The Auditor General reveals instances of financial mismanagement, significant outstanding bills, and uncollected fee arrears at Malindi Boys, under the administration of Joseph Kazungu

 

UNAPPROVED FEES ON BUS FUND AND BOARD OF MANAGEMENT TEACHERS

The statement of receipts and payments reflects school fund income - parents' contributions amount of Kshs.57,462,017 as disclosed in the financial statements which includes bus Fund and Board of Management (BOM) teachers amount of Kshs.4,233,780 and Kshs.5,934,322 respectively.
Review of the records revealed that the school charged an amount of Kshs.4,750 for bus Fund and Kshs.7,050 for BOM teachers per student to support the programmes which had not been approved by the Ministry of Education through the County Education Board. This was contrary to Ministry of Education Circular No. MOE.HQSl3l10l1Bl(112) dated 15 November, 2022 on guidelines on implementation of Free Day Secondary Education for the year 2023 which stipulates that parents will only pay for school uniforms, boarding related costs as reflected in the boarding fees structure and lunch for the day scholars.
In the circumstances, Management was in breach of the guidelines
UNSUPPORTED PAYMENTS
The statement of receipts and payments reflects Kshs.2,791 ,197, Kshs.12,183,922 and Kshs.64,894,212 in respect of tuition, operations and boarding and school fund payments respectively, all totalling to Kshs.79,869,331 as disclosed in the financial statements.
Out of the total amount of Kshs.79,869,331 , examination of payment vouchers amounting to Kshs.17,632,045 revealed that Management made payments without proper support documents such as requisitions, local purchase orders, delivery notes, inspection reports, goods received notes, certificate of payments.
In the circumstances, the regularity, accuracy and completeness of the tuition, operations and boarding and school fund payments amounting to Kshs.'17,632,045 could not be confirmed.
IRREGULAR PROCUREMENT OF LABOUR AND MATERIALS FOR CONSTRUCTION OF SCHOOL DORMITORY
The statement of receipts and payments reflects infrastructure payments totalling to
Kshs.1,500,000 as disclosed in Note 8 to the financial statements. Review of the records revealed that the payment was in relation to construction of a dormitory and which was paid to a contractor for labour services.
However, procurement records were not provided for audit verification.
In addition, acknowledgement of receipt of the infrastructure funds through the County Director of Education was not done and an official receipt was not uploaded on the NEMIS platform.
This is contrary to the guidelines by Ministry of Education provided under Circular Ref. No. MOE.HQS/3/101181(112\ dated 15 November, 2022 which require that approval must be sought from the relevant office on utilization of this vote.
In the circumstances, Management was in breach of the guidelines
FAILURE TO/LATE TRANSFER OF LNFRASTRUCTURE FUNDS FROM OPERATIONS BANK ACCOUNT
The statement of receipts and payments reflects operations grants amount of
Kshs.15,945,117 as disclosed in Note 2 to the financial statements from the Ministry of
Education credited in the operations bank account.
Included in the amount is Kshs.5,191,500 in respect of infrastructure grants which were to be transferred to infrastructure bank account for maintenance and improvement of the School's facilities,
However, only Kshs.2,300,000 was transferred to infrastructure account, leaving a
balance of Kshs.2,891,500 as at 30 June, 2024.
Further, amounts of Kshs.989.600 and Kshs.1,274,300 were transferred two hundred and seventy-five (275) days or approximately nine (9) months and ninety-five (95) days or approximately three (3) months respectively of receipt.
This was contrary to The Ministry of Education Circular Ref. No: circular MOE.HQS/3/13/3 dated 16 June, 2023 which directed that infrastructure grants as well as maintenance and improvement funds should be transferred to the school infrastructure account fifteen (15) days upon receipt of the funds in the operations account.
In the circumstances, Management was in breach of the guidelines.
UNSUPPORTED INVENTORY BALANCES
Note 19 to the financial statements under other important disclosures is inventory balance of Kshs.1 ,702,961 , However, the inventory balance has not been supported by inventory listing and stock taking sheets and reports that were used to count stock balances at the end of the year.
In the circumstances, the effectiveness of the safeguards on the inventory could not be confirmed.
UNSUPPORTED PAYABLES
The statement of financial assets and financial liabilities reflects payables balance of
Kshs.14,688,284.
Included in the balance is trade creditors balance of Kshs.'12,269,359 which was not supported by user requisitions, local purchase order, invoice, delivery notes, goods received notes and inspection and acceptance certificates and report.
In the circumstances, the accuracy and completeness of accounts payables balance of Kshs.14,688,284 could not be confirmed.
UNSUPPORTED CASH AND CASH EQUIVALENTS
The statement of financial assets and financial liabilities reflects cash and cash
equivalents balance of Kshs.3,312,232. lncluded in this balance are bank balances of
Kshs.3,104,5'12 and cash balance of Kshs.2O7,720 as disclosed in Notes 10 and 'l 1 to
the financial statements.
However, the balances were not supported by bank certificates, bank reconciliation statements and board of survey report.
OVERDRAWN ACCOUNT AND NETTING OFF OF BANK BALANCE
The statement of financial assets and financial liabilities reflects bank balance of
Kshs.3,104,512.
Included in the bank balance is school fund account boarding bank account with an overdraft balance of Kshs.'t,544,368 which was offset against bank balances of Kshs.3,104,5'12 contrary to Section 28(4)(5) of the Public Finance Management Ac|,2012.
In the circumstances, the accuracy, completeness and existence of the cash and cash
equivalent balance of Kshs.3,312,232 could not be confirmed.
IRREGULAR TRANSFER OF FUNDS TO KENYA SECONDARY SCHOOLS HEADS ASSOCIATION
The statement of receipts and payments reflects boarding and school fund payments
amount of Kshs.64,894 ,212 as disclosed in Note 9 to the financial statements-
Included in the expenditure is an amount of Kshs.1,389,210 transferred to Kenya Secondary School Heads Association (KESSHA).
However, KESSHA is a welfare organization that draws its membership from School Principals only.
The organization is not defined in Government Funding system and there is no assurance that it has implemented effective, efficient, and transparent financial management and internal control systems to manage the funds transferred by schools.
In the circumstances, value for money transferred to KESSHA amounting to
Kshs.1,389,210 could not be confirmed
OVER FUNDING OF CAPITATION GRANTS
The statement of receipts and payments reflects capitation grants for tuition and operations amount of Kshs.3,288,501 and Kshs.15 ,945,117 , respectively as the financial statements.
During the financial year, NEMIS reported a total number of four thousand and fourteen (4,014) students while the enrolment records provided by the School indicated a total number of three thousand eight hundred and ninety-four (3,894) students, resulting to an unexplained variance of one hundred and twenty ('120) students.
As a result of the variances, the School was over funded by an amount of Kshs.41 4,792.