The Kenya Bureau of Standards (Kebs) is now technically insolvent after incurring KES 1.5 billion budget deficit, making it the latest institution to rely entirely on taxpayer funds to stay afloat, according to the Auditor-General.
According to Nancy Gathungu’s report to Parliament, the Kenya Bureau of Standard’s financial deficit grew by KES 1.39 billion from KEBS 99.32 million in the fiscal year that ended June 2020 to KES 1.49 billion in 2021.
Ms Gathungu raised concerns about KEBS service sustainability, stating that the financial position reflects a current liabilities balance of KES 2.23 billion versus current assets of KES 1.06 billion, resulting in a negative working capital of KES 1.16 billion.
“In the circumstances, the bureau is technically insolvent and the financial performance has been prepared on the assumption of continued support from the national government, bankers and creditors,” Ms Gathungu said in an audit of Kebs books of accounts for the year to June 2021.
The KEBS is tasked with inspecting the standards of all imported goods to ensure consumer safety. It also undertakes the provision of testing and calibration facilities and controls for the use of standardisation marks.
Ms Gathungu also questioned the standards body’s budgetary controls and performance in the fiscal year under review. She stated that KEBS’s actual revenue was KES 4.38 billion compared to the final budget of KES 5.74 billion, resulting in KES 1.36 billion (or 24 per cent) shortfall.
“Further, the statement reflects the actual expenditure for the year as KES 5.87 billion against the final budget of KES 5.24 billion resulting in an over expenditure of KES 629 million or 12 per cent of the budget,” Ms Gathungu said.
She stated that management attributed the revenue shortfall to low service demand during the Covid-19 pandemic. The management also attributed the budget overspending to legal expenses incurred during the fiscal year under review.
Last year, the Supreme Court ordered KEBS to pay a Dubai-based firm Sh1.6 billion in compensation for failing to comply with a fuel inspection issued 11 years ago. The Supreme Court judges denied a request to review a December 2020 judgment that found KEBS liable for breach of the contract awarded to Geo-Chem Middle East in 2009.
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