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Auditor General Flags Ksh810 Billion In Loans For Gov’t Agencies

Nancy Gathungu
Auditor General Nancy Gathungu. [PHOTO/ COURTESY]

State agencies had outstanding loan balances of Ksh809,988,920,916 as at 30 June, 2019, auditor general Nancy Gathungu has revealed.

However, the amount could not be authenticated since it was full of discrepancies between the reported loan balances and the confirmed balances.

The discrepancies, according to the audit report, are over Ksh60 billion, putting into question the accounting transparency of state agencies.

Kenya Railways Corporation had the highest discrepancy of Ksh37.7 billion, after reporting a loan balance of Ksh473.2 billion, but the auditor general was able to confirm Ksh435.5 billion.

“The summary schedule of outstanding loans reflects an outstanding loans balance of Ksh809,988,920,916 as at 30 June, 2019. However, circularization of sample debtors for the loan balances revealed significant discrepancies between the reported book balances and the amounts confirmed as owing by the respective institutions,” said Gathungu.

Read: Bungoma, Meru Rank Top In Misappropriation Of Covid-19 Funds From World Bank – Auditor General

Agro Chemical and Food Company Limited had a difference of Ksh6.5 billion, with the reported loan balance of Ksh2.8 billion while the confirmed amount was Ksh9.4 billion.

“The discrepancies between the two sets of records was not explained or reconciled. Under the circumstances, the accuracy of the reported outstanding loans balance of Ksh809,988,920,916 as at 30 June, 2019 could not be confirmed,” she added.

Below is a list of the firms that recorded biggest discrepancies:-

Loans amounting to Ksh84,284,132,909 representing 10.4% of the total loan portfolio of Ksh809,988,920,916 as at 30 June, 2019 had no movement and as previously reported, have remained unpaid over a significant period of time casting doubts on their recoverability.

Kenya Airways had the highest amount at Ksh24.2 billion, followed by Lake Victoria South Water Services Board at Ksh13.1 billion and Coast Water Service Board Ksh12.2 billion.



Ms Gathungu says that no evidence of the measures taken by Management to recover the outstanding amounts was provided for audit.

The statement of outstanding obligations guaranteed by the Government of Kenya reflects outstanding balance of Ksh152,317,825; (2018-Ksh164,132,745) being Capital and Interest owed by Cereals and Sugar Finance Company.

However, the Consolidated National Government Investment Report for the year 2018/2019, prepared by The National Treasury indicates that the total outstanding Government guaranteed debt stood at Ksh159,405,000,000 as at June 30, 2019.

The total outstanding Government guaranteed debt of Ksh159,405,000,000 does not include the balance of Ksh152,317,825 reflected in the statement of outstanding obligations guaranteed by the Government of Kenya prepared and submitted for audit by The National Treasury, which is indicated as relating to Capital and Interest owed by Cereals and Sugar Finance Company.

Further, the parent Ministries for the Agencies mentioned above did not prepare and submit for audit their respective statements of outstanding obligations guaranteed by the Government of Kenya as at 30 June, 2019. No explanations have been provided for the omissions.

“Under the circumstances, the completeness and accuracy of the outstanding balance of Ksh152,317,825 reflected in the statement of outstanding obligations guaranteed by the Government of Kenya as at June 30, 2019 could not be ascertained,” added Gathungu.

The statement indicates that obligations guaranteed decreased from Ksh164,132,745 reported as at June 30, 2018 to Ksh152,317,825 as at June 30, 2019.

However, the management did not avail documentary evidence to support the decrease. Consequently, the accuracy of the reported decrease of Ksh11,814,920 could not be confirmed.

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Written by Francis Muli

Follow me on Twitter @francismuli_. Email francis@kahawatungu.com

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