REPORT OF THE KENYA FILM COMMISSION BOARD AUDIT COMMITTEE TO THE FULL BOARD OF THE MEETING HELD ON 11TH May and 14th May 2012

The Board Audit Committee met on 11th May and 14th 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 first and second quarter of this financial year. The Committee in fulfillment of this task interviewed the head of finance, the marketing manager, the procurement officer and the head of human resource and administration in the search for the justifications and clarifications as to what lead to 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 to define the process to be followed in order to identify the filmmakers for sponsorships to the various 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 in the Commission and therefore there is need for it to be developed. This will eliminate the ambiguity in identification of the film makers and the applicable rates used as is currently seen in the 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 the employees who are assigned duties outside their normal place of work. In the last one financial year the employees are given huge amount as contingency money/funds. This in effect puts the employee under pressure to use the funds thereby providing an opportunity to present the Commission with not accurate receipts.

The committee proposes that the contingency funds that can be applied by an employee of the Commission should only be capped to only 10% of the total imprest taken.

The table below shows the contingency amount drawn:-

Date

Impest Holder

Imprest warrant No.

Event attended

Amount

(USD)

Exchange Rate used

Amount in Kshs

15/05/2012

Timothy Owase

 

Cannes International festival – 2012

5,000.00

87.40

437,000.00

31/10/2011

Alex Mulwa

0366

American Film market

4,000.00

104.5

418,000.00

9/5/2011

Timothy Owase

0222

Cannes International festival – 2011

5,000.00

88.5

442,500.00

30/5/2011

Alex Mulwa

0235

AFCI locations show 2011

5,000.00

90.15

450,750.00

9/12/2010

Alex Mulwa

0094

Dubai international film festival- 2010

1,000.00

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 travel policy. 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 payable for each complete period of 24 hours commencing from the time of departure from Kenya are designed to meet the cost of accommodation at good, but not luxury class hotels, three meals 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 essential entertainment. 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. A notable 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 the staff members as soon as possible. This was seen as key in raising awareness of what should be allowable 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/ budget holders in the Commission. This was identified as cause of some manager not knowing the balances 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 not consulted before his funds were committed. The committee proposes that all the funds should be committed 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 not communicated 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 for another 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 manager 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 tender committee. The committee 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 from the departments which are not big spender and is not in the tender committee. This will ensure that 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 Kshs 1,385,019.00. 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 be substantiated as he did not produce any evidence such as a copy of extract of the board minutes authorizing 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 an examination of memo Ref. No. KFC/5/MEMOS/11 dated 24th October, 2011 from his department had included the CEO among the delegation that was scheduled to travel. Therefore the 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 the funds 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.

The Kenya film commission organized a reception dinner for the filmmakers in the Los Angeles for a total of USD 3,407.89. The committee’s examination of the surrender voucher No 0426 dated 18th January 2012 revealed that the only proof of the expenditure was a statement/guest folio showing that banquets, audio visual and VLT park all at total cost of USD 3,407.89. However, the expenditure was not supported by the receipts from the hotel or a contract signed prior to provision of services.

It was unanimously agreed that since the expenditure was not supported by receipts as is required by the government procedures, then the whole amount of USD 3,407.89 should be recovered as its propriety could not be ascertained.

b)    Drivers allowance – USD 1,020.

The committee was informed that Mr. Sam Okolji of the Kenyan consulate received a total of USD 1,020 as driver’s fee for six days at a rate of USD 170 per day. The committee took note that the only supporting document attached to the surrender voucher as evidence was a signed letter showing that he received the money from the imprest holder. The committee noted that this was not sufficient and could not account for the expenditure since no invoices or receipts were presented as evidence of the said expenditure especially where the Commission has received services from suppliers.

The Committee sought to establish how the rate of USD 170 per day was arrived at as there was no letter headed letter from the Kenyan consulate or a government circular specifying the applicable rates at the time of the transaction. Further, they noted that there was no letter of engagement spelling the terms of contract between the consulate’s driver and the Commission. These two documents were not availed for verification. Further, the committee noted that the letter showing that the money was paid out didn’t have either the pass port number or ID number or even the staff’s personal number.

The committee agreed that since the expenditure was not supported with the necessary documents such as receipts, engagement letter and the recipient’s identity could not be ascertained then the amount of money paid to the driver should be recovered in full.

c)    Support to the Kenya film maker amounting to USD 1,000.

Among the support that was given to Ms Jane Munene was USD 1,000. This amount was to be refunded by the Ministry of Information and Communication. However, no such monies have been refunded to the Commission at the time of the meeting. The marketing manager said that there was no follow up which had been done by the Commission to have the Ministry give us the refund.

The committee agreed that the imprest holder should be surcharged if no money refund is gotten from the Ministry as initially agreed.

d)    Air ticket refund of USD 2,000.00 to Ms Jane Munene.

The Committee noted that the Commission decided to sponsor Ms Jane Munene travel to the USA at a cost of USD 2,000.00. This was meant to be in the form purchase of the air tickets to the filmmaker. The commission instead of purchasing the air tickets for the filmmaker resulted to giving her the money in form of cash. This is evidenced by the letter of acceptance by the film maker as the only attachment as the supporting document in the surrender voucher. The Committee wondered how a procurement process could have turned to be refund process to a filmmaker. It was not clear how the Commission can relinquish its role to procure and had it over to a third party who has not been authorized by the Commission. Further, the committee was not provided with the boarding passes and the photocopy of the film maker’s passport and therefore could not ascertain if the said film maker actually attended the function in the American film maker.

The committee resolved that in absence of the boarding passes and the photocopy of the passport as the supporting documents then the amount shall be recoverable from the imprest holder. The Committee advised that in future the Commission should not let third parties procure on behalf of the Commission.

e)    Per Diem on the day of arrival.

The Committee noted that the officer who had travelled to the USA was scheduled to arrive back into the country in 12th November 2011. The per diem given to the officer as per the warrant No 136 catered even for the day he landed back into the country. The Committee found it irregular for an officer to access full per diem even when he landed into the country before midnight. It was observed that the officer should have been allowed to access only quarter per diem on the day of the arrival and not the full per diem as was the case. The committee took cognizance of the fact that the officer did not spend in a hotel on the arrival date and therefore there was no need for the officer to be given full per diem on the arrival day.

The Committee recommended that the three quarters of the per diem which amounts to USD 315 should be recovered from the officer involved.  

NB: This report was deferred till the end of the current boards term which expires this August. It is understood that this was done under the persuasion of the acting board chair with a few board members insisting that it be known that they were not for the idea (as per the minutes)

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2 thoughts on “REPORT OF THE KENYA FILM COMMISSION BOARD AUDIT COMMITTEE TO THE FULL BOARD OF THE MEETING HELD ON 11TH May and 14th May 2012

  1. I like your blog and the way you are exposing serious issues. Why not write about this to the Weekly Citizen? I don’t work there, but I am a regular reader of the paper and they have all kinds of exposes about public and private institutions. However, be sure of your facts before you publish otherwise you could get sued.

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