According to a new report by Auditor General Nancy Gathungu tabled in Parliament, the institution is in the red.
“The college’s continued existence as a going concern is mainly dependent on financial support from the government and its directors,” the auditor said.
The report shows that Utalii College has current liabilities of Sh5.6 billion against current assets of Sh1.4 billion resulting into a negative working capital of Sh4.28 billion as of June 30, 2021.
“The college is therefore technically insolvent and may not be able to meet its short-term obligations as and when they arise,” she said.
The auditor has cast doubt on Kenya Utalii College’s disclosure in its financial statements that the institution will be in existence for the next year and will meet its short-term obligations.
“In the circumstances, these events or conditions indicate that a material uncertainty exists that may cast significant doubt about the colleges’ ability to continue as a going concern,” Gathungu said.
“My opinion is not modified in respect of this matter,” the auditor general added, further raising key audit queries on the entity’s spending for the year under review.
Gathungu has, among other issues, flagged an excess expenditure of Sh317 million by the agency without the required budgetary approval.
“The over-expenditure has, however, not been supported by a supplementary budget or authorisation by the college council,” she noted.
The auditor also raised concerns that the college has not addressed several issues that were raised in the previous audits.
She said that the management has neither resolved the issues nor given any explanation for the failure to adhere to the provisions of the Public Sector Accounting Standards Board template.
Supplies of fuel to the tune of about Sh4 million have also been flagged in the face of no contract agreement between the college and a local fuel company.
Gathungu said in the absence of the signed agreement, the college violated the Public Procurement and Asset Disposal Act, 2015 which provides that accounting officers enter into a written contract with suppliers.
The agreements are to be entered into with the person submitting the successful tender based on the tender documents and any clarification that emanates from the tender proceedings.
“In the circumstances, the management was in breach of the law,” the report said.
Gathungu has further flagged an anomaly in the payroll records leading to an unexplained variance of Sh36 million.
Whereas the management indicated in payroll summaries that it had deducted Sh93.6 million as Pay as You Earn from the employees of the college, other records had different figures.
The summary report provided by the college which was generated from the accounting system reflected a total PAYE deduction of Sh57.6 million.
“It is not clear why the management is not using the same system to deduct all the statutory deductions and chooses to use a different system for PAYE deductions,” Gathungu said.
“In the circumstances, the reliability of the PAYE reports generated from the two systems could not be confirmed.”
Utalii College also has issues with an uncollected debt to the tune of Sh100 million, some of which the audit revealed have been outstanding for more than four years.
The auditor is concerned that in as much as the college has indicated efforts of recovery through demand letters, the efforts have not yielded any results.
“It was not possible to confirm the accuracy, completeness of the receivables from exchange transactions balance of Sh100 million. Further, the recoverability of this balance remains in doubt,” the audit report reads.
Utalii College has also been called out, amid uncertainty it would recover some Sh22 million in house and car loans extended to staff without security.
The management, Gathungu said, did not provide the audit of logbooks and title deeds which were used a security for loans amounting to Sh3.3 million.
The scheme also had an outstanding principal amount to the tune of Sh10.5 million while two staffs had not repaid Sh955,000 for more than a year, with the management showing no clear recovery strategy.
“In the circumstances, the recoverability of the debts of Sh22.6 million as at June 30, 2021 could not be confirmed,” Gathungu said.
