Former East Africa Portland Cement Company (EAPCC) employees were still running its bank accounts as of October, long after they left the company, marking one of the glaring lack of controls at the Nairobi Securities Exchange-listed firm.
The issue has been flagged by Auditor-General Nancy Gathungu in her review of the cement manufacturer’s latest annual financial statements.
“Review of the bank confirmations received from the financial institutions revealed that four former staff were still signatories to the bank accounts for KCB Bank despite having long ceased being employees of the company,” reads part of the audit statement dated October 26, 2023.
“There is a risk of unauthorised access to the bank accounts. In the circumstances, the existence of effective controls in the management of bank accounts could not be confirmed.”
Managers who run bank accounts for a company are expected to relinquish such and other responsibilities immediately upon their departure whether through resignation or retrenchment.
EAPCC’s delay in removing them as signatories to its bank accounts thus represented a financial exposure and corporate information leak for the loss-making firm.
The company has transactions running into billions of shillings each year, including the sale of property, borrowings and repayment of debt that go through its bank accounts.
EAPCC had bank balances of Sh77.9 million as of June compared to Sh37.1 million in the same month last year.
The running of bank accounts by outsiders is part of several failures in corporate governance highlighted by the auditor.
They include a weak debt collection system, a lack of supplier reconciliation and a lack of a formal policy for directors’ emoluments.
“The audit identified material differences between the ledger and the supplier statements independently circularized which amounted to Sh165 million against the total sampled amount of Sh266 million,” the auditor said.
“These variances indicate lapses in the effectiveness of the supplier reconciliations which were not done at the closure of the year. In the circumstances, effectiveness in management of suppliers could not be confirmed.”
EAPCC says its non-executive directors are remunerated through fees and other emoluments “which acknowledge their invaluable contributions during board and committee meetings.”
The company, whose total board remuneration rose to Sh35.1 million in the year to June from Sh32.9 million a year earlier, added that the pay of all directors is subject to regular review to ensure that levels of remuneration and compensation are appropriate.
The company posted a net loss of Sh1.3 billion in the review period, reversing a net profit of Sh541.5 million a year earlier which was largely due to gains on its investment property.
