The June 30, 2025 report, tabled in Parliament, has flagged the legality
of payments amounting to Sh1.33 million made to the officer attached to the
Vice Chancellor.
The Auditor General said the university failed to provide evidence
showing that the VC’s contract entitled him to a bodyguard or that the
University Council had approved the engagement.
“The armed bodyguard from the Kenya Police has been earning on a monthly
basis. During the year under audit, a total of Sh1,326,900 was paid to the
bodyguard,” Gathungu states in the report.
“No evidence was provided to confirm whether the terms of service and
the contract signed by the Vice Chancellor had a provision for a bodyguard.”
The report has also painted the picture of a university grappling with
severe financial distress, huge debts, unremitted statutory deductions and weak
internal controls.
Gathungu warned of ‘material uncertainties’ about MMU’s ability to
continue operating as a going concern.
According to the report, the university’s current liabilities stood at
Sh2.06 billion against current assets of Sh741.6 million, leaving it with a
negative working capital position of Sh1.32 billion.
Although the university posted a net surplus of Sh324.3 million during
the period under review, its books still carried an accumulated deficit of
Sh1.62 billion.
“The continued accumulation of deficits and the severe liquidity gap
raises material uncertainties on the university’s ability to continue operating
as a going concern,” the report says.
The audit also uncovered massive failures in the remittance of taxes and
employee deductions.
MMU failed to remit Sh502 million in statutory taxes to the Kenya
Revenue Authority, including Sh448.4 million in Pay As You Earn deductions,
Sh40 million in withholding VAT and Sh13.6 million in withholding tax.
Gathungu noted that KRA had already issued a demand notice over
PAYE arrears amounting to Sh195.4 million, inclusive of penalties and interest.
Despite agreeing on a payment plan requiring monthly remittances of
Sh3.5 million, the university reportedly failed to honour some of the payments.
The institution was further put on the spot over failure to remit
Sh738.6 million deducted from employees' salaries for pension contributions.
Another Sh14.6 million in third-party deductions and Sh1.1 million in
housing levy and NHIF deductions also remained unremitted.
Failure to remit pension contributions jeopardises employees’
retirement benefits and exposes the university to additional penalties and
legal risks.
The report also flagged questionable expenditure on legal services, with
payments worth Sh9 million flagged.
Gathungu says the university failed to provide documentation on how the
firms were identified or contracted.
“No documentation was provided on how these firms were identified, including any service agreement signed with the university, certificate of
appointment in respect of every case or transaction and the Attorney General’s
approval,” she noted.
The audit further flagged weak controls in fuel management, amid findings that there was no fuel tracking system to monitor mileage, usage or quantities
consumed by vehicles.
“Fuel is often acquired on an ad-hoc basis, with limited documentation
or verification procedures in place,” the report says, warning of risks of fuel
diversion, fictitious deliveries and inflated invoices.
The university was also cited for irregularities in staff management. Two officers held acting positions for periods beyond six months, contrary to the Public Service Commission Act.
At the same time, casual workers were reportedly retained on
continuously renewed contracts beyond the legally permitted duration.
The institution spent Sh17.5 million on casual employees, some of whom
were engaged for periods exceeding one year.
Gathungu said the university was operating without an approved human
resource policy.
The report additionally found that some employees received net salaries
below one-third of their basic pay.
Management attributed the situation to deductions arising from the housing
levy and revised NSSF rates.
Council allowances also rose sharply by 69 per cent from Sh9.2 million
to Sh15.6 million, exceeding the approved budget.
The audit also highlighted gaps in disability and gender mainstreaming, noting that the existing gender policy had not been reviewed since
2015.
Auditors further found that the administration block lacked
wheelchair-accessible ramps, locking out persons living with disabilities.
The report also found that some university-owned commercial spaces,
including a shop and canteen, were being occupied by third parties without
formal lease agreements, exposing the institution to potential revenue loss and
legal disputes.
The latest findings add to growing scrutiny of financial management and
governance standards in public universities as institutions battle revenue cuts,
rising wage bills and burgeoning debt obligations.