The latest audit findings on the County Government of Kwale present a mixed picture—one where financial statements may appear compliant on the surface, but underlying revenue processes reveal notable weaknesses in documentation, controls, and statutory compliance.
While the audit does not raise material issues in some governance areas, a closer, audit-focused analysis highlights recurring concerns around unsupported balances, weak record-keeping, and incomplete revenue systems, all of which affect the reliability of reported figures.
Unsupported Cash in Hand Raises Accuracy Concerns
The audit flagged a cash-in-hand balance of KSh341,779 that was not supported by a board of survey report, a standard requirement used to verify physical cash balances.
In the absence of this verification:
- The reported balance cannot be independently confirmed
- There is no assurance that the amount reflects actual cash held
- The completeness and accuracy of the figure remain uncertain
From an audit standpoint, even relatively small unsupported balances signal weaknesses in basic financial controls. Cash, by its nature, is highly sensitive and requires strict verification procedures to ensure integrity.
Inside Mombasa County’s Audit Report of Missing Billions, Legal Breaches, and a System Under Strain
Mpesa Revenue Streams Without Cashbooks
A more structural issue emerges in the handling of Mpesa paybill collections.
The audit indicates that:
- Five M-Pesa paybills operated by hospitals
- One additional paybill for other revenue streams
did not have dedicated cashbooks. Instead, transactions were recorded within KCB bank account cashbooks.
This approach creates a gap in financial tracking:
- Mpesa transactions are not separately documented
- There is limited traceability between collections and banked amounts
- Reconciliation becomes more complex and less reliable
As a result, even though the reported bank balance in question is small, the underlying issue is systemic. Without proper cashbooks, the integrity of mobile money collections—an increasingly dominant revenue channel—cannot be fully assured.
Revenue Shortfall Without Formal Explanation
Kwale County also recorded a 13% revenue shortfall, with actual collections of KSh393.29 million against a target of KSh454.27 million.
As with other counties, the issue is not just the shortfall itself, but the absence of a formal report explaining the gap.
Under the Public Finance Management Act regulations, the Receiver of Revenue is required to document and communicate challenges affecting revenue collection to the County Executive Committee Member for Finance.
No such report was provided.
This limits:
- Institutional understanding of revenue weaknesses
- The ability to implement corrective measures
- Accountability in revenue performance management
Liquor Licensing Revenue Without Evidence of Vetting
The audit also highlights KSh4,277,500 collected from liquor licenses, included within broader administrative fees totaling KSh6.75 million.
However, auditors noted that:
- No evidence was provided to confirm that applicants were vetted
- No documentation showed inspection of premises
- Compliance with public health and planning regulations was not demonstrated
This creates uncertainty around the basis for issuing licenses and collecting fees.
In practical terms, it means:
- Licensing may not be fully aligned with regulatory standards
- The process lacks documented verification
- The legitimacy of some issued licenses cannot be confirmed through audit evidence
Parking Revenue Without Supporting Infrastructure Records
Another key finding relates to KSh17,658,087 collected as parking fees.
The audit found that:
- No register of designated parking slots was provided
- No evidence of marked or secured parking infrastructure was submitted
Without these records:
- There is no clear linkage between revenue collected and actual parking facilities
- The basis for calculating or verifying parking income is unclear
- Monitoring of revenue-generating locations becomes difficult
This weakens the reliability of reported parking revenue and highlights gaps in revenue system documentation.
Broader Budget Performance Challenges
Beyond specific revenue streams, the county also faced broader financial performance issues.
The audit shows:
- KSh1.66 billion underfunding (14% below budget)
- KSh2.32 billion under-expenditure (19% below budget)
This reflects a gap between planning and execution:
- Expected funds were not fully realized
- Approved budgets were not fully utilized
Such imbalances can delay or scale down planned development activities, ultimately affecting service delivery to residents.
Internal Controls: Structurally Sound but Operationally Limited
The audit notes that no material issues were identified in internal controls, risk management, and governance frameworks.
However, when viewed alongside the findings:
- Unsupported balances
- Missing documentation
- Weak revenue tracking systems
it becomes evident that while structures may exist, operational application is inconsistent.
This suggests that:
- Policies and procedures are in place
- But adherence and enforcement require strengthening
A Pattern of Weak Revenue Systems
Taken together, the audit findings point to a broader theme—gaps in revenue system management.
These include:
- Incomplete documentation for key revenue streams
- Weak integration of digital payment systems
- Limited verification of regulatory compliance
- Inadequate reporting on performance challenges
Such gaps affect the reliability of financial data and limit the county’s ability to fully account for its revenue.
Implications for Service Delivery
Revenue is the foundation of county operations. When revenue systems are weak:
- Planning becomes less accurate
- Resource allocation is affected
- Implementation of projects may slow down
The identified shortfalls and inefficiencies suggest that some planned activities may not have been fully realized, potentially impacting services provided to the public.
Conclusion: Strengthening Revenue Accountability
The audit findings on the County Government of Kwale highlight the need for improved financial discipline, particularly in revenue management.
Key areas for improvement include:
- Strengthening documentation and verification processes
- Establishing proper cashbooks for all revenue streams, including Mpesa
- Enhancing compliance with statutory reporting requirements
- Improving linkage between revenue sources and supporting infrastructure
While the county demonstrates elements of structured governance, the effectiveness of these systems depends on consistent implementation.
In public finance, reliability is built on traceability, documentation, and compliance. The audit suggests that reinforcing these pillars will be essential in improving transparency, accountability, and overall financial performance going forward.
