•Management on spot for not disclosing the situation to auditors.
•Authority also on verge of losing Sh129 million it deposited in now collapsed banks.
Image: FILE
A rare ‘exchange’ of land between a private developer and the state agency that regulates industrial training is now the subject of an audit query.
New details show that the National Industrial Training Authority ceded prime land supposed to house its Mombasa premises to a private developer.
Whereas the private developer took up 12.91 hectares of NITA land valued at Sh1.26 billion, it offered a parcel measuring 6.2 hectares in exchange.
In the compensation plan, the authority’s regional centre in Mombasa would be located in Bombolulu area.
Auditor General Nancy Gathungu unearthed the anomaly during a review of NITA books of accounts for the year ending June 2021.
In an adverse opinion of the entity’s books, the auditor raised concerns that the industrial training authority failed to reveal the events in its books of accounts.
“This fact has not been disclosed in the financial statements [NITA’s],” Gathungu said in the report tabled in Parliament.
The Stephen Ogenda-led authority had included the value of the new parcel at Sh6.6 billion but did not provide title deeds for the same, sparking the query.
“Management did not show effort made by the authority in pursuing the matter with the National Land Commission to acquire the titles to avoid losing the property,” the auditor added.
Taxpayers are also at the risk of losing Sh580 million which the authority reported as investments.
Of the amount, Sh440 million was invested on call deposits while Sh140 million related to mortgage and car loan maintained at a commercial bank.
Gathungu has cast doubt on the investment on call deposits saying fixed deposit receipts, certificate of balance, board approval, and interest earned were not provided.
“Further, the register provided did not reflect the fixed deposit receipt references, period, date deposited, maturity date, and the interest rate.”
For the mortgage, the audit revealed that NITA does not maintain a separate cashbook or monthly reconciliation on the same.
“In the circumstances, the accuracy and propriety of Sh580 million could not be confirmed.”
NITA is also at the risk of losing its 11 motor vehicles which the audit revealed were not registered in its name.
Of the vehicles valued at Sh20.6 million, 10 were registered under the Ministry of Labour while one is registered under Danida/Rural Enterprise Fund.
“No documents were provided for audit to show efforts by the management to have the vehicles registered in the authority’s name,” Gathungu said.
NITA is further at the risk of losing Sh129 million in deposits at various banks that collapsed over 20 years ago.
Gathungu says the recoverability of the monies is in doubt as the authority did not allocate monies to cushion it from the losses.
“During the year under review, no contingent liability was provided for the likely loss from these doubtful deposits,” the auditor said.
“The management did not demonstrate any efforts to recover the deposits through the Deposit Protection Fund.”
NITA is also having trouble collecting debts it is owed by other agencies to the tune of Sh188 million which relates to the fiscal year 2019-20 and prior years.
“Some trade payables date back to 2016-17 and there was no explanation why they had not been paid to date,” Gathungu said.
The audit further revealed that the authority has challenges with remitting pension deductions.
In the year under review, NITA did not remit Sh43 million to the pension scheme its workers subscribe to.
Gathungu said it was not clear why the deductions were not remitted to the pension administrator as required by law.
Also unresolved is a query involving the loss of Sh248,496 in 2008 in the hands of an officer managing the authority’s petty cash.
“The loss still remains outstanding as cash in hand and there is no evidence of efforts to recover the same,” the auditor said.
Also flagged are unexplained discrepancies in the payrolls between what is captured in the financial statement and payroll analysis.
A variance of Sh11 million was reported in respect of wages and salaries, Sh16 million in staff pension, and another Sh16 million on other allowances.