The Moi Teaching and Referral Hospital is teetering on the brink of a financial crisis due to huge losses, auditor general Nancy Gathungu has warned.
In her latest audit report on the facility, Gathungu exposed a Sh3.2 billion hole amid irregular procurement.
“If management does not initiate strategies to reverse the trend the hospital may face cash flow challenges in the future,” the auditor said.
The report for the period ended June 30, 2023, reveals that MTRH is unable to recover more than Sh1.15 billion from patients who sought services at the facility.
Some of the debt dates as far back as the year 2001.
“Records provided for audit revealed that the individual clients' receivable balance had increased by Sh750.99 million from Sh408.21 million in 2021-22 to Sh1.15 billion in 2022-23 with some of the debts.”
The management of the hospital has numerous land title deeds and motor vehicle log books submitted as collateral for the debtors.
However, there were neither affidavits nor agreements between the hospital and the patients provided for review.
This rendered the management’s continued retention of these documents as a debt security measure, futile.
In addition, no evidence was provided for audit to show that legal pursuit to recover the amounts owed is in progress.
“In the circumstances, the accuracy and recoverability of the individual clients’ receivables balance of Sh1.15 billion could not be confirmed.”
Further, the facility posted an operating loss of Sh619.92 million during the period in review.
“During the year ended June 30, 2022, the hospital also reported a net loss of Sh486.47 million translating into operating losses for two consecutive years,” Gathungu said in the report.
Shockingly, the facility has accumulated pending bills amounting to Sh1.63 billion.
The hospital has also not remitted employee deductions amounting to Sh1.44 billion.
“It was also observed that the hospital’s trade payables increased by Sh578.17 million from Sh1.05 billion in 2021-22 to Sh1.63 billion in 2022-23.”
Gathungu also exposed irregular procurements which could put the management of the Eldoret-based facility on the spot.
A review of financial records provided revealed that a local contractor was paid Sh14.97 million on various dates for the purchase of oxygen.
However, the advertisement, tender opening and evaluation minutes and the contract between the hospital and the contractor were not provided for review.
Moreover, the auditor established that the hospital has an active oxygen processing plant.
“Even though the management of the hospital has explained that the services of the local contractor were sought when the hospital’s oxygen processing plant was undergoing maintenance, no documentary evidence was provided for audit verification,” the report says.
Management also spent Sh10.63 million on the purchase of various hospital supplies, through imprest purchases, under the low-value procurement method.
“This is contrary to Regulation 92(a) of the Public Procurement and Asset Disposal Regulations, 2020 which states that a procuring entity may use low value procurement method under Section 107(b) of the Act.”