UoN’s Debt Pile-Up Worsens to Sh15.7 Billion
According to a report by the Auditor General Nancy Gathungu, the University of Nairobi is struggling with a debt of Sh15.7 billion, of which Sh9.7 billion is related to non-payment of statutory deductions.
The university owes Sh4.9 billion to Kenya Revenue Authority (KRA) for taxes and Sh4.8 billion for pension contributions.
The report also indicates that the university’s liabilities stand at Sh11.3 billion against current assets of Sh5.3 billion, resulting in a negative working capital.
The university’s financial performance reflects a deficit of Sh3.1 billion, which is an increase from the previous financial year’s deficit of Sh1.6 billion. This has led to an accumulated deficit of Sh5.6 billion from Sh3.4 billion in the previous financial year.
The report raises various financial concerns facing the university, including unsupported and un-cleared adjustments and balances, variances between the financial statements and trial balances, incomplete register, unreconciled cash and cash equivalents, unsupported clearance of bank overdraft, unsupported general fund balance, and unsupported trust endowment funds.
There are also queries relating to the construction of a school of pharmacy, non-disclosure of students pre-payments, unreconciled transactions between students management information system and sage system, irregular payments of allowances, having loss-making income-generating activities, operating unauthorized bank accounts, as well as having stalled student hostels at Lower Kabete Campus.
The report indicates that the university’s income-generating programs are loss-making, with the financial statements reflecting an accumulated loss from income-generating activities and parallel programs totaling Sh770.2 million.
The report also notes that the income-generating activities under UNES Limited made a total loss of Sh106.98 million during the year under review.
The report also highlights the construction of student hostels at Lower Kabete campus comprising 500 bedrooms, kitchen, dining, and accommodation room. The project, which started in 1990, stalled in 1992 after budgetary allocation ceased.
Although the contract was mutually terminated in 2000, the university still owes the contractor a balance of Sh50 million, which has remained unpaid to date. The contractor has since sued the university claiming the outstanding payment of Sh50 million plus interests and cost.
The report also reveals irregular payments of allowances. Examination of records revealed that there were 53 and another six staff members in various job groups whose entertainment and responsibility allowances were above the stipulated salary structure provided for Collective Bargaining Agreement (CBA) 2013-2017, resulting in an overpayment of Sh2.3 million and Sh258,709, respectively.
Additionally, the allowances were paid contrary to article 230(4) of the constitution of Kenya and part C 2(1) of the Human Resources Policies and Procedures Manual for the public service.
Finally, the report shows that during the year under review, the university did not report any balance relating to student payables, including prepayment of student fees.
However, a re-computation of the student balances at the end of the year under review established that there was an amount of Sh1.9 billion from 29,029 students, which was either school fees overpaid or paid in advance.
UoN’s Debt Pile-Up Worsens to Sh15.7 Billion
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