New state payroll system erroneous, says audit report

Auditor General Nancy Gathungu on September 4 last year/FILE

A highly anticipated government system designed to eliminate ghost workers and streamline payroll management in public service is riddled with flaws, a special audit by Auditor General Nancy Gathungu has revealed.

The audit established that the Human Resource Information System-Kenya (HRIS-Ke), launched to replace the outdated Integrated Personnel and Payroll Database, is erroneous.

It exposed weak governance, incomplete functionalities and glaring security gaps that the auditor general says could perpetuate payroll fraud and inefficiencies. 

The audit, tabled in Parliament on June 19, found alarming discrepancies during the migration of employee data from the old IPPD system to HRIS-Ke.

“These included instances where employees existed in one system but were missing in the other, discrepancies in job groups, unjustified changes in job groups and designations,” Gathungu said.

In the pilot phase, 47 employees appeared on the HRIS-Ke payroll but were missing from IPPD records, while 18 employees listed in IPPD vanished during migration.

“This indicates weakness in the data reconciliation and validation process during migration, which could lead to inaccurate payroll processing, unauthorised changes to employee records and potential financial losses,” the auditor general said.

County governments faced even worse inconsistencies, with 56 employees’ job groups unjustifiably changed and designations altered without explanation.

“These gaps indicate poor validation controls during migration, creating loopholes for ghost workers, overpayments or wrongful exclusions,” the report says.

The latest report by the Public Service Commission (December 2024) indicated that at least 17,000 ghost workers were still on the national government’s payroll.

The compliance report revealed high-profile government institutions like State House, had more employees than are physically present in their offices.

The audit also flagged cases where employees who had reached retirement age remained active on the payroll, suggesting the system failed to enforce mandatory retirement rules. 

The HRIS-Ke project, intended to centralise human resource management across all government tiers, was also found to be lacking basic governance frameworks.

It was also established during the review that the Ministry of Public Service had no dedicated ICT strategy, budget, or formal agreements with developers.

Shockingly, developers from various ministries worked without non-disclosure agreements (NDAs) or software licenses, exposing the system to intellectual property theft and unauthorised modifications. 

“The absence of quality assurance teams and change management policies means anyone could alter the system unchecked,” the audit warned.

Critical modules like the Staff Establishment Module, meant to validate employee positions, were delayed, forcing manual processes prone to errors.

The report further red-flags payroll chaos and non-compliance, including a dysfunctional payroll module, a flagship feature in the system.

It also emerged that salary arrears were computed manually offline and uploaded, risking errors and fraud. 

“Key weaknesses included manual calculation of arrears, lumping of arrears with other allowances, and the inability to generate net pay reports for specific departments.”

The system was also found to fall short on pre-payroll audits or generate the previous month’s payroll reports, thus impairing transparency, auditability and operational effectiveness.

The audit also cited overpayments and underpayments of allowances (health risk and travel allowances).

These totalled millions of shillings due to the system’s failure to enforce the Salaries and Remuneration Commission guidelines. 

County governments, which joined HRIS-Ke in December last year, also faced unique challenges.

Designations like ward administrators and revenue clerks weren’t configured in the system, forcing staff into incorrect job groups.

“This undermines accountability and could lead to wrongful terminations or unpaid salaries,” the auditor general said.

Gathungu, in her recommendations, urged immediate action to salvage the system, including an overhaul of the governance system.

She wants the Public Service Ministry to develop an ICT strategy, allocate budgets and formalise the service agreements. 

The auditor further wants the government to enter into non-disclosure agreements with developers and establish a quality assurance team. 

She has also asked the state to upgrade the system, automate arrears calculations, enforce retirement rules, and integrate with systems like KRA and NSSF. 

Gathungu has further directed the executive to expand the project’s steering committee to include county representatives. 

Recently, the Ministry of Public Service said it was looking to the system to help deal with the crisis of ghost workers.

Public Service CS Geoffrey Ruku said the system was up and running, and would be improved from time to time on a case-by-case basis.

He further announced that the state was engaging telcos to develop a mobile app to augment the HR system.

INSTANT ANALYSIS

The government has made an effort to curb the country’s bloated wage bill, which consumes over 50 per cent of tax revenue. The web-based system, created with the support of the World Bank, was designed to handle salary payments. A PSC report said there were 17,000 ghost workers.