Kenyatta University (KU) has dipped into Sh1.3 billion deficit in the year to June, forcing the university to rely on short term loans to finance its operations.
Auditor-General Nancy Gathungu said the university deficit stood at Sh677 million in the year to June 2019.
She said the university is operating under financial difficulties and is relying on costly borrowings which may further worsen the liquidity problem.
“The university is therefore, technically insolvent and if no urgent positive measures are taken to improve the financial position, it may not be able to meet its mandate in future,” Ms Gathungu said in a qualified audit opinion.
The latest audit reveals the deep financial difficulties facing the country’s institutions of higher learning.
Public universities have found themselves in deep financial straits blamed on falling student population, mismanagement and low State funding.
In recent months, a number of universities have had to scrap some courses and close satellite campuses to cut cost of operations.
Ms Gathungu said the deficit that the university recorded in the year under review reduced KU’s accumulated surplus from Sh5.84 billion in 2019 to Sh4.5 billion.
“Further, the current liabilities of Sh6.38 billion as at June 30, 2020, exceeded the current assets of Sh1.58 billion resulting in a negative working capital of Sh4.8 billion,” Ms Gathungu said in a report tabled in Parliament.
She said the liabilities indicate that the university is likely to be unable to meet its financial obligations as and when they fall due. In particular, Ms Gathungu said the university was unable to remit pensions and taxes amounting to Sh3.67 billion, audit fees of Sh8.1 million and other deductions worth Sh342.9 million to the respective beneficiaries.