The troubled Kerio Valley Development Authority lost Sh101 million, pushing its debt to at least Sh2.1 billion.
Auditor General Edward Ouko, in his report for 2016-17, said if the loss-making trend continues, the state corporation faces collapse.
The agency's accumulated deficit rose from Sh2 billion to Sh2.1 billion.
"If strategies are not put in place to reverse the loss-making trend, the authority’s future operations will be adversely affected," Ouko said.
The Directorate of Criminal Investigations is probing KVDA's Chief Executive Officer David Kimosop over the possible loss of Sh21 billion meant for the Arror and Kimwarer dams in Elgeyo Marakwet.
Several Cabinet secretaries have also been questioned by the DCI over the dams scandal.
The Auditor General does not mention the two dams in his 2016-17 report because the dams were not at issue at that time.
Kimosop said good progress has been achieved on the projects.
Ouko said KVDA has questionable debts of Sh37.9 million. This includes Sh22 million owed by a former MD, former directors owe Sh316,000 and tenants of the 14-storey KVDA Plaza in Eldoret have not paid Sh14 million.
“In the circumstances, the completeness and accuracy of KVDA’s property balance of Sh708.9 million could not be confirmed," Ouko said.
The auditor questioned the authority's expenditure on several projects, such as the Rokocho Honey Plant. It stalled despite a contractor having been paid Sh4.2 million. Ouko said this was more than 74 per cent of its total cost.
“The management has not explained the reasons that led to non-execution of the project by the contractor," he said.
Ouko said the authority did not get value for money on the Sh13.2 million Nagule Akiring water pan in Turkana county.
However, in his KVDA performance report, Kimosop said the authority had mobilised more than Sh98 billion for development in the eight counties where it operates.
He said the authority had mapped irrigation potential of 751,000 acres and developed irrigation infrastructure on 3,650 acres.
Kimosop said KVDA had created new revenue streams to increase income from Sh100 million annually to Sh185 million. He said it has the potential to increase revenue to Sh300 million annually by 2019-20.
The CEO said the authority had also reduced staff from 600 to 460 at the time of the audit.
