KQ plans forensic audit of operations

National carrier Kenya Airways has announced plans to undertake a forensic audit of its operations to investigate claims of revenue leakages.

The airline’s poor financial performance has been linked to revenue haemorrhage through the machinations of its management and government officials.

Finance director Alex Mbugua Tuesday told a Senate committee inquiring into the affairs of KQ that a team had been tasked to identify a suitable forensic auditor.

“We do not believe there is any revenue haemorrhaging but since the matter has been raised several times we decided to get a forensic audit,” said Mr Mbugua.

He said the audit would be carried out in the next few weeks and is intended to boost transparency in the airline’s operations.

Kisumu senator Anyang’ Nyong’o said there was a need to investigate revenue losses linked to the airline’s consumables, fleet acquisition and outsourcing of services.

The committee recently sought an explanation from KQ’s management on why some former staff could access its computer systems months after leaving employment.

An internal Kenya Airways report showed six former employees accessed company information more than four months after resignation or termination of contracts.

The report expressed concerns that system weaknesses within the company could be linked to revenue leakage leading to the record loss of Sh25.7 billion in the year ended March.

READ: Senators take KQ to task over ex-staff access to company data

The loss has also been blamed on poor decisions by KQ management, including a lack of foresight on the ambitious Project Mawingu and leasing of aircraft.

The 10-year strategy was rolled out in 2011, with intentions of positioning Nairobi as a hub of flights from the East, notably China and India.

Consulting firm Deloitte had warned KQ management against the timing of the roll-out given that it was coming in a year after launch of the open sky policy under the International Air Transport Association.

The open sky policy came into force in 2010, eliminating the use of government oversight in commercial air carrier services.

To resume profitability, the airline has been compelled to rethink its strategy and has hired American consultancy firm McKinsey to help restructure its operations.

Execution of the turnaround plan by McKinsey starts Wednesday and will focus on five areas including cost reduction, revenue growth and productivity improvement.

READ: KQ signals fresh job cuts as it sinks to Sh11bn half-year loss

“We are determined to fix the problem and the plan is already approved by the board for execution,” said Mr Mbugua.

The turnaround plan includes 24 strategies that will be implemented over the next one and a half years.