- More than Sh1 billion is owed by government agencies at the national and county levels.
- NCA said to be at risk of revenue loss following loopholes in systems.
Image: CHARLENE
The National Construction Authority has failed to collect over Sh2 billion levy from individuals and government institutions over the past four years.
The Auditor General Nancy Gathungu, in a report, has termed the situation as an irregularity further saying the authority has not showed any proper plans to get the monies.
The outstanding debts include Sh1 billion owed by various debtors and another Sh1.08 billion owed by county governments and national government institutions.
The auditor said in her review of the NCA’s books of accounts as of June 2020 that the recoverability of the debts was in doubt.
She said the authority has only set aside Sh738 million as provision for bad debts.
“Further, a review of records indicated the amount related to construction levy that was suspended through an Executive Order of 2017,” the auditor said.
Gathungu said she was not satisfied by the measures the NCA management had put in place to get back the monies.
“Although management has initiated various strategies to collect the outstanding debts by issuing demand notices, engaging debt collection agencies, engagement with the National Treasury and the Council of Governors, the efforts have not been successful,” the auditor said.
“In the circumstances, the recoverability of the receivables balance of Sh1.4 billion as at June 30, 2020 is doubtful,” Gathungu said.
At the same time, the audit revealed there was a problem with the authority’s revenue management system which is not integrated with the e-citizen platform.
Staff under the finance and accounts department, the audit shows, do not have access to invoices generated by the revenue collection information system.
This has made it impossible to conduct reconciliations of the amounts received on e-citizen against the invoiced amounts.
“Further, it was observed that it was not possible to trace a transaction from the revenue collection system and the enterprise resource planning system.”
Gathungu said there was a possible loss of revenue during registration and transfers from e-citizen to ERP for lack of the reconciliations.
“In the circumstances, I am unable to confirm the effectiveness of revenue collection measures put in place by management,” she said.
Taxpayers may have also lost up to Sh30 million in an Enterprise Risk Management System, the same having been found dysfunctional during the time of the audit.
Further to this, the authority has to procure licenses from the vendor in order to continue using the system.
This has been worsened by the fact that the contract period of two years for the supply of the system ended in November 2017.
“Consequently, the ERMS cannot be put into use despite the consultant having been paid their dues in full amounting to Sh20.6 million.”
“In the circumstances, I am unable to confirm whether the public will obtain value for money for the procurement of the system totalling Sh30,467,400,” Gathungu said.
The auditor further revealed that foreign contractors were being registered by NCA without being pegged on contracted works.
“The foreign contractors were not required to provide an undertaking to subcontract local contractors and they are not required to commit to transfer of technical skills to locals. Consequently, the management is in breach of the law,” Gathungu said.
-Edited by SKanyara