The Kenyan parliament has introduced a new Cooperatives Bill aimed at strengthening oversight of Saccos and cooperatives. The bill proposes the establishment of county-level offices of commissioners and directors of audit to protect members' savings from mismanagement, fraud, and falsified records. This move comes in response to the collapse of several cooperative institutions, resulting in significant losses for members. The bill was drafted to address these issues and ensure that members' savings are secure.
Under the proposed bill, each county would have a director of audit appointed by the government to independently review financial reports prepared by external auditors. These reports would be verified against available records, and any irregularities would be flagged before members vote to approve the accounts. This added layer of review aims to prevent collusion between cooperative management teams and auditors, a loophole that has allowed financial misconduct to go undetected in the past.
The Cooperatives Bill, 2024, also calls for an independent Office of the National Auditor for Cooperatives. This office would be staffed by technical officers appointed by the Public Service Commission and would review audit reports from federations and the Apex Cooperative before forwarding findings to the Commissioner for Cooperative Development. This measure is designed to provide an additional layer of oversight and ensure that financial reports are accurate and reliable.
The bill further proposes that county audit directors have the power to recommend the dissolution of cooperatives deemed at risk of collapse. A mediation committee comprising Senate and National Assembly members supports this measure, which aims to prevent further losses for members. External auditors would continue to examine cooperative books, but their reports would not be presented to members without prior approval from the county audit directors.
The push for stronger controls follows high-profile failures such as the collapse of KUSCCO, the umbrella body for Saccos. KUSCCO incurred estimated losses of Sh17 billion due to fraud and falsified records. The bill aims to prevent similar incidents in the future by introducing stricter oversight and review processes. By doing so, members' savings can be protected, and confidence in the cooperative sector can be restored.
The proposed bill also bars individuals previously named in inquiry or inspection reports for mismanagement or corruption from serving on cooperative boards. This measure aims to prevent those with a history of financial misconduct from being involved in the management of cooperatives. By introducing these stricter controls, the bill seeks to ensure that cooperatives are managed in a responsible and transparent manner.
The introduction of the Cooperatives Bill, 2024, marks a significant step towards strengthening oversight of Saccos and cooperatives in Kenya. If passed, the bill would provide an additional layer of protection for members' savings and help prevent financial misconduct. The bill's proposals have been widely supported, and it is expected to be debated and passed into law in the coming months.
Key points
- The proposed bill aims to prevent financial misconduct by introducing county-level audit offices and an independent Office of the National Auditor for Cooperatives.
- The bill proposes to bar individuals with a history of financial misconduct from serving on cooperative boards.
- The introduction of the bill follows high-profile failures such as the collapse of KUSCCO, which incurred estimated losses of Sh17 billion due to fraud and falsified records.
