Companies owed money by the government are set to go through another layer of scrutiny as the Treasury seeks the Auditor-General’s oversight on pending bills, which rose to Sh706 billion by December 2024.
Treasury wants entities in national and county governments to prepare records of pending bills they owed suppliers and contractors by end of June 2024 to serve as part of opening balances for financial liabilities, as the government transitions from cash to accrual accounting.
In a letter to accounting officers last week, Treasury Principal Secretary Chris Kiptoo asked them to obtain supplier statements and reconcile the information with government records to ensure completeness of pending bills.
“These bills should be verified and supported adequately with all the relevant documentation. These bills will form the opening balances as of July 1, 2024 and will be subject to audit by the Office of the Auditor General,” Mr Kiptoo said.
The Auditor-General is coming in just after a committee formed to verify the pending bills issued a report showing that out of Sh664 billion claims filed for its verification, only Sh206 billion had been cleared for payment by March 2025.
The committee, whose work continues, raised questions over Sh268 billion claims due to lack of sufficient paper work. The move to subject pending bills to scrutiny by the Auditor-General also comes at a time when the bills hit Sh706 billion in December 2024, with counties accounting for Sh182 billion, and the national government Sh524 billion.
The Auditor-General will be scrutinising outstanding pending bills by the entities and those that have already been paid following verification by a committee formed in 2023, Treasury said on Tuesday.
“Whenever we close a financial year and open a new one, we do so with audited financial statements and balances of the previous financial year. Therefore, for FY 2024/2025 the opening balances will be audited financial assets and financial liabilities (including pending bills and third-party deposits) for FY 2023/2024,” said Treasury’s Director of Accounting & Exchequer Services Jona Wala.
Mr Wala termed the expected scrutiny by the Auditor-General as a re-audit of what is owed to companies and what the pending bills verification committee approves for payment.
“Pending bills verification ... leads to recommendations to the Accounting Officer to pay a pending bill. Once paid the transaction will be subject to audit like all other transactions,” he said.
The Cabinet approved establishment of the pending bills verification committee in June 2023 to audit liabilities owed by national and county governments between 2005 and 2022.
The pending bills have risen from Sh640.9 billion in 2022 to Sh706 billion by end of 2024, a 10 percent increase despite the existence of the committee.
The committee is led by former Auditor-General Edward Ouko and consists of State departments for roads, public works and Housing which have the highest proportion of pending bills in government.
A preliminary report by the committee last month showed that out of Sh664 billion pending bills claims it received for verification, Sh206 billion was cleared for payment while it raised questions over Sh268 billion claims due to lack of sufficient documentation.
“The committee has received a total of Sh664 billion as pending bills from individuals, corporate bodies and companies. The committee is yet to complete its work but has so far certified Sh206 billion as eligible for payment,” Treasury Cabinet Secretary (CS) John Mbadi told Parliament.
He said the committee had only verified 48 percent of the pending bills at the time.
Companies owed by the government had by December 2024 penalized different entities Sh24.8 billion for delays in settlement of their dues, with the six months to December seeing an increase of Sh3.3 billion in the penalties.
Among state agencies that have been slapped with penalties is the Kenya Rural Roads Authority-Kerra (Sh12 billion), Kenya National Highways Authority- Kenha (Sh7 billion), Kenya Medical Research Institute (Sh1.45 billion), Pyrethrum Processing Company of Kenya (Sh777 million) and Chemelil Sugar Company (Sh134.29 million).
