KBC on spot for failing to remit taxes worth Sh6.7M

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Kenya Broadcasting Corporation (KBC) failed to remit taxes worth Sh6.7 million to the Kenya Revenue Authority (KRA) in the year to June 2018.

Auditor-General Edward Ouko says the Corporation, under its Digital Terrestrial Television (DVB2 Platform) Coverage Roll Out Project breached the VAT Act, Cap 476 which gives guidelines on ways in which VAT is charged on goods of Sh15,549,255 and Sh2,532,000 all totaling Sh18,081,255.

“Failure to remit VAT may attract heavy penalties. No explanation was given for non-remittances of the VAT. The project management was therefore in breach of the law,” Mr Ouko says in a qualified audit opinion.

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Mr Ouko cited the project management for failing to maintain a fixed assets register to record details of the project assets such as cost, date of purchase, rate of depreciation, net book value and other necessary information contrary to section 68(2)(e) of the Public Finance Management Act 2012 which states that the accounting officer should ensure that all applicable accounting and financial controls, systems, laws and procedures are followed when procuring or disposing of goods and services and that, in the case of goods, adequate arrangements are made for their custody, safeguarding and maintenance of assets.

“In addition, the project equipment worth Sh892,988,931 equivalent to euros 8,192,559 shipped from Spain was not physically verified.

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“In the circumstances, it has not been possible to confirm the existence and ownership status of the project assets worth 892,988,931 as at June 30, 2017 and that the project management was in breach of the law,” Mr Ouko said.

The KBC managers were also found to have signed a contract agreement on December 8, 2015 for supply of 12 standby auto controlled generators with a supplier at a contract sum of Sh35.9 million with duration of six weeks from the date of Local Purchase Order (LPO) of Sh10.8 million or 30 per cent of the contract sum.

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“Available information indicates that only three out of 12 generators were delivered to Langata station which was not part of the initial stations identified for the project.

Mr Ouko said a review of the matter in February 2018 revealed that the balance of nine generators have not been delivered to the designated project sites.

“It is not clear and management has not explained if and when the nine generators will be delivered and when stakeholders will get the value for the public resources,” Mr Ouko said.

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