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Taxpayers may have lost more than Sh487.06 million in the Coffee Cherry Advance Revolving Fund (CCARF) last year due to financial inaccuracies, the Auditor General has revealed in a new report.

The Office of the Auditor General revealed, in the report on the Coffee Cherry Advanced Revolving Fund for the year ended June 30, 2023, that financial statements presented by the New Kenya Planters Cooperative Union (NKPCU) for audit contained unexplained and unreconciled balances in cash and cash equivalents, total net assets and liabilities.

The statements also had inaccuracies in its current liabilities, cash flows and capital risk management.

Unexplained and unreconciled balances refer to discrepancies between actual results and expected or budgeted amounts that remain without a clear explanation or justification after analysis. These inaccuracies normally indicate errors in accounting, missed transactions, or even fraudulent activities.

“The statement of financial position reflects comparative cash and cash equivalents balance of Sh2.9 billion while the corresponding Note 29 to the financial statements reflects the comparative balance of Sh2.8 billion resulting to an unexplained and unreconciled variance of Sh19.8 million,” the report read in part.

The report further revealed unexplained and unreconciled variance of Sh6.7 million in total net assets and liabilities, Sh6.1 million in current liabilities and Sh436.6 million in net cash flows from operating activities.

Additionally, the Auditor General revealed that the disclosure on capital risk management at Note 51(iv) to the financial statements reflected total borrowings of Sh17.6 million that had not been incorporated into the financial statements.

“In the circumstances, the presentation, accuracy and completeness of the above balances as reflected in the financial statements could not be confirmed,” the Auditor stated.

Trade receivables balance

Further, the presentation of the financial statements was not in accordance with the format prescribed by the Public Sector Accounting Standards Board. Hence, the Management did not comply with the International Public Sector Accounting Standards (Accrual Basis).

The report said that during the year under review, the Auditor General could not confirm the accuracy and recoverability of trade receivables balance of Sh703.4 million of the Coffee Cherry Fund.

The statement of financial position reflected receivables from exchange transactions and receivables from non-exchange transactions balances of Sh488.2 million and Sh215.1 million as disclosed in the financial statements respectively both totalling Sh703.4 million.

“However, included in Sh703.4 million is Sh337.9 million of receivables, which have been outstanding for more than one (1) year. Management did not provide explanation for the delays in recovery or actions being taken to recover the long overdue amounts,” the report added.

Further, no provisions for bad and doubtful debts have been made despite its doubtful nature, leading the Auditor General to conclude that the accuracy and recoverability of the trade receivables balance of Sh703.4 million could not be confirmed.

The Auditor General revealed that it was difficult confirming the inaccuracies due to the Fund’s failure to prepare annual work programme and budget for the financial year ended 30 June, 2023.

“In the foregoing circumstances, it was impossible to establish the Fund’s approved activities and cost estimates thereof for the financial year under review as envisaged,” the Auditor General said.