Large sums of money flowed through the newly established Public Officers Medical Scheme Fund last year, but auditors were unable to determine the sources or uses of much of the cash due to missing and unreliable records for the financial year ending June 2025.
The fund declared total income of KSh 6.5 billion; however, KSh 5.3 billion of this could not be supported with proper documentation, leaving most of the revenue unverified.
Similarly, expenditures totaling KSh 6.34 billion lacked sufficient evidence such as claims records, invoices, and payment schedules, making it difficult to track how the funds were spent. Within this amount, KSh 994 million could not be tied to any confirmed claims, agreements, or documentation.
The Auditor-General noted that the financial statements were not backed by adequate records, indicating serious weaknesses in accounting practices. Important documents, including detailed income and expenditure ledgers as well as records of receivables and payables, were either incomplete, unavailable for review, or unreliable.
The fund operates under the Social Health Authority (SHA), which was created to consolidate public-sector healthcare coverage for over 123,000 members into a unified national system.
An additional KSh 50 million reported as income from SHA lacked supporting bank statements or an approved budget. Meanwhile, KSh 351.5 million allocated to the staff medical scheme also raised concerns. Bank records further showed KSh 7.62 million in salary payments and KSh 3.59 million in unexplained funds that were neither recorded as income nor liabilities.
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Auditors also found inconsistencies in membership data, which is essential for tracking contributions and benefits. Discrepancies in member records cast doubt on whether payments were made for legitimate beneficiaries and whether contributions matched actual membership.
The fund lacked a clear policy framework to guide benefits, claims processing, eligibility, and payments to service providers. As a result, disbursements were made without standardized procedures, reducing accountability and consistency.
In several cases, payments to healthcare providers were made without formal contracts or proper procurement documentation, creating a risk of unclear pricing and unenforceable agreements.
The audit further highlighted weak internal controls, including poor separation of duties, inadequate approval processes, and missing audit trails. Financial and claims management systems were either insufficient or poorly implemented, increasing the risk of errors or fraud going undetected.