•The auditor cast doubt on the recoverability of Sh342 million owed to the board by the Ministry of Agriculture.
•Also flagged was an unsupported bank overdraft of Sh544 million.
Image: FILE
National Cereal and Produce Board has been hit with fresh claims of impropriety in the procurement of subsidised fertiliser.
Auditor General Nancy Gathungu has flagged an unaccounted Sh68 million purchases of the farm inputs, casting doubt on the Sh1.8 billion reported as cost of sales.
An audit report tabled in Parliament shows, NCPB bought 10,000 metric tonnes of government fertiliser under an assignment contract.
The board reported that it spent Sh496 million on the purchases yet the contract was Sh427 million resulting in the explained variance.
“Consequently, the accuracy of the cost of sales amount of Sh1.8 billion as of June 30, 2019, could not be confirmed,” Gathungu said.
Data in the audit report reveals that the board ordered 100,000 bags of NPK fertiliser at Sh241 million and a similar quantity of CAN at Sh186 million.
The audit further revealed that management did not provide for audit, documents in support of the importation and the certificate of conformity issued by the Kenya Bureau of Standards.
“It was difficult to ascertain that value for money was realised in the procurement of the fertiliser,” Gathungu said.
The auditor further cast doubt on the recoverability of Sh342 million owed to the board by the Ministry of Agriculture under the fertiliser account.
At least Sh342 million and Sh191 million were at the time of the audit owed to Strategic Grain Reserve Fund and GOK famine relief depots which have remained unpaid for over 17 years.
“It has not been possible to confirm whether the board will be able to recover the amounts, management did not make provisions for bad and doubtful debts,” the auditor said.
“The accuracy and completeness of Sh7.6 billion in respect to the government debtors fertiliser account as of June 2019 could not be confirmed.”
Also flagged is an unsupported reduction of Sh2 billion in debts owed by the government. The debt was reduced from Sh11 billion to Sh9 billion.
“The management did not provide documents to support the reduction.”
NCPB was also found to be lacking an expert in finance and accounting at the board’s audit committee, contrary to the Mwongozo Code of Governance for State Corporations.
The code requires that at least one of the members of the audit committee should have financial expertise and be a member of the professional body regulating accountancy professionals.
In the year ending 2018, an audit revealed that NCPB could not account for Sh2.3 billion from fertiliser sales. In the query, the board failed to bank all the revenue realised from the sales.
The cereals board is further on the spot for various transactions which it failed to provide supporting documents to auditors.
Among them is an unsupported bank overdraft of Sh544 million which the NCPB failed to back up using a bank reconciliation statement and bank confirmation certificates.
The board also failed to explain unreconciled bank balances of Sh5.3 million.
“The accuracy, completeness and fair statement of overdraft balance could not be confirmed,” Gathungu said.
She further flagged an imminent loss of 35 parcels of land that don’t have title deeds, further reprimanding the grain handler for failing to disclose details of 55 donor-funded storage facilities.
“The ownership of the donor-funded storage facilities has not been clarified,” the auditor said, further questioning unexplained discrepancies in the stock take report.
“There was no stock reconciliation to separate government stocks and those of the board,” the report reads.
On the land query, the audit further revealed that portions of NCPB depots in Bungoma, Nakuru, Kericho and Kakamega have been heavily encroached.
In Kericho, permanent residential houses have been constructed and occupied by third parties who have allotment letters.
“It is not clear under what circumstances that the land ceased to belong to the board,” Gathungu said.
She further revealed that a tenant has built permanent structures on the open space and also repainted the board’s offices.
“There was no evidence provided to show that these developments on the property were approved by the board of directors,” the report revealed.
The cereals agency was also reprimanded for failing to recognise losses of Sh342 million from maize which was reported to contain high levels of aflatoxin by the Ministry of Health.
The grains were declared unfit for human consumption.
“The management did not provide a write-down of the stocks to recognise the losses made during the year under review,” Gathungu said.
Also cited was a difference of 82 million bags that were not reconciled in stock reported by Strategic Grain Reserve Fund and board store records.
NCPB also queried for failing to remit Sh143 million to the government from cereal sales by the board prior to the liberalisation of the board in 1993.
“Management did not provide documentary evidence for audit in support of the balance and the reason why the board has not remitted the money to the government since 1993,” Gathungu said.