Audit Uncovers Sh358m Financial Irregularities at Kenya School of Law.
An audit has identified several financial discrepancies related to the Kenya School of Law (KSL), particularly concerning millions spent on the construction of a library and moot court.
The project, initiated in 2013, remains incomplete despite significant expenditures and extended timelines.
Additional issues were raised regarding payments of damages, irregular renewal of contracts, excessive board meetings, and unsubmitted bank reconciliation statements.
Delayed Project: Library and Moot Court
The Kenya School of Law began construction of an ultra-modern library and moot court on June 24, 2013.
The contract was awarded at a cost of Sh488.7 million, with an expected completion date set for September 2016. However, by 2023, the project remains unfinished, despite KSL already disbursing Sh358 million.
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Auditor General Nancy Gathungu expressed concerns over the value obtained from the expenditure, stating that physical inspections revealed ongoing construction work seven years past the original deadline.
Additionally, management failed to provide necessary site inspection reports or meeting minutes for audit verification.
Unjustified Delays and Payments
The contractor did not adequately justify the prolonged delays in completing the moot court, according to the auditor.
Consequently, it was unclear whether the school achieved value for the Sh358 million spent.
Despite the project’s incomplete status, the audit report showed KSL paid the contractor Sh7.2 million in liquidated damages in June 2023, calculated at Sh400,000 per week for 18 weeks.
The audit raised questions about why liquidated damages were paid for a project that was behind schedule, instead of penalizing the contractor for delayed completion.
This failure to complete the project 12 years after its inception cast doubt on the efficiency and effectiveness of the expenditure.
Bank Reconciliation and Legal Breaches
The audit uncovered that KSL management failed to submit bank reconciliation statements for accounts held with Absa Bank, Equity Bank, and Coop Bank, in violation of the Public Finance Management (National Government) Regulations, 2015.
Regulation 90(1) requires accounting officers to provide statements for all accounts. This lapse was highlighted as a breach of the law.
KSL also faced scrutiny for the renewal of a medical insurance contract valued at Sh23 million.
The initial contract was meant to last from July 1, 2021, to June 30, 2022, with the possibility of renewal contingent on satisfactory performance.
However, the renewal process for the year 2022/2023 was found to contravene Article 227 of the Constitution, which mandates fair, transparent, and cost-effective procurement procedures.
Excessive Board Meetings
The board of directors at KSL was criticized for holding 30 meetings during the financial year, significantly exceeding the government directive that caps meetings at six per year.
No approval was provided for these additional meetings, violating Circular no. REF: OP/CAB.9/1A issued on March 11, 2020.
This breach was flagged as unlawful, with the audit pointing to a lack of proper oversight from relevant authorities.
KSL management was also reprimanded for not addressing issues raised in past audits. No explanations were provided for the failure to implement previous recommendations, leading to ongoing financial mismanagement.
Unpaid VAT
The audit further revealed that KSL had failed to remit value-added tax (VAT) amounting to Sh26 million during the review period, which was a breach of the law.
According to the VAT Act of 2013, VAT should be paid by the 20th day after the end of the relevant period.
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The school’s non-compliance with this requirement added to the list of legal breaches highlighted in the audit.
Audit Uncovers Sh358m Financial Irregularities at Kenya School of Law.