The Auditor General’s report on Kebs for the year ended June 2024 says it is technically insolvent.
Highlighting the uncertainty on the sustainability of services by the bureau, Auditor General Nancy Gathungu says it has Sh3.2 billion liabilities against Sh1.85 billion assets, resulting in a negative working capital of Sh1.3 billion.
“In the circumstances, the bureau is technically insolvent, and the financial statements have been prepared on the assumption of a going concern basis and of continued financial support from the national government, bankers and creditors,” the report says.
The bureau also has long-outstanding trade and other payables amounting to Sh1.68 billion, including Sh319.37 million that has been outstanding for more than a year.
“No satisfactory explanation was provided for not clearing these outstanding liabilities,” the report says.
“In the circumstances, business operations, liquidity and livelihoods of the creditors and by extension their beneficiaries may be affected negatively due to failure by the bureau to pay the amounts due to them.”
The Auditor General also raised issue with long-standing debts, with the bureau being owed Sh188.6 million for more than a year.
“In the circumstances, the absence of active and intentional collection of the long-outstanding debts, including enforcement of existing debt collection mechanisms, may lead to the bureau losing revenue,” the report says.
The bureau is also facing staffing woes as the audit found that the bureau has 1,117 members of staff against an approved establishment of 1,441, resulting in a staffing shortfall of 324 at various levels.
In addition, there was an over-establishment of 104 members in some of the various cadres.
Kebs joins a list of other state corporations in the red as they struggle with liquidity challenges. These include the Agricultural Development Corporation, the Kenya Broadcasting Corporation, Kibo Seed Company and National Museums of Kenya
Others are the National Oil Corporation of Kenya, Kenya Post Office Savings Bank (Postbank), the Postal Corporation of Kenya, Nzoia Sugar and Nema.
The National Oil Corporation, for instance, recorded a loss before tax of Sh2.24 billion in the year ended June 2024, raising its accumulated losses to Sh8.3 billion from Sh6.8 billion in 2023.
In addition, the corporation has liabilities totalling Sh12.82 billion, exceeding the assets balance of Sh1.2 billion by Sh11.6 billion.
“These events or conditions indicate material uncertainty regarding the corporation’s ability to continue as a going concern,” the auditor report said.
“In the circumstances, the Corporation was technically insolvent, and its continued existence is dependent upon the financial support of the Government and its creditors unless Management puts in place measures to improve the performance of the Corporation and to reduce reliance on financial support from the shareholders.”
The government had made attempts to reform the parastatals, but those changes have been delayed.
In January, the Cabinet approved the merging of 42 state corporations into 20 entities to eliminate inefficiencies, improve service delivery and reduce the financial strain on the national budget.
The Cabinet Office at the time said many of the state corporations were struggling to meet their contractual and statutory obligations, leading to an accumulation of pending bills amounting to Sh94.4 billion as of March 31, 2024.
