Hansard - CPIC - 28.2.2023 - Kisumu CE

February 28, 2023 HANSARD (CPIC) –KISUMU COUNTY EXECUTIVE 1
Mr. Philip Adundo - Chief Officer

Perasia Omino - City Finance Officer
Mr. Michael Wanga - City Manager
OFFICE OF THE AUDITOR-GENERAL (OAG)
Mr. Mark Gachanja - Parliamentary Legislative Relations

Officer
SECRETARIAT
Mr. Yusuf Shimoy - Clerk Assistant

Mr. David Angwenyi - Clerk Assistant
Mr. Eric Njogu - Clerk Assistant
Mr. Andrew Nyairo - Legal Counsel
Mr. Joseph Tiyan - Research Officer
Ms. Winfred Atieno - Audio Assistant
Ms. Raisa Mwithi - Research Officer
Mr. Matano Kataa - Research Officer
Mr. Josphat Ng’eno - Media Relations Officer
CPA Kennedy Owuoth - Fiscal Analyst
Mr. John Pere - Serjeant-at-arms
(The Committee commenced at 11.15 a.m.)
PRAYER
(The Chairperson and Members of the Committee introduced themselves)
(Delegations present and the Secretariat introduced themselves)
The Chairperson (Sen. Osotsi): Hon. Members, we have an agenda in the files. I would
like one Member to propose and another one to second.
Sen. Kisang: I propose.
Sen. Olekina: I second.
The Chairperson (Sen. Osotsi): Before we start, let me make very brief remarks. This
Committee is called the Senate County Public Investments and Special Funds Committee.
Professor, I am sure that when you were a Senator, there was one committee called the
County Public Accounts and Investment Committee (CPAIC) which had the Public
Accounts and the Public Investment. Now they split (CPAIC) to create CPAC and CPIC
to basically look at issues of special funds and investments in the counties. The Senate
discovered that we had a huge backlog of those reports which had not been handled by
the Senate.
Therefore, we are fairly a new Committee whose role is to look at audit issues around
investments in counties, water companies and special funds. It is for this reason that we
invited you to come. We have so far dealt with six counties and we are still going to deal
with all the other counties. Today was the turn of Kisumu County to appear before us. As
a matter of formality, we will now go into the next step.
Sorry, I am reminded that we have an auditor here from the Office of the Auditor-General
(OAG) who had not introduced himself.
The Parliamentary Legislative Relations Officer, OAG (Mr. Gachanja): My name is

Mark Gachanga from the Office of the Auditor-General.
The Chairperson (Sen. Osotsi): Any other person who has not gone on record? No one
from the Ethics and Anti-Corruption Commission?
Now, Your Excellency, the Governor and Hon. Members, we will go to the oathing. I
will ask our clerk to guide us in that process. Governor, you will lead us in that process
on behalf of your team.
The Governor of Kisumu County (Hon. (Prof.) Nyong’o): Mr. Chairman, Sir, I
understand there is an oath I have to take before we begin. Just for your information, I
used to chair such a committee when I was a Member of Parliament in 1994-1995, 1995-
1996. Maybe some of you were not yet born, but that is okay.
(Laughter)
(The Governor of Kisumu County

(Hon. (Prof.) Anyang’-Nyong’o)
took the Oath)
The Chairperson (Sen. Osotsi): Very well. Your Excellency, I remember those days
when you were in the picture.
I am told substantive auditors are not here with us today. The Liaison Auditor, what is the
position?
The Parliamentary Legislative Relations Officer, OAG (Mr. Gachanja): Mr.

Chairman, Sir, I wish to report to the Committee that there was a logistical challenge but
I have been briefed adequately to represent them during the proceedings.
The Chairperson (Sen. Osotsi): Will you be able to respond to all the issues that
Members are going to raise?
The Parliamentary Legislative Relations Officer, OAG (Mr. Gachanja): Yes, Mr.
Chairman, Sir.
The Chairperson (Sen. Osotsi): Okay. Hon. Members, we had a number of issues. We
will start with Kisumu Water and Sanitation Company. We will look at the financial
statements for 2018/2019, 2019/2020, 2020/2021 Financial Years. As usual, we shall
start with the latest year, which is 2020/2021.
The Auditor who is here today, guide us starting with 2020/2021 Financial Year.
Sen. Olekina: Mr. Chairman, Sir, with your directions, if there are prior year matters,
please take note of them and then notify the Committee that these matters have been
recurring from the last two financial years to help us be able to move fast.
The Chairperson (Sen. Osotsi): Team from Kisumu County, you can guide us on the
document, where necessary. Clerk, please guide us on the tabling of the responses.
Sen. Kisang: Mr. Chairman, Sir, are there copies for the Members to peruse? I hope they
have enough copies.
The Chairperson (Sen. Osotsi): You can give the copies to the Members after tabling.
Sorry, there is a small hitch. Clerk, please tell us about the responses because it seems we
do not have enough copies for the Members.
The Clerk Assistant (Mr. Shimoy): Mr. Chairman, Sir, we received the soft copy seven
days ago within timelines. They were also to send one copy to us physically. There are
some that we received yesterday around midday. As per the letter we sent to the county,
they were supposed to avail 15 hard copies on the day of appearance, which is today. We
expected them to come with 15 copies here.
The Chairperson (Sen. Osotsi): Is it possible to produce the soft copies you are talking
about? I am resisting having to postpone this meeting. You remember we did that last
time because the governor was handling a very important official matter. If the
documents were sent in soft copy, then the clerk can organize to make copies for
Members.
Sen. Olekina, please proceed.
Sen. Olekina: We have to be consistent with what we call from each and every county.
What we need to find out first from the Governor is that how come your team has not
tabled 15 copies, as per the letter unless we are making an assumption?
The Governor of Kisumu County (Hon. (Prof.) Anyang’-Nyong’o): Mr. Chairman, Sir,
I understand that 15 hard copies were sent last week.
Sen. Olekina: Mr. Chairman, Sir, allow me to read the letter. This letter was dated 3 rd
November, 2022. If you look at No.4, it says the Committee requested that on the
scheduled day of appearance, you avail to the Committee15 hard copies of the
management response, together with the supporting documents for each financial year
under review.
Now, if we do not get those copies, then we will not be able to give justice to the matters
under consideration from the Auditor-General. Do we have those 15 copies? Can we get
the 15 copies of the responses? I believe it is not the Secretariat to produce them, it is the
governor to produce them.
The Chairperson (Sen. Osotsi): Mr. Shimoy, please proceed.
The Clerk Assistant (Mr. Shimoy): Mr. Chairman, Sir, there is a box we received
yesterday through the courier services. In the morning, we tried to make some review,
but we could not because we do not know which financial year it belongs to. It is mixed
up.
The Governor of Kisumu County (Hon. (Prof.) Anyang’-Nyong’o): Where is the box?
Sen. Olekina: Bring it here then let them sort it out for us.
The Chairperson (Sen. Osotsi): Are you referring to this document? Do we have
enough copies of this document?
The Clerk Assistant (Mr. Shimoy): Due to the late submission yesterday, we could not
go through all of them.
The Chairperson (Sen. Osotsi): How many copies of this is available?
Sen. Olekina: Can you bring them in?
The Clerk Assistant (Mr. Shimoy): Yes, we can. Give us five minutes.
The Chairperson (Sen. Osotsi): I have a copy here and I believe Sen. Tom Odhiambo
Ojienda has a copy as well. There is another copy here. So, if the copies are enough, give
them to the Members.
The Vice-Chairperson (Sen. (Prof.) Ojienda, SC): I have the other fund copies, the other
responses, COVID-19 and the other funds. I do not have the specific one on the water
companies.
The Chairperson (Sen. Osotsi): We are trying to make arrangements for the box to be
brought here so that the documents are officially tabled then we can start. I am sorry for
that hitch. Five minutes.
Sen. Thang’wa, please proceed.
Sen. Thang’wa: Mr. Chairman, Sir, as we wait for the documents to be brought, I
believe it is good for you to give clarity that in future, because you are going to have
these engagements, the county should not send them through courier. I believe they have
huge cars to carry. Just come with them. We do not want to be accused of tampering
with their documents. Every time they come, they should do so with their documents.
Even in an election, you have to wait for the announcement to be made. You do not send
the results to people to open the boxes for themselves.
The Chairperson (Sen. Osotsi): Okay. Sen. Kisang’, please proceed.
Sen. Kisang’: Mr. Chairman, Sir, I concur with what the Senator for Kiambu County has
said. So that we have a standard procedure where on the day of appearance, they come
with all the documents, they table and we verify them as the documents that they were
supposed to have given us by the letter.
Secondly, they can still send advance copies for the clerks to go through so that they can
analyze, but for the real documents, they table them on the day of appearance. This is
because the governor has taken an oath. When he is taking an oath, he is supposed to
have the documents to be tabled.
The Chairperson (Sen. Osotsi): Very well. I have heard you. The clerk has just
confirmed to me that soft copies were sent. Kisumu County is advanced. Let us wait for
a few minutes. Once the documents arrive, we will be able to continue.
You can settle down so that we start.
Your Excellency the Governor, you need now to table the documents officially then the
documents should be distributed to each and every Member who is here.
The Governor of Kisumu County (Hon. Nyong’o): Let me ask my finance minister to
table the documents.
The CECM Finance, Economic Planning and ICT (Mr. Okong’o): Mr. Chairman, Sir,
in the first place, we have the response to the Auditor-General's report for Kisumu Water
and Sanitation Company Limited (KIWASCO). It is a document entitled response to the
Auditor-General's Report for the year ended 30th June, 2019, 2020 and 2021. It is the one
that was missing.
We also have the summary. Actually, I should have started with this summary of
responses. It is a small folder addressed to the Clerk dated 21st February saying reference
information to Public Investments and Special Funds Committee. This is sort of our
schedule of responses. It points to which document is addressing which response.
On the question of the Car and Mortgage Scheme, we have the responses to the Auditor-
General's report on the financial statement of Kisumu County Car Loan and Mortgage
Scheme Fund for the year ended 30th June, 2019.
Then we have responses to the Auditor-General’s report on the financial statements of the
Kisumu Car and Mortgage Scheme Fund for the year ended 30th June, 2020. Responses
to the Auditor-General’s report on the financial statement of Kisumu County Car Loan
and Mortgage Scheme Fund for the financial year ended 30th June, 2021.
Also, responses to the report of the Auditor-General on the Kisumu County Education
Fund for the year ended 30th June, 2021. Responses to the Auditor-General’s report on
Kisumu County COVID-19 Emergency Response Fund for 15 months. For the period
ended 30th June, 2021.
Finally, we have a document titled, The City of Kisumu addressed to the Clerk of the
Senate dated 16th February, 2023 which addresses the issues in the response to the
Auditor-General’s report on the financial statement of the Kisumu Urban Project for the
year ended 30th June, 2020
The Chairperson (Sen. Osotsi): Are you done?
The CECM, Finance and Economic Planning Kisumu County (Mr. Okong’o): Yes,
Mr. Chairman, Sir. Clerk, ensure the documents are distributed to the Members. Start
with the response from the water companies. As you are doing this, we have another
Member who has joined. Please introduce yourself.
(Sen. Hamida Kibwana introduced herself)
The Chairperson (Sen. Osotsi): I hope every Member has a copy of the response on
Kisumu Water and Sewerage Company. If you do not have one, please raise your hand so
that the clerk can give you. I will invite the Auditor-General to take us through the audit
queries for 2020/2021.
As requested by Sen. Olekina, if any other issues appeared in the previous financial year,
we can handle them as we go on. Make the presentation of the audit query, and the
governor will then respond. Governor, if you need your staff to give an input feel free to
do that.
The Parliamentary Legislative Relations Officer, OAG (Mr. Gachanja): Thank you,
Mr. Chairman, Sir. I will be reading from the report of the Auditor-General on Kisumu
Water and Sanitation Company for the year ended 30th June, 2021. With your permission,
I will go straight to the financial statement report. The Auditor-General issued a qualified
opinion. I will go based on a qualified opinion.
Audit Query No. 1.0 – Unsupported Property

Plant and Equipment
The Parliamentary Legislative Relations Officer (OAG) (Mr. Gachanja): The

Statement of financial position reflects a property plant and equipment balance of
Kshs266,509,028 which as disclosed in note 10 to the financial statement includes
additions during the year totaling Kshs26,849,851.
However, the Asset Register maintained by the management was not updated with an
asset identification number, location, cost, depreciation rate, accumulated depreciation,
and depreciation charge for the year, and book value of the asset among others.
In this circumstance, the accuracy and completeness of the property, plant, and
equipment balance of Kshs266,509,028 could not be confirmed.
The Chairperson (Sen. Osotsi): Your Excellency the governor, proceed.
I seek your indulgence to ask Mr. Tom Odongo the boss of Kisumu Water and Sewerage
Company to respond on behalf of the county.
The Managing Director, KIWASCO (Mr. Odongo): Mr. Chairman, Sir, we provided an
updated and detailed asset register as required by the auditors. We have a copy attached
as Annex 6 the auditor can confirm that they received this document. However, when the
report came, it was not taken into consideration. However, we do have an Asset Register.
The Chairperson (Sen. Osotsi): Auditor, can you confirm that the details are included in
Annex Six? We can confirm that the Asset Register is as expected. We shall keep this in
mind as we audit the year under review. Explain to Members how the information came
later. In your report, you indicated that the information was not available. What could
have happened in between?

Chairman, Sir, in compliance with the Public Audit Act, the information had not been
provided by the time of publishing the final report. Subsequently, after the report had
been tabled, they provided the information in their response. It is expected that the
auditee will respond within 14 days. Failure to which, the auditor proceeds to write the
final report. This was the position at the time.
The Chairperson (Sen. Osotsi): Sen. Olekina, proceed.
Sen. Olekina: Mr. Chairman, Sir, I am concerned because I do not know what the
auditor is reading. Tell us exactly where you are reading from. I have never seen such a
shoddy job. Governor, you have been in this Committee and chaired it. I am sure this
document has been prepared by Mr. Odongo. I cannot tell what I am reading. First of all,
I am concerned about what I am reading. The document has no cover and is not
communicating. Tell us where you are reading from so that we can follow you and ask
you relevant questions.
The Managing Director KIWASCO (Mr. Odongo): Thank you, Mr. Chairman, Sir. We
all have this document. We are on page 11. At the bottom, we have the report of the
Auditor-General for the year ended 30th June, 2021. Let us proceed to page 12. The
auditor went to the basis for qualified opinion and I gave a response which I did not read.
Sen. Olekina: Governor, did you brief Mr. Odongo? When you appear before this
Committee you read your response verbatim. The Auditor-General is reading the query.
You read exactly what you have indicated so that we can follow you.
The Chairperson (Sen. Osotsi): Mr. Odongo, you are well guided.
The Managing Director KIWASCO (Mr. Odongo): Thank you, Mr. Chairman, Sir. I
am well guided. We will proceed to the management response on page 12 at the bottom.
An updated detailed register was provided as requested by the auditors. A copy is hereby
attached for your review and confirmation.
Sen. Olekina: Mr. Chairman, Sir, allow me to ask a question. Why was this not
presented to the auditors during the audit process? Do you understand the audit process as
described in Section 31 of the Public Audit Act? Why was this information not presented
to the auditor so that we know the value of the assets you own as a company?
The Managing Director KIWASCO (Mr. Odongo): Thank you, Mr. Chairman, Sir. The
information was presented to the auditors. When we receive the management letter, we
normally have two weeks to respond. I can confirm via correspondence to the Office of
the Auditor-General that we responded and provided the updated detailed Asset Register.
However, the final report from the Office of the Auditor-General came within a short
time. This was not taken into consideration but the information was provided.
Sen. Olekina: Mr. Chairman, Sir, I have a final remark on that query. I know this
Auditor is not the substantive Auditor, but he said that he was briefed. Is the statement
being presented by Kisumu County accurate or is it false? I do not understand why the
law gives them two weeks to respond, but then they go out and render an opinion without
taking into consideration the responses given within that stipulated period of time. Can he
confirm or deny what Kisumu County government is saying?

Chairman, Sir, I wish to state as follows: At the time of conclusion of the audit, this
information had not been unveiled and it is the basis upon which this report was made.
However, subsequent to the audit and the report being tabled, we were submitted with the
documents that are now before us. We were able to go through and confirm that this
information was there.
The concern of the Auditor was that if this information had been provided within the
timelines, then this would not have reached the stage that it has reached at the moment;
the final report.
I thank you.
The Chairperson (Sen. Osotsi): Proceed Sen. (Prof.) Tom Odhiambo Ojienda, SC.
The Vice-Chairperson (Sen. (Prof.) Ojienda, SC): Auditor, kindly confirm if you were
you part of this as you go on. Were you part of the verification process subsequent to the
presentation?
The Parliamentary Legislative Relations Officer, OAG (Mr. Gachanja): Mr. Vice-
Chairman, Sir, as I stated before, I am representing the auditors on the ground and the
information they have given me is that they have now verified this information which
was given to them.
The Vice-Chairperson (Sen. (Prof.) Ojienda, SC): Just answer the question. Were you
part of the verification process subsequent to the presentation?
The Parliamentary Legislative Relations Officer, OAG (Mr. Gachanja): No, Mr.
Chairman, Sir. I was not.
The Vice-Chairperson (Sen. (Prof.) Ojienda, SC): You cannot confirm the statement
you are stating because you are not the substantive Auditor. Correct?

Chairman, Sir, as I stated earlier, I have been adequately briefed by the Auditor on the
ground.
The Vice-Chairperson (Sen. (Prof.) Ojienda, SC): Let me go to the Managing Director
(MD) or to the respondent. You said that a confirmation was made of what was not
presented; the Kshs266 million as being the value of the company. Correct?
The Managing Director, KIWASCO (Mr. Odongo): Yes.
The Vice-Chairperson (Sen. (Prof.) Ojienda, SC): Now, let me ask the question. Look
at Page 11, Annex Six. What is the net asset balance in your response? Can you see it? I
can see it and can read it out for you. It is Kshs247,770,131.72 Correct? That is the last
page.
The Managing Director, KIWASCO (Mr. Odongo): Confirmed.
The Vice-Chairperson (Sen. (Prof.) Ojienda, SC): What was at variance was
Kshs266,509,028. Is there still a problem?
The Managing Director, KIWASCO (Mr. Odongo): Mr. Chairman, Sir, I shall respond
to that.
The Chairperson (Sen. Osotsi): Kindly respond
The Head of Finance and Strategy, KIWASCO (Mr. Moseti): Thank you. Hon.
Members, I---
Sen. Olekina: Just hold on. Mr. Chairman, Sir, the only person who can ask somebody to
respond is the Governor. Governor, maybe you can be guided
the head of Finance can respond to that because he is the person who knows the figures.
The Head of Finance and Strategy, KIWASCO (Mr. Moseti): Thank you. We indeed
responded to this in time. We responded through email because of the nature and size of
the asset register that we had. You asked about verification. Yes, we did verification with
the office of the Auditor-General (OAG) and the Auditor on the ground. Their advice was
that we give a sample of what was supposed to be attached because of the nature and the
bulkiness. We could not attach everything. This is not the entire register. The Auditor
asked us to only give a sample because it is big. We can confirm that we sent this on a
soft copy. The soft copy is---
The Vice-Chairperson (Sen. (Prof.) Ojienda, SC): No. The asset balance as verified is
Kshs247,771,131. Can you see that?
The Head of Finance and Strategy, KIWASCO (Mr. Moseti): I can see that. Yes.
The Vice-Chairperson (Sen. (Prof.) Ojienda, SC): What was outstanding for
confirmation or an issue as the audit query is the given asset value of Kshs266,509,028. I
am just wondering whether that was responded to or whether you simply sent this
schedule to the accountant or to the Auditors and they said; it is okay to let it lie because
that is what I am seeing here.
The Head of Finance and Strategy, KIWASCO (Mr. Moseti): That is exactly what I
am saying. We indeed verified this with the two auditors on the ground. Their advice was
that we give a sample because we also had to give them a copy of all these attachments
and confirmations. So, the list that is there is just a sample. We do not have the list of
motor vehicles and other properties here to total to 266.
The Chairperson (Sen. Osotsi): Proceed, Sen. Olekina.
Sen. Olekina: Mr. Chairman, Sir, let me try to make some sense out of this, or maybe
try to demystify what the auditors are looking for. The position taken by Mr. Odongo and
the water company is that they presented the information to the auditors. Now, if I ask
them what they presented to the auditors, they will not be able to respond.
I want us to go back together and look at the query because we are now limiting
ourselves into figures. However, if you look at the issues which were requested by the
auditors, they have clearly indicated that you never presented that information to them.
They need to know the number of assets, their location and the cost of each. They need to
understand the depreciation rate, the accumulated depreciation, the depreciation charge
for the year and the book value of the assets, among others.
Governor, a response that would be acceptable to this Committee is one that says:
Attached to our management response are the following. You can then list all those issues
and state clearly that, yes, I submitted them to the Auditor. When you say you sent some
responses, we are not seeing them.
The auditors have highlighted the issues that they asked for that you did not deal with. I
know my colleague has said the value that also shows the difference because in the
financial statement that you presented here, it is showing something completely different.
Governor, can you please ask your team to relook at the query and respond to it because
that has not been responded to.
Mr. Chairman, Sir, I seek your guidance on how we move forward on that matter because
as we sit here, that query has not been responded to.
The Vice-Chairperson (Sen. (Prof.) Ojienda, SC): Mr. Chairman, Sir, I have something
to say on the same query. What time frame did they take to respond to this query from the
time the audit report came out?
Auditor, is there a letter that was written to you confirming that the audit query was
sufficiently dealt with in communication? I am sure you can table that if you have it.
The Chairperson (Sen. Osotsi): Auditor, you can respond on the last bit. Is there any
letter that you issued?
Mr. Chairman, Sir. In the process of audit, at the end, we normally have an exit meeting.
During the exit meeting, we discuss issues which are outstanding. Any issue not
discussed then goes to the minutes and is carried into the management letter. After that,
we issue a management letter which is supposed to be responded to. Any issue not
responded to in the management letter goes to the draft report which also gives the
auditee another opportunity to respond. After which, we do the final report.
I wish to report to this Committee that those correspondences and letters were done, but it
is now before us today as an audit query because this matter was not resolved during
those three stages.
I thank you.
The Chairperson (Sen. Osotsi): If you are called upon to provide those
correspondences, will you be able to provide them?
Chairman, Sir.
The Chairperson (Sen. Osotsi): I think you need to provide those documents in seven
days’ time confirming that this matter was resolved. Governor, I invite you to respond to
Sen. Olekinas’ query.
The Governor for Kisumu County (Hon. (Prof.) Anyang’-Nyong’o: Mr. Chairman, Sir,
I will ask Mr. Odongo to respond.
The Chairperson (Sen. Osotsi): Very well.
The Managing Director, KIWASCO (Mr. Odongo): Thank you, Mr. Chairman, Sir. As
the Auditor has clarified, there were correspondences and we were able to provide the
assets register as has also been confirmed. Our assets register has all the details included
there. The sample register that was given confirms that all those details are captured.
Mr. Chairman, Sir, the way we look at the annual audits is to add value to our prudence,
processes and make the company better. Therefore, if you ask me, this issue of asset
register has now been resolved to the extent that they have done the revaluation of our
assets, something that has not been done for the last 10 years. Due to this audit opinion,
we are able to now make our processes much better and the subsequent audits are going
to show that.
Thank you.
Sen. Olekina: Mr. Chairman, Sir.
The Chairperson (Sen. Osotsi): Sen. Olekina, please go ahead.
Sen. Olekina: I do now want to deliberate on this, but I do not know whether you
listened to Mr. Odongo telling the Committee that the way you look at the audits is for
you to improve. Now, the audit indicates to us where you adhere to a fiduciary
responsibility; whether money has been spent accurately or whether you able to
accurately State public assets. This are public assets. This are a company owned by the
County Government of Kisumu.
What I request you to do is within the timeline of seven or 14 days you deem fit, this
query is responded to substantively as per the requirement of the auditor. This is so that
we can put a value to the assets owned by this company on behalf of Kisumu County.
That is how we now follow.
This issue of opinion by the auditor is to actually just say whether you have your books in
order, but it is not value for money. When you are given an opinion, there are different
types of opinions that you can be given. You can be given a disclaimer which essentially
means that there are no papers found. You can be given an adverse, which means that,
everything was in shambles. You can be given a qualified opinion which means that
things are okay. However, there are so many issues that have been found.
The only time when you can quietly and comfortably sit there, is when the auditor has
been not been able to render an opinion and say, this is an unqualified report. This is
because they seem to have seen everything.
For this, I am concerned because this is an investment of the county and our job is to
defend the interest of the counties and their governments. When the Governor is there, he
takes all the beatings. However, the county investment must also adhere to the rule of
law.
Mr. Chairman, I request that within seven or 14 days, depending on how you see fit, this
query is responded to accurately and it conforms with what the auditors are stating.
The Vice-Chairperson (Sen. (Prof.) Tom Ojienda, SC): Mr. Chairman, Sir, may I add
just this one point. Many of what I see as assets, not just the motor vehicles, but a lot of
meters that go into a lot of water works by KIWASCO. He has responded and said that
there is an improvement in the last 10 years. Therefore, it was doing badly and now they
are improving.
Since I am sure a lot of these assets were bought out of funding maybe provided by other
entities, including the World Bank and the French Government, this audit is a very
important exercise. The asset register has to be verified. Otherwise, if you do not settle
the values and these questions, then you create a possibility that; we can even look back
into the previous year, this needs to be verified.
I support what Sen. Olekina said that this audit query be responded to in detail as set out
within a timeframe. Otherwise, we call for a special audit so that we settle this issue.
The Chairperson (Sen. Osotsi): Okay, very well. I want to hear the recommendation of
the auditor on this audit query.

Chairman, Sir, as directed by the hon. Members, the auditor can verify the assets register
with regards to the issues raised. Especially the depreciation rate and accumulative
depreciation which are key in determining the value of the assets as indicated in the
financial statements.
I wish to also point out that in the current audit for Financial Year 2021/2022, this will be
a key item. I am sure in the subsequent reports; we will be able to submit satisfactorily
confirmation on assets of KIWASCO.
The Chairperson (Sen. Osotsi): Very well. Hon. Members, there are two issues on this
audit query that run across all the water companies as we have seen. One is the issue of
submission of documents for audit. We have noted that the audit query sometimes
appears the way it appears because documents were not submitted. I think that is
something that staff working for counties will need to be up to date. You should not have
an audit query where you are not supposed to have just because documents were not
submitted. The other day, I sat in a meeting for my county and the report was adverse.
However, when we went through the audit query, there was nothing. It was just a simple
issue of submission of documents.
Secondly, this audit query seems to be appearing in every water company. Auditor, this is
a matter that you need a long term solution. We will give you seven days, please respond
to us about your level of satisfaction of this audit query with the necessary letters you
issued. I believe if the documents are issued and the Members are satisfied, then this
audit query should be cleared.
Is there a similar issue for Financial Year 2018/2019 and Financial Year 2019/2020?
Sen. Olekina: It also indicated that this will be a substantive matter in the current audit. I
do not know whether we should wait for them to look into it in future.
The Chairperson (Sen. Osotsi): Yes, they can include it. Meanwhile, in the seven days,
once you submit those documents and they are in order, we will be able to make a step.
What I wanted to know is if we had a similar query in Financial Year 2018/2019 and
Financial Year 2019/2020.

Chairman, Sir, the issue of assets is not in any of the other two reports.
The Chairperson (Sen. Osotsi): Okay, proceed to the next query please. Hon. Members,
you know we have up to 2.00 p.m. to clear this matter. After 2.00 p.m. it becomes
difficult because of the rules. Therefore, let us strive to ensure that we manage time and
clear these responses.
Audit Query No. 2 – Unsupported Provision of Bad Debts
Mr. Chairman, Sir. The second query is on unsupported provision of bad debts.
The statement of profit or loss and other comprehensive income reflects administrative
expenses of Kshs158,958,106 which as disclosed in Note 26 to the financial statements,
includes bad debts provision of Kshs48,986,667 owed by 747 customers. The decision to
provide for bad debts was recommended by the finance committee.
However, the management has not disclosed the basis for the provision, given that the
majority of the customers are schools. It has also not been indicated for how long the
debts have been outstanding and measures taken to have them collected.
In addition, according to data’s age analysis report, the provision included a balance of
Kshs573,824 owed by customers whose accounts were less than 180 days old. The
management did not provide customer statements and demand notices to confirm
measures taken to recover each debt.
In the circumstances, the accuracy and completeness of provision for bad debts
amounting to Kshs48, 996,687 could not be confirmed.
The Chairperson (Sen. Osotsi): Very well. Governor, proceed.
The Governor of Kisumu County (Hon. (Prof.) Anyang’-Nyong’o): Could I ask Mr.
Odongo to respond to this, please?
The Managing Director, KIWASCO (Mr. Odongo): Thank you, Mr. Chairman, Sir.
Most of the accounts provisioned were public schools that were under the defunct
Kisumu Municipal Council. The debts have remained uncollected since the inauguration
of the new Constitution and the current budgetary allocation to these schools for water
bills is insufficient to cover the recurring bills.
Despite several remainders, meetings, disconnections and outsource to external debt

collectors, the schools are still unable to pay. The disconnections paused a health
challenge during the COVID-19 pandemic. So, it was passed that the debts be written off,
including and as at the date of the write off, to enable the schools get water and also
avoid further loss of revenue.
This was the basis of the write off and as the Board of Directors, we agreed we this basis,
hence the approval vide Min2/22/09/2021 dated 22nd September, 2021. The Minutes were
presented and confirmed by the audit team and a copy can be availed at Annex No.7.
The Kshs573,823.47 were debts of less than 180 days provided for write off, were as a
result of standing charges and estimated bills on disconnected accounts. These were due
to challenges in the billing system and the only remedy was to write them off irrespective
of the duration.
The Chairperson (Sen. Osotsi): Very well. Over to you, auditor.

Chairman, Sir, we wish to confirm that we have seen the minutes recommending for
write off these debts.
The Chairperson (Sen. Osotsi): What about the Kshs573,000 where you alleged that
there were no demand notices? Did you confirm that?
Chairman, Sir. The team on the ground has confirmed they were able to see the demand
notices to the customers. The only issue is whether the payments have now started to
come in or what further actions have been taken by the county in terms of recovery.
The Chairperson (Sen. Osotsi): Proceed, Sen. Olekina.
Sen. Olekina: Mr. Chairman, Sir, I am baffled and Governor, this should concern you.
Why have a company which is not making money and going at a loss?
I have a question to ask and I do not whether this is a moot question. However, my
question is advised by the response given by Mr. Odongo; that the Board of Directors
agreed with the basis, hence approved vide Min2/22. Let me read that Minute. Min2/22
dated 22nd September, 2021, you said the Minutes were presented and confirmed by the
audit team and a copy can be availed at KWAC at Annex No.7.
Now, I do not know whether there is any other minute apart from the one that is
presented here. So, let us go through the minutes. Min/M2/22 says-
“(1) Members agreed that we include the position of the members present.
(2) It was agreed that the County Government needed to work on arrears, so as to pay
water bills on a monthly basis. The Head of the Committee (HOC), to send the itemized
bills to the County Executive Committee Member (CECM) of Finance.
(3) It was reported that a temporary solution was provided in Kajulu with major works
planned for the financial year. Therefore, both the proposed budget and procurement plan
were approved by the Board of Directors and the virtual meeting through Zoom and
Google were effective.”
Now, I am concerned. My concern is both with the auditor and Mr. Odongo. I have not
seen anywhere in the minutes that says that those debts be written off. Auditor, you have
just confirmed that you have looked at the minutes and the debts were to be written off.
Do you have any other minutes that you confirmed which are not these minutes that you
presented here?
We have a tendency of giving false information because Senators are too busy to read
through. However, some of us are very thorough. I do not know whether my colleagues
have seen what I am seeing. It is really shocking and I am concerned.
The Chairperson (Sen. Osotsi): Sen. Kisang, you have not spoken.
Sen. Kisang: Yes, Mr. Chairman, Sir, I have not spoken. I was still going through the
response. If you check the response from the company, it says most debts were from
schools. The money that the schools are receiving for recurrent expenditure is not enough
to pay the bills. So, if they have written off these amounts, it basically means going
forward, these schools are unlikely to pay the water bills. Are you confirming that they
are unlikely to pay the bills? If the money they are getting is not enough to pay, then what
will happen?
What plans do you have? Perhaps, have you started to negotiate with the Ministry of
Education, so that there is a way they can be assisted to meet the bills? Otherwise, in
another three to four years, you will come back here and say that the schools are unable
to pay. You will disconnect the water supply and lose the revenue. If you do not
disconnect, basically, it means the companies will continue making losses because the
majority of these customers are the schools and will be unable to pay.
The Chairperson (Sen. Osotsi): Back to the Governor.
The Vice-Chairperson (Sen. (Prof.) Tom Ojienda, SC): Mr. Chairman, Sir, before the
Governor speaks, I am baffled. I must say I am at a loss at the policy. Mr. Odongo, if it is,
indeed, a policy of KIWASCO to write off debts on the basis that there is a possibility
that payment will not be made, this is crazy.
Let me just join issues with Sen. Kisang that is it your policy that schools do not pay for
water? For me, that is not even enough. I see Kibuye School, Lake Primary School and
Joyland Special School owing millions of shillings. Do these institutions still enjoy water
services or did you disconnect all their meters? If you disconnected their meters, are they
enjoying unaccounted water or do they buy water in tanks? Just settle that.
Secondly, I see individuals, for instance, my good friend Nathan Ondago Mudeizi who I
know very well, owing Kshs600,000. However, the comment here is that it is a historical
debt and efforts to recover are unsuccessful since the customer disputed the high bills. Do
you ordinarily as a policy write off all debts where the customer disputes them?
I see many other names here for people that I know. For instance, Mr. Albert Ochieng,
Mr. Rabong’o, Mr. Muga Apondi the former Judge and Mr. Okombo. I see names of
people who are still alive. Do you have a policy for debt collection? Do you not have
lawyers who can trace these people and simply write a demand letter to get them to pay?
Do these people have new meters or how do you say you cannot recover because they
disputed bills or they cannot be traced?
We know these people as being alive and I know many of them here. I can even trace
them for you. For instance, Mr. Tedman Aloo is my colleague. I meet him every week
and they are here. What is the problem with you?
The Chairperson (Sen. Osotsi): Okay very well. Governor, the questions have been
understood.
The Governor of Kisumu County (Hon. (Prof.) Anyang'-Nyong'o): Mr. Chairman, Sir,
let me ask Mr. Odongo to respond, please.
From the first question, Annex Seven has seven pages which if you go through; you will
find that the issue of provision for bad debts is captured. So, the minutes have---
The Chairperson (Sen. Osotsi): Can you please state the exact page?
The Managing Director, KIWASCO (Mr. Odongo): Mr. Chairman, Sir, this is captured
in page four.
The Chairperson (Sen. Osotsi): Can you just read out the resolutions, please?
The Managing Director KIWASCO (Mr. Odongo): Mr. Chairman, Sir, there were two
resolutions from the Finance Committee: first is the financial statement for the year
ended 30th June, 2021, was adopted and recommended for approval on proposal by
Director George and seconded by Director Salmon.
Secondly, also recommended for approval is the specific bad debts provisioning totaling
Kshs48,986,666.96.
The Chairperson (Sen. Osotsi): Okay. Sen. Olekina wanted to react to that.
Sen. Olekina: Thank you, Mr. Chairman, Sir. Seriously, Mr. Odongo, we do not expect
you to mislead this Committee. In your response, you cited minute M22/09. In your
response, you use the following words; you say “this was the basis of write off and the
Board of Directors agreed with this basis hence approval via minute No. M22/09 dated
22nd September, 2021.
That minute ends at No.v. It does not refer us to any observations or any other thing. The
Finance Committee's resolution, if I can read it clearly. Governor, you can help us here,
also recommended for approval is the specific bad debt provisions totaling that amount.
Recommended for approval. However, that minute does not say that it was approved, but
recommended for approval.
As I had said earlier the legal team can help us on this matter and it could be a moot
question. Since everything that is done by the Governor is approved by the County
Assembly, I do not know whether when we have an investment, since it is still under the
county Government structure--- Any approval for bad debt because today if Governor
(Prof.) Anyang’-Nyong'o wants to waive parking fees, or land rates, he will be guided by
the provisions of the Public Finance Management (PFM) Act. It is quite clear on the
process.
The CECM for Finance has to put a recommendation to the County Assembly. If it
approves it, this is only when the Governor comes and says that we are now waiving the
following.
I do not know if the legal team can assist us here. There are two things here. First, the
information presented in the Management response is misleading, and second, there was
no approval for writing off bad debt
If, indeed, there was an approval for writing off bad debt, if it was there, is it the Board or
the Assembly given that this company exists as a baby of the county government? Those
are issues that we need to note so that we know how to proceed. So, Governor, I do not
know---
The Chairperson (Sen. Osotsi): Sen. Kibwana, you have not spoken---
Sen. Kibwana: Mr. Chairman, Sir, this document is quite huge. I was just trying to go
through it since we just got it yesterday. It is quite bulky and also just too tub on what the
Auditor-General was saying.
However, I was just wondering if the bill of Kshs57,823,000 is the same as Sen. Olekina
is saying about the writing off--- I can see that these were due to challenges in the billing
system and the only remedy was to write them off.
I wonder what kind of challenges that you went through that you had to write off that
kind of amount. Is it human error or what kind of challenges can make you write off that
kind of amount?
You are also saying also talking of the standing charges and estimated bills on the
disconnected account. Does that mean that whatever you bill the Kenyans with standing
charges are all fake which is why you decided that you have overbilled them or what? I
would like to understand the challenges.
The Chairperson (Sen. Osotsi): Okay, Mr. Odongo through the Governor, the response
to Sen. (Prof) Tom Ojienda, Sen. Kibwana, and finally the issue of when you recommend
a Board, who approves. Let us have a response.
The Governor of Kisumu County (Hon. (Prof.) Anyang'-Nyong'o): Mr. Chairman, Sir,
can Mr. Odongo answer this one?
The Managing Director, KIWASCO (Mr. Odongo): Thank you, Mr. Chairman, Sir. I
will start with the process of recommending to the Board and approval for the provision
of bad debts. Provision of bad debts is allowed in accounting and the OAG will confirm
that that is good practice.
As I had said, most of these debts were inherited from the defunct Municipal Council.
The biggest chunk of this is from the public primary schools which are unable to pay.
There were also the recent debts that we wrote off and the reason we wrote off those
debts are because we normally have accounts that have been disconnected for a long time
which we transition to dormant accounts.
So, an active account attracts standing charges and this accumulates over time. However,
when you do a customer identification survey, you realize that we have been billing this
account, but the account is not in use and therefore this money is not recoverable. The
only wise thing is to provide for that as a bad debt.
I also confirm that when we provide for a bad debt, it is not that this is removed from our
books. The situation in the future might change and that is why we call it provision for
bad debts.
Before we provide, we normally give evidence to the Board the efforts that we have made
to recover and why we feel that this debt is not recoverable for now and that it is not
prudent for it to continue appearing as a debt. So, we normally give all that information.
We also have lawyers who may have to follow certain accounts and two external debt
collectors who we also hired on a commission basis to follow these difficult debts for us.
So, it is based on the recommendations of our internal debt collection team and external
debt collectors that we go to the Board and request for provision of bad debts.
This is a responsibility of the Finance and Commercial Committee. It goes to the

Committee, they deliberate on it and take it to the Board for approval. That is the p we
normally take
Now, the Government allocation for water bills for public primary schools is in public
knowledge, it is not enough even to pay for current bills. However, the schools have
devised ways of raising additional money to cover the deficit. So, we did not want to
continue disconnecting the public primary schools, causing a health hazard because of
debt that was inherited from the defunct municipal council.
The Chairperson (Sen. Osotsi): Vey Well. I can see Sen. (Prof.) Tom Odhiambo
Ojienda, SC, has something itching him.
The Vice-Chairperson (Sen. (Prof.) Tom Odiambo Ojienda, SC): Mr. Odongo, you said
you have lawyers and debt collectors on assignment. What amount of the outstanding
have you collected, so far? Where is that information, if any?
The Chairperson (Sen. Osotsi): Very well. Through the Governor.
We have that information. We can provide it within a stipulated time as directed by the
Committee.
The Chairperson (Sen. Osotsi): So, within seven days, provide that information together
with the other information to the auditors.
Auditor, what is your recommendation, having listened to the views expressed by the
Members and the response from the county?

Chairman, Sir, we look forward to listing of information for us to verify the amounts
collected within seven days as directed, so that we are able to verify the collections to
date from the previous audit.
Thank you, Mr. Chairman, Sir.
The Chairperson (Sen. Osotsi): Okay, Members, you can see this is a common audit
query in water companies because of the transition from the local authorities to the water
company. However, we will be waiting for your responses in seven days on the same.
So, is there any other recurring audit query similar to this?
Auditor, please proceed.

Chairman, Sir, I am going through the other audit statements to verify for the 2018/2019
Financial Year.
The Chairperson (Sen. Osotsi): Can you indicate the page number, please?
The Parliamentary Legislative Relations Officer, OAG (Mr. Gachanja): It is in the

Financial Year 2019/2020, Mr. Chairman, Sir.
The Chairperson (Sen. Osotsi): I do not seem to see it. Is that starting on page five?
The Parliamentary Legislative Relations Officer, OAG (Mr. Gachanja): On the report,
you can see it under unsupported trade and other receivables.
The Chairperson (Sen. Osotsi): What is the page number? Can you indicate the page
number on that big bundle?
The Managing Director, KIWASCO (Mr. Odongo): It is on page six, Mr. Chairman,
Sir. That is for the year ended 30th June, 2020.
The Chairperson (Sen. Osotsi): Okay. Very well. Members, you can check on page six
on unsupported trade and other receivables.
Auditor, please take us through that.
Audit Query - Unsupported Trade and Other Receivables
The Parliamentary Legislative Relations Officer, OAG (Mr. Gachanja): In the

Auditor-General's Report for the year ended 30th June 2020. As disclosed in Note 13 of
the financial statements, the statement of financial position reflects a balance of
Kshs254,915,333, under trade and other receivables, which includes an amount of
Kshs8,372,163, in respect of repayments and deposits, whose supporting documents such

as detailed schedules and invoices were not provided for audit review.
Consequently, the accuracy of the balance of Kshs8,372,163, of the trade and other
receivables as at 30th June, 2020 could not be confirmed.
The Chairperson (Sen. Osotsi): Very well. Your Excellency the Governor, proceed.
The Governor of Kisumu County (Hon. (Prof.) Anyang’-Nyong’o): Mr. Odongo,

respond.
will read the response. It is worth noting that page 26 of the audited financial statements
contains appendices with appendix C describing the nature of the items included as
deposits and prepayments. Additionally, all the schedules were provided for audit review.
Copies are hereby attached.
It is not fair for the Office of the Auditor-General to ask for invoices of the deposits, yet
these were mostly paid at the inauguration of the company in the year 2003. Moreover,
these are deposits for utilities that support the company operations and were not expensed
in the year under review.
We would also wish to reiterate that at no point during the audit process did the above
issue come up or was queried as both the management letter and the draft audit report did
not contain the said matter. Hence, the company was not given an opportunity to respond
to it as required, but it only appeared in the final report. We have attached Annex
KWNC, Annex No. 4.
The Chairperson (Sen. Osotsi): Very well. Office of the Auditor-General, proceed.
The Parliamentary Legislative Relations Officer (OAG) (Mr. Gachanja): Yes. I wish
to confirm that my colleagues received these supporting documents and were able to
verify them as requested.
The Chairperson (Sen. Osotsi): Members, please. Proceed, Sen. Olekina.
Sen. Olekina: Mr. Chairman, Sir, I was trying to understand. I was trying to follow the
governor's response, and the part that interests me the most was the part where Mr.
Odongo said, ‘it is not fair for the auditor to ask for this’. Then the auditor comes back
and says, ‘I confirm that my colleagues received these supporting documents and were
able to verify them as requested.’
Auditor, there are things which we have to be very careful about especially what we say
because you have to follow the responses coming from the Governor.
Now, auditor, we will not accept your response there. We want to understand how we
will deal with this issue. Mr. Odongo has indicated that the receipts relate to the year
2003 when the company was initiated. We need to deal with that issue.
Secondly, I would like to know from the Governor, what system do you have in place to
show the transactions carried out by the company, so that we see how we can marry the
two together.
The Chairperson (Sen. Osotsi): Any other questions from the Senators?
The Vice-Chairperson (Sen. (Prof.) Tom Odiambo Ojienda, SC): Mr. Chairman, Sir,
maybe Mr. Odongo should confirm whether there were all these receivables that the
questions are raised on repayments, and of course, the defence that they cannot avail the
receipts. However, because we are dealing with the debts and outstanding, was there any
policy? I presume he was in office then. Is there anything new that they did in the year
2021 to mitigate the problems or the queries of 2020?
You talked about lawyers and the rest. However, is there anything that was outstanding
then that you did, to show that you improved or you intended to remedy an audit issue of
receivables raised in the year 2020?
Sen. Olekina: Mr. Chairman, Sir, this part bothers me. Auditor, Mr. Odongo says as
follows-
“We would wish to reiterate that at no point during the audit process did the
above issues come up or were queried, as neither the management letter nor the draft
audit report contained the said matters, hence, the company was not given an opportunity
to respond to the required, but it only appeared in the final report.”
Auditor, I am concerned about that because Section 31 of the Public Audit Act stipulates
what happens in the entry interview or entry meeting. The head of the institution to be
audited has to be there so that you discuss the areas to be audited. In your draft
management letter, still in that section, you say you have an Exit Interview then you send
that. So, if the County Government is stating that these issues did not appear, what
exactly is happening here?
I have one question to the Auditor and I want him to respond to it because this will guide
me when I retreat to write the report. He has contradicted himself when he said that he
has received the information and verified it. Mr. Odongo has stated that the information is
not available because it was old information from 2003. That leaves a lot to be desired.
If I go to the land registry in Narok today and want to get transactions for my land that I
was given by my great grandparents, I will still get that information as long as the land
registry is there. In addition, there is this new introduction of audit queries which were
not part of the agreement. Do you see where the confusion is coming from?
The Chairperson (Sen.Osotsi): Let us start with the Auditor.

Chairman, Sir, as indicated earlier, my colleagues had briefed me on this. To the best of
my knowledge, this information was communicated in line with the Public Audit Act to
the Auditee. Given seven days, I can provide the Meeting Letter (ML) and perhaps
detailed minutes of the Exit Meeting to confirm that this matter was actually raised.
The Chairperson (Sen.Osotsi): We will be looking forward to receiving the Exit

Meeting Minutes for that. Your Excellency, the Governor, please proceed.
The Governor of Kisumu County (Hon. (Prof.) Anyang’-Nyong'o): Mr. Odongo,

please, respond.
The Managing Director, KIWASCO (Mr. Odongo): Thank you. This Query relates to
prepayments and deposits when Kisumu Water and Sanitation Company Limited
(KIWASCO) was formed to take over from the Municipal Council. The prepayments and
deposits were carried forward into our books without supporting documents. That is why
I said that providing invoices for that would be a challenge.
Mr. Chairman, Sir, to respond to Professor's Query, yes, we received this. As we have
stated, you realise that this is similar, but not exactly the same as provision of bad debts.
These are prepayments and deposits. So, we provided the necessary information on the
prepayments and deposits after the final report had been given.
As I have said, and the minutes will confirm that we provided them in seven days, this
did not appear in the Management Letter and the Draft Audit Report. If it had appeared,
we would have responded to it adequately and perhaps it would not have appeared in this
Report.
As I said, when we receive this kind of report, we normally look at it internally to see
areas of improvement. That led to the subsequent audit, looking now at the provision for
bad debts.
The Chairperson (Sen. Osotsi): Okay. I would like to hear from the Auditor. What is
your recommendation on this?

Chairman, Sir, in reference to the concern by the Auditee that this matter did not arise
during the Exit Meeting, I will demonstrate to this Committee that there was
communication for them to provide this, for us to be able to resolve this matter.
Therefore, as the Chairman has directed, in seven days, we will provide evidence that this
matter was brought to the attention of the Auditee and they did not respond adequately
for it to have come up in the audit report, as I just read out.
Sen. Olekina: Mr. Chairman, Sir, I want to follow that line with the Auditor. He should
provide that Management Letter to this Committee, so that it can demonstrate clearly that
these issues were raised in the Exit Interview or Meeting.
Auditor, we may also need your guidance. How do we clear this matter when it comes to
taking into consideration the response given by the Governor, stating that these were
figures which were carried forward but did not have supporting documentation? How do
we then clear it? Do we say balance brought forward? That is what I understand, Mr.
Odongo, to have indicated. We need to clear that up.
Finally, in future, Mr. Odongo, we should be careful not to use words like, “it is not fair
for the Auditor” because auditors do their work. We have a serious, contentious issue
here when it comes to the Management Letter. So, we just have to be careful because the
auditors are there to ensure fiduciary, responsibility or duty. So, when you use such
words, you create--- Let me leave it there. So, guide us on how we would clear this
matter.
The Chairperson (Sen.Osotsi): I fully agree with you, Sen. Olekina, on that bit. That
sounds like the Supreme Court kind of language.
Sen. Kibwana: I wanted to mention the same. Hot air!
(Laughter)
The Chairperson (Sen.Osotsi): Hon. Members, let us go back to Financial Year (FY)
2020/2021.
Sen. Olekina: Mr. Chairman, Sir, the Auditor has not given us guidance on how we can
clear this matter so that it does not appear again.
The Chairperson (Sen.Osotsi): Auditor, how do we deal with this matter so that it does
not appear again?
The Parliamentary Legislative Relations Officer (OAG) (Mr. Gachanja): Mr.

Chairman Sir, it will begin by management creating a policy on how to handle these
balances which are historical in nature and they have to approve it. That policy would
then guide the decision on the financial management aspect of things. So, management
has to formulate a policy on how to handle this then we can verify that policy in line with
Public Finance Management (PFM) and the Public Sector Accounting Standards Board.
The Chairperson (Sen. Osotsi): Okay. Your Excellency, is there anything that you want
to say?
The Governor of Kisumu County (Hon. (Prof.) Anyang’-Nyong'o): Mr. Chairman, Sir,
I agree with the Auditor-General on that issue. A clear policy, especially noting that 2003
is so far. He can say it is not fair to ask me about documents like invoices then, when I
was not there. However, the point is not to pass the blame to somebody else. The point is
that he bears responsibility in the manner in which the Auditor says it.
Report on the Lawfulness and Effectiveness

in the Use of Public Resources
The Chairperson (Sen. Osotsi): We will go back to FY2020/2021, and we will go to

report on the lawfulness and effectiveness in the use of public resources. The Auditor
should take us through that.
Basis of Conclusion
Non-compliance with the Public Sector

Accounting Standards Board Requirements
The Parliamentary Legislative Relations Officer, OAG (Mr. Gachanja): In the audit
report of the previous year, several issues were raised. However, the management has not
disclosed and resolved the issues or even given satisfactory explanation for the failure to
adhere to the provisions of the Public Sector Accounting Standards Board templates. In
the circumstances, the annual reports and financial statements are not compliant with
Public Sector Accounting Standards Board requirements.
The Chairperson (Sen.Osotsi): Let us hear the responses from His Excellency, the
Governor.
The Governor of Kisumu County (Hon. (Prof.) Anyang’-Nyong'o): Please, proceed.
Management responded to all issues that were raised in the previous year, as required
during the opening meeting with the auditors and the explanations were captured in their
own minutes. KIWASCO has also continually relied on Public Sector Accounting
Standards Board requirements board templates in the preparation and presentation of
financial statements and reports.
The new and reviewed template had not been shared with the management, hence it was
only sensible to use the previous template.
The Chairperson (Sen. Osotsi): Very well. I want to hear from the Auditor.
The Parliamentary Legislative Relations Officer, OAG (Mr. Gachanja): I think that
matter still remains pending because the financial statements as were presented in 2021
were not in adherence to the Public Sector Accounting Standards Board (PSASB).
The Chairperson (Sen. Osotsi): Before you respond to that, one of the youngest
Senators has arrived. Can he introduce yourself?
Sen. Oketch Gicheru: Thank you, Mr. Chairman, Sir. Good afternoon everyone. My
name is Sen. Oketch Gicheru representing the great people of Migori County and a
Member of this Committee. I tender my apologies for coming late. We were having
another session with the Committee on Budget and Finance. We were doing vetting for
the Deputy Governor of the Central Bank of Kenya (CBK).
It is a pleasure to be here to ponder over the issues that affect Kisumu.
The Chairperson (Sen. Osotsi): Sen. (Prof.) Ojienda, you had a query in response to
what the Auditor has just said.
The Vice-Chairperson (Sen. (Prof.) Tom Ojienda, SC): I was suggesting that since the
auditor said that there has been noncompliance, we give a timeframe for compliance as
we have done in the previous audit queries.
Sen. Olekina: Governor, I am a bit concerned because I have been following the
language by Mr. Odongo in his responses. It seems that I am trying to be polite here and
not use a term that may be considered unparliamentary. However, every word which is
coming to my head will be considered unparliamentary. So, let me try to state it this way.
The Auditor has said that there is noncompliance with the PSASB requirements. The
Governor through Mr. Odongo, has indicated that now they have complied. So, there
seems to be a tug of war here and you know the person who will win is the Auditor. Why
do you not sit down with the Auditor and seek guidance from him because this matter
will not go away? This leads to the basis of our conclusion.
When the Auditor says noncompliance with PSASB requirements, find out what are these
board requirements? How can we comply? In your response you seem to be dancing
around the issue. You are not answering. It is very arrogant. Let me just use that word.
You are saying: We have responded to the issues and we have also relied on this. Sit
down with the Auditor and ask: You raised this query, how can we be compliant so that
subsequently, the reports that come out we will have complied and that issue will not be
raised by the Auditors. I think that you need to be a little bit ready to learn from the
Auditor so that the issue does not reoccur.
I thank you Mr. Chairman, Sir.
The Chairperson (Sen. Osotsi): Very well, Governor what is your response to that?
think I am now well guided and the next time I appear here, you will see a difference in
the tone and probably the wording.
The Chairperson (Sen. Osotsi): So, are you telling this Committee that in the next
financial year we will not have this audit query? That has to do with your management.
The Managing Director, KIWASCO (Mr. Odongo): Mr. Chairman, Sir, you are not
going to see this one again because we now have the reviewed template and that is what
we are using. I also want to inform the Committee that the audit is currently ongoing at
KIWASCO.
The Chairperson (Sen. Osotsi): Okay. Auditor-General, what is your final

recommendation?

Chairman, Sir, this is a very straightforward matter. There is a template issued by the
PSACB which is mandated by the Public Finance Management (PFM) Act to provide the
templates for preparation of financial statements. As rightly indicated, our teams are on
ground and we will be able to verify compliance with the templates as provided by
PSACB.
Sen. Oketch Gicheru: I think it is fine to say that this one will not appear again, but I
would just be curious to know what has been the impact of non-compliance.
The Chairperson (Sen. Osotsi): Back to the Auditor, please. What is the impact of
noncompliance?
The Parliamentary Legislative Relations Officer, OAG (Mr. Gachanja): I wish to

point out to the Committee that, that particular section or part of the template which was
not complied with is to do with prior year issues. Any prior year issue needs to be
followed up, so that then audits are able to make an impact in the management.
So, failure to comply with this, then we are not able to see or track issues which were
raised in the previous year’s audit and how the management has responded to them. That
was the reason the PSACB revised the template to ensure this appears in the financial
statement.
The Chairperson (Sen. Osotsi): Do we have any prior year issues on this for 2018/2019
and 2019/2020?
Chairman, Sir. I do not seem to find it on 2018/2019 or 2019/2020.
The Chairperson (Sen. Osotsi): Okay. Very well. Let us move to next Audit Query on
the Register of Bank Accounts.
Lack of Bank Accounts Register
The Parliamentary Legislative Relations Officer, OAG (Mr. Gachanja): Audit Query
No.2 is lack of bank accounts register. It was noted during the audit that the Company did
not maintain a register of bank accounts. This was contrary to Section 87(3) of the PFM
County Governments Regulations of 2015, which requires each public entity to maintain
a register of bank accounts. Although eight accounts were disclosed in the financial
statements, it was not possible to confirm that they were the only accounts operated by
the Company.
In the circumstances, the Management was, therefore, in breach of the law.
The Chairperson (Sen. Osotsi): Your Excellency the Governor?
The Governor of Kisumu County (Hon. (Prof.) Anyang’-Nyong’o): Proceed, Mr.

Odongo.
This is the Management Response. The bank register is contained in Note 31 on Page 25
of the financial statement and we confirm that those are the only bank accounts
maintained by the Company. Bank confirmation letters were provided by the different
banks for audit confirmation.
Your office can write to the same banks for confirmation. Copies of the bank
confirmation letters and a detailed register is hereby attached in soft copy due to its size
for your review. Annexure 8.
The Chairperson (Sen. Osotsi): Back to the Auditor. Your comment before I take it to
the Members.

Chairman, Sir, I wish to state that Management has now put a bankers accounts register.
It is now currently in place.
The Chairperson (Sen. Osotsi): Proceed, Senator Olekina.
Sen. Olekina: Mr. Chairman, Sir, you know if Mr. Odongo was not Luo and I am a
Maasai, I would be at a loss because of the choice of words. Maybe these are cultural
differences and I will probably let it slide. I, however, think that writing again and saying
you can write to the bank for verification, Bw. Odongo, those words---
(Laughter)
I apologize on behalf of Mr. Odongo.
(Laughter)
That sentence was not necessary at all. It does not add value to the response being given.
(Laughter)
Sen. Olekina: Mr. Odongo, I think next time when you are writing these responses,
please ask someone else to write and then you just read them because I think that you are
very apprehensive. When the Auditor raises a concern, a register of bank accounts is
necessary.
The Public Finance Management (PFM) Act restricts the executive on having all the
money collected deposited in one revenue fund account. They can be allowed to have
collections accounts but the money goes to one account.
Mr. Chairman, Sir, it would have been in order when the Governor was writing his
response to indicate as follows; that the following are the bank accounts held by the
company. We did not provide them during the audit period. However, we have provided
now and the auditor can confirm.
That would have been better so that it helps us. However, when the Governor says that he
can write to them, then--- Omera.
(Laughter)
The Chairperson (Sen. Osotsi): Sen. (Prof.) Tom Ojienda, SC.
The Vice-Chairperson (Sen. (Prof.) Tom Ojienda, SC): Mr. Chairman, Sir, I want to
take this to the next level to Mr. Odongo because of the previous audit query and this one
with regard to receivables and unclear accounts. I would like him to respond to this on
how he procures services? Does he consider himself as a public entity guided by the PFM
Act by advertising, eventually shortlisting and procuring services or he just single-
sources and gets people to perform services? This also includes supplies.
take note of the Senators’ comments and going forward, I will polish on that. We are a
public entity and we do follow the PFM Act. Our procurement is also guided by the
Public Procurement and Oversight Authority (PPOA). We are guided by the Act and we
advertise for tenders and for prequalification as well. We are also guided by the
Procurement Act which we follow to the latter.
The Vice-Chairperson (Sen. (Prof.) Tom Ojienda, SC): Therefore, there would be no
exceptions and if I pointed to exceptions, that would not be correct.
The Managing Director, KIWASCO (Mr. Odongo): To the best of my knowledge,

there are no exceptions.
The Chairperson (Sen. Osotsi): Auditor, do we have a recurring audit query on the same
matter?
Chairman, Sir. I have not seen any in previous years.
Sen. Olekina: Mr. Chairman, Sir, one last question which my sister Senator was going
to ask but I will ask on her behalf. Does Mr. Odongo use accrual or the cash-basis
accounting?
The Managing Director, KIWASCO (Mr. Odongo): Mr. Chairman, Sir, we use
accrual.
The Chairperson (Sen. Osotsi): Okay. We are progressing on well. The next audit
query is a common one. Hon. Members, I do not know whether it will be worth our time
to go through it – the issue of staff ethnic composition.
Sen. Olekina: No, Mr. Chairman, Sir.
The Chairperson (Sen. Osotsi): We agree we move forward because it is a challenge in

all water companies. We will go to item No. 4, a substantial one– Non-compliance on the
law on non-revenue water. Auditor?
Audit Query No. 4 – Non-Compliance with the

Law on Non-Revenue Water
Mr. Chairman, Sir. During the year under review, the Company produced a total of
9,915,691 cubic meters of water. However, a total of 6,842,992 cubic meters was billed
to customers resulting to non-revenue water of 3,072,699 cubic meters or 31 percent.
The allowable now-revenue water rate according to the Water Services Regulatory Board
(WASREB) guidelines is 25 per cent, resulting to 6 per cent over and above the allowable
rate. Therefore, the unallowed six per cent represents 594,942 cubic meters of water may
have resulted to non-revenue loss estimated at Kshs70,848,244 at the rate of Kshs30 per
cubic meter.
In the circumstances, management was in breach of the law.
The Chairperson (Sen. Osotsi): Hon. Governor?
Mr. Odongo can respond.
Management response – non-revenue water is a global water sector concern and
challenge, with Kenya currently averaging 45 per cent. The performance on the same for
the year under review of 31 per cent is above the industry target of 25 per cent. This is an
ideal target that companies are required to strive to achieve.
It is not a law, but an ideal standard set by the regulator. The Kisumu Water and
Sanitation Company Limited (KIWASCO) has old dilapidated water networks laid during
the colonial times, which continue to contribute to the high non-revenue water. The
Company is continuously rehabilitating its water networks, but is limited by financial
muscle.
Due to the heavy investment needed to overhaul all networks, KIWASCO is currently
working with various partners to help in containing non-revenue water. The non-revenue
water action plan shown here presents all activities and tasks to be conducted to manage
and reduce non-revenue water in line with their strategy-
(a) Sensitize customers on their roles in leak detection and reporting.

(b) Conduct network pressure surveys to inform leak detection.
(c) Frequent meter servicing, testing and calibration.
(d) Establishment of a reliable water balance at sub-levels - district meter areas
(DMAs) and reprioritizing non-revenue water actions based on the results of the water
balance.
(e) Design an establishment of DMAs for sustainable non-revenue water reduction
and management.
(f) Establishment and implementing meter management.
(g) Pressure management.
(h) Leak management.
(i)Strengthening the institutional capacity on non-revenue water reduction and
management.
The Chairperson (Sen. Osotsi): Very well. Auditor, your rejoinder for that.

Chairman, Sir, these concerns still remain. Our concern is that the management has given
us a statement of intent but it is not verifiable. I would have preferred measures
undertaken which can be verified on the ground so that we report back to this Committee,
that that management has taken concrete steps which are verifiable, in order for the
Committee to be satisfied that the non-revenue water will substantially reduce or be
within the guidelines.
The Chairperson (Sen. Osotsi): Hon. Members, this is a common problem in water
companies. Nairobi and Nyeri had the same problem. Auditor, how many days do you
require to give us additional information on this?

Chairman, Sir, that is for the management to provide data for us to verify and how soon
they can provide information on the measures taken to reduce non-revenue water.
Thereafter, we will be able to verify and report back to the Committee.
The Chairperson (Sen. Osotsi): Hon. Governor?
Mr. Odongo will respond.
The Managing Director, KIWASCO (Mr. Odongo): Thank you Mr. Chairman, Sir. As
I have stated, we believe that those measures which we have will help us reduce non-
revenue water to desirable levels. I also want to inform the Committee that this has
actually been revised downwards to 20 per cent. So, we have now formed a non-revenue
water department that reports directly to the Managing Director (MD). We have those
strategies which we are going to share with the Auditor-General since they are currently
on the ground.
Mr. Chairman, Sir, reduction of non-revenue water is gradual. When Kisumu Water and
Sanitation Company (KIWASCO) started, non-revenue water was about 60 per cent. So,
over the years, we have managed to reduce it to 31 per cent. I believe with the measures
that we currently have, we are going to gradually reduce it to around 20 per cent within
the next five years in line with the strategic plan that we are currently formulating.
The Chairperson (Sen. Osotsi): Sen. Olekina.
Sen. Olekina: Mr. Chairman, Sir, I am a bit concerned. Governor, maybe I would like to
hear this directly from you and not Mr. Odongo. Mr. Odongo has indicated that the
system is dilapidated. It is old. When you do your budget and since we know that water
is life. We have a system which is dilapidated that is giving you a loss of Kshs17 million
on an annual basis. Maybe until we see the audited financial statement for the current
year, we do not know whether this loss has actually gone down. Yes, we note that this is
a common issue especially for companies that have taken over assets and liabilities of
defunct local authorities.
Nevertheless, Governor, what are you going to do about this? I am not convinced with
the responses that Mr. Odongo has given. If I am running a company, I would ensure that
if something is old, I get rid of it or present a scenario where you are making money. If
you are not making money, you go to the county. Governor, how much do you budget
for water in the county?
I do not know what other plans you have in your County Integrated Development Plan
(CIDP) for the next five years. How are you going to assist this investment of the county
government to be able to, one, give more people water and, two, reduce these losses.
If you lose 31 per cent, you know, there are other unintended consequences Governor,
like the cost of electricity. That is a huge loss. You are pumping the water but losing 31
per cent of that water. You produce nine million cubic litres, but can only sell six million
and then you lose three million. I would really like to hear from the Governor what
measure are you going to put in place because these losses are huge.
An. Hon. Senator: Mr. Chairman, Sir, I have a question.
The Chairperson (Sen. Osotsi): Before you ask, let the Governor respond. Please, let
him respond and then we come back to you.
the question that Sen. Olekina is asking is very important. I do not think it is a question of
what are we intending to do or what are we doing?
As Mr. Odongo has said, non-revenue water has reduced to about 20 per cent. It means
that progressively over the years, it has been coming down, given the modernisation
plans that we have put in place. We have replaced old pipes, collected revenue more
efficiently by metering and also created new sources of water provisions like boreholes
and so on.
There are a lot of things happening in the water sector. I have inaugurated various water
projects in the county over the last five years which open new frontiers in water
consumption in areas that were not covered.
We have two problems. One, the old water system was covering few consumers, having
been run down and, therefore, things running at a loss. Secondly, is the new consumers
who need water, but have not been provided with water, where we have new water
projects going on.
I do not have the figures at my fingertips now to tell Sen. Olekina how many. I can ask
the CECM for Finance, Economic Planning and ICT, Mr. Okong’o, to enlighten the
Committee with some facts and figures which he has but I do not. As Governor, I
oversee, give policies and inspect. Then, when I need figures, they are provided by those
who domesticate them in their ministries. I will ask Mr. Okong’o to respond.
The Chairperson (Sen. Osotsi): Very well. I think Sen. Tabitha Mutinda has just come
in.
(Sen. Olekina spoke off record)
No. I want her to introduce herself before she asks any question.
Sen. Tabitha Mutinda: Thank you, Mr. Chairman, Sir. Sorry, I am late. My name is
Sen. Tabitha Mutinda, a Member of this Committee. Karibu Governor.
The Chairperson (Sen. Osotsi): Sen. Oketch Gicheru.
Sen. Oketch Gicheru: I just want to give an advisement to that conversation. A

statistical assessment. I think your finance team might go deeper into this. We have been
looking at water companies. Looking at the point of leakages and even being able to rank
those that are causing more losses is extremely important. I would be very curious if
perhaps you could be able to statistically show us the causative factors which are causing
the leakages and 31 per cent loss. With that kind of assessment, we can be able to know
whether it is deliberate or not. If for instance it is metres that are made dysfunctional by
the officers working for you, then we can advise on how it can be corrected.
I think this blanket idea of 31 per cent of non-revenue water does not make sense if you
do not take us into which areas are causing these problems. Which are the highest
ranking? How do you intend to deal with it? That is what I wanted to ask. It is not
about the system being old and dilapidated but what part of the system are we talking
about when we look at these losses.
The Chairperson (Sen. Osotsi): Very well.
I will ask George to respond because that is not a very difficult question to respond to.
The CECM Finance, Economic Planning and ICT (Mr. Okong’o): Thank you, Mr.
Chairman, Sir. I am just going to add to what His Excellency the Governor has said in
terms of facts and figures. The situation is such that whereas KIWASCO does the
distribution of water and all of the other things, the investment in infrastructure is still
supported by the County Government of Kisumu. To that extent, in the last two financial
years, the County Government has allocated about Kshs35 million for infrastructure
development in three water service facilities. These are Maseno-Kombewa-Kisumu
Rural Water Works and Nyakach Water Works. That investment is represented in the
financial year budgets that I have referred to. If the Committee wishes to see the budgets,
they can be availed.
Further to that, in regards to other funding for infrastructure development that are coming
from our partners, again, there is a new partnership that is being negotiated by the Dutch
Government. I think the Governor participated in some of those meetings where again,
Kshs26 million is likely to be availed in the coming financial year to deal with non-
revenue water, specifically, in informal settlements.
Finally, in terms of other resources for dealing with that problem; there is a grant that has
been given to Lake Victoria South Water Development Authority of Kshs2 billion which
will also cover KIWASCO’s territory. Out of that money, again, Kshs800 million is
allocated to deal with the problem of non-revenue water.

The Chairperson (Sen. Osotsi): Very well. Sen. Olekina.
Sen. Olekina: Mr. Chairman, Sir, there is a question that I have asked the auditor. As
soon as you have that response, please give it to me.
Thank you, Mr. Odongo, for more insights in terms of what you are looking to do. I do
not know whether I should hold these comments to my closing remarks. Governor, I am a
bit concerned that the total loss incurred by the company is about Kshs17 million. Since
we cannot look at the losses in isolation, we were told earlier on that there is around
Kshs48 million which is now going to be considered as bad debt. If you add that, it is
about Kshs65 million in losses.
That is a company which is technically insolvent. I would like to know what the budget
is. I know Mr. Odongo alluded to that but I have asked the auditors to give me the actual
budget for that company.
If, indeed, the losses are Kshs65 million, Governor, you may need to take a serious
administrative action when it comes to management of that water company. People are
not doing what they are supposed to do there. These losses will continue recurring. You
need to identify all those loopholes which are there. You have water, you produce water
and you sell water but people do not pay for that water. You also have leakages in the
system and dilapidated pipes. There is no way you can survive.
Governor, I know you might want to do much in terms of launching a lot of water
projects. However, sometimes you may want to put everything on paper and look at it
and ask whether you should continue using the old system or lay out new pipes where
you detect and stop all the losses. Otherwise, these losses will continue on an annual
basis.
The Chairperson (Sen. Osotsi): Proceed, Sen. Tabitha Mutinda.
Sen. Tabitha Mutinda: Thank you, Mr. Chairman, Sir. I wish to emphasize on the point
of Sen. Olekina. What duration has Mr. Odongo served as the Managing Director? We
will appreciate if the Governor would allow him to give the years of experience.
Looking at the feedback and the measures put in place by your management, it is quite
worrying, keeping in mind that you are a second term Governor. I believe if I was in your
position, my key goal would be to leave a legacy in terms of achievements and the
management of the county.
At this beginning of the new term, we are talking of about Kshs65 million loss. Having
been with that team, there are questions in terms of the experience and management. That
is why I wish to know the duration he has served as the MD.
The Chairperson (Sen. Osotsi): Very well. Proceed, Governor.

The Governor of Kisumu County (Hon. (Prof.) Anyang-Nyong’o): Thank you, Mr.
Chairman, Sir. Mr. Odongo, you know how long you have served.
(Laughter)
have served for five years. There is a notion I want to correct; we are dealing with audited
accounts, which do not show the losses we are talking about. Provision for bad debts is
not a loss.
Non-revenue water as we have seen, is not only a problem for KIWASCO. However, we
have seen progress over the five years in terms of reduction and leveraging on efficiency.
So, let us not talk about Kshs65 million loss because we have provided for bad debts of
Kshs48 million.
Sen. Olekina: Just, hold on. I have just been given what I was looking for and I wish I
had this before because it also contradicts what you just said. Your profit is actually
negative Kshs46,853,000. So, your profit is negative Kshs46,853,000. You have lost
Kshs17 million in terms of leakages and non-revenue water and that is still money.
On top of that, even money which you have not recovered, which we will now consider
bad debt, is still a loss. It is because you have incurred an expense. I am good at
mathematics. We need to be very careful with issues of business because if I am not
making that money, then what is it?
The Chairperson (Sen. Osotsi): Very well. I take it back to His Excellency the
Governor.
The Governor of Kisumu County (Hon. (Prof.) Anyang-Nyong’o): Mr. Odongo, can
you respond?
The Managing Director, KIWASCO (Mr. Odongo): Thank you. Which year are you
referring to?

Chairman, Sir, what you requested the Hon. Member was the budget for 2021. The
budget had a loss of Kshs46 million.
Sen. Olekina: I think that is the year under review, the one we are looking at.
The Managing Director, KIWASCO (Mr. Odongo): Mr. Chairman, Sir, that is the
budget. I want the Head of Finance to read for us the bottom line of the financial
statement for the year under review.
The Head of Finance and Strategy, KIWASCO (Mr. Moseti): Through the Governor,
yes, we had anticipated a loss of Kshs46 million but we made a profit of Kshs77 million.
It is in the financial statement and the auditor can confirm.
Sen. Olekina: Auditor, can you demystify what you just presented to me here?

Chairman, Sir, that is the approved budget. In other words, in their estimates, they
estimated they would make a loss of Kshs46 million. However, they actually made a
profit of Kshs77 million in the actual financial statements for the year under review.
What was requested from me was the budget for the year under review, 2020/2021. In
that year, they had projected a loss of Kshs46 million.
Sen. Olekina: What is the net profit because if you had estimated to make a loss of
negative Kshs46 million and you had a gross profit of Kshs77 million or Kshs71 million,
what is the net profit? I want you to take into consideration the non-revenue because that
is still a loss. It does not matter how you look at it, it is still a loss that can be avoided.
The Chairperson (Sen. Osotsi): Mr. Odongo, through the Governor.
The Managing Director, KIWASCO (Mr. Odongo): Thank you. The Head of Finance
has the audited financial statements. He can take us through.
The Head of Finance and Strategy, KIWASCO (Mr. Moseti): Thank you. We had
anticipated to make a loss of Kshs46 million. We made a profit of Kshs77 million having
taken care of all the activities including the purported loss of Kshs17 million. So, all that
has been considered for us to make the profit of Kshs77 million.
Sen. Olekina: You are not answering the question. Is that the net or the gross profit? You
are the Head of Finance and you should know the difference.
The Head of Finance and Strategy, KIWASCO (Mr. Moseti): This is the net profit.
Sen. Olekina: Auditor, you have indicated to me here that it is a gross profit. Is it gross
profit or net profit?

Chairman, Sir, when you look at the financial statements on page 1, this is the operating
profit after all the expenses. Profit before tax is Kshs77,671,831.
Sen. Olekina: Is that gross profit?

Chairman, Sir, that is the net profit because the gross profit is indicated as
Kshs648,722,181. Gross profit is gained by revenue minus cost of sales. From gross
profit, you less the expenses to get the net profit. So, the gross profit is Kshs648,722,181.
When you less all the expenses, you get a profit before tax of Kshs77,671,832.
Sen. Olekina: How about the taxes?
The Parliamentary Legislative Relations Officer, OAG (Mr. Gachanja): There is a nil
tax charge for the year under review. Profit before tax is what is indicated as profit for the
year.
Sen. Olekina: Do you pay any taxes? Let us get into the interesting debate of the nation.
The auditor is saying profit before tax. Auditor, I am reflecting at your earlier statement
that these financial statements were not prepared in accordance to the international
standards. Could there be an issue there in terms of how they capture that information?

Chairman, Sir, the concern that we had, as auditors, was to do with compliance with the
Public Sector Accounting Standards Board. The specific issue that we raised was to do
with failure to indicate the prior year issues, which in our opinion and also in that of the
public Sector Accountants Board, is very important for follow up prior year concerns by
the auditor. That was the specific issue raised on the non-compliance with the template.
Sen. Olekina: Let me put this matter to rest. One of the reasons I asked that is because I
asked a very specific question; which system of financial management do you use? Is it
accrual or is it a cash basis? You indicated clearly that it is accrual which means you
accrue prior year’s expenses and you move forward. So, when you are factoring in your
net profit and losses, you are misrepresenting facts. If you indicate that your profit is 77
per cent and the auditors have already said you did not put the previous year expenses---
Mr. Chairman, Sir, I believe what you need to do is to direct that the auditor and the
Governor sit together to try and understand how to prepare these financial statements.
This is because there are issues there that have not been raised; the issue of whether you
pay the taxes and those of prior year matters. If it was a cash basis of accounting, then I
will probably go with the figures that you are presenting but you are accruing, balance
brought forward, balance carried forward in terms of losses and profits.
For us to be in a better position to understand these financial statements, you should

direct them to reconcile their views to know which is which.
The Chairperson (Sen. Osotsi): I take it back to the Governor.
The Governor of Kisumu County (Hon. (Prof.) Anyang’-Nyong’o): I thought that was
an advice that---
The Chairperson (Sen. Osotsi): Your comment on the advice?

The Governor of Kisumu County (Hon. (Prof.) Anyang’-Nyong’o): I do not have any
comment.
The Chairperson (Sen. Osotsi): Okay. I think the advice is right. I agree with Sen.
Olekina who is our experienced Member of this Committee, that engineer, you need to
have a sitting with the auditors to have such matters resolved.
Before we conclude on that matter, I can see the prior year audit on the same issue of
Financial Year 2019/2020 where Mr. Odongo indicated a number of strategies that he
was going to employ to deal with the issue of non-revenue water. It is more detailed than
the current one. Just wondering, the fruits of all these strategies that you have listed down
was a reduction of the percentage from 37 per cent to 31 per cent. That is only a
reduction of 6 per cent. You need to explain more to us to understand that after
employing all these strategies, how come you only achieved 6 per cent against the
recommended 25 cent? Through the Governor.
The Managing Director, KIWASCO (Mr. Odongo): Rightfully observed Mr.

Chairman, Sir. I had a detailed strategy and plan of action to reduce non-revenue water
and it bore fruits. Within a year, we reduced from 37 per cent to 31 per cent. The 6 per
cent reduction in non-revenue water in water service provision is a very huge
achievement. It normally takes years to reduce non-revenue water by let us say five per
cent.
The challenge we have now is to maintain that momentum. The six per cent is not
significant. Remember that the target, then was 25 per cent. We have moved from 37 per
cent to 31 per cent. Progressively, we are moving towards the 25 per cent. We will
continue tweaking the strategy so that we achieve the desired non-revenue water levels as
set by the regulator.
The Chairperson (Sen. Osotsi): Very well. Any more questions on that matter by the
Senators taking into account we have only ten minutes to go?
Sen. Tabitha Mutinda: Mr. Chairman, Sir, through the Governor, I would want the
Head of Finance to indicate if the Kshs77 million mentioned as profit will be available in
the bank statements.
The Governor of Kisumu County (Hon. Nyong’o): Head of Finance.
The Head of Finance and Strategy, KIWASCO (Mr. Moseti): Thank you, Governor.
As mentioned earlier and clarified, we are using accrual basis of accounting not cash
basis of accounting. In essence, it means what we have is an accounting profit.
Accounting profit is different from the cash flow statement.
If you look at that year under review in our cash flow and financial position statements,
there is cash of Kshs54,884,182. However, I need to clarify here that an accounting
profit is not the same as the cash flow because we are not using cash basis of accounting,
we are using accrual basis of accounting.
The Chairperson (Sen. Osotsi): Any more questions from the Hon. Senators? Hon.
Senators, we will conclude there. We have covered Financial Year 2020/ 2021. I know
there are a few audit queries for the previous year which we will go through in our
meeting. In case we need more clarification from the auditor or the county, we will make
that clarification in writing and deal with any matter that will be coming forward. For
now, I will end it there.
In your agenda, we had a list of many issues. These issues would require a retreat of two
days to deal with. I hope the clerk has learnt something from this. Let us bite what we
can chew next time. We have had officers from Kisumu County who have come to deal
with these issues and have had no time to deal with them.
I would want the clerk to give direction. I know we were to deal with the Kisumu County
Car and Mortgage Scheme. We will create another time to do that. We were also to deal
with the Kisumu County Education Fund, Kisumu County COVID-19 Emergency
Response Fund, Kisumu Urban Projects, and then we have a list of other things which I
would want to ask the auditor to confirm the audit status of some of those reports. Do you
have audited reports for all these things listed here?
The Parliamentary Legislative Relations Officer, OAG (Mr. Gachanja): Yes, we do.
The Chairperson (Sen. Osotsi): Tabled in Parliament?
The Parliamentary Legislative Relations Officer, OAG (Mr. Gachanja): Yes, they
have been tabled. The COVID-19 report has been tabled. That, I am sure.
The Chairperson (Sen. Osotsi): Okay. Clerk, please confirm.
The Clerk Assistant (Mr. Shimoy): Yes, they have been tabled.
The Chairperson (Sen. Osotsi): I give direction that today we have tackled Kisumu
Water and the clerk will create time for those other issues that are listed here. As I have
directed, please, let us bite what we can chew next time. Next time, maybe we will deal
with the funds; Kisumu Car and Mortgage Scheme Fund and the Kisumu County
Education Fund so that we are able to finish within time.
The Governor of Kisumu County (Hon. (Prof.) Nyong’o): Mr. Chairman, Sir, can I
seek your indulgence? I would like my team to correct this.
The CECM, Finance and Economic Planning Kisumu County (Mr. Okong’o): Thank
you, your Excellency. Mr. Chairman, Sir, the additional issues are listed as number one to
nine. Some of those issues have not been subjected to any audit by the Auditor General.
If you look at the questions of Afro-cities at number six and, the Kibuye Market at
number eight, these are projects and expenditures of the last financial year, which will
feature in the current ongoing audit. It needs to be recorded that there are no audit reports
on some of these issues, particularly No.1-8.
The Chairperson (Sen. Osotsi): Sen. Olekina, proceed.
Sen. Olekina: Mr. Chairman, Sir, it would be proper for the county to put that
clarification in writing. Given that this was raised by your Senator and for us to be clear
of the issues that we will look at, write to the Committee and copy to the auditor, who
will verify to us whether some of the issues have been audited or not. You are right that it
will be pre-empting audit queries, if we tackle issues that have not been audited. If on the
other hand, we were on the ground and we see things going on, nothing stops us from
asking those questions. The Governor should write to the Committee pointing out the
issues of concern and as good practice or behavior, you can copy it to your Senator. As
stated in Article 96 of the Constitution, our role is to protect the interest of counties and
their governments. We may be asking questions because of our interest in oversight.
However, if a matter has not been audited by the Auditor General, it is good for you to
notify us.
The Chairperson (Sen. Osotsi): The position is that we must not overstep our mandate
as a Committee. The legal officer is present. We only deal with the audited reports. What
is not audited is not within our mandate. Maybe they belong to the departmental
committees.
Sen. Olekina: Mr. Chairman, Sir, let George through the Governor take us through
agenda No.3. I do not see a problem with providing a list of projects funded by the World
Bank and Kenya Urban Support Project in Kisumu County and the amount of funds
involved, whether or not it has been audited. I do not also see a problem with providing
detailed information on the Kisumu42 Venture Limited. Also, there is no problem with
providing information on the amount of money the county used in the Afro-city
Conventional Centre and the Afro-City Conference that was held in Kisumu County.
In addition, you could provide information on the Kano Rice Project. Also, provide
information on any grant received by the county for the development of the Kibuye
market. Clerk, what information is this? Be specific. Since this is on provision of
information, you could share it. I will be honest with you. This is the better way of
requesting this information and the Government knows this. Rather than seeking a
Statement on the Floor of the House, using a Committee is better so that we can cipher
the information and know the steps to take from there.
The Chairperson (Sen. Osotsi): The clerk has supplied me with a copy of the
information requested. We will go through the information and assess it. We need to play
within our tracks, we should not go beyond our mandate. Before we conclude, I will ask
Members to make their final comments. We will finish with the Governor making the
final comments. Senator for Kiambu, you have the Floor.
Sen. Thang’wa: Mr. Chairman, Sir, I have no comment.
The Chairperson (Sen. Osotsi): Sen. Olekina proceed.
Sen. Olekina: Mr. Chairman, Sir, I have a comment. Governor, thank you for coming.
As you have noticed, the management of the water company leaves a lot to be desired. I
know you are busy. However, take a day or two, sit down with the management, and go
through this information. I also request that you spend time with auditors to clarify issues.
I talked to the auditor to understand the financial statements.
I have also had the chance to go through the financial statements with the auditor. It
shows that the tax amount was nil for the year in review. However, you have also
indicated that you paid a tax of Kshs3.8 million. The way to prepare the financial
statement is important. You made Kshs77 million during that financial year. However,
you had losses. Also, when you do not collect money from metered water that is a loss.
I hope that in the 2022 financial statement, there will be Kshs9.2 million carried forward.
This is information that George can take time to explain. Mr. Odongo, it is agreed
between us that you will use Parliamentary language which will help the auditors and
assist you in understanding the issues of concern. This is public money. We all here serve
at the pleasure of the people who elected us to come here. When you are the head of an
institution, the first thing you should subscribe to is ensuring fiduciary duty. You should
be responsible enough to undertake due diligence in all the projects.
You need to sit down and look at whether you can start new projects from the grants you
receive that will cost a lot of money. Water is life for the people of Kisumu County. We
will retreat and write the report. There are issues we have noted which are of concern.
Governor, when we retreat to write our report, most of the observations come from the
written responses. I hope the HANSARD will be provided to us so that we can take into
consideration some of the mitigating factors you have raised.
Thank you, Governor, for coming. Let us do this to change our country and make it a
much better place. Kisumu City is a beautiful county. We need to be advancing and
running away from the Stone Age to a different time.
The Chairperson (Sen. Osotsi): Thank you, we proceed to His Excellency the Governor.
I apologize. Sen. Tabitha Mutinda who is in the Nairobi Delegation should conclude.
Sen. Tabitha Mutinda: Thank you, Mr. Chairman, Sir. I thank the Governor for finding
time to be here. It is our mandate to ensure that we support devolution. As my colleague
has mentioned, I admire Kisumu County. It is one of the counties where standards have
been set in terms of cleanliness and the good things you associate with cities like London
City. As young legislators, we look upon our seniors who have been there. Governor,
kindly, leave Kisumu County with the highest of standards.
The Chairperson (Sen. Osotsi): Very well, Your Excellency the Governor, proceed to
make your final remarks.
I want to take this opportunity to thank the Committee. I have really enjoyed myself this
morning. I have learnt a lot.
I used to sit in that Chair and I sat in it Bunge too in a Chair like that in the mid-90s, and I
did not realize it is more enjoyable to sit here listening to you and learning more than to
sit there asking the questions. I think that is great. We have done a lot of work in the
water sector. I would, when time allows, invite the Committee to come to Kisumu
County particularly because the discussions we have had in the water sector are very
important and will help us go even further in what we are doing.
One of the biggest problems in the water sector is how to deal with the old water
provision facilities. A lot of money was spent, maintenance was neglected, decay has
occurred and first of all, it takes money to deal with what you are removing and even
more money to replace it.
Sometimes it may be easier to abandon the old system and start completely new one,
rather than trying to modernize the old one. These are some of the experiences we have
had in the water sector. I think that seeing is believing and subject to your availability
and time allowing.
I invite you to Kisumu one of these days so that we can go through that experience
together.
I thank you and I appreciate you.
The Chairperson (Sen. Osotsi): Thank you, Governor, and your team for honoring our
invitation to come. We have really enjoyed your contribution and responses. We
understand that the water companies in counties are facing almost similar challenges.
Most of the audit queries that we have looked through are the same, but we still
encourage that you can do more to improve the water systems and processes in counties.
This Committee so far has made an impact because some of the counties which have
appeared before us; we have listened to their challenges and we have made
recommendations which have been acted on immediately.
For your information, Your Excellency Governor, the county which Sen. Olekina
represents, Narok Water and Sewerage Services Company Limited (NARWASSCO)
appeared before us and we recommended that the Chief Executive Officer (CEO) be
sacked and the Board be reconstituted.
We are happy that the Governor did that and there are improvements there. We are not
saying that we are sacking someone today but some of the matters needs administrative
action; the way we have seen.
We had a similar challenge with the Othaya Mukurweini Water and Services Company
Limited (OMWASCO). We are making progress and as a new Committee, we want to
talk to all the water companies and possibly look at the legislative and regulatory gaps
that this Committee can help them deal with; so that counties are in full control of the
water companies within their jurisdiction.
We want to be players in good governance of water companies within your various

counties. Count on our support. We want to run our Committee very professionally
without those harsh exchanges.
That is the spirit we want to promote between Senators and the county governments on
the other side. I thank you very much for coming. We are very grateful. Being one of the
senior governors around and political mentor of many of us here, Sen. Olekina being one
of them together with Sen. Oketch Gicheru--- Thank you for coming and have a safe
journey to Kisumu County.
The meeting is adjourned.
The Committee adjourned at 2.10 p.m.

Hansard - CPIC - 28.2.2023 - Kisumu CE

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Hansard - CPIC - 28.2.2023 - Kisumu CE

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February 28, 2023 HANSARD (CPIC) –KISUMU COUNTY EXECUTIVE 1

February 28, 2023 HANSARD (CPIC) –KISUMU COUNTY EXECUTIVE 2

Mr. Philip Adundo - Chief Officer

OFFICE OF THE AUDITOR-GENERAL (OAG)

Mr. Mark Gachanja - Parliamentary Legislative Relations

Mr. Yusuf Shimoy - Clerk Assistant

(The Committee commenced at 11.15 a.m.)

(The Chairperson and Members of the Committee introduced themselves)

(Delegations present and the Secretariat introduced themselves)

Sen. Kisang: I propose.

Sen. Olekina: I second.

The Parliamentary Legislative Relations Officer, OAG (Mr. Gachanja): My name is

(The Governor of Kisumu County

The Parliamentary Legislative Relations Officer, OAG (Mr. Gachanja): Mr.

Sen. Olekina, please proceed.

The Chairperson (Sen. Osotsi): Mr. Shimoy, please proceed.

The Chairperson (Sen. Osotsi): How many copies of this is available?

Sen. Olekina: Can you bring them in?

Sen. Thang’wa, please proceed.

The Chairperson (Sen. Osotsi): Okay. Sen. Kisang’, please proceed.

You can settle down so that we start.

The Chairperson (Sen. Osotsi): Are you done?

(Sen. Hamida Kibwana introduced herself)

Audit Query No. 1.0 – Unsupported Property

The Parliamentary Legislative Relations Officer (OAG) (Mr. Gachanja): The

The Chairperson (Sen. Osotsi): Your Excellency the governor, proceed.

The Parliamentary Legislative Relations Officer, OAG (Mr. Gachanja): Mr.

The Chairperson (Sen. Osotsi): Sen. Olekina, proceed.

The Parliamentary Legislative Relations Officer, OAG (Mr. Gachanja): Mr.

The Parliamentary Legislative Relations Officer, OAG (Mr. Gachanja): Mr.

The Managing Director, KIWASCO (Mr. Odongo): Yes.

The Managing Director, KIWASCO (Mr. Odongo): Confirmed.

The Chairperson (Sen. Osotsi): Kindly respond

The Chairperson (Sen. Osotsi): Proceed, Sen. Olekina.

The Chairperson (Sen. Osotsi): Very well.

Sen. Olekina: Mr. Chairman, Sir.

The Chairperson (Sen. Osotsi): Sen. Olekina, please go ahead.

The Parliamentary Legislative Relations Officer, OAG (Mr. Gachanja): Mr.

The Parliamentary Legislative Relations Officer, OAG (Mr. Gachanja): Mr.

Audit Query No. 2 – Unsupported Provision of Bad Debts

The Chairperson (Sen. Osotsi): Very well. Governor, proceed.

Despite several remainders, meetings, disconnections and outsource to external debt

The Chairperson (Sen. Osotsi): Very well. Over to you, auditor.

The Parliamentary Legislative Relations Officer, OAG (Mr. Gachanja): Mr.

The Chairperson (Sen. Osotsi): Proceed, Sen. Olekina.

The Chairperson (Sen. Osotsi): Back to the Governor.

This is a responsibility of the Finance and Commercial Committee. It goes to the

The Chairperson (Sen. Osotsi): Very well. Through the Governor.

The Parliamentary Legislative Relations Officer, OAG (Mr. Gachanja): Mr.

Thank you, Mr. Chairman, Sir.

Auditor, please proceed.

The Parliamentary Legislative Relations Officer, OAG (Mr. Gachanja): Mr.

The Parliamentary Legislative Relations Officer, OAG (Mr. Gachanja): It is in the

Auditor, please take us through that.

Audit Query - Unsupported Trade and Other Receivables

The Parliamentary Legislative Relations Officer, OAG (Mr. Gachanja): In the

Kshs8,372,163, in respect of repayments and deposits, whose supporting documents such

The Governor of Kisumu County (Hon. (Prof.) Anyang’-Nyong’o): Mr. Odongo,

Thank you, Mr. Chairman, Sir.

The Chairperson (Sen. Osotsi): Members, please. Proceed, Sen. Olekina.

The Chairperson (Sen.Osotsi): Let us start with the Auditor.

The Parliamentary Legislative Relations Officer, OAG (Mr. Gachanja): Mr.