Auditor General exposes how public universities embezzled Sh14 billion

A report released by Auditor General Nancy Gathungu has revealed significant financial mismanagement in public universities, potentially leading to the loss of over Sh14 billion in taxpayer funds.

According to the report, several universities failed to properly account for how substantial sums of money were spent, highlighting severe financial mismanagement amid the financial distress currently plaguing the country.

Maasai Mara University topped the list with unexplained expenditures amounting to Sh3 billion, followed by Moi University at Sh1.6 billion, the Technical University of Kenya at Sh1 billion, Kabianga University at Sh877 million, and Kenyatta University at Sh835 million.

The audit also identified nine universities that collectively disbursed Sh559 million in irregular allowances, overpayments, penalties, and avoidable legal costs.

Specific cases included Kenyatta University's expenditure of Sh430 million on its closed Kigali Campus and Moi University's overpayment of Sh56 million on a Collective Bargaining Agreement (CBA).

Gathungu criticised the expenditures, terming them "a wasteful charge to public funds," emphasising the lack of proper documentation supporting the payments.

“Failure by the entities to fully support payments casts doubt on the authenticity of the reported expenditure,” she said in the report ending June 2022.

According to Gathungu, unsupported expenditures indicate weak internal controls and governance at the affected universities.

She highlighted that universities have weaknesses in cash and imprest management, messy payrolls, weak controls on stores, and fee policies.

Further irregularities included dubious supplier contracts, procurement exceeding approved budgets, and mismanagement of financial resources.

Auditor General Nancy Gathungu. (Photo: Office of the Auditor General)

These were evident in cases such as Jomo Kenyatta University of Agriculture and Technology's payment of over Sh3.3 million for an undelivered dental chair. Gathungu said that as a result, the university lost money, triggering a query not only on the loss but also for using direct procurement regularly.

Masinde Muliro University of Science and Technology (MMUST), Garissa, and Maasai Mara University also had no control over personnel and payroll data.

According to the report, Garissa University had several employees with different payroll numbers but shared bank account numbers.

The report also revealed a lack of accountability in financial management practices, with instances of unsupported expenditures totalling billions across various categories like personnel costs, supplier payments, and student tuition fees.

In particular, Maasai Mara University failed to explain the Sh641 million paid to suppliers and a variance of Sh287 million in financial statements and bank accounts.

The institution also did not account for Sh113 million, including Sh6 million on council foreign travel, Sh55 million on goods and services, Sh12 million on repairs, and Sh13 million to contractors.

Gathungu also cited Sh51 million in irregular payments that the institution expended on allowances, legal services, rent, and medical cover.

The Technical University of Kenya is also under scrutiny for questionable staff training expenses amounting to Sh7 million.

Additionally, South Eastern Kenya University is facing inquiries regarding Sh5 million paid in professional fees and failing to account for Sh46 million claimed to have been spent on field courses.

“The expenditure incurred under field courses was not supported by travel documents such as work tickets, prior approval for use of personal vehicles, and relevant receipts,” Gathungu said.

The auditor also raised concerns about the university's payment of Sh7.3 million to the Kenya Universities and Colleges Central Placement Services (KUCCPS), which was recorded as intended for student welfare services.

Furthermore, Gathungu flagged a Sh262 million payment to casual workers in the placement service, along with unsupported balances totalling Sh1.5 billion.

Additional financial discrepancies included unsupported tuition fees of Sh1.3 billion, a Sh62 million work-in-progress expense, and Sh1.5 billion in supplier payments.

Gathungu warned that accounting officers at these universities face potential prosecution for their failure to substantiate these expenditures with proper documentation, signalling a need for urgent reforms in financial management practices within public universities.