Degrees and diplomas conferred by Maseno University could be brought into question due to a lack of a substantive chancellor in the institution.
The university has not had a substantive chancellor for the past five years following the expiry of the term of ex-Safaricom CEO and chairman Michael Joseph.
Michael Joseph was appointed for five years from January 2014 and his contract ended on January 6, 2019.
Since then, no one has been named to the post despite the university senate recommending nominees.
A new audit has put the State Department for University Education and Research for perpetuating the anomaly.
Auditor General Nancy Gathungu has flagged the delay in appointing the top official in a review of the varsity’s books as of June 30, 2023.
“In the circumstances, the effectiveness of the university’s overall governance and its core mandate of conferring degrees and granting diplomas could not be confirmed,” the auditor general said.
She stated in the latest review that a special senate meeting held on March 23, 2022, settled on five nominees for the chancellors’ position.
The names, the audit reveals, were communicated to the Principal Secretary for the State Department of University, who apparently has yet to act on the same.
“As at the time of the audit in February 2024, no appointment had been made,” the auditor general noted.
The varsity’s top managers are also on the spot for failing to disclose that the university is broke.
Gathungu says her review established that the university had a budget deficit of Sh560 million but did not disclose the same in financial statements.
The university, the audit stated, recorded a deficit of Sh204 million during the year under review alone.
It’s liabilities of Sh569 million exceed the current assets of Sh436 million, resulting to a negative working capital of Sh133 million.
“However, management did not make any disclosure... of the material fact that the university cannot sustain its services in the foreseeable future,” the auditor general said.
The varsity bosses also did not state the mitigating measures they had taken to reverse the financial mess at the university.
“The university is, therefore, technically insolvent and may face financial challenges in settling liabilities as and when they fall due,” Gathungu said.
The cash crisis is already biting amid revelations that the university is unable to settle debts of Sh104 million.
Some of the debts, up to Sh72 million, had been outstanding for more than 60 days at the time of the review.
“No explanation was provided as to why these creditors had not been settled as at June 30, 2023,” the report reads.
“The university management risks incurring extra costs on penalties and litigation due to delayed payments,” Gathungu said.
Auditors further found that the university is struggling to meet expenses for statutory deductions.
During the year under review, Pay as You Earn for the months f October 2022, February and March 2023, totaling Sh123 million, were remitted late.
The university also owes KRA Sh3.8 million in withholding tax.
“No explanation was provided as to why the withholding taxes were not remitted to the commissioner of domestic taxes at the time of payments to the suppliers and contractors. In the circumstances, management was in breach of the law,” Gathungu said.
While the cash crisis persists, the university was found to be holding Sh1.3 million in six dormant accounts, sparking an audit query as the accounts continue to incur costs in bank charges.
“In the circumstances, value for Sh1,260,079 held in dormant accounts could not be confirmed,” the auditor said, further flagging breach of public finance laws on payment of salaries.
During the year under review, Maseno University paid Sh2.4 billion wages, yet it only received Sh3.1 billion as income or revenue.
The Public Finance Management (National Government) Regulations, 2015 requires expenditure on wages not to exceed 35 per cent of revenue.
The university has also been called out for non-compliance with the law on ethnic composition.
As of June 30, 2023, the university had 1,143 employees, of whom 741 were from the dominant community, Luo.
NCIC Act 2008, requires public offices to represent the diversity of the people of Kenya in the employment of staff.
Public institutions are not allowed to have more than one third of its staff from the same ethnic community.