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Documents Linking KFC Chief Peter Mutie To Graft

Documents Linking KFC Chief Peter Mutie To Graft

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07/21/2012

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The Board Audit Committee met on 11
th
May and 14
th
May,2012 to consider the internal audit
report as prepared by the Commission’s Internal Auditor and also conduct interviews with the
departmental heads who were provided insights on the over expenditures as observed in the firstand second quarter of this financial year. The Committee in fulfillment of this task interviewedthe head of finance, the marketing manager, the procurement officer and the head of humanresource and administration in the search for the justifications and clarifications as to what leadto the over expenditure.The following was the deliberations and decisions reached by the Audit committee of the Board
1.0 Sponsoring policy
 The Committee noted that the Commission does not have sponsoring policy. This policy is todefine the process to be followed in order to identify the filmmakers for sponsorships to thevarious events both locally and internationally. The proposed policy should spell out the types of support available to a film maker as well as state the applicable rates. This was found lacking inthe Commission and therefore there is need for it to be developed. This will eliminate theambiguity in identification of the film makers and the applicable rates used as is currently seen inthe Commission. The Committee therefore recommends development of sponsoring policy.
2.0 Contingency
The committee noted that there was no policy on how much contingency should be given to theemployees who are assigned duties outside their normal place of work. In the last one financialyear the employees are given huge amount as contingency money/funds. This in effect puts theemployee under pressure to use the funds thereby providing an opportunity to present theCommission with not accurate receipts.The committee proposes that the contingency funds that can be applied by an employee of theCommission should only be capped to only 10% of the total imprest taken.The table below shows the contingency amount drawn:-
Date
 
ImpestHolder
 
ImprestwarrantNo.
 
Event attended
 
Amount
 
(USD)ExchangeRateusedAmountin Kshs
 15/05/2012 Timothy Cannes 5,000.00 87.40 437,000.00
 
Owase Internationalfestival
 – 
201231/10/2011 AlexMulwa0366 American Filmmarket4,000.00 104.5 418,000.009/5/2011 TimothyOwase0222 CannesInternationalfestival
 – 
20115,000.00 88.5 442,500.0030/5/2011 AlexMulwa0235 AFCI locationsshow 20115,000.00 90.15 450,750.009/12/2010 AlexMulwa0094 Dubai internationalfilm festival- 20101,000.00 84 84,000.00
3.0 Code of regulation provision on international travel.
 The Committee noted that the Commission does not have a policy on foreign/international travelpolicy. In view of this noted absence then the Commission relies on the provision of the section j3 on subsistence allowance when travelling on duty outside Kenya in the Code of regulation
revised 2006. Subsection J.3 (2) states “
The rates of subsistence allowance which are payablefor each complete period of 24 hours commencing from the time of departure from Kenyaare designed to meet the cost of accommodation at good, but not luxury class hotels, threemeals a day including service charges, local travelling (such as taxi, bus or train fare),incidental expenses including any taxes and an element in respect of essentialentertainment. In addition, travelling expenses incurred from the airport of disembarkation to a hotel or other residential place and vice versa, airport charges, fees for
vaccination, visas and passport charges will be refunded.”
 The committee noted with concern that the provisions above regulations were being flaunted. Anotable case was where the marketing manager presented taxi receipts, fuelling receipts and
driver’s allowance as part of the surrender of imprest given to him.
 The committee noted that the contents of the above regulation need to be disseminated to thestaff members as soon as possible. This was seen as key in raising awareness of what should beallowable and what is not as far as imprest usage is concerned.
4.0 Communication between departments
 The committee noted that of the vote book balances are not available to all the managers/ budgetholders in the Commission. This was identified as cause of some manager not knowing thebalances on their votes at the time the commitment. The Committee proposes that the vote book system software be made available to all the CEO and all the managers.Further, the committee noted that there was a tendency where the holder of the budget is notconsulted before his funds were committed. The committee proposes that all the funds should becommitted only if the budget holder agrees the vote to be committed.
 
A case in point is where the Committee noted the human resource department was notcommunicated to about the error in the budget which affected the salaries of temporary staffs.This fact was communicated to the department only when it had engaged the temporary staff foranother three months.
5.0 Signatory to the accounts
 The committee noted that one of the senior managers in the Commission is a signatory of the
Commission’s bank accounts. The mana
ger in question runs one of the core departments of the
Commission which accounts for huge portion of the Commission’s budget. The departmental
head not only approves the requisitions of his department but also is a member of the tendercommittee. The comm
ittee noted that this is a weakness in the Commission’s internal control
system and could lead to cases of conflict of interest. They observed that this vulnerability on the
side of Commission’s controls once exploited then the Commission stands to lose a
lot of funds.The committee noted there is need to identify another signatory to the account especially fromthe departments which are not big spender and is not in the tender committee. This will ensurethat more control and scrutiny is enhanced before a cheque is signed.
6.0 Over expenditure in international travel and accommodation.
 The Committee noted with concern that the vote had been over expend by a total of Kshs1,385,019.00. This translated to 186% over and above the allocated amounts. The marketing
manager’s justification that the CEO travel expenditures was not meant to be charged to the
international travel and accommodation vote but to the research and advocacy vote could not besubstantiated as he did not produce any evidence such as a copy of extract of the board minutesauthorizing the use of the research and advocacy funds.
It was further noted that the explanation given by the Marketing manager that the CEO’s travel
was not planned for from the beginning could also not be substantiated. This was after anexamination of memo Ref. No. KFC/5/MEMOS/11 dated 24
th
October, 2011 from hisdepartment had included the CEO among the delegation that was scheduled to travel. Thereforethe assertions by the marketing manager that he came to know about the
CEO’s travel on the day
he was due to board the plane to the USA for the event were not factual.
The Committee noted that this was a case where the management overrode the Commission’s
internal controls. The committee proposes that the management should religiously stick to thefunds allocated to avoid the cases of over expenditure as was the case above.
7.0 Unsupported expenditures- American Film Market
 
The Committee discussed the internal auditor’s findings as well as sought the clarification from
the imprest holder. The following were the findings of the Committee.
a) Kenya film reception expenditure.
 

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Samuel Njoroge added this note
we need justice in kenya what happen before election in 2007?

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