- During the year, the ministry paid an amount of Sh350 million as part payment for the court award.
- The remaining balance of Sh1.071 billion is still outstanding subject to an outcome of a court case.
The Ministry of Defence had Sh8.1 billion in pending bills as at June 30, 2020, a report of Auditor General Nancy Gathungu shows.
The report covering the 2019-20 financial year further showed the ministry had a contingent liability of Sh1.4 billion arising from a court award on a disputed contract.
“During the year, the ministry paid an amount of Sh350 million as part payment for the court award,” the report states.
Gathungu said the remaining balance of Sh1.071 billion is still outstanding, subject to an outcome of a court determination of Civil Case 39 of 2014 on the matter.
“The above amount has not been included as part of the pending bills during the year,” she said.
“Failure to settle bills during the year to which they relate distorts the financial statements and adversely affects the budgetary provisions for the subsequent year as they form the first expenditure to be charged,” she added.
Gathungu, however, said there were no material issues noted during the audit.
She further said there were also no material issues relating to lawfulness and effectiveness in use of public resources or issues relating to effectiveness of internal controls, risk management and governance.
Gathungu also flagged pending bills amounting to Sh244 million at the Ministry of Foreign Affairs over the same period.
She said the bills were not paid during the year under review but were instead carried forward to the 2020-21 financial year.
The auditor reiterated that failure to settle the bills during the year to which they relate to alters financial statements and disrupts the budgeting process.
She added that examination of records revealed MFA purchased 27 laptops, two desktop computers and 28 printers at a cost of Sh10 million in the year under review.
“It was observed that the ICT equipment were delivered before Local Purchase Orders were issued,” she said.
She added that the statement of assets and liabilities reflected cash and cash equivalents balance of Sh2.1 billion.
“As disclosed in Note 10 A to the financial statements, the bank balance of Sh2.1 billion includes recurrent and development accounts balances of Sh524,746 and Sh134,300 in accounts No.1000302337 and No.1000302356, respectively, at the Central Bank of Kenya,” the report said.
However, it adds, the Central Bank of Kenya certificate of balances reflected recurrent account and development account balances of Sh21,848,532.61 and Sh299,128.85.
The bank reconciliation statements for June 30, 2020 also reflected balances of Sh65,580,230.56 and Sh667,436.10 under recurrent and development accounts, respectively resulting in differences between the three sets of records.
“Under the circumstances, the accuracy of the bank balance of Sh2,177,403,861 as at 30 June, 2020 could not be confirmed,” the report explained.
Gathungu said there were also no material issues relating to effectiveness of internal controls, risk management and governance.
(Edited by Bilha Makokha)