Kenyatta University is broke, says auditor
Kenyatta University (KU) is technically solvent as it is unable to fulfil its financial obligations, says a new audit report.
The report from the Auditor General Nancy Gathungu shows that the total liabilities of the University which stand at Sh10 billion outweighs the current assets totalling to Sh1 billion.
Reads the report: “The statement of financial position reflects total current assets and total current liabilities totalling Kshs. 1,061,709,070 and Kshs. 10,894,129,913, respectively, resulting in a negative working capital of Kshs. 9,832,420,843. This casts significant doubts on the University’s ability to continue to sustain services. In the circumstances, the University is technically insolvent and may not be able to meet its current obligations as and when they fall due.”
Statutory dedications
The report for the year ending June 2023 claims that the situation of the university is so bad as it is unable to pay statutory dedications, its assets have continued to depreciate, has an unsustainable wage bill as well as failed to reclaim land encroached by informal settlers.
The university is also on the spot over irregular procurement process, irregular procurement of entertainment services, fuel, lubricants, LPG gas, and security services.
The institution is also on the spot over irregular transactions, unsupported employee costs, doubtful expenditure on Rwanda campus, irregular acting allowances, two seasonal staff earning below minimum wage, non-compliance with law on ethnic composition as well as having stalled projects.
On statutory deduction, the report shows that the unremitted dedication totals to Sh8.4 billion.
These deductions, the report says have attracted undetermined penalties and interests which have not been disclosed.
In addition, Kenya Revenue Authority (KRA) issued a demand notice demanding corporate tax and PAYE amounting to Sh42.2 million and Sh7.469 billion respectively inclusive of penalties and interests all totalling to Sh7.5 billion.
Of the amount Sh4.7 billion is in respect to Pay As You Earn (PAYE), Sh4.7 million for National Hospital Insurance Fund (NHIF), Sh2.6 million for National Social Security Fund (NSSF), Sh3.3 billion is for pension contribution and Sh15 million for welfare deductions. Other deductions include Sh3.7 million is for insurance, Sh184.9 million for cooperative, Sh70.5 million for staff loan while Sh68.4 million is for other salary deductions.
Reads the report: “In the circumstances, the accuracy and completeness of trade and other payables from exchange transactions amounting to Kshs. 10,422,900,821 could not be confirmed.”
On wage bill, the report notes that employee costs totalling Sh6.7 billion which is 95 per cent of total revenue amounting to Sh7 billion which was contrary to Regulation 26(1)(a) of the Public Finance Management (National Government) Regulations, 2015 which states that compensation of employees should not exceed thirty-five per cent of total revenue.
On land, the report regrets that land measuring 12.472 hectares amounting to Sh123.3 million has been illegally encroached by informal settlers.
Although the University filed a case in Court against the encroachment and obtained a favourable ruling, no eviction has been enforced.
Further, the report notes that a review of records revealed that the University was allocated 32 hectares of land in Garissa County after it paid registration fees of Sh880,000 yet ownership documents for the land were not provided.
Land compensation
In addition, the report also raises concerns that ownership and compensation of the land measuring Sh7.97 hectares Kenyatta University Teaching, Referral and Research Hospital (KUTRRH) l is built on has not been determined.
On Rwanda Campus, the university is on the spot over doubtful expenditure that has seen the university gobble a whopping Sh679.8 million yet the campus has remained closed as no students have been admitted.
