The University of Nairobi is facing a financial crisis triggered by low state funding and under-collection of internal revenue that has made it to survive on commercial bank overdrafts, according to a special audit report.
Auditor-General Edward Ouko says as a result the institution has fallen behind in paying statutory dues to the Kenya Revenue Authority, Pensions Scheme, National Hospital Insurance Fund, National Social Security Fund, Higher Educations Loans Board and University of Nairobi Cooperative.
“The special audit noted that the University did not remit Shs. 673.6 Million, being statutory deductions from staff salaries to respective institutions,” said the report on UoN Financial, Procurement and Human Resources Management.
The report was sanctioned by the National Assembly following a public petition to Parliament alleging the university is experiencing a financial crisis of unprecedented promotions and is operating on a debt of Sh. 2.6 Billion.
The petitioners also claimed there were glaring cases or irregular procurement , unresolved conflict between the office of the vice-chancellor and the deputy vice-chancellor (Finance and Administration) and blatant abuse of office through hiring of staff from one ethnic community.
In his findings, Ouko said the university has a history of low funding fro the Treasury dating back to 2009.
”This was noted to have continued to date, for example, for the period under review (July 2014 to November 30 2015) the special audit that the University of Nairobi received capitation from the government totaling Sh. 5.3 Billion against a request of Sh. 6.7 Billion -thus a shortage of Sh. 1.42 Billion or 26 per cent,” Mr. Ouko said in a report tabled to Parliament on Tuesday.
He said the university expected to raise revenues internally but has been recording shortfalls as well.
The audit noted that the university expected to raise Sh. 8 Billion but only managed Sh. 6.4 Billion with a shortage of Sh. 1.6 Billion.
Mr. Ouko said the staff salary review for universities after signing the CBA in 2010 has contributed to part of the institution’s problems.
The university made a payment on behalf of others and has since been claiming Sh. 194.8 Million from the government.
”The university is making a further claim of Sh.627.7 Billion from the government for delayed pension receipts amounting to total claims of Sh. 833, 483, 452,” he said.
The hard-pressed institution;s executive consequently secured a Sh.450 Million overdraft facility from from Barclays Bank of Kenya to bridge the spending gap on exchequer releases.
Mr. Ouko said the university does not have policies on overdrafts but it relied on a memo prepared by the Finance and Administration department for the vice-chancellor which the university council also approved.
He also defended the 13 procurements conducted by the university during the review period , saying they had been factored in the 2015/2015 financial year.
On governance issues , the Auditor-General said there is no policy in guiding staff in handling issues but there are existing practices.
He said the audit did not find any evidence of interference of duties of the deputy vice-chancellor (Finance and Administration) Prof. Benard Njoroge and that of the Vice-chancellor Phillip Mbithi as alleged in the petition.
”There is legislative provisions which are explicit that the vice-chancellor is the academic and administrative head of the university and has overall responsibility for direction, organization and administration of programs in the university and other duties as provided in the charter,”he said.
He dismissed claims of ethnic hiring and termination of staff, but noted one community dominated the list of officers promoted during the period under review.
COURTESY OF NATION