The Agriculture and Food Authority (AFA) has been directed to strengthen its financial management systems after Members of Parliament raised concerns over repeated audit queries touching on revenue collection, procurement, pending liabilities and delayed implementation of key projects.
The National Assembly's Public Investments Committee on Social Services, Administration and Agriculture (PICSSAA) issued the directive after examining the Auditor-General's report on the authority's financial statements for the year ended June 30, 2025.
During the Wednesday's session, legislators questioned AFA over gaps in financial records, delayed submission of audit documents, unresolved debts and projects that have either stalled or remain incomplete despite receiving public funding.
A major issue before the committee was the inability by auditors to verify Sh4.23 billion from exchange transactions against the authority's reported revenue of Sh5.27 billion.
The Auditor-General found that AFA lacked complete supporting records for revenue collected through government payment platforms, including E-Citizen (PesaFlow) and the Trade Facilitation Platform (KenTrade).
Records presented during the audit did not contain key transaction details such as customer information, invoice references and sequential receipt records, making it difficult to fully account for the collections.
Appearing before the committee, Acting Director General Calistus Kundu admitted that the authority experienced challenges obtaining some financial reports required during the audit. He said the information was held within National Treasury systems and became available only after the audit exercise had already been concluded.
“Hon. Chairperson and Members, we had challenges to get some of the financial reports required for the audit, some of which we could only access from the National Treasury, and we were only able to access them after the audit”, he told the Committee.
Committee members, however, said the explanation did not justify the failure to provide the necessary records within the timelines set under the Public Audit Act and the Public Finance Management Act.
Committee Chairperson Emmanuel Wangwe questioned why the documents only surfaced after the audit report had already been finalised.
“Mr. Kundu, are you conversant with the provisions of the Public Audit Act with respect to reconciliation of financial records for audit purposes? How come you could only find these documents after the audit report was out and not when the process was underway?”, Hon. Wangwe questioned.
Committee member Bishop Emeritus Dr. Jackson Kipkemoi Kosgei also sought clarification over the delayed responses submitted to auditors.
“Why couldn’t you give complete responses? You need to explain to this Committee what could have been the challenge”, he insisted.
AFA management assured the committee that the reconciliation has since been completed and no material differences were identified. The authority also said it is upgrading its Integrated Management Information System (IMIS), with completion expected by December 2026, to improve integration with E-Citizen and KenTrade and enhance access to financial information.
The committee also reviewed progress on the rehabilitation of Nzoia Sugar Company after the audit revealed that machinery purchased for the project had not reached the factory because it remained at the Port of Mombasa awaiting clearance.
Members further questioned the value of the investment after learning that the company has since been leased to a private investor for 30 years, raising uncertainty over whether the equipment would eventually be used.
The management explained that Nzoia Sugar Company had initiated procurement of boiler tubes and mill rollers in 2022 as part of routine maintenance but later faced financial difficulties that prevented clearance of the imported equipment.
According to AFA, the Ministry of Agriculture intervened by providing financial support through the authority, leading to the establishment of Letters of Credit worth Sh43,419,529 to settle suppliers. Legislators requested documentary evidence to support the explanation.
Attention also shifted to an outstanding rent debt of Sh156.43 million owed to the Kenya Airports Authority for land occupied by the Horticultural Crops Directorate headquarters at Jomo Kenyatta International Airport.
Management told MPs the matter dates back to a lease arrangement initiated in 2000 that was never formally concluded. The authority said discussions with the Kenya Airports Authority are ongoing to finalise the lease agreement and agree on a structured repayment plan.
Lawmakers further questioned the implementation of an Sh85.32 million hot water treatment plant at the Nairobi Horticulture Centre after the Auditor-General reported repeated contract extensions, expiry of the performance bond and abandonment of the site by the original contractor after completing only 57.77 per cent of the works.
The committee sought an explanation on why the project was later retendered with additional components, resulting in a positive budget variance.
Responding to the concerns, AFA management maintained that the extensions complied with procurement laws and were occasioned by delayed payments. The authority said payments were only made for certified works completed before termination of the contract.
Kundu told MPs the remaining works were later procured through TradeMark Africa at a cost of Sh65.26 million after the initial contract was terminated. He added that construction works have since been completed and only installation of equipment remains.
The committee also examined the authority's decision to spend Sh446,552,202 on cane testing units that are yet to be put into use.
According to the Auditor-General, the units were installed and calibrated in sugar factories but have remained idle because the Sugar (Quality-Based Sugarcane Payment System) Regulations, 2025 have not been enacted.
Wangwe questioned why public funds were committed to the project before the legal framework was in place, while Kosgei said the authority's board should also account for approving expenditure before the regulations had taken effect.
The management urged Parliament to fast-track consideration of the regulations to pave the way for operationalisation of the cane testing units.
At the end of the meeting, committee members stressed that public institutions must uphold accountability and ensure strict compliance with financial management laws.
Wangwe directed AFA to submit all outstanding documents by Thursday next week to enable the committee to finalise and table its report before the House.
The committee also instructed the authority to strengthen internal controls, complete ongoing system integration and ensure future financial operations fully comply with public finance and procurement laws to safeguard public resources.