Auditor-General Says KNEC Is Technically Insolvent After Debts Surpass Assets

The Kenya National Examinations Council (KNEC) has been declared technically insolvent after a new audit report revealed that the council’s debts are higher than the value of its assets.

According to the Office of the Auditor-General, the situation means the council may struggle to meet its financial obligations unless it continues receiving financial support from the government.

The declaration was made by Nancy Gathungu after reviewing the council’s financial statements and annual reports.

KNEC Facing Huge Financial Deficit

The audit report shows that by June 2025, KNEC had accumulated a deficit of about Sh2.79 billion.

Financial records further revealed that the council’s total liabilities stood at Sh2.81 billion, while its current assets were only worth Sh694.8 million.

This imbalance resulted in a negative working capital of about Sh2.12 billion, meaning the institution currently owes far more money than it owns.

The Auditor-General warned that under these circumstances, the council’s operations may only continue smoothly if it receives continuous financial assistance from the Government of Kenya and other partners.

KNEC Blames Budget Cuts for Financial Problems

KNEC officials also appeared before the National Assembly Public Investments Committee on Governance and Education to explain the situation.

During the meeting, the council admitted that it has been facing financial challenges for years. KNEC said the main cause is insufficient government funding to run national examinations and pay professionals hired during exam periods.

The council suggested that the situation could improve if national examinations are funded through capitation instead of irregular grant allocations.

Teachers Yet to Be Paid for 2025 Exams

The financial crisis has also led to delays in paying thousands of teachers who worked during the 2025 national examinations.

Those affected include teachers who served during the:

Kenya Certificate of Secondary Education (KCSE)
Kenya Primary School Education Assessment (KPSEA)

The unpaid personnel include:

Invigilators
Supervisors
Centre managers
Examiners

Teacher unions have strongly criticized the delays.

The chairman of Kenya Union of Post Primary Education Teachers (KUPPET), Omboko Milemba, warned that the union could take action against KNEC if the payments are not made soon.

Government Responds to Payment Concerns

The Ministry of Education has acknowledged the complaints from teachers over delayed payments.

Education Cabinet Secretary Julius Ogamba told Parliament that the government is working to release funds to clear the pending payments.

In a statement issued on February 12, 2025, the ministry said teachers and other professionals involved in national examinations play a key role in ensuring the exams remain credible and are delivered on time.

Audit Raises Questions Over Mitihani House Project

The audit report also flagged concerns about the delayed completion of the New Mitihani House South C project, which is meant to serve as the new headquarters for KNEC.

The building project has reportedly remained unfinished for nearly 40 years.

Auditors warned that continued delays could increase the cost of the project due to inflation, which may affect the value for taxpayers’ money.

KNEC told the parliamentary committee that no funds were allocated in the 2024/2025 financial year to complete the project.

The last funding of Sh500 million was received during the 2021/2022 financial year, but the council now says it needs another Sh800 million to finish the construction.

Staff Shortage at KNEC

The audit also revealed that KNEC is operating with a major staff shortage.

Currently, the council has 435 employees, while the approved workforce is 720 positions.

This leaves a gap of 285 workers, which auditors warned could affect the council’s ability to manage and administer national examinations effectively.

KNEC Requests Approval to Hire More Staff

To address the staffing problem, KNEC told the parliamentary committee that it had already requested approval from the National Treasury of Kenya through the Ministry of Education.

The request was submitted on January 17, 2025, seeking funds to recruit additional employees.

According to the proposal, KNEC plans to hire 115 new workers, which would require an estimated Sh256.7 million annually for salaries.

However, the council said it sent another reminder in January 2026, but the request has not yet been approved.

KNEC said solving the staffing problem will depend on cooperation between government agencies and the allocation of the necessary funding.