Parliament wants the Directorate of Criminal Investigations (DCI) to probe the Postmaster-General over failure to pay Sh159.06 million that was meant for onward transmission to orphans and persons with disabilities in the year to June 2015.
The National Assembly's Public Accounts Committee (PAC) has given the DCI 90 days to start investigations into the matter.
This is with a view to charge any public official found culpable of financial misconduct as stipulated in Section 197 of the Public Finance Management (PFM) Act, 2012.
The State Department for Social Protection had previously contracted Postal Corporation of Kenya (PCK) as an agent to deliver cash to vulnerable beneficiaries throughout the country.
Former Auditor-General Edward Ouko said that after expiry of the contract between the State department and PCK, a balance of Sh169.3 million remained unpaid.
Social Protection Principal Secretary Nelson Marwa however told PAC that Sh10.24 million from the persons with severe disabilities programme had been refunded, leaving a balance of Sh159.063 million uncleared by PCK as at June 30, 2017.
"Correspondence between the State Department and the accounting officer, State Department for Broadcasting and Telecommunication, dated July 12, 2016, and which were copied to the National Treasury, requested the agent (PCK) to refund the funds. But to date, no action has been taken," Mr Ouko said in his audit report.
"It is not clear why the State Department has not taken legal action against PCK to have the amount which has been outstanding since 2015 (three years) without earning any interest refunded," the report says.
The entire unremitted amount included Sh105.58 million for orphans, Sh35 million for vulnerable children and Sh28.72 million for people with severe disabilities.
Mr Marwa said various correspondences with the Office of the President, National Treasury, PCK and State Department for Broadcasting and Telecommunications to try and resolve the issue have not been very successful.
The committee recommended that, within three months after tabling and adoption of its report, the Postmaster-General and CEO of the PCK provide in writing to the Auditor-General the reasons why the corporation failed to pay the balance.