Annual Report and Financial Statements: Kenya Roads Board

KENYA ROADS BOARD
Annual Report
And Financial Statements
For The Year Ended 30th June 2014
Core Statements
Our Vision
An efficient road network for a prosperous
Nation
Our Mission
Our Core Values
To fund, oversee and coordinate road

development, rehabilitation and maintenance.
We shall ensure prudent sourcing and optimal
utilization of resources for socio-economic
development.
1. Excellence
We are committed to timely delivery of high quality and

cost effective services and encourage peak performance,
enthusiasm and passion for work. We shall encourage
productivity, be responsive and acknowledge individual and
team accomplishments
2. Customer Focus
We are committed to meeting our stakeholder requirements to their

satisfaction by ensuring effective and efficient use of resources. We encourage
continual improvement of our services and processes.
3. Integrity and Impartiality
We are committed to promoting transparency, accountability and professionalism

in our work. We shall be impartial, objective and unbiased in how we relate to each
other and our stakeholders.
4. Staff Focus
We are committed to promoting transparency, accountability and professionalism

in our work. We shall be impartial, objective and unbiased in how we relate to each
other and our stakeholders.
5. Diversity and Inclusiveness
We shall embrace diversity and promote inclusiveness in our organization and shall
not discriminate on the basis of age, gender, race, religion, tribe or physical ability.
6. Good Corporate Citizenship
We shall ensure good corporate citizenship by supporting the less fortunate and
ensuring compliance with our legal and statutory obligations. We shall endeavor to be
sensitive to issues that affect Kenyans such as poverty and environment degradation
and shall ensure they form part of our planning processes.
Kenya Roads Board

Annual Report for the year ended 30th June 2014
TABLE OF CONTENTS
CORE STATEMENTS
ABBREVIATIONS
1.
ONE // KEY HIGHLIGHTS 1
Who We Are 2
What We Do 3-4
Corporate Information 5
Performance At A Glance 6-7
2.
TWO // BUSINESS REVIEW 8
Chairmans Statement 9-10
Who Governs Us 11-12
Executive Directors Statement 13-14
Who Leads Us 15-16
Business Performance 17-24
3. THREE // GOVERNANCE & CORPORATE RESPONSIBILITY
25
Corporate Governance Statement 26-36
Sustainability Statement 37-41
4.
FOUR // FINANCIAL REVIEW 42
5. KENYA ROADS BOARD FUND FINANCIAL STATEMENTS
Reports of the Directors
Statements of the Boards Responsibilities
Report of Independent Auditors
Statement of Financial Performance
Statement of Financial Position
Statement of Changes in Net Assets
Statement of Cash Flows
Comparison of Budget and Actual Amounts
Notes to the Financial Statements
Progress on Follow Up of Audit Recommendations
43
44
45
46
47
48
49
50
51
52-65
65
6. KENYA ROADS BOARD FINANCIAL STATEMENTS

Reports of the Directors
Statements of the Boards Responsibilities
Report of Independent Auditors
Comparison of Budget and Actual Amounts
Progress on Follow Up of Audit Recommendations
67
68
69
70
71
72
73
74
75
76-93
93
7.
NOTES 94
Kenya Roads Board

ABBREVIATIONS
APRP Annual Public Roads Programme

CBS Chief of Burning Spear
FY Financial Year
HIV/AIDS Human Immune Deficiency Virus /Acquired Immune Deficiency Syndrome
IPSAS International Public Sector Accounting Standards
KeRRA Kenya Rural Roads Authority
KeNHA
Kenya National Highways Authority
KRB Kenya Roads Board

KRBF Kenya Roads Board Fund
KURA Kenya Urban Roads Authority
KWS Kenya Wildlife Services
MBS Moran of the Burning Spear
RMLF Road Maintenance Levy Fund
RSIP Road Sector Investment Programme
Kenya Roads Board

One // Key Highlights

Who We Are

What We Do

Performance At A Glance

Corporate Information
Kenya Roads Board Fund

Financial Statements for the year ended 30th June 2014
WHO WE ARE
Incorporation
Kenya Roads Board (KRB) is a statutory body established by the Kenya Roads Board Act No. 7 of 1999. The Board was established
in accordance with Chapter 446 (State Corporations Act) of the Laws of Kenya, which is An Act of Parliament to make provision for
the establishment of state corporations for control and regulation of state corporations and for connected purposes.
Kenya Roads Board is a State Corporation under the Ministry of Transport and Infrastructure.
Kenya Roads Board Fund (KRBF) is a Fund established under Chapter 408 of the Laws of Kenya - Kenya Roads Board Act, which
came into effect under Legal Notice No. 7 of 1999.
The Kenya Roads Board Fund is managed by the Board of Directors of Kenya Roads Board. The Board is domicile and operates
within the republic of Kenya.

WHAT WE DO
Principal Activity
As stipulated in the Kenya Roads Board Act of 1999, the object and purpose for which the Board was established is to oversee the
road network in Kenya and coordinate its maintenance, rehabilitation and development funded by the fund and to be the principal advisor
to the Minister of Roads on all matters related thereto.
Specific Mandates
The mandates of KRB are provided for in the Kenya Roads Board Act, No. 7 of 1999 as hereunder:
(a) Coordinate the optimal utilization of the Fund in implementation of programmes relating to the maintenance, rehabilitation and
development of the road network;

(b) Seek to achieve optimal efficiency and cost effectiveness in roadworks funded by the Fund;

(c) Manage the Fund;

(d) Based on a five year road investment programme approved by the Minister for Roads and the Minister for Finance, determine
the allocation of financial resources from the Fund, or any other source available to the Board required by Road Agencies
for the maintenance, rehabilitation and development of the road network to ensure that the allocation of funds is pegged to
specific categories of roads and that not less than:(i) Twenty-two percent (22%), which shall be deposited into a special bank account to be called Constituency Road Fund Account to
be maintained by every constituency for monies from the Fund which is allocated equally to all Constituencies in the country to
be administered by the Kenya Rural Roads Authority (KeRRA);
(ii) Ten percent (10%) of the monies from the Fund is allocated for the maintenance or development of link roads between
constituencies and to serve as Government counterpart funds in funding works on rural roads, to be administered by the Kenya
Rural Roads Authority and that the said per centum shall be equally distributed to the Constituencies where Kenya Rural Roads
Authority has the mandate;
(iii) Forty percent (40%) of the monies from the Fund is allocated in respect of the national roads to be administered by the Kenya
National Highways Authority (KeNHA);
(iv) Fifteen percent (15%) of the monies from the Fund is allocated in respect of the Kenya Urban Roads Authority (KURA);
(v) One percent (1%) of the monies from the Fund is allocated in respect of roads in national parks and game reserves to be
administered by the Kenya Wildlife Service (KWS);
(vi) A maximum of two percent (2%) of the monies from the Fund is allocated in respect of recurrent expenditure of the Board under
section 31(5); and
(vii) The remainder of the monies from the Fund (10%) shall be allocated annually by the Board with the approval of the Minister to
road authorities based on an Annual Roads Work Programme (ARWP) derived from the five-year Road Investment Programme
(RSIP) approved by the Minister responsible for Roads and the Minister for Finance.
(e) Ensure that a maximum of ten percent (10%) of all monies allocated to each road agency is utilized for development purposes
by the said agency;
(f) Monitor and evaluate, by means of technical, financial and performance audits, the delivery of goods, works and services funded
by the Fund;
(g) In implementing paragraph (f), pay due regard to public procurement and disposal regulations and additional guidelines issued
or approved by the Minister;
Kenya Roads Board

WHAT WE DO (Continued)
(h) Recommend to the Minister appropriate levels of road user charges, fines, penalties, levies or any sums required to be collected
under the Road Maintenance Levy Fund Act, 1993 and paid into the Fund;
(i) Recommend to the Minister such periodic reviews of the Fuel Levy as are necessary for the purposes of the Fund; and
(j) Identify, quantify and recommend to the Minister such other potential sources of revenue as may be available to the Fund for
the development, rehabilitation and maintenance of roads.
Kenya Roads Board

CORPORATE INFORMATION
Registered Office
Principal Bankers
Kenya Re-Towers, 3rd Floor

Off Ragati Road, Upper Hill
P.o. Box 73718- 00200, City Square
Nairobi, Kenya
Tel. No.: 254-020-4980000, 2722865/6
Fax No.: 254-020-2723161
Website: www.krb.go.ke
E-mail address: info@krb.go.ke
Facebook: Kenya Roads Board
Central Bank of Kenya

P. o. Box 60000-00200, City Square
Nairobi, Kenya
Independent Auditors
Auditor-General
Kenya National Audit Office
P.o. Box 30084 00100, GPO
Nairobi, Kenya
Citibank N.A
Citibank House, Upper Hill
P.o. Box 30711-00100, GPO
Nairobi, Kenya
Co-operative Bank of Kenya
P. o. Box 41862-00100, GPO
Nairobi, Kenya
Kenya Roads Board

PERFORMANCE AT A GLANCE
Our Numbers in Brief
9.00
12.4
Annual Percentage Growth
in RMLF Collections
RMLF Rate per Litre in Kshs.
27.88
FY 2013/14 RML Collections in
Kshs. Billion
25.17
FY 2013/14 RML Disbursements
in Kshs. Billion
56,679
Number of Kilometers
maintained in FY 2013/14
Kenya Roads Board

PERFORMANCE AT A GLANCE (Continued)
Allocation Criteria of Road Maintenance Levy

Kenya Urban Roads Authority 15%
(Urban Roads)
Kenya Rural Roads Authority 22%

(Constituency/Rural Roads)
Kenya Rural Roads Authority 10%

(County Link Roads)
Kenya National Highways Authority 40%

(A,B,C Roads)
Kenya Wildlife Service 1%
(Park Road)
Allocation by Kenya Roads Board/Ministry 10%

(Development of Roads)
Kenya Roads Board 2%

(Administration of the Fund)
30.000
25.000
20.000
27.882
23.573
24.814
24.402
23.776
12%
14%
12%
10%
10%
8%
15.000
6%
10.000
4%
3%
5.000
2%
2%
1%
0%
2009/2010
2010/2011
2011/2012
2012/2013
2013/2014
FINANCIAL YEAR
% Annual Growth Rate
Linear (Amount (Kshs Billion) )
ANNUAL GROWTH RATE
ANNUAL COLLECTIONS - KSHS BILLION
Historical Collections and Growth of Road Maintenance Levy
Kenya Roads Board

Two // Business Review

Chairmans Statement

Who Governs Us

Executive Directors Statement

Who Leads Us

Business Performance
Kenya Roads Board

CHAIRMANS STATEMENT
The Board has continued to monitor

the implementation of the five-year
Strategic Plan (2013-2017). Major
milestones have been achieved during
the planned period which include
increased collections from Kshs. 25Bn
to Kshs. 28Bn.
Eng. Joel Wanyoike,
Chairman
n behalf of the Members of the Board, it is my pleasure to present the Annual Report and Financial Statements for
Kenya Roads Board Fund and Kenya Roads Board for the year ended 30th June 2014.
Overview
Rising domestic and foreign investment are set to boost economic activity in Kenya, as the country reaps rewards of extensive
institutional reforms and prudent macroeconomic policy.
In a regular review of Kenyas economy, the International Monetary Fund noted a surge in public investment in infrastructure,
renewed interest of foreign investors, and lower transaction costs thanks to information technology.
10
Kenya Roads Board

CHAIRMANS STATEMENT (Continued)
In the last three years, the Government has continued

to commit more financial resources for infrastructural
development - including roads, ports and energy generation.
The need for better roads continues to be a priority for
Kenyan road users.
strategy. The various board committees continue to play a

vital role in supporting the board in discharging its duties.
The Statement of Corporate Governance, included in this
report, details the measures that the Board has undertaken
to ensure a robust corporate governance environment.
Operating Environment
Kenya Roads Board, for the third year running was nominated
and declared the winner under public sector category in the
Annual Financial Reporting (FiRe) Awards held in October
2014. This was a confirmation of the Boards commitment
to high standards of financial reporting and good corporate
governance. The FiRe Awards are jointly organized by the
Nairobi Securities Exchange, the Institute of Certified Public
Accountants of Kenya and the Capital Markets Authority.
The Kenyan economy is projected to grow at a higher rate

for a third straight year, at 5.8 percent in 2014/15 after an
estimated 5 percent in 2013/14. Inflation remains moderate,
but rising food prices and rapid credit growth may fuel
inflation expectations. Foreign reserves have increased
steadily and are broadly adequate.
Interest rates have shown a downward trend in comparison
to the high rates witnessed in 2013. Crude oil prices declined
sharply in the period under review, and this is reflected in
the falling pump prices in Kenya.
In the short to medium term, the Kenyan economy is
expected to have a sustained and rising growth based
on the following fundamentals: stable macroeconomic
environment, a projected easing of international oil prices
and reforms in security, governance and the judiciary.
Strategy
The Board has continued to monitor the implementation of its
five-year Strategic Plan (2013-2017). The Board developed
the FY2013/14 business plan which was extracted from the
five year strategic plan. The deliverables that were set out in
the business plan and performance contract for FY 2013/14
were achieved. Specifically, the Kenya Roads Board Fund
collections exceeded the estimates, the APRP was approved
and implemented during the year, the Board carried out
monitoring and evaluation of utilization of the KRB Fund, and
the internal capacity was strengthened to ensure effective
delivery of the Boards mandates.
Future Outlook 2015/16

Kenya Roads Board will align itself with the new Constitutional
dispensation to serve Kenyans at the National and County
levels of government. The Board is actively engaged in
activities aimed at increasing and sustaining the KRB Fund
to meet the ever increasing road maintenance needs. The
Board remains committed to deepening relationships with
its stakeholders and key partners. Further, the Board shall
endeavor to develop its people, innovative and cost-effective
methods of road construction and maintenance.
Acknowledgement
On behalf of KRB directors and staff, I express my sincere
gratitude to the Government of Kenya, Ministry of Transport
and Infrastructure, Road Agencies, taxpayers and other
stakeholders for their continued support. This has gone a
long way towards building a solid institution that is responsive
to its mandates and stakeholders expectations.
Corporate Governance
Strong Corporate Governance is integral to the Boards
long-term success and is essential in delivering KRBs
Eng. Joel M. Wanyoike

Chairman
30th October 2014
Kenya Roads Board

WHO GOVERNS US

(Chairman)
Eng. John K. Mosonik, EBS
Eng. Wanyoike is the Chairman of the Board. He represents the Institution of Engineers
of Kenya. He has been serving the Board in the position of Director until April, 2012
when His Excellency the President appointed him as Chairman of the Board. He is a
career Highway Engineer holding a Bachelor of Science Degree in Civil Engineering
from University of Nairobi and Master of Science Degree in Highway Engineering from
Birmingham University, UK. Eng. Wanyoike has served in the public service since 1974,
rising from the position of an Assistant Engineer to Chief Superintending Engineer
(Design) in charge of Roads Design at the Ministry of Roads. Eng. Wanyoike also served
as a City Engineer of the Nairobi City Council. He is currently the Vice Chairman of
Muranga University College and founder of Jowamu Consulting Engineers.
Eng. Mosonik is the Principal Secretary, State Department of Infrastructure. Eng.

Mosonik holds a Bachelor of Science degree in Electrical Engineering. He is a
registered member with Engineers Registration Board and Institution of Engineers of
Kenya. Eng. Mosonik has more than twenty years practical experience.
Dr. Kamau Thugge, EBS, MBS
Mr. John O. Konchellah
Dr. Kamau Thugge, is currently the Principal Secretary at The National Treasury. Dr Kamau
Thugge is the first Principal Secretary, National Treasury. Prior to his appointment as
Principal Secretary, he worked as a Senior Economic Advisor in the Ministry of Finance
from the year 2010. He has also worked at the International Monetary Fund in various
capacities for over twenty years. He was the Head of the Fiscal and Monetary Affairs
Department, between 2004 to 2005, and the Economic Secretary and Head of Economic
Affairs Department, between 2005 and 2008. He represents the Permanent Secretary,
Treasury on various Boards.
Mr. Konchellah is the Principal Secretary, State Department of East African Affairs.
He had served as Principal Secretary, State Department of Devolution, where he
pioneered the initial setting up of County Government structures and systems
which are now fully operational. A graduate of Poona University in India and Daystar
University, Mr. Konchellah holds a Masters Degree in Business Administration(double
Major in Strategic and Marketing Management); and a Bachelor of Commerce Degree
in Banking.
Dr.Thugge holds a Bachelor of Arts (Economics) from Colorado College, USA; Masters in
Economics; and Doctor of Philosophy (PhD) in Economics, from Johns Hopkins University,
USA.
Mr. Konchellah brings with him a wealth of experience gained from over twenty
six years, working in the banking industry, where he held several senior managerial
positions, and witnessed the industrys expansion and growth. He has held various
leadership positions and has been engaged in community projects. He is a fellow of
the Kenya Institute of Bankers.
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12
Kenya Roads Board

WHO GOVERNS US (Continued)
Ms. Mwanamaka Amani

Mabruki
CPA Osman H. Ibrahim,

OGW
Ms. Rita Kavashe
Mr. Joel Kipkemboi Yego
Ms. Mwanamaka Amani Mabruki is currently

the Principal Secretary, State Department of
Devolution. Prior to her appointment she was
served as the Principal Secretary in the State
Department of East African Affairs. She served
in various leadership capacities - Managing
Director, Kenya National Shipping Line, Head
of Corporate Development at Kenya Port
Authority, among others. She holds a Master
and Bachelor degree in Economics from the
University of Nairobi.
CPA Ibrahim represents the Institute of

Certified Public Accountants of Kenya. He
holds a Masters in Business Administration in
Finance and a Bachelor of Commerce degree
both from the University of Nairobi. He is the
Acting Director, Finance and Administration
at the Kenya School of Government. He has
over nineteen years extensive experience in
strategic planning, finance and procurement
management in both public and private
sectors.
Ms. Kavashe represents the Automobile

Association of Kenya. She holds a Bachelors
Degree in Education from Moi University
and a Masters in Business Administration
from the University of Nairobi. She is the
Managing Director and Export Director
Sub-Saharan Africa of General Motors East
Africa Limited. She has over sixteen years
experience in the Motor Industry.
Mr. Yego represents the Institution of

Surveyors of Kenya and is serving his second
term. He holds a Masters Degree in Remote
Sensing and a Bachelor of Science degree
in Survey and Photogrammetry from the
University of Nairobi. He has served as
lecturer in the Department of Survey at the
University of Nairobi. He has also served as
a Commissioner in the Njonjo Commission
of Inquiry and is currently the Managing
Consultant at Chalan Associates.
Mrs. Monika Solanki
Mr. Joseph William

Nduva Muli , EBS
Eng. Michael Karanja
Mrs. Mary Wangui

Wambugu
Mrs. Solanki represents the Kenya Association

of Tour Operators (KATO) in the Board. She is
the Chairperson of Coast KATO branch and a
member of the Executive Board of KATO.
Mr. Nduva is the Principal Secretary,

State Department of Transport. Prior to
his appointment, he was the Managing
Director of Kenya Railways Corporation
where he spearheaded significant reform
in the railway sector. He has held senior
management positions in other organizations
including the African Medical Research
Foundation (AMREF) and Kenya Airways. Mr.
Nduva sits on various boards of blue chip
companies and parastatals. Mr. Nduva holds
a Bachelors degree in Land Economics from
the University of Aberdeen, Scotland, and
Masters in Business Administration from Moi
University.
Eng. Karanja is a Board member representing

the Kenya Association of Manufacturers.
He holds a Bachelor of Science degree in
Engineering and is a registered Engineer.
He was previously the managing director of
Sameer Africa Limited and has over twenty
seven years experience in engineering,
supply chain management and general
management.
Mrs. Mary Wangui Wambugu is a Board

member representing the League of Kenya
Women Voters. Mrs. Wambugu is an
Economics graduate of the University of
Nairobi and holds CPA qualifications and
an alumnus of Alliance Girls. She also holds
certificates in Corporate Governance and
Labour Laws. She is the Finance Director
of a group of companies specializing in
Construction and Real Estate business. She
has previously served on the Board of Suntra
Investment Bank. As an ardent golfer, she has
risen to the prestigious position of Chairlady
of Kenya Ladies Golf Union.
She has over twenty five years experience in

tours and travel and is the Managing Director
of Lofty Tours.
He is also a founder member and nonexecutive director of the Center for

Corporate Governance.
Kenya Roads Board

EXECUTIVE DIRECTORS STATEMENT
The Board surpassed its budgeted

revenue for the financial year by Kshs.
3.1 Billion (2012/13: Kshs 899 Million)
despite the challenges faced
during the year.
Eng. Jacob Ruwa,

Executive Director
enya achieved lower middle income status in 2012, according to revised national statistics released on September
30, 2014. The economy is 25% larger than earlier estimated, and Kenya is now the ninth largest African country with
a Gross Domestic Product (GDP) of $55.2 billion.
Overview
The economy continued to recover from the slowdown experienced in the last couple of years, with Real GDP growth estimated
at 5.7% for 2014. The recovery is attributed to aggregate demand, fueled by strong consumption and investment. Growth is
also broad-based, with all sectors of the economy making a contribution to GDP.
13
14
Kenya Roads Board

EXECUTIVE DIRECTORS STATEMENT (Continued)
However, for Kenya to sustain the economic growth

into 2015, the government needs to deal with emerging
pressures on GDP growth from drought, insecurity, fiscal
expansion, inflationary pressure, high electricity costs and
implementation of devolution.
Kenya Roads Board has continued to carry out its mandate of
effectively and efficiently managing the Kenya Roads Board
Fund in light of these factors. We are happy to note that
the Board continues to achieve its ambitious performance
targets set in the annual business plans, derived from the
Strategic Plan 2013-2017.
Performance & Utilization of Funds

The Board surpassed its budgeted revenue for the financial
year 2013/14 by Kshs 3.1 Billion (2012/13: Kshs. 899 Million)
despite the challenges faced during the year. The total
collections for the period amounted to Kshs. 28.3 Billion
compared to Kshs. 25.3 Billion in FY 2012/13.
The Board released funds amounting to Kshs. 26 Billion to
the Road Agencies during the financial year, which includes
prior year funds of Kshs 899 Million. At the close of the
financial year, the Board carried over Kshs. 718 Million
which will be released in the course of the Financial Year
2014/2015.
The Road Agencies applied 53% (Kshs 19.86 Billion) of
the available funds (Kshs 37.5 Billion) to maintain 56,679
KM of the road network. In FY 2012/13 the Road Agencies
reported that 81% (Kshs 26.5 Billion) of the available funds
(Kshs 32.6 Billion) was utilized to maintain 68,183 KM of
the road network. The board shall continue to ensure all the
funds are utilized as planned.
Business Plan
The Board undertook a participatory and consultative process
in the development of the Business Plan for FY2013/14.
This entailed among others, a review of the business
environment, key policies and laws & regulations. The board
has continued to implement the approved business plan
during the year and has successfully achieved most of the
key deliverables. The key business highlights are shown on
pages 17 to 24.
Performance Contracting
At the commencement of the year, the board signed the
2013/14 performance contract with the Government of Kenya
through the Parent Ministry. The board has continuously
endeavored to meet the agreed performance targets.
During FY 2013/14, the board scored an average of 2.7795
(very good) compared to 2.8354 in FY 2012/13.
Human Capital
The Board believes that human capital is a key pillar to the
successful execution of the Boards Strategic Plan. The input
of members of staff is the most critical element guaranteeing
the attainment of targets set in the Performance Contracts
and the Strategic Plan.
The staff of the Board have received high quality training
both locally and overseas through an elaborate training plan
for all staff. There exists a performance management system
that sets key performance benchmarks which when attained
result in achievement of the Boards goals and reward of
staff.
Appreciation
I would like to thank the Board of Directors, Management
and Staff of Kenya Roads Board for their continued support
and dedication, without which our ambitious objectives
could not have been achieved. I would also wish to extend
our gratitude to the Government of Kenya, the Ministry of
Transport and Infrastructure, the National Treasury and the
Road Agencies for their co-operation and support.
Finally, I would like to thank all taxpayers and stakeholders,
and assure them of our strong commitment to deliver
outstanding value to Kenyans as a whole.
Eng. Jacob Ruwa

Executive Director
29th October 2014
Kenya Roads Board

WHO LEADS US
Eng. Jacob Zecha Ruwa
CPA Rashid Kamis Mohamed, MBS
Ms. Lucy Kabura Gathika
Eng. Ruwa is the Executive Director, Kenya Roads Board.

Prior to his appointment he was the General Manager,
Planning and Programing. Eng. Ruwa holds a Bachelor of
Science degree in Civil Engineering from the University of
Nairobi. He is a registered member with Engineers Board
of Kenya and Institution of Engineers of Kenya.
CPA Mohammed is currently the General Manager, Finance.

He has over twenty years expansive managerial experience
from key sectors of the economy including public and private
organizations. He has been engaged in public policy and
advocacy matters of governance, finance management and
various social initiatives. CPA Mohammed holds a Masters
Degree in Business Administration from the Said Business
School, University of Oxford-UK, B.Com (Accounting) from
the University of Nairobi. He has also participated in several
social projects in Wajir County and been part of strategies
employed to improve road networks in Kenya; a contribution
that earned him an award of order of Moran of the Burning
Spear (MBS) in 2011. CPA Mohammed is a council member
at the Institute of Certified Public Accountants (ICPAK). He
Co-convenes the public policy and governance Committee
of ICPAK.
Ms. Gathika is the Head of Legal and Corporate Affairs.

Ms. Gathika holds a Bachelor of Law and a Masters in
Business Administration from the University of Nairobi. Ms.
Gathika is also a member of the Institute of Certified Public
Secretaries of Kenya and is an Advocate of the High Court
of Kenya.
Eng. Stephen Waireri Ndinika
Eng. Benjamin Maingi
Mrs. Ruth Moraa Bita
Eng. Ndinika is the General Manager, Technical Compliance.

Eng. Ndinika holds a Bachelor of Science in Civil Engineering
from University of Nairobi and Masters of Science in
Highway Engineering, from Birmingham University in the
United Kingdom. He is a registered member with Engineers
Board of Kenya and Institution of Engineers of Kenya.
Eng. Maingi is the General Manager, Planning and Programming,

effective November 2014. Until his appointment, he served
the Board in the capacity of Manager, Technical Compliance
Department. He holds a Bachelor of Science degree in Civil
Engineering from University of Nairobi and Masters of Science
in Highway Engineering, from Birmingham University, United
Kingdom. He is a member of Engineers Board of Kenya , the
Institution of Engineers of Kenya, Kenya Geotechnical Society
and Institution of Directors of Kenya. Eng. Maingi has more
than twenty years practical experience in roads construction
and maintenance in tropical countries having worked in
both public and private sectors. He has managed projects
funded by various international funding agencies. He is well
versed in monitoring and evaluation of delivery of roadworks
through Technical, Performance and Financial Audits, Planning,
Programming and overall project management.
Mrs. Bita is the Head, Human Resources and Administration.

Mrs. Bita holds a degree in Business Administration and a
Masters in Business Administration from the University of
Nairobi. Mrs. Bita is a member of the Institute of Certified
Public Secretary and Institute of Human Resource
Management.
Eng. Ruwa has more than twenty years practical experience

in road planning, design, construction and maintenance.
He has headed various projects and regional offices. Eng.
Ruwa has been involved in training, preparation of training
manuals for road works and has deputized the Principal at
Kenya Institute of Highways and Building Technology.
Eng. Ndinika has more than twenty years practical

experience in roads construction and maintenance in
developing countries having worked in both public and
private sectors . He has also managed projects funded by
various international funding agencies. He also has been
involved in monitoring and evaluation of road works as well
as Technical, Performance and Financial Audits.
Ms. Gathika has a wealth of more than fifteen years

experience having worked in both public and private
sector. Ms. Gathika has worked at Kenya Power and Lighting
Company as Legal Officer and as a State Counsel at the
Attorney Generals chambers. Ms. Gathika has also served
as a Resident Magistrate.
Mrs. Bita has over fifteen years managerial experience in

both public and private sectors having worked with Kenya
Wildlife service, Kenya Airways, Co-operative Bank, among
others.
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16
Kenya Roads Board

Kenya Roads Board

BUSINESS PERFORMANCE
Sources of Funds
The Kenya Roads Board Act No. 7 of 1999 empowers the Board to manage such moneys or assets as may accrue to or vest in the
Board in the course of its functions under the Act or under any other written law.
The Road Maintenance Levy Fund (RMLF) mainly comprises Fuel Levy and Transit Tolls. Fuel levy is charged at the rate of Kshs.
9 per litre of petrol and diesel imported into the country, while Transit Tolls are charged on foreign-registered commercial trucks
exceeding 2 tonnes that ply the roads in Kenya, and are based on distance covered, axle load and country of origin of the truck. Fuel
levy is collected from the oil marketers on the Boards behalf by Kenya Revenue Authority, which charges an agency commission of
2% on all fuel levy remittances.
Other sources of funds comprise agricultural cess and income from treasury operations. The Board currently manages 80% of the
Coffee Cess collected for maintenance of roads within the coffee growing areas. Income from treasury activities represents interest
earned from the Boards liquid assets.
Allocation Criteria
The Board prepares an Annual Disbursement Program based on the historical collection trends and the annual budget.This program
details the funding available to each Road Agency during the course of the year for the planning of works. Based on this program
and the monthly collections, the Board disburses funds to the Road Agencies in accordance with the Kenya Roads Board Act and
the Kenya Roads Act of 2007, summarized on page 7 of this report.
Growth in RMLF Collections
Annual fuel levy collections have improved since 1993 due to the upward reviews of the rate charged per litre of fuel and increased
economic activity. The last review was done in FY 2006/07, when the rate was increased from Kshs. 5.80 to Kshs. 9.00 per litre of
petrol and diesel. Since then, annual RMLF collections have increased from Kshs.16 Billion to Kshs. 27.9 Billion in FY 2013/14.
RMLF Receipts and Disbursements - FY 2013/14
The Board collected Kshs. 27.9 Billion from fuel levy and transit tolls, against a target of Kshs. 25.2 Billion, representing RMLF surplus
collections of Kshs. 2.7 Billion. The RMLF collections were disbursed to the Road Agencies in accordance with the KRB Act.
Agricultural Cess
These funds are administered by the Kenya Rural Roads Authority (KeRRA), for maintenance of feeder roads that provide access to
the coffee growing areas.The Work Plans for coffee cess funds are prepared by the Constituency Roads Committees in consultation
with coffee stakeholders, and submitted to the KeRRA Regional Office. KeRRA then forwards the Work Plans to the Kenya Roads
Board for review and approval. Once Work Plans are approved, funds are released to the KeRRA Regional Office through KeRRA
Headquarters, for implementation of the road works.
During the year, the Board released Kshs. 127 Million (Kshs. 149 Million in FY 2012/13) to various constituencies in coffee growing
areas for maintenance of roads as per the approved Work Plans.
Forward Estimates
The Board prepares its annual budget based on the Medium Term Expenditure Framework. The budget is then submitted to the
Ministry of Transport and Infrastructure and Treasury for approval by the end of January every year.
Based on the Medium Term Expenditure Framework, the forward budgets for the next four financial years are as follows:
17
18
Kenya Roads Board

BUSINESS PERFORMANCE (Continued)
Road Maintenance Levy Fund
FY 2014/15
Kshs '000
25,792,248
FY 2015/16
Kshs '000
29,178,480
FY 2016/17
Kshs '000
29,175,751
FY 2017/18
Kshs '000
30,611,453
Utilization of the Kenya Roads Board Fund

The Kenya Roads Board is committed to ensure that the proceeds from the KRBF have been applied for the purpose for which
they were intended and that the use of such resources is efficient and transparent, in accordance with the principles, procedures
and requirements of KRB and sound professional practice. The Board monitors the utilisation of funds on a regular basis through
Technical, Performance and Financial audits and APRP Implementation Progress Reports to ensure value for money on KRBF funded
road maintenance works.
The Kenya Roads Board Act requires each Road Agency to submit its audited accounts to the board within six months of the end
of the financial year. From the unaudited financial statements for the Road Agencies for FY2013/14 and the APRP implementation
reports, the broad summary of the total expenditure of the Fund for FY2013/14 is shown below:Road
Agency
KeNHA
KeRRA
KURA
KWS
KRB
10% KRB
Board/
Ministers
Allocation
TOTAL
Opening Bank
Balance
1 July 2013
Kshs
3,106,950,788
4,374,094,383
2,070,059,689
276,065,315
166,540,350
1,236,822,784
11,230,533,309
Transfers from
KRB Fund
Kshs
Total Available
Funds
Kshs
Amount
%
Utilized UtiliKshs zation
10,330,789,000
8,039,194,897
4,389,430,323
247,244,725
503,489,450
2,935,368,615
13,437,739,788
12,413,289,280
6,459,490,012
523,310,040
670,029,800
4,172,191,399
6,430,813,649
7,803,021,782
4,174,811,372
217,584,227
498,472,966
725,677,547
26,445,517,010 37,676,050,319
19,850,381,543
48%
63%
65%
42%
74%
17%
Closing Bank
Balance
30 June 2014
Kshs
2,332,969,989
4,228,950,244
2,333,600,997
226,246,315
171,556,834
618,367,574
Unreported
funds Kshs
4,673,956,150
381,317,254
48,922,357
79,479,498
2,828,146,278
53%
9,911,691,953
7,913,976,823
The Road Agencies only reported on Kshs 27.4 Billion, being amount utilized and closing bank balances, out of the 37.7 Billion
available funds. Therefore a total of Kshs 7.9 Billion was not reported on in the financial year.
The low level of utilization of funds (53%) was due to inaccurate reporting by some Road Agencies, delays in procurement and low
contracting capacity by the Road Agencies. A comprehensive report on the expenditure and performance of the Road Agencies for
the year is detailed in the Annual Public Roads Programme FY 2013/14 Implementation Report. The Board is committed to ensure
all Road Agencies account for all KRBF funds and the funds are applied on planned roadworks.
Kenya Roads Board

The Road Agencies utilized Kenya Roads Board Fund to maintain roads as follows during the financial year:
Road Agency
Network Category
KeNHA
KeRRA
KURA
KWS
A, B, C Roads
D, E & Others
Urban Roads
Parks & Game Reserves
TOTAL
Planned Network
(KMs)
11,705
45,634
2,080
1,611
61,030
KMs Achieved
9,193
47,594
1,365
1,527
59,679
% Achieved of planned
Network
79%
104%
66%
95%
98%
Based on the available funding, the Road Agencies planned for only 38% (KMs 61,030) coverage of the road network (KMs 160,886)
in Kenya. Details are as explained below:The Kenya National Highways Authority (KeNHA)
The budgetary allocation for KeNHA for FY 2013/14 was Kshs 10.3 Billion comprising Kshs 9.9 Billion - 40% allocation and Kshs
441.0 Million transit tolls. By the close of the financial year, KeNHA had received all their allocation. In addition KeNHA had Kshs
3.1 Billion opening bank balance as carry-over funds from FY 2012/13. KeNHA therefore had Kshs 13.4 Billion for implementation
of works in the FY 2013/14. Out of this, the Authority reported an expenditure of Kshs 6.4 Billion and closing bank balance of Kshs
2.3 Billion.
KeNHA utilized fuel levy funds to maintain 9,193 Kms against a planned target of 11,705 Kms, which represents 79% of planned
road network.
The Kenya Rural Roads Authority (KeRRA)
In FY 2013/14 Kshs. 8.0 Billion was released to KeRRA during the financial year. The Authority had Kshs 4.37 Billion opening bank
balance as carry-over funds from FY 2012/13. In total KeRRA had Kshs 12.4 Billion for implementation of works in the FY 2013/14.
The Authority expended Kshs 7.8 Billion, to achieve 47,594 kms which represents 104% of the planned road network.
Coffee Cess
The Board had not budgeted for Agricultural Cess due to changes in the new Agricultural Act. However, coffee cess marketers
continued to remit coffee cess to the Boards bank accounts. During the year, KRB received Kshs 127.7 Million from coffee cess.
These funds will be disburse and released in the FY 2014/2015, upon receipt of works plans.
During the year, the Board released coffee cess funds for the FY 2012/13 amounting to Kshs 92.07 Million and Kshs 9.6 Million for
FY 2011/12 to KeRRA. However, KeRRA reported an expenditure of Kshs 182.7 Million on road works which included funds from
prior period which were held in their bank accounts.
The Coffee cess funds were utilised to maintain Kms 729 in coffee growing regions.
The Kenya Urban Roads Authority (KURA)
The Board released Kshs 4.39 Billion to KURA in FY 2013/14. This comprised of Kshs 3.7 Billion - 15% allocation for the FY
2013/2014 and Kshs 0.69 Billion FY 2012/13 funds. Therefore, the Authority had Kshs 6.4 Billion for implementation of road works
which included opening bank balance of Kshs 2 Billion.
The Authority utilized funds to maintain 1,365 Kms which represents 66% of the planned road network (2,080Kms).
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20
Kenya Roads Board

The Kenya Wildlife Service (KWS)

A total of Kshs 247.2 Million was budgeted for road works implementation in National Parks in FY 2013/14. A total of Kshs 523
Million was available for road maintenance, including prior year funds in its bank account.
KWS maintained a total of 1,527 Kms using Kshs 217 Million.
Kenya Roads Board
The audited financial statements indicate the utilization of funds received by the Board for its operations. KRB had a budget allocation
of Kshs 503.4 Million for administering the Kenya Roads Board Fund. By the close of the financial year, the entire budget had been
disbursed.
The Annual Public Roads Programme
The Kenya Roads Board Act requires the Board to review, individually, the Annual Road Works Programmes submitted by Road
Agencies and consolidate these into an Annual Public Roads Programme (APRP). The APRP forms the basis of funds allocation
and auditing of works by the Board and is not to be varied by any Road Agency without prior written approval from the Board. It
provides detailed allocations for all the funds accruing from KRBF in the Financial Year and outlines funding for road works to be
undertaken by Road Agencies as identified in the KRB Act and subsequent legal statutes.
During the year, the Board allocated and released funds in accordance with the FY 2013/14 Annual Public Roads Programme. As
the process of alignment of the Roads Sector to the new Constitution continues, road works contained in the APRP for FY 2013/14
continued uninterrupted and were undertaken by the designated Road Agencies.
A total of Kms 59, 679 was maintain which represents 37% of the entire road network in Kenya, as tabulated below;
Road Agency/ KMS
Network Extent
Kms Achieved
% Achievement
KeNHA
KeRRA
KURA
KWS
13,687
9,193
67%
130,067
46,178
35.5%
12,549
1,365
11%
4,583
1,527
33%
KRB/Minister
allocation
1,416
N/A
Total
160,886
59,679
37%
The current collations at Kshs 28 Billion is not adequate to cover maintenance needs of road network in Kenya, estimated at Kshs
50 Billion annually ( Draft Road Sector Policy, 2014).The Road Agencies planned maintenance for only 61,030 which represents 38%
of the entire road network (Kms 160,886) The Board has continued to lobby for additional funding for road maintenance.
Technical Compliance, Financial and Performance Audit
Kenya Roads Board commitment to ensure value for money is realized in the utilization of Kenya Roads Board Fund (KRBF) by Road
Agencies cannot be overemphasized. The Board has the principle role of overseeing the utilization of the Kenya Roads Board Fund
through monitoring and evaluation of KRBF funded road projects and activities.The Kenya Roads Board Act of 1999 and subsequent
amendments mandates the Board to coordinate the optimal utilization of the fund and monitor and evaluate the delivery of goods,
works and services through programmed and adhoc Technical Compliance, Financial and Performance audits.
Inspection of KRBF funded works implemented by Road Agencies i.e. KeNHA, KeRRA, KURA and KWS, is done during these audits
as well as verification of the utilization of KRBF released to these Agencies. These audits are conducted for both KRBF funded
works and development partner funded projects (upon request by the development partner).The Board carries these audits using
in-house personnel and through the use of consultancy engagements with engineering and financial audit firms. The current audit
Kenya Roads Board

consultants were engaged in FY 2012/13 on a contractual period of three financial years ending in FY 2014/15. The country is
currently packaged into seven regions with each region having a consortium to carry out the audits on a semi annual and annual
basis.
The audit for FY 2013/14 covered a representative sample of activities funded by the KRBF and implemented by Road Agencies as
contained in the APRP for that financial year. Road works activities implemented during the period were executed by either force
account or through contracting. The works included routine, periodic, rehabilitation, emergency and development works.
For the development partner funded programs, the audit exercise captures a percentage of works that is agreed jointly between KRB
and the development partner. During the year, the Board was engaged in the audits for road works funded by European Commission,
Programme for Agriculture and Livelihood in Western Communities(PALWECO), LAgence Francaise de Developpement(AFD) and
German Development Bank (KFW). These audits are carried out using in-house personnel and through consultancy engagements
with engineering and financial audit firms.
Both KRBF funded road works and development partner programs are audited on an interim and annual basis. The consultants
discuss the audit findings with the auditees before submitting the reports to KRB. KRB reviews the audit findings and disseminates
them to Road agencies and donors for action. Regional workshops are held to disseminate audit findings to the Road Agencies and
donors (where applicable).
Some of the gains realised on the audits include:
(a) Progressive increased compliance with APRP;
(b) Payment to contractors have been streamlined and take reasonable time to settle;
(c) An accounting system has been acquired by KeNHA and KURA;
(d) Increased use of contracting rather than the use of force account in project implementation;
(e) Increased adherence with government procedures, rules and regulations;
(f) Establishment of effective accounting systems by Road Agencies;
(g) Reduced time in disbursement of funds to the implementing units, among others.
The following audit issues have remained a major challenge to the Roads sub-sector:
(a) Non-compliance with APRP by Road Agencies;
(b) Cost overruns on projects funded by KRBF;
(c) Payments made over and above the value of work done;
(d) Inappropriate procurement procedures for works;
(e) Delay in implementation of funded works
(f) Poor quality of maintenance works and poor performance of completed works including pavement failures, poor or lack of
mitre drains
(g) Misapplication of proceeds from KRBF e.g. Ineligible and unsupported payments,
(h) Failure to release funds for administration to the regional offices, resulting into a significant reduction of funds for road
maintenance as the regions are forced to spend part of the works funds on administration.
(i) Non adherence to Government financial regulations and guidelines.
The detailed audit reports are available for review at KRB offices.
The Board shall continue to monitor the implementation of road works funded by the fund to ensure value for money is achieved,
and assist in driving the economy towards Vision 2030 goals.
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Kenya Roads Board

Road Sector Investment Programme (RSIP)

The Road Sector Investment Programme (RSIP) forms the basis of prioritization of roads in the APRP. The Board monitors the
implementation of the RSIP through regular reports and stakeholders meetings. The Board continues to ensure that the APRP
prepared by Road Agencies is based on the RSIP.
The 1st 5 year RSIP (2010-2014) was prepared in 2011 with projected available funding of Kshs 604 billion for different interventions
on the road network. Although projects implemented during Phase 1 of the RSIP were largely in line with the priorities set out in
the RSIP, only approximately 50% of the RSIP targets have been achieved. Some of the constraints experienced during the 1st Phase
of RSIP included lack of funding, lengthy procurement processes, low contractor capacity among others. Phase 1 of the RSIP will
expire in FY 2014/15.
There is need to develop the 2nd Phase of RSIP (2015-2019) by the beginning of the next financial year which is aligned to the
Governments strategic development goals to clear all ongoing road projects within the next two years and develop 10,000 km of
paved roads within the next four years. KRB submitted a request to the PS to approve funding for preparation of 2nd Phase of RSIP
(2015-2019) and also prepared the Terms of Reference for Calibration of the HDM-4 to conditions in Kenya.
Overloading Control
Roads are designed to withstand certain traffic loading (equivalent standard axles) over their lifetime. The damaging effect to
pavement by vehicles depends largely on the axle loads applied by the vehicles plying the route.
Therefore overloading has become a major challenge for the road asset in Kenya as it reduces the lifecycle of our roads hence
increasing the maintenance cost. Adherence to axle load limits prescribed in law can considerably sustain the durability of the road
asset through preventing premature failure.
The Board has developed a database for analysis of weighing data and preparing customised weight measurement reports including
axle loading trends in terms of axle configurations, overloading, among others.
The Board engaged two consultants, CAS consultants and Kiri consultants to carry out the axle load monitoring in Kenya.
The following improvements have been noted from the axle load monitoring undertaken by the two consulting firms:
Axle load compliance per axle and Gross Vehicle Weight (GVW) improved from 44% and 92% in June, 2013 to 68% and 99%
in June, 2014 respectively.
There is notable improvement in axle load control management in the country with installation of 4no. static weighbridges
High Speed Weigh-in-motion (HSWIM) weighbridges, computerization, installation of CCTV, data loggers and upgrade of
weighbridge facilities programmes at Mariakani, Athi River, Gilgil and Webuye.
Continuous classified directional traffic counts are now being undertaken at Mariakani and Athi River from January, 2014, when
data loggers and HSWIM scales were introduced;
There is a gradual reduction of queuing time at the weighbridges with the average queuing time of 15minutes at Mariakani and
Athi River weighbridges and 5 minutes at the Gilgil and Webuye weighbridges.
However, the findings of the monitoring show high percentages of undiverted Heavy Goods Vehicles (HGV) which is an indication
that diversion of all HGV traffic to the weighbridges is still a major challenge especially in Mariakani, Athi River and Gilgil weighbridges.
Kenya Roads Board

Road Network Management Data In Kenya

In its role as an advisor to the Minister, the Board is in the process of procuring a consultant, funded by the World Bank, to collect
and collate road network management data in Kenya. The components of the study are as follows: Phase 1: Road Inventory and Condition Survey for Narrow Roads and Road Condition for Classified Roads Network;
Phase 2: Formulation of policy on management of Narrow Roads; and
Phase 3: Transport Sector Indicator Framework, Road Asset Valuation and Traffic Data studies
The Road Network Management Data will provide essential data for planning, monitoring perfomance of the road network, sourcing
and allocation of funds and therefore enhance road asset management in Kenya.
Road Classification
The Constitution of Kenya classifies roads into National Trunk Roads and County Roads. The Board has presented the proposed
re-classification system to define and delineate the two types of roads to the various stakeholders in the road subsector. Further,
the proposed re-classification system categorises rural and urban road networks into three broad functional groups; Arterial roads,
Collector roads and Local roads.
During the year, the Board prepared the National and County Roads Network Register and submitted to the Principal Secretary,
State Department for Infrastructure, for approval and adoption.
Roads 2000 (R2000) Strategy
The Board co-ordinates the R2000 Strategy. During the year, the Board facilitated and coordinated R2000 activities undertaken
by the Road Agencies. The R2000 Strategic Plan (2013-2017) intends to use methods of constructing feeder roads that would be
cheaper, durable and create employment opportunities in the long run.
The Board has continued to encourage Road Agencies to use R2000 Strategy in implementing road maintenance and development
activities funded by the fund, hence enabling creation of jobs within the road sub-sector. The strategy has helped in building capacity
for small and emerging contractors through various training initiatives financed by the fund in various institutions such as Kenya
Institute of Highways & Building Technology.
During the year, the R2000 Strategy supported the creation of 16,664 jobs against a target of 32,986. The Board shall continue to
monitor the implementation of the R2000 Strategy and ensure more jobs are created to reduce the unemployment rate in the
country and assist in making Kenya a middle income country as envisioned in the Vision 2030.
Research and Development
Kenya Roads Board established an Interagency Research and Development Committee in order to enhance coordination of research
efforts within the Roads sub-sector. Key Road Sub sector institutions, practitioners, academia and other institutions are represented
in this committee. The purpose of the Committee is to provide technical and logistical oversight for the design and implementation
of research activities in the road sub-sector including data collection, analysis, documentation and dissemination of research findings.
One of the main objectives of Committee is to establish and maintain a centralized knowledge base of research undertakings in
the road sub sector. During the year, KRB began the process of procuring a consultant to carry out review of the past and current
research efforts within the Roads Sub-Sector with a view to establish a centralized knowledge base of research undertakings.
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Kenya Roads Board

Performance Contracting
At the commencement of the FY 2013/14, the Board signed an annual Performance Contract with the Government of Kenya
through the Parent Ministry which sets out targets that the Board is expected to achieve during the financial year.The annual targets
are monitored on quarterly basis; progress reports submitted to the Board for approval and subsequently submitted to State
Corporations Advisory Committee under the Office of the President.
During FY 2013/14, the Board scored an average of 2.7795 (very good) compared to 2.8354 in FY 2012/13, which was an
improvement from the previous financial year, with the highest score being one in perfomance contracting. The performance
contracting results for the last five years are tabulated below;
Performance Contracting Score

FY 2009/10 to 2013/14
3.00
2.50
2.00
1.50
1.00
0.50
0.00
2009/2010
2.30
2010/2011
2.33
2011/2012
2.73
Performance Score
2012/2013
2.84
2013/2014
2.78
Kenya Roads Board

Three // Governance &

Corporate Responsibility
Corporate Governance Statement
Sustainability Statement
Board members pose for a photo after one of the Board meeting held during the year.
25
26
Kenya Roads Board

CORPORATE GOVERNANCE STATEMENT
Introduction
The culture and demureness of Kenya Roads Board is a reflection of the clear direction and commitment of the Board of Directors
to the principles of transparency, professionalism and high performance culture for the benefit of its stakeholders. The Board of
Directors regards corporate governance as pivotal to the attainment of the Boards core mandates and ensuring that KRB remains
the best managed fund for an effective road network. This enables effective and efficient decision making and gives a structural
aid for the Directors to discharge their duty to promote the success of KRB while taking into account the interest of stakeholders.
Effective governance is achieved through a combination of strong process and structures, underpinned by the right values and
culture. The principles of corporate governance are contained in the Directors Code of Conduct and Ethics.
Board Organisation and Structure
Board Size, Composition and Appointment
Kenya Roads Board comprises of thirteen (13) independent non-executives board of directors, eight (8) are from the private sector
institutions and five (5) members represents the public sector. Each member serves for a maximum of two terms of three (3) years
each. The Chairman of the Board is appointed by the President from among the eight members from the private sector. Names of
all members and changes thereto are published in the Kenya Gazette.
The public sector representatives are the permanent secretaries or designated alternates not below the level of deputy secretary
from the ministries responsible for matters relating to roads, finance, local authorities, regional co-operation, transport and
communications.The representatives from the private sector are appointed by the Minister for roads from among the three persons
nominated by each organization specified in the First Schedule to the Kenya Roads Board Act.
The Board is well composed in terms of range and diversity of skills, knowledge, age and experience in various sectors which makes
it effective and provides an appropriate balance for the oversight of the Boards mandate. On gender, the Board has three (3)
women out of eight (8) members from the private sector.
The membership of the Board changed in November, 2013 when the term of the previous Board expired. The position of the
member from Kenya Transport Association remained vacant during the period. The membership from the public sector changes
depending on the appointments to the Permanent Secretary(ies) position(s) or designated alternate(s).
The position of the Executive Director is filled through public advertisement. The appointment is done by the Board in consultation
with the Minister. The Executive Director is an ex-official member of the Board but has no voting right at any meeting of the Board
and is the secretary to the Board.
The directors abridged biographies appear on pages 11 to 12 of this Annual Report. The Board membership is shown on page 28.
Independence, Separation of Roles and Responsibilities
All Directors except the Executive Director are non-executive directors. The non-executive directors are independent of
management, they appoint the Executive Director and establish a framework for the delegation of authority and ensure succession
planning for the executive director and senior management is in place. Their role is to advise, constructively challenge and monitor
the success the management is delivering the agreed strategy within the risk appetite and control framework that is set out by the
Board.
Kenya Roads Board

CORPORATE GOVERNANCE STATEMENT (Continued)
The roles and responsibilities of the Chairman of the Board, the Executive Director and non-executive directors remain distinct
and separate which ensures a balance of power of authority and provides for checks and balances such that no one individual has
unfettered powers of decision making. Their roles have been documented and are expected to be independent and free from
conflict upon appointment.
The Chairman provides overall leadership to the Board without limiting the principles of collective responsibility for Boards
decisions. The Chairman builds an effective board and sets the board agenda in consultation with the Secretary/Executive Director
and ensures effective communication to stakeholders.
The Executive Director is responsible to the Board and takes the overall responsibility for the management of the Kenya Roads
Board Fund and takes responsibility for effective and efficient day to day running of the affairs of the Board. The Executive Director
recommends the strategy to the Board and implements it and makes operational decisions. Noting that the position also dubs as the
secretary to the Board, the Executive Director ensures appropriate and timely information flows within the Board, its committees
and management.
Board Responsibilities
The Boards responsibility is to promote the long term success of the Board. The Board provides leadership and concentrates its
efforts on the strategic and governance issues. The Kenya Roads Board Act, the Board Charter and the Directors Code of Coduct
and Ethics defines the governance parameters within which the Board exists and operates, the specific responsibilities to be
discharged and powers of the Board, its committees and directors collectively, as well as certain roles and responsibilities incumbent
upon directors as individuals.
The Board is charged with the following responsibilities:(a) Defining the purpose of the Kenya Roads Board, that is, its strategic intent and objectives, and its values which should be clear,
concise and achievable;
(b) Strategy formulation and ensuring there are appropriate policies, systems and structures to effectively and successfully implement
the strategies;
(c) Provide leadership within a framework of prudent and effective structures which enable risks to be assessed;
(d) Identify the opportunities as well as the principle risks in its operating environment including the preparation of the risk policy
plans/risk management policies and implementation of appropriate measures to manage such risks or anticipated impact on the
corporate business;
(e) Review on a regular basis the adequacy and integrity of the internal controls, acquisition and divestures, management information
systems including compliance with applicable laws and regulations;
(f) In stewardship and in discharging its obligations, the Board assumes responsibility in the following areas:
(i) Retaining full and effective control over KRB, and monitoring management in implementing Board plans and strategies;
(ii) Ensuring ethical behavior and compliance with relevant laws and regulations, audit and accounting principles, and KRBs own
governing documents and Code of Ethics; and
(iii) Defining levels of materiality, reserving specific powers to the Board and delegating other matters with the necessary written
authority to management and instituting effective mechanisms that ensure Board responsibility for management performance of
its functions; among other mandates and responsibilities as stipulated in the Kenya Roads Board Act.
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28
Kenya Roads Board

Meetings Attended by Board Members

Kenya Roads Board Act provides that the Board holds meetings at least once every month. The Board therefore holds regular
scheduled meetings throughout the year and supplementary meetings are held as and when necessary. In case of non attendance
due to other commitments, such information is communicated to the chair prior to the date of the scheduled meeting.
The table below details board membership and attendance at scheduled board meetings during the year:Board Membership and Attendance of Meetings
Director
Sector
Private
Organization
Institution of Engineers of Kenya
Attendance
14/14
Joel Kipkemboi Yego
Classification
Non-Executive
Chairman
Non-Executive
Private
Institute of Surveyors of Kenya
14/14
Osman H. Ibrahim (*)
Non-Executive
Private
Institute of Certified Accountants of Kenya 12/14
Consolata Yambo Migowa

(up to 9th May 2014)
Non-Executive
Private
League of Kenya Women Voters
14/14
Rita Kavashe(*)
Non-Executive
Private
Automobile Association of Kenya
6/14
Geoffrey Irungu(*)
Non-Executive
Public
Ministry of Transport & Infrastructure,

State Department of Transport
9/14
Alfred Kitolo(*)
Non-Executive
Public
Ministry of East African Community
10/14
Non-Executive
Public
Ministry of Transport & Infrastructure,

State Department of Infrastructure
11/14
Non-Executive
Public
Ministry of Devolution
14/14
Non-Executive
Public
The National Treasury
10/14
Monika Solanki (*)
Non-Executive
Private
Kenya Association of Tour Operators
13/14
Michael Karanja
Non-Executive
Private
Kenya Association of Manufacturers
14/14
Mary Wambugu (from

10th May 2014)
Mwanamaka A. Mabruki
Billow H. Abdi (*)
Eng. John K. Mosonik
Grace Kamasara (up to
26th February 2014)
Kennedy Nyamao (from
27th February 2014)
Dr. Charles Onchoke (*)
(up to April 2014)
Onderi Ontweka (from
May 2014)
Notes: (*) An accepted apology was received by the Chairman well in advance of the scheduled meeting
Kenya Roads Board

Board Committees and Responsibilities

The Board delegates certain functions to well structured committees but without abdicating its own responsibilities. The Board has
developed a committee structure that assists in the execution of its duties, powers and authorities. Each Committee is guided by the
Committee Charter/Terms of Reference, which outlines its responsibilities as mandated by the Board and is reviewed on a yearly
basis. The Committees are appropriately constituted drawing membership from amongst the board members with appropriate
skills and experience. The Chairman of the Board, management and external parties/advisors are required to attend the committee
meetings only by invitation.
The committees are expected to operate transparently, ensure full disclosure to the Board and conduct themselves within the rules
and procedures set out by the board. Matters deliberated by the Committees are presented to the board by the respective chairman
during the next board meeting. The Board Committees are Audit & Risk Management, Finance & Planning and Management. The
responsibilities and attendance of meetings during the year is as summarized below:Finance and Planning Committee
The Finance and Planning Committee assists the board in fulfilling its oversight responsibilities for funds collection, sourcing of funds,
allocation and disbursements, review of budgets, Annual Public Roads Programme and the implementation reports.
The responsibilities of the committee are as follows:(a) Review the ceilings for Road Agencies to ensure compliance with the KRB Act and the approved Road Sector Investment
Programme;
(b) Constantly review and monitor the collections of Kenya Roads Board Fund including seeking explanations for certain trends;
(c) Review financial statements, management accounts, audit reports and make appropriate recommendations.
(d) Review KRB budgeting process, systems and cycle to ensure that they promote openness, accountability and prudence;
(e) Periodically review the extent of utilization and compliance with budgetary levels and make appropriate recommendations;
(f) Review the consolidated Annual Public Roads Programme to ensure compliance with the guidelines from KRB and the
proposals from the Road Agencies;
(g) Review the reports on works carried out to ensure that they are within specifications, costs and time.
Finance and Planning Committee Membership and Attendance
Name
Organization
Billow Abdi
5/5
Michael Karanja
Ministry of Transport & Infrastructure, State Department of

Infrastructure
Osman Ibrahim
Institute of Certified Accountants of Kenya
5/5
Grace Kamasara(*)
Kennedy Nyamao(*)
Ministry of Devolution
3/5
Onderi Ontweka(*)
Charles Onchoke(*)
The National Treasury
3/5
Rita kavashe(*)
2/5
Notes: (*):- An accepted apology was received by the Chairman well in advance of the scheduled meeting
Attendance
5/5
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Kenya Roads Board

Audit and Risk Management Committee

The Audit and Risk Management Committee assists the board in fulfilling its oversight responsibilities for the programming and
monitoring of works, as well as the advisory role to the Minister responsible for Roads.The Audit and Risk Management Committee
has authority to conduct or authorize investigations into any matters within its scope of responsibility. The Committee has the
following responsibilities:(a) Review the effectiveness of the system for monitoring compliance with laws and regulations and ensure business continuity
amongst other responsibilities as may be delegated by the Board.
(b) Review and ensure the integrity of financial statements and appropriate accounting principles prior to review and approval by
the Board;
(c) Review the effectiveness of the Boards internal control systems and compliance as well as advise the board on risks and
mitigation measures;
(d) Review audit reports and make recommendations to the Board.
Audit and Risk Management Committee Membership and Attendance
Name
Organization
Attendance
Alfred Kitolo(*)
1/2
Joel Kipkemboi Yego
Institute of Surveyors of Kenya
2/2
Billow H. Abdi
Ministry of Transport & Infrastructure, State Department of 2/2

Infrastructure
Consolata Yambo Migowa
2/2
Osman H. Ibrahim
Institute of Certified Accountants of Kenya
2/2
Notes: (*) - An accepted apology was received by the Chairman well in advance of the scheduled meeting
Management Committee
The Management Committee oversees strategic planning, staff matters, performance contracting and general management oversight.
Specifically the Committee is responsible for the following:(a) Setting the policies and strategic direction of the organization;
(b) Review the Strategic Plan and the Business Plan for approval by the Board;
(c) Monitoring the implementation of the Strategic Plan;
(d) Evaluation of the performance of the organization, Executive Director, staff and departments;
(e) Negotiating the annual performance Contract between KRB and the Ministry of Roads;
(f) Reviewing of the organization structure of KRB;
(g) Reviewing KRBs staff terms and conditions of service;
(h) Reviewing the various management policies aimed at enhancing staff performance.
During the year, the Committee approved the Annual Business Plan and Performance Contract for FY 2013/2014 and reviewed
quarterly monitoring of performance. The Committee also reviewed the staff matters and results of performance assessment of
the senior staff.
Kenya Roads Board

Management Committee Membership and Attendance

Name
Organization
Attendance
Joel Kipkemboi Yego
Institution of Surveyors of Kenya
7/7
Consolata Yambo Migowa(*)
6/7
Geoffrey Irungu(*)
5/7
Alfred Kitolo(*)
Ministry of Transport & infrastructure, State Department

of Transport
Monika Solanki (*)
Kenya Association of Tour Operators
6/7
3/7
(*) - An accepted apology was received by the Chairman well in advance of the scheduled meeting
Interagency Research and Development Committee (IRDC)

The IRDC has authority to conduct or authorize investigations into any matters within its scope of responsibility. It is empowered
to review all research proposals forwarded to KRB and recommend funding, retain an independent adviser if it so wishes to advise
the Committee on issues related to research proposals and oversee the work of any research consultancy that may be appointed
by KRB.
The main responsibilities of the Committee are:a) Provide comment for approval of planned research activities and will provide guidance on identifying needs, scope and
approaches;
b) Monitor progress of on-going research activities in terms of major activities milestones and deliverables;
c) Endorse final outputs from the research projects and programmes and agree on any next steps;
d) Keep the local industry aware of the research activities and promote a wide dissemination of project results;
e) Promote collaborative working arrangements with like-minded organizations in the Africa Region and elsewhere.
Interagency Research and Development Committee Membership and Attendance
Name
Organization
Attendance
Michael Karanja
3/3
Colin Scott
The Roads and Civil Engineering Contractors Association
3/3
Ritah Kavashe(*)
2/3
Prof. Patts Odira(*)
University of Nairobi - Engineering Department
2/3
Eng. Kariuki Muchem(*)
Association of Consulting Engineers of Kenya
2/3
Eng. Joel Wanyoike(*)
Institution of Engineers of Kenya
1/3
Prof. Winnie Mitullah(*)
Institute of Development Studies
1/3
(*) - An accepted apology was received by the Chairman well in advance of the scheduled meeting
Remuneration of the Board

The non ex-official Board members are paid taxable sitting allowance as approved by the Minister responsible for Roads following
guidelines from the State Corporations Advisory Committee.The Chairman is paid honoraria at a rate approved by the Government.
Transport expenses are reimbursed on travel for Board business at the prevailing AA rates. The members are also entitled to
outpatient and inpatient medical cover and a personal accident cover, as applicable.
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Kenya Roads Board

Directors Induction and Training

The Board develops an induction and training programs designed to introduce new directors to the operations of the Board and
related governance matters. The programs are also aimed at deepening the understanding of the changes in risks, laws and business
and political environment in which the Board operates.
During the year, the new board members were inducted at a workshop held in Mombasa. The induction included among others
presentations by all heads of departments, on the operations of KRB and the Kenya Roads Board Fund.
Two field trips were held to various projects funded by KRBF around the country. This was a new experience especially for the new
members as it helped them learn about road sector structural arrangements and actual implementation of works which the Board
funds.
Directors were also trained in corporate governance, road sector financing and reforms including the impact of the Constitution,
prevailing political and economic environment on the functions of Kenya Roads Board.
Board Effectiveness and Evaluation
In order to assess and improve the capacity, functionality and effectiveness of the Board and its Committees, an annual evaluation
is undertaken in accordance with the widely accepted principles of corporate governance. The self evaluation reviews the capacity,
functionality and effectiveness of its performance in the achievement of its goals and objectives. It assesses the performance and
independence of the Board and its Committees jointly and individual members of the Board, including the Executive Director. The
Executive Director is assessed in his roles as the Chief Executive Officer and the Secretary to the Board. The Chairmans ability to
add value, his performance against what is expected of his role and function, is also assessed.
The results of the evaluation forms the basis on which action/work plans for the proceeding year are formulated, assists to identify
the training needs and it also forms the basis of re-appointment of directors.
During the year, a comprehensive board evaluation was conducted under the guidance of Promin Consultants. The Board and
Committees were evaluated against the following criteria, amongst others: Effective preparation for and participation at meetings;
Understanding the business, mandates, strategic thrift of KRB;
Ability to take an independent view on matters brought for discussion;
Communication with fellow directors, management and stakeholders;
Regular attendance of meetings; and
Keeping abreast with the latest developments, including awareness and compliance with regulatory guidelines.
A report on the overall evaluation assessment was submitted to the Minister responsible for Roads in accordance with the best
governance practices.
Conflict of Interest, Code of Conduct and Ethics
The directors and employees of the Board have a fiduciary duty to act honestly and in the best interest of the Board. Business
transactions with all parties must be carried out at arms length and with integrity. The Board provides effective leadership based
on ethical foundation and ensures all deliberations, decisions and actions are based on the Boards core values underpinning good
governance. The Board has developed a Code of Conduct and Ethics Manual whose aim is to enhance relationships and fostering
teamwork among board members and staff and to build respect, confidence and credibility with its citizens. The Code provides
guidance to its members regarding ethical and behavioral considerations as they address their duties and obligations during their
appointment and their term in KRB.
Kenya Roads Board

The Board has put various measures in place to ensure that there is no conflict of interest amongst its directors and staff.The Board
has put in place Corruption Prevention and Code of Conduct & Ethics Policies that binds both the directors and the employees.
At the beginning of the financial year, all directors and employees signed a declaration of interest form declaring that they will
disclose any interest that conflicts or possibly may conflict with the interests of the Board. At the commencement of any business
to be transacted, all directors/staff are required to declare their interest, if any.
During the year, the Board carried out training on the Leadership & Integrity Act, 2012, Corruption Prevention and Code of Conduct
& Ethics Policies, provisions of Constitution of Kenya in particular Chapters 2 (10) National Values and Principles of Governance,
Chapter 4 The Bill of Rights and Chapter 6 Leadership and Integrity.
During the year, the directors and employees demonstrated their commitment to the public service through professionalism,
integrity, moral and ethical requirements, conflict of interest, and political neutrality through compliance with relevant laws as evident
from the legal audit, internal audit, and external audit reports presented to the Board. All staff and directors declared their wealth
as required to the Public Service Commission.
Accountability & Audit /Control Environment Management
Annual Report and Accounts
The Board is required to present an objective and understandable assessment of the Funds and Boards operation position and
prospects. The Board has ensured that accounts are presented in accordance with the International Public Sector Accounting
Standards and obtained an unqualified audit report.
The Board received unqualified audit report on the activities of the Fund and it operations.
External and Internal Audits
(i) External Auditors
Kenya Roads Board accounts are audited by the Auditor-General. The Auditor-General is an independent office whose role and
responsibilities are defined under the Constitution of Kenya.
(ii) Internal Auditors
The Board in furtherance of its duties to ensure that the process, structure and internal controls are maintained and adhered to,
may appoint independent audit consultants or recruit in-house staff to carry out such functions.
The Internal Audit firm was appointed through a competitive open tendering process.The Board engaged the services of M/s Davle
& Associates to carry out the internal audit function and present reports on compliance. Further, the Board engaged the services
of Technical, Financial and Performance audit consultants to evaluate the efficiency, effectiveness and economy, value for money, on
the utilization of funds by Road Agencies
Internal Controls and Risk Management
The Board has the responsibility of identifying internal risk exposures and developing measures to mitigate against the identified
risks. The Board reviews and monitors the development and implementation of systems of internal controls. The Board must have
an understanding of these risks and mitigate them by implementing sound internal controls and risk management practices. The
Board has developed the risk management framework and management control which identifies the risks. The Board recognizes
that information technology form an integral part of the risk management process and has developed the business continuity plan,
disaster preparedness plan and the Information Technology policy.
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34
Kenya Roads Board

The Board reviewed the internal controls, policies and procedures and satisfied that appropriate controls and procedures were in
place. This review was done by the internal auditors who report directly to the audit committee. The Board also delegated the day
to day management of risks to management through systems and process carried out on a day to day basis. to day basis.
Relationship with Stakeholders
The Board appreciates that stakeholder perception affect the organizations reputation. Therefore the Board strives to achieve an
appropriate balance between its various stakeholders in the best interest of the organization by taking into account their legitimate
interest and expectations in decision making.
The Board values the importance of complete, timely, transparent and effective communication with its stakeholders for building and
maintaining their trust and confidence by providing regular information on its performance, activities and addressing their concerns
whilst having regard to legal and strategic considerations. The Board has developed a Corporate Communications Strategy which
encompasses internal & external communication, customer service and public relations.
The main avenues for communication are through press releases, stakeholder forums and publications on disbursements, APRP
and annual reports and financial statements. The Board has continued to encourage electronic communication through publishing
documents in the corporate website www.krb.go.ke and has endeavored to ensure that the website is highly interactive and contains
all the relevant information.
Additionally, the Board has dedicated staff to deal with complaints and public relations effectively, efficiently and as expeditiously
as possible. The Board has an established mechanism of receiving, resolving and giving feedback on complaints referred to it by its
stakeholders. The Board submits quarterly reports to the Commission of Administrative Justice on the complaints handling and
management. During the year the Board scored 91% against a target of 85% on complaints handling and management.
The Board encourages communication through email by allocating all directors and staff with an email address and Internet. For
external communication, the Board has set up an email address info@krb.go.ke.
The Boards Service Charter, which has been cascaded to all staff and displayed at strategic locations, is monitored on a regular basis.
The Charter stipulates the service delivery timelines, commitments and expectations of KRBs customers. During the year, the level
of customer satisfaction on the Boards services was at 78%. The Board is committed to continually improve access to information
by the public and provision of efficient and quality public services.
Kenya Roads Board

KRB Directors and members of staff during a team building session
Tree planting at Ngeny Secondary School
35
36
Kenya Roads Board

KRB staff and their families during the Standard Chartered Marathon
KRB Staff mentoring students at Okwach Primary School
Kenya Roads Board

SUSTAINABILITY STATEMENT
Introduction
The Board works with its staff and stakeholders to enrich community life and participates in charitable projects.The Board recognizes
the importance of conducting operations in a manner that meets existing needs without compromising the ability of the future
generation to meet their needs; therefore it carries out its operations in a manner that ensures the economic life of the community
in which it operates. It remains the Board policy to ensure that activities meet and exceed the social, economic and environmental
expectations of stakeholders. The Board believes that ethical leadership and corporate citizenship should direct the strategy and
operations to build sustainable business.
The Board executes the objectives through the following:(a) Our people, values and processes;
(b) Stakeholder engagement;
(c) Protecting the environment; and
(d) Corporate Social Responsibility and Investment.
Our People, Values and Processes
At KRB, people are the primary asset.The Board therefore recruits and invests in the best talent in the market. Our success has been
and will continue to be highly dependent on the performance and accountability of our youthful team.
Diversity and Equal Opportunity
The Board endeavours to preserve gender and cultural diversity in our employee mix and takes pride as an equal opportunity
employer for all qualified persons. This has created an inclusive environment where individuals and teams harness strengths in
diversity to maximize potential and excel in performance.
Our Culture and Values
Our vision of an efficient road network for a prosperous nation describes who we are, what we stand for and is what makes our
culture distinctive. The staff and directors are committed to live their values of excellence, customer focus, integrity and impartiality,
staff focus, diversity inclusiveness and good corporate citizenship.
The Board strives to create a culture where people have a strong sense of personal accountability and are able to make good
personal judgments, based on its values. This is driven by the Boards mission to fund, oversee and coordinate road development,
rehabilitation and maintenance and the commitment to ensure prudent sourcing and optimal utilization of resources for socioeconomic development. During the year the Board strengthened this emphasis in the definitions of its values and will continue to
reflect them in future strategic and business plans.
The Board values its employees for who they are and what they bring to the Board and recognizes that different views create
innovation. The Board encourages its staff to pursue their careers and personal aspirations and strive to create an open and
collaborative working environment in which they can maximize their talents.
The Board maintains an open and collaborative dialogue with our employees, through regular staff meetings, open door policy
as well as our annual employee opinion survey, in which participation has remained above 80% in the last five years. In addition,
providing world-class training and development opportunities remains central to our long-term commitment to invest in its people.
Employee Welfare
At KRB, the staff and directors view each other as part of one big family and each members welfare is our collective responsibility.
The Board takes every effort to ensure that employees well being (physical, emotional and financial) is considered as this affects
them both at home and at work.
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Kenya Roads Board

SUSTAINABILITY STATEMENT (Continued)
The Board will continue to invest in out-of-office staff activities such as team-building in reflection of our deep commitment to staff
welfare. During the year, the Board held its team building activities and rewarded staff who had exemplary performance and those
who had served the Board for long.
The Board has also continued to ensure that all cross cutting issues have been addressed; in particular the policies and work plans
for HIV/AIDs, Persons with Disability and Gender have been developed and are being implemented.
Staff Training and Development
To ensure that KRB not only attracts but also retains the best talent, the Board aims to nurture peoples careers by making relevant
opportunities accessible and helping them to develop skills, knowledge and experience in different functions or specialism.
Staff training and development are a prerequisite for employees growth. In FY 2013/14, training continued to focus on departmental
technical competencies and people management skills at all levels.
Strengthening the leadership capability remains a key business priority to ensure that the Board has strong leaders today and in the
future. The Board also provides opportunities for groups of existing and future senior leaders to benchmark with best practices on
management. Capacity building will remain a key objective for the Board.
Employee Engagement
The staff are committed to the realization of the Boards mandates. Focus is on delivering an employee experience where staff feel
strongly connected to the realization of Boards mandates and are able to do what they do best each day.
One way in which employees experience is enhanced is by conducting the employee opinion survey. In FY 2013/14, the overall
employee satisfaction survey was at 89.3% compared to 2012/13 achievement of 88.2%.
Occupational Health and Safety
Good health and safety standards are ideal and remain an individual and corporate responsibility for the staff and the Board. The
Board is committed to proactively managing all health and safety risks associated with its mandates.
During the year, the Board organized several workshops to sensitize staff and evaluated the work environment to ensure it meets
the set standards. An annual health and safety audit was conducted at the Boards premises. The audit was carried out with the view
of evaluating compliance of the work place and the associated operations with the provisions of the Occupational Safety and Health
Act, 2007.
Specifically, the following areas were assessed: Work place information;
Management of Occupational Safety and Health policies;
Work place safety, Health and Welfare conditions including safety, occupational hygiene conditions as well as general conditions;
and
Emergency response plan.
Additionally, the Board has several medical policies for its staff and directors. The policies are reviewed annually to ensure that the
Board maintains a healthy workforce and safe environment.
Zero Tolerance to Corruption
KRB has a zero tolerance policy towards corruption. The Board has an elaborate corruption prevention programme and has
undertaken various sensitization and training activities to prevent corruption.
Kenya Roads Board

The Board, under its current performance contract scored 70%, compared to a score of 68% in prior year, by undertaking activities
such as Corruption Risk Assessment and Implementing Corruption Control measures. The Board was also issued with unqualified
audit report for FY2013/14 by the Auditor-General for both the Fund and its operations. Further, the internal audit reports have
not identified any issues on corruption.
Ethics and Integrity
The Board has in place Code of Conduct and Ethics and Corruption Prevention Policies. This policy requires employees and
members of the Board to conduct business with integrity, in accordance with the Public Officers Ethics Act and ensure the
enforcement of corruption prevention plans. Accordingly, corruption prevention, training, risk assessments and surveys form part of
the Performance Contract between the Government of the Republic of Kenya (through Ministry of Transport & Infrastructure, state
department of Infrastructure) and the Board of Directors.
The Board is cognizant of the financial crime risks that arise from internal and external sources. The Board conducts business in
compliance with high ethical standards of business practice. To this end, the Board has conducted various training courses on anticorruption and financial fraud practices. The Board has put in place various systems and procedures which are implemented and
monitored on regular basis. The internal audit reports have not identified any non-compliance with the ethics policies.
The Board is committed to ensure compliance with all laws and regulations.The compliance is monitored through legal audits which
are submitted to the Board.
Stakeholder Engagement
The Board is committed to open dialogue which helps to understand the concerns of its stakeholders and respond to them
appropriately. These engagements assist to get feedback on the policies, procedures and ways of working. Stakeholder engagement
is done through the following:Reporting
The Board is committed to transparency in reporting of its activities to its stakeholders. This is done regularly through the print and
electronic media, published annual reports and financial statements. During the Nairobi International Show, Institute of Engineers
of Kenya conference and the African Road Maintenance Funds Association and other stakeholders workshops, the Board got to
interact with the public and provide information on its activities.
Customer Focus
The Board is committed to meeting stakeholder requirements to their satisfaction by ensuring effective and efficient use of resources.
It encourages continual improvement of its services and processes. The performance and interaction with its stakeholders is also
guided by the Constitution of Kenya - Bill of Rights.
To demonstrate that the Board is living on this promise, a resolved service charter was rolled out, and cascaded to all the staff and is
displayed at various strategic places in the organization. The compliance to the service charter is monitored on a regular basis, plans
are made on how to reduce or eliminate the non-compliances.
During the year, the Board carried a customer satisfaction survey which satisfaction levels of 78% against the estimate target of 70%
which has continued to improve over the years. For the coming financial year, the board plans to carry out a baseline survey on the
population accessing public services and establish if the services are provided in an efficient and effective manner. The Board is also
committed to implement innovative service delivery methods.
Grievance Mechanisms and Procedures
The Board has put in place a grievance handling mechanisms for both the directors and employees. The employees issues are dealt
with by the Management Committee of the Board.
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Kenya Roads Board

The Board has set up a complaints handling mechanism which is handled by the management. The Board submits quarterly reports
on complaints to the Commissioner of Administrative Justice who evaluates the extent to which the Board has complied with the
procedures and issues a certificate. During FY 2013/14, the Board achieved 91% against a target of 85% in the performance contract
evaluation on resolution of public complaints.
Directors Stakeholder Meeting and Tour to Road Projects
In June, 2014, KRB directors and staff toured Western and Rift Valley regions to among other things assess the conditions of the road
network in the country, obtain an overall view on the usage of the road maintenance levy for implementation of road maintenance
projects, receive feedback and interact with stakeholders and road users.
Protecting the Environment
Environmental Conservation is one of the enablers to the Social Pillar in the countrys economic blue print Vision 2030. Road
projects have the potential of damaging the natural resources upon which economies are based. The environment is the resource
base for materials used in road construction. It assimilates road construction waste, hence affecting the lifespan of roads.
To minimize the negative environmental impact, the Board requires the Road Agencies to factor in mitigation measures at the
planning stage, during and after construction for all rehabilitation and periodic maintenance projects.These measures include control
of soil erosion through construction of gabions, tree planting, covering and enhancing borrow pits to provide water catchment areas
for use by local residents.
During the year the Board planted trees in Kisumu and Garissa Counties. To ensure survival of the trees, the Board partnered
with primary and secondary schools. The Board catered for the tree planting while the schools were to ensure that watering and
maintenance is done. The trees were purchased from the local community. The Board achieved a score of 110% in FY2013/14
performance contract on its planned efforts towards environmental sustainability.
Corporate Social Responsibility and Investment
The Board continued to invest in the communities in which its operates through various corporate social responsibility initiatives,
which include;
Standard Chartered Marathon
During the year, KRB staff and families participated in the Standard Chartered Marathon. The theme of the Marathon was Run for
a Reason, which seeks to raise funds to help needy children. The number of participants this year increased as more staff and their
family members enrolled for the event. The Boards contribution towards the noble event was KShs 0.27 million.
To ensure sustainability, the annual Standard Chartered Marathon now forms an important part of the Boards calendar as the Board
shares vision with needy and disadvantaged persons.
Road Safety Activities
The Board recognizes that 80% of all road traffic crashes were attributable to human error and therefore a need for behavior change
to reduce needless deaths and injuries on the roads.
KRB held its fifth road safety awareness campaign for Boda boda operators in Busia County. The objective of the awareness
workshop was mainly to influence behavior change and thereby reduce accidents caused by the operators. In its continued support
to the Sector, KRB issued reflective jackets, helmets and first aid kits and was confident that at least some lives may be saved as a
result of the training. The Busia County Government officials noted that they had included construction of motor cycle lanes in the
new road works contracts.
Kenya Roads Board

The Board funded through KeNHA the construction of foot bridges at Bellevue and General Motors along Mombasa Road. The
Board also funded the National Transport Safety Authority activities to the tune of Kshs 50Million.
Research and Development
The Board has set an inter agency Research and Development Committee to explore the innovative technology in road design,
construction and maintenance. The committee has requested for proposals from the universities on researches that among others
on construction of low volume cost roads.
It is also noted that gravel in Kenya is diminishing at a very high rate; the committee is also tasked with the responsibility of research
on alternative materials for road construction and maintenance. Over the years, the Board in Consultation with the Minister set
aside funds for research and development.
Roads 2000 (R2000) Strategy
The R2000 Strategy is a method of road development and management that ensures optimum utilization and development of
locally available resources, where technically and economically feasible. The strategy focuses on the optimum use of labor and local
resources with the support of appropriate tools and equipment.
The use of this strategy provides employment to the local community and saves on foreign exchange substantially. This guarantees
sustainable community investment and creation of wealth among the increasing youth population in the country.
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Kenya Roads Board

Four // Financial Review

Kenya Roads Board Fund Financial Statements
Kenya Roads Board Financial Statements

KENYA ROADS BOARD FUND

FINANCIAL STATEMENTS
FOR THE YEAR ENDED
30TH JUNE 2014
Prepared in accordance with the Accrual Basis of Accounting Method under the International
Public Sector Accounting Standards (IPSAS)
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44

Report of the Directors

For the year ended 30th June 2014
The Directors have the pleasure of presenting their report together with the Kenya Roads Board Fund audited financial statements
for the year ended 30th June 2014 which show the state of the Fund affairs.
Principal Activities
The Board is primarily engaged in management of the Kenya Roads Board Fund together with other mandates specified in the Kenya
Roads Board Act, 1999.
Results
The results for the year ended 30th June 2014 are set out on page 43 to 65.
Directors
The Board of Directors who held office during the year are shown on pages 11 to 12.
In accordance with Section 7(4) of the Kenya Roads Board Act, 1999 the Chairman and members of the Board, other than the exofficial members shall hold office for a period of three years from the date of appointment, but shall be eligible for re-appointment for one
further term of a period not exceeding three years. The appointment and vacation of office of any member of the Board shall be in
accordance with Section 2 of the Second Schedule to the Kenya Roads Board Act, 1999.
Financial Statements
At the date of this report, the Board was not aware of any circumstances which would have rendered the values attributed to the
assets in the financial statements misleading.
Auditors
The Auditor General is responsible for the statutory audit of the Boards books of account in accordance with Sections 14 and 39
(i) of Chapter 12 of the Laws of Kenya, Public Audit Act, 2003.
BY ORDER OF THE BOARD
ENG. JACOB Z. RUWA

SECRETARY TO THE BOARD
Nairobi
29th October 2014

Statement of the Boards Responsibilities

The Kenya Roads Board Act, 1999 requires the Board to prepare financial statements of each financial year which give a true and
fair view of the state of affairs of the Kenya Roads Board as at the end of the financial year and of the Boards operating results
for that year. It also requires the Board to ensure that the Kenya Roads Board keeps proper accounting records which disclose
with reasonable accuracy at any time the financial position of the Board and to ensure that the financial statements comply with
the enabling Act. They are also responsible for safeguarding the assets of the Kenya Roads Board and taking reasonable steps for
prevention and detection of fraud and other irregularities.
The Board accepts responsibility for the financial statements which have been prepared using appropriate accounting policies
supported by reasonable and prudent judgments and estimates, in conformity with International Public Sector Accounting Standards
and the requirements of the Kenya Roads Board Act. The Board is of the opinion that the financial statements give a true and fair
view of the state of affairs of the Kenya Roads Board and of its financial performance. The Board further accepts responsibility for
the maintenance of accounting records which may be relied upon in the preparation of the financial statements, as well as designing,
implementing and maintaining internal controls relevant to the preparation and fair presentation of the financial statements that are
free from material misstatements.
The Board is required to prepare the financial statements on a going concern basis unless it is determined that after the reporting
period, the Board intends to liquidate or cease it activities, or that it has no realistic alternative but to do so.
Nothing has come to the attention of the Board to indicate that the Kenya Roads Board will not remain a going concern for at least
the next twelve months from the date of this statement.
Approved by the Board and signed on its behalf by:-
ENG. JOEL WANYOIKE

CHAIRMAN

30th October 2014
ENG. JACOB Z. RUWA

EXECUTIVE DIRECTOR
29th October 2014
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Report of the Independent Auditors
KENYA NATIONAL AUDIT OFFICE

REPORT OF THE AUDITOR-GENERAL ON KENYA ROADS BOARD FUND
FOR THE YEAR ENDED 30TH JUNE 2014
Report on the Financial Statements
I have audited the accompanying financial statements of Kenya Roads Board Fund set out on pages 47 to 65 which comprise the
statement of financial position as at June 30, 2014, and the statement of financial performance, statement of changes in net assets
and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory
information, in accordance with the provisions of Article 229 of the Constitution of Kenya and Section 14 of the Public Audit Act,
2003. I have obtained all the information and explanations which, to the best of my knowledge and belief, were necessary for the
purpose of the audit.
Boards Responsibility for the Financial Statements
The Board of Kenya Roads Board is responsible for the preparation and fair presentation of these financial statements in accordance
with the International Public Sector Accounting Standards and for such internal controls as the Board determines is necessary to
enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
The Board is also responsible for the submission of the financial statements to the Auditor-General in accordance with the provisions
of Section 13 of the Public Audit Act, 2003.
Auditor-Generals Responsibility
My responsibility is to express an independent opinion on the financial statements based on the audit and report in accordance
with the provisions of Section 15(2) of the Public Audit Act, 2003 and submit the audit report in compliance with Article 229 (7)
of the Constitution of Kenya. The audit was conducted in accordance with the International Standards on Auditing. Those standards
require compliance with ethical requirements and that the audit be planned and performed to obtain reasonable assurance about
whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.
The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the
financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant
to the entitys preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Boards internal controls. An audit
also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by
the Board, as well as evaluating the overall presentation of the financial statements.
I believe that the audit evidence obtained is sufficient and appropriate to provide a basis for my audit opinion.
Opinion
In my opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as at 30 June 2014, and
of its financial performance and its cash flows for the year then ended in accordance with the International Public Sector Accounting
Standards and comply with the Kenya Roads Board Act, Cap 408 of the Laws of Kenya.
Edward R. O. Ouko, CBS

AUDITOR-GENERAL
Nairobi
27 November 2014

47


Note
2013/2014 2012/2013
KShs 000
KShs 000
Receipts
6 28,006,693 24,929,393

Disbursements
8 (25,174,473) (24,370,450)

Fund Balance

2,832,220
558,943

Interest Income
7
314,887
340,382

Net Assets Available for Distribution
11
3,147,107
899,325
The notes on pages 52 to 65 form an integral part of these financial statements.
48


As at 30th June 2014
2013/2014
ASSETS
Note
KShs 000
2012/2013
KShs 000
Current Assets

Cash and Cash Equivalents
9
3,866,034
2,655,295
Total Assets
3,866,034
2,655,295

LIABILITIES

Current Liabilities
Payables
10 718,927 1,755,970
Total Liabilities
718,927
1,755,970

TOTAL NET ASSETS
3,147,107
899,325
REPRESENTED BY:
Net Assets
Net Assets Available for Distribution
11
3,147,107
899,325

TOTAL NET ASSETS
3,147,107
899,325

The financial statements on pages 43 to 65 were approved and authorized by the Board of Directors and signed on its behalf by:
ENG. JOEL M. WANYOIKE

CHAIRMAN
30th October 2014
ENG. JACOB Z. RUWA

EXECUTIVE DIRECTOR
29th October 2014

49


2013/2014 2012/2013

Note
KShs 000
KShs 000
Net Assets, as at 1st July
11
899,325
970,528
Collections in the year:

Road Maintenance Levy
27,881,797
24,814,043
Agricultural Cess
124,896
115,350
Interest Income
314,887
340,382
29,220,905
26,240,303
Funds available
Releases to the Road Agencies
Net Assets, as at 30th June
8
11
(26,073,798)
3,147,107
(25,340,978)
899,325
50



2013/2014
2012/2013

Note
KShs 000
KShs 000

Cash Flows from Operating Activities

Cash from/(applied to) operations
12
1,795,177
(1,733,843)
Disbursements of prior year funds
(899,325)
(970,528)
Net cash applied to operating activities

895,852
(2,704,371)

Cash Flows from Investing Activities

Interest received
7 314,887 340,382
Net cash generated from investing activities

314,887
340,382

Net Increase/(Decrease) In Cash and Cash Equivalents
1,210,739
(2,363,989)

Movement in Cash and Cash Equivalents:
At the beginning of the year
2,655,295
5,019,284
Net increase\ (decrease) in cash and cash equivalents
1,210,739
(2,363,989)
At the end of the year
9(b)
3,866,034
2,655,295

51
Statement of Comparison of Budget and Actual Amounts

BUDGET
ACTUAL
VARIANCE VARIANCE
2013/14 2013/14
KShs000
KShs000
KShs000
%
Receipts
25,174,473
27,881,797
2,707,324
11%
Agricultural Cess
124,896
124,896
100%
Interest Income
314,887
314,887
100%
Total Receipts
25,174,473
28,321,580
3,147,107
13%
Disbursements
(25,174,473)
(25,174,473)
Net Assets
3,147,107
3,147,107
52


1.0 Standards and Interpretations Affecting the Reported Results or Financial Position
(a) Adoption of New and Revised International Public Sector Accounting Standards (IPSASs)
(i) New Standards and Interpretations In Issue But Not Yet Effective in Year Ended 30th June 2014
(a)
New Standards
Effective for Annual

periods Beginning on
or after
IPSAS 32 Service Concession Arrangements: Grantor.
1st January, 2014
The Standard prescribes disclosure requirements for service concession arrangements by

the grantor, a public sector entity. The Standard will not impact on the accounting policy
and financial position of the Fund.
(ii) Proposed Amendments to IPSASs as per Exposure Draft 55
The International Public Sector Accounting Standards Board (IPSASB) has released an exposure draft of proposed improvements
to International Public Sector Accounting Standards (IPSASs).
The proposals incorporate relevant amendments made by the International Accounting Standards Board (IASB) in the 20092011 and 2010-2012 cycles of annual improvements, and the changes made by Clarification of Acceptable Methods of
Depreciation and Amortization (Amendments to IAS 16 and IAS 38).
The proposals are contained in IPSASB Exposure Draft 55 Improvements to IPSASs 2014 and would see amendments made
to four IPSASs:
(a) IPSAS 1, Presentation of Financial Statements - clarification of comparative information requirements;
(b) IPSAS 17, Property, Plant and Equipment - classification of servicing equipment, clarification of the revaluation methodology,
acceptable methods of depreciating assets;
(c) IPSAS 28, Financial Instruments: Presentation - tax effects of distributions to holders of equity instruments;
(d) IPSAS 31, Intangible Assets - clarification of the revaluation methodology, clarification of acceptable methods of amortizing
assets.
The exposure draft contains an appendix which outlines all of the items the IPSASB considered including in the document, and
the rationale as to why changes equivalent to those made by the IASB in recent narrow scope amendment projects have not
been proposed by the IPSASB. Reasons include where:
(a) IASB amendments relate to IFRSs without an equivalent IPSAS, e.g. first-time adoption, business combinations , sharebased payments and interim financial reporting (in some cases, the IPSASB has projects underway in these topic areas);
(b) The existing IPSAS is not fully converged with IFRSs, e.g. borrowing costs, related parties, employee benefits, segment
reporting, financial instruments;
(c) Minor amendments are not considered relevant.
The exposure draft does not indicate a proposed effective date for the amendments if they are finalized. The comment period
on the exposure draft closes on 30th September 2014.

Notes to the Financial Statements (Continued)

2.0 Summary Significant Accounting Policies
The principle accounting policies adopted in the preparation of these financial statements are set out below. These policies
have been consistently applied to all years presented, unless otherwise stated.
(a) Statement of Compliance
The financial statements for the year ended 30th June 2014 have been prepared in accordance with and comply with
International Public Sector Accounting Standards (IPSAS) as issued by International Public Sector Accounting Standards Board
(IPSASB), the Public Financial Management Act, 2012, Public Audit Act, 2003 and Kenya Roads Board Act.
For the Public Financial Management Act, 2012, Public Audit Act, 2003 and Kenya Roads Board Act reporting purposes, in these
financial statements the balance sheet/ statement of assets and liabilities is represented by/equivalent to the statement of
financial position and the profit and loss account/ statement of income and expenditure is presented in the statement of
financial performance.
(b) Basis of Preparation
The financial statements have been prepared under the historical cost convention, unless otherwise stated. The financial
statements are presented in the functional currency, Kenya Shillings (Kshs.), and all values are rounded to the nearest thousands
(Kshs.000) except when otherwise indicated.
(c) Presentation of Financial Statements
The financial statements comprise of statement of financial performance, statement of financial position, statement of changes
in net assets/equity and the statement of cashflows and the notes to the financial statements.
The Board classifies its expenditure by the nature of expense methodology.
The disclosure on risks are presented in the financial risk management objectives and policies contained in note 5.
The statement of cash flows shows the changes in cash and cash equivalents arising during the period from operating, investing
and financing activities.
Starting 1st July 2010, Kenya Roads Board adopted the IPSAS 1 on Presentation of Financial Statements. In previous years the
financial statements were prepared in accordance with the International Financial Reporting Standards (IFRSs).The change was
necessitated by the reporting standards on public entities which are not Government Business Entities (GBE) as defined and
required by IPSAS 1-Presentation of Financial Statements which states that the scope of application is for all public sector
entities other than Government Business Enterprises.
The requirement by the Auditor General to present separate financial statements for the Kenya Roads Board Fund has led to
reclassification of assets and liabilities including prior year.
(d) Budget Information

International Public Sector Reporting Standards allow for non-disclosure where (a) an entity is not required to disclose its
budget information publicly and (b) the entity has elected not to present its approved budget publicly.
The Board has attached a Statement of Comparison of Budget and Actual amounts. It is observed that the Approved KRB
Budget amounts for the year have not been exceeded.
53

54

(e) Functional Currencies

(i) Functional and Presentation Currency
The financial statements are presented in the functional currency, Kenya Shillings (Kshs.), which is the Boards presentational
currency. The financial information is rounded to the nearest thousands (Kshs.000) except when otherwise indicated.

(ii) Transactions and Balances

a) Translation of Foreign Currencies
Transactions in foreign currencies during the year are converted into the functional currency using the prevailing exchange
rates ruling at the dates of the transactions. Assets and liabilities denominated in foreign currencies have been translated at the
mean rates of exchange ruling at the end of the reporting period.
The foreign currency exchange gains and losses resulting from the settlement of such transactions and from the translation
at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized through the
statement of financial performance in the year in which they arise.
b) Translation of Foreign Operations
The Board does not have any foreign operations.
(f) Revenue Recognition

Revenue comprises the fair value of the consideration received or receivable in the ordinary course of business. Revenue
earned by the Board is from non-exchange transactions. Revenue mainly comprises of levies whose use is limited by law, the
Kenya Roads Board Act, 1999.
The Board recognizes revenue when the amount of revenue can be reliably measured and it is probable that future economic
benefits will flow to the Board. The revenue for the Board comprises of :
(i) Road Maintenance Levy Fund

In accordance with the Kenya Roads Board Act, revenue comprises all proceeds from the Road Maintenance Levy Fund, such
moneys, sums or assets that may accrue to the Board, or may be payable to the Board. The revenue is for specified purposes
including maintenance, rehabilitation and development of the road network in Kenya.
Proceeds from the Road Maintenance Levy Fund comprises of collections from the Road Maintenance Levy and Transit Toll
and any interest that may accrue from the fund. Fuel levy is charged at the rate KShs 9 per litre of petrol and diesel imported
in the country. Transit Toll is charged on foreign registered commercial trucks exceeding two (2) tonnes that ply the roads in
Kenya and varies based on distance covered and the country of origin of the truck.
Proceeds from the Road Maintenance Levy Fund are generally recognized in the Statement of Financial Performance on
accrual basis.
(ii) Agricultural Cess

The Agricultural Act provides that 80% of all monies collected as cess in respect of tea and coffee shall be transmitted to Kenya
Roads Board Fund for purposes for which the Board was established.
Revenue is recognized in the Statement of Financial Performance on accrual basis.



(iii) Transfers and other income

The Kenya Roads Board Act provides that the Board may receive all monies from any other source provided for or donated
or lent to the Board. Such monies are recognized as they accrue in the period in which the transfer becomes binding at fair
value, in the Statement of Financial Performance, unless the collectability is in doubt. The fair values can be determined by
reference to the market rate.
Where a transfer is subject to conditions that if unfulfilled require a return of the transferred resources they shall be recognized
as a liability until the condition is fulfilled.
(g) Interest Income and Expense

Interest income and expense, including interest income from non-derivative financial assets are recognized at fair value through
the Statement of Financial Performance using the effective interest method. Interest income is accrued on a time basis and is
calculated on call deposits held with approved banking institutions.
(h) Cash and Cash Equivalents
For purposes of the cash flow statement, cash and cash equivalents comprise of cash and cash balances held at the bank with
less than three months maturity from the statement of financial position date. These include notes and coins on hand and
deposits held at call with banks.
(i) Receivables
Receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.
They arise when the Board provides money or services directly to a debtor with no intention of trading the receivable.
Receivables mainly arise from non exchange transactions which accrue in the ordinary course of business and there is no
intention of trading the receivable.
Receivables are recognized initially at the fair value (transaction price/carrying value less any discounts). They are subsequently
measured at amortized costs using the effective interest method less provision for impairment.
A provision for impairment of receivables is made when there is objective evidence that the Board will not be able to collect
all amounts due according to the original terms of receivables.
The carrying value less discounts and any impairment provision of impairment is assumed to approximate their fair values.
For financial instruments such as short term receivables, no disclosure of fair value is required when the carrying amount is a
reasonable approximation of fair value.
Receivables are classified as current assets if payment is due within one year or less (or in the normal operating cycle of
business, if longer). If not, they are presented as non-current assets.
(j) Impairment of Non-Financial Assets
At each reporting period end, based on internal and external sources, the Board reviews the carrying amounts of its tangible
and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such
indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss.
Where it is not possible to estimate the recoverable amount of an individual asset, the Board estimates the recoverable value
of the asset.
55
56


Impairment losses are recognized as an expense in the Statement of Financial Performance whenever the carrying amount of
an asset exceeds its recoverable amount. Where an impairment loss subsequently reverses, the carrying amount of the asset
is increased to the revised estimate of its recoverable amount. A reversal of impairment loss is limited to the assets carrying
amount that would have been determined had no impairment loss been recognized in prior years. A reversal of an impairment
loss is credited to the Statement of Financial Performance in the year reversals are recognized.
(k) Provisions
Provisions are recognized when the Board has a present obligation (legal or constructive) as a result of a past event, it is
probable that the Board will be required to settle the obligation, and a reliable estimate can be made of the amount of
obligation.
The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the
reporting period end, taking into account the risks and uncertainties surrounding the obligation.
(l) Payables
Payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers.
Payables also include payments in respect of social benefits where formal agreements for specific amounts exist. The Board
allocates funds to the Road Agencies in accordance with the allocation criteria set out in the Kenya Roads Board Act, 1999.The
amounts allocated are referred to as disbursements and are released to compliant Road Agencies. Any amounts not released
at any time are referred as payables to Road Agencies.
Payables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method.
The historical cost carrying amount of payables subject to the normal credit terms usually approximates fair value.
Payables are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of business
if longer). If not, they are presented as non-current liabilities.
(m) Guarantees, Acceptances and Letters of Credit
Guarantees are accounted for as off statement of financial position transactions and disclosed as contingent liabilities.
(n) Subsequent Events
There have been no subsequent events that would have an impact on the financial statements for the year ended 30th June
2014.
(o) Comparatives
Except otherwise required, all amounts are reported or disclosed with comparative information. Where necessary, comparative
figures have been adjusted to conform with changes in presentation in the current year.


3.0 Critical Accounting Estimates, Judgements And Assumptions
In the process of applying the Boards accounting policies, the directors have made estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Estimates and judgments are
continually evaluated and are based on historical experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances. Although these estimates are based on the directors knowledge of current
events and actions, actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized
in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future
periods if the revision affects both current and future periods.

(a) Critical Judgments in Applying the Boards Accounting Policies

In the process of applying the Boards accounting policies, judgments have been made in determining: Whether the assets are impaired;
The classification of financial assets;
The going concern.
(b) Critical Accounting Estimates and Assumptions

The key areas of judgments and sources of uncertainty in estimation are as set out below:
(i) Contingent Liabilities

As disclosed in these financial statements, the Board is exposed to various contingent liabilities in the normal course of
business.
The directors evaluate the status of these exposures on a regular basis to assess the probability of the Board incurring related
liabilities. However, provisions are only made in the financial statements where, based on the directors evaluation, a present
obligation has been established.
(ii) Provision for Doubtful Debts

The Board reviews its travel advances portfolio to assess the likelihood of impairment. Provision for impairment of receivables
is established when there is objective evidence that the Board will not be able to collect all amounts due. Where necessary,
an estimation of the amounts irrecoverable is made in that year. Provision for impairment shall be recognized upon approval
by the Board of Directors.
(iii) Other Provisions

Other provisions are recognized when the Board has legal or constructive obligation as a result of past events, for which it is
probable that an outflow of economic benefits will be required to settle the obligation, and a reliable estimate can be made
of the amount of the obligation.
(iv) Impairment Losses

At each reporting period end, the Board reviews the carrying amounts of its tangible and intangible assets to determine
whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent of the impairment loss.
Where it is not possible to estimate the recoverable amount of an individual asset, the Board estimates the recoverable
value of the asset. Any impairment losses are recognized as an expense immediately. Where an impairment loss subsequently
reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount. A reversal of an
impairment loss is recognized as income immediately.
57
58


4.0 Segment Reporting
The Board does not have any branches/reporting segments. All the operations of the Board are managed from the registered
office. The core business of the Kenya Roads Board continues to be management of the Kenya Roads Board Fund together
with other mandates as stipulated in the Kenya Roads Board Act.
There is no distinguished component of the Board that is engaged in providing an individual service that is subject to risks and
returns that are different from the main mandates of the Board.
5.0 Financial Risk Management Objectives and Policies
The Board has initiated and facilitated the process that will see the enhancement of risk management. The Board has an
integrated risk management framework/strategy. The Boards approach to risk management is based on risk governance
structures, risk management policies, risk identification, measurement, monitoring and reporting. The risk management policies
and systems are reviewed regularly to ensure they are in tandem with the micro and macro environment, regulatory guidelines,
industry practice, market conditions as well as the services offered.
The Board recognizes the critical role the risk management will continue to play in its endeavor to carry out its business
in a dynamic environment. The Board is committed to ensure that corporate governance and risk management are deeply
entrenched in the Boards strategy and culture. An elaborate risk management strategy that will provide direction on matters
of policy and guide the implementation and control has been developed.
This risk management framework captures the following among other things: The Boards risk appetite and parameters;
The Boards risk matrix that highlights the rating of risks;
The structure of managing risks and accountabilities;
The processes, procedures and reports that manage risks;
The mitigating factors, prevention, contingency plans and controls.
The Boards core business involves major engagements with financial transactions and processes which pose certain risks.Three
types of risks are reported as part of the risk profile namely operational, strategic and business continuity risks.
(i) Operational risks are events, hazards, variances or opportunities which could influence the achievement of the Boards
compliance and operational objectives.
(ii) Strategic risk is a significant unexpected or unpredictable change or outcome beyond what was factored into the
organizations strategy and business model which could have an impact on the entitys performance.
(iii) Business continuity risks are those events, hazards, variances and opportunities which could influence the continuity of the
entity.
One of the key risks for the Board has identified in both the operational and strategic areas is the sustainability of the Road
Maintenance Levy in the provisions of the Constitution. Financial risk as defined in IPSAS 15 and the management thereof, form
part of this risk area.
The Members of the Board have the overall responsibility for the establishment and oversight of the Boards risk management
framework. The Board has delegated its risk management to the Audit and Risk Committee. One of the responsibilities of this
committee is to review risk management strategies in order to ensure business continuity and survival. Most of the financial
risks arising from financial transactions and processes are managed by the Finance and Planning Committee of the Board.
The Boards exposure to risks, its objectives, policies and processes for managing the risk and the methods used to measure
it have been consistently applied in the years presented, unless otherwise stated. The Board aims therefore to achieve an
appropriate balance between the risk and return and minimize potential adverse effects on its financial performance.
The financial management objectives and policies are as outlined below:-


a) Liquidity Risk
Liquidity risk is the risk that the Board will not have sufficient financial resources to meet its obligations when they fall due or
will have to do so at excessive costs. This risk can arise from mismatches in the timing of cash flows from revenue and capital/
operational outflows, assets and liabilities according to their maturity profiles and can occur where cash flow streams have been
discontinued, etc. Funding risk arises when the necessary liquidity to fund illiquid asset positions cannot be met at expected
terms and when required.
The objective of the liquidity and funding management is to ensure that all foreseeable operational, capital and loan commitment
expenditure can be met under both normal and stressed conditions and the mismatch is controlled in line with allowable risk
levels.
The Board has adopted an overall balance sheet approach which consolidates all sources and uses of liquidity, while aiming to
maintain a balance between liquidity, cash flows and interest rate considerations. The Boards liquidity and funding management
process includes: Projecting cash flows and considering the cash required and optimizing the short term requirements as well as the long
term funding,
Maintaining balance sheet liquidity ratios,
Maintaining/soliciting for a diverse range of funding sources with adequate back up facilities,
Managing the concentration and profile of debt maturities, where applicable,
Maintaining liquidity and funding contingency plans.
The table shows the undiscounted cash flows on the Boards financial assets and liabilities on the earliest possible contractual/
maturity date. The liquidity ratio in FY 2013/14 is 5.4 (FY 2012/13: 1.51)

Note
2013/14 2012/13
Financial Assets
KShs 000
KShs 000
Cash & Cash Equivalents
9
Total Financial Assets
3,866,034
3,866,034
2,655,295
2,655,295
Financial Liabilities
Payables
10
Total Financial Liabilities
NET LIQUIDITY
LIQUIDITY RATIO
718,927 1,755,970
718,927
1,755,970
3,147,107
899,325
5.4
1.51
The Board has an established corporate governance structure and process of managing risks regarding guarantees and
contingent liabilities. All guarantees issued are approved by the Members of the Board and are administratively managed by
the finance department.
The primary sources of revenue for the Board are receipts from the Kenya Roads Board Fund, mainly receipts from fuel levy
fund. The Board is pursuing additional sources of revenue for which approval has been sought from Ministries of Finance and
Roads.
59

60

b) Market Risk
Market risk is the risk that the fair value of future cash flows of financial instruments will fluctuate because of changes in
foreign exchange rates, prices and interest rates. The objective of market risk management policy is to protect and enhance
the Statements of Financial Position and performance by managing and controlling market risk exposures within acceptable
parameters, and to optimize the funding of business operations and facilitate capital expansion. The Board is exposed to the
following market risks:
(i) Currency Risk

The currency risk is minimal as most of cash and cash equivalents held with banks are dominated in Kenya Shillings.
(ii) Price Risk

The Board collects Kshs. 9 per litre of diesel and petrol imported into the country. The Board is exposed to the extent that
the levy on diesel and petrol is reduced or eliminated due to changes in the international fuel prices, inflation or other macro
indicators.
The Road Maintenance Levy is backed up by an Act of Parliament and changes thereof require approval by Parliament.
(iii) Interest Rate Risk

The Boards financial condition may be adversely affected as a result of changes in interest rate levels. The interest rate risk is
minimal as the Board does not have any borrowings.
c) Operational Risk
Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the Boards processes,
personnel, technology and infrastructure and from external factors other than credit, market and liquidity risks such as legal and
regulatory requirements and generally acceptable standards of corporate behavior.
The Board seeks to ensure that key operational risks are managed in a timely and effective manner through a framework of
policies, procedures and tools to identify, assess, monitor and report such risks.
The Boards objective is to manage operational risk so as to balance the avoidance of financial losses and damage to the Boards
reputation with overall cost effectiveness and to avoid control procedures that restrict initiative and creativity.
The primary responsibility for the development and implementation of controls to address operational risk is assigned to senior
management. The responsibility is supported by the development of overall standards for the management of operational risk
in the following areas: Requirements for appropriate segregation of duties, including the independent authorization of transactions;
Requirements for the reconciliation and monitoring of financial transactions;
Compliance with regulatory and legal requirements;
Documentation of controls and procedures;
Requirements for the yearly assessment of operational risks faced and the adequacy of controls and procedures to address
the risks identified;
Requirement for the reporting of operational losses and proposed remedial action;
Development of Business Contingency Plans;
Training and professional development;
Ethical and business standards; and
Risk mitigation, including insurance where it is effective.


Operational risks are documented in the Framework for Management Control and are managed by the Internal Audit function
established to spearhead and coordinate risk management activities.The measures taken include proactively identifying, analyzing
and mitigating risks in all facets of the business.
d) Compliance and Regulatory Risk
Compliance and regulatory risk includes the risk of non-compliance with regulatory requirements. The Board has complied
with all externally imposed requirements throughout the year.
e) Legal Risk
Legal risks is the risk of unexpected loss, including reputational loss, arising from defective transactions or contracts, claims being
made or some other event resulting in a liability or the loss for the Board, failure to protect the title to and inability to control
the rights to assets of the Board (including intellectual property right), changes in law, or jurisdictional risk.
The Board manages legal risk through the legal function, legal risk policies and procedures and the effective use of internal
controls and external lawyers.
6.0 Receipts

2013/14 2012/13
KShs 000
KShs 000

Agricultural Cess
27,881,797
124,896
24,814,043
115,350
Total Operating Revenue
28,006,693
24,929,393
Revenue mainly represents receipts of Road Maintenance Levy from the Kenya Revenue Authority.
The Board did not receive any transfers of any form, (including assets, gifts, donations, goods and service-in-kind, advance
receipts, pledges, expenses paid on behalf and concessionary loans) from national and local government, public entities, Donor
& International development agencies.
7.0 Interest Income

2013/14 2012/13

KShs 000
KShs 000

Interest Income
314,887
340,382
Total Interest Income
314,887
340,382
These represent interest, net of withholding tax, earned on placement of funds on call deposits with approved banking
institutions.
61
62


8.0 Disbursements and Releases of Funds
The Board allocates funds to the Road Agencies in accordance with the allocation criteria set out in the Kenya Roads Board
Act, 1999 as shown below:
Road Agency:
Kenya Roads Board
Kenya Rural Roads Authority
Kenya Urban Roads Authority
Kenya Wildlife Service
Allocation by Kenya Roads Board/Ministry
Total
Particulars/ Class of Roads

Operations
A, B, C Roads
Constituency/Rural Roads
Constituency Link Roads
Urban Roads
Park Roads
Development of roads
Allocation
2%
40%
22%
10%
15%
1%
10%
100%
The Board disbursed funds as follows during the year:

Agency
2013/14 2012/13
KShs 000
KShs 000
Kenya Roads Board

Kenya Urban Roads Authority
Kenya Wildlife Service
Allocation by Kenya Roads Board/Ministry
503,489
10,330,789
7,911,831
3,708,672
247,245
2,472,447
485,609
9,944,180
7,731,744
3,582,067
238,805
2,388,045
Total Disbursements
Add: Releases of Prior year funds
25,174,473 24,370,450
899,325
970,528
Total Fund Released in the Year
26,073,798
25,340,978
9.0 Cash and Cash Equivalents

(a) Analysis of Bank and Cash Balances:
These represent cash held at various banks, as follows:

2013/14 2012/13
KShs 000
KShs 000
Amounts held in local currency

Amounts held in foreign currency
3,741,137
124,897
2,539,945
115,350
Total
3,866,034 2,655,295
The Board is not exposed to credit risk on cash and bank balances as the funds are held with sound financial institutions
approved by Central Bank of Kenya.

63

(b) Cash and cash equivalents
For the purposes of the cash flow statement, cash and cash equivalents comprise balances with less than three months
maturity from the date of acquisition, including cash in hand, deposits held at call with banks and other short term highly liquid
investments with original maturities of three months.
Analysis of cash and cash equivalents is as set out below:

2013/14 2012/13

Bank and Cash Balances
KShs 000
3,866,034
KShs 000
2,655,295
10.0 Payables
These represent funds due to the Road Agencies, but not released as at 30th June 2014, as follows:-

2013/14 2012/13
KShs 000
KShs 000
Road Agency Funds Payable
718,927
1,755,970
11.0 Net Assets Available for Distribution

These represent amounts received over and above the approved budget for the year, as follows:

2013/14 2012/13

KShs 000
KShs 000
Interest Income
Agricultural Cess
2,707,324 718,601
314,887
155,374
124,896
25,350
Total Net Assets
3,147,107
899,325
The funds are allocated to the Road Agencies in the subsequent year in accordance with the Kenya Roads Board Act, 1999.

64

12.0 Cash Generated from Operations
Reconciliation of Net Cash Flows from Operating Activities to Surplus for the year:

2013/14 2012/13
Note
KShs 000
KShs 000

Net assets available for distribution
11
3,147,107
899,325

Adjustments for:
Interest income
7
(314,887)
(340,382)
Operating income before working capital changes
2,832,220
Changes in working capital balances:
Decrease in agencies payable
(1,037,043)
(2,292,786)
Net cash flows from/(applied to) operating activities
(1,733,843)
(1,795,177)
558,943
13.0 Contingent Liabilities

The directors believe, based on the information currently available, that the Board does not have any contingent liabilities which
are likely to have a material effect on the results of the Boards operations, financial position or liquidity. Therefore no provision
has been made in the financial statements.
14.0 Fair Value
The directors consider that there is no material difference between the fair value and carrying value of the Boards financial
assets and liabilities, where fair value details have not been presented.
15.0 Capital Commitments
All capital commitments contracted for and authorized at the reporting period end have been recognized in the financial
statements.
16.0 Post Balance Sheet Events
The Directors are not aware of any matter or circumstances arising since the end of the financial year, not otherwise dealt with
in the financial statements, which would significantly affect the financial position of Kenya Roads Board Fund and results of its
operation as laid out in these financial statements.
17.0 Comparatives
Where necessary, comparative figures have been adjusted to conform to changes in presentation of the Financial Statements
as required by International Public Sector Accounting Standards, and any amendment whenever necessary in the current year.
18.0 Currency
The financial statements are presented in Kenya Shillings (KShs 000).


PROGRESS ON FOLLOW UP OF AUDITORS RECOMENDATIONS
All audit issues raised by the external auditor were resolved and concluded during the audit process. There are no audit issues that
were carried forward.

ENG. JOEL WANYOIKE

DATE: 30th October 2014
CHAIRMAN

ENG. JACOB Z. RUWA
EXECUTIVE DIRECTOR
65
66

Kenya Roads Board

KENYA ROADS BOARD

FINANCIAL STATEMENTS
FOR THE YEAR ENDED
30TH JUNE 2014
Prepared in accordance with the Accrual Basis of Accounting Method under the International
Public Sector Accounting Standards (IPSAS)
67
68
Kenya Roads Board

Report of the Directors

The Directors have the pleasure of presenting their report together with the Kenya Roads Board audited financial statements for
the year ended 30th June 2014 which show the state of the Boards affairs.
Principal Activities
The Board is primarily engaged in management of the Kenya Roads Board Fund together with other mandates specified in the Kenya
Roads Board Act, 1999.
Results
The results for the year ended 30th June 2014 are set out on pages 67 to 93.
Directors
The Board of Directors who held office during the year are shown on pages 11 to 12.
In accordance with Section 7(4) of the Kenya Roads Board Act, 1999 the Chairman and members of the Board, other than the exofficial members shall hold office for a period of three years from the date of appointment, but shall be eligible for re-appointment for one
further term of a period not exceeding three years. The appointment and vacation of office of any member of the Board shall be in
accordance with Section 2 of the Second Schedule to the Kenya Roads Board Act, 1999.
Financial Statements
At the date of this report, the Board was not aware of any circumstances which would have rendered the values attributed to the
assets in the financial statements misleading.
Auditors
The Auditor General is responsible for the statutory audit of the Boards books of account in accordance with Sections 14 and 39
(i) of Chapter 12 of the Laws of Kenya, Public Audit Act, 2003.
BY ORDER OF THE BOARD
ENG. JACOB RUWA

SECRETARY TO THE BOARD
Nairobi
29th October 2014
Kenya Roads Board

Statement of the Boards Responsibilities

The Kenya Roads Board Act, 1999 requires the Board to prepare financial statements of each financial year which give a true and
fair view of the state of affairs of the Kenya Roads Board as at the end of the financial year and of the Boards operating results
for that year. It also requires the Board to ensure that the Kenya Roads Board keeps proper accounting records which disclose
with reasonable accuracy at any time the financial position of the Board and to ensure that the Financial Statements comply with
the enabling Act. They are also responsible for safeguarding the assets of the Kenya Roads Board and taking reasonable steps for
prevention and detection of fraud and other irregularities.
The Board accepts responsibility for the financial statements which have been prepared using appropriate accounting policies
supported by reasonable and prudent judgments and estimates, in conformity with International Public Sector Accounting Standards
and the requirements of the Kenya Roads Board Act. The Board is of the opinion that the financial statements give a true and fair
view of the state of affairs of the Kenya Roads Board and of its financial performance. The Board further accepts responsibility for
the maintenance of accounting records which may be relied upon in the preparation of the financial statements, as well as designing,
implementing and maintaining internal controls relevant to the preparation and fair presentation of the financial statements that are
free from material misstatements.
The Board is required to prepare the financial statements on a going concern basis unless it is determined that after the reporting
period, the Board intends to liquidate or cease it activities, or that it has no realistic alternative but to do so.
Nothing has come to the attention of the Board to indicate that the Kenya Roads Board will not remain a going concern for at least
the next twelve months from the date of this statement.
Approved by the Board and signed on its behalf by:-
ENG. JOEL WANYOIKE

CHAIRMAN
30th October 2014

ENG. JACOB RUWA

EXECUTIVE DIRECTOR
29th October 2014

69
70
Kenya Roads Board

Report of the Independent Auditors
KENYA NATIONAL AUDIT OFFICE

REPORT OF THE AUDITOR-GENERAL ON KENYA ROADS BOARD
FOR THE YEAR ENDED 30 JUNE 2014
Report on the Financial Statements
I have audited the accompanying financial statements of Kenya Roads Board Fund set out on pages 71 to 93 which comprise the
statement of financial position as at June 30, 2014, and the statement of financial performance, statement of changes in net assets
and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory
information, in accordance with the provisions of Article 229 of the Constitution of Kenya and Section 14 of the Public Audit Act,
2003. I have obtained all the information and explanations which, to the best of my knowledge and belief, were necessary for the
purpose of the audit.
Boards Responsibility for the Financial Statements
The Board of Kenya Roads Board is responsible for the preparation and fair presentation of these financial statements in accordance
with the International Public Sector Accounting Standards and for such internal controls as the Board determines is necessary to
enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
The Board is also responsible for the submission of the financial statements to the Auditor-General in accordance with the provisions
of Section 13 of the Public Audit Act, 2003.
Auditor-Generals Responsibility
My responsibility is to express an independent opinion on the financial statements based on the audit and report in accordance
with the provisions of Section 15(2) of the Public Audit Act, 2003 and submit the audit report in compliance with Article 229 (7)
of the Constitution of Kenya. The audit was conducted in accordance with the International Standards on Auditing. Those standards
require compliance with ethical requirements and that the audit be planned and performed to obtain reasonable assurance about
whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.
The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the
financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant
to the entitys preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Boards internal controls. An audit
also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by
the Board, as well as evaluating the overall presentation of the financial statements.
I believe that the audit evidence obtained is sufficient and appropriate to provide a basis for my audit opinion.
Opinion
In my opinion, the financial statements present fairly, in all material respects, the financial position of the Board as at 30 June 2014, and
of its financial performance and its cash flows for the year then ended in accordance with the International Public Sector Accounting
Standards and comply with the Kenya Roads Board Act, Cap 408 of the Laws of Kenya.
Edward R. O. Ouko, CBS

Auditor-General
Nairobi
25 November 2014
Kenya Roads Board


Note

2013/2014
KShs 000
2012/2013
KShs 000
Operating Revenue
6
509,187 582,567

Operating Expenses
Director Costs
7
44,416
49,637

Staff Costs
8
204,080
203,669

Field Activity Costs
9
44,982
38,239

Other Operating Costs
10
209,756
251,755

Corporate Social Responsibility
11
1,789
1,645

Total Operating Expenses

505,023
544,945

Surplus from Operations

4,164
37,622

Gain on Disposal of Property & Equipment
15
7,343
1,069

Net Surplus for the Year
12
11,507
38,691
71
72
Kenya Roads Board


As At 30th June 2014
Note

2013/2014 2012/2013
KShs 000
KShs 000
ASSETS

Current Assets

Cash and Cash equivalents
13
896,425
681,002
Receivables
14
480
1,245
Total Current Assets
896,905
682,247
Non-Current Assets
Property & Equipment
15
55,659
68,057

Total Assets
952,564
750,304

LIABILITIES

Current Liabilities

Payables
16
52,500
45,873

TOTAL NET ASSETS
900,064
704,431
NET ASSETS/EQUITY
Reserves
KRB Staff Fund
KRB Capital Fund
Accumulated Surpluses
17(a)
17(b)
17(c)
TOTAL NET ASSETS/EQUITY
248,683
474,253
177,128
900,064 704,431

The financial statements on pages 67 to 93 were approved by the Board of Directors and signed on its behalf by:
ENG. JOEL M. WANYOIKE

CHAIRMAN
30th October 2014

ENG. JACOB RUWA

EXECUTIVE DIRECTOR
29th October 2014
238,228
300,582
165,621
Kenya Roads Board



Accumulated
Capital Staff Fund
Surpluses
Fund

Note KShs 000 KShs 000 KShs 000
As at 1st, July 2013
Total
KShs 000
165,621
300,582
238,228
704,431
Growth in Staff fund
17(a)
10,455
10,455
Transfer to Capital Fund
17(b)
150,000
150,000
Growth in Capital Fund
17(b)
23,671
23,671
Net Surplus for the year
17(c)
11,507
474,253
248,683
900,064

Accumulated
Capital Staff Fund
Surpluses
Fund

Note KShs 000 KShs 000 KShs 000
Total
As at 30th, June 2014
11,507
177,128
KShs 000
126,930
590,111
220,973
938,014
Growth in Staff fund
17(a)
17,255
17,255
Transfer from Capital Fund
17(b)
(400,000)
(400,000)
Transfer to Capital Fund
17(b)
50,000
50,000
Growth in Capital fund
17(b)
60,471
60,471
Net Surplus for the year
17(c)
38,691
300,582
238,228
704,431
38,691
165,621
73
Kenya Roads Board

74
Statement of CashFlows
Note

2013/2014
KShs 000
2012/2013
KShs 000
Cash Flows from Operating Activities

Cash generated from operations
18
34,899
61,855
Net Cash Generated from Operating Activities
34,899
61,855

Cash Flows from Investing Activities
Interest received
6
5,397
7,637
Purchase of property and equipment
15
(16,357)
(36,330)
Proceeds on disposal of equipment
15
7,343
1,069
Net book value of disposed assets
15
Net Cash (Used in) Investing Activities
(3,602) (27,624)

Cash Flows from Financing Activities
Growth in KRB Staff Fund (Interest)
17(a)
10,455
17,256
Growth in KRB Capital Fund (Interest)
17(b)
23,671
60,471
Increase in KRB Capital Fund (KRBF)
17(b)
150,000
50,000
Transfer to KRB Capital Fund
17(b)
-
(400,000)
Net Cash inflow /(Used in) from Financing Activities
184,126
(272,273)

NET INCREASE /(DECREASE) IN CASH AND CASH EQUIVALENTS
215,423
(238,042)

MOVEMENT IN CASH AND CASH EQUIVALENTS
At the beginning of the year
681,002
919,044
Net increase/decrease in cash and cash equivalents
215,423
(238,042)
At the end of the year
13(b)
896,425
681,002

Kenya Roads Board

Statement of Comparison on Budget and Actual Amounts


Col 1
Col 2
Col 3
Annual
Actual
Forecast
FY 13/14

FY 13/14

(KShs)
(KShs)
Variance:
Actual to
Annual
Forecast
(KShs)
COL 4
% of
Actual to
Annual
Forecast
Income
Fuel Levy Fund
Interest Earned
Sale of Tenders
Gain on Disposal

Total Income
503,489,450
6,000,000
300,000
9,000,000

518,789,450
503,489,450
5,397,478
300,500
7,343,438
-
(602,522)
500
(1,656,562)
100%
90%
100%
82%
516,530,866
(2,258,584)
100%
Directors Costs
Staff Costs
Operating Costs
Audit Fees
Dept. Costs
Corporate Social Responsibility
Depreciation
53,105,240
217,397,090
198,337,120
2,900,000
45,250,000
1,800,000

-
44,416,421
204,079,693
178,115,511
2,900,000
44,981,784
1,790,264
28,740,553
8,688,819
13,317,398
20,221,608
-
268,216
9,736
(28,740,553)
84%
94%
90%
100%
99%
99%
-
Total Expenses
518,789,450
505,024,226
13,765,224
97%
Operations Surplus
11,506,640
11,506,640
75
76
Kenya Roads Board


1.0 Standards and Interpretations Affecting the Reported Results or Financial Position
(a) Adoption of New and Revised International Public Sector Accounting Standards (IPSASs)
(i) New Standards and Interpretations In Issue But Not Yet Effective in Year Ended 30th June 2014
New Standards
IPSAS 32 Service Concession Arrangements: Grantor
(a)
Effective for Annual

periods Beginning on
or after
1st January, 2014
The Standard prescribes disclosure requirements for service concession arrangements by

the grantor, a public sector entity. The Standard will not impact on the accounting policy
and financial position of the Fund.
(ii) Propsed Amendments to IPSASs -as per Exposure Draft 55

The International Public Sector Accounting Standards Board (IPSASB) has released an exposure draft of proposed improvements
to International Public Sector Accounting Standards (IPSASs).
The proposals incorporate relevant amendments made by the International Accounting Standards Board (IASB) in the 20092011 and 2010-2012 cycles of annual improvements, and the changes made by Clarification of Acceptable Methods of
Depreciation and Amortization (Amendments to IAS 16 and IAS 38).
The proposals are contained in IPSASB Exposure Draft 55 Improvements to IPSASs 2014 and would see amendments made
to four IPSASs:(a) IPSAS 1, Presentation of Financial Statements - clarification of comparative information requirements;
(b) IPSAS 17, Property, Plant and Equipment - classification of servicing equipment, clarification of the revaluation methodology,
acceptable methods of depreciating assets;
(c) IPSAS 28, Financial Instruments: Presentation - tax effects of distributions to holders of equity instruments;
(d) IPSAS 31, Intangible Assets - clarification of the revaluation methodology, clarification of acceptable methods of amortising
assets.
The exposure draft contains an appendix which outlines all of the items the IPSASB considered including in the document, and
the rationale as to why changes equivalent to those made by the IASB in recent narrow scope amendment projects have not
been proposed by the IPSASB. Reasons include where:
(a) IASB amendments relate to IFRSs without an equivalent IPSAS, e.g. first-time adoption, business combinations , sharebased payments and interim financial reporting (in some cases, the IPSASB has projects underway in these topic areas);
(b) The existing IPSAS is not fully converged with IFRSs, e.g. borrowing costs, related parties, employee benefits, segment
reporting, financial instruments;
(c) Minor amendments are not considered relevant.
The exposure draft does not indicate a proposed effective date for the amendments if they are finalized. The comment period
on the exposure draft closes on 30th September 2014.
Kenya Roads Board


2.0 Significant Accounting Policies
The principle accounting policies adopted in the preparation of these financial statements are set out below. These policies
have been consistently applied to all years presented, unless otherwise stated.
(a) Statement of Compliance
The financial statements for the year ended 30th June 2014 have been prepared in accordance with and comply with
International Public Sector Accounting Standards (IPSAS) as issued by International Public Sector Accounting Standards Board
(IPSASB), the Public Financial Management Act, 2012, Public Audit Act, 2003 and Kenya Roads Board Act.
For the Public Financial Management Act, 2012, Public Audit Act, 2003 and Kenya Roads Board Act reporting purposes, in these
financial statements the balance sheet/ statement of assets and liabilities is represented by/ equivalent to the statement of
financial position and the profit and loss account/ statement of income and expenditure is presented in the statement of
financial performance.
(b) Basis of Preparation
The financial statements have been prepared under the historical cost convention, unless otherwise stated. The financial
statements are presented in the functional currency, Kenya Shillings (KShs.), and all values are rounded to the nearest thousands
(KShs.000) except when otherwise indicated.
(c) Presentation of Financial Statements
The financial statements comprise of statement of financial performance, statement of financial position, statement of changes
in net assets/equity and the statement of cash flows and the notes to the financial statements.
The Board classifies its expenditure by the nature of expense methodology.
The disclosure on risks are presented in the financial risk management objectives and policies contained in note 5.
The statement of cash flows shows the changes in cash and cash equivalents arising during the period from operating, investing
and financing activities.
Starting 1st July 2010, Kenya Roads Board adopted the IPSAS 1 on Presentation of Financial Statements. In previous years the
financial statements were prepared in accordance with the International Financial Reporting Standards (IFRSs).The change was
necessitated by the reporting standards on public entities which are not Government Business Entities (GBE) as defined and
required by IPSAS 1-Presentation of Financial Statements which states that the scope of application is for all public sector
entities other than Government Business Enterprises.
The requirement by the Auditor General to present separate financial statements for the Kenya Roads Board has led to
reclassification of assets and liabilities including prior year financial statements.

(d) Budget Information
International Public Sector Reporting Standards allow for non-disclosure where (a) an entity is not required to disclose its
budget information publicly and (b) the entity has elected not to present its approved budget publicly.
The Board has attached a Statement of Comparison of Budget and Actual amounts. It is observed that the Approved KRB
Budget amounts for the year have not been exceed.
77
78
Kenya Roads Board


(e) Functional Currencies

(i) Functional and Presentation Currency
The financial statements are presented in the functional currency, Kenya Shillings (KShs.), which is the Boards presentational
currency. The financial information is rounded to the nearest thousands (KShs.000) except when otherwise indicated.
(ii) Transactions and Balances
a) Translation of Foreign Currencies
Transactions in foreign currencies during the year are converted into functional currency using the prevailing exchange
rates ruling at the dates of transactions.
Assets and liabilities denominated in foreign currencies have been translated at the mean rates of exchange ruling at
the end of the reporting period.
The foreign currency exchange gains and losses resulting from the settlement of such transactions and from the
translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are
recognized through the statement of financial performance in the year in which they arise.
b) Translation of Foreign Operations
The Board does not have any foreign operations.
(f) Revenue Recognition
In accordance with the Kenya Roads Board Act, 1999, the Board is allocated 2% of the Road Maintenance Levy Fund (RMLF)
for its operations and is recognized on accrual basis. An inflow of the funds is recognized as revenue and a liability is recognized
in respect of the same inflow upon approval of the disbursements by the Board. Revenue is generally recognized in the
Statement of Financial Performance on accrual basis.
Interest income from all interest bearing financial instruments is recognized in the Statement of Financial Performance on
accrual basis using the effective interest method.
Other incomes are recognized as they accrue unless the collectability is in doubt.
(g) Cash and Cash Equivalents
For purposes of the cash flow statement, cash and cash equivalents comprise of cash and cash balances held at the bank with
less than three months maturity from the statement of financial position date. These include notes and coins on hand and
deposits held at call with banks.
(h) Receivables
Receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.
They arise when the Board provides money or services directly to a debtor with no intention of trading the receivable.
Receivables are amounts due from the Kenya Roads Board Fund which are accrued in the ordinary course of business and
there is no intention of trading the receivable.
Receivables are recognized initially at the fair value (transaction price/ carrying value less any discounts). They are subsequently
measured at amortized costs using the effective interest method less provision for impairment.
A provision for impairment of receivables is made when there is objective evidence that the Board will not be able to collect
all amounts due according to the original terms of receivables.
Kenya Roads Board


The carrying value less discounts and any impairment provision of impairment is assumed to approximate their fair values.
For financial instruments such as short term receivables, no disclosure of fair value is required when the carrying amount is a
reasonable approximation of fair value.
Receivables are classified as current assets if payment is due within one year or less (or in the normal operating cycle of
business, if longer). If not, they are presented as non-current assets.
(i) Inventories
Given the nature of the Boards operations and mandates, items in stock relate to stationery. Stationery costs are recognized
as an expense when deployed for utilization in the ordinary course of the Boards operations.
As at 30th of June 2014, the Board did not have any inventory.
(j) Property and Equipment and Depreciation
All property and equipment are initially stated at cost and thereafter at historical cost less accumulated depreciation and any
accumulated impairment loss. Historical cost comprises expenditure initially incurred to bring the asset to its location and
condition ready for its intended use.
Subsequent costs are included in the assets carrying amount or recognized as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item will flow to the Board and the cost can be reliably measured.
All other repairs and maintenance are charged to the Statement of Financial Performance during the financial year in which
they are incurred.
Depreciation is calculated on straight line basis at annual rates estimated to write down the carrying value of the assets over
their expected useful lives. The annual depreciation rates in use are:Asset
Computer Equipment
Office Equipment
Motor Vehicles
Furniture & Fittings
Annual Rate of Depreciation

33 1/3%
12.5%
25.0%
12.5%
An item of property and equipment is de-recognized upon disposal or when no future economic benefits are expected to
arise from the continued use of the asset. Any gain or losses on de-recognition of the asset is included in the Statement of
Financial Performance in the year the asset is de-recognized.
(k) Payables
Payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers.
Payables also include payments in respect of social benefits where formal agreements for specific amounts exist.
Payables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method.
The historical cost carrying amount of payables subject to the normal credit terms usually approximates fair value.
Payables are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of business
if longer). If not, they are presented as non-current liabilities.
79
80
Kenya Roads Board


(l) Leases
The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement and
requires an assessment of whether the fulfillment of the arrangement is dependent on the use of a specific asset or assets and
the arrangement coveys a right to use the asset.
Leases are classified as finance leases whenever the terms of the lease transfer substantially all risks and rewards of ownership
to the Board as the lessee. All other leases are classified as operating leases.
Where the Board is the lessee, the total payments made under operating leases are charged to the statement of financial
performance on a straight line basis over the period of the lease. When an operating lease is terminated before the expiry
of the lease period, any payment required to be made to the lessor by way of penalty is recognized as expense in the year in
which termination takes place.
Rentals payable under operating leases are amortized on the straight line basis over the term of the relevant lease.
(m) Impairment of Non-financial Assets
At each reporting period end, based on internal and external sources, the Board reviews the carrying amounts of its tangible
and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such
indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss.
Where it is not possible to estimate the recoverable amount of an individual asset, the Board estimates the recoverable value
of the asset.
Any impairment losses are recognized as an expense in the Statement of Financial Performance whenever the carrying amount
of an asset exceeds its recoverable amount. Where an impairment loss subsequently reverses, the carrying amount of the asset
is increased to the revised estimate of its recoverable amount. A reversal of impairment loss is limited to the assets carrying
amount that would have been determined had no impairment loss been recognized in prior years. A reversal of an impairment
loss is credited to the Statement of Financial Performance in the year reversals are recognized.
(n) Provisions
Provisions are recognized when the Board has a present obligation (legal or constructive) as a result of a past event, it is
probable that the Board will be required to settle the obligation, and a reliable estimate can be made of the amount of
obligation.
The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the
reporting period end, taking into account the risks and uncertainties surrounding the obligation.
(o) Retirement Benefit Obligations
The Board operates a defined contribution provident fund for eligible employees. The fund is administered by an independent
administration company and Trustees. It is funded by contributions from both the employer and employees.
The Board and its employees also contribute to the statutory pension scheme, the National Social Security Fund (NSSF).
Contributions are determined by the local statute and are currently limited to KShs. 200 per employee per month. The Board
also sets aside on monthly basis the gratuity for its employees who are on contract basis.
The Boards contributions in respect of staff retirement benefit costs are charged to the statement of financial performance, as
they fall due or in case of service gratuity as they accrue to each employee.
Kenya Roads Board


(p) Guarantees, Acceptances and Letters of Credit
Guarantees are accounted for as off statement of financial position transactions and disclosed as contingent liabilities.
(q) Subsequent Events
There have been no subsequent events that would have an impact on the financial statements for the year ended 30th June
2014.
(r) Comparatives
Except otherwise required, all amounts are reported or disclosed with comparative information. Where necessary, comparative
figures have been adjusted to conform with changes in presentation in the current year.
3.0 Critical Accounting Estimates, Judgements and Assumptions
In the process of applying the Boards accounting policies, the directors have made estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as at the date of the financial
statements, and the reported amounts of revenues and expenses during the reporting period. Estimates and judgments are
continually evaluated and are based on historical experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances. Although these estimates are based on the directors knowledge of current
events and actions, actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized
in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future
periods if the revision affects both current and future periods.
The key areas of judgments and sources of uncertainty in estimation are as set out below:
(a) Critical Judgments in applying the Boards accounting policies
In the process of applying the Boards accounting policies, judgments have been made in determining: Whether the assets are impaired;
The classification of financial assets;
The going concern.
(b) Critical Accounting Estimates and Assumptions
(i) Useful Lives of Property, Plant and Equipment
The directors make estimates in determining the depreciation rates for property and equipment. The rates used are set out in
the accounting policy (j) above for property and equipment.
The Board reviews the estimated useful lives of plant and equipment at the end of each reporting period. During the financial
year, no changes to the useful lives were identified by the directors.
(ii) Contingent Liabilities
As disclosed in these financial statements, the Board is exposed to various contingent liabilities in the normal course of business.
The Directors evaluate the status of these exposures on a regular basis to assess the probability of the Board incurring related
liabilities. However, provisions are only made in the financial statements where, based on the directors evaluation, a present
obligation has been established.
81
82
Kenya Roads Board


(iii) Provision for Doubtful Debts
The organization reviews its travel advances portfolio to assess the likelihood of impairment. Provision for impairment of
receivables is established when there is objective evidence that the Board will not be able to collect all amounts due. Where
necessary, an estimation of the amounts irrecoverable is made in that year. Provision for impairment shall be recognized upon
approval by the Board of Directors.
(iv) Other Provisions
Other provisions are recognized when the Board has legal or constructive obligation as a result of past events, for which it is
probable that an outflow of economic benefits will be required to settle the obligation, and a reliable estimate can be made
of the amount of the obligation.
(v) Impairment Losses
At each reporting period end, the Board reviews the carrying amounts of its tangible and intangible assets to determine
whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent of the impairment loss.
Where it is not possible to estimate the recoverable amount of an individual asset, the Board estimates the recoverable value of
the asset. Any impairment losses are recognized as an expense immediately. Where an impairment loss subsequently reverses,
the carrying amount of the asset is increased to the revised estimate of its recoverable amount. A reversal of an impairment
loss is recognized as income immediately.
4.0 Segment Reporting
The Board does not have any branches/reporting segments. All the operations of the Board are managed from the registered
office. The core business of the Kenya Roads Board continues to be management of the Kenya Roads Board Fund together
with other mandates as stipulated in the Kenya Roads Board Act.
There is no distinguished component of the Board that is engaged in providing an individual service that is subject to risks and
returns that are different from the main mandates of the Board.
5.0 Financial Risk Management Objectives and Policies
The Board has initiated and facilitated the process that will see the enhancement of risk management. The Board has an
integrated risk management framework/strategy. The Boards approach to risk management is based on risk governance
structures, risk management policies, risk identification, measurement, monitoring and reporting. The risk management policies
and systems are reviewed regularly to ensure they are in tandem with the micro and macro environment, regulatory guidelines,
industry practice, market conditions as well as the services offered.
The Board recognizes the critical role the risk management will continue to play in its endeavor to carry out its business
in a dynamic environment. The Board is committed to ensure that corporate governance and risk management are deeply
entrenched in the Boards strategy and culture. An elaborate risk management strategy that will provide direction on matters
of policy and guide the implementation and control has been developed.
This risk management framework captures the following among other things:

The Boards risk appetite and parameters;

The Boards risk matrix that highlights the rating of risks;
The structure of managing risks and accountabilities;
The processes, procedures and reports that manage risks;
The mitigating factors, prevention, contingency plans and controls.
Kenya Roads Board


The Boards core business involves major engagements with financial transactions and processes which pose certain risks.Three
types of risks are reported as part of the risk profile namely operational, strategic and business continuity risks.
a) Operational risks are events, hazards, variances or opportunities which could influence the achievement of the Boards
compliance and operational objectives;
b) Strategic risk is a significant unexpected or unpredictable change or outcome beyond what was factored into the
organizations strategy and business model which could have an impact on the entitys performance;
c) Business continuity risks are those events, hazards, variances and opportunities which could influence the continuity of the
entity.
One of the key risks the Board has identified in both the operational and strategic areas is the sustainability of the Road
Maintenance Levy in line with the Constitution. Financial risk as defined in IPSAS 15 and the management thereof, form part
of this risk area.
The Members of the Board have the overall responsibility for the establishment and oversight of the Boards risk management
framework. The Board has delegated its risk management to the Audit and Risk Committee. One of the responsibilities of this
committee is to review risk management strategies in order to ensure business continuity and survival. Most of the financial
risks arising from financial transactions and processes are managed by the Finance and Planning Committee of the Board.
The Boards exposure to risks, its objectives, policies and processes for managing the risk and the methods used to measure
it have been consistently applied in the years presented, unless otherwise stated. The Board aims therefore to achieve an
appropriate balance between the risk and return and minimize potential adverse effects on its financial performance.
The financial management objectives and policies are as outlined below:a) Liquidity Risk
Liquidity risk is the risk that the Board will not have sufficient financial resources to meet its obligations when they fall due or
will have to do so at excessive costs. This risk can arise from mismatches in the timing of cash flows from revenue and capital/
operational outflows, assets and liabilities according to their maturity profiles and can occur where cash flow streams have been
discontinued, etc. Funding risk arises when the necessary liquidity to fund illiquid asset positions cannot be met at expected
terms and when required.
The objective of the liquidity and funding management is to ensure that all foreseeable operational, capital and loan commitment
expenditure can be met under both normal and stressed conditions and the mismatch is controlled in line with allowable risk
levels.
The Board has adopted an overall balance sheet approach which consolidates all sources and uses of liquidity, while aiming to
maintain a balance between liquidity, cash flows and interest rate considerations.The Boards liquidity and funding management
process includes:

Projecting cash flows and considering the cash required and optimizing the short term requirements as well as the long
term funding,
Maintaining balance sheet liquidity ratios,
Maintaining/ soliciting a diverse range of funding sources with adequate back up facilities,
Managing the concentration and profile of debt maturities, where applicable,
Maintaining liquidity and funding contingency plans.
The table shows the undiscounted cash flows on the Boards financial assets and liabilities on the earliest possible contractual/
maturity date. The liquidity ratio in FY 2013/14 is 17.08 (FY 2012/13: 14.87)
83
Kenya Roads Board

84

Note
2013/14 2012/13
Financial Assets
KShs 000
KShs 000
Receivables
13
14
894,711
2,194
680,384
1,863
Total Financial Assets
896,905
682,247
Financial Liabilities
Payables
16
Total Financial Liabilities

NET LIQUIDITY
LIQUIDITY RATIO
52,500 45,873
52,500
844,405
17.08
45,873
636,374
14.87
The Board has an established corporate governance structure and process of managing risks regarding guarantees and
contingent liabilities. All guarantees issued are approved by the Members of the Board and are administratively managed by
the finance department.
The primary sources of revenue for the Board are receipts from the Kenya Roads Board Fund, mainly receipts from fuel levy
fund. The Board pursuing additional sources of revenue for which approval has been sought from Ministry of Finance.
b) Market Risk

Market risk is the risk that the fair value of future cash flows of financial instruments will fluctuate because of changes in
foreign exchange rates, prices and interest rates. The objective of market risk management policy is to protect and enhance
the Statements of Financial Position and performance by managing and controlling market risk exposures within acceptable
parameters, and to optimize the funding of business operations and facilitate capital expansion. The Board is exposed to the
following market risks:(i) Currency Risk
Currency risk arises primarily from purchasing imported goods and services from overseas or indirectly via local supplies. The
currency risk is minimal as cash and cash equivalents held with banks are dominated in Kenya Shillings and there are minimal
dealings in foreign currency.
(ii) Price Risk
The Board is exposed to the price risk of the fuel levy. The Board collects KShs. 9 per litre of diesel/petrol imported into the
country. The Board is exposed to the extent that the levy on diesel and petrol is reduced or eliminated due to changes in the
international fuel prices, inflation or other macro indicators.
The Road Maintenance Levy is backed up by an Act of Parliament; changes thereof require approval by Parliament.
(iii) Interest Rate Risk
The Board is exposed to various risks associated with effects of fluctuations in the prevailing levels of market interest rates
on its financial position and cash flows. Interest margin may increase as a result of such changes but may reduce losses in the
event that unexpected movement arises.
Kenya Roads Board


The Board closely monitors interest rate movements and seeks to limit its exposure by managing the interest rate and maturity
structure of assets and liabilities on the statement of financial position. The interest rates on call deposits held in financial
institutions are fixed and agreed upon on monthly basis. The management is in regular contact with the approved banks in a
bid to obtain the best interest rates and therefore able to plan for the resulting income.
The interest rate risk is minimal as the Board does not have any borrowings.
c) Operational Risk

Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the Boards processes,
personnel, technology and infrastructure and from external factors other than credit, market and liquidity risks such as legal
and regulatory requirements and generally acceptable standards of corporate behavior.
The Board seeks to ensure that key operational risks are managed in a timely and effective manner through a framework of
policies, procedures and tools to identify, assess, monitor and report such risks.
The Boards objective is to manage operational risk so as to balance the avoidance of financial losses and damage to the Boards
reputation with overall cost effectiveness and to avoid control procedures that restrict initiative and creativity.
The primary responsibility for the development and implementation of controls to address operational risk is assigned to senior
management. The responsibility is supported by the development of overall standards for the management of operational risk
in the following areas:

Requirements for appropriate segregation of duties, including the independent authorization of transactions;
Requirements for the reconciliation and monitoring of financial transactions;
Compliance with regulatory and legal requirements;
Documentation of controls and procedures;
Requirements for the yearly assessment of operational risks faced and the adequacy of controls and procedures to
address the risks identified;
Requirement for the reporting of operational losses and proposed remedial action;
Development of Business Contingency Plans;
Training and professional development;
Ethical and business standards;
Risk mitigation, including insurance where it is effective.
Operational risks are documented in the Framework for Management Control and are managed by the Internal Audit
function established to spearhead and coordinate risk management activities.The measures taken include proactively identifying,
analyzing and mitigating risks in all facets of the business.
d) Compliance and Regulatory Risk

Compliance and regulatory risk includes the risk of non-compliance with regulatory requirements. The Board has complied
with all externally imposed requirements throughout the year.
e) Legal Risk

Legal risks is the risk of unexpected loss, including reputational loss, arising from defective transactions or contracts, claims being
made or some other event resulting in a liability or the loss for the Board, failure to protect the title to and liability to control
the rights to assets of the Board (including intellectual property right), changes in law, or jurisdictional risk.

The Board manages legal risk through the Audit and Risk Committee, legal function, legal risk policies and procedures and the
effective use of internal controls and external lawyers.
85
Kenya Roads Board

86

6.0 Operating Revenue

2013/14 2012/13
Particulars
KShs 000
KShs 000
Revenue 503,489 485,609
Interest Earned
5,397
7,637
Other income
301
89,321
Total Operating Revenue
509,187 582,567
Revenue mainly represents the 2% portion from the Kenya Roads Board Fund which is allocated in accordance with Section
6(2) (e) of the Kenya Roads Board Act. Interest is earned on the balances held in the bank accounts. Included in other income
is KShs 7.34 million being gains on disposal of fully depreciated assets and KShs. 0.30 million being income from sale of tender
documents.
The operating revenue is recognized in accordance with the accounting policy on revenue recognition set out in policy 2 (f)
above.
The Board did not receive any transfers of any form, (including assets, gifts, donations, service-in-kind, advance receipts,
pledges, expenses paid on behalf and concessionary loans) from National and Country Government, public entities, donor and
International development agencies.
7.0 Directors Costs

2013/14 2012/13
Particulars

KShs 000
KShs 000
Emoluments

Insurance
Field Activities
Training
Board Evaluation and Induction
Total Directors Costs
22,714
27,581
379
223
10,747
10,625
8,891
10,163
1,685
1,045
44,416 49,637

8.0 Staff Costs

2013/14 2012/13
Particulars
KShs 000
KShs 000
Salaries & Wages
Pension Costs
Training & Development
Staff Insurance
Other Costs
Total Staff Costs
140,520 144,422
16,085
16,374
27,147
24,986
13,162
13,190
7,166
4,697
204,080 203,669
The average number of employees during the year was as follows:-
No. of Employees
Permanent Employees
61 57
Contract Employees
2
6
Total Employees
63 63
Kenya Roads Board

87

9.0 Field Activity Costs

2013/14 2012/13
Departments/Sections
KShs 000
KShs 000
Planning & Programming
Technical Compliance
Finance
Human Resource & Administration
Legal & Corporate Affairs
Information Communication & Technology
Procurement
Total Field Activities
8,404
8,486
9,470
8,497
8,423 6,488
7,732
6,233
6,491
5,485
2,483
1,484
1,979 1,566
44,982 38,239
10.0 Other Operating Costs

2013/14 2012/13
Particulars
KShs 000
KShs 000
Advertising & Publicity
Audit fees
Conferences & Seminars
Depreciation
Consultancies
Rent & Rates
Telephone, Postages & Internet
Travelling, Vehicle Maintenance & Repairs
Other Operating Costs
Total Other Operating Costs
13,232
37,958
2,900
2,500
19,726
17,999
28,741 27,002
78,850 101,775
30,256
29,723
6,510
6,941
13,460
13,070
16,081
14,787
209,756 251,755
11.0 Corporate Social Responsibility

The Boards contribution towards the Corporate Social Responsibility (CSR) amounts to KShs 1.79 million (2012/13: KShs 1.64
million). In FY 2013/14, the Board participated in the Standard Chartered Marathon, environment sustainability implementation
projects in Taita, and capacity building in HIV/AIDS.
12.0 Operating Surplus
The operating surplus is arrived at after charging/ (crediting):
Note
2013/14 2012/13
Particulars
KShs 000
KShs 000
Staff Costs
Depreciation
Directors emoluments
Auditors remuneration
Rent & Rates
Gain on Disposal of Assets
Interest earned
8
15
7
10
10
15
6
204,080
203,669
28,741 27,002
22,714
27,581
2,900
2,500
30,256
29,723
(7,343)
(1,068)
(5,397)
(7,637)
Kenya Roads Board

88

13.0 Cash and Cash Equivalents
(a) Analysis of bank and cash balances:

Particulars
Note
2013/14 2012/13

KShs 000
KShs 000
Cash at Bank and in Hand

KRB Staff Fund
17(a)
Bank Term Deposit
17(b)
Cash Imprests and Advances
171,775
248,683
474,253
1,714
167,066
213,228
300,090
618
896,425 681,002
Total
The Board is not exposed to credit risk on cash and bank balances as they are held with sound financial institutions approved
by Central Bank of Kenya. The carrying amounts of the Boards cash and cash equivalents are dominated in Kenya Shillings.
(b) Cash and cash equivalents:
For the purposes of the cash flow statement, cash and cash equivalents comprise balances with less than three months
maturity from the date of acquisition, including cash in hand, deposits held at call with banks and other short term highly liquid
investments with original maturities of three months.
Analysis of cash and cash equivalents is as set out below:
Note
2013/14 2012/13
Particulars
KShs 000
KShs 000
13 (a)
896,425
681,002
14.0 Receivables
Receivables constitute short term liquid assets which are recoverable within one year.

2013/14 2012/13
Particulars
KShs 000
KShs 000
Prepayments & Deposits
480
Total
1,245
480 1,245
The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable mentioned above. The
Board does not hold any collateral as security. The aged analysis of receivables is as follows:
Particulars
Prepayments and Deposit
Total
0-3 months
KShs 000
3-12 months
KShs 000
Total
KShs 000
480
480
480 480
Kenya Roads Board

89

15.0 Property and Equipment

Cost:
Start of year
Disposals
Additions
Computer
Office
Equipment Equipment
KShs000 KShs000
38,672
(3,897)
3,717
44,858
(381)
163
Motor
Vehicles
KShs000
Furniture
& Fittings
KShs000
Total
KShs000
84,180
(15,785)
7,104
55,694
-
5,373
223,404
(20,063)
16,357
Total Cost
38,492
44,640

Depreciation;
Start of year
35,811
23,024
Disposals
(3,897)
(381)
For the period
3,336
4,740
75,499
61,067
219,699
47,166
(15,785)
17,497
49,362
-
3,168
155,362
(20,063)
28,741
Total Depreciation
35,250
27,381

NBV 30th June 2014
3,242
17,259
48,878
52,530
164,040

26,621
8,537
55,659
NBV 30th June 2013
2,861
21,850
37,014
6,332
68,057
The net book value of non-current assets decreased from KShs. 68.05 Million in prior period to KShs. 55.65 Million in the
review period. This is as a result of asset additions amounting to KShs. 16.35 Million, net of depreciation charge for the year
amounting to KShs. 28.74 Million.
Gain on disposal of assets during the year ended 30th June 2014 amounted to KShs. 7.34 Million (2012/13: KShs. 1.06 Million).
These assets had an accumulated depreciation amounting to KShs. 20.06 Million.
The Board is of the opinion that the net book values represent the fair value of the equipment.
16.0 Payables
Payables are expected to be settled in KRBs normal operating cycle and within twelve months after the reporting period and
are not attached to an unconditional right to defer payment of the liability for at least twelve months after the reporting period.
Provisions and accruals relate to accrued expenses during the year.

2013/14 2012/13
Particulars
KShs 000
KShs 000
Provisions and accruals
Other Payables
Total
50,096
39,901
2,404
5,972
52,500 45,873
The maturity analysis of payables is as follows:

Particulars
Provisions and accruals
Other Payables
Total
0-3 months
KShs 000
3-12 months
KShs 000
50,096
-
50,096
Total
KShs 000
-
50,096
2,404
2,404
2,404 52,500
90
Kenya Roads Board


17.0 Net Assets
The net assets are made of up of designated funds and accumulated reserve which are explained as follows:
(a) KRB Staff Fund

2013/14 2012/13
Particulars
KShs 000
KShs 000
Car Loan Staff Fund
Mortgage Scheme Fund
53,147
195,536
52,834
185,394
Total
248,683 238,228
The Board established independently managed Car Loan and Mortgage Scheme Funds for members of staff. Staff funds
increased from KShs. 238.22 Million to KShs. 248.68 Million. The growth is represented by KShs. 10.45 Million being bank
interest earned during the year (FY 2012/13-Kshs 17.25 Million)
(b) KRB Capital Fund
The Board established a Capital Fund in FY 2009/10 for the purpose of purchase of office premises.

2013/14 2012/13
Particulars
KShs 000
KShs 000
KRB Capital Fund
474,253
300,582
Total
474,253 300,582
The KRB Capital Fund increased from KShs.300.58 Million in prior period to KShs. 474.25 Million.The growth is represented by
KShs. 23.67 Million being bank interest earned during the year and KShs. 150.0 Million being a transfer from KRB Fund.
(c) Accumulated Surpluses

2013/14 2012/13
Particulars
KShs 000
KShs 000
Accumulated Surpluses
177,128
165,621
Total
177,128 165,621
Accumulated surpluses increased from KShs. 165.62 Million in prior period to KShs. 177.12 Million. Net surplus for the current
year amounted to KShs. 11.50 Million (FY 2012/13 KShs. 38.69 Million).
Kenya Roads Board

91

18.0 Cash Generated from Operations
Reconciliation of Net Cash Flows from Operating Activities to Net Surplus from Ordinary Activities;

2013/14 2012/13

Notes
KShs 000
KShs 000
Net surplus from operating activities
12
11,507
Adjustments for:
Depreciation
15
28,741
Interest Income
6
(5,397)
Gain on disposal of property and equipment
15
(7,343)
38,690
27,002
(7,637)
(1,068)
Operating Income before Working Capital Changes

27,508
56,987

Changes in Working Capital Balances:
Decrease in receivables
764
3,223
Increase in payables
6,627
1,645
34,899
Net Cash Flows Generated from Operating Activities
61,855
19.0 Contingent Assets & Liabilities

2013/14 2012/13
KShs 000
KShs 000
Guarantees
3,393
3,393
a) Guarantees
Guarantees commit the Board to make payments on behalf of the guaranteed in the event of a specific act and carry a certain
risk. The Board has given a guarantee for rent to Kenya Reinsurance Corporation (Kenya Re) for KShs. 2,620,379.50 and KShs
772,219.40 which shall expire on 1st February and 1st April 2016 respectively.
This guarantee covers the obligation to Kenya Re of three months rent. The guarantee was issued by the Boards bankers in
favour of Kenya Reinsurance Corporation. The Board has entered into counter indemnity with the same bank. The guarantee
was issued in the normal course of the business, after the end of the financial year and does not affect the Boards financial
position as at the reporting date.
b)

Legal matters
The directors believe, based on the information currently available, that the Board does not have any contingent liabilities
which are likely to have a material effect on the results of the Boards operations, financial position or liquidity. Therefore no
provision has been made in the financial statements.
20.0 Commitments : Operating Lease Rentals

Non-cancellable operating lease rentals are payable as follows:

2013/14 2012/13
KShs 000
KShs 000
Not later than one year

Later than one year and not later than five years
30,256
151,278
27,471
137,355
181,534 164,826
92
Kenya Roads Board


The Board has leased office premises under an operating lease. The lease typically runs for 5 years with an option for renewal.
Lease payments are increased accordingly to reflect market rentals.The Board does not have an option to purchase the leased
asset at the expiry of the lease period. There are no contingent rents recognized in the Statement of Financial Performance.
21.0 Retirement Benefits Scheme Obligations
The Board operates a defined contribution retirement benefit plan for eligible employees. The assets of the plan are held
separately from those of the Board in funds under the control of trustees. The scheme is administered by an independent
administration company and is funded by contributions from the Board and employees. The Boards obligations to the staff
retirement benefits plan are charged to the Statement of Financial Position as they fall due or, in the case of service gratuity,
as they accrue to each employee.
The Board also makes contributions to the statutory defined contribution scheme, National Social Security Fund. This is a
defined contribution scheme registered under the National Social Security Act. The Boards obligations under the Scheme are
limited to specific contributions legislated from time to time, which are currently at KShs 200 per employee per month.
The total pension expense recognized in the income statement of KShs 16.08 million (FY 2012/13: KShs 16.37 million)
represents contributions payable to the plan by the Board at rates specified in the rules of the plan. The expense has been
included within the staff pension costs under staff costs.
22.0 Fair Value
The directors consider that there is no material difference between the fair value and carrying value of the Boards financial
assets and liabilities, where fair value details have not been presented.
23.0 Capital Commitments
All capital commitments contracted for/authorized at the reporting period end have been recognized in the financial statements.
24.0 Post Balance Sheet Events
The Directors are not aware of any matter or circumstances arising since the end of the financial year, not otherwise dealt
with in the financial statements, which would significantly affect the financial position of Kenya Roads Board and results of its
operation as laid out in these financial statements.
25.0 Comparatives
Where necessary, comparative figures have been adjusted to conform to changes in presentation of the Financial Statements
as required by International Public Sector Accounting Standards and any amendment whenever necessary in the current year.
26.0 Currency
The financial statements are presented in Kenya Shillings (KShs000).
Kenya Roads Board


PROGRESS ON FOLLOW UP OF AUDITOR RECOMENDATIONS
All audit issues raised by the external auditor were resolved and concluded during the audit process. There are no audit issues that
were carried forward.
ENG. JOEL WANYOIKE

CHAIRMAN
ENG. JACOB RUWA DATE: 29th October 2014

EXECUTIVE DIRECTOR
93
94
Kenya Roads Board

NOTES
Kenya Roads Board

3rd Floor Kenya Re Towers

Off Ragati Rd, UpperHill
P.O. BOX 73718 - 00200
NAIROBI, KENYA.
Tel: +254 20 4980 000/+254 20 2722865/6/8

Cell: +254 733 334422/+254 722 203418
Email: info@krb.go.ke

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KENYA ROADS BOARD

Our Core Values

To fund, oversee and coordinate road

We are committed to timely delivery of high quality and

We are committed to meeting our stakeholder requirements to their

3. Integrity and Impartiality

We are committed to promoting transparency, accountability and professionalism

We are committed to promoting transparency, accountability and professionalism

5. Diversity and Inclusiveness

6. Good Corporate Citizenship

Kenya Roads Board

6. KENYA ROADS BOARD FINANCIAL STATEMENTS

Kenya Roads Board

APRP Annual Public Roads Programme

Kenya National Highways Authority

KRB Kenya Roads Board

Kenya Roads Board

One // Key Highlights

Kenya Roads Board Fund

Kenya Roads Board Fund

Kenya Roads Board

Kenya Roads Board

Kenya Re-Towers, 3rd Floor

Central Bank of Kenya

Kenya Roads Board

Our Numbers in Brief

RMLF Rate per Litre in Kshs.

Kenya Roads Board

PERFORMANCE AT A GLANCE (Continued)

Allocation Criteria of Road Maintenance Levy

Kenya Rural Roads Authority 22%

Kenya Rural Roads Authority 10%

Kenya National Highways Authority 40%

Allocation by Kenya Roads Board/Ministry 10%

Kenya Roads Board 2%

Linear (Amount (Kshs Billion) )

ANNUAL GROWTH RATE

ANNUAL COLLECTIONS - KSHS BILLION

Historical Collections and Growth of Road Maintenance Levy

Kenya Roads Board

Two // Business Review

Kenya Roads Board

The Board has continued to monitor

Eng. Joel Wanyoike,

Kenya Roads Board

CHAIRMANS STATEMENT (Continued)

In the last three years, the Government has continued

strategy. The various board committees continue to play a

The Kenyan economy is projected to grow at a higher rate

Future Outlook 2015/16

Eng. Joel M. Wanyoike

30th October 2014

Kenya Roads Board

Eng. Joel M. Wanyoike

Eng. John K. Mosonik, EBS

Eng. Mosonik is the Principal Secretary, State Department of Infrastructure. Eng.

Dr. Kamau Thugge, EBS, MBS

Mr. John O. Konchellah

Kenya Roads Board

WHO GOVERNS US (Continued)

Ms. Mwanamaka Amani

CPA Osman H. Ibrahim,

Ms. Rita Kavashe