State-owned pyrethrum processor now insolvent, reveals Auditor-General

Kenya’s pioneer pyrethrum processing company is technically insolvent and requires government support, according to the latest audit report.

The report by Auditor-General Nancy Gathungu for the year ending June 30, 2019, shows that Pyrethrum Processing Company of Kenya recorded a negative working capital of Sh481 million.

"The company is, therefore, technically insolvent and its continued existence is dependent upon the financial support of the government and its creditors," says Ms Gathungu.

The financial statement reflects a company in deep financial troubles as its current assets worth stands at Sh376 million against total current liabilities of ShSh857million.

Interestingly, the financial statement reveals a company property asset, plant and equipment that stands at Sh5.6 billion.

The Auditor-General casts doubts on the assets as they were not disclosed in the financial statements and approval for the revaluation which was done by the management in the previous financial year.

"In the previous year, the management revalued its assets and the revaluation was adopted in the year under review. However, the revaluation has not been disclosed in the financial statements and approval of the revaluation was not availed," read the report.

"Out of the 58 motor vehicles and heavy machinery, only six motor vehicles were valued, while there was no evidence that 35 motor vehicles although serviceable were valued. This is contrary to the International Accounting Standard (IAS) 16 which states that if an item of property, plant and equipment is revalued, the entire class of property, plant and equipment to which the asset belongs shall be revalued."

The Auditor-General further states that physical verification of the company vehicles revealed that eight vehicles purchased at Sh11.5million were impounded and auctioned on May 19, 2018, due to outstanding payments to a businessman.

"The disposal of the vehicles has not been recorded in the financial statements. Besides, out of the existing 50 vehicles, logbooks for 10 vehicles were not provided for audit review," said the Auditor-General report.

At the same time, the Auditor-General report reveals a shocking lack of land documents belonging to the company.

"The company did not provide ownership documents of 18 parcels of land valued at Sh354million for audit review," read the report.

The company did not provide information on two prime land in Nakuru Municipality valued at Sh7.5million and another land in Nyandarua county valued at Sh45.8million.