Auditor General calls out roads authority Kerra for poor financial oversight

The Kenya Rural Roads Authority (Kerra) is under fire from the Auditor General for being secretive with information necessary for auditing.

In May, the National Treasury identified Kerra as one of Kenya's wealthiest state corporations, noting that it held 13.89 per cent of the idle cash in commercial banks.

However, the latest audit report reveals troubling issues.

Kerra has accumulated a significant amount of pending bills due to delayed payments to contractors, with some being paid promptly while others face long waits.

The authority admitted to a low fund absorption rate, which has stalled several road projects.

Kerra's financial statement showed a 63 per cent fund absorption rate and pending bills exceeding Sh14.1 billion, despite receiving Sh64 billion of the Sh65 billion allocated by the Treasury for the fiscal year.

Auditor General Nancy Gathungu highlighted discrepancies in the valuation of fully depreciated assets.

Kerra claimed these assets were worth Sh225,073,000, but a review found their actual value to be Sh989,846,468.

"Review of the fixed assets schedule provided for audit revealed that the fixed assets with a total value of Sh989,846,468 but which were fully depreciated had been included in the authority's assets register and were still in use," reads the report.

Moreover, Kerra's management failed to recover Sh12 million in staff advances and imprest, with some records dating back to the 2021 financial year.

Regarding road works, out of 14 contracts worth Sh16 billion awarded for sealed roads between November 2020 and October 2022, only Sh2.8 billion worth of work had been completed and certified by December 2023, with contractors receiving just Sh1.5 billion in payments.

Alarmingly, six contracts totalling Sh6.2 billion had not seen any work initiated, and Kerra management could not provide explanations for this inactivity.

The report also pointed out that contractors had not been paid Sh424 million from Sh18.3 billion allocated for eight projects classified as terminated and retendered, despite the work being certified.

An audit inspection in February 2024 of 19 low-volume seal roads, with a total contract value of Sh31,426,015,932, revealed that many contractors abandoned their sites due to delayed payments.

Those who remained on-site were making slow progress for the same reason.

"Management has not provided any explanation for this unsatisfactory situation," Gathungu noted.

Furthermore, the Kerra management was unable to clarify the reasons for long-held receivables by contractors, even as the authority struggles with pending bills for completed road works.

Concerns were also raised about the absence of internal controls, which could lead to unsustainable levels of contractor advances.

Kerra attributed its low absorption rates to delays in the procurement process, project implementation issues, and frequent changes in work plans by constituency roads committees.