KAA on the spot over questionable cash flow

Auditor General Nancy Gathungu has pointed fingers at Kenya Airports Authority (KAA) over unaccounted car park revenue as well as hiring of lawyers without approval amounting to billions of shillings

 In an adverse report rendered on the Authority, Gathungu has also raised concerns over a number of issues with the institution including being in possession of lands that are in dispute yet various airstrips are sitting on it, having unsupported administrative expenses, unsupported land acquisition as well as having a Kenya Airways debt.

 Reads the report: “In my opinion, because of the significance of the matters described in the basis for adverse opinion section of my report, the financial statements do not present fairly, in all material respects, the financial position of the Kenya Airports Authority as at June 30, 2023, and of its financial performance and its cash flows for the year then ended, in accordance with International Financial Reporting Standards and do not comply with the Kenya Airports Authority Act, Cap.395 and the Public Finance Management Act, 2012.”

Physical receipts

 With regards to car park revenue collection, Gathungu regretted that the authority is not able to account for Sh2.5 billion as crucial documents required to support the same were not provided.

Part of the money includes Sh447 million collected from all the airports across the country which the report says cannot be accounted for. This, the report says, is because field verification carried out in the month of February, 2024 revealed that revenue collection in Kisumu International Airport, Malindi International Airport and Eldoret International Airport was based on manual systems with issuance of physical receipts and at times no receipts at all.

  On Jomo Kenyatta International Airport (JKIA) the report raises questions regarding the over Sh296.7 million collected from car parks through Kenya Airports Parking Services (KAPS) which JKIA agreed to collect car park revenue on their behalf.  Part of the agreement was that the concessionaire pays to the Authority revenue at the rate of 82 per cent of parking revenue collected, subject to a Minimum Annual Guarantee (MAG) of Sh250,000,000

 Despite the move, the report has raised concerns that weaknesses were noted on management and control of the car parks revenue collections by KAPS.

Critical data

 Part of the issues raised is the fact that the Authority is exposed to loss of funds as it solely relies on the report from KAPS for billing as JKIA bills the car parks fees based on the concessionaire’s (KAPS) reports and not electronic point of sale (ePOS) reports as per contract requirement. The ePOS, the report notes, although connected to the KAPS System, reports generated from two systems showed unexplained variance of Sh101,873,256 between the month of January, 2023 to May, 2023 in a span of five months.

The report further notes that an audit interview and review of the system data showed that there was deficiency in integration between the Authority’s ePOS and KAPS whereby data was partially transmitted to the Authority’s ePOS from KAPS with numerous instances of critical data reflecting as null details.

 This, the report says indicates that ePOS could only extract selected data as shared from KAPS system via its Application Protocol Interface (API) thereby restricting the ability of the authority to validate any information from the concessionaire.  Reads the report: “No data verification and reconciliation is undertaken to ensure accuracy of the information declared by the concessionaire.”

 It adds: “Although the KAPS database was not exposed to the cyber security attack that the authority experienced, the details of the revenue collections for the months of July, 2022 to December 2022 was not provided and could not be accessed through the KAPS system.”

 In addition, the report raises concerns that automated car parking management system from KAPS is not fully

car registration number plate controlled as the system sometimes captures and prints symbols on the tickets instead of the specific car registration number, a move that exposes the Authority to loss of revenue because one car ticket can be used by a different car to exit creating a lapse in the security system.

 At the point of exit from the airport, the report further raises concerns that some users were paying in cash to the KAPS operators and the collections were not recorded in the system while in other cases other users would present the tickets and be allowed to exit.

Reads the report: “In the circumstances, the accuracy and completeness of concession income balance of Sh2,504,250,000 could not be confirmed.”

 On legal fees, the report raises concerns over Sh12.3 million that relates to fees paid to lawyers who represented the Authority in various disputes yet relevant documents were not available to show how the legal services were procured, the scope of work per firm and the terms and conditions of engagement.