The Judiciary risks paying millions of shillings in interest on Sh300 million tax deducted from payments made to suppliers and unrecovered tax from employee contributions.
In the latest report by Auditor General Edward Ouko on the year ended June 2017, KRA had carried out a compliance audit covering July 2013 to June 2016, which concluded that the Judiciary had failed to recover withholding tax and tax on employer pension contributions in excess of Sh20,000 for each employee per month.
The omission resulted in a tax assessment bill that included interest and penalties totaling to Sh306,575,269.
“During the year under review, the Judiciary paid Sh181,400,212 of principal tax due on excess pension, and charged the cost to compensation of employees and hence overstated the compensation of employees expenditure by Sh181,400,212,” Ouko said.
He added that outstanding tax for the period ending June 30, 2017 calculated as tax due from the employer contributions was not recovered and remitted to the KRA.
He also said the Judiciary failed to explain why the expenditure that was not budgeted for under compensation of employees was charged on the item, adding that the tax due had not been included among pending bills in the year ending June 30, 2016.
On the issue of tax deducted from payments made to suppliers, the Judiciary failed to explain to the auditor’s office why it did not remit withheld taxes worth Sh28,930,496 that had accrued penalties and interest of Sh96,244,561. The withheld tax was also not included in the pending bills for the year that ended on June 30.
The auditor has also questioned the Sh76 million used to purchase three vehicles and other transport equipment for the year under review.
In particular, the audit query touches on the Sh27,535,000 spent on the purchase of one Subaru Outback and two Toyota Prados minus ownership documents.
The Judiciary failed to provide the documents for audit verification, making it difficult for the auditor to ascertain the ownership and valuation of the assets purchased using the taxpayers’ money The Judiciary is also said to have spent Sh461,459,838 on acquisition of assets, but failed to provide the auditor with the fixed assets register for confirmation.
A decision by the Judiciary to control and manage vehicles used by the Judicial Service Commission (JSC) headed by Chief Justice David Maraga also formed part of the query.
This is after the auditor general discovered that they were not included in the fixed assets register maintained by the commission.
Judicial Service Act 13(1)(a) provides that the commission has powers to purchase or otherwise acquire, hold, charge and dispose of movable or immovable property.
“Pending bills amounting to Sh655,263,852 chargeable to both the recurrent and development vote were not settled during the year under review but were instead carried forward to 2017/18 financial year,” Ouko said.
Ouko stated in his report dated June 27 that he had communicated with the management regarding the audit and significant findings.