advertisement

Economy

Ouko says Sh2bn KCC property status unknown

Auditor-General Edward Ouko. FILE PHOTO | NMG
Auditor-General Edward Ouko. FILE PHOTO | NMG 

The valuation, ownership status and security of Kenya Cooperative Creameries (KCC) properties amounting to Sh2.2 billion could not be confirmed, a new audit report says.

Auditor-General Edward Ouko said title documents for 49 properties estimated at Sh1.9 billion were not availed for audit verification in the year to June 2016.

“As previously reported, property, plant and equipment balance of Sh2,175,594,502 as at June 30, 2016 had the following unresolved issues,” Mr Ouko said in an audit of the financial statements for the milk processors books of accounts.

He said the Sh2.2 billion valuation of the assets excludes 15 parcels of land and buildings, which have not been valued.

Mr Ouko said 16 disputed properties with the value of Sh222.5 million were registered in the name of third parties and the valuation report recorded Sh750 million for the disputed properties.

He said KCC failed to disclose in the financial statements that the Ethics and Anti-Corruption Commission had cleared two disputed properties LR No. 37/371 and LR No.37/22 situated in Upper Hill, Nairobi, which had legally been transferred to third parties.

The auditor said five acres out of 32.94 acres (13.33 ha) of land LR No MN/VI/2860 on which Miritini factory is located have been encroached by squatters, some of whom have already put up permanent structures thereby exposing the company to likely loss of vital property.

“In view of the foregoing, it has not been possible to confirm the valuation, ownership status and the security of the properties and that property, plant and equipment balance of Sh2,175,594,502 as at June 30, 2017 is fairly stated,” Mr Ouko said in a report dated October 23 and tabled in Parliament by Leader of Majority Aden Duale.

Mr Ouko also questioned KCC’s ability to recover Sh1,482,520,265 in trade receivables and prepayments in the year to June 30, 2016.

“Included in this balance are bounced cheques amounting to Sh35,453,124, which have been outstanding for over one year,” Mr Ouko said in a qualified audit opinion.

Paying ability

Further, he said the balance includes staff debts amount of Sh25.5 million out of which an amount of Sh9.4 million relates to staff that have since left the company although the amount has been fully provided for.

The trade receivable balance also includes an unreconciled and unexplained credit balance of Sh45,958,447.

“In the circumstances, it has not been possible to confirm the accuracy and recoverability of trade receivables and prepayment balance of Sh1,482,520,265,” he said.

Mr Ouko cast doubt on KCC’s ability to pay its debts as they fall due following its failure to settle Sh70.2 million, which has remained outstanding for more than one year.

advertisement