The University of Nairobi (UoN) sank into an Sh1.4 billion loss last year after overshooting its budget and failing to raise projected revenue, an audit report has revealed.
A report by Auditor-General Edward Ouko shows that the university was unable to meet financial obligations worth Sh2 billion in the year to June 2018, as the biting cash crisis at the institution gets even worse.
Critical statutory deductions such as Pay As You Earn (PAYE) tax, National Social Security Fund (NSSF), National Hospital Insurance Fund (NHIF), Higher Education Loans Board (Helb), pension and Sacco deductions went unpaid, the report reveals.
“The university was therefore unable to meet its financial obligations as and when they fell due,” Mr. Ouko says in a qualified audit opinion tabled in the National Assembly by Leader of Majority Aden Duale.
The University of Nairobi, for instance, was unable to remit workers’ deductions of Sh2 billion.
The university failed to remit PAYE of Sh283 million, National Social Security Fund deductions of Sh3.4 million and National Hospital Insurance Fund deductions of Sh10.8 million.
It also failed to submit pension contributions of Sh1.5 billion, sacco deductions of Sh204 million and Helb deductions of Sh828,387.
The auditor warns that the universities’ continued operation is “a going concern” as they now depend entirely on creditors, banks and the government.
Ouko also said KU may further worsen its liquidity position, having resorted to financing its operations using short-term bank overdrafts.
The university recorded a deficit of Sh2.1 billion during the year under review. Its current liabilities exceed its Sh847 million current assets, resulting in negative working capital of Sh3.5 billion.