The Auditor General’s Performance Audit Report on the management of Unclaimed Financial Assets by the Unclaimed Financial Assets Authority (UFAA) examined the Authority’s activities for the financial years 2018 to 2024 to determine trends in its performance regarding its mandate. The audit was motivated by an anticipated substantial increase of KES 156.0 billion by 2022 in financial assets still unreported to the authority, a figure first highlighted in UFAA’s 2018 Baseline Survey, which estimated that KES 241.0 billion remained unclaimed and unremitted by holders.
The audit sought to assess implementation measures to ensure compliance by asset holders, safeguarding of surrendered assets and reunification with rightful owners. The review conducted under Section 36 of the Public Audit Act, 2015 covered both operational and financial performance with a focus on compliance and reunification and asset safeguarding.
According to the Auditor General, compliance by holders in surrendering unclaimed financial assets remained notably low. By August 2024, UFAA had received KES 65.0 billion, only 16.4% of the projected KES 397.0 billion estimated in 2018. Furthermore, just 644 out of 477,112 potential holders had voluntarily remitted unclaimed assets.
Public institutions, including universities, law courts and water companies were singled out for non-compliance largely due to their continued use of cash basis accounting that mask disclosures of unclaimed assets. Compliance audits conducted by UFAA and outsourced auditors identified KES 12.2 billion in unremitted assets, but only 14.0% had been surrendered as of the audit date. The report also noted gaps in enforcement namely failure to close compliance audits and inconsistencies in recovery of audit fees and penalties.
Despite improvements since inception, UFAA’s asset reunification rate remains low, averaging only 4.0% by mid-2024. The Authority had received KES 60.0 billion worth of assets, split almost evenly between cash and non-cash holdings but faced challenges tracing owners due to insufficient contact information, outdated databases and cumbersome verification processes
The Auditor-General observed that a uniform claim process discouraged low value claimants and recommended amendments to the Unclaimed Financial Assets Act, 2011 and related regulations to streamline claims, update reporting forms and enable donation of unclaimed assets to charitable causes.
While UFAA effectively safeguarded cash assets by investing KES 22.3 billion in government securities, generating KES 13.1 billion in income between 2018 and 2024, the report found no mechanism to manage non-cash assets such as 1.7 million unclaimed shares still held by original custodians. Moreover, KES 9.6 billion, representing 73.0% of investment income, remained idle due to absence of a legal framework for its utilization in socio-economic development programs.
The Auditor-General concluded that the Authority’s enforcement and reunification mechanism were ineffective, limiting its ability to fulfil its constitutional mandate of protecting Kenyan’s rights to property. The report recommends legislative reforms, periodic data updates, enhanced collaboration with regulators and counties and a clear policy of using investment income to fund public initiative.
If implemented, these changes could significantly improve the transparency, efficiency and socio-economic impact of Kenya’s unclaimed financial assets regime.
