• Auditor General Nancy Gathungu says the money was not accounted for in the financial year ended June 30, 2020.
• Gathungu’s report also shows inaccuracies in the company’s records on its property, plant and equipment.
Image: MATHEWS NDANYI
Rivatex East Africa's management in Eldoret failed to account for more than Sh1 billion given by the government for the expansion of the firm.
Auditor General Nancy Gathungu says the money was not accounted for in the financial year ended June 30, 2020.
Rivatex has also made accumulated losses of more than Sh1.8 billion, according to Gathungu’s report.
The Eldoret-based textile firm was revived by the state and donors at a cost of more than Sh6 billion but is currently facing managerial and financial challenges.
Gathungu noted that during the financial year under review, the company received grants of Sh1.08 billion from the ministries of Industry, Trade and Co-operatives, and Education.
“However the management did not provide audit documents and explanations on how the Sh1.08 billion was used,” Gachungu said in her report.
Consequently, the accuracy of the use of the receipts for the development grant could not be confirmed.
Gathungu noted material uncertainty related to the company as a going concern because of its shaky operations.
For the year under review, the company reported a net loss Sh376.5 million resulting in accumulated loss to Sh1.81 billion as at June 30, 2020.
The company management attributes the poor performance to constant breakdown in processing machines that had hindered the company's ability to supply goods of the right quality and on time.
Gathungu said the company’s statement of comparative budget and actual amounts reflected the final receipts budget and actual on comparable basis of Sh355.5 million and Sh353.4 million respectively.
The company incurred an expenditure of Sh730 million against an approved expenditure budget of Sh716.6 million resulting in an overexpenditure of Sh13.5 million.
Gathungu’s report also shows inaccuracies in the company’s records on its property, plant and equipment.
The Rivatex statement of financial position reflected the property, plant and equipment balance of Sh6.4 billion as at June 30, 2020.
However, the property balance was at variance with the Rivatex asset register balance of Sh4.4 billion which was provided for the audit resulting in an unexplained and unreconciled balance of Sh2 billion.
The auditor noted that assets with carrying value of Sh105.3 million were dismantled to pave the way for the installation of new machines during the year ended June 30, 2019. The dismantled assets have not been included under non-current assets.
Gathungu also noted that on the property, plant and equipment balance of Sh6.4 billion was a work-in-progress balance of Sh1.9 billion comprising of buildings with a carrying value of Sh459 million and plant and equipment with a carrying value of Sh1.5 billion.
“However, the management did not maintain a work-in-progress register as required,” the auditor said.