Auditor General raises queries over Sh102m Kebs expenditure
Auditor General Edward Ouko. PHOTO | FILE
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Auditor General Edward Ouko says the management failed to submit the details of what the consultancy firms quoted and the criteria used to select them for audit review.
Mr Ouko said the expenditure of Sh101.9 million continued to be reflected as work-in-progress and he could therefore not confirm the propriety of the expenditure.
He further questioned the payment of Sh46 million to a law firm which was not supported by documentary proof of work done on the basis of fees charged.
The Kenya Bureau of Standards (Kebs) is on the spot over its failure to support an expenditure of Sh101.9 million paid to various consultants for the construction of proposed regional offices and laboratories in Mombasa.
Auditor General Edward Ouko says the management had indicated that they were picked from a list of prequalified consultants but that neither the details of what the consultancy firms quoted nor the criteria used on evaluation and selection were produced for audit review.
“The bureau invited tender for construction of the proposed regional offices and laboratories in Mombasa on March 17, 2013. Preliminary expenses totalling Sh101,938,209 were paid to various contractors,” Mr Ouko said in the latest audit report of Kebs tabled in Parliament.
Mr Ouko said the expenditure of Sh101.9 million continued to be reflected as work-in-progress and he could therefore not confirm the propriety of the expenditure.
He further questioned the payment of Sh46 million to a law firm which was not supported by documentary proof of work done on the basis of fees charged.
He said Kebs entered into a contract agreement with a legal firm to represent it in the Kebs versus Centurion Engineers and Builders Limited case through a letter of engagement drawn by the managing director dated August 17, 2012.
“The letter provided for a meeting where the legal fee was to be negotiated in advance. However, as at June 30, 2015, the legal firm had received a cumulative payment of approximately Sh46,186,402 without supporting documents of work done and basis of fees charges,” Mr Ouko said in a qualified audit opinion.
A qualified audit means that there were gaps in book-keeping hence not providing the true picture of Kebs' financial health.
Mr Ouko said available information indicates that through an arbitration process, an award in favour of Centurion Engineers and Builders limited was made but Kebs has filed an application in the High Court challenging the award.
“This is an indication that there was no value for money in the legal representation. In the circumstances, the propriety and value for money in the expenditure of Sh46,186,402 could not be confirmed,” Mr Ouko said.
Revenue loss
The auditor also queried failure by Kebs to collect revenue amounting to Sh28.1 million arising from the Pre-Export Verification of Conformity (PVOC) for exports to Kenya.
Mr Ouko said Kebs' financial performance reflects revenue from exchange transactions amounting to Sh3.7 billion out of which Sh2.4 billion was earned from the PVOC programme.
“However, M/s Tellam Freight Forwarders limited imported goods with custom value of Sh187,652,754 which were not subjected to Destination Inspection (DI) and duty of 15 per cent on value was not levied,” Mr Ouko said.
He said had the goods been subjected to DI and the 15 per cent duty levied, the bureau would have recorded additional revenue of Sh28.1 million.
“As a result, the corporation (Kebs) lost an opportunity to collect revenue amounting to Sh28,147,193,” the auditor said in the report.
