In the latest audit report, she says the agency has continued to record a decline in performance in all its operations.
Gathungu says the NCPB statement of profit or loss and other comprehensive incomes reflects a significant decline in gross sales by Sh2 billion or 75 per cent from Sh2.7 billion reported in the 2018-19 financial year to Sh692.8 million in the year under review.
The latest audit covers the 2019-20 financial year.
The auditor says the decline resulted in an operating loss amounting to Sh1 billion in the year compared to Sh717.3 million in the previous year.
“Management attributed the low revenues to large debts owed by the government that resulted in a shortage of working capital needed to restock trading stock,” Gathungu says in the report.
However, she says, the board disclosed bank and cash balances of Sh3.8 billion and bank overdrafts of Sh5.4 billion, resulting in a net overdraft of Sh1.6 billion.
“Consequently, board may require the support of the national government and creditors to finance its operations,” Gathungu says.
The statement on the financial position reflects the current liabilities of Sh19.2 billion comprising various short-term liabilities, the audit report shows.
Gathungu notes a review of the liabilities included in the balance revealed several unsatisfactory matters, including trade payable balance of Sh674 million.
The balance includes Sh7.6 million owed to Export Trading Company for the supply of fertiliser. However, the management did not explain how the liability arose since the fertiliser was procured through a letter of credit from Kenya Commercial Bank, which was subsequently converted into a loan on maturity.
She says although the amount owed to the company decreased by Sh643 million in the year under review, records on payments made to the company were not provided for the audit.
“As a result, the occurrence of the payment could not be confirmed,” the report says.
Gathungu also notes that the financial statements reflect creditors due to the national government on SGR maize sales balance totalling Sh4.4 billion as at 30 June, 2020.
The balance includes maize transport costs at Sh472 million incurred in the year ended June 30, 2018, whose documents were not provided for audit verification.
Gathungu says also included in the current liabilities balance are VAT arrears at Sh964 million payable to Kenya Revenue Authority arising from the board being an agent of the authority.
This tax balance includes Sh464 million arrears that have remained outstanding since 2002.
She says although the tax arrears had continued to attract penalties and interest, the same were not formally assessed and incorporated in the financial statements for the year's review.
The report shows the statement of financial position of NCPB also reflects creditors due to government on fertiliser sales totalling Sh5 billion.
The statement of financial position also reflects creditors due to government on SGR maize sales of Sh4.4 billion.
