Kenya Revenue Authority single sourced the procurement of printing, supply and delivery of security revenue stamps worth Sh4.6 billion from SCI PA Security Solution SA Prilly, contrary to the Public Procurement and Disposal Act.
Auditor General Edward Ouko's qualified opinion on the tax collector's financial statement for the year ended June 30, 2016 says KRA did not give justification why it shielded the Swiss firm from competitive bidding of Sh4,552, 516,226 tender, denying the authority value for money on the contract.
This is not the first time KRA is being questioned over single sourcing SICPA Security Solutions SA Limited.
In July 2016, the agency commissioner-general John Njiraini was quizzed by Public Investments Committee (PIC) it procured the Swiss firm to deliver Sh17.7 billion e-tax tender amid allegations that the IT company had corrupted tax agencies in Albania, Morocco, Brazil and the Philippines.
Defending the contract, Njiraini denied knowledge of SICPA’s involvement in corruption but promised to provide further information on why KRA decided to use direct procurement.
The auditor found out that the contact was silent on ownership of equipment that had been delivered at a cost of Sh2.37 billion and that KRA had not capitalised the cost of the assets in their books.
The tax man also failed to disclose under the trade coeditors Sh770 million owed to SICPA for supply of equipment as at June 30 2016.
The report also revealed that KRA had 17 pieces of land without title deeds worth Sh378 million, which were transferred to the authority by the government in 1995.
'Under the circumstances, it has not been possible to confirm ownership status of these 17 parcels of land and whether property, plant and equipment balance of Sh15, 631, 210,000 as at June 30 2016 is fairly stated,'' said the auditor.
Further more, in evaluating the tax man's books, the auditor general noted understatement of up Sh5.6 million in the cash and bank balance of Sh10.05 billion reflected in the statement of financial position during the year under review.
According to the auditor, whereas the total cash and bank balances amounted to Sh10,o57,811,645.23, the statement indicated Sh10,052,218,000 hence a difference of Sh5,593,645.23
Consequently, the tax agency could not explain Sh10.63 million disparity in its interest income. The auditor found out that Sh843,982,000 reflected in the statement of the financial performance for the year did not match with the ledger balance which stood at Sh824,353,467.10
Also, the auditor noted an understatement of Sh13.5 million in KRA's miscellaneous as well as Sh6.9 million income from rental properties owned by the authority at Wilson Airport.
Although KRA has signed service level agreements with financial institutions that prohibits th imposition of any charges, commissions or any other costs by banks for any service rendered to the authority, the auditor general noticed bank charges of up to Sh101.37 million in KRA's operating expenses, putting to question the validity of S980.5 million appearing in the agency's statement as operating expenses for the year
Examination of KRA records also established that it received excess development budget support of Sh164 million which were not supported by either supplementary budget or request. It had received Sh1,254,930,000 from the National Treasury against an approved budgetary request of Sh1,090,930,000.