KPA failed to disclose forex loss in results

Uncollected containers at the Kenya Ports Authority container terminal. A government audit shows KPA overstated its profit. FILE 

By EDWIN MUTAI
 

 

In Summary

• Auditor-general Edward Ouko said the profit after tax of Sh3.3 billion excluded the losses on transactions based on hard currencies.

The Kenya Ports Authority (KPA) overstated its profit for the year 2010/11 by failing to provide for a foreign exchange loss of Sh132.5 million, a government audit shows.

Auditor-general Edward Ouko said the profit after tax of Sh3.3 billion excluded the losses on transactions based on hard currencies. He said the loss was charged to the general reserve contrary to International Accounting Standard (IAS) No 21.

The accounting standard requires that exchange differences arising from transaction of monetary liabilities be dealt with in the statement of comprehensive income.

‘‘Had the authority complied with the standard, the reported profit after tax would have amounted to Sh3.2 billion,” said Mr Ouko in his report tabled in Parliament last week.

Mr Ouko also failed to ascertain that the property, plant and equipment was worth Sh44.28 billion as at June 2011, concluding a qualified opinion on the KPA accounts. A qualified audit opinion means the auditors did not find essential material evidence needed to determine the validity of the information provided.

The auditor-general said the property, plant and machinery balance in question included four parcels of land located in Mombasa valued at Sh230 million and 15 parcels of land in Mombasa valued at Sh556 million registered in the name of the defunct East African Railways and Harbours Corporation.

In the trade and other receivables balance of Sh4.47 billion, Mr Ouko found that Sh287.23 million and Sh342.59 million were owed by the former Ministry of Transport (now Transport and Infrastructure) and Kenya Ferry Services Limited respectively.

“These amounts have been withstanding for more than 15 years, no meaningful progress has been made to ensuring the receivables are paid as recommended by the Public Investments Committee in its ninth report,” Mr Ouko noted.

He said no provision in respect to the debt was made in the financial statements presented for audit by KPA board chairman Shukri Baramadi and managing director Gichiri Ndua.

The auditor found that another Sh587 million owed by four firms since 2005 had been included in the trade and other receivables balance and no specific provisions made.

Mr Ouko said the trade and receivables balance of Sh4.48 billion was arrived at after netting off debtors with credit balances amounting to Sh141.1 million contrary to the international accounting standards that prohibits set-off of assets against liabilities.