August 21st 2017

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Audit report reveals weak financial management at Chuka University

The Auditor General has raised questions about financial management at Chuka University.

By Winfred Mbuya Mwanikiwmwaniki@kenyafreepress.comTuesday, 28 Jun 2016 11:34 EAT

The Auditor General has raised questions about financial management at Chuka University. The Auditor General's report tabled last week in Parliament reveals extreme weaknesses in the university's financial management, budgeting and reporting procedures that could expose the institution to heavy financial losses and corruption.

While not holding that any funds were embezzled or stolen, the auditor general gave a qualified opinion on the university's books of accounts for the year ending 30 June 2015. Among other concerns, the auditor's report due for debate in Parliament questions big mismatches between the university's approved revenue budgets and actual collections as well as under spending in key areas.

The university also lacks a register of its assets, exposing valuable land, plant, machinery and other facilities to theft. The university's books provided to the auditors only indicated the total value of assets without showing location or specific identification of assets.

For example, while the university claims in its books that it owns a one-acre piece of land in Karingani/Ndagani worth Sh7.5 million, no title deed was availed for verification, leaving the auditors unsure whether the land is actually in the university's possession. The university says that it acquired the land on June 28, 2011.

Several other assets can't be properly identified and accounted for, the report holds. “Under the circumstances it has not been possible to confirm the location, completeness, security, and the accuracy of the non-current assets whose balance stood at Sh2,124,462,388.05 as at 30 June 2015,” says the report.

The report also questions the university's budget performance and the maintenance of account payables, in particular students caution money. The report says that, ‘it has not been possible to ascertain the security and the existence of the students caution money balance of Sh22,062,000 as at 30 June 2015."

The mismatches between budgeted and actual revenues were also found to be gross. “During the year under review, Chuka University had an approved revenue budget of Sh1,980,000,000,000 but only realized Sh1,441,481,319 resulting to an unexplained under collection of revenue of Sh538,518,681,” says the report.

The budget also showed variance in the amount of budgeted expenditures and actual spending, revealing extreme under expenditure. In some instances, not a single shilling was spent on budget items running into millions of shillings. “The unspent Sh725,294,366 development funds impends the growth of the University including its ability to offer quality services to its clients,’’ the report says.

Such variation raises questions on the accountability of the expenditure of the money. “Forty items with a budgeted total expenditure of Sh516,113,494 (more than a quarter of the budget) did not have any expenditure hence rendering the budget unrealistic,” the report says.
The audit also questioned the performance of the university farm, which has recorded losses totalling Sh1,416,451 in the last three years, yet the management has made no efforts to turn it around to become an income generating activity.
If the trend of annual farm losses continued, the auditor said, "the university's activities may be distorted as funds will have to be sourced from other budgeted items to cover the unbudgeted for farm losses."

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