UoN wallows in Sh15.7 billion debt

The University of Nairobi is wallowing in Sh15.7 billion debt comprising Sh9.7 billion nonpayment of statutory deductions and is therefore not able to meet its financial obligations when they fall due, a new report shows.

The report by the Auditor General Nancy Gathungu, shows that of the Sh9.7 billion statutory deductions that the university has failed to remit, Sh4.9 billion relates to taxes owed to Kenya Revenue Authority (KRA) and Sh4.8 billion is in regards to pension’s contributions

The report also shows that out of the Sh15.7 billion, Sh6 billion amounts to debts as the university’s liabilities stand at Sh11.3 billion against current assets of Sh5.3 billion resulting in a negative working capital.

Further, it also shows that the financial performance of the university reflects a deficit of Sh3.1 billion which is an increase from the previous financial year of Sh1.6 billion thus leading to accumulated deficit of Sh5.6 billion from Sh3.4 billion in the previous financial year.

“In the circumstances, the continued existence of the university is dependent on continued financial assistance from government, donors and its creditors,” reads the report.

The report tabled in the National Assembly last week Thursday by leader of Majority Kimani Ichung’wah further raises various financial concerns facing the university including unsupported and un-cleared adjustments and balances, variances between the financial statements and trial balances, incomplete register, unreconciled cash and cash equivalent, unsupported clearance of bank overdraft, Unsupported general fund balance and un supported trust endowment funds.

Others are queries relating to construction of a school of pharmacy, non-disclosure of students pre-payments, unreconciled transactions between students management information system and sage system, Irregular payments of allowances, having loss making generating incomes, operating unauthorised bank accounts, as well as having stalled student’s hostels at Lower Kabete Campus.

Income programmes

With regards to loss making income generating programmes, the report discloses that the financial statement of the university reflects accumulated loss from income generating activities and parallel programs totalling to Sh 770.2 million

Examination of records, the report says revealed that the income generating activities under UNES Limited made a total loss of Sh106.98 million during the year under review.

“In the circumstances, the effectiveness of the income generating activities funded by the university could not be confirmed,” reads the report.

On construction of student hostels at Lower Kabete campus comprising 500 bedrooms, kitchen, dining, and accommodation room, Gathungu regretted that this project being undertaken by a contractor in 1990 stalled in 1992 after budgetary allocation ceased.

Mutually terminated

According to her, although the contract was mutually terminated in 2000, the university still owes the contractor a balance of Sh50 million which has remained unpaid to date. The contractor has since sued the university claiming the outstanding payment of Sh50 million plus interests and cost.

“Although the university management indicated that they had requested for funding amounting to Sh450 million to finance the completion of the stalled project, audit inspection of the project in February 2022 revealed the building is deteriorating due to roof leakages, termites, visible cracks in the columns and beams, chemical and physical damage on the stalled building. In the circumstances, the possibility of achieving value for money from the project could not be confirmed,” adds the report.

On irregular payments of allowances, Gathungu regretted that examination of records had revealed that there were 53 and another six staff members in various job groups whose entertainment and responsibility allowances were above the stipulated salary structure provided for Collective Bargaining Agreement (CBA) 2013-2017, resulting to an overpayment of Sh2.3 million and Sh258,709 respectively.

Further she regretted that the allowances were paid contrary to article 230(4) of the constitution of Kenya and part C 2(1) of the Human Resources Policies and Procedures Manual for the public service which empowers the Salary and Remuneration Commission to advise the National and County Governments on the remuneration and benefits of all public officers.

“In the circumstances the accuracy, completeness of salaries and wages amount of Sh2,573,707 could not be confirmed,” she added.

With regards to non-disclosure of student payments, the report shows that during the year under review, she noted that the university did not report any balance relating to student payables including prepayment of student fees.

However, she disclosed that re-computation of the student balances at the end of the year under review, established that there was an amount of Sh 1,9 billion from 29,029 students which was either school fees over paid or paid in advance.