KENYA:Audit queries Kemsa’s purchase of Sh352 million expired drugs

March 2017 BusinessDaily;

A State agency is on the spot for procuring expired drugs worth Sh352 million in two years.

Auditor-General Edward Ouko has flagged the purchase in his audit report on the Kenya Medical Supplies Authority (Kemsa).

“In the last two financial years, public money on the purchase of drugs worth Sh352,134,551 have not been applied in an effective way,” says Mr Ouko in the report.

The report says Kemsa bought commodities worth Sh92,392,937 in the year to June 2017 that could not be sold due to expiry or damage.

“In the previous year, the expired drugs amounted to Sh259,749,614,” Mr Ouko says in the audit tabled in Parliament Tuesday evening.

The auditor notes that the Kemsa management did not give an explanation for stocking expired or damaged drugs at a time when public hospitals are severely short of drugs.

“In the circumstance, it has not been possible to determine the propriety of the inventory balance of Sh11.8 billion included  in the statement of financial position as at June 30,2017 as well as the net sales of Sh900,094,880 included in the statement of financial performance for the year under review,” Mr Ouko says in his qualified audit opinion.

Mr Ouko also questions staff costs amounting to Sh25.9 million paid to 47 officers employed during the year under review and eight promoted in the same period whose supporting recruitment and promotion documents including approval from the board were not made available for audit.

“Further, the agency has 695 employees against the approved staff establishment of 341 resulting in an unapproved over the employment of 354 officers. No explanation has been provided for the excess employment,” Mr Ouko said. Consequently, Mr Ouko said the propriety of the staff cost of Sh695,779,767 for the year to June 2017 could not be confirmed. The auditor further revisited his previous year’s audit queries touching on long-standing receivables totalling Sh3.4 billion.

He said the amount comprises of Sh1 billion from the Ministry of Health and Sh2.3 billion from the 47 county governments.

“No explanation has been provided for failing to recover these long outstanding debts. In the circumstances, the accuracy and validity of the exchange transactions balance of Sh3,964,035,099 reflected in the statement of financial position as at June 30, 2017, is doubtful,” Mr Ouko said.

The auditor also queried Sh3.5 billion in property, plant and equipment balance which includes various parcels of land spread across the country.

He said Kemsa did not possess ownership documents for land valued at Sh183 million.

The properties are in Eldoret (Sh25 million), Garissa (Sh6.5 million), Kakamega-Green Site (Sh7.5 million), Kakamega-PG (Sh3 million), Kisumu (Sh25 million), Mombasa (Sh76 million), Nakuru (Sh25 million) and Nyeri (Sh15 million).

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