The Senate Committee on Devolution and Intergovernmental Relations has raised concern over counties operating unauthorized commercial bank accounts in violation of the Public Finance Management (PFM) Act.
The committee, chaired by Wajir Senator Mohamed Abbas, held a joint meeting at a Mombasa hotel with Auditor General Dr. Nancy Gathungu, Controller of Budget Dr. Margaret Nyakang’o, and the Council of Governors (CoG), represented by Kakamega Governor Fernandes Barasa.
Other committee members present included Senators Karung’o Thang’wa (Kiambu), Peris Tobiko (Kajiado), and Prof. Margaret Kamar (nominated).
Senator Thang’wa said the meeting aimed to address growing concerns over counties flouting Section 82(1)(b) of the PFM Act, which stipulates that all county bank accounts must be approved by the National Treasury Cabinet Secretary and preferably operated through the Central Bank of Kenya.
“It has come to the attention of the Senate, the Auditor General, and the Controller of Budget that some counties are managing commercial bank accounts without proper authorization,” said Thang’wa.
“We recognize that some of these accounts may be necessary for specific entities, but they still require formal approval from the National Treasury,” he added.
Thang’wa noted that the committee had instructed the Auditor General and the Controller of Budget to issue a circular to all county governments requesting full disclosure of all commercial bank accounts — including their numbers, purposes, and balances.
He warned that some of these accounts were being used to divert public funds to unbudgeted projects, while others remained undocumented, creating loopholes for financial mismanagement.
The committee cited discrepancies in reported data across oversight agencies, highlighting the urgent need for harmonized reporting.
“In Kiambu County, for instance, the CoB lists 74 accounts, the Office of the Auditor General (OAG) reports 276, while the Senate has none on record. In Baringo County, the figures range from 233 to 304 depending on the source. We must ensure the records tally,” he said.
Senator Tobiko emphasized the need for transparency and compliance. “The law must be followed to the letter. Counties must notify and seek approval from the National Treasury CS. We’ve just been informed by the Auditor General of an undeclared account holding Sh1.2 billion. These are the things that alarm citizens,” she said.
Governor Barasa, who chairs the CoG’s Finance, Planning, and Economic Affairs Committee, acknowledged the concerns but clarified that the law allows counties to operate commercial accounts under specific conditions.
“Section 82(1)(b) must be read alongside Regulation 76, which permits special purpose accounts at the Central Bank. The National Treasury can, however, grant exceptions for commercial bank use. What matters is adherence to the proper approval process,” said Barasa.
He added that the discussion was constructive, with all stakeholders agreeing on the need to strengthen internal controls, enhance disclosure, and empower audit committees.
“As governors, we will not defend any illegality. We are committed to public accountability and transparency,” Barasa affirmed.
The Devolution Committee is expected to meet the National Treasury Cabinet Secretary, John Mbadi, for a full briefing on counties operating unauthorized accounts before issuing formal recommendations.
By Sitati Reagan
