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OFFICE OF THE AUDITOR GENERAL
THE REPUBLIC OF UGANDA
REPORT AND OPINION OF THE AUDITOR GENERAL
ON THE FINANCIAL STATEMENTS OF KABERAMAIDO DISTRICT
FOR THE YEAR ENDED 30TH JUNE 2014
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REPORT AND OPINION OF THE AUDITOR GENERAL
ON THE FINANCIAL STATEMENTS OF KABERAMAIDO DISTRICT
FOR THE YEAR ENDED 30TH JUNE 2014
THE RT. HON. SPEAKER OF PARLIAMENT
Introduction
I have audited the accompanying financial statements of Kaberamaido District for the year
ended 30th June 2014. These financial Statements comprise of the statement of financial
position as at 30th June 2014, statement of financial performance, statement of changes in
equity, cash flow statement together with other accompanying statements, notes and
accounting policies.
Management Responsibility for the Financial Statements
Under Article 164 of the Constitution of the Republic of Uganda and Section 64 and 86 of
the Local Governments’ Act 1997 as amended, the Accounting Officer is accountable to
Parliament for the funds and resources of the Local Government. The Accounting Officer is
responsible for the preparation of financial statements, in accordance with regulation 68 of
the Local Governments Financial and Accounting Regulation, 2007 and for such internal
controls as management determines necessary to enable the preparation of financial
statements that are free from material misstatements whether due to fraud or error.
Auditor’s Responsibility
My responsibility as required by Article 163 of the Constitution of the Republic of Uganda,
Section 86 of the Local Government Act and Sections 13, 16 and 19 of the National Audit
Act, 2008 is to express an opinion on these statements based on my audit. I conducted my
audit in accordance with the International Standards on Auditing(ISA)/ International
Standards of Supreme Audit Institutions (ISSAIs). Those standards require that I comply
with ethical requirements and plan and perform the audit to obtain reasonable assurance
whether the financial statements are free from material misstatement.
An audit involves performing audit procedures to obtain evidence about the amounts and
disclosures in the financial statements as well as evidence supporting compliance with
relevant laws and regulations. The procedures selected depend on the Auditor’s judgment,
including the assessment of the risks of material misstatement of the financial statements,
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whether due to fraud or error. In making those risk assessments, the Auditor considers
internal controls relevant to the entity’s preparation 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 entity’s internal control. An audit also
includes evaluating the appropriateness of accounting policies used and the reasonableness
of accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
I believe that the audit evidence I have obtained is sufficient and appropriate to provide a
basis for my unqualified audit opinion.
Part “A” of my report sets out my opinion on the financial statements. Part “B” which forms
an integral part of this report presents in detail, all the significant audit findings made during
the audit which have been brought to the attention of management.
PART "A"
Basis for Qualified Opinion
Procurements
Procurements worth UGX. 100,167,976 lacked procurement records contrary to the
regulations.
Qualified Opinion
In my opinion, except for the possible effects of matter described in the Basis for Qualified
Opinion paragraph, the financial statements of Kaberamaido District as at 30th June 2014
are prepared in all material respects, in accordance with the Local Government Financial and
Accounting Manual, 2007, Section 31(6) of the Public Finance and Accountability Act 2003,
the Local Government Financial and Accounting Regulation, 2007 and the Local
Governments’ Act cap 243 (as amended), of the Laws of Uganda.
John F.S. Muwanga AUDITOR GENERAL
20th Feburary 2015
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PART "B"
KABERAMAIDO DISTRICT DETAILED REPORT OF THE AUDITOR GENERAL FOR
THE FINANCIAL YEAR ENDED 30TH JUNE 2014
1.0 Introduction
In accordance with Article 163(3), of the Constitution of the Republic of Uganda I am
required to audit and report on the public accounts of Uganda and of all public
offices, including the courts, the central and the local government administrations,
universities and public institutions of the like nature and any public corporation or
other bodies or organizations established by an Act of Parliament. Accordingly, I
carried out the audit of the Kaberamaido District to enable me report to Parliament.
2.0 Audit Objectives
The audit was carried out in accordance with International Standards on Auditing
and accordingly included a review of the accounting records and agreed procedures
as was considered necessary. The audit was carried out with regard to the following
objectives:-
a. To verify whether the financial statements have been prepared in accordance
with the requirements of the Local Government Financial and Accounting
Manual 2007 and the Local Government Financial and Accounting Regulations
2007; and fairly present the income and expenditures for the year and of the
financial position as at the end of the year.
b. To verify whether all the funds of the entity were utilized with due attention to
economy and efficiency and only for the purposes for which the funds were
provided.
c. To verify whether goods and services financed have been procured in
accordance with the PPDA Act.
d. To evaluate and obtain sufficient understanding of the internal control structure
of the entity, assess control risk and identify reportable conditions, including
material internal control weaknesses
e. To verify whether the management of the funds of the entity was in
compliance with the Government of Uganda financial regulations.
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f. To verify whether all necessary supporting documents, records and accounts
have been kept in respect of all activities, and are in agreement with the
financial statements presented.
3.0 Audit Methodology
The following audit procedures were undertaken:-
a. Revenue
Obtained all schedules of all revenues collected and reconciled the amounts to the
cashbooks and bank statements of the entity.
b. Expenditure
The payments vouchers of the entity were examined for proper authorization,
eligibility and budgetary provision, accountability and support documentation.
c. Internal Control System
Reviewed the internal control system and its operation to establish whether sound
controls were applied throughout the period
d. Procurement
Reviewed the procurement of goods and services under the various department
during the period under review and reconciled with the approved procurement
plan.
e. Fixed Assets Management
Reviewed the use and management of the assets of the entity during the period
under review
f. Financial Statements
Examined, on a test basis, evidence supporting the amounts and disclosures in the
financial statements; assessed the accounting principles used and significant
estimates made by management; as well as evaluating the overall financial
statement presentation.
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4.0 Entity Financing
Kaberamaido District is financed by grants (Conditional and Unconditional) from
Central Government, development partners and locally generated revenues from
taxes, fees, licenses and charges. During the year, the district received grants
totaling to UGX 15,030,615,723 from Central Government, and UGX 207,825,240.
from locally generated revenues. The total revenue of UGX 15,238,440,963.
Constituted 90% of its approved budget estimates of UGX 16,888,839,698.
5.0 Detailed Audit Findings
This section outlines the detailed audit findings and my recommendations in respect
thereof.
5.1 Irregular Procurements
A review of the procurements files revealed the following shortcomings as shown in
appendix i;
Section 41 (1) of the Public Procurement And Disposal Of Public Assets Act (2003)
requires the procuring and disposing entity to maintain records on its procurement
and disposal proceedings for a period of seven years from the date of a decision to
terminate the procurement or disposal action, or the date of the completion of the
contract, whichever comes later. It was observed that the District procured goods
and services worth UGX.100,167,976, which lacked both procurement files and
procurement records. I could not confirm whether the procurements were carried
out transparently and competitively. (Refer to Colum (1))
Regulation 62 (1) of the LGPPDA Regulations (2006) requires a user department to
prepare an annual work plan for procurement, based on the approved budget, to
facilitate orderly execution of annual procurement activities; procurements worth
UGX 99,230,657 were undertaken during the financial year but were not provided for
in the procurement plan. (Refer to Colum (2)).
Regulation 124 (1) of the PPDA Regulations (2003) require that Pre-qualification shall
be based on the capability and resources of a bidder. Pre-qualified firms awarded
contracts worth UGX 61,952,000 lacked experience, equipment in similar contracts,
valid trading license, Income tax clearance, Powers of Attorney, Certificate of
registration, VAT Registration and Audited accounts. (Refer to Colum (3)).
Regulation 40 (1&2) of the LGPPDA Regulations (2006) require the use of Direct
procurement or disposal where exceptional circumstances prevent the use of
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competition after contract committee approval. The District used the direct
procurement method in procurements worth UGX 30,536,000 without justification.
(Refer to Colum (4)).
Quarterly procurement and disposal reports from October 2013-June 2014 were not
submitted to PPDA, contrary Regulations 7 of LG (PPDA) 2006. Additionally, all micro
procurements were not communicated to the Contracts Committee on monthly basis,
as required by Regulation 41(8) of LG (PPDA) 2006.
The above shortcomings undermined the basic principles of maximum competition,
disclosure, transparency and accountability and value for money was not achieved.
The Accounting Officer attributed the matter to failure of user departments to submit
implementation records to PDU, time constraint, failure to update the procurement
plan and poor filing of documents. The Accounting Officer promised to rectify the
anomalies.
I advised the Accounting officer to rectify the anomalies and provide training where
capacity gaps are noted.
5.2 Transfers to Non-Governmental Hospitals
The District transferred UGX 219,442,000 to various non-governmental hospitals as
a grant to help subsidize medical facilitation and ensure that there is better health
service delivery. (See the Details in Appendix ii). However, the following
shortcomings were noted:
There was no memorandum of understanding to specify the utilization and
management of the grants.
The District did not carry out quarter two, three and four performance and
service delivery reviews for the money that was transferred.
UGX 1,140,000 in respect of purchase of drugs from Joint Medical store for
Kaberamaido catholic Dispensary remained unaccounted for.
Transfers totalling to UGX 12,000,000 to Otuboi and Bululu COU HC II
remained unaccounted for.
This was caused by lack of memoranda of understanding between the District and
the hospitals for the utilization and management of the grant.
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Failure to effectively manage this grant materially affects service delivery.
The Accounting Officer acknowledged the shortcoming and promised to have the
health management boards of the respective health facilities in place and sign the
memorandum of understanding.
The Accounting Officer was advised to ensure that a memorandum of understanding
to guide the utilization and management of the grant is put in place.
5.3 Contract Variation
Regulation 120(12) of Local Government Public Procurement and Disposal of Assets
Regulations requires any variation above 15% to be approved by the Authority.
Contractor awarded a contract to construct a laboratory at Angara Health HC III
was paid UGX 13,653,988 (29%) above the original cost of UGX. 47,115,762
without an approved variation from PPDA regulations.
Unapproved variation is irregular and may be a Conduit for over payments.
This was caused by failure to comply with the LGPPDA regulations on variation.
According to the Accounting Officer the over payment was 2,204,248 that the District
will seek to recover from the contractor.
I advised the Accounting Officer to adhere to the Local Government Public and
Procurement Disposal of Assets regulations and seek for the approval of the variation
by PPDA.
5.4 Understaffing
The District has an approved structure of 346 staff. However, out of the 346
approved posts, only 212 (42.8%) are filled, leaving a 134 vacant posts representing
38% of the establishment. (See appendix iii).
It was explained that the understaffing was caused by the ban on recruitment by the
Ministry of Public Service. Understaffing undermines service delivery.
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The Accounting Officer explained that the Ministry of Public Service had authorized
the recruitment of some key staff positions in the district.
I advised the Accounting Officer to ensure that the vacant posts are filled as
appropriate.
5.5 Local Revenue Shortfall
Regulation 32 of the Local Government Financial and Accounting Regulations 2007
requires the head of finance to collect all budgeted revenue. However, the district
collected UGX 125,283,937 of the budgeted Local Revenue of UGX.142,956,772,
resulting into a shortfall of UGX.17,672,835. The local revenue shortfall adversely
affected service delivery.
The Accounting Officer attributed the shortfall to business fluctuations; brake down
of district tractor for hire, animal quarantine, resistance from taxi operators to pay
park fees and low turn up of bidders.
I advised the Accounting Officer to institute measures to ensure that all local revenue
budgeted is collected.
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Appendix i
Procurement Irregularities
No.
Contract Details
Contractor
Contract Sum Missing procurement files and requisition form/BEB Notice/Record of Bid receipt and Opening.
Procurements not in plan.
Irregular Pre-qualification
Direct Procurement
1 2 3 4
1 Rehabilitation works of a staff Room and an Office with a Store in Apele P/S
Anyim Lach Enterprises 29,452,000 29,452,000
29,452,000
2 Supply of wooden office chairs, wooden office desks, lockable book shelves and lockable notice boards to 8 Sub counties
Mejo Construction firm 26,000,000 26,000,000
3 Supply of 500 bags of cassava cuttings to Production Dep't
Ocent Enterprises 18,500,000 18,500,000
4 Construction of a 5-stance drainable latrine in Otuboi Town ship P/S
CanPwonyi Construction Co. 17,615,000 17,615,000
5 Supply of Reinforced concrete culverts for force account road works
Ogur millers ltd 14,896,000 14,896,000
6 Renovation of OPD Block at Bululu H/C III
Goana Co. Enterprises 14,500,000 14,500,000
7 Completion of a 4 classroom
J. Fene Enterpris 14,182,499
14,182,499 (no file)
10
block in Oyama p/s
es
8 Supply of 34 office chairs and 10 Tables to Health Dep't
Doma Engineering Works 14,000,000 14,000,000 14,000,000
9 Construction of 3 stances Drainable pit latrine at Otuboi P/S
Epic Developers Ltd 12,603,477
12,603,477 (no file) 12,603,477
10 Basic Computer Training for sub-county and district
Mukiz Business Ltd 9,972,180 9,972,180
11 Supply of furniture to Natural Resources Department
Atopi Ipenet Enterprises (U) LTD 8,890,000 8,890,000 8,890,000
12 Construction of 2 stance VIP Drainable latrine in Alwa sub county
Emio Civil Engineering and Construction 7,000,000
7,000,000 (no file)
13 Construction of 2 stances pit latrine with bath shelter at Kaberamaido HCIV
Eurolight Foundation (U) LTD 6,750,000 6,750,000 6,750,000
14 Construction of 2 stancs pit latrine with bath Shelter at Aperkira HCIII
CanPwonyi Construction Co. 6,700,000 6,700,000
15 Wiring and Supply of electricity to Kaberamaido H/C IV
Solex Energy Care (U) Ltd 6,565,000
6,565,000 (no file) 6,565,000
16 Installation of rain water harvesting system at Apapai p/s
CanPwonyi Construction Co. 6,000,000
6,000,000 (no file)
Total 213,626,156 100,167,976 99,230,657 61,952,000 30,536,000
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Appendix ii :
Transfers to Non-government Hospitals
Vr No Date Account Details Payee Amount
30//8 27/08/2013 Health Transfer to Lwala Hospital Lwala Hospital 41,236,000
31//8 27/08/2013 Health
Transfer to KAB Catholic
Dispensary KAB Catholic Dispensary 7,500,000
32//8 27/08/2013 Health Transfer to Kaberamaido COU
Kaberamaido Church of
Uganda HC II 3,000,000
33//8 27/08/2013 Health Transfer to Otuboi COU Otuboi COU HC II 1,500,000
34//8 27/08/2013 Health Transfer to Bululu COU Bululu COU HC II 1,500,000
15//11 11/11/2013 Health
Transfer to Lwala Hospital for
2rd quarter Lwala Hospital 41,236,000
16//11 11/11/2013 Health
Transfer to Kaberamaido COU
for 2rd quarter
Kaberamaido Church of
Uganda HC II for 2rd
quarter 7,500,000
17//11 11/11/2013 Health
Transfer to KAB Catholic
Dispensary KAB Catholic Dispensary 1,500,000
18//11 11/11/2013 Health
Transfer to Otuboi COU for 2rd
quarter Otuboi COU HC II 1,500,000
19//11 11/11/2013 Health
Transfer to Bululu COU for 2rd
quarter Bululu COU HC II 1,500,000
08//2 17/02/2014 Health
Transfer to KAB Catholic
Dispensary for 3rd quarter KAB Catholic Dispensary 5,000,000
22//2 17/02/2014 Health
Transfer to Lwala Hospital for
3rd quarter Lwala Hospital 41,236,000
23//2 17/02/2014 Health
Transfer to Kaberamaido
Catholic dispensary for 3rd
quarter
Kaberamaido Church of
Uganda HC II for 2rd
quarter 7,500,000
24//2 17/02/2014 Health
Transfer to Kaberamaido COU
for 3rd quarter Kaberamaido COU 1,500,000
25//2 17/02/2014 Health Transfer to Otuboi COU for 3rd
Otuboi COU 1,500,000
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quarter
26//2 17/02/2014 Health
Transfer toBululu COU for 3rd
quarter Bululu COU 1,500,000
26//5 19/05/2014 Health
Transfers to Lwala Hospital for
4th quarter Lwala Hospital 41,234,000
27//5 19/05/2014 Health
Transfers to Kab Catholic
Dispensary for 4th quarter KAB Catholic Dispensary 7,500,000
28//5 19/05/2014 Health
Transfers to Kab COU for 4th
quarter Kab COU 1,500,000
29//5 19/05/2014 Health
Transfers to Otuboi COU for 4th
quarter Otuboi COU 1,500,000
30//5 19/05/2014 Health
Transfers to Bululu COU for 4th
quarter Bululu COU 1,500,000
Total
219,442,000
Appendix iii.
Staff Gaps
Departments Approved Filled Vacant %Filled % Vacant Overstaffing
Office of the chief CAO 3 3 0 100.0% 0.0% 0
Administration department 24 9 15 37.5% 62.5% 0
Statutory bodies 7 4 3 57.1% 42.9% 0
Procurement unit 3 2 1 66.7% 33.3% 0
Finance department 19 10 9 52.6% 47.4% 0
Education & sports 11 5 6 45.5% 54.5% 0
Production & marketing 16 6 10 37.5% 62.5% 0
Department of works staff 20 7 13 35.0% 60.0% 0
Community based services 8 3 5 37.5% 62.5% 0
Natural resources 18 5 13 27.8% 72.2% 0
Planning unit 6 2 4 33.3% 66.7% 0
Internal audit 6 2 4 33.3% 66.7% 0
District health office 11 7 4 63.6% 36.4% 0
Total for district staffs 152 65 87 42.8% 57.2% 0
District health staffing 194 147 47 80.3% 27.3% 7.6%
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