18/12/2025
AUDITOR-GENERAL FLAGS MAJOR IRREGULARITIES IN KITUI COUNTY ASSEMBLY EMPLOYEES’ CAR & MORTGAGE FUND
A report by the Auditor-General on the Kitui County Assembly Service Board Employees’ Car and Mortgage Fund Schemes for the year ended 30th June 2024 has raised serious concerns over loan management, compliance with the law, and protection of public funds.
Doubtful receivables
The financial statements reflect long-term receivables totalling Kshs.182.9 million. However, audit review revealed a mortgage loan of Kshs.5,016,843 issued in January 2019 to an employee whose services were terminated in March 2022. The officer had defaulted on repayments from November 2021, with accumulated arrears of Kshs.4,928,932 as at June 2022.
Despite this, management did not demonstrate any recovery measures, nor did it make provisions for doubtful debts. The Auditor-General could not confirm the recoverability of the Kshs.4.9 million.
Loans not fully secured
During the year under review, four mortgage loans amounting to Kshs.10,133,313 were disbursed. Audit findings show that the value of securities charged was lower than the loan amounts approved, contrary to the Fund’s Regulations. As a result, the effectiveness of recovery measures in case of default could not be confirmed.
Failure to pay rates, rents and insurance
Audit review further revealed that there was no proof that borrowers had paid land rates, rents, or insurance for the mortgaged properties. This is a direct violation of the Fund’s Regulations, which require borrowers to meet these obligations and submit evidence to the Board. Management was found to be in breach of the law.
Disbursement without interim certificates
The report also highlights that Kshs.8.9 million in respect of three loans was disbursed without interim certificates to confirm progress of construction. This goes against regulations requiring subsequent disbursements to be based on certified stages of development by a qualified architect. Once again, management was found to be in breach of the law.
The Auditor-General’s report paints a worrying picture of weak controls, poor compliance, and exposure of public funds to potential loss within the Kitui County Assembly Service Board Employees’ Car and Mortgage Fund Schemes.
I will leave it at that.
This is Kamba Insights