JKUAT firm faces financial trouble over losses and wastage

The Jomo Kenyatta University of Agriculture and Technology (JKUAT) has suffered millions in losses through a failing industrial park venture, compounded by excessive spending and mismanagement, an audit report has revealed.

The findings highlight a worrying pattern of wastage, with no clear accountability in several areas.

According to the audit conducted on the university's financial accounts for the 2022-2023 period, JKUAT Enterprise Limited has incurred losses for the fourth consecutive year, leaving it technically insolvent.

Assets stand at Sh277 million, while liabilities have surpassed Sh295.7 million.

The company’s current ratio of just 0.94 percent further emphasizes its inability to meet its debt obligations, raising concerns over its financial stability.

The Auditor-General’s report, presented by Nancy Gathungu, pointed out that despite efforts by the company’s board and management to improve its financial performance, these initiatives have yet to yield meaningful results.

The report details various financial irregularities, including excess staffing, wasteful procurement processes, and unnecessary spending on board expenses.

One of the key issues raised is the overstaffing at the industrial park. While the approved staff establishment was set at 136, the company employed 26 additional workers, stretching its financial resources further.

For instance, the Institute for Biotechnology Research department was supposed to have 24 staff members, but the actual number stood at 41.

There was no analysis provided for the extension of contracts or the recruitment of additional staff beyond what was authorized.

Procurement issues have also surfaced, with a Sh27.3 million consultancy fee paid to various firms that were not on the pre-qualified supplier list, without valid justification.

The company also awarded an insurance tender to a local firm at Sh5.4 million, ignoring the lower bid of Sh4.9 million, with no explanation provided for this deviation from standard procedures.

Another financial concern raised was the Sh1.42 million spent on board expenses, despite a lack of attendance records and the absence of appointment records for board members.

This further deepens the questions surrounding the university's financial oversight and management.

In the face of these revelations, questions are being raised about the viability of JKUAT Enterprise Ltd. as it continues to struggle with mounting losses and financial mismanagement.