The Board Audit Committee met on 14th October, 2011 to consider 3rd edition of Kalasha Film and Television Awards feedback analysis report prepared by the Commission’s Internal Auditor.
The Committee arrived at the following summary highlight observations, recommendations, and advice to the full board.
1.0 KALASHA AWARDS 3rd EDITION BUDGETARY OVER EXPENDITURE
1.1 Budgetary Re-Allocations
The Audit committee of the board noted with grave concern that the year 2011 Kalasha Awards budget for the quarter one of the financial year 2011/2012 was overshot by Ksh 6,978,113.00. This was the difference between the expenditure of Ksh 14,978,113.00 against a budget of Ksh 8,000,000.00.The committee observed that the management never kept the board informed on the monitoring of the budget and only presented a request for approval of the same well after incurring the unauthorized expenditures.
It is the committee’s position that failure to seek the full board’s approval of both revised budget and expenditures thereof before incurring the same constitutes willful dereliction of duty and due process critical to prudent utilization of the Commission’s public funding resources by the Management.
In view of this, the board stands advised by the committee to issue a formal written strong reprimand to the Management for having occasioned this anomaly. Responsibility for any internal and/or external redress that may become necessary in restoring the Commission’s loss therefore fully rests with the Management. It is important that disciplinary measures should be taken against section(s) of the Management that originated this gross over-expenditure of Commission’s resources.
Examination of Tendering process documents by the committee revealed an originating memo KFC.1/09(memos) request 138 dated 23rd September 2011 from the Marketing and Product Development manager requesting the Chief executive officer to approve a re-allocation of Ksh 5,000,000.00 to the Kalasha vote. The Committee noted that this memo that triggered the processing of expenditure was highly irregular as well as a misguided action by the Manager involved. The subsequent approval and procurement of supplies thereafter was grossly irregular. Both officers acted well beyond the powers vested in their offices. Approval of funds budgetary reallocation entirely rests with the Board and not Management.
1.2 Procurement of Venue for Kalasha Awards
The committee observed that the procurement of The Carnivore (Tamarind Management Limited) venue was not done competitively. Out of three bids which were floated only two were responsive. The bids were sent out to National Museums of Kenya, Kenyatta International Conference Centre (KICC) and Carnivore Grounds. NMK and KICC turned out to be inadequately non responsive. The whole process could have therefore been adjudged non responsive thus warranting a repeat of the exercise this time with inclusion of other potential well known local exhibition/conference/event venues suppliers such as Bomas of Kenya, Utalii College and various Bank institutional training and event premises like Kenya Commercial Bank. After the bids were opened, The Carnivore was given the go ahead to arrange for the dome as well as the food. This procurement process seemed to have been faulty as it was skewed towards awarding Carnivore the supply. Perusal of the Commission’s Tender Committee minutes of 19th September 2011 clearly shows evidence of this. The minutes captured submission to the Tendering Committee stating preference to have Kalasha Awards gala event at Carnivore grounds prior to full exhaustion of the Tender process.
It is the Board Audit Committee’s view that value for the Commission’s money expended could not have been gotten in the non competitive context in which only two approached firms showed interest in provision of the required services. Carnivore’s price floatation of Dome & Drapery, Venue set and elaborate décor was notably high in the absence of any comparative competitive market survey. This was compounded further by revelation that these does not comprise Carnivore’s core service supply and was instead procured and supplied by them to KFC through a third supplier party.
1.3 Overall Management Delivery of the 3rd Kalasha Awards
The Committee members took note of the fact that the Commission constituted a Kalasha Secretariat which was tasked with the overall planning and execution of the 3rd edition of Kalasha Awards Event. However, the committee observed that the timing of procuring of goods and services from the various service providers was hurriedly done at the last minute. This resulted in failure to follow due process and necessary diligence in discharging requirements of sound procurement practice as provided by the Procurement and Disposal of Public goods and services Act. It therefore occasioned high cost expenditures thus denying the commission value for money.
The committee has not been privy to any substantive report compiled by Kalasha Secretariat detailing feedback on overall aspects of running this year’s edition comprising achievements and challenges covering planning, administrative processes, event execution and rapid assessment of it overall impact in Kenya’s film industry.
Administrative process feedback on specific activities line tasks like details of procurement, event’s sales revenue analysis, essentially could have been part of the Financial Resource utilization section of an overall comprehensive Secretariat report.
Observations about hurried administrative operational delivery of the event; lapses in observing specific rules and provisions in the governance of public institutional business; and failure to generate verifiable feedback analysis in various monetary transactions* of Kalasha 3rd Edition all make it difficult to independently come to a conclusion that the Commission may have gotten adequate value for the resources spent. As it stands now all these are inconclusive due to inadequate feedback.
*Examples: 1. some revenue of Ksh 300,000.00 remains uncollected at the time of the audit. Part of this is an amount of Ksh 60,000.00 for the purchase of two tables by Take 2 Communications which reportedly was supposed to have been deducted from the final dues paid to them. This was not done!
2. Members of the Nomination Academy were paid a total of Ksh 40,000.00 each. The process of arriving at this figure was not in line with the circular No/ OP/CAB.2/12A of 14th August 2006 on allowances payable to officers participating in workshops, seminars and retreats.
- 1. The Committee noticed many irregularities in the entire management of the Kalasha Awards Edition 3 as an event. There might be several others not brought to its attention.
- 2. Committee is wary of the likelihood of these issues being picked up by the external audit. The board should therefore be made aware of FULL detailed reports from the awards Secretariat.
- 3. Management needs to be formally warned by the board NOT TO REPEAT THIS because it is a recurring issue. The Commission potentially stands the danger of being thrown into confusion if the board abdicates its role of sanctioning expenditures. This situation has been there before in the management practice of the commission placing the board in awkward position. The current case in point is a repeat.
- 4. The Board needs to have in place a mechanism of having a committee to oversee all procurements above certain amount. Heavy penalties should be put in place in event of failure to follow set rules of practice.
In line with provisions of Section 15 (1) of the State Corporation Act Cap 446 which states that “A Board shall be responsible for the proper management of affairs of a state corporation and shall be accountable for the moneys, the financial business and management of a state corporation”, the boards stands advised by the Committee to quickly remedy this situation to forestall possibility of being called to account by the parliamentary Public Investment Committee for censure.