ANOTHER KENYAN UNIVERSITY COLLAPSES. WHO WILL BE BLAMED THIS TIME ROUND?

Jomo Kenyatta University of Agriculture and Technology is broke and unable to meet its financial obligations, a new audit report has revealed.

The report by Auditor General Nancy Gathungu shows that the university has negative working capital of more than Sh2.8 billion.

Whereas the university’s current assets were valued at Sh4.44 billion as of June 30, 2020, JKUAT’s liabilities were to the tune of Sh7.3 billion.

“The university was, therefore, unable to meet its financial obligations as and when they fall due,” Gathungu said.

The audit further revealed that the situation has deteriorated to the point the university is unable to remit statutory deductions, among them pension, Pay as You Earn, and other third party deductions.

In the year under review, JKUAT was unable to remit pension and contributions by the employer to the tune of Sh11.8 billion.

The varsity could not also remit about Sh2 billion Pay as You Earn deductions and Sh243 million in respect of other third parties, with the non-remittances totalling Sh4.1 billion.

“In the circumstances, the university is technically insolvent and its continued operations as a going concern will depend on the continued support from the government, donors, and creditors.”

Apart from the deductions, the varsity was yet to pay general suppliers and contractors Sh145 million, debts that have been outstanding for more than one year.

The university was yet to pay audit fees of Sh15 million for services offered for more than five years, amid concerns the sorry situation was not disclosed in the university’s financial statements.

“The material uncertainty relating to the going concern has not been disclosed in the financial statements,” Gathungu said in the report tabled in Parliament recently.

The findings mirror the cash crisis that public universities are grappling with, which universities dons attribute to funding cuts by the exchequer.

Government’s plan to merge universities for them to overcome the cash crisis has been met with resistance, with the university staff union saying it would interfere with each institution’s independence.

UASU organising secretary Onesmus Mutio vouched for increased capitation instead of mergers, saying the latter would see many dons lose their jobs.

Gathungu, in her reports on the year ending June 2019, declared about 12 universities technically insolvent, a situation said to be pervasive in nearly all the institutions.

Most of it, the audits show, is caused by long outstanding fee balances. Most universities rely on tuition fees as their primary sources of income.

For instance in JKUAT, the audit reveals that students owed the university a total of Sh3.3 billion, out of which Sh1.1 billion has been outstanding for more than one year.

“Management did not disclose measures put in place to ensure long outstanding debts are recovered,” Gathungu reported.

JKUAT is further owed Sh136 million in sales and offers from its income-generating activities, some that have been outstanding for more than three years.

“Under the circumstances, the accuracy and recoverability of debts amounting to Sh1.23 billion could not be confirmed,” the auditor said.

Despite the pressure to meet obligations, the university failed to spend Sh1.4 billion of its approved budget of Sh8.4 billion in the year to June 2020 and missed its revenue target by Sh1.7 billion.

Management, Gathungu said, attributed the shortfall in revenue collection to the challenging business environment brought about by the Covid-19 pandemic.

“The underfunding and underperformance affected the planned activities and may have impacted negatively on service delivery to the public,” the report says.

JKUAT was also flagged for ethnic imbalance in its jobs after a review revealed that it had 45 per cent of its staff from one ethnic community.

“This is in contravention of the National Cohesion and Integration Act, 2008, which requires that no public establishments shall have more than one-third of its staff (33 per cent) from the same ethnic community,” the audit reads.

She also pointed out were instances of 13 officers who were found to have held acting positions for more than the set six months.

“No explanation has been provided by management on why the posts have not been filled or the officers confirmed to the posts. The management, in the circumstances, is in breach of the law.”

A Sh68 million perimeter wall whose construction is at 73.6 per cent, yet has consumed nearly all the cash allocated to the project, is also a subject of an audit query.

“The Sh50.6 million incurred on the project may not have been a proper charge to public funds and the university may not obtain value for money on funds spent,” Gathungu said.

By The Star