Kenyatta University has sunk deeper into debt with fresh details showing the institution has a negative working capital of Sh6.6 billion.
A new audit shows the university's budget deficit increased to Sh2.1 billion as of June 30, 2021, an increase of Sh800 million in less than a year.
Lifting the lid on the cash crisis, the audit shows that the institution was yet to remit statutory deductions of up to Sh4.9 billion at the time of the audit in September 2022.
The unremitted statutory deductions are in respect of pension, NHIF, NSSF and employee's tax obligations to the exchequer through Pay as You Earn (PAYE) and VAT.
Details further show that the university staff could be defaulting in their sacco remittances among other social contributions with more than Sh421 million yet to be remitted to the beneficiary institutions.
The third-party deductions from employees include welfare, insurance, cooperative as well as staff loans.
Further to this, the audit established that KU had not paid general suppliers and other contractors Sh505.7 million, some of which have been outstanding for a long period.
KU also had projects valued at Sh616 million which had stalled for over a year at the time of the audit.
The projects’ completion dates, the audit showed, were uncertain, leading to auditors concluding that value for money on the stalled projects could not be confirmed.
Auditor General Nancy Gathungu said the situation paints an uncertain future for the university.
"In view of the deficit and negative working capital, the ability of the university to continue to sustain its services is dependent on continued government support," Gathungu said.
"My opinion is not qualified based on the above matter," she said in her review of the varsity’s books as of June 30, 2021.
In what paints the dire financial crisis at the varsity, its liabilities were to the tune of Sh7.5 billion against assets of Sh838 million.
Gathungu said that with the unpaid dues, confirming the varsity’s chances of surviving the debt storm was impossible.
The auditor further flagged loss-making operations the university has continued engaging in despite the cash woes.
KU, it emerged, made losses in its catering business and at the North Coast Beach Hotel which it runs.
A review of personnel files established that the staffers at the hospitality facility had expired contracts.
“The basis of their continued employment was not explained. In the circumstances, the effectiveness of internal controls and governance could not be confirmed,” the auditor said.
The auditor general said a regional centre for capacity development, which is among the revenue streams, generated no income during the year.
“Management has not explained measures that will be put in place to reverse the trend from these operations and ensure their sustainability.”
“In the circumstances, the effectiveness of the University’s risk management and governance could not be confirmed,” Gathungu said.
Apart from the sorry financial status, the Prof Paul Wainaina-led institution has been put on the spot over a number of infractions.
The auditor general has flagged unsupported expenses to the tune of over Sh100 million during the year under review.
Among the queried expenses was Sh35 million which the university reported was spent on regional learning expenses.
However, supporting schedules provided for audit review showed the money was spent on coffins, clinical waste, refuse collection, garbage collection and dairy feeds.
“The expenditure appeared unrelated to open learning expenses,” the auditor general said.
Also queried was Sh41 million and Sh17.9 million the varsity reported as having spent on stationery and health unit drugs respectively.
Management, however, provided supporting schedules which reflected debit figures which were not explained.
“Corresponding information on payees and amounts were not provided for audit,” Gathungu said.
The auditor has further cast doubt on Sh16.7 million the varsity reported as having spent on office consumables, Sh20.6 million in respect on examination stationary.
“The supporting schedules showed an unexplained payment to a local bank amounting to Sh8.9 million.”
“In the circumstances, the accuracy and completeness of the operations expense of Sh1.18 billion could not be confirmed,” Gathungu said.
Also queried is Sh33 million that was spent on imprest for researchers. Auditors established that multiple imprests were issued to various members of staff.
The timeline for the researches, the approved budgets, type of research, work plans and completion timelines were not disclosed.
