[kictanet] Auditor: ICT authority is technically insolvent

[Admin CampusCiti]

I’m curious to understand this insolvency conclusion.

Just picked up this explanation of insolvency from Wikipedia.

Insolvency is the state of being unable to pay the money owed, by a person or company, on time; those in a state of insolvency are said to be insolvent. There are two forms: cash-flow insolvency and balance-sheet insolvency.

Cash-flow insolvency is when a person or company has enough assets to pay what is owed, but does not have the appropriate form of payment. For example, a person may own a large house and a valuable car, but not have enough liquid assets to pay a debt when it falls due. Cash-flow insolvency can usually be resolved by negotiation. For example, the bill collector may wait until the car is sold and the debtor agrees to pay a penalty.

Balance-sheet insolvency is when a person or company does not have enough assets to pay all of their debts. The person or company might enter bankruptcy, but not necessarily. Once a loss is accepted by all parties, negotiation is often able to resolve the situation without bankruptcy.

A company that is balance-sheet insolvent may still have enough cash to pay its next bill on time. However, most laws will not let the company pay that bill unless it will directly help all their creditors. For example, an insolvent farmer may be allowed to hire people to help harvest the crop, because not harvesting and selling the crop would be even worse for his creditors.

I suggest that we don’t consume news that is shallow and half baked. This is a critical government agency and sensationalism does no one any favors. The editors have a fiduciary responsibility to expound and give us an in-depth expose of what the auditor’s report actually says and an interpretation of what it means. 

My two cents.

Ali Hussein

+254 0713 601113 

Twitter: @AliHKassim
Skype: abu-jomo
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"Discovery consists in seeing what everyone else has seen and thinking what no one else has thought".  ~ Albert Szent-Györgyi

Sent from my iPad

> On 22 Oct 2018, at 8:07 AM, S.M. Muraya via kictanet <kictanet at lists.kictanet.or.ke> wrote:
> 
> Priorities, priorities, priorities..
> 
> Auditor: ICT authority is technically insolvent
> 
> https://www.nation.co.ke/news/Auditor--ICT-authority-is-technically-insolvent/1056-4816222-1ob4pwz/index.html
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