Do you remember the NYS season one and two scandals? The Kenya’s power man might be playing the two seasons combined. Kenya Power’s newly released financial statements for the year ended June have not been corrected to reflect the company’s true financial position, an unprecedented disregard for good corporate governance practices by a publicly traded firm.
“Accordingly, had the company complied with the principles of IAS 18, the profit before income tax for the year ended June 30, 2017 and the trade and other receivables (current assets) as at June 30, 2017 would have decreased by Sh7.2 billion; and the profit before income tax for the year ended June 30, 2018 would have increased by Sh5.5 billion,” Auditor General Edward Ouko says.
“The correction of the misstatements requires a restatement of the comparative balances for the year ended June 30, 2017.”
While Kenya Power was caught up in the fuel cost saga, it racked up major claims from power producers such as KenGen, another majority State-owned public listed firm.
KenGen disclosed that Kenya Power only recently paid it Sh18.5 billion, reducing its debt from highs of Sh21.8 billion.
Besides the controversial fuel cost charge, Kenya Power failed to write off Sh2.6 billion worth of unpaid electricity bills on its books.
The business news local daily, Business Daily, reported that the company also failed to disclose its financial distress after it breached terms attached to Sh59.9 billion worth of commercial loans.
Compliance should have seen the debt reclassified from long-term to short-term as of June but Kenya Power once again ignored accounting standards.
“Had management complied with IAS 1, an amount of Sh49.9 billion would have been reclassified from non-current to current. Accordingly, current liabilities and the net current liabilities would have increased by Sh49.9 billion,” Mr Ouko says.
Mr Ouko’s revelation makes Kenya Power the latest publicly traded firm found to have misled investors.
The list includes KenGen , ARM Cement , Uchumi Supermarkets , East African Breweries , KenolKobil and National Bank of Kenya.
KenGen, for instance, did not provide for a tax liability amounting to Sh963.3 million in its financial statements for the year ended June, arguing that it was lobbying the government to rescind the claim.
The Auditor-General, however, noted that the waiver had not been issued and there was uncertainty over what impact the delayed payment will have on the company’s finances.
Do you think Kenya Power has misled investors?