The Public Trustee of Kenya has come under scrutiny after Auditor General Nancy Gathungu raised concerns over weak controls surrounding Sh6.6 billion held on behalf of beneficiaries
The auditor has in her latest report stated that the effectiveness of systems used to identify and manage the funds could not be confirmed.
The June 30, 2025 review paints a picture of an institution struggling with manual records, staffing shortages and governance gaps despite managing billions of shillings in estates and trusts.
According to the audit, the Public Trustee held total non-current liabilities amounting to Sh7.12 billion as at June 2025, including Sh6.66 billion belonging to beneficiaries.
However, auditors established that some of the money deposited in the institution's accounts could not be linked to their rightful owners.
"The statement of financial position reflects total non-current liabilities balance of Sh7,122,663,050, which includes an amount of Sh6,656,694,439 relating to beneficiaries' funds," Gathungu said in the report.
She added that the beneficiaries' fund contained unallocated deposits amounting to Sh4.37 million for which the beneficiaries' details had not been identified.
"In the circumstances, the effectiveness and control of identifying beneficiaries' funds deposited in the Public Trustee's account could not be confirmed," Gathungu said.
The Public Trustee administers estates of deceased persons, manage trusts and safeguard funds belonging to minors and other beneficiaries unable to manage their own affairs.
The office therefore handles substantial amounts of money on behalf of thousands of Kenyans across the country.
The audit findings are likely to raise questions over the institution's ability to effectively track and account for beneficiary funds under its custody.
Gathungu also faulted the Public Trustee for failing to establish an account for unclaimed estates as required under the Public Trustee Act.
The law requires funds belonging to untraceable beneficiaries to be placed in an Unclaimed Estates Account for observation for seven years.
If still unclaimed, the amounts are supposed to be transferred to the Consolidated Fund, especially after the lapse of the statutory period.
Auditors, however, established that no such account had been opened contrary to the Public Trustee Act, which requires estates reverted to the government if unclaimed.
"The management is in breach of the law," Gathungu stated, further raising concerns over the management of investments worth Sh210.4 million held by the institution.
The audit established that the Public Trustee has continued operating without an Investment Board despite the Public Trustee (Amendment) Act, 2018 creating the body to oversee investment decisions.
The board was supposed to comprise the Solicitor-General as chairperson, a representative from the National Treasury, and Law Society of Kenya nominee with at least 10 years' experience.
However, seven years after the law came into force, the board had not been established.
"In the circumstances, the effectiveness of the investment decisions could not be confirmed and management was in breach of the law," Gathungu said.
The report also paints a troubling picture of the institution's record management systems.
Despite handling average annual disbursements of approximately Sh3 billion to beneficiaries through its headquarters and regional offices, the Public Trustee continues to maintain records manually.
Auditors found that the institution was relying on more than 50,000 physical ledgers spread across its headquarters and 12 regional offices.
According to Gathungu, the records have deteriorated over time, making it difficult to update and retrieve them.
"Failure to perform periodic risk assessments may lead to losses, inefficient management and delays in processing beneficiaries' financial transactions," she warned.
The auditor general linked the challenges to the absence of adequate risk management mechanisms within the institution.
The Public Trustee also lacked an approved and operational Enterprise Risk Management Strategy contrary to the Public Finance Management Regulations, 2015.
The regulations require public institutions to establish risk management systems, including fraud prevention mechanisms and internal controls designed to safeguard public resources.
Without such a framework, auditors said they could not confirm whether adequate systems existed to identify, assess and mitigate operational and financial risks.
The institution was also faulted over staffing shortages in critical accounting positions.
At the headquarters, only two accountants were in place against an approved establishment of five, with the staffing situation in the regions more severe.
The Kakamega, Kericho, Kisii and Meru regional offices had no accountants at all, while the sole accountant at the Nakuru office was due for retirement in December 2025.
"The lack of effective internal control measures poses the risk of error and misstatements in the accounting records," Gathungu said.
Auditors additionally questioned the management of ex-official agents collecting revenue on behalf of the Public Trustee.
Although fees collected by the agents were being deposited directly into the State Law Office revenue collection account, auditors established that the officers had not been formally appointed.
The Public Trustee was also not receiving regular reports on revenue collected, estates administered and balances held by the agents.
According to the auditor general, the weak accountability framework had undermined effective planning and follow-up on the activities of the agents.
