- Management of the Fund has never provided an analysis of the transfers made by the National Treasury.
- No record of the contracts entered into between the Fund and consultants were provided for the audit review.
Image: ELIAS YAA
The Auditor General has questioned how an Utalii College campus at the Coast that was to be built at Sh2 billion ended up gobbling Sh9 billion.
Nancy Gathungu said the extra amount was 361 per cent higher than the original estimated cost.
This has put the Tourism Fund in a spot amid concerns of its failure to account for transfers to the college.
Construction of Ronald Ngala Utalii College was to cost Sh1,948,000,000 as was proposed by the Ministry of Tourism and Finance and approved by Cabinet.
Gathungu said no record was provided for audit to explain the increase in the cost of the project and whether the new cost was approved by Cabinet.
“No disclosures have been made in the books of the Fund or independently on the progress of works or the assets and liabilities of the college as at the time of the audit,” the report for the year ending June 2019 reads.
Gathungu also raised concerns that the financial statements of the college have never been submitted to her office for audit contrary to provisions of the PFM Act, 2012.
“Besides the gazettement of the college, it appears that it has no governing board or staff deployed to start its operations,” the auditor said.
She said that management of the Fund has never provided an analysis of the transfers made by the National Treasury as capital grants to the college.
Also the value of aggregate grants as well as the detail of the other resources invested in the school.
Gathungu said that in view of the flagged issues, “the probity and value for money on the public funds spent by the Fund on the envisioned college as of June 30, 2019, could not be confirmed.”
She also said the number of funds received and transfers made by the Fund in relation to the project and the valuation of the work in progress and the pending works as at June 30 could not be confirmed.
In her report of the review of Tourism Fund books of accounts tabled at the National Assembly recently, the auditor has also queried the manner in which the tender was awarded.
The award of the construction was made to the third-lowest qualified bidder at Sh8.96 billion and not the lowest bidder who had quoted Sh8.46 billion
Gathungu says the resultant difference of Sh498 million was significant, “notwithstanding that all bidders had undergone evaluation and prequalification processes and had their competencies and suitability confirmed.”
At the same time, officials attempted to change the project scope downwards from Sh8.9 billion to Sh4.9 billion but no records were provided to explain the drawdown and whether Cabinet approved the same.
Further to this, no record was provided to align expenditure of Sh2.6 billion incurred on the consultants to the payments rates prescribed in the Architects and Quantity Surveyors Act Cap 256 of 2010.
No record of the contracts entered into between the fund and the consultants were also provided for the audit review.
“The fees Sh2,631,215,086 fees charged by the consultants seemed high and did not match the civil works expenditure of Sh3.6 billion as at June 30, 2019, and the contract sum of Sh4.9 billion,” the auditor said.
Also questioned is an expenditure amounting to Sh44.9 million in out of pocket expenses by the architect for which no supporting documents were provided for audit verification.
Payments of Sh7.2 million to the project’s quantity surveyor as reimbursement for costs were also not backed up by documents contrary to the Public Procurement and Asset Disposal Act, 2015.
“No evidence was provided to confirm that the procurement of the architectural and other consultancy services was preceded by an advertisement for the expression of interest by potential contractors,” she said.
Gathungu has also questioned Sh13 million paid to an advocate engaged in August 2013 to negotiate outstanding land rates with the Kilifi government.
The advocate was to obtain the rates clearance certificate within 30 days from the date of payment – September 9, 2014.
On October 10, 2016, the advocate wrote to the Tourism Fund requesting an additional Sh10 million "to finalise the matter" but the fund did not honour the request.
“The reasons for the payments made to the advocate in excess of the value of the outstanding rates were not explained by the management,” the report reads.
Gathungu has also flagged an unclear claim to the tune of Sh1.14 billion by the quantity surveyors fashioned as interest on delayed payments, price fluctuations and idle plant and labour.
The interest was reported to have been from a certificate of work done valued at Sh2.18 billion, which the auditor argued were outside the contract agreement.
“Detailed information on how the interest and penalties arose was not submitted by the surveyors alongside the certificate. As a result, the validity of the additional costs could not be confirmed,” the auditor said.
(Edited by Bilha Makokha)