Auditor General's report reveals financial mismanagement in Butula, Nyamira, Kijabe, Chania, Kolanya schools

Auditor General Nancy Gathungu has uncovered extensive financial misconduct in secondary schools, which may lead to school heads and their boards being summoned before Parliament for the first time to explain their financial practices.

  In a groundbreaking audit designed to ensure the prudent use of public funds across government entities, Gathungu's findings indicate significant financial irregularities, such as unauthorized fee increases and dubious expenditures, among various national schools, some of which handle budgets similar to those of state corporations. Key institutions, including Butula Boys, PCEA Kikuyu High, Kijabe Girls High School, Nyamira Girls, and SA Kolanya Boys, have been identified for charging illegal fees to students, thereby directly contravening Ministry of Education regulations. In addition to the unauthorized fees, Gathungu expressed concerns regarding the management of school resources, particularly noting irregular large cash withdrawals by school principals. Furthermore, the Auditor criticized the allocation of taxpayer funds to support the Kenya Secondary Schools Heads Association (KESSHA), an organization that lacks official government recognition for funding. The audit also revealed problems concerning remedial pay for teachers, where additional payments made by parents for extra lessons are not subjected to the required Pay As You Earn (PAYE) tax. This audit, being the first thorough examination of secondary schools in Kenya, uncovers widespread breaches of the Ministry of Education's fee regulations. The Ministry stipulates that schools wishing to increase fees must secure formal approval from the Cabinet Secretary. However, numerous schools have disregarded this requirement, imposing illegal additional charges on parents, which has led to significant revenue for the schools.

For instance, Butula Boys High School imposed an additional charge of Sh13,554 per student, resulting in a total of Sh23.4 million from its 1,723 students. The audit indicated that the school had clearly violated its official annual fee limit of Sh45,000. Likewise, PCEA Kikuyu High School increased fees by Sh5,535 per student, contrary to the ministry’s cap of Sh35,000. Without any authorization, Kijabe Girls High School levied an extra Sh4,500 per student. "In light of these circumstances, management was in violation of the Ministry of Education guidelines," Gathungu remarked in her report, emphasizing that no documentation was provided to substantiate the fee hikes. The audit further uncovered concerning practices regarding school fee management, expenditures, and payroll procedures. For example, Nyamira Girls could not account for Sh13.4 million in withdrawals due to the absence of supporting petty cash records. Several other institutions, including Kinyui Boys, were discovered to have collected fees in cash but neglected to deposit the receipts, which contravenes the Public Finance Management (PFM) Act. Regarding payroll issues, the audit pointed out that some schools failed to withhold taxes on payments made for remedial lessons, which exposes them to possible penalties from the Kenya Revenue Authority (KRA). Chania Girls, for instance, did not impose taxes on Sh5.2 million in payments made to teachers for remedial classes, while Kinyui Boys lacked an approved staff establishment and salary framework, raising concerns about human resource controls. "Cash revenue was not deposited in banks; instead, it was spent at the source, which could lead to potential misuse," Gathungu stated.