFund.Itwas noted that the accountsfor thefinancialyear ended 30June,2019,were not prepared on time.Section 21 (d) ofPublicService Commission CarLoanSchemeRegulations 2018andSection22(b)of PublicServiceCommission MortgageSchemeregulations provide that administrator of the Scheme should prepare,sign and transmittheincome andexpenditurestatementandstatementoffinancialpositionof the schemein accordancewiththestandards asmaybeprescribedbytheKenyaPublicSector Accounting Standards Board.

212.The guidelines and standard template for preparation of financial statements were issued by the National Treasury from 30th June,2022.The National Treasury through the Circular REF:AG.4/16/3Vol.1I(66)dated 6thJuly,2022communicated toall AccountingOfficers on New and Revised Annual Financial Reporting Templates for all National and County GovernmentEntities.Section 2.1.1of the circular introducedguidelines onNewTemplates for Car Loan and Mortgage Funds under theNational Government Entities However, the financialstatementsforPublicServiceCommissionforfinancialyear2018/2019hada discloser on amount disbursed on Mortgage and Car Loan under Domestic Lending and OnLending on page 33;Financial Assets.He promised that the Management is committed to ensuring compliance with the law on matters of Financial Reporting.

ObservationsoftheCommittee

213.TheCommitteeobserved that
i) TheAccounting Officer was inbreach of Section 47(1) of thePublicAuditAct, CAP.412B whichprovides that the financial statementsrequiredunder the Constitution of Kenya 2010, the Public Finance Management Act, 2012 and any other legislationshall besubmitted to theAuditor-General within three(3)months after the end of the fiscal year towhich the accountsrelate;and
ii) TheMatter is unresolved.

RecommendationsoftheCommittee

214.The Committee recommends that the Accounting Officer should ensure timely submissionof financial statements asper theprovisionsofsection 47(1)of thePublic AuditAct,CAP.412B.

2)Unconfirmed Procurement of anInstitution to Manage Car and Mortgage Schemes

215.The Fund Management entered into an agreement on 27 February, 2018 with a financial institution to manage the Car Loan and Mortgage Schemes. However, procurement records indicatinghowthebankwasidentified and awardedthetenderwerenotprovidedfor audit review.In the circumstances, it was not confirmed whether the procurement of the bank was competitive and transparent.

SubmissionsbytheAccountingOfficer

216.The Accounting Officer submitted that—— Public Service Commission Car Loan Scheme Regulation 2018(10) provides that "the officer administering the scheme may appoint a reputable financial institution to administer the scheme. In addition, Section 10 of Public Service Commission Mortgage Scheme Regulations 2018givepowers to theAdministrator to consultwith TheNational Treasury on a reputable financial institution to administer the scheme.
217.He noted that the Commission did engage the National Treasury for guidance on a suitable institutionfor FundAdministration.Aletter addressed to thePrincipalSecretaryNational Treasury on 14th December, 2017 on operationalization of the two (2) Funds forwarded the Regulations and also indicated the preferred service provider. Kenya Commercial Bank (KCB) National Treasury eventually granted authority for the Commission to engage Kenya Commercial Bank(KCB) as theFund Administrator tomanage theScheme.

ObservationsoftheCommittee

218.TheCommitteeobserved that
i)The Fund Management entered into an agreement with a financial institution to manage the CarLoan andMortgageSchemeswithoutcompetitivebidding;
Managementwas inbreachof Section103(1)of thePublicProcurement andAsset Disposal Act, CAP.412C;
ii) The Public Service Commission Car Loan Scheme Regulation 2018 relied upon by the Fund when selecting the Fund Manager were still in draft form; and
iv)The matter is not resolved.

RecommendationsoftheCommittee

219.The Committeerecommends that

Within three months of adoption of this report,

i)Management must submit authorisation from the National Treasury allowing the Fund to engage Kenya Commercial Bank as the Fund administrator to the AuditorGeneral forAuditverification.
i)The Cabinet Secretary to institute disciplinary measures against the Accounting Officerinlinesectionwith74ofthePFMAct,CAP.412A.
3)Unfavourable Clauses in ContractAgreementwith aFinancial Institution
220.Thestatement of financial position reflects car loan and mortgagerevolving funds amounting toKshs.15,000,000 andKshs.85,000,000,respectively.Review of the Agreement dated27February,2018betweentheFundsandthefinancialinstitutionmanagingtheCar LoanandMortgageSchemesrevealed thefollowing anomalies:

3.1IrregularLoanInterest

221.The agreement provides for an interest rate of five (5) percent on the loans. This is contrary toPart6oftheSalaries sandRemunerationCommissionCircular No.SRC/ADM/CIR/1/13/Vol.1ll(128) dated 17December,2014which approved an interest rate of three (3) percent per annumfor the duration of the loan.

SubmissionsbytheAccountingOfficer

222.The Accounting Officer submitted that—

Article17(1)of bothPublicServiceCommissionCarLoanScheme andMortgageScheme Regulations 2018guide on interest rate at 5%per annum at reducing balance basis.However, review ofthe interest rate was underway to ensure it was not more than3%.In addition,Article 24 ofthePublicServiceCommissionCar LoanRegulations andArticle 26of PublicService Commission Mortgage Scheme Regulations require the officer administering the scheme recommend to the Cabinet Secretary any amendment to the regulation.The review of interest rateisinprogress.DraftRegulations are attached in theManagementResponses.

ObservationsoftheCommittee

223.The Committeeobserved that
i)The agreement stipulates an interest rate of five percent on theloans,in contravention of Part 6 of theSalaries andRemuneration Commission Circular,which approves a three percent per annum rate for the loan duration; and
ii)The Matter is unresolved.

RecommendationsoftheCommittee

224.TheCommitteerecommendsthat
i)Within three months upon the adoption of thisreport;
a)The issuance of newmortgage andcar loansbesuspended until theregulations are approved byParliament.
b) The Cabinet Secretary to institute disciplinary measures against the AccountingOfficerin linewithSection74of thePFMAct.
c) The 2% differential interest charged based on the agreement should be refunded to theloanee.
d)The agreement should be reviewed and aligned with the provisions of Part 6 of theSalariesandRemunerationCommissionCircular.

3.2HighAdministrationFees

225.The agreement provides for charging of 4% and 3.5% administration fee on interest earned from car loans and mortgage loans, respectively. Further, the financial institution charges a negotiationfee of 1% on car and mortgage loans taken and a monthly ledger feeof Kshs.350. Thesehaveincreased thecostoftheloans.

Submissionsby theAccounting Officer

226.The Accounting Officer submitted that

The Commission is currentlyin theprocess of reviewingPublicService Commission Car Loan and Mortgage Regulations 2018 in order to make the facility affordable and attractive to staff. Sofar,Draft Regulations havebeen developed and circulated to stakeholders includingstaff and senior management; and their inputs already incorporated. The Draft Regulations are awaiting tabling before the Commission Board for adoption. The proposed changes in the Draft Regulations that addresses high administrationfees will be addressed asfollows:

a) Administrationfeeof3.5%toberemoved;
b) Negotiation fee of 1% of mortgage loan principal to be removed since the funds are not sourced from administering ban;.
c) Ledgerfee ofKshs350per month toberemoved;and
d) The interest charged shall be at a rate of not more than three(3) percent per annum for mortgage and car loans on a monthly reducing balance.

ObservationsoftheCommittee

227.TheCommitteeobserved that
i) The agreement imposes charges, including a 4% and 3.5% administration fee on interest earned from car and mortgage loans respectively,a 1%negotiation fee, and a monthlyledgerfee of Kshs.350,therebyincreasing the overall cost of theloans.
ii)The matter is unresolved.

RecommendationsoftheCommittee

228.The Committeerecommends that
i) within three months upon the adoption of this report:
a)The issuance ofnew mortgage andcarloansbe suspendeduntil the Regulations are approved by Parliament.
b)The Cabinet Secretary toinstitute disciplinarymeasures against the AccountingOfficerinlinewithSection74ofthePFMAct.
ii The agreement should be reviewed to address the highcost ofadministrationfees.

3.2UnderUtilizedFunds

229.The agreement requires the Funds to maintain a lien deposit account which should at all timeshaveabalanceequivalentto thetotal aggregatedisbursedIoanprincipal amountwhich earnsinterestof1.5%per annum.Thishas denied thebeneficiariesfrom accessing theloans anddenied theFunds optimal revenue duetothelowinterest rate onthe lien amount.In the circumstances,the effectiveness and achievement ofvalueformoneyfortheFunds could not beconfirmed.

Submissionsby theAccounting Officer

230.The Accounting Officer submitted that—

231.The Mortgage and Car Loan Fund was held in a fixed Deposit Account awaiting staff to applyfor theloan.Henoted thatSection6of theMOUbetweenPublicServiceCommission MortageScheme andKenya Commercial Bankindicated that"The client may revise this rate ofinterestfrom time to time and shall adviseKenya CommercialBankinwriting andgivetwo (2)months'noticeforKenya Commercial Bank to effect.The review oftheinterest ratewill beinthenewMemorandumofUnderstanding(MOU)afterthe adoptionofthenewCarLoan andMortgageRegulationsby thePublicService CommissionBoard.

ObservationsoftheCommittee

232.The Committee observed that
i)Kshs.85,0oo,0o0 held in a lien account denied beneficiaries access to loans and reduced theFund'srevenueduetothelowinterestearnedonthelien amount.
ii)The Matter is unresolved.

RecommendationsoftheCommittee

233.The Committeerecommends that
i)Within three months upon the adoption of this report:

a)The issuance of newmortgage and car loansbe suspended until the Regulations areapprovedbyParliament.
b) The Cabinet Secretary to institute disciplinary measures against the Accounting Officer inlinewithSection 74 of thePFM Act.
ii)TheAccountingOfficermustensurestrict adherence torelevantstatutoryprovisions andcirculars.

4.Irregular Consolidation of Two Separate Funds

235.No explanation was provided for the consolidating of the financial statements for the two Schemes which are distinct. This is contrary to Section 84(l) of the Public Finance Management Act, 2012 which requires an Administrator of a National Public Fund established by the Constitution or an Act of Parliament to prepare financial statements for the Fund for each financial year in a form prescribed by the Accounting Standards Board. In the circumstances,Management was inbreach of thelaw.
234.The financial statements are in respect of Public Service Commission Car Loan Scheme and the Public Service Commission Mortgage Scheme. However, the two schemes are established under Public Service Commission Car Loan Scheme Regulations, 2018 and the Public Service Commission Mortgage Scheme Regulations,2018,respectively.

Submissionsby theAccountingOfficer

236.TheAccountingOfficer submitted that—

237. During the audit of the financial statements, separate supporting schedules for both Mortgage and Car Loan were issued to the Auditors which were used to prepare financial statementsfor the six-month period ended30thJune 2019.However,He noted thematter and undertook to ensure preparation of separate financial statements from the current financial year 2023/2024 after consultationwithTheNationalTreasury andPublicSector.

ObservationsoftheCommittee

238.The Committeeobserved that
i) TheAccountingOfficerwasinbreachof Section84(1)of thePublicFinance ManagementAct,CAP.412Awhichprovidethattheadministrator of a national publicfund established by the Constitution or an Act of Parliament shall prepare

SPECIALFUNDACCOUNTSCOMMITTEE-CARLOANANDMORTGAGESCHEMESFUND

financial statements for the fund for each financial year in a form prescribed by theAccountingStandardsBoard;and

ii) The Matter is unresolved.

Recommendationsofthe Committee

239.The Committee recommends that
Within threemonthsuponthe adoption ofthisreport theCabinet Secretarytoinstitute disciplinary measures against the Accounting Officer in line with the PFM Act.
i) TheAccountingOfficermustatall timesensurethatallapplicableaccountingand financial controls, systems, standards,laws,and procedures are followed in the preparation of Annual Reports and financial statements and in accordancewith the standards prescribed by the Public Sector Accounting Standards Board and in compliance with regulation 101 (4) of the public finance management (National Government)Regulations.

FinancialYear2019/2020

1)LateSubmissionofFinancial Statements

240.The financial statements of the Fund for the year ended 30 June,2020were submitted to the Auditor General on 30 October, 2023, approximately five (5) years afterthe end of the period.This was contrary toSection84(3) ofthePublic FinanceManagementAct,2012which requires anAdministrator ofaNational PublicFund topreparefinancial statements and submit themtotheAuditorGeneralwithinthreemonthsaftertheendofthefinancialyear.Inthe circumstances,Managementwasinbreachofthelaw.

SubmissionsbytheAccountingOfficer

241.TheAccountingOfficersubmitted that—

ThePublicServiceCommissionentered intoan agreementwithKenyaCommercialBank (KCB) on 27thFebruary,2018;where it was agreed thatKCBwill administer the employees Car Loan and MortgageScheme Fund.It was noted that the accounts for the financialyear ended 30June,2020were notprepared on time.Section 21(d)of PublicService Commission CarLoanSchemeRegulations2018andSection22(b)ofPublicServiceCommission Mortgage Scheme regulations provide that administrator of the Scheme should prepare, sign and transmit theincome andexpenditurestatement andstatement offinancialposition of the scheme in accordancewith the standards as maybeprescribed by theKenyaPublicSector Accounting Standards Board.

242.The guidelines and standard template for preparation of financial statements were issued by the National Treasury from 30th June,2022. The National Treasury through the Circular REF:AG.4/16/3Vol.11 (66) dated 6th July,2022 communicated to all Accounting Officers on New and Revised Annual Financial Reporting Templates for all National and County

SPECIALFUNDACCOUNTSCOMMITTEE-CARLOANANDMORTGAGESCHEMESFUND

Government Entities. Section 2.1.1 of the circular introduced guidelines on New Templates for Car Loan and Mortgage Funds under theNational Government Entities However,the financialstatementsforPublicServiceCommissionforfinancialyear2019/2020had a discloser on amount disbursed on Mortgage and Car Loan under Domestic Lending and OnLending on page 38;Financial Assets.He promised that the Management is committed to ensuringcompliancewith thelaw onmatters ofFinancial Reporting.

ObservationsoftheCommittee

243.TheCommitteeobservedthat

i) TheAccountingOfficerwasinbreachofSection47(1)ofthePublicAuditAct, ConstitutionofKenya 2010,thePublicFinanceManagementAct,CAP.412Aand any otherlegislationshallbesubmittedtotheAuditor-Generalwithinthree(3)months after theendofthefiscalyear towhich the accountsrelate;and
i) TheMatter isunresolved.

RecommendationsoftheCommittee

244.The Committee recommends that theAccountingOfficershouldensure timely submission offinancialstatements asper theprovisions of section47(1)of thePublic AuditAct,CAP.412B.

2. Unconfirmed Procurement of an Institution to Manage Car and Mortgage Schemes

245.The Fund Management entered into an agreement on 27 February, 2018with a financial institution tomanage the Car Loan and MortgageSchemes.However,procurement records indicatinghowthebankwasidentified and awarded thetenderwerenotprovidedfor audit review.In the circumstances,it wasnot confirmedwhether theprocurement of thebankwas competitive and transparent.

SubmissionsbytheAccountingOfficer

246.TheAccountingOfficer submitted that—

Public Service Commission Car Loan Scheme Regulation 2018(10) provides that "the officer administering the scheme may appoint a reputable financial institution to administer the scheme.In addition,Section10ofPublicServiceCommissionMortgageSchemeRegulations 2018givepowers to theAdministrator toconsultwithTheNationalTreasuryon a reputable financial institution to administer the scheme.

247.He noted that the Commission did engage theNational Treasuryforguidance on a suitable institutionforFundAdministration.Aletter addressed to thePrincipalSecretaryNational Treasury on 14h December, 2017 on operationalization of the two(2) Funds forwarded the Regulations and alsoindicated thepreferredserviceprovider.Kenya Commercial Bank(KCB) and HFCK had similar engagements with other public institutions operating such Funds. The

SPECIALFUNDACCOUNTSCOMMITTEE-CARLOANANDMORTGAGESCHEMESFUND

Commercial Bank (KCB) as theFund Administrator tomanage theScheme.

ObservationsoftheCommittee

248.The Committee observed that
i)The Fund Management entered into an agreement with a financial institution to manage the CarLoan and MortgageSchemeswithoutcompetitivebidding;
ii) ManagementwasinbreachofSection103(1)of thePublicProcurementandAsset Disposal Act, CAP.412C;
ili) ThePublicService Commission CarLoanSchemeRegulation2018relied uponby the Fund when selecting the Fund Manager are still in draft form; and
iv)The matter is not resolved.

RecommendationsoftheCommittee

249.TheCommitteerecommends that-

Within threemonths ofadoption of thisreport;

i)Management must submit authorisation from the National Treasury allowing the Fund to engage Kenya Commercial Bank as the Fund administrator to the Auditor General forAuditverification.
ii)The Cabinet Secretary to institute disciplinary measures against the Accounting OfficerinlinewithSection74ofthePFMAct.

3.Unfavorable Clauses in Contract Agreementwith a Financial Institution

250. The statement of financial position reflects car loan and mortgage revolving funds amountingtoKshs.15,000,000andKshs.85,000,000,respectively.ReviewoftheAgreement dated 27February,2018between theFunds and thefinancialinstitutionmanagingthe Car LoanandMortgageSchemesrevealed thefollowinganomalies:

3.1IrregularLoanInterest

The agreement providesfor aninterest rate of five (5) percent on the loans.This is contrary toPart 6 oftheSalariesandRemunerationCommissionCircularNo.SRC/ADM/CIR/1/13/Vol.lll (128) dated17 December,2014which approved aninterest rateof three(3)percentper annumfor the duration of the loan.

Submissions by the Accounting Officer

251.TheAccountingOfficersubmitted that—

Article17(1)ofbothPublicServiceCommissionCarLoanSchemeandMortgageScheme Regulations2018guide oninterest rate at5%per annum at reducingbalancebasis.However, reviewoftheinterestratewasunderwaytoensureitwasnotmorethan3%.Inaddition,Article 24of thePublicService CommissionCar LoanRegulations andArticle 26of PublicService CommissionMortgageSchemeRegulationsrequiretheofficeradministeringthescheme recommend to theCabinetSecretary any amendment to theregulation.Thereviewofinterest rateis in progress.Draft Regulations are attached in theManagement Responses.

ObservationsoftheCommittee

252.TheCommittee observedthat
i)The agreement stipulates an interest rate of five percent on the loans,in contravention of Part6of theSalariesandRemuneration Commission Circular,which approved a three percent per annum rate for the loan duration;and
i)The Matter is unresolved.

RecommendationsoftheCommittee

253.The Committeerecommends that
i)Within three monthsupon the adoption of this report;
a)The issuance of new mortgage andcar loansbe suspended until the regulations are approved by Parliament.
b)The Cabinet Secretary to institute disciplinary measures against the AccountingOfficer.
i)The 2% differential interest charged based on the agreement should be refunded to theloanee.
iii) The agreementshouldbereviewed andalignedwith theprovisionsof Part6of the Salaries and Remuneration Commission Circular.

3.2HighAdministrationFees

2.The agreementprovides for charging of 4% and 3.5% administration fee on interest earned from car loans and mortgage loans, respectively. Further, the financial institution charges a negotiation fee of 1% on car and mortgage loans taken and a monthly ledger fee of Kshs.350. These haveincreased the cost of the loans.

Submissionsby theAccounting Officer

3.The Accounting Officer submitted that

The Commissioniscurrentlyintheprocess ofreviewingPublicService Commission Car Loan andMortgageRegulations2018inordertomakethefacilityaffordable and attractivetostaff. Sofar, Draft Regulations have been developed and circulated to stakeholders including staff and senior management; and their inputs already incorporated. The Draft Regulations are awaiting tabling before the Commission Board for adoption. The proposed changes in the Draft Regulations that addresses high administrationfees will be addressed asfollows:

a) Administrationfeeof3.5%toberemoved;
b) Negotiation fee of 1% of mortgage loan principal to be removed since the funds are notsourcedfromadministeringban.
c) Ledger fee ofKshs350 permonth to be removed; and

SPECIALFUNDACCOUNTSCOMMITTEE-CARLOANANDMORTGAGESCHEMESFUND

d) Theinterestcharged shall beat arateof notmore thanthree(3)percentper annum for mortgage and car loans on a monthly reducingbalance.

ObservationsoftheCommittee

4.The Committee observed that
i)The agreement imposes charges, including a 4% and 3.5% administration fee on interest earnedfrom car and mortgage loansrespectively,a1%negotiationfee,and a monthly ledger fee of Kshs.350, thereby increasing the overall cost of the loans.
ii)Thematter isunresolved.

RecommendationsoftheCommittee

5.The Committeerecommendsthat-
i) Within three months upon the adoption of this report-
a)The issuance of new mortgage and car loans be suspended until the Regulations are approved by Parliament.
b) The Cabinet Secretary to institute disciplinary measures against the AccountingOfficer in linewithSection74 of thePFMAct.
ii) The agreement should bereviewed to address thehigh cost ofadministrationfees.

3.3UnderUtilizedFunds

The agreement requires the Funds to maintain lien deposit account which should at all times have abalance equivalent tothe totalaggregatedisbursedIoanprincipal amountwhich earns interestof1.5%per annum.Thishasdenied thebeneficiariesfromaccessing theloans and deniedtheFundsoptimalrevenue duetothelowinterestrate onthelien amount.Inthe circumstances,theeffectivenessand achievementofvalueformoneyfortheFundscouldnot beconfirmed.

SubmissionsbytheAccountingOfficer

6.TheAccountingOfficer submitted that The agreement entered into with Kenya Commercial Bank (KICC Branch) was on 27th February, 2018.After the signing of the Memorandum of Understanding (MOU), the Scheme Management Committee undertookstaffsensitizationinpreparationforissuance of Car Loan

andMortageScheme.

7.The Mortgage and Car Loan Fund was held in a fixed Deposit Account awaiting staff to apply for theloan.He noted thatSection 6of theMOUbetweenPublicService Commission mortgageScheme and Kenya Commercial Bankindicated that"The clientmay revise this rate ofinterestfromtimeto time and shall adviseKenyaCommercialBankinwriting andgivetwo (2) months'noticeforKenya Commercial Bank to effect.The review oftheinterest ratewill beinthenewMemorandumofUnderstanding(MOU)afterthe adoptionofthenewCarLoan andMortgageRegulationsbythePublicServiceCommissionBoard.

ObservationsoftheCommittee

8.TheCommitteeobserved that
i)Kshs.85,00o,000 held in a lien account denied beneficiaries access to loans and reducedtheFund'srevenueduetothelowinterestearnedon thelienamount.
i)The Matter is unresolved.

RecommendationsoftheCommittee

9.TheCommitteerecommendsthat
i)Within threemonthsupon the adoption of thisreport-
a)The issuance of newmortgage and carloans besuspended until theRegulations areapproved byParliament.
b) The Cabinet Secretary to institute disciplinary measures against the AccountingOfficerinlinewithSection74of thePFMAct.
)TheAccountingOfficermustat all timesensure thatallapplicable accountingand financial controls,systems,standards,laws,and procedures are followed in the preparationofAnnual Reports andfinancialstatements andin accordancewith the standardsprescribedby thePublicSectorAccountingStandardsBoard and in compliance with regulation 101 (4)of the public finance management (National Government) Regulations.

4.Irregular Consolidation of TwoSeparateFunds

10. The financial statements are in respect of Public Service Commission Car Loan Scheme and the Public Service Commission Mortgage Scheme. However, the two schemes are established underPublicService CommissionCarLoanSchemeRegulations,2018 and thePublicService Commission Mortgage Scheme Regulations, 2018, respectively. 11. No explanation was provided for the consolidating of the financial statements For the two Schemes which are distinct. This is contrary to Section 84(l) of the Public Finance ManagementAct,2012which requires anAdministrator ofaNational PublicFundestablished by theConstitutionoranActof Parliament topreparefinancialstatementsfor theFundfor each financial year in a form prescribed by the Accounting Standards Board. In the circumstances,Managementwasinbreach of thelaw.

Submissionsby theAccounting Officer

12. The Accounting Officer submitted that

Thepreparation of theFinancial Statementsfor the sixmonths period ended30thJune 2018, was in consultationwith TheNational Treasury.The Commission used the standard template issued byPublicSectorAccountingStandardsBoard.Thetemplateprovidefordisclosure of the two fund in statement of financial position as shown in page 2 of the Public Sector Accounting Standards Board templateIn addition,He stated that the statement of cash flow onpagefour(4) ofthetemplateprovidefor disclosure of Receiptinto theMortgageRevolving Fund and Receipts into the Car Loan Revolving Fund, both under cash flow from financing activities

13.Duringthe audit of thefinancial statements,separate supportingschedulesforbothMortgage and CarLoanwereissued totheAuditorswhichwereusedtopreparefinancial statementsfor the six-month period ended 30thJune 2020.However, He noted the matter and undertook to ensurepreparationofseparatefinancial statementsfromthecurrentfinancialyear2023/2024 after consultationwithTheNationalTreasury andPublicSector.

ObservationsoftheCommittee

14.TheCommitteeobserved that
i)The Accounting Officerwasinbreachof Section 84(1)of thePublic Finance Management Act,CAP.412A which provide that the administrator of a national publicfundestablished bythe Constitutionor anActof Parliamentshallprepare financial statementsfor thefundfor eachfinancialyearinaformprescribed bythe Accounting Standards Board.
ii)The Matter is unresolved.-

15.The Committeerecommendsthat

i)The Cabinet Secretary to institute disciplinary measures against the Accounting Officer.
i)The Accounting Officer must at all times ensure that all applicable accounting and financial controls, systems, standards,laws,and procedures are followed in the preparation of Annual Reports andfinancial statements and in accordance with the standardsprescribed by thePublicSectorAccountingStandardsBoard and in compliance with regulation 101 (4) of the public finance management (National Government) Regulations.

FinancialYear2020/2021

1)LateSubmissionofFinancialStatements

16.Thefinancialstatementsof theFundfortheyearended30June,2021weresubmitted tothe Auditor General on 30 October, 2023, approximately five (5) years after the end of the period. Thiswas contrary toSection84(3)of thePublicFinanceManagementAct,2012which requires anAdministrator ofaNationalPublicFund topreparefinancial statements and submit them to theAuditor Generalwithin threemonths after theendof thefinancialyear.In the circumstances,Managementwasinbreachofthelaw.

Submissionsby theAccountingOfficer

17.TheAccountingOfficer submitted that

SPECIALFUNDACCOUNTSCOMMITTEE-CARLOANANDMORTGAGESCHEMESFUND

The Public Service Commission entered into an agreement with Kenya Commercial Bank (KCB) on 27thFebruary,2018;where it wasagreed thatKCBwill administer the employees Car Loan and Mortgage Scheme Fund.Itwas noted that the accountsfor the financialyear ended30 June,2021 were not prepared on time.Section 21(d) of PublicService Commission Car LoanSchemeRegulations 2018 and Section 22(b)ofPublicService Commission Mortgage Scheme regulations provide that administrator of the Scheme should prepare, sign andtransmit theincome and expenditurestatement andstatementoffinancialpositionof the scheme inaccordancewith the standards asmaybeprescribed by theKenyaPublicSector Accounting Standards Board.

18.The guidelines and standard templateforpreparation offinancial statementswere issued by the National Treasury from 30th June, 2022. The National Treasury through the Circular REF:AG.4/16/3Vol.1I(66) dated 6th July,2022communicated to all Accounting Officers on New and Revised Annual Financial Reporting Templates for all National and County Government Entities.Section 2.1.1 of the circular introduced guidelines on New Templates for Car Loan and Mortgage Funds under the National Government Entities However, the financial statementsfor PublicServiceCommissionfor financialyear 2020/2021 had a discloser on amount disbursed on Mortgage and Car Loan under Domestic Lending and OnLending on page 45 and 46; Financial Assets. He promised that the Management is committed to ensuring compliance with the law on matters of Financial Reporting.

ObservationsoftheCommittee

19.TheCommitteeobserved that

i) TheAccountingOfficerwasinbreachofSection47(1)of thePublicAuditAct, CAP.412Bwhichprovides that thefinancialstatementsrequiredunder the Constitution of Kenya 2010,thePublicFinance ManagementAct,2012 and any otherlegislationshallbesubmitted totheAuditor-Generalwithinthree(3)months after the endofthefiscalyear towhich the accountsrelate:and

2. ii) TheMatterisunresolved.

RecommendationsoftheCommittee

20.The Committeerecommends thattheAccountingOfficer should ensure timely submissionoffinancialstatementsasper theprovisions ofsection47(1)of thePublic AuditAct,CAP.412B.

2.Unconfirmed Procurement of anInstitution toManage Car and MortgageSchemes

21. The Fund Management entered into an agreement on 27 February, 2018 with a financial institution tomanage the Car Loan and Mortgage Schemes.However,procurementrecords indicatinghowthebankwasidentified and awarded thetenderwerenotprovidedfor audit review.In the circumstances,it was not confirmed whether theprocurement of thebank was competitive and transparent.

SPECIALFUNDACCOUNTSCOMMITTEE-CARLOANANDMORTGAGESCHEMESFUND

Submissions by the Accounting Officer

22.TheAccountingOfficersubmittedthat PublicServiceCommissionCar LoanSchemeRegulation2018(10)provides that"theofficer administering the scheme may appoint a reputable financial institution to administer the scheme. In addition,Section 10 of Public Service Commission Mortgage Scheme Regulations 2018givepowers to theAdministratortoconsultwithTheNational Treasuryonareputable financial institution to administer the scheme.

23. He noted that the Commission did engage the National Treasury for guidance on a suitable institution for Fund Administration. A letter addressed to the Principal Secretary National Treasury on 14th December, 2017 on operationalization of the two (2)Funds forwarded the Regulations and alsoindicated the preferred service provider.Kenya Commercial Bank (KCB) and HFCK had similar engagements with other publicinstitutions operating such Funds. The Commercial Bank(KCB) as theFund Administrator tomanage theScheme.

ObservationsoftheCommittee

24.TheCommitteeobservedthat

i)TheFundManagemententered intoanagreementwith afinancial institution to manage the Car Loan and Mortgage Schemes without competitive bidding.
ii Managementwasinbreachof Section103(1)of thePublicProcurement andAsset Disposal Act, CAP.412C.
ii)The PublicService Commission Car LoanScheme Regulation 2018relied upon by the Fund when selecting the Fund Manager are still in draft form:and
iv)The matter is not resolved.

RecommendationsoftheCommittee

25.TheCommitteerecommendsthat

i)) Within three months of adoption of this report, management must submit authorisation from theNational Treasury allowing theFund to engage Kenya CommercialBankastheFundadministratortotheAuditorGeneralforAudit verification.
ii)The Cabinet Secretary to institute disciplinary measures against the Accounting OfficerinlinewithSection74ofthePFMAct.

3.Unfavorable Clauses in ContractAgreementwith aFinancialInstitution

26.The statement offinancial positionreflects car loan andmortgage revolvingfunds amounting to Kshs.15,000,000 and Kshs.85,000,000, respectively. Review of the Agreement dated 27 February,2018betweentheFunds and thefinancialinstitutionmanaging theCar Loan and MortgageSchemesrevealedthefollowinganomalies:
3.1 Irregular Loan Interest

SPECIALFUNDACCOUNTSCOMMITTEE-CARLOANANDMORTGAGESCHEMESFUND

The agreement providesfor an interest rate of five(5)percent on theloans.Thisis contrary toPart 6 of theSalaries and RemunerationCommission Circular No.SRC/ADM/CIR/1/13/Vol.ll (128) dated17December,2014which approved aninterest rate of three(3)percentper annumfor the duration of the loan.

SubmissionsbytheAccountingOfficer

27.TheAccountingOfficersubmittedthat-

Article17(1)ofbothPublicServiceCommissionCarLoanSchemeandMortgageScheme Regulations2018guide oninterest rate at5%per annum at reducingbalancebasis.However, review oftheinterest ratewas underwayto ensure it was not more than3%.In addition,Article 24 of thePublicService Commission Car Loan Regulations andArticle 26ofPublicService Commission Mortgage Scheme Regulations require the officer administering the scheme recommend to the CabinetSecretary anyamendment to theregulation.Thereview ofinterest rate is in progress. Draft Regulations are attached in the Management Responses.

ObservationsoftheCommittee

TheCommitteeobserved that

i)The agreement stipulates an interest rate of five percent on the loans,in contraventionofPart6of theSalariesandRemunerationCommissionCircular, which approves a threepercentper annumratefor theloan duration;and
ii)The Matter is unresolved.

RecommendationsoftheCommittee

28.TheCommitteerecommendsthat
i)Withinthreemonthsupontheadoptionof thisreport:
a)The issuance of new mortgage and car loans be suspended until the regulations are approved byParliament.
b) The Cabinet Secretary to institute disciplinary measures against the Accounting Officer.
i)The 2% differential interest charged based on the agreement should be refunded to theFund.

iii)The agreement should bereviewed and aligned with the provisions of Part 6 of the Salaries andRemuneration CommissionCircular.

iv)TheAccounting Officermust at all times ensure that all applicable accounting and financial controls,systems, standards,laws,and procedures are followed in the preparation ofAnnual Reports andfinancialstatements andin accordancewith the standardsprescribed by thePublicSector AccountingStandards Board and in compliancewithregulation101(4)of thepublicfinancemanagement(National Government) Regulations.

SPECIALFUNDACCOUNTSCOMMITTEE-CARLOANANDMORTGAGESCHEMESFUND

3.2HighAdministrationFees

29. The agreement provides for charging of 4% and 3.5% administrationfee on interest earned from car loans and mortgage loans, respectively. Further, the financial institution charges a negotiationfee of 1% on car and mortgageloans taken and a monthly ledger fee of Kshs.350.

Thesehaveincreasedthecostoftheloans.

Submissions by theAccounting Officer

30.TheAccountingOfficersubmitted that

The Commission is currentlyin the process of reviewingPublicService Commission Car Loan andMortgageRegulations 2018inorder tomake thefacility affordable and attractivetostaff. Sofar,DraftRegulationshavebeendevelopedandcirculatedtostakeholdersincludingstaff andsenior management;and theirinputs alreadyincorporated.TheDraftRegulations are awaiting tablingbefore the CommissionBoard foradoption.The proposed changes in theDraft Regulations that addresseshigh administrationfeeswill be addressed asfollows:

a) Administrationfeeof3.5%toberemoved;
b) Negotiation fee of 1% of mortgage loan principal to be removed since the funds are notsourcedfrom administeringban.
c) Ledgerfeeof Kshs350 per month tobe removed; and
d) The interest charged shall be at a rate of not more than three (3) percent per annum for mortgage and car loans on a monthly reducing balance.

Observationsofthe Committee

31.TheCommitteeobservedthat-
i) The agreement imposes charges, including a 4% and 3.5% administration fee on interest earned from car and mortgage loans respectively,a 1% negotiationfee,and a monthly ledger fee of Kshs.350, thereby increasing the overall cost of the loans.
ii)The matter is unresolved.

Recommendationsofthe Committee

32.TheCommitteerecommendsthat

i) within three months upon the adoption of thisreport

2. a)The issuance of newmortgage and car loans be suspendeduntil the Regulations are approved by Parliament.

b) The Cabinet Secretary to institute disciplinary measures against the Accounting Officer.
i) The agreement shouldbereviewed to address thehigh cost ofadministrationfees.

3.4UnderUtilizedFunds

The agreement requires the Funds to maintain lien deposit account which should at all times have a balance equivalent to the total aggregate disbursed Ioan principal amount which earns interest of 1.5%per annum.This has denied the beneficiaries from accessing theloans and denied theFunds optimal revenue due to thelow interestrate on the lien amount.In the circumstances,the effectiveness and achievement ofvalueformoneyfortheFunds could not be confirmed.

Submissions by the Accounting Officer

33.TheAccountingOfficer submitted that—

34.The Mortgage and Car Loan Fund washeld in afixed Deposit Account awaiting staff to apply fortheloan.HenotedthatSection6of theMOUbetweenPublicServiceCommission MortgageScheme and Kenya Commercial Bankindicated thatTheclient mayrevise this rate ofinterestfrom time totime and shall adviseKenya CommercialBankinwriting and give two (2)months'noticeforKenya CommercialBank toeffect.The review of theinterestrate will bein the newMemorandum of Understanding (MOU) after the adoption of the new Car Loan andMortgageRegulations by thePublicService CommissionBoard.

ObservationsoftheCommittee

35.TheCommitteeobserved that
i)Kshs.85,000,000 held in a lien account denied beneficiaries access to loans and reducedtheFund'srevenueduetothelowinterestearnedonthelienamount.
ii)The Matter is unresolved.

RecommendationsoftheCommittee

36.The Committeerecommends that
i)Within threemonthsuponthe adoptionof thisreport
a)The issuance of new mortgage and car loans be suspended until the Regulations areapprovedbyParliament.
b) The Cabinet Secretary to institute disciplinary measures against the Accounting Officer.
ii)TheAccounting Officermust at all times ensure that all applicable accounting and financial controls,systems,standards,laws,and procedures are followed in the preparation ofAnnual Reports and financial statements and in accordance with the standardsprescribed by thePublicSector Accounting Standards Board and in compliance with regulation 101(4)of the publicfinancemanagement(National Government) Regulations.

4.Irregular Consolidation of TwoSeparate Funds

37. The financial statements are in respect of Public Service Commission Car Loan Scheme and the Public Service Commission Mortgage Scheme. However,the two schemes are established underPublicServiceCommissionCarLoanSchemeRegulations,2018and thePublicService Commission Mortgage Scheme Regulations, 2018, respectively. 2. 38.Noexplanationwasprovidedfortheconsolidatingofthefinancialstatementsfor thetwo Schemes which are distinct. This is contrary to Section 84(l) of the Public Finance Management Act,CAP412A which requires anAdministrator of a National PublicFund establishedbytheConstitutionoranActofParliamenttopreparefinancialstatementsforthe Fund for eachfinancial year in a form prescribed by the Accounting Standards Board. In the circumstances, Management was in breach of the law.

Submissionsby theAccounting Officer

39.TheAccountingOfficersubmitted that—

During the audit of thefinancial statements,separate supporting schedulesfor bothMortgage andCarLoanwereissuedtotheAuditorswhichwereusedtopreparefinancialstatementsfor the six-month period ended 30th June 2021.However, He noted the matter and undertook to ensurepreparationofseparatefinancialstatementsfromthecurrentfinancialyear2023/2024 after consultationwith TheNational Treasury and PublicSector.

Observationsofthe Committee

40.TheCommitteeobserved that

TheAccountingOfficerwasinbreachofSection84(1)of thePublicFinance ManagementAct,CAP.412Awhichprovidethattheadministratorofanational publicfundestablishedby the Constitution oranAct of Parliamentshallprepare financial statementsforthefundforeachfinancialyearinaformprescribedby theAccountingStandardsBoard:and
ii) TheMatteris unresolved.

41.TheCommitteerecommendsthat-

institute disciplinary mcasures against the Accounting Officer.
ii) TheAccounting Officermust ensure that all applicable accountingand financial controls,systems,standards,laws,andproceduresarefollowedinthepreparation ofAnnualReports andfinancialstatementsand inaccordancewith thestandards prescribed bythePublicSectorAccountingStandardsBoard andincompliance with regulation 101 (4) of the public finance management (National Government) Regulations.

FinancialYear2021/2022

1)LateSubmissionofFinancialStatements

42. The financial statements of the Fund for the year ended 30 June,2022 were submitted to the Auditor General on 30 October, 2023, approximately five (5) years after the end of the period. This was contrary toSection84(3) of thePublicFinance ManagementAct,CAP.412Awhich requiresanAdministratorofa NationalPublicFundtopreparefinancialstatements andsubmit them to the Auditor General within three months after the end of the financial year.In the circumstances,Managementwasinbreach of the law.

Submissions by theAccounting Officer

43.TheAccountingOfficersubmittedthat—

ThePublicService Commissionenteredintoan agreementwithKenya Commercial Bank (KCB) on 27th February, 2018; where it was agreed that KCB will administer the employees Car Loan and Mortgage Scheme Fund. It was noted that the accounts for the financial year ended 30 June,2022 were not prepared on time. Section 21 (d) of Public Service Commission Car LoanSchemeRegulations 2018 and Section 22(b)of PublicService Commission Mortgage Scheme regulations provide that administrator of the Scheme should prepare, sign andtransmit theincomeand expenditurestatement and statementoffinancial positionof the scheme inaccordancewith thestandards asmaybeprescribed by theKenyaPublicSector AccountingStandards Board.

44. The guidelines and standard template for preparation of financial statements were issued by the National Treasury from 30th June,2022. The National Treasury through the Circular REF:AG.4/16/3Vol.1I (66) dated 6h July,2022 communicated to all Accounting Officers on s GovernmentEntities.Section 2.1.1 of the circular introduced guidelinesonNewTemplates for Car Loan and Mortgage Funds under the National Government Entities However, the financial statementsforPublicServiceCommissionfor financialyear2021/2022hada discloser on amount disbursed on Mortgage and Car Loan under Domestic Lending and On-

SPECIALFUNDACCOUNTSCOMMITTEE-CARLOANANDMORTGAGESCHEMESFUND

Lending on page 12; Financial Assets.He promised that the Management is committed to ensuring compliance with the law on matters of Financial Reporting.

ObservationsoftheCommittee

45.TheCommitteeobserved that
i) TheAccounting Officer was in breach of Section 47(1)of thePublicAudit Act, CAP.412B which providesthat the financial statements required under the ConstitutionofKenya2010,thePublicFinanceManagementAct,2012andany other legislationshall be submitted to theAuditor-General withinthree(3)months after the end ofthefiscalyear towhich theaccountsrelate:and
i) TheMatter is unresolved.

RecommendationsoftheCommittee

46.TheCommitteerecommendsthat

i)TheAccounting Officer should ensure timely submission of financial statements as per the provisions of section 47(1) of the Public Audit Act, CAP.412B.
ii)The Cabinet Secretary to institute disciplinary measures against the Accounting OfficerreportinlinewiththePFMAct.
2)Unconfirmed Procurement of an Institution to Manage Car and Mortgage Schemes

47. The Fund Management entered into an agreement on 27 February, 2018 with a financial institution to manage the Car Loan and Mortgage Schemes. However, procurement records indicatinghowthebankwasidentified andawarded thetenderwerenotprovidedforaudit review.In thecircumstances,it was not confirmedwhether theprocurement of thebankwas competitiveandtransparent.

SubmissionsbytheAccountingOfficer

48.The Accounting Officer submitted that— Public Service Commission Car Loan Scheme Regulation 2018(10) provides that "the officer

administering the scheme may appoint a reputable financial institution to administer the scheme.In addition,Section10ofPublicServiceCommissionMortgageSchemeRegulations financialinstitutiontoadministerthescheme.

49. He noted that the Commission did engage the National Treasury for guidance on a suitable institutionforFundAdministration.A letter addressedto thePrincipal SecretaryNational Treasury on14thDecember,2017onoperationalization of thetwo(2)Fundsforwarded the Regulations and alsoindicated thepreferredserviceprovider.Kenya CommercialBank(KCB) and HFCK had similar engagements with other public institutions operating such Funds. The

SPECIALFUNDACCOUNTSCOMMITTEE-CARLOANANDMORTGAGESCHEMESFUND

NationalTreasury eventuallygrantedauthorityfor theCommissiontoengageKenya Commercial Bank(KCB)as theFundAdministrator tomanage theScheme.

ObservationsoftheCommittee

50.TheCommitteeobservedthat

i)The Fund Management entered into an agreement with a financial institution to manage the CarLoan and MortgageSchemeswithoutcompetitivebidding.
ii) Managementwasinbreachof Section103(1)of thePublicProcurement andAsset Disposal Act,CAP.412C.
iii) ThePublicService Commission CarLoanSchemeRegulation2018relied uponby theFundwhenselectingtheFundManagerarestill indraftform:and
iv)The matter is unresolved.

RecommendationsoftheCommittee

51.The Committeerecommendsthat

i)within three months of adoption of this report, management must submit authorisationfrom theNational Treasuryallowing theFund toengageKenya Commercial Bankas theFundadministrator to theAuditorGeneral forAudit verification.
i)The Cabinet Secretary to institute disciplinary measures against the Accounting Officerinlinewithsection74ofthePFMAct.

3.Unfavorable Clauses in ContractAgreementwithaFinancial Institution

52. The statement of financial position reflects car loan and mortgage revolving funds amounting to Kshs.15,000,000 and Kshs.85,000,000, respectively. Review of the Agreement dated 27 February,2018between theFunds and thefinancial institutionmanaging the Car Loan and MortgageSchemesrevealed thefollowing anomalies:

3.1IrreguiarLoanInterest

The agreement providesfor an interest rate of five(5)percent on the loans.This is contrary toPart 6 of theSalariesandRemuneration Commission CircularNo.SRC/ADM/CIR/1/13/Vol.1ll (128) dated17 December,2014which approved aninterest rate of three(3)percentper annumfor the durationof theloan.

Submissionsby theAccountingOfficer

53.TheAccountingOfficersubmitted that Article17(1)ofbothPublicServiceCommission Car LoanSchemeand MortgageScheme Regulations 2018guide on interest rate at5% per annum at reducingbalance basis.However, reviewoftheinterest ratewas underway toensure itwas not more than3%.In addition,Article 24 of thePublicService Commission Car LoanRegulations andArticle 26ofPublicService Commission Mortgage Scheme Regulations require the officer administering the scheme

SPECIALFUNDACCOUNTSCOMMITTEE-CARLOANANDMORTGAGESCHEMESFUND

recommend to the Cabinet Secretary any amendment to the regulation. The review of interest rate is in progress. Draft Regulations are attached in the Management Responses.

ObservationsoftheCommittee

54.The Committeeobserved that

i)The agreement stipulates an interest rate of five percent on the loans,in contravention of Part 6 of the Salaries and Remuneration Commission Circular, which approves a threepercentper annumratefor the loan duration.
ii)The Matter is unresolved.

RecommendationsoftheCommittee

55.TheCommitteerecommendsthat

i)Within three months upon the adoption of this report;
are approved byParliament.
b)The Cabinet Secretary for National Treasury and EconomicPlanning to institute disciplinary measures against the Accounting Officer in line with Section74ofthePFMAct.
ii)The 2% differential interest charged based on the agreement should be refunded to the loanees.
iii) The agreement shouldbereviewed and alignedwith theprovisions of Part 6of the SalariesandRemuneration Commission Circular.
iv) TheAccounting Officer must ensure that all applicable accounting and financial controls,systems,standards,laws,andprocedures arefollowedin thepreparation ofAnnual Reports andfinancial statements andin accordancewith the standards prescribed by the Public Sector Accounting Standards Board and in compliance with regulation 101 (4) of the public finance management (National Government) Regulations.

3.2HighAdministrationFees

56.The agreement provides for charging of 4%and 3.5% administration fee on interest earned from car loans and mortgage loans, respectively. Further, the financial institution charges a negotiationfee of 1%oncar andmortgage loans taken and a monthly ledgerfee of Kshs.350. Thesehaveincreased thecostoftheloans.

Submissions by theAccounting Officer

57.TheAccountingOfficersubmitted that

SPECIALFUNDACCOUNTSCOMMITTEE-CARLOANANDMORTGAGESCHEMESFUND

The Commission is currently in the process of reviewing Public Service Commission Car Loan andMortgageRegulations2018inorder tomakethefacility affordable and attractive tostaff. Sofar,Draft Regulationshavebeen developed and circulated to stakeholdersincluding staff and senior management; and their inputs already incorporated. The Draft Regulations are awaiting tablingbefore theCommissionBoardfor adoption.Theproposed changesin theDraft Regulations that addresses high administration feeswill be addressed asfollows:

a) Administrationfee of3.5%toberemoved;
b) Negotiation fee of 1% of mortgage loan principal to be removed since the funds are not sourced from administeringban.
c) LedgerfeeofKshs350permonthtoberemoved;and
d) Theinterest charged shall be at a rate of not more than three(3)percent per annum formortgage and car loans on a monthly reducingbalance.

ObservationsoftheCommittee

58.TheCommitteeobserved that

i)The agreement imposes charges, including a 4% and 3.5% administration fee on interest earned from car and mortgage loans respectively, a 1% negotiation fee, and a monthly ledger fee of Kshs.350,thereby increasing the overall cost of the loans:and
i)The matter is unresolved.

Recommendationsofthe Committee

59.The Committee recommends that

i) within threemonthsupontheadoptionofthisreport-

2. a)The issuance of new mortgage and car loans be suspended until the Regulations are approved by Parliament. 3. b)TheCabinetSecretaryforNationalTreasuryandEconomicPlanningto institute disciplinarymeasures against the Accounting Officer in line with Section74ofthePFMAct,2012. 4. ii) Theagreementshouldbereviewed to addressthehighcostofadministrationfees.

3.5UnderUtilizedFunds

The agreement requires theFunds tomaintainlien deposit account which should at all times have a balance equivalent to the total aggregate disbursed Ioan principal amount which earns interest of 1.5% per annum. This has denied the beneficiaries from accessing the loans and denied the Funds optimal revenue due to the low interest rate on the lien amount.In the circumstances,the effectiveness and achievement of value for money for theFunds could not be confirmed.

SPECIALFUNDACCOUNTSCOMMITTEE-CARLOANANDMORTGAGESCHEMESFUND

Submissions by theAccounting Officer

60.TheAccountingOfficersubmitted that

61.TheMortgage and Car LoanFund was held in a fixed Deposit Account awaiting staff to apply fortheloan.Henoted thatSection6oftheMOUbetweenPublicServiceCommissionMortage Scheme and Kenya Commercial Bankindicated that"The client may revise this rate ofinterest from timetotimeandshalladviseKenyaCommercialBankinwritingandgivetwo(2) months'noticeforKenya CommercialBanktoeffect.The reviewof theinterestratewill be in the new Memorandum of Understanding (MOU) after the adoption ofthe new Car Loan and Mortgage Regulations by the Public Service Commission Board.

ObservationsoftheCommittee

62.TheCommitteeobservedthat
i)Kshs. 85,ooo,0o0 held in a lien account denied beneficiaries access to loans and reduced theFund'srevenueduetothelowinterestearned on thelien amount.
ii)The Matter is unresolved.

RecommendationsoftheCommittee

63.TheCommitteerecommendsthat
i)Within three months upon the adoption of this report;
a) The issuance of new mortgage and car loans -be suspended until the Regulations are approved by Parliament.
b)The Cabinet Secretary toinstitute disciplinary measures against the Accounting Officer.
i)The Accounting Officer must ensure strict adherence to relevant statutory provisions and circulars.

4.Irregular Consolidationof TwoSeparateFunds

64. The financial statements are in respect of Public Service Commission Car Loan Scheme and thePublicService CommissionMortgageScheme.However,the twoschemesareestablished underPublicServiceCommission Car LoanSchemeRegulations,2018 and thePublicService Commission Mortgage Scheme Regulations, 2018,respectively. 2. 65.Noexplanationwasprovidedfortheconsolidatingof thefinancial statementsfor thetwo Schemes which are distinct. This is contrary to Section 84(1) of the Public Finance Management Act, 2012 which requires an Administrator of a National Public Fund established by the Constitution or an Act of Parliament to prepare financial statements for the Fund for

SPECIALFUNDACCOUNTSCOMMITTEE-CARLOANANDMORTGAGESCHEMESFUND

eachfinancialyear in a form prescribedby theAccountingStandards Board.In the circumstances,Managementwasinbreachofthelaw.

SubmissionsbytheAccountingOfficer

66.TheAccountingOfficer submitted that-

Thepreparation of theFinancial Statementsfor the sixmonthsperiodended3oJune 2018, wasinconsultationwithTheNational Treasury.The Commissionused thestandard template issued by Public Sector Accounting Standards Board. The template provide for disclosure of the two fund in statement of financial position as shown in page 2 of the Public Sector AccountingStandardsBoard templateIn addition,Hestated that the statement of cashflow on pagefour(4)ofthe template providefor disclosureof Receipt into the MortgageRevolving Fund and Receipts into the Car Loan Revolving Fund,both under cashflow from financing activities

67. During the audit of the financial statements, separate supporting schedules for both Mortgage and Car Loan were issued to the Auditors which were used to prepare financial statements for the six-month period ended 30"h June 2022.However,He noted the matter and undertook to ensurepreparationofseparatefinancialstatementsfrom thecurrentfinancialyear2023/2024 afterconsultationwithTheNational TreasuryandPublicSector.

ObservationsoftheCommittee

68.TheCommitteeobservedthat
i) TheAccounting Officer was inbreach of Section 84(1)of the PublicFinance ManagementAct,2012whichprovidethattheadministratorofanationalpublic fundestablishedby theConstitutionoranActofParliamentshallprepare financialstatementsforthefundforeachfinancialyearinaformprescribedby theAccountingStandardsBoard:and
i) TheMatterisunresolved.

RecommendationsoftheCommittee

69.TheCommitteerecommendsthat

i)Withinthree monthsupon the adoption of this report the CabinetSecretary to institute disciplinary measures against the Accounting Officer.
ii) TheAccounting Officermust at all times ensure that all applicable accounting and financial controls,systems,standards,laws,and procedures are followed in the preparation ofAnnual Reports andfinancial statements and in accordancewith the standardsprescribedby thePublicSectorAccountingStandardsBoard and in compliance with regulation 101 (4) of the public finance management (National Government)Regulations.

SPECIALFUNDACCOUNTSCOMMITTEE-CARLOANANDMORTGAGESCHEMESFUND

FinancialYear2022/2023

1)Unconfirmed Procurement of anInstitution to Manage Car and Mortgage Schemes

70. The Fund Management entered into an agreement on 27 February, 2018 with a financial institution to manage the Car Loan and Mortgage Schemes. However, procurement records indicatinghow thebankwas identified and awarded the tender were notprovidedfor audit review.In the circumstances,it was not confirmed whether the procurement of thebankwas competitive and transparent.

Submissions by the Accounting Officer

71.TheAccountingOfficersubmittedthat Public Service Commission Car Loan Scheme Regulation 2018(10) provides that "the officer

administering the scheme may appoint a reputable financial institution to administer the scheme.In addition,Section10 of PublicService Commission MortgageSchemeRegulations 2018givepowersto theAdministrator toconsultwithTheNational Treasury on a reputable financialinstitutiontoadministerthescheme.

72.He noted that the Commission did engage theNational Treasuryfor guidance on a suitable institutionfor FundAdministration.A letter addressed to thePrincipal SecretaryNational Treasury on14thDecember,2017on operationalization of the two(2)Funds forwarded the Regulations and alsoindicated thepreferredserviceprovider.Kenya Commercial Bank(KCB) and HFCK had similar engagements with other public institutions operating such Funds. The NationalTreasuryeventuallygrantedauthorityfor the Commission toengageKenya CommercialBank(KCB)as theFundAdministrator tomanage theScheme.

ObservationsoftheCommittee

73.TheCommitteeobservedthat
i)The Fund Management entered into an agreement with a financial institution to manage the CarLoanand MortgageSchemeswithout competitivebidding.
ii) ManagementwasinbreachofSection103(1)ofthePublicProcurementandAsset DisposalAct,CAP.412C.
iii)The Public Service Commission Car Loan Scheme Regulation 2018 relied upon by the Fund when selecting theFund Manager are still in draft form;and
iv)The matter is not resolved.

RecommendationsoftheCommittee

74.The Committeerecommends that

i)Within three months of adoption of this report, management must submit authorisationfrom theNational Treasury allowingtheFund toengageKenya CommercialBankastheFundadministratortotheAuditorGeneralforAudit verification.

SPECIALFUNDACCOUNTSCOMMITTEE-CARLOANANDMORTGAGESCHEMESFUND

i)The Cabinet Secretary to institute disciplinary measures against the Accounting Officerasprovidedinsection74ofthePFMAct

2)Unfavorable Clausesin ContractAgreementwith aFinancial Institution

75. The statement of financial position reflects car loan and mortgage revolving funds amounting to Kshs.15,000,000 and Kshs.85,000,000, respectively. Review of the Agreement dated 27 February, 2018 between the Funds and the financial institution managing the Car Loan and MortgageSchemesrevealed thefollowing anomalies:

2.1IrregularLoanInterest

76.The agreement provides for an interest rate of five (5) percent on the loans.This is contrary to Part6oftheSalaries and RemunerationCommissionCircularNo.SRC/ADM/CIR/1/13/Vol.lll (128) dated 17 December,2014 which approved an interest rate ofthree(3)percent per annum for thedurationoftheloan.

SubmissionsbytheAccountingOfficer

77.TheAccountingOfficersubmittedthat

Article17(1)ofbothPublicServiceCommission Car LoanScheme and MortgageScheme Regulations 2018guide oninterest rate at5%per annum at reducingbalancebasis.However, reviewoftheinterest ratewasunderway toensure it wasnot more than3%.In addition,Article 24 of thePublicService Commission Car LoanRegulations andArticle 26 ofPublicService CommissionMortgage SchemeRegulationsrequire theofficer administering thescheme recommend to the Cabinet Secretary any amendment to the regulation.The review of interest rate is in progress.Draft Regulations are attached in theManagement Responses.

ObservationsoftheCommittee

78.TheCommitteeobserved that
i)The agreement stipulates an interest rate of five percent on the loans,in contraventionofPart6oftheSalariesandRemunerationCommissionCircular, which approvedathreepercentper annumratefortheloanduration:and
i)The Matter is unresolved.

RecommendationsoftheCommittee

79.TheCommitteerecommends that
i)Within threemonthsupon the adoption of thisreport;
a)The issuance of newmortgage and car loans be suspendeduntil the regulations are approved by Parliament.
b)The Cabinet Secretary to institute disciplinary measures against the AccountingOfficer.
i)The 2% differential interest charged based on the agreement should be refunded to the loanees.

ii)The agreement should be reviewed and aligned with the provisions of Part 6 of the SalariesandRemunerationCommissionCircular.TheAccountingOfficermust ensure 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 standardsprescribed by the Public SectorAccountingStandards Board and in compliance with regulation 101(4) of the public finance management (National Government) Regulations.

2.2HighAdministrationFees

80.The agreement providesfor chargingof 4%and3.5% administrationfeeoninterest earned from car loans and mortgage loans, respectively. Further, the financial institution charges a negotiationfeeof1%on car andmortgageloans taken and a monthlyledger fee of Kshs.350. Thesehaveincreasedthecostoftheloans.

Submissionsby theAccounting Officer

81.The Accounting Officer submitted that

The Commission is currently in the process of reviewingPublic Service Commission Car Loan andMortgageRegulations 2018inorder tomake thefacility affordable and attractiveto staff. So far, Draft Regulations have been developed and circulated to stakeholders including staff and senior management; and their inputs already incorporated. The Draft Regulations are awaiting tablingbefore the CommissionBoard for adoption.The proposed changes in the Draft Regulations that addresses high administrationfeeswill be addressed asfollows:

a) Administrationfeeof3.5%toberemoved;
b) Negotiationfeeof1%ofmortgageloanprincipaltoberemovedsincethefunds are notsourcedfromadministeringban.
c) LedgerfeeofKshs350permonthtoberemoved;and
d) Theinterest charged shall be atarateof notmore than three(3)percentper annum formortgage and car loans onamonthlyreducingbalance.

ObservationsoftheCommittee

82.TheCommitteeobserved that
i)The agreement imposes charges, including a 4% and 3.5% administration fee on interest earned from car and mortgage loans respectively,a 1%negotiation fee,and amonthlyledgerfeeofKshs.350,therebyincreasing the overallcost oftheloans.
i)The matter is unresolved.

Recommendationsofthe Committee

83.TheCommitteerecommendsthat

i) within threemonthsupon the adoption of thisreport:

2. a)The issuance of new mortgage and car loans be suspended until the regulations are approved by Parliament.

b) The Cabinet Secretary to institute disciplinary measures against the AccountingOfficerinlinewithSection74of thePFMAct.

4. ii) Theagreement should bereviewed to address thehighcost ofadministrationfees.

2.2UnderUtilizedFunds

The agreement requires the Funds to maintain lien deposit account which should at all times have a balance equivalent to the total aggregate disbursed Ioan principal amount which earns interest of 1.5%per annum.This has denied the beneficiaries from accessing theloans and deniedtheFunds optimal revenue due tothelow interestrate on thelien amount.In the circumstances,the effectivenessand achievement ofvalueformoneyfortheFunds could not be confirmed.

SubmissionsbytheAccounting Officer

84.TheAccountingOfficersubmitted that

The agreement entered into with Kenya Commercial Bank (KICC Branch) was on 27h February, 2018. After the signing of the Memorandum of Understanding (MOU), the Scheme Management Committee undertook staff sensitization in preparation for issuance of Car Loan and mortgage Scheme.

85.TheMortgage and Car LoanFund washeld in a fixed Deposit Account awaiting staff to apply fortheloan.HenotedthatSection6oftheMOUbetweenPublicServiceCommission MortgageScheme andKenya Commercial Bankindicated that"The client may revise thisrate ofinterestfrom time totime andshall adviseKenya CommercialBankinwriting andgive two (2)months'noticeforKenya CommercialBanktoeffect.Thereview oftheinterestratewill bein the newMemorandum of Understanding(MOU) after the adoptionofthe new CarLoan and Mortgage Regulations by thePublic Service Commission Board.

ObservationsoftheCommittee

86.TheCommitteeobservedthat
i)Kshs.85,000,000 held in a lien account denied beneficiaries access toloans and reducedtheFund'srevenueduetothelowinterestearnedonthelienamount.
ii)TheMatterisunresolved.

RecommendationsoftheCommittee

87.The Committeerecommends thatwithin threemonthsuponthe adoption of thisreport
a)The issuance of new mortgage and car loans be suspended until the Regulations are approved byParliament.

SPECIALFUNDACCOUNTSCOMMITTEE-CARLOANANDMORTGAGESCHEMESFUND

b)The Cabinet Secretary to institute disciplinary measures against the Accounting OfficerasprovidedinSection74of thePFMAct.

4.Irregular Consolidation of TwoSeparateFunds

88.Thefinancial statements areinrespect of PublicService Commission Car LoanScheme and the Public Service Commission Mortgage Scheme. However, the two schemes are established underPublicService Commission Car LoanSchemeRegulations,2018 and thePublicService Commission Mortgage Scheme Regulations, 2018, respectively.
89.No explanation was provided for the consolidatingof thefinancial statementsfor the two Schemes which are distinct.This is contrary to Section84(l)of the Public Finance Management Act, CAP.412A which requires an Administrator of a National Public Fund established by the Constitution or anAct of Parliament topreparefinancial statementsfor the Fund for eachfinancialyearin aform prescribed by theAccountingStandardsBoard.In the circumstances, Management was in breach of the law.

Submissionsby theAccountingOfficer

90.TheAccountingOfficersubmitted that

During the audit ofthefinancial statements,separate supporting schedulesfor bothMortgage and Car LoanwereissuedtotheAuditorswhichwere used topreparefinancialstatementsfor the six-month period ended 30thJune 2023.However,He noted the matter andundertook to ensurepreparationofseparatefinancialstatementsfrom thecurrentfinancialyear2023/2024 after consultationwith TheNational Treasury andPublicSector.

ObservationsoftheCommittee

91.TheCommitteeobservedthat

i.The Accounting Officer was in breach of Section 84(1) of the Public Finance ManagementAct, CAP.412A which provide that the administrator ofa national publicfund established by the Constitution or anAct of Parliament shall prepare financial statementsfor thefundforeachfinancialyearinaformprescribed by theAccountingStandardsBoard and
ii. TheMatterisunresolved.

SPECIALFUNDACCOUNTSCOMMITTEE-CARLOANANDMORTGAGESCHEMESFUND

RecommendationsoftheCommittee

92.TheCommitteerecommendsthat-
i)The Cabinet Secretary to institute disciplinary measures against the Accounting Officer.
ii TheAccountingOfficermustensure that allapplicable accountingand financial controls,systems,standards,laws,andproceduresarefollowedinthepreparation ofAnnualReportsandfinancialstatementsandinaccordancewiththestandards prescribedbythePublicSectorAccountingStandardsBoardandincompliance with regulation 101 (4)of thepublic finance management (National Government) Regulations.

SPECIALFUNDACCOUNTSCOMMITTEE-CARLOANANDMORTGAGESCHEMESFUND

EXAMINATIONOFAUDITEDACCOUNTSFORTHENATIONALLAND COMMISSIONCARLOANANDMORTGAGESCHEMEFUNDFORTHE FINANCIALYEAR2020/2021AND2021/2022.

1.Ms.Kabale Tache Ann,The Chief Executive Officer appeared before the Committee on Thursday14th November,2025to adduce evidence on the auditedfinancial statements for the National Land Commission Car loan and Mortgage Scheme Fund for the Financial Years 2020/2021 and 2021/2022.During the meeting,the Accounting Officer was accompanied by:
1)Mr.Benard cherotich-DFCP
2)Mr.ben Bett-DHRA
CPADanielMwalu-DFA
4) Mr.Peter Odhiambo-HRM.
5)Mr.Abdullahi Dowsi -NLC/PAC
6)Mr.Ken Mutai -Accountant.
7)Mr.Elijah Letangule-DDFCP

FinancialYear2020/2021

Report on thefinancial statements.

Unmodified Opinion

2.There were no materialissues noted during the audit ofthe financial statements of the Fund.

Report onlawfulness and effectiveness in use of publicresources.

Conclusion

3.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. Conclusion.

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

FinancialYear2021/2022.

1)Unreconciled Long-Term Receivables fromExchange Transactions.

5.The statement offinancial position reflectslong-termreceivablesfrom exchange transactions balance ofKshs.48,993,645asdisclosed inNote5tothefinancial statements.However,the loanstatementsfromthebankreflects a total amount ofKshs.41,875,799resultingto an unexplained variance of Kshs.7,117,846.

SPECIALFUNDACCOUNTSCOMMITTEE-CARLOANANDMORTGAGESCHEMESFUND

6.Further,the current amount receivable in the next twelve(12) months was not separated from the long-term receivablesfrom exchange transactionsbalance ofKshs.48,993,645 contrary to therequirement of the reporting template.In the circumstances,the accuracy and fair presentationofthelong-termreceivablesfrom exchangetransactionsbalance of Kshs.48,993,645couldnotbe confirmed.

Submissionsof the Accounting Officer

7.The Accounting Officer submitted— There were variances in the long term receivables, which have since been explained and balances of each beneficiary tied to the bank balances of the individual beneficiaries to eliminate the variances. The variances was a result of payroll ledger using straight-line method of amortization and the bank using reducing balance method of amortization on the beneficiary

account.The Commissionhas since adoptedreducingbalancemethod to eliminate anyfuture variances.GoingforwardtheCommissionundertook toseparateinthenext subsequent financial year's receivables from exchange transaction as per the reporting templates.

ObservationsoftheCommittee.

8.The Committeeobserved that
i.The variance of Kshs.7, 117, 846 was not supported with reconciliation or entries to correctthe anomaly.
ii.The matteris unresolved

Recommendationsby the committee

9.The Committeerecommended thatwithin three months of the adoption of thisreport, the Accounting Officer to submit documents supporting reconciliation of Kshs.7, 117, 846totheAuditor-Generalforauditverification.
2) Failure by the Steering Committee to Hold Requisite Meetings.

10. Perusal of the Steering Committee meetings minutes revealed that during the year under review, the Committee held three (3) meetings. This was contrary to Regulation 6(5) of the National Land Commission Housing SchemeFund Regulations,2016which states that,the Committeeshall meet at leastfour timesin ayear and theperiodbetweenonemeetingofthe Committee and the next shall not exceed four(4) months.In the circumstances,the Managementwas in breach of theRegulations.

SubmissionsoftheAccountingOfficer

11.TheAccountingOfficersubmitted-
TheAccounting officer acknowledged that steering committee held only three meetings during theyear underreview and committedthatgoingforwardmechanismshavebeenputinplace

SPECIALFUNDACCOUNTSCOMMITTEE-CARLOANANDMORTGAGESCHEMESFUND

to ensure compliance with the regulations by holding quarterly meetings therefore ensuring full compliance with the requisite meetings number annually.

ObservationsoftheCommittee

12.TheCommitteeobserved that

(i) The Steering Committee was in breach of Regulation 6(5) of the National Land CommissionHousingSchemeFund Regulations,2016which provides that,the Committeeshallmeetatleastfourtimesinayear.
(i) Thematteris unresolved

The CommitteeRecommendations

13.The Committee recommends that

i) The Steering Committee conducts meetings in accordance with theNational Housing Scheme Fund Regulations.

2. ii) Within three months of the adoption of this report the Cabinet Secretaryfor Treasury and National Planning to take appropriate disciplinary action against the Accounting Officer in accordance with the provisions of section 74 of the Public Finance Management Act.

FinancialYear2020/2021

Report on the financial statements.

Unmodified Opinion

14.Therewere nomaterial issues noted during the audit of thefinancial statements of theFund.

Report on lawfulness and effectiveness in use of public resources.

Conclusion

15. 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. Conclusion.

16.There were nomaterialissues relating to lawfulness and effectiveness in use of public resources.

Financial Years 2021/2022.

1)Long Term Receivables from Exchange Transactions.

17. The statement of financial position reflects long-term receivables from exchange transactions balanceofKshs.2,792,520asdisclosedinNote5tothefinancialstatements.However,the scheduleofreceivablesprovidedforauditreviewreflectedabalanceofKshs.2,419,673 resulting in an unexplained variance of Kshs.372,847. In the circumstances, the accuracy

SPECIALFUNDACCOUNTSCOMMITTEE-CARLOANANDMORTGAGESCHEMESFUND

and completenessofthelong-termreceivablesfrom exchange transactionbalanceofKshs. 2,792,520 could not be confirmed.

SubmissionsoftheAccountingOfficer.

18. The Accounting officer submitted that—There were variances of thelong termreceivables,they have since beenprovided for and explained and thebalancesofeachbeneficiarytied tothebankbalancesoftheindividual beneficiaries to eliminate thevariances.Thevarianceswere a result of thepayroll ledger using straight-linemethodofamortizationandthebankusingreducingbalancemethodof amortizationon the beneficiary account.The Commission hassince adoptedreducingbalance method toeliminate anyfuturevariances.

ObservationsoftheCommittee

19.TheCommitteeobserved that
(i) The variance of Kshs.372,847 was not supported with reconciliation or entries to correcttheanomaly.
(i) The matter is unresolved.

Recommendations by the Committee

20. The Committee recommends that within three months of the adoption of this report

i) TheAccountingOfficermustsubmitreconciliationentries to support the varianceofKshs.372,847totheAuditor-Generalforauditverification.
i) TheAccountingOfficershould ensure that all applicableaccountingand financial controls, systems, standards, laws, and procedures are followed in the preparation of the financial statements in compliancewithPublicFinance ManagementAct,2015and in accordancewiththestandardsprescribedbythe PublicSectorAccountingStandardsBoard asperRegulation101(4)of the PublicFinance Management(National Government) Regulations,2015.

SIGNED.

....DATE..

HON.FATUMAZAINABMOHAMMED,MP (CHAIRPERSON) SPECIALFUNDSACCOUNTSCOMMITTEE

20/..

THIRTEENTHPARLIAMENT-SECONDSESSION THENATIONALASSEMBLY SPECIALFUNDSACCOUNTSCOMMITTEE.

ADOPTIONLISTFORTHE REPORTONAUDITEDFINANCIALSTATEMENTSFOR

THE:

Kenya Universities and Colleges Central Placement Staff Car loan and Mortgage schemeFund-2018/2019to2021/2022.

| NO. | NAME | SIGNATURE | |-------|-----------------------------------------------------|-------------| | I. | 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 | | | 6. | Hon. Erastus Kivasu Nzioka, MP | | | 7. | Hon. Eve Akinyi Obara, MP | | | | Hon. Joseph Majimbo Kalasinga, MP | | | 8. | | | | 9. | Hon. Tom Mboya Odege, MP | | | 10. | Hon.Catherine Nakhabi Omanyo,MP | | | 12. | Hon. Erick Kahugu Mwangi MP | | | 13. | Hon. Joseph Kimutai Cherorot, MP | | | 14. | Hon.Paul Biego Kibichy,MP | | | 15. | Hon.Onchoke CharlesMamwacha,MP | |

THIRTEENTHPARLIAMENT-SECONDSESSION THENATIONALASSEMBLY SPECIALFUNDSACCOUNTSCOMMITTEE.

ADOPTIONLISTFORTHE REPORTONAUDITEDFINANCIALSTATEMENTSFOR THE:

National Land Commission Car Loan and Mortgage Scheme Fund -2020/202I and 2021/2022.

| No. | NAME | SIGNATURE | |-------|------------------------------------------------------|-------------| | 1. | Hon.Fatuma Zainab Mohammed,MP-Chairperson | tInv | | 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 | CMC |

THIRTEENTHPARLIAMENT-SECONDSESSION THENATIONALASSEMBLY SPECIALFUNDSACCOUNTSCOMMITTEE.

ADOPTIONLISTFORTHE REPORTONAUDITEDFINANCIALSTATEMENTSFOR THE:

Public Service Commission Car Loan and Mortgage Scheme Fund 2018/2019to2021/2022.

| 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:

Office of Director of Prosecutions Car Loan and Mortgage Car loan and Mortgage scheme Fund - 2018/2019 to 2021/2022.

| 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 | |

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 CharlesMamwacha,MP

6.Hon. Catherine Nakhabi Omanyo, MP

APOLOGIES

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

2. Hon. Eve Akinyi Obara, MP 3. 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.JosephKimutai Cherorot,MP 8. Hon. Cecilia Asinyen Ngitit, MP 9. Hon. Kahugu Erick Mwangi, MP

INATTENDANCE

NATIONALASSEMBLYSECRETARIAT

1.Mr. Erick Nyambati

-Senior ClerkAssitant

2. Ms. Mercy Kinyua

Legal Counsel Il

3. Ms. Bevaline Mosoti

-ResearchOfficerI

4. Mr.DerrickKathurima

-Media Relations Officer IlI

5. Mr.Joshua Lenambet

Sergeant-at-arms

6. Ms. Felistus Muiya

-Public Communications Officer Ill

7.Mr.Peter Mutethia

-Audio Officer III

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.Thefollowing agendawas adopted as circulated:

I.Prayers.
2.Preliminaries/lntroductions.

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

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

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.

4. Any Other Business. 6. 5.AdjournmentDateofthenextmeeting

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

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

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 FinancialYears2018/19to2021/2022.Theadoptionof thereportwasproposedbyHon. 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 CharlesMamwacha,MP.

3.State Officers and Public Officers Motor Car Loan Scheme Fund for Financial rYears 2019/2020 To 2021/ 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 20l8/2019 To2022/2023.

aoas pue d sauo eoq woi uo a pasodod sm odan aue jo uodope au by Hon. Onchoke Charles Mamwacha, MP.

5 Management and Supervision Fund for Financial Years 2018/2019 To 2022/ 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/DATE OF NEXT MEETING

There being no other business, the meeting was adjourned at I2.00 Noon. The next meeting will be held on notice.

2.1li112s

SIGNED...

.DATE.

HON.FATUMAZAINABMOHAMMED,MP

(CHAIRPERSON) SPECIALFUNDSACCOUNTSCOMMITTEE

MINUTES OF THE25TH SITTINGIN THE FOURTHSESSIONOF 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. HonOnchokeCharlesMamwacha,MP 6. Hon. Kahugu Erick Mwangi, MP

INATTENDANCE NATIONALASSEMBLYSECRETARIAT

1.Mr. Erick Nyambati

-SeniorClerkAssitant

2. Ms. Comfort Achieng

-Clerk Assistant II

3.Ms. Mercy Kinyua

Legal Counsel Il

4.Ms. Bevaline Mosoti

-ResearchOfficerII

5. Mr.DerrickKathurima

-Media Relations Officer Ill

Mr.Joshua Lenambet

Sergeant-at-arms

7. Ms. Felistus Muiya

-PublicCommunications Officer Il

8.Mr.Peter Mutethia

-Audio Officer III

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

The Chairperson called 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 financial statements-

a) Kenya Universitiesand CollegesCentralPlacementStaffCar loan and MortgageschemeFundfor theFinancialYears2018/19 to2021/2022
b) National Land Commission Car loan and Mortgage scheme fund

3. 4.Any Other Business. 4. 5.AdjournmentDateof the nextmeeting

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

1. Kenya Universities and Colleges Central Placement Staff Car loan and Mortgage schemeFundfor theFinancialYears2018/19to2021/2022

The Committee unanimously adopted the report on the consideration of the audited accountsoftheKenyaUniversitiesandCollegesCentralPlacementStaffCarloanand Mortgage scheme Fund for the Financial Years 2018/19 to 2021/2022. The adoption of the 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 FinancialYears2020/202Iand2021/2022.

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 Financial Years 2020/2021 and 2021/2022. The adoption of the report was proposed by Hon. Erastus Kivasu, MP. and seconded by Hon. Charles Nguna Ngusya, MP

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

Retreatwith theStateDepartmentofPetroleum

i) The Committeewas informed that StateDepartment forPetroleumhadproposed a two-dayretreatfrom13thto16thNovember,2025toexaminetheaudited accountsofPetroleumDevelopmentLevyFundandPetroleumTrainingFundfor 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

There being no other business, the meeting was adjourned at Il.58 a.m. The next meeting willbeheldonnotice.

SIGNED...

.....DAte....

HON.FATUMAZAINABMOHAMMED,MP

(CHAIRPERSON)

SPECIALFUNDSACCOUNTSCOMMITTEE

ACCOUNTS COMMITTEE HELD ON THURSDAY, 1"t AUGUST 2024, 4TH FLOOR, CONTINENTALBUILDINGAT9.30AM.

PRESENT

1.Hon.Fatuma Zainab Mohammed, MP- Chairperson

2. Hon.Dr. Christine Ombaka Oduor,MP

Hon.CatherineNakhabi Omanyo,MP

4. Hon. Cecilia Asinyen Ngitit, MP 5. Hon.Erastus Kivasu Nzioka, MP 6. Hon. Eve Akinyi Obara, MP 7. Hon.Joseph MajimboKalasinga,MP 8. Hon. Joseph Kimutai Cherorot, MP

9Hon.Kahugu Erick Mwangi, MP
10.Hon. Paul Kibichi Biego, MP

11. Hon. Tom Mboya Odege, MP

APOLOGIES

1.Hon. Faith Wairimu Gitau, MP

2. Hon. Dawood Abdul Rahim,HSC, MP -Vice Chairperson 3. Hon. Charles Ngusya Nguna, MP 4. Hon. Joshua Odongo Oron, MP

INATTENDANCE

Office of the Director of Public Prosecutions Loan and Mortgage Scheme Fund

1. Mr. Renson Ingonga

Director of Public Prosecutions.

2.Ms.MediatrixRapando

DHRM ODPP

3.Ms.Zuwene Zainabu

Prosecutions CA.

4. Mr. Hassan Abdi

ODPP.

5. Mr. Alloys Kemo

ODPP PTI

6.Ms.Jacinta Nyamosi

Deputy Director.

7.Mr.NkadudaHiribae

Deputy Director, CFS.

8. Mr. Michael Sang

CA&RP

9. Ms. Christine Gakoso

PTI.

10. Ms. Irene Mobangi

ODPPFinance

11. Mr. Geoffrey Obiro

EI&OC

12.Mr.Kioko Maundu

SA ODPP.

13.Mr.Martin Aoko

ODPP.

14.Mr.Frankword Dauddo -

SAODPP

Office of theAuditor General

1.Ms. Sophia Wadulo

Director.

2. Mr. David Osiemo

Liason Officer

3.Ms.Florence Amollo

Principal Auditor.

4. Dr. Cyrus Munyua

The National Treasury.

NATIONALASSEMBLYSECRETARIAT

1.Mr. Eric Nyambati

ClerkAssistant I

2. Mr.Nimrod Mate

Clerk AssistantIII

3. Ms.Mercy Ondego

Research OfficerII

4. Mr.Derrick Kathurima

MediaRelations OfficerIII

5. Mr.Festus Muiya

PublicCommunications Officer

6. Mr.Joshua Lenambeti

SSAAII

7. Mr. Allan Kimani

Audio Intern

8.Ms. Glory Nkatha

PublicCommsIntern

MIN.NA/AA&GPC-SFAC/2024/044: PRELIMINARIES

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

1.Prayers

2. Preliminaries/Introductions 3. Examinationof theAuditorGeneralReportof theOfficeofDirectorof Public 2018/2019 to2021/2022.

4.Any Other Business

5. Adjournment/ Date of the next meeting.

Mr. Nkaduda Haribae who officially represented the Director Public Prosecutions undertook the oath of witness. He tabled the management responses and supporting documents on the audited accounts of the ODPP for the financial years 2018/2019 to 2021/2022.

MIN.NA/AA&GPC-SFAC/2024/045:Examinationof Auditor General Reports of financial StatementsoftheODPPfor thefinancialyears2018/2019 to2021/2022.

Briefonthemandateandscopeof theFund

The Fund was established in the year 2017 and is run by a Fund Administration Committee in conjunction with the Consolidated Bank of Kenya as the Fund manager. The interest chargeable is 3% on a reducing balance basis and is used to settle administrative costs.The seed capital for the scheme at the beginningwasKsh.100million with Ksh.70 million allocated toMortgage and Ksh.30 million to car loans. Being a revolving fund, repayments from members of staff is used to issue newloans.The fund alsoreceives annual disbursements from the exchequer.

1. Misleading Disclosures on Budget Information in the financial statements.

Thequeryindicated that the statement toreconcile theactual amountson a comparablebasis includedinthestatement of comparisonofbudget and actual amounts and the actuals asper the statement of financial performance presented under 9 of the financial statements. However, no reconciliation statement hasbeenpresented atpage 9 of thefinancial statements.TheAgency indicated itwas a typo and thereconciliation hasbeen provided.

Thecommitteenotedthat accordingtotheOAG,thematterwasstillpending.

2.Unexplained variance in current assets

The statement of financial position reflects total assets balance of Kshs.143, 407,731 while the recomputed amount is Kshs.143, 557,731 resulting to an unexplained variance of Kshs.150, 000. Consequently, the accuracy of the current assets balance as at 30 June, 2019 could not be confirmed.

Thecommitteenotedthatthismatterisyettoberesolved.

3.Failure to support the balance with a board of survey report.

Thestatementof financialpositionreflectscashandcashequivalentsbalanceofKshs. 132,038,808. However, the balance was not supported with a board of survey report as at 30 June, 2019.In response, the agency committed to conduct board of survey in the subsequent years and attached a certified cashbook, certificate of balances and bank reconciliations.

Tiecommitteenotedthatthismatterisyettoberesolvedanddirectedtheagencytoensure thatthisisdonewithinthreemonths.

4.IncompleteBankStatements

The scheme's staff housing mortgage and assets finance fund accounts held had closing balances of Kshs.91,438,329 and Kshs.38,554,086 respectively, according to the bank certificates. However, the bank statements provided for audit review reflects lump sum cash receipts (credits) and loan disbursements tobeneficiaries (Debits)without details on interest income and individual borrower's principal amounts repayments. In addition, individual borrowers loan statementsfromthebankwerenotprovidedforreconciliationwithschedulesprovidedforaudit bytheSchemeManagement.

In the circumstances, the accuracy and completeness of the cash and cash equivalence balance of Kshs.132,038,808couldnotbeconfirmed.

Inresponse the agencysaid that theyhadinstructed consolidatedbanktobecrediting the principal amounts to their accounts on a monthly basis.Further they had directed them to provide abreakdownofthelumpsum amounts.

TheOAGsaidthatthismatterispartiallyaddressed.

TheCommitteedirectedthatthisreconciliationbedonewithintwoweeks.

5.LateSubmissionofFinancial Statements

TheScheme's annual report andfinancial statementsweresubmitted to theAuditor-General on 18August2022whichwasthirty-eight(38)months after thestatutorydeadlineof30September,

2019. This is contrary to Section 84(3) of the Public Finance Management Act, 2012 which requires the Administrator of a national public fund to prepare and submit the financial statements thereof to theAuditor-Generalnot later than three months after the end of each financial year. In the circumstances.Management was in breach of the law.

In response, the agency committed to ensure compliance with Section 47(1) of the Public Audit Act, 2015.

The committee said that it will deal with the matter at report writing.

6.Unaccounted for Principal Amount Repaid

A review of the loan repayment schedule and statements revealed that amounts of Kshs. 6,251,222 and Kshs.3,036.282 both totalling Kshs.9,287,504 in respect of car loan and morigage loan were deducted as the principal amount recovered and remitted to the Consolidated Bank of Kenya.However, a review of the bank statements showed that a lump sum principal repayment of Kshs. 6,537,415 was credited to staff mortgage account Kshs.2,188,329 and asset finance fund account Kshs. 4,349,086 on 10th April, 2019 resulting to unaccounted for balance of Kshs.2, 750,089. However, the Management did not disclose any lien account where the remaining amount was held pending crediting to the Scheme's accounts. In the circumstances,regularity in the use of the principal amount repaid could not be confirmed.

In response, the agency said that they had instructed consolidated bank to be crediting the principal amounts to their account on a monthiy basis. An internal committee has been set up to reconcile the work of the scheme and its relationshipwith service provider.

The OAG said that this matter isyet tobe resolved.

The matters outlined above kept on reoccurring in the financial years 2019/2020, 2020/2021 and2021/2022.

The committeedirected thefollowingtobe donewithintwoweeks;

A reconciliation be done from year 2017 to-date on utilization of the seed capital.
Interestearnedandretainedorused.
Annualexchequer amountsreceived.
Memorandum of understanding(M.O.U)entered withtheConsolidated Bank tobe availed.

MIN.NA/AA&GPC-SFAC/2024/046: ADJOURNMENT/DATEOFNEXTMEETING

There being no other business, the meeting was adjourned at 12.10pm. The next meeting will be held on notice.

SIGNED..

..DATE.

HON.FATUMAZAINABMOHAMMED,MP

(CHAIRPERSON)

SPECIALFUNDSACCOUNTSCOMMITTE

MINUTES OF THE 31ST SITTING IN THE THIRD SESSION OF SPECIAL FUND ACCOUNTS COMMITTEE HELD ON THURSDAY, 13TH JUNE 2024, 5TH FLOOR, CONTINENTALBUILDINGAT9.30AM.

PRESENT

1.Hon.Fatuma Zainab Mohammed, MP- Chairperson

2. Hon.Dr. Christine Ombaka Oduor,MP 3. Hon. Charles Ngusya Nguna, MP 4. Hon.CatherineNakhabi Omanyo,MP 5. Hon. Eve Akinyi Obara, MP 6. Hon. Paul Kibichi Biego, MP 7. Hon. Tom Mboya Odege, MP

APOLOGIES

1."Hon. Faith Wairimu Gitau, MP

2. Hon.Dawood Abdul Rahim,HSC,MP-Vice Chairperson 3. Hon.Erastus Kivasu Nzioka,MP 4. Hon. Cecilia Asinyen Ngitit, MP 5. Hon.Joseph MajimboKalasinga,MP 6. Hon. Joseph Kimutai Cherorot, MP 7. Hon. Joshua Odongo Oron, MP 8. Hon. Kahugu Erick Mwangi, MP

IN ATTENDANCE

Office of the Director of Public Prosecutions Loan and Mortgage Scheme Fund

1. Mr. Renson Ingonga

Director of Public Prosecutions.

2.Ms.Zuwene Zamadu

Prosecutions CA.

3. Mr. Hassan Abdi

ODPP.

4.Ms.Jacinta Nyamosi

Deputy Director.

5.Mr.Nkaduda Hiribae

Deputy Director, CFS.

6. Mr. Michael Sang

CA&RP

7.Ms.Christine Gakoso

PTI.

8.Mr.Kioko Maundu

SA ODPP.

9.Mr.Frankword Dauddo-

SAODPP

Office of theAuditor General

1. Ms. Josephine Warega

Director.

2. Mr. David Osiemo

Liason Officer

3. Ms. Jane Chege

Principal Auditor.

NATIONALASSEMBLYSECRETARIAT

1.Ms. Comfort Achieng

ClerkAssistantIII

2. Mr. Nimrod Mate

ClerkAssistantIII

3.Ms.Judith Kanyoko

Legal Counsel II

4. Mr. Ngetich Robia

Fiscal Analyst

5. Ms. Mercy Ondego

Research OfficerIII

6.Mr.Derrick Kathurima

MediaRelations Officer

MIN.NA/AA&GPC-SFAC/2024/042:

PRELIMINARIES

The Chairperson called the meeting to order at 10.00am, 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 the Office of the Director of Public Prosecutions Car Loan and Mortgage scheme Fund for the FinancialYear2018/2019 to2021/2022.

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

The Committee was informed by the OAG that the Agency had not prepared Audit reports since the Financial year 2018/ 2019. The committee directed that the agency goes back and prepares thereports and get another date rescheduled as soon aspossible.

The meeting therefore did not proceed further.

MIN.NA/AA&GPC-SFAC/2024/043: ADJOURNMENT/DATEOFNEXTMEETING

There being no other business, the meeting was adjourned at 10.45 a.m. The next meeting will be held on notice

101cql2i

SIGNED...

..DATE...

HON.FATUMAZAINABMOHAMMED,MP

(CHAIRPERSON)

SPECIALFUNDSACCOUNTSCOMMITTE

MINUTES OF THE 32ND SITTING IN THE THIRDSESSION OF SPECIAL FUND ACCOUNTS COMMITTEE HELD ON TUESDAY,18TH JUNE 2024, COMMITTEE ROOM9,MAINPARLIAMENTBUILDINGSBUILDINGAT9.30AM.

PRESENT

1.Hon.Fatuma ZainabMohammed,MP-Chairperson

2. Hon.Erastus Kivasu Nzioka, MP 3. Hon. Dr. Christine Ombaka Oduor, MP 4. Hon. Charles Ngusya Nguna, MP 5. Hon.Catherine Nakhabi Omanyo,MP 6. Hon. Eve Akinyi Obara, MP 7. Hon. Tom Mboya Odege, MP

APOLOGIES

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

2. Hon. Faith Wairimu Gitau, MP 3. Hon. Cecilia Asinyen Ngitit, MP 4. Hon. Joseph Majimbo Kalasinga, MP 5. Hon. Joseph Kimutai Cherorot, MP 6. Hon. Joshua Odongo Oron, MP

Hon. Paul Kibichi Biego, MP

8. Hon. Kahugu Erick Mwangi, MP

INATTENDANCE

Public Service Commission Loan and Mortgage Scheme Fund

1. Mr. Remmy Mulati

Ag Chief Executive Officer

2.Mr.Gerald Kuhaka

DirectorAccounts

3.Mr.Patrick Malakweri

Deputy Director Supply Chain

4. Mr. Joseph Njoroge

Deputy Director Accounts

OfficeoftheAuditorGeneral

1. Mr. David Osiemo

Liason Officer

2. Mr. Stephen Karanu

Director of Audit

3.1 MR. Samuel Nyamamba

Principal Auditor.

NATIONALASSEMBLYSECRETARIAT

1. Ms. Comfort Achieng

ClerkAssistantIII

2. Mr. Nimrod Mate

ClerkAssistantIII

3. Ms. Judith Kanyoko

Legal Counsel II

4. Mr. Ngetich Robia

Fiscal Analyst

Ms. Mercy Ondego

Research OfficerIII

6.Mr.Derrick Kathurima

MediaRelationsOfficer

MIN.NA/AA&GPC-SFAC/2024/036: PRELIMINARIES

The Chairperson called the meeting to order at 10.00am. 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 Public Service Commission Car Loan and Mortgage scheme Fund for the Financial Year 2018/2019 to 2021/2022.
4.Any Other Business

5. AdjournmentDateofthenextmeeting

a) The Committee was informed by the Auditor General that the Management had not prepared Financial Statements since the Financial year 2018/ 2019.
b) The committee directed that Management prepares the financial statements from 2018/2019 till date and rescheduled to another date for consideration.
c)The meeting therefore did not proceed further.

MIN.NA/AA&GPC-SFAC/2024/037: ADJOURNMENT/DATEOFNEXTMEETING

There being no other business, the meeting was adjourned at 10.45 a.m. The next meeting will be held on Thursday 20th June 2024.

SIGNED...

DATE

HON.FATUMAZAINABMOHAMMED,MP

(CHAIRPERSON)

SPECIALFUNDSACCOUNTSCOMMITTE

CONTINENTALBUILDINGAT9.30AM.

PRESENT

1.Hon.Fatuma ZainabMohammed, MP-Chairperson

2. Hon. Dawood Abdul Rahim, HSC, MP - Vice Chairperson 3. Hon.CatherineNakhabi Omanyo,MP 4. Hon. Charles Ngusya Nguna, MP 5. Hon. Cecilia Asinyen Ngitit, MP 6. Hon. Erastus Kivasu Nzioka, MP 7. Hon. Eve Akinyi Obara, MP 8. Hon. Joseph Majimbo Kalasinga, MP 9. Hon. Joseph Kimutai Cherorot, MP 10. Hon. Kahugu Erick Mwangi, MP 11. Hon. Paul Kibichi Biego, MP 12. Hon. Tom Mboya Odege, MP

APOLOGIES

1.Hon.Faith Wairimu Gitau,MP

2. Hon.Dr.Christine Ombaka Oduor,MP 3. Hon. Joshua Odongo Oron, MP

INATTENDANCE

Public Service Commission Car Loan and Mortgage Scheme Fund

1.Mr.Paul Famba

CEO PSC.

2. Mr. Lemmy Mulati

Deputy Commission Secretary, PSC.

3. Mr. Maina Njoroge

Deputy Finance, Planning & RM.

4. Mr. Gerald G. Kuhaka -

Director, Administration.

5. Mr. Joseph Njoroge

Deputy Director, Accounts.

6. Mr. William M. Migwi-

Deputy Director, Planning.

7. Mr. Simiyu Njalale

Deputy Director, Finance.

8. Mr. Patrick Malakwen -

Deputy Director, Supply Chain.

9. Ms. Caroline C. Kiget -

Deputy Director, HRM.

10.Ms.Naomi Sidi

Assistant Director,HRM.

Office of the Auditor General

1. Mr. Stephen K. Karanu

Director of Audit.

2.Mr.David Osiemo

Liason Officer

3.Mr.Samuel Nyamamba

Principal Auditor.

NATIONALASSEMBLYSECRETARIAT

1.Mr.Eric Nyambati

ClerkAssistant I

2.Mr. Nimrod Mate

ClerkAssistantIII

3.Mr. Peter Baraza

Legal Cousel II

4. Ms. Mercy Ondego

Research OfficerIII

5. Mr.DerrickKathurima

MediaRelations OfficerIII

6. Mr.Felistus Muiya

PublicCommunications Officer

7. Mr.Peter Mutethia

Audio OfficerIII

8. Mr.Joshua Lenambeti

SSAAII

9. Ms. Glory Nkatha

Public Comm's Intern

MIN.NA/AA&GPC-SFAC/2024/046

PRELIMINARIES

The Chairperson called the meeting to order at 10.00am, 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 Report of thePublicService Commission Car Loan and Mortgage schemeFund for the Financial Years 2018/2019 to 2022/2023.
4.Any Other Business
5.Adjournment/ Date of the next meeting.

The CEO,PublicService CommissionMr.Paul Famba took the oath of witness.He tabled the management responses and supporting documents on the audited accounts of the Public Service Commission Car loan and Mortgage scheme fund for Financial Years 2017/2018 to 2022/2023.

MIN.NA/AA&GPC-SFAC/2024/047;Examination of Auditor General Reportsof financial StatementsforFinancialYears2017/2018to2022/2023.

1.LateSubmission of Financial Statements.

Financial Statements were submitted to theAuditor-General on30 October,2023,approximately fiveyears after the end of thefinancial year.

The agency responded that the amounts received by the fund were disclosed in Public Service Commission(PSC) financial statements for year 2021/2022.

The Committee noted that PFM Section 84(3) and Regulations 21(d) and 22 (b) of the Public Service Car loan Scheme Regulations 2018 and PSC Mortgage Scheme Regulations 2018 require prompt returns of financial statements and the penalties thereinfor lack of compliance.

2.Unconfirmed ProcurementofanInstitution toManage Car and MortgageScheme.

Fund Management entered into an agreement on 27February,2018without anybidding. However,procurement records indicating how thefinancial institution was identified and awarded thetenderwerenotprovidedfor audit review.

In response, the agency said the Fund engaged National Treasury for guidance on suitable organization to administer the fund as per Regulation 10 of Regulations of the PSC Car Scheme Regulations,2018 andPSCMortgageScheme.

Thecommitteenoted thatthismatter hadnotbeen addressed.

3.Unfavorable Clauses in Contract Agreement with a Financial Institution.

Anagreement dated 27February,2018with a financialinstitution revealed that,the agreement provides for an interest rate of five(5) percent on the loans contrary toSRC Circular which approved an interest rate of three (3) percent per annum. Further, the agreement provides for charging of 4% and 3.5% administration fee on car loans and mortgage loans and further levy a negotiationfee of 1% and a monthly ledger fee of Kshs.350.

In addition, Funds is to maintain lien deposit account which should at all times have a balance equivalent to the total aggregate disbursed loan principal amount, which earns interest of 1.5% per annum thus denying beneficiaries to access the loans and Fund an opportunity to earn optimalrevenue.

In response the agency said the proposed changes in the Draft Regulations that addresses high administration fees will be addressed as follows:

.Administrationfeeof3.5%toberemoved.
·Negotiation fee of 1% of mortgage loan principal to be removed since the funds are not sourcedfrom the administeringbank.
Ledger fee of Kshs 350 per month tobe removed and
The interest charged shall be at a rate of not more than three (3) percent per annum for mortgage and car loans on a monthly reducing balance.

Thecommittee noted that this matter is yet tobe addressed.

4.Irregular Consolidation of Two Separate Funds.

Financial statements are in respect of Public Service Commission Car Loan Scheme and the PublicService CommissionMortgage Scheme.However,theFund Management prepared consolidatedfinancialstatements.

In Response the agency said that the Commission used a reporting templatefrom National treasury, which provides for disclosure of the two funds statement as per statement of financial position and statements of cash flows. Separate supporting documents were issued to auditors. The Committeenoted that thismatterhad notbeen addressed.

Please note that the four queries were repeated in Financial Years 2019, 2020, 2021, 2022 and2023.

MIN.NA/AA&GPC-SFAC/2024/048: ADJOURNMENT/DATEOFNEXTMEETING

There being no other business, the meeting was adjourned at 12.10pm. The next meeting will be held onnotice.

iSlcney

SIGNED..

DATE.

HON.FATUMAZAINABMOHAMMED,MP

(CHAIRPERSON)

SPECIALFUNDSACCOUNTSCOMMITTE

MINUTESOFTHE4THSITTINGOFSPECIALFUNDSACCOUNTS COMMITTEE HELD ON TUESDAY, 20TH FEBRUARY 2024,MINI CHAMBER COUNTY HALL AT 9.30AM.

PRESENT

1.Hon.Fatuma Zainab Mohammed, MP- Chairperson

2. Hon.DawoodAbdul Rahim,HSC,MP-Vice Chairperson 3. Hon. Faith Wairimu Gitau, 4. Hon. Charles Ngusya Nguna, MP 5. Hon. Tom Mboya Odege, MP 6. Hon. Catherine Nakhabi Omanyo,MP

7.Hon. Cecilia Asinyen Ngitit, MP
8.1 Hon. Paul Kibichi Biego, MP

APOLOGIES

1. Hon. Eve Akinyi Obara, MP 2. Hon. Joseph Majimbo Kalasinga, MP 3. 3.1 Hon.Erastus Kivasu Nzioka, MP 4. Hon.Dr.Christine Ombaka Oduor, MP 5. Hon. Joseph Kimutai Cherorot, MP 6. Hon. Joshua Odongo Oron, MP 7. 7.Hon.Kahugu Erick Mwangi,MP

IN ATTENDANCE

KUCCPSMORTGAGESCHEMEFUND

1. Ms. Agnes Mercy Wahome -

CEOKUCCPS

2.Mr.Michael Kimani

Finance Manager

3. Mr. Eric Asande

SeniorAccountant

OFFICEOFTHEAUDITOR-GENERAL

1.Mr.David Osiemo

Liason Officer.

2. Mr. Gideon Nyamwea

OAG

3.Ms. Josephine Warega

OAG

NATIONALASSEMBLYSECRETARIAT

1.Mr. Erick Nyambati

ClerkAssistantI

Ms. Comfort Achieng

ClerkAssistantIII

Mr.Nimrod Mate

ClerkAssistantIII

Ms. Judith Kanyoko

Legal Counsel II

5. Mr.Derrick Kathurima

MediaRelationsOfficer

6. Ms.Pauline Sifuma

Hansard Reporter III

7. Ms.MariamGabow

Public Communications Officer

8.Mr.Peter Mutethia
9.Mr.Benard Omondi
10.Mr.AbdifatahMahat
-Hansard Audio officer
Sergeant-at-arms
-Attachee

MIN.NA/AA&GPC-SFAC/2024/011: PRELIMINARIES

The Chairperson called the meeting to order at 10.01am, 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 the Kenya Universities and CollegesCentralPlacementStaff Car Loan and Mortgageschemefund for the FinancialYears 2018/2019 to2021/2022.
4.Any Other Business
5.Adjournment Date of the next meeting.

After that,the Chief Executive Officer and the Accounting Officer for theKenya Universities and Colleges Central Placement staff Car Loan and Mortgage scheme fund undertook the oath of witness. He tabled the management responses and supporting documents on the audited accounts for thefinancialyears2018/2019 to2021/2022.

MIN.NA/AA&GPC-SFAC/2024/012:CONSIDERATION OF THE AUDIT REPORTSOF THEKENYAUNIVERSITIESANDCOLLEGES CENTRALPLACEMENTSTAFFCARLOANAND MORTGAGE SCHEME FUND FOR THE FINANCIALYEARS2018/2019t02021/2022

Brief on the mandate and scope of the Fund

The Accounting officer briefed the Committee on the operations and the Kenya Universities and Colleges Central Placement Staff Car Loan and Mortgage scheme Fund for the financial years 2018/2019 to2021/2022.

Examination of the Auditor General reports for the Kenya Universities and Colleges Central Placement Staff Car Loan and Mortgage scheme fund for the financial years 2018/2019 to2021/2022.

The Committee examined the Auditor General's report for the Kenya Universities and Colleges Central Placement Staff Car Loan and Mortgage scheme fund for the financial years 2018/2019 to 2021/2022 as follows:

FINANCIALYEAR2018/2019

1. Inaccuracies in Financial Statements

1.1StatementofCashFlow

The statement of cash flow reflects cash and cash equivalent of an amount of Kshs 139,412,583.

料

However,casting the accuracy and review of statements revealed that the cash equivalent as at 1 July,2018wasnotincludedresultingtounderstatementsofanamountofKshs156,655,556was not included resulting to understatements of an amount of Kshs 156,655,556 not explained. In circumstances,the accuracy and completeness of the cash and cash equivalents of an amount ofKshs139,412,583couldnotbeconfirmed.

Submissions by the Accounting Officer

TheAccounting Officer submitted thefollowing;

The Cash flow was prepared under the direct method as recommended by thePublic Sector Accounting Board. In this method you start with the opening balance at the beginning of the year, reflect the cashflows to arrive at the cash position as at the end of the period/year.The amount of Kshs 156,655,583was thebalance as at 30June2018 and therefore the openingbalance for the Financial Year 2018/2019 as at 1st July 2018. The period had a net cash outflow of Kshs 17,242,973 resulting to a reduced cash position of Kshs 139,412,583 as at 30th June 2019 as computedbelow.

Cash andcashequivalent1/7/2018

Kshs 156,655,556

Netdecreaseincashandcashequivalent

Kshs (17,242,973)

Cash andcashequivalent30/6/2019

Kshs 139,412,583

Findings and Observations of the Committee

The Committee observed the following;

i. The statementfromManagement had been observed tobe accurate.
ii. Thematter is resolved.

1.2StatementoffinancialPerformance

Reviewof thestatementoffinancialperformancerevealed a nilbalanceinrespect of 3% commission on service providers.However,the staff mortgage and car loans bank statements reflect an amount of Kshs.329,644in respect of tax on credit and other bank chargeswhich are not included as expenses in the statement of financial performance.

In the circumstances, the accuracy and completeness of the nil balance in respect of 3% commissiononserviceprovidercouldnotbeconfirmed.

Submissions by the Accounting Officer

The Accounting Officer submitted the following;

TheHFCbank account openedand operated as depositaccount for advancing thehouse mortgage and car loans to the Placement Service staff. The account does not attract bank charges withholds15%oninterestearnedandthesameisremittedtoKenyaRevenueAuthorityas required by law.The amount of Kshs329,644was part of the withheld tax oninterest earned on the unutilized deposit fund.ThePlacementService treated thewithheld tax as a prepayment until the same is claimedwhile making annual returns after theyear end. ThePlacement Service does not incur expenses to operate theHFCbank account instead the staffincur an administration expensewhich is directly recoveredfrom them and remittedwith monthly mortgage andcarloan instalments.

Findingsand Observations of theCommittee

The Committee observed the following;

i. The amount appeared as debit in the bank statement and ought to have been reflected in the statement of financial performance as an expense.
ii. Management had explained that they treated it as a prepayment however, the amount hadnotreflected in thestatement of financialposition.
iii. TheMatterremainedunresolved.

Late submission of financial statements

The financial statements for the Kenya Universities and Colleges Central Placement Service Staff Mortgage and Car LoanSchemefor the year ended 30"hJune,2019were submitted to the Auditor-General on 27 March, 2023, forty-five (45) months after the statutory deadline to submit of 30 September, 2019. This was contrary to section 47(1) of the public Audit Act,2015 which states that the financial statements required under the Constitution of Kenya 2010, the Public Finance Management Act,2012 and any other legislation shall be submitted to the AuditorGeneral within three (3) months after the end of the fiscal year tom which the accounts relate In the circumstances, Management was in breach of the law.

Submissions by the Accounting Officer

The Accounting Officer submitted the following;

Upon the release of the guidelines and templates for preparation of separate financial statements, the Placement Service prepared the Annual Reports and Financial Statement for the year ended 30 June 2022 and submitted by 30 September 2022 as required by the law.(Attached screenshot of the Car loan and mortgage funds template released in 2021-2022 from the PSASB website).

The Office of the Auditor General guided that we prepare the Financial Statements for the earlier years.

Findingsand Observations of the Committee

The Committee observed the following;

i.Management has explained that the reporting template was issued on 30 June,2022 althoughfinancial statementsweresubmittedon27March,20239monthslater.

Regulations, 2015 which requires preparing of the annual financial statements for each financial year within three months after end of the financial year, and submit to the Controller of Budget and theAuditor General for audit.
ili. Management in the subsequent financial years have complied with the reporting template issued.
iv.Matter is resolved

2. Non-Compliance with the Public Sector Accounting Standards Board Requirement on PresentationoftheFinancialStatements.

TheFund submitted thefinancial statements for audit during theyear theunder review.

However,inconsistencies on the preamble information revealed that the names of the chairperson,chief executive/scheme administrator and manager legal and corporation secretary as per the staff mortgage and car loan scheme committee profile presented was different from persons who signed the Financial Statements, Chairman's Report and Staff Mortgage and Car Loan Scheme Committee Report. In addition, the Statement of Change in Net Assets presented thebalancesofthepreviousyearandnottheyearunderreview.

In the circumstances, the Fund did not comply with the Public Sector Accounting Standards Board(PSASB)guidelines.

Submissions by theAccounting Officer

The Accounting Officer submitted the following;

Thechiefexecutiveofficerwhowas alsothe scheme administratorinofficein2018/2019was John Muraguri and the financial statement were prepared in 2023 when Dr. Agnes Mercy Wahomewasin office and thereforesigned the annual report andfinancial statements.

The chairman of the Car Loan and Mortgage Scheme in office in 2018/2019 was Michael Kimani and the financial statement were prepared in 2023 when Ms. Christine Mwaka was in office and therefore signed the annual report and financial statements.Michael Kimani signed the Financial Statements as the Accountant and not as the Chairman since he had ceased being the Chairman.

The Legal Manager and the Corporation Secretary in 2018/2019 was Ms. Edna Adala who had since left the institution while Ms.FaithKaluai was in office in 2023when the statement was prepared and therefore signed. The above was disclosed in the notes to the financial statement to inform thereaders.

Findings and Observations of the Committee The Committee observed that the following;

i.Management was in breach of Section 68 2 (k) of the Public Finance Management Regulations, 2015 which requires preparing of the annual financial statements for each financial year within three months after end of the financial year, and submit to the Controller of Budget and theAuditor General for audit.

i. Due to the changes in Management from 2018 to 2023, Management has clarified the positions of the officials signingthefinancial statements.
iii. Management has complied in the following subsequent years and the current fund administration committee members were signing the annual report and financial statement as required.

3. iv.The matter is resolved.

FINANCIALYEAR2019/2020

1.Inaccuraciesin theFinancial Statements

1.1 Cash and cash Equivalents

As disclosed in Note 9 to the financial statements of financial position reflects two (2) bank account balances of Kshs 111,233,937 in respect of cash and cash equivalents.However,review of certificateof bankbalancesfor auditrevealed 4(four)bankaccountsbalancestotaling toKshs 176,307,448 resulting to unexplained and unreconciled variance of Kshs 65,073,511.

Submissionsby theAccounting Officer

The Accounting Officer submitted the following:

The National Treasury require that all public institutions seek and receive approval from the

National Treasury for operation of bank accounts. The Placement Service sought and was granted approval to open and operate bank accounts with the HFC Bank for its Car Loan and House Mortgage (letters of approvals attached). The bank operates two other accounts for tracking the loans advanced to thePlacement Service staff.These accounts are calledBack up accounts andwhenever a staff loan is advanced, the backup is credited with equal amount and the account is adjusted periodically as the loan portfolio is increased or decreased bypayments. The Backup account is mirrored by the staff debtors which is reflected in the Statement of Financial Position.In 2019, the debtors were Kshs 64,406,935 as reported in the Statement of FinancialPosition andreflected onnote 11 to theNotes totheFinancial Statement while the backup accounts reflected Kshs 65,073,511. This was a temporary timing difference.

Kshs 176,307,448 was the total cash amount deposited with the HFC bank together with the interests earned and received from the unutilized deposit before any loans advanced to staff as at 30June2020.

Findingsand ObservationsoftheCommittee

The Committee observed thefollowing

i.The reconciliation provided were for two accounts; Mortgage Kshs. 81,550,074 and Car loan Kshs.29,683.863.
ii.The variance of Kshs.65,073,511 had not been reconciled and management had not explainedwhat thebackup accountwas asper theresponse.
iii. Managementhad four bank accounts which had amounts belonging to them but they only disclosed two.
iv.Managementindicated that they onlyhad two accounts.
v.TheMatterremainedunresolved.

1.2StatementsofFinancialPosition

The statement of financial position reflects revenue reserve of an amount of Kshs 7,153,313 whichis at variance with accumulated surplus of am amount of Kshs 25,640,873 reflected in the statement of changes in net asset resulting an amount of unexplained and unreconciled variance ofKshs18,487,555

In the circumstances, the accuracy and completeness of the accumulated of an amount of kshsm7,153,313 could not be confirmed.

SubmissionsbytheAccountingOfficer

TheAccountingOfficersubmitted thefollowing;

The amount of Kshs 7,153,313 posted in the statement of financial position is the net revenue for theyear and not thesame as the accumulated revenuereserveof Kshs25,640,873 as reflected in thestatement of changes in net assets. This reporting format was revised and the amounts are

FindingsandObservationsoftheCommittee

The Committee observed the following

i.The reporting ought to have been revenue reserve of Kshs. 7,153,318 and accumulated surplus of Kshs. 18,487,560 and staff mortgage and car loan of Kshs. 150,000,000
ii. The accumulated surplus amounts should be Kshs.18,478,555 and not 18,478,560.
ii. The fund has combined the accumulated surplus of Kshs. 18,487,560 with the mortgage fund of Kshs. 120,000,000 and car loan of Kshs. 30,000,000 to reflect Kshs. a168,487,560
iv.The correction had not been made to have reserves, accumulated surplus and car loan and mortgage fund reported separately as per the template issued.
v.Thematter is not addressed.

1.3StatementofFinancialPerformance

Reviewof thestatementof financialperformancerevealed anilbalanceinrespect of 3% commission on service provider.However,thestaff mortgage and car loans bank statements reflect an amount of Kshs.329,644in respect of tax on credit and other bank charges which are not included as expenses in the statement of financial performance. In the circumstances, the accuracy andcompleteness of thenilbalancein respect of 3%commissionon serviceprovider couldnotbeconfirmed.

Submissionsby theAccounting Officer

TheAccountingOfficersubmitted thefollowing;

TheHFbankwas opened and operated as deposit account for thepurpose of advancing the car loans and house mortgages to the Placement Service staff. The account does not attract bank charges but earns interest on unutilized funds.Thebank withholds 15% on interest earned and the same is remitted to Kenya Revenue Authority as required by law. The Placement Service treats amount is treated as a prepayment until the same is claimed while making annual returns after the year end. The Placement Service does not incur expenses to operate the HF bank account instead thestaffincur an administration expensewhichis directlyrecoveredfrom them and remitted withmonthly car loan and housemortgageinstalments.

Findings and Observations of the Committee

The Committee observed thefollowing;

i. The amount appeared as debit in the bank statement and ought to have been reflectedinthestatementoffinancialperformanceasanexpense.

2. i.Management had explained that they treated it as a prepayment. However, the amount isnot reflectedin the statement of financial position.

ili. The matter remained unresolved.

2.Unsupported Disbursed Loans

Statement of financial position reflects balances of Kshs 64,406,935 in respect of long-term receivable of the staff mortgage and car loans. However, review of the ledger schedules provided for audit review revealed that the management disbursed an amount of Kshs 39,055,435 which included an amount of Kshs 20,532,436 not supported by schedules indicating the name of the beneficiaries.In the circumstances,the accuracy and completeness of the long-term receivables from staff mortgage on car loan balances of Kshs 20.532,436

Submissions by the Accounting Officer

The Accounting Officer submitted the following;

Total loans issued to the staff during the year was Kshs 39,055,435 while cumulatively the loans issued as at 30 June 2020 for the staff mortgage and car loan rose to Kshs 64,406,935. The schedule of staffwhobenefittedwiththe loans is herewith attachedfor your review.Note that the Loans issued to financial year 2018/2019 was Kshs 29.074,976.

Findingsand Observationsof the Committee

The Committee observed the following;

i.The Management did not provide the list of beneficiaries amounting to Kshs. 20,532,426.
ii.The schedules were not provided not signed or stamped and were incomplete.

The Committee recommended that Management provides a complete stamped schedule that includes all names Identification numbers, the staff designation together with the amountsdisbursed and the amountspaidback.

3.Latesubmissionoffinancialstatements

The financial statements for the Kenya Universities and Colleges Central Placement Service Staff Mortgage and Car Loan Scheme for the year ended 30th 2020 were submitted to the Auditor-General on 27 March, 2023,thirty-three(33) months after the statutory dateline to submit of 30 September, 2019. This was contrary to section 47(1) of the public Audit Act,2015 which states that the financial statements required under the Constitution of Kenya 2010, the Public Finance Management Act,2012 and any other legislation shall be submitted to the Auditor-Generalwithin three (3) months after the end of thefiscalyear tom which the accounts relate In the circumstances,Management was in breach of thelaw.

SubmissionsbytheAccountingOfficer

The Accounting Officer submitted the following;

The Placement Service prepared a consolidated annual report and financial statements for financialyear ended30June2020,which were submitted by30September2020 toAuditor General for audit as required.At that time,there were noguideline from PublicSector Accounting Standards Board on preparation of separate account and the template to use for the Mortgage accounts.

The Placement Service therefore did not prepare separate financial statement for Staff Mortgage andCar loan schemeannual report and financialstatements and continued preparing consolidated financial statements.(Attached screenshotof the Carloan and mortgage funds templatereleased in 2021-2022 from thePSASB website).The Office of the Auditor General guided that thePlacementService prepares theFinancial Statements for the earlier years.

Findings and Observations of the Committee

The Committee observed the following;

i) Management has explained that the reporting template was issued on 30 June, 2022 although financial statements were submitted on 27 March,2023 9 months later.

2. ii) ManagementwasinbreachofSection682(k)ofthePublicFinance Management Regulations, 2015 which requires preparing of the annual financial statements for each financial year within three months after end of the financial year,andsubmittothe ControllerofBudgetand theAuditorGeneral foraudit. 3. ili) template issued. 4. iv) Matterisresolved

2.Non-Compliance with the Public Sector Accounting Standards Board Requirement onPresentationoftheFinancialStatements.

TheFundsubmitted thefinancialstatementsforauditduringtheyeartheunderreview.However, inconsistencies on the preambleinformation revealed that the names of the chairperson,chief mortgage and car loan scheme committee profilepresented was differentfrom personswho signed the financial statements ,chairman's report and staff mortgage and car loan scheme committee report.in addition, the statement of change in net assets presented the balances of the previous year and not the underreview.

Inthe circumstances,theFund did notcomplywith thePublicSector AccountingStandards Board(PSASB)guidelines.

Submissionsby theAccounting Officer

The Accounting Officer submitted the following;

After the year end, there were changes in the management of the Car Loan and Mortgage Scheme with new team taking over and were in office during the signing of the Financial Statements though they were not responsible for the period's operations. The offices being perpetual, they took over the office and responsibility and therefore signed the statements. This fact was disclosed in the notes to thefinancial statement as events after balance sheet date.

Findings and Observations of the Committee

The Committee observed that thefollowing;

i.Management was in breach of Section 68 2 (k) of the Public Finance Management Regulations, 2015 which requires preparing of the annual financial statements for each financialyearwithin threemonths after end of thefinancialyear,and submit to the Controller of Budget and theAuditor General for audit.
i. Due to the changes in management from 2018 to 2023, the management has clarified the positions of the officials signing the financial statements.
ii. Management has complied in the following subsequent years and the current fund administrationcommittee membersweresigning the annualreport and financial statement as required.
iv.The matter is resolved.

MIN.NA/AA&GPC-SFAC/2024/013: ADJOURNMENT/DATEOFNEXTMEETING

There being no other business, the meeting was adjourned at 1.21 p.m. The next meeting will be held onFriday23rdFebruary2024.

SIGNED...

.DATE.

HON.FATUMAZAINABMOHAMMED,MP

(CHAIRPERSON)

SPECIALFUNDSACCOUNTSCOMMITTE

MINUTESOFTHE 47TH SITTINGIN THETHIRDSESSIONOF SPECIAL FUND ACCOUNTS COMMITTEE HELD ON TUESDAY,5TH NOVEMBER 2024, IN CONTINENTALROOMAT10.00AM.

PRESENT

1.Hon.FatumaZainabMohammed,MP-Chairperson

2. Hon.Dawood Abdul Rahim,HSC,MP-Vice Chairperson 3. Hon. Dr. Christine Ombaka Oduor, MP

4 Hon. Erastus Kivasu Nzioka, MP
5.1 Hon. Charles Ngusya Nguna, MP

6. Hon. Eve Akinyi Obara, MP 7. Hon. Tom Mboya Odege, MP 8. Hon. Catherine Nakhabi Omanyo,MP 9. Hon. Paul Kibichi Biego, MP

APOLOGIES

1.Hon. Faith Wairimu Gitau, MP
2.Hon. Joseph Majimbo Kalasinga, MP
3.Hon. Cecilia Asinyen Ngitit, MP

4. Hon. Joseph Kimutai Cherorot, MP 5. Hon. Kahugu Erick Mwangi, MP 6. Hon. Joshua Odongo Oron, MP

INATTENDANCE

NATIONALASSEMBLYSECRETARIAT

1.Ms. Comfort Achieng

Clerk Assistant II

2. Ms. Judith Kanyoko

Legal Counsel II

3. Ms.Bevaline Mosoti

Research Officer III

4.Mr.DerrickKathurima

-MediaRelations Officer

5. Mr.Peter Mutethia

-Audio OfficerIII

6. Ms. Felistus Muiya

-Public Communication Officer III

KENYAUNIVERSITIESCOLLEGESCENTRALPLACEMENTSERVICE

OFFICEOFTHEAUDITOR-GENERAL

1.Mr.David Osiemo

Liaison Officer.

2. Mr. Wilson Maiya

Director, Audit

MIN.NA/AA&GPC-SFAC/2024/081.

PRELIMINARIES

The Chairperson called the meeting to order at 10.13 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 the Kenya Universitics Colleges Central Placement Service Car loan and Mortgage scheme fund for the financial YearS 2020/21 and 2021/22

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

The Chief Executive Officer who is the Accounting Officer for the fund took the oath of witness and tabled the Submissions of the Accounting Officer including supporting documents on the audited accounts of the fund.

EXAMINATIONOFTHEAUDITORGENERAL REPORTS ON ACCOUNTS OF KENYA UNIVERSITIES COLLEGES CENTRAL PLACEMENT SERVICE CAR LOAN AND MORTGAGESCHEMEFUNDFORTHEFINANCIAL YEARS2020/21AND2021/22

MIN.NA/AA&GPC-SFAC/2024/082.

Briefonthemandateand scope of theFund

The Accounting officer briefed the Committee on the operations and scope of the fund.

Examination of the Auditor General reports for Water Sector Trust Fund for the financial Year2018/19to2021/22

The Committee examined the Auditor General's report for the Kenya Universities Colleges Central Placement Service Car loan and Mortgage scheme fund for the financial YearS 2020/21 and 2021/22 as follows:

FinancialYear2020/2021

1.1Variancebetweenthefinancial statement and comparativefigures

The Fund's statements of financial position reflect two (2) items that varies with 2019-2020 comparativebalances as shown below.

| Description | Audited financial statements (2019/2020) Kshs. | Financial statements (2020/2021) Kshs. | Variance Kshs | |---------------|--------------------------------------------------|------------------------------------------|-----------------|

| Accumulated Surplus | 7,153,313 | 25,640,873 | 18,487,560 | |---------------------------------|-------------|-------------------------|--------------| | Staff Mortgage & CarLoanreserve | 168,487,560 | 150,000,000(18,487,560) | |

In the circumstance, validity, accuracy and completeness of the balances in the statement of financial positionin respect ofreceivablesfromnon-exchange andreceivablesfrom exchange transactionscouldnotbeconfirmed.

Submissions by theAccountingOfficer

The Accounting Officer submitted the following;

Thefinancial statements for the year ended 30June 2020,the Surplus was reported for the year at Kshs7,153,313 unlike in 2021 where it was reported cumulativelyKshs 25,640,873 and seed capital was reported at Kshs 168,487,560in 2019/2020.In 2020/2021 the seed capital was retained at Kshs150,000,000 while the surplus was accumulated with the surplus for the year as reportedinthestatementoffinancialperformance.

Thecumulativeeffectisthesamebutfor theuserseaseof understanding,it isbestreported cumulatively. The Staff Mortgage and Car Loan Reserve in 2019/2020 reported both the initial deposit and thepreviousyear'ssurpluses and the samehavebeenseparatedforsurplus tobe accumulatedseparately as it appearsinthe statement of ChangesinNet assetwhile theseed capital isseparate.

Observationsbythe Committee

TheCommitteeobserved that thematterisresolved.

1.2Variance between financial statement and supported ledgers balances

The Fund's statements of financial position reflects two (2) items that varies with ledger schedule balances as shown below;

| Description | Audited financial statements Kshs. | ledger Schedules Kshs. | Variance Kshs. | |---------------------------------------------|--------------------------------------|--------------------------|----------------------| | Receivables from Non- Exchange Transactions | 150,000,000 | 69,596,249 80,403,751 | | | Receivables from | 69,647,830 | | 5,733,020 63,914,810 |

| Exchange | |--------------| | Transactions |

In the circumstance, validity, accuracy and completeness of the balances in the statement of financial position in respect of receivables from non-exchange and receivables from exchange transactions could not be confirmed.

SubmissionsbytheAccountingOfficer

The amount of Kshs 150 million,current receivablesfrom non-exchange transactions relate to theadditionalfundscommittedbytheBoard towards theStaff CarLoan andMortgageScheme andwhichwasoutstanding asat 30June 2021inthebooks of thePlacementServicemain account. This money has been settled as per the attached Board Minutes, transfer documents and bank statement from both KUCCPS main account (KCB bank) and the Staff Car Loan and Mortgage Scheme (HFC bank). On the other hand, Kshs 69,647,830 was the non-current receivablesfrom theexchange transactions(staffdebtors)and a scheduleofthe debtors attached for perusal. The two amounts of receivables are not comparable and therefore reported separately.

TheAccountingOfficersubmitted thefollowing:

Kshs69.647.830 on the other hand was theNon-Current receivablesfrom the exchange transactions(staff debtors andwithholdingtaxprepaidofKshs51.582.The amount ofKshs 5,733,020 relate to the interest income for the period ended30 June 2021 as reported in the statement of financial performance and disclosed in note 6 of the notes to the financial statementsThe twoamounts aredifferent,properlyreported and arenot comparable onebeingin thestatement of Financial Performance and theotherin thestatement of financialposition.

Observationsbythe Committee

TheCommitteeobserved that thematterisresolved.

1.3 Cash and Cash Equivalent

As disclosed inNote 9 to thefinancial statements,the statements of financial positionreflect two (2)bankaccountbalancesofKshs.111,777,645inrespect ofcash andcashequivalents. However,review of the certificate of bankbalanceprovided for audit revealed 4(four)bank accounts balances totaling to Kshs.182,040,469 resulting to an unexplained and unreconciled

varianceofKshs.70,762,824.

SubmissionsbytheAccountingOfficer

The Placement Service operates two bank accounts, Fixed Deposit Account Number 2211863401 and Fixed Deposit Car Loan account number 2211863402 as approved by the National Treasury (Approval letters from the Treasury Attached). Bank balance confirmation letter dated 6"hJuly2021indicated fourbank accounts in the nameof KUCCPStotaling toKshs 182,040,469.

The Accounting Officer submitted the following;

AsindicatedinthecommunicationfromtheHFCbank(Letterdated21February2024 attached), the additional accounts which appeared in their certificate dated 6th July 2021 were not KUCCPS account but banks operation account. This certificate included amounts of Kshs 71,173,563fromback up accounts,which thebank has explained areitsown operation accounts for KUCCPS. KUCCPS management are not signatory to these bank accounts.

Observations by the Committee

The Committee observed thematter is resolved.

1.4StatementofCashflows

Statementsof cashflows reflectscashandcashequivalentsbalanceof Kshs.111,777,645. However,review of thestatements of changesin net assets revealed receipt offunds amounting to~Kshs.150,000,000 in respect of mortgage and car loan funds which were not included in respectofcashflowsfromfinancingactivities.

Submissionsby theAccountingOfficer

Kshs 150 million was a receivable reflected as such in note11(a) of the Notes to the Financial Statementandwasnotpartofthecashinflows.

The Accounting Officer submitted the following;

The amount of Kshs150millionwas abook entry to recognize the obligationof thePlacement ServicetoitsStaff Mortgage and Car LoanSchemefollowing theresolution to transferKshs 150 milliontothescheme.Thereserveoftheschemewasincreased byrecognizingdebtorsfrom the main Placement Service account while the Main account recognized a liability of the same amount.

ThisamountofKshs150millionwasreceivedasfromKUCCPSasfollows:

·Kshs 70 million vide Payment Voucher (PV) number 8222 dated 23 January 2023
·Kshs30millionvidepaymentvouchernumber8654dated16August 2023

Observations by the Committee

The Committee observed the matter is resolved.

1.5Statement offinancial performance

Reviewof thestatementoffinancialperformancerevealedanil balanceinrespectoftotal expenses.However,the staff mortgage and car loans bank statement reflects total amounts of Kshs.599,269 in respect of tax on credit and other bank charges which are not included as expensesin thestatement offinancialperformance.

In the circumstances, the accuracy and completeness of the nil balance in respect of total expensescouldnotbeconfirmed.

SubmissionsbytheAccountingOfficer

The Accounting Officer submitted the following;

The Placement Service opened and operated deposit account with HFC bank for advancing mortgageand car loanstothePlacementService staffs.The account doesnot attract bank

购

charges but earns interest on unutilized funds. The bank withholds 15% on interest earied and the sameremitted toKenyaRevenueAuthority asrequired by law.

The Placement Service does not incur expenses to operate the HF bank account instead the staffs incur an administration expense which is directly recovered from the staff and remitted with monthly car loan and house mortgage instalments.

The amount ofKshs599.269 relatetothewithheld interest earnedfrom Car Loan interestfor the period ended June 30, 2021. This amount treated as a prepayment until the same claimed while making annual returns after theyear-end.

Observationsby the Committee

The Committee observed the matter is resolved.

2.0 Unsupported Increase inReceivable from Exchange Transaction

As disclosed inNote 11(b) to the financial statements,the statement of financial positionreflects balance of Kshs.69,647,830 and Kshs.64,406,935 in respect of receivables from exchange transactions and its comparative balances respectively resulting to an increase of Kshs.5,240,895 in respect of loans disbursed. However, the supporting documents including list of loan beneficiaries were not provided for audit review. In the circumstances, the accuracy and completeness of the receivables from exchange transactions balance of Kshs.69,596.248 could not be confirmed.

Submissions by the Accounting Officer

Theincrease of Kshs 5,240,894 in receivables from the staff loans was as a result of loans disbursed of Kshs 11,198,227 and the loan repayments of Kshs 5,957,333. The schedules of the loans issued and repaid attached for review.

The Accounting Officer submitted the following;

ObservationsbytheCommittee

The Committee observed the matter is resolved.

3.0LateSubmissionofFinancialStatement

The financial statements for the Kenya Universities and Colleges Central Placement Service Staff Mortgage and Car LoanSchemefor the year ended 30June,2021were submitted to the Auditor-General on 27 March, 2023, twenty-one (21) months after the statutory deadline to submit of 30 September, 2021.This was contrary to Section 47(1) of the Public Audit Act, 2015 which states that the financial statements required under the Constitution of Kenya 2010, the Public Finance Management Act, 2012 and any other legislation shall be submitted to the Auditor-General within three(3) months after the end of thefiscalyear towhichthe accounts relate. In the circumstances, Management was in breach of the law.

Submissions by the Accounting Officer

The Accounting Officer submitted the following StandardsBoardonpreparationofseparateaccount and thetemplatetousefor theMortgage accounts. The Placement Service therefore did not prepare separate financial statements for Staff Mortgage and Car loan scheme. (Attached screenshot of the Car loan and mortgage funds templatereleased in2021-2022from thePSASBwebsite).

TheOfficeoftheAuditor Generalguided that thePlacementServiceprepares theFinancial Statementsfortheearlieryears.

ObservationsbytheCommittee

The Committee observed the matter is resolved.

4.0Non-CompliancewithPSASBonpresentationof FS

TheFundsubmitted thefinancial statementsfor audit duringtheyearunderreview. However, inconsistencies on presentation of the preamble information revealed that the names of thechairperson,chiefexecutive/scheme administrator andmanagerlegal andcorporation secretary asper thestaff mortgage and carloanscheme committeeprofilepresented was different from personswho signed thefinancial statements,chairman's report and staff mortgage and carloanschemes committeereports.Further,Notes tothefinancialstatementswere not included.In addition, the statement of changes in net assets presented the balances of the previousyear and not the year under review. In the circumstances, the Fund did not comply with thePublicSectorAccountingStandardsBoard (PSASB)guidelines.

Submissions by theAccounting Officer

TheAccounting Officer submitted the following

After the year end, there were changes in the management of the Car Loan and Mortgage Scheme with new team taking over and were responsible for the preparation and signing of the Financial Statements though they were not responsible for the period's operations. Christine MwakatookoverfromMichaelKimaniastheChairmanwhileEdnaAdalaexitedandFaith Kaluai took over as Corporation Secretary. The offices being perpetual, the officers took over the offices and responsibility and therefore signed the statements prepared while in office. Thisfactwasdisclosedinnote14ofthenotestothefinancialstatementaseventsafterbalance

sheet date appearing on pages 21 and 22.

Observationsbythe Committee

TheCommitteeobserved thematterisresolved.

FinancialYear2021/2022

1.1Variancebetweenfinancialstatementandsupportedledgersbalances

items thatvarieswith ledger schedulebalances as shownbelow;

| Description | Audited financial statements Kshs. | ledger Schedules Kshs. | Variance Kshs. | |-----------------------|--------------------------------------|--------------------------|------------------| | Receivables from Non- | 0 | 150,000,0095,707,698 | 54,292,302 |

| Exchange Transactions | | | |----------------------------------------|---------------------|------------| | Receivables from Exchange Transactions | 96.659.2505.999.797 | 90.659.453 |

In the circumstance, validity, accuracy and completeness of the balances in the statement of financial position in respect of receivables from non-exchange and receivables from exchange transactionscouldnotbeconfirmed.

SubmissionsbytheAccountingOfficer

TheAccountingOfficersubmitted thefollowing

The amount of Kshs 150 million, current receivables from non-exchange transactions relate to the additional funds committed by theBoard (Board minutes attached) towards the Staff Car Loan and Mortgage Scheme and which had not been received as at 30 June 2022 from the PlacementServicemain account.

The amount transferred at varied dates as per the attached payments vouchers and bank statementsfromKCBbankandHFCbank.

1. 20 January 2023

Kshs 70,000,000

2. 16 August 2023

Kshs 30,000,000

3.9 January2024

Kshs 50,000,000

Kshs95,707,698on the other hand wasnon-current receivables(schedule attached)for the staff carloan and mortgage schemewith thebank.The two amounts are not comparable.The amount ofKshs96,659,250wasnon-current receivablesfrom theexchange transactionsfor the actual loans advanced to the Placement Service staff Car Loan and Mortgage Scheme as at June 30 2022with areconciliation ofKshs951,552being the amount ofwithholding taxfrom interest earnedtreatedasprepayment.

The amount of Kshs5,999,797on the other hand relates to theinterest income for theperiod as reportedinthestatementoffinancialperformanceanddisclosedinnote7ofthenotestothe financial statements =The non-current receivables and interest income are not comparable.

ObservationsbytheCommittee

TheCommitteeobserved that thematterisresolved.

1.2 Cash and CashEquivalent

As disclosed innote9 to thefinancialstatements,thestatementsof financialpositionreflect balance of two (2) Kshs 90,766,022 in respect of cash and cash equivalents. However, review of thecertificateofbankbalanceprovided for auditrevealed 4(four)bankaccountsbaianccs totaling to Kshs. 187,140,296 resulting to an unexplained and unreconciled variance of Kshs 90,766,022.

SubmissionsbytheAccountingOfficer

The Accounting Officer submitted the following

During the period ended 30 June 2022, the Placement Service operates two bank accounts, Fixed Deposit Account Number 2211863401 and Fixed Deposit Car Loan account number 2211863402.

The two accounts were approved by the National Treasury vide letter dated 30 May 2017 Bank balance confirmation letter dated 6th July 2021 indicated four bank accounts in the name of KUCCPS totaling toKshs 182,040,469.As indicated in the communication from the HFC bank letter dated 26February2024),the additional accounts which appeared in their certificate dated 6thJuly2021werenot KUCCPS accountbutbanks operation account.Thiscertificateincluded amounts of Kshs 97,285,013 from back up accounts, which the bank has explained as its own operation accounts for KUCCPS. The KUCCPS management are not signatory to these bank accounts..

ObservationsbytheCommittee

TheCommitteeobservedthatthematterisresolved.

1.3StatementofFinancialPerformance

Reviewofthestatementoffinancialperformancerevealed anilbalanceinrespectofexpenses. However, the staff mortgage and car loans bank statements reflect an amount of Kshs. 122,566 in respect oftaxon credit and otherbankcharges arenotincluded as expensesin the statement of financial performance.In the circumstances,the accuracy and completeness of the nil balance in respect ofexpensescould notbe confirmed

SubmissionsbytheAccountingOfficer

The Accounting Officer submitted the following;

Reviewof thestatementoffinancialperformancerevealed anilbalanceinrespectofexpenses. However, the staff mortgage and carloans bank statements reflect an amount of Kshs.122,566 in respect of tax on credit and otherbank charges are not included as expenses in the statement of financial performance.In the circumstances,the accuracy and completeness of the nil balancein respectofexpensescouldnotbeconfirmed

Observations by the Committee

The Committee observed that thematter is resolved.

2.0Non-CompliancewithPSASBonpresentation ofFS

TheFundsubmitted thefinancialstatementsforauditduringtheyearunderreview.

However, inconsistencies on presentation of the preamble information revealed that the names of the chairperson,chiefexecutive/scheme administrator andmanagerlegal and corporation secretary asper thestaffmortgage and carloanscheme committeeprofilepresentedwas different from persons who signed the financial statements, chairman's report and staff mortgage and car loan schemes committee reports.Further,Notes to the financial statements were not included. In addition, the statement of changes in net assets presented the balances of the previous year and not the year under review. In the circumstances, the Fund did not comply with the Public Sector Accounting Standards Board (PSASB) guidelines.

Submissions by the Accounting Officer

After the year end, there were changes in the management of the Car Loan and Mortgage Scheme with new team taking over and were responsible for the preparation and signing of the Financial Statements though they were not responsible for the period's operations. Christine Mwaka took over fromMichael Kimani as the Chairman whileEdnaAdala exited and Faith Kaluai took over as Corporation Secretary. The offices being perpetual, the officers took over the offices and responsibility and therefore signed the statements prepared while in office. This fact was disclosed in note14of thenotesto thefinancial statement as events afterbalancesheet date appearingonpages 21 and22.

The Accounting Officer submitted the following

Observationsby the Committee

The Committee observed the matter isresolved.

MIN.NA/AA&GPC-SFAC/2024/083: ADJOURNMENT/DATEOFNEXTMEETING

There being no other business, the meeting was adjourned at 12.1lpm . The next meeting will be held on notice.

SIGNED..

..DATE...

( (2 24

HON.FATUMAZAINABMOHAMMED,MP

(CHAIRPERSON)

SPECIALFUNDSACCOUNTSCOMMITTEE

MINUTES OF THE 39TH SITTING IN THE THIRDSESSION OF SPECIAL FUND ACCOUNTS COMMITTEE HELD ON TUESDAY, 17TH SEPTEMBER 2024, 4TH FLOOR,CONTINENTALBUILDINGAT9.30AM.

PRESENT

1.Hon.FatumaZainabMohammed,MP-Chairperson

9.Hon. Paul Kibichi Biego, MP

10. Hon. Tom Mboya Odege, MP

APOLOGIES

1.Hon. Faith Wairimu Gitau, MP

2. Hon. Dr. Christine Ombaka Oduor, MP 3. Hon. Kahugu Erick Mwangi, MP 4. Hon. Joseph MajimboKalasinga, MP

5.Hon. Joshua Odongo Oron, MP

INATTENDANCE

THEKENYAUNIVERSITIESANDCOLLEGESCENTRALPLACEMENTSERVICE (KUCCPS).

1. Ms. Christine Mwaka -

Director.

2. Mr.MichaelKimani

Head of Finance.

3. Mr.Eric Asande

KUCCPS.

OFFICEOFTHEAUDITORGENERAL

1. Mr. Phillip Ndegwa

Director of Audit.

2. Mr. David Osiemo

Liason Officer

3. Ms. Hilda Odanga

DA.

4. Dr. Cyrus Munyua

TheNational Treasury/ Liason.

NATIONALASSEMBLYSECRETARIAT

1. Mr. Eric Nyambati

Clerk Assistant I

2. Mr.Nimrod Mate

ClerkAssistantIII

3. Ms. Comfort Achieng

ClerkAssistantIII

4. Ms. Judy Kanyoko

Legal Cousel II

5. Ms. Mercy Ondego

Research Officer III

6.Mr.DerrickKathurima

MediaRelations OfficerIII

7. Mr.Peter Mutethia

Audio OfficerIII

MIN.NA/AA&GPC-SFAC/2024/053 PRELIMINARIES

The Chairperson called the meeting to order at 10.40am, 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 Report of KUCCPS Car Loan and Mortgage schemeFundfortheFinancialYears2020/2021to2021/2022.
4.Any Other Business

5. Adjournment/ Date of the next meeting.

MIN.NA/AA&GPC-SFAC/2024/054 Preliminaries

The Director of the agency Ms. Christine Mwaka informed the meeting that the substantive CEO was awayandwould not be able to attend themeeting.Memberstookexceptionwiththefact that no official communication had been sent about her absence. The meeting could therefore NOT proceed because the Director was not the AIE holder and would not swear oath onbehalf of the CEO. The meeting was adjourned.

MIN.NA/AA&GPC-SFAC/2024/055 ADJOURNMENT/DATE OF NEXT MEETING

There being no other business, the meeting was adjourned at 12.10pm. The next meeting will be held on notice.

23110124

SIGNED...

DATE.

HON.FATUMAZAINABMOHAMMED,MP

(CHAIRPERSON)

SPECIALFUNDSACCOUNTSCOMMITTE

MINUTESOFTHE49THSITTINGINTHETHIRDSESSIONOFSPECIALFUND ACCOUNTSCOMMITTEEHELDONTHURSDAY,14THNOVEMBER 2024,IN COMMITTEEROOMON4THFLOOR,CONTINENTALBUILDINGAT9.30AM.

PRESENT

i.Hon. Fatuma Zainab Mohammed, MP - Chairperson

2. Hon. Erastus Kivasu Nzioka, MP 3. Hon. Charles Ngusya Nguna, MP 4. Hon.Catherine Nakhabi Omanyo,MP 5. Hon. Eve Akinyi Obara, MP 6. Hon. Joseph Kimutai Cherorot, MP 7. Hon. Cecilia Asinyen Ngitit, MP

Hon. Dr. Christine Ombaka Oduor, MP

9. Hon. Joseph Majimbo Kalasinga, MP 10. Hon. Paul Kibichi Biego, MP 11. Hon. Tom Mboya Odege, MP

APOLOGIES

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

2. Hon. Faith Wairimu Gitau, MP

3.Hon.Kahugu Erick Mwangi, MP
4.Hon. Joshua Odongo Oron, MP

INATTENDANCE

NATIONALASSEMBLYSECRETARIAT

1.Mr.Erick Nyambati

-Senior ClerkAssistant 1

2. Mr. Nimrod Mate

Clerk Assistant III

3. Mr. Robert Ng'etich

Fiscal Analyst II

4. Ms. Judith Kanyoko

Legal Counsel II

5. Ms.Bevaline Mosoti

Research Officer II

6. Mr.Derrick Kathurima

-MediaRelations Officer.

7. Mr.Peter Mutethia

Audio Officer III.

NATIONALLANDCOMMISSION

1.Mr.Benard cherotich

Dfcp

2. Mr.ben Bett

Dhra

3. CPADanielMwalu

Ddfa

4. Mr.Peter Odhiambo

HRM.

5. Mr.Abdullahi Dowsi

NLC/PAC

6.Mr. Ken Mutai

Accountant.

7. Mr. Elijah Letangule

OFFICEOFTHEAUDITOR-GENERAL

1. Mr. David Osiemo

Liaison Officer.

2.Mr.Wilson Kamula

OAG/ Lands,Housing and Transport.

MIN.NA/AA&GPC-SFAC/2024/087

PRELIMINARIES

The Chairperson called the meeting to order at 10.00am, 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 the Audited Financial Statements of The National Land Commission Mortgage and Car Loan Scheme Fund for the FinancialYears2020/2021and2021/2022.
4.Any Other Business
5.Adjournment Date of the next meeting.

MIN.NA/AA&GPC-SFAC/2024/088. EXAMINATION OF THE AUDITOR GENERAL REPORTSONAUDITEDFINANCIALSTATEMENTS OF THE NATIONAL LAND COMMISSION MORTGAGEANDCARLOANSCHEMEFUNDFOR THEFINANCIALYEARS2020/2021AND2021/2022.

The CEO Ms. Kabale Tache Ann appeared before the committee accompanied by the following officers;

1878.Unreconciled Long-Term Receivables fromExchange Transactions.

Long-term receivables from exchange transactions balance of Kshs.48.993.645 did not agree with loan statements from the bank of Kshs.41, 875,799 resulting to an unexplained variance of Kshs. 7,117,846.

The current amount receivable in the next twelve (12) months was not separated from the longterm receivables from exchange transactions balance of Kshs.48, 993,645.

Management Response.

The Commission has since adopted reducing balance method to eliminate any future variances.

The variances is as a result of payroll ledger using straight-line method of amortization and the bank using reducing balance method of amortization on the beneficiary account.

DDFCP.

Committee Observation.

Variance of Kshs.7, 117,846was not supported with reconciliation or entries to correct the anomaly. The bank statement balance is less than the payroll ledger balance disclosed in the 2021/2022financialstatements.

Amortization method adopted is yet to be confirmed in subsequent financial statements presented by theFund.

The Financial statements did notdisclose the12months ageing analysis.

The query is therefore not resolved.

TheFundwas asked tocorrect the anomalywithin sevendays.

1879. Failure by the Steering Committee to Hold Requisite Meetings.

Perusal of the Steering Committee meetings minutes revealed that, during the year under review, the Committee held three (3) meetings contrary to Regulation 6(5) of the National Land Commission Housing SchemeFund Regulations, 2016.

ManagementResponse.

The management agreed that it was in breach of the law.Going forward the management said that mechanisms havebeen put in place to ensure compliance.

1881. Long Term Receivables from Exchange Transactions.

Long-term receivables from exchange transactions balance of Kshs.2, 792,520 did not agree with loan statements from the bank of Kshs.2, 419,673 resulting to an unexplained variance of Kshs. 372,847.

This is contrary to regulation 101 (1) and (4) of the Public Finance Management (National Government) Regulations, 2015.

ManagementResponse.

The variances is as a result of payroll ledger using straight-line method of amortization and the bank using reducing balance method of amortization on thebeneficiary account.

The Commission has since adopted reducing balance method to eliminate any futurevariances.

Committee Observation.

VarianceofKshs.372,847wasnot supportedwithreconciliation or entriestocorrect the anomaly.Thebankstatementbalanceisless than thepayrollledgerbalancedisclosedinthe 2021/2022financialstatements.

Further,amortization method adopted is yet tobe confirmed in subsequentfinancial statements presented by the Fund.

Theissueisthereforeunresolved.

MIN.NA/AA&GPC-SFAC/2024/089:

ADJOURNMENT/DATEOFNEXTMEETING

There being no other business, the meeting was adjourned at 12.20 p.m. The next meeting will be heldonnotice.

SIGNED..

.DATE..

HON.FATUMAZAINABMOHAMMED,MP

(CHAIRPERSON)

SPECIALFUNDSACCOUNTSCOMMITTEE

Machine-extracted text (docling) from a scanned document — may contain recognition errors. Original PDF — parliament.go.ke.

{# 360° link graph — topics this report is tagged with, and the members / legislation its text mentions. The mention data comes from legislation.EntityMention (extracted from the OCR text). #}

Topics

Committee Reports

Members mentioned 9

← Back to Special Funds Account