Areas of ReportingCounty by County

How To Intepret Auditor General Reports

It is easy to accuse somebody of “embezzlement of funds” or “misappropriation” when reporting about the audit reports produced by the Auditor General in accordance with the stipulated timeline. But in many cases it is simply not correct stick to label like that on a process. And it is risky for a journalist because it may constitute a false accusation and trigger a defamation lawsuit. Therefore the technical terms the Auditor General uses in his reports should be understood precisely.

Definition of Terms
Unsupported Expenditure

When you come across this term in the auditor general reports, it means that a government ministry or a county department reported to the auditor general that an expenditure took place, but the entity did not provide enough documentation to show that the expenditure was authorized, or that goods and services were received for the expenditure.

For example, a county department may report about a retreat for county officials that took place at a certain hotel for a specified time period, but fails to provide receipts and travel documents to support the expenditure.

Journalists and media houses often substitute the term ‘unsupported expenditure’ with the term ‘unaccounted for’. So, you will see a headline like Auditor General: Sh7b public funds unaccounted for (ext. link) . The correct accounting term is ‘unsupported expenditure’, but the term ‘unnacounted for’ is used exclusively by media houses. But they all refer to the same observation.

Another example of unsupported expenditure is the sh215 billion from Eurobond proceeds (ext. link) that the Auditor General reported as unaccounted for.

Excess Expenditure

Also known as excess vote, this is where the government ministry or county department overspends it budget without authorization from parliament or the county assembly. Each ministry and county department has a ‘vote’ of spending, that is, how much they can spend as authorized by parliament or the county assembly. When they exceed this threshold, then the whole spending translates to excess expenditure or excess vote.

Let’s say the county department of health was allocated sh30 billion but it ends up spending sh35 billion within a particular financial year. If the extra sh5 billion was spent without the approval or authorization of the county assembly, then it all becomes an excess expenditure or excess vote.

Pending Bills

In this case, a ministry or a county department commits to pay for goods and services, and ends up receiving those goods and services, but does not settle the bills during that particular financial year. It carries the bills over to the next financial year as pending bills.


Imprests are cash advances given to government or county officials, to cover issues like travel and meetings, with commitment to return or refund the money to ensure it is properly accounted for with proper records. Often, the money is not refunded and those who fail to account for them end up receiving new imprests which is against government rules and policies.

Material vs Fundamental Finding

A material finding would involve failure to follow the laid down procedures, or an indication that there is a potential loss of funds, which is less significant (hence there may be less potential loss). A fundamental finding would indicate a systematic failure rather than an occassional lapse, or a significant loss of funds.

Audit Statements

These are the opinions or statements the Auditor General gives in the financial statements or audit reports.

Qualified Opinion

The auditor general gives a qualified opinion or statement when they find some problems or issues with the financial statements, but the problems are not pervasive, that is, widespread or persistent. The auditor general received all the information required for the audit, but the audit reveals several gaps, which often arise from failure to stick to procedures and budget limits.

Much of the budget spent by county departments (and also the national government) receives a qualified opinion. It is very worrisome when such a huge amount of money is given a qualified opinion, because it shows failure to follow laid-down procedure or the law (such as procurement laws).

Unqualified Opinion

Also known as unqualified certificate. This shows that there are no problems with the documents reviewed by the auditor general and the county department managed and spent its funds properly. Unqualified opinion basically shows that all the money was accounted for with the proper documentation provided with proof of received goods and services.

An example showing unqualified opinion is the 1.2 per cent of Kenya’s Sh1tr budget accounted for (ext. link) in the financial year 2013/14. The auditor general found no problems with the documentation provided for the 1.2 per cent expenditure.

Adverse Opinion

The auditor general gives an adverse opinion when they review the documents provided by the county department and they find problems that are pervasive and which require a great deal of changes to rectify. The documents (financial statements) provided are usually misleading or incomplete.

An example of an adverse opinion is the Sh 390,266,678,529 reported here by the Standard Newspaper (ext. link).


The auditor general issues a disclaimer when they are unable to fully review the county department’s documentation because there is a substantial amount of information that has not been made available. In such a case, the auditor general is unable to determine whether the situation is qualified or adverse because the paperwork is not adequate.

The auditor general is unable to express an opinion due to lack of sufficient and accurate information and explanations.

The Auditor was further unable to express his opinion over financial statements of Sh28 billion due to lack of sufficient and accurate information and explanations. (Source: Standard Newspaper)

Example for these terms in the summary of the audit statements from the auditor general report for the national government in FY 2012/13:
Qualified, unqualified, adverse and disclaimer opinion. (source: IBP Kenya)
Qualified, unqualified, and adverse opinion. (source: IBP Kenya)
How differentiate between money is lost, stolen, or unaccounted for from the auditor general reports

The Kenyan mainstream media likes to post sensational tales about how the national or the county governments officials ‘loot’ and ‘steal’ money. The media comes up with these tales by looking at the reports by the Auditor General and the Controller of Budget.

It is not easy to find out if money was looted or stolen from simply reading the Auditor General Reports. The purpose of the audit is primarily to find out if public funds were spent well in line with the stipulated laws. Loss of funds (unaccounted for) does not necessarily mean theft.

It is easy to find out if money was lost though. Two main areas to look at are the unsupported expenditure and non-surrendered imprests since they are the most likely to receive a qualified opinion.

Instances that lead to loss of funds often involve issues such as poor record keeping, lack of fiscal discipline and failure to follow stipulated laws on budgets (e.g. breaking procurement laws). There may be theft therein, but it would require more investigation beyond the audit report.

In short, the reports by the auditor general report loss of funds but not necessarily theft.


Show More
Back to top button