Summary

SAI Kenya conducted a performance audit of the Unclaimed Financial Assets Authority’s (UFAA) measures to ensure compliance of holders in the surrender of unclaimed financial assets (UFAs), safeguard the assets surrendered, and facilitate the eventual reunification of assets with the rightful owners. Audit was conducted due to the substantial amount of unreported UFAs, as well as low rate of tracing and reunifying UFAs to rightful owners by the UFAA. The audit covered the period from 2018–2019 to 2023–2024 financial years. Auditors noted continued low compliance by holders in surrender of UFAs to the UFAA. Due to insufficient contact information for owners, limited location and notification systems, inability of holders to reunify UFAs at source, low number of claims lodged and delays in the claim verification process, only 4% of UFAs was reunified to the rightful owners. The UFAA safeguarded UFAs through investments in government securities, but lacked mechanisms or legal framework to guide the full utilization of investment income for long-term socio-economic development, leading to the accumulation of unutilized reserves, missed public investment opportunities, and increased risks of misapplication or loss of funds. Among other deficiencies, auditors also mentioned the UFAA's use of outdated data on the number and value of UFAs held by holders and lack of a mechanism to receive and safeguard non-cash assets. SAI Kenya recommended that the UFAA raise awareness among holders of the different categories of UFAs, put in place clear mechanisms to regulate compliance audits (including outsourced compliance audits), strengthen oversight of public institutions through a shift to the accrual basis of accounting and collaborations with the regulators, update legislation and holder reporting forms to collect contact information, strengthen partnerships with local authorities to increase the effectiveness of the mechanisms used to locate and notify apparent owners, include a differentiated claim process based on the value of claimants' assets, and increase the accessibility of its UFAs management services.