KFS on spot over ethnic hiring, Sh2.1bn unpaid tax

Kenya Forest Service has been cited by auditors for lack of ethnic diversity in last year’s recruitment of rangers.

A new report by Auditor General Nancy Gathungu has revealed that 26 per cent of the 2,666 rangers recruited in February 2023 were from one ethnic community.

The said community took up 693 slots while many others did not get a single chance. 

The service recruited overage personnel to join its ranks, contrary to the set entry requirements.

At least 114 rangers did not meet the set criteria, since they were aged above 28 years.

Entry requirements stipulate that recruits are to be 28 years or below to be eligible for the listing.

“The management was in breach of the law and internal controls relating to the recruitment of 114 rangers were not adhered to,” Gathungu said.

The recruitment queries are besides findings that the service has weak revenue control systems, is battling a tax row with KRA and an uncertain retirement benefit scheme.

On the revenue leakages, auditors established that there was no integration between revenue collection, invoicing and receipting.

Revenue is collected through M-Pesa and bank accounts, but it emerged that receipts are manually keyed in the system and invoices are generated after receipting.

“In the circumstances, the effectiveness of the internal controls on revenue collection could not be confirmed,” Gathungu said.

On the tax row, taxpayers are at the risk of paying more money following KFS default in payments to KRA to the tune of Sh2.1 billion.

The audit established that KRA in May issued agency notices to the service’s bankers on unpaid taxes amounting to Sh4.1 billion.

KFS, the report shows, acknowledged the existence of the arrears and entered into a negotiated arrangement with KRA.

The two agencies agreed to a settlement of the principal amount of Sh2.1 billion by paying Sh10 million every month starting March 2023.

KFS banks remitted Sh98.9 million to settle the principal amount, leaving a balance of Sh2.1 billion at the end of the year to June 30, 2023.

“The failure or delay of payment of tax arrears of Sh2.1 billion may attract penalties and interest which may affect service delivery by KFS,” the report reads.

A debt of Sh75 million owed by government agencies and media houses whose transmitters are located within the service’s forests has also been flagged.

It was established that the licence charges had not been paid as the fee is said to have been paid to the government-owned Kenya Broadcasting Corporation.

Further, the balance excludes amounts receivable from the defunct Ministry of Sports and Kenya National Highways Authority of Sh10 million and Sh77.7 million respectively.

Gathungu reported that the balances do not include an amount of Sh32.4 million for special user licence issued to Sustainable Energy Systems Limited, which has remained receivable due to an outstanding legal case.

In the circumstances, the accuracy and completeness of the receipts of  Sh1.7 billion could not be confirmed.

KFS also faces questions after it failed to add rangers houses that were constructed and donated by China Roads and Bridges Corporation.

The agency reported that it owned property worth Sh715 million at various locations save for the Chinese donations.

“Further, contrary to the requirements of IPSAS 17, the land on which these buildings are erected had not been valued and disclosed separately in the last seven years,” the report reads.

It also emerged that out of the 265 gazetted forest blocks owned by Kenya Forest Service with acreage of 2,585,526.44 hectares, only 77 blocks have title deeds.

The acreage is also in doubt as lands of an undetermined size have ownership court cases between the service and private parties.

Illegal encroachments and excisions on forest land were also flagged in parts of the country.

Of these, a total of 555.9 hectares were illegally acquired by private parties in Kipkabus, Tingwa and Ngong' forest.

Further, in Uasin Gishu county, 29.5 hectares of land had unlicensed operational installations while other parcels, though licensed, remain unpaid by five institutions.

The institutions include the Ministry of Energy, Kenya Airports Authority, Nabkoi Water Project, Kapseret Water Project and County Cemetery.

“The Service has not valued its assets as required by IPSAS 17 Section 31 which requires that revaluations should be carried out regularly, so that the carrying amount of an asset does not differ materially from its fair value at the balance sheet date,” Gathungu stated.

On pensions, there was no evidence KFS appointed its members to the board of trustees of the scheme.

Thus, the members were locked out of the day-to-day operations of the scheme.

In the circumstances, the scheme's usefulness and oversight by employees could not be confirmed, the auditor general said.