Billions of shillings moved through the new ‘Public Officers Medical Scheme Fund’ last year with little clarity on where the money came from or where it went, after auditors said they couldn’t verify how the cash was earned, recorded or spent in the year to June 2025.
- •The fund reported total income of KSh 6.5 billion, but KSh 5.3 billion of that amount could not be reconciled to supporting documentation, leaving the bulk of its revenue unsubstantiated.
- •On the expenditure side, KSh 6.34 billion in payments could not be verified due to missing claims records, invoices, and schedules, effectively obscuring how public money was applied across the scheme.
- •Within that expenditure, a distinct payment of KSh 994 million could not be linked to any verifiable claims, contracts, or supporting documentation.
The Auditor-General highlighted that the financial statements were not supported by adequate underlying records, pointing to a breakdown in basic accounting processes. Key supporting schedules including detailed ledgers for income, expenditure, receivables, and payables were either incomplete, not provided for audit, or could not be relied upon.
The Public Officers Medical Scheme Fund sits inside the new Social Health Authority (SHA) architecture designed to absorb and reorganise public-sector medical cover for 123,728 principal members into a centralized universal health system.
The fund’s accounts show an additional KSh 50 million in income from the Social Health Authority (SHA) that lacked supporting bank statements or an approved budget for the staff medical scheme, which itself totalled KSh 351.5 million over the period under review. At the same time, the bank statements and cash book recorded KSh 7.62 million in salary payments and a further KSh 3.59 million in unapplied funds that were neither recognised as income nor recorded as liabilities, despite having been received into the bank.
Membership data, which underpins both contributions and benefit payments, was found to be inconsistent and unreliable. The audit noted discrepancies in member registers, raising questions about whether contributions corresponded to actual beneficiaries and whether payments were made on behalf of legitimate members. Without a credible membership database, the integrity of both income and expenditure streams remains uncertain.
The fund operated without a comprehensive policy framework governing benefits, claims processing, eligibility criteria, and provider payments. In the absence of these guidelines, disbursements were made without a standardized basis, weakening consistency and accountability across transactions.
In multiple instances, payments to service providers were not supported by formal contracts or service-level agreements, and procurement documentation was either incomplete or missing. This created conditions under which funds could be disbursed without enforceable terms or clear pricing structures.
The audit also cited inadequate segregation of duties, weak approval workflows, and the absence of reliable audit trails. System controls, including those governing financial and claims data, were either insufficient or not effectively implemented, increasing the risk of manipulation going undetected.
