Universities Require Government Bailout To Survive.
Kenyan taxpayers may soon be forced to bail out public universities that are on the verge of bankruptcy, increasing the tax burden.
According to the Auditor General, the majority of the country’s public universities have liabilities that exceed their assets, raising concerns about their ability to continue operations.
Auditor General Nancy Gathugu says almost all of the universities have a problem.
According to the most recent National Treasury report, Moi, Egerton, and Kenyatta universities reported deficits of Sh1.7, Sh1.3, and Sh2.1 billion, respectively, for the fiscal year 2020/2021.
During the same period, the Jomo Kenyatta University of Agriculture and Technology and the University of Nairobi both reported deficits of Sh1.4 billion and Sh2.1 billion, respectively.
“The universities need to re-organise themselves to ensure they are self-sustaining and most of them will need funding from the government,” she said.
Ms Gathugu stated that the same holds true for a number of other State-owned enterprises, some of which should be removed to prevent further draining of taxpayer resources through bailouts.
Gathugu was speaking at a session hosted by the Public Sector Accounting Standards Board (PSASB), which stated that the government was ready to abandon cash-based accounting standards in favour of the international best practices.
She said there is a need to evaluate the mandates of some State-owned enterprises to see if they can be merged into their line ministries because they continue to be a drain on taxpayers.
“This is a conversation we are having with the management of these entities.”
“We are moving from cash-bred accounting to accrual accounting which we believe will improve transparency in the public sector,” said Jonah Wala, director for accounting services at the National Treasury.
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Government entities such as ministries and counties use cash-based reporting, which has been criticized for encouraging irregular expenditure such as spending at the point of origin and piling up of pending bills.
According to Stephen Masha, interim chairman of the PSASB, the transition from cash-based to accrual accounting has been a long time coming and will help address the perennial issue of pending bills.