Kenya Revenue Authority (KRA) has frozen all bank account belonging to Kenyatta University following a protracted battle over Ksh2 billion tax arrears.
A report by Nation on Sunday, September 12, indicated that KRA resorted to the move after the university failed to remit statutory deduction.
The Ksh2 billion is part of a wider Ksh5.6 billion that the university reportedly owes its supplies and the taxman.
The publication further indicated that the situation had worsened in the past month – the university is reported to have paid its staff in cheques that bounced at the bank.
In a past report, Auditor General Nancy Gathungu noted that the situation had worsened at Kenyatta University to a point where it depended on short-term loans to finance its operations.
Gathungu further observed that the situation was likely to worsen for the institution which had a protracted battle with KRA for months now.
“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,” stated the Auditor General.
Gathungu added that the deficit KU recorded in the year under review reduced its accumulated surplus from Ksh5.84 billion in the financial year 2019 to Ksh4.5 billion in 2020.
“Further, the current liabilities of Ksh6.38 billion as of June 30, 2020, exceeded the current assets of Ksh1.58 billion resulting in a negative working capital of Ksh4.8 billion,” Gathungu said in a report tabled in Parliament in mid-August.
The institutions that have found themselves in deep financial constraints have heaped blames on the reducing number of students, mismanagement, and low state funding.
They include the University of Nairobi as well as Moi University.
In July, the University of Nairobi implemented a raft of leadership changes to deal with the Ksh7.2 billion debt it owed to the Kenya Revenue Authority (KRA).
Vice Chancellor Stephen Kiama made the appointments aiming to turn around the loss-making institution.
The institution was struggling to honour tax obligations, retirement benefits, and insurance premiums for employees’ obligations.