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.
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