A resident of Beledweyne told CNN reporters that al-Shabaab executed the two girls Wednesday because the rebel group claimed the girls were spies for the transitional government.
"Hundreds of people came out to watch the execution," he said. "It was very bad ... the girls looked shocked and were crying but (no one) could help."
Witnesses said the two girls, ages 15 and 16, were blindfolded and bound to a tree before being shot by an al-Shabaab firing squad. Residents denied the claims of spying were accurate.
The area has seen recent fighting between pro-government forces and al-Shabaab, which has declared war on African Union peacekeepers in the war-torn country.
Somalia hasn't had a functioning government since 1991 and the mandate for the transitional administration expires next year.
The United Nations said, however, it was preparing to dispatch staff members to the capital Mogadishu after militias loyal to the government gained modest ground on al-Qaida affiliates with al-Shabaab.