local authorities...6.9.12 kotido tc..... 302 6.9.13 kumi tc..... 303 6.9.14 moroto dlg..... 304...

THE REPUBLIC OF UGANDA

OFFICE OF THE AUDITOR GENERAL

ANNUAL REPORT OF THE AUDITOR GENERAL

ON THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30TH JUNE 2016

LOCAL AUTHORITIES

iii

Table of Contents

Table of Contents .................................................................................................... iii

List of Acronyms ..................................................................................................... xii

Definitions ............................................................................................................. xiv

PART I ...................................................................................................................... 1

1.0 INTRODUCTION ........................................................................................ 1

2.0 STATUS OF COMPLETION OF AUDITS ........................................................ 1

3.0 KEY AUDIT FINDINGS ............................................................................... 3

4.0 CROSS CUTTING ISSUES IN LOCAL GOVERNMENTS ................................. 6

PART II ................................................................................................................... 19

5.0 REPORT AND OPINION OF THE AUDITOR GENERAL ON THE ANNUAL

CONSOLIDATED FINANCIAL STATEMENTS OF LOCAL GOVERNMENTS FOR THE

YEAR ENDED 30TH JUNE 2016 .......................................................................... 19

PART III ................................................................................................................. 33

6.0 OTHER SIGNIFICANT FINDINGS ............................................................. 33

6.1 ARUA BRANCH ............................................................................................. 33

6.1.1 ADJUMANI DLG ........................................................................................ 33

6.1.2 ARUA DLG ................................................................................................. 35

6.1.3 KOBOKO DLG ............................................................................................ 35

6.1.4 MOYO DLG ................................................................................................ 38

6.1.5 NEBBI TC .................................................................................................. 39

6.1.6 YUMBE DLG .............................................................................................. 40

6.1.7 ZOMBO DLG .............................................................................................. 40

6.1.8 ZOMBO TC ................................................................................................ 42

6.2 FORT-PORTAL BRANCH ............................................................................... 43

6.2.1 BULIISA TC ............................................................................................... 43

6.2.2 BUNDIBUGYO DLG ................................................................................... 44

6.2.3 BUNDIBUGYO TC...................................................................................... 44

6.2.4 NYAHUKA TC ............................................................................................ 45

6.2.5 KABAROLE DLG ........................................................................................ 45

6.2.6 FORT-PORTAL MC .................................................................................... 46

iv

6.2.7 RWIMI TC ................................................................................................. 46

6.2.8 RUBONA TC .............................................................................................. 47

6.2.9 HOIMA DLG .............................................................................................. 48

6.2.10 HOIMA MC ................................................................................................ 48

6.2.11 KAMWENGE DLG ...................................................................................... 49

6.2.12 KAMWENGE TC ......................................................................................... 51

6.2.13 KASESE DLG ............................................................................................. 52

6.2.14 HIMA TC ................................................................................................... 53

6.2.15 KATWE KABATORO TC ............................................................................. 53

6.2.16 KIBAALE DLG............................................................................................ 54

6.2.17 KIBAALE TC .............................................................................................. 55

6.2.18 KAGADI TC ............................................................................................... 56

6.2.19 MUHOORO TC ........................................................................................... 56

6.2.20 MASINDI DLG ........................................................................................... 57

6.2.21 MASINDI MC ............................................................................................ 57

6.2.22 KYEGEGWA DLG ....................................................................................... 59

6.2.23 KIRYANDONGO DLG ................................................................................ 60

6.2.24 KIRYANDONGO TC ................................................................................... 62

6.2.25 KYENJOJO DLG ......................................................................................... 62

6.2.26 KYENJONJO TC ......................................................................................... 63

6.2.27 KYARUSOZI TC ......................................................................................... 64

6.2.28 KARAGO TC .............................................................................................. 64

6.2.29 NTOROKO DLG ......................................................................................... 65

6.2.30 KARUGUTIU TC ........................................................................................ 65

6.2.31 RWEBISENGO TC ..................................................................................... 66

6.2.32 KIBUKU TC ............................................................................................... 67

6.3 GULU BRANCH ............................................................................................. 68

6.3.1 AMOLATAR DLG ........................................................................................ 68

6.3.2 AMURU DLG .............................................................................................. 70

v

6.3.3 APAC DLG ................................................................................................. 72

6.3.4 APAC TC .................................................................................................... 73

6.3.5 ADUKU TC ................................................................................................. 73

6.3.6 AGAGO DLG .............................................................................................. 74

6.3.7 ALEBTONG DLG ........................................................................................ 75

6.3.8 PADIBE TC ................................................................................................ 76

6.3.9 DOKOLO DLG ............................................................................................ 77

6.3.10 GULU DLG ................................................................................................. 78

6.3.11 GULU MC................................................................................................... 80

6.3.12 KOLE DLG ................................................................................................. 80

6.3.13 KITGUM DLG ............................................................................................ 80

6.3.14 KITGUM TC ............................................................................................... 81

6.3.15 LAMWO DLG ............................................................................................. 82

6.3.16 LAMWO TC ................................................................................................ 86

6.3.17 LIRA DLG .................................................................................................. 87

6.3.18 LIRA MC .................................................................................................... 87

6.3.19 NWOYA DLG ............................................................................................. 90

6.3.20 OTUKE DLG ............................................................................................... 90

6.3.21 OTUKE TC ................................................................................................. 92

6.3.22 OYAM DLG ................................................................................................ 92

6.3.23 OYAM TC ................................................................................................... 94

6.3.24 PADER DLG ............................................................................................... 94

6.3.25 KALONGO TC ............................................................................................ 96

6.4 JINJA BRANCH ............................................................................................ 96

6.4.1 BUGIRI DLG ............................................................................................. 96

6.4.2 BUYENDE DLG .......................................................................................... 98

6.4.3 IGANGA DLG........................................................................................... 101

6.4.4 IGANGA MC ............................................................................................ 104

6.4.5 JINJA DLG .............................................................................................. 105

vi

6.4.6 JINJA MC ................................................................................................ 108

6.4.7 BUGEMBE TC .......................................................................................... 109

6.4.8 KAKIRA TC .............................................................................................. 110

6.4.9 KALIRO DLG ........................................................................................... 111

6.4.10 KAMULI DLG ........................................................................................... 115

6.4.11 KAYUNGA DLG ........................................................................................ 121

6.4.12 LUUKA DLG ............................................................................................. 123

6.4.13 MAYUGE DLG .......................................................................................... 124

6.4.14 NAMUTUMBA DLG .................................................................................. 127

6.4.15 NAMAYINGO DLG ................................................................................... 128

6.5 KAMPALA BRANCH .................................................................................... 129

6.5.1 BUIKWE DLG .......................................................................................... 129

6.5.2 BUIKWE TC ............................................................................................. 133

6.5.3 BUVUMA DLG.......................................................................................... 134

6.5.4 BUVUMA TC ............................................................................................ 137

6.5.5 GOMBE TC .............................................................................................. 137

6.5.6 GOMBA DLG ............................................................................................ 138

6.5.7 LUWERO DLG ......................................................................................... 141

6.5.8 WOBULENZI TC ...................................................................................... 146

6.5.9 MPIGI DLG ............................................................................................. 147

6.5.10 MPIGI TC ................................................................................................ 148

6.5.11 MUKONO DLG ......................................................................................... 148

6.5.12 MUKONO MC .......................................................................................... 150

6.5.13 NAKASEKE DLG ...................................................................................... 151

6.5.14 NAKASEKE TC ......................................................................................... 154

6.5.15 NAKASEKE-BUTALANGU TC ................................................................... 154

6.5.16 NAKASONGOLA DLG............................................................................... 155

6.5.17 WAKISO DLG .......................................................................................... 158

6.5.18 WAKISO TC............................................................................................. 162

vii

6.5.19 ENTEBBE MC ........................................................................................... 164

6.5.20 KAKIRI TC .............................................................................................. 166

6.5.21 KIRA MC ................................................................................................. 166

6.5.22 NANSANA MC ......................................................................................... 168

6.5.23 KAKOOGE TC .......................................................................................... 169

6.5.24 MIGEERA TC ........................................................................................... 170

6.5.25 MASULITA TC ......................................................................................... 171

6.6 MASAKA BRANCH ...................................................................................... 172

6.6.1 KALANGALA DLG .................................................................................... 172

6.6.2 BUKOMERO TC ....................................................................................... 173

6.6.3 LYANTONDE DLG .................................................................................... 173

6.6.4 LYATONDE TC ......................................................................................... 174

6.6.5 MASAKA DLG .......................................................................................... 175

6.6.6 MASAKA MC ............................................................................................ 175

6.6.7 MITYANA DLG ........................................................................................ 176

6.6.8 MUBENDE DLG ....................................................................................... 178

6.6.9 MUBENDE MC ......................................................................................... 179

6.6.10 BUTEMBA TC .......................................................................................... 179

6.6.11 BUKOMANSIMBI DLG ............................................................................ 180

6.6.12 KALUNGU DLG ........................................................................................ 180

6.6.13 KALUNGU TC .......................................................................................... 182

6.6.14 LUKAYA TC ............................................................................................. 182

6.6.15 LWENGO DLG ......................................................................................... 183

6.7 MBALE BRANCH ......................................................................................... 184

6.7.1 BUDAKA DLG .......................................................................................... 184

6.7.2 BUDAKA TC ............................................................................................. 187

6.7.3 BUDUDA DLG .......................................................................................... 188

6.7.4 BUDUDA TC ............................................................................................ 191

6.7.5 BUKWO DLG ........................................................................................... 192

viii

6.7.7 BUSIA DLG ............................................................................................. 196

6.7.8 BUSIA MC ............................................................................................... 197

6.7.9 BUSOLWE TC .......................................................................................... 200

6.7.10 BUTALEJA DLG ....................................................................................... 201

6.7.11 KAPCHORWA DLG .................................................................................. 203

6.7.12 KIBUKU DLG ........................................................................................... 205

6.7.13 KIBUKU TC ............................................................................................. 205

6.7.15 MANAFWA DLG ....................................................................................... 209

6.7.16 MANAFWA TC ......................................................................................... 213

6.7.17 MBALE DLG ............................................................................................. 214

6.7.18 MBALE MC .............................................................................................. 216

6.7.19 PALLISA DLG .......................................................................................... 218

6.7.20 SIRONKO DLG ........................................................................................ 221

6.7.21 TORORO DLG .......................................................................................... 222

6.7.22 MALABA TC ............................................................................................. 225

6.7.23 NAGONGERA TC ..................................................................................... 226

6.7.24 BULAMBULI DLG .................................................................................... 227

6.7.25 BULAMBULI TC ....................................................................................... 231

6.7.26 BULEGENI TC ......................................................................................... 232

6.7.27 NAKALOKE TC ......................................................................................... 232

6.8 MBARARA BRANCH ................................................................................... 234

6.8.1 BUSHENYI DLG ...................................................................................... 234

6.8.2 BUSHENYI-ISHAKA MC .......................................................................... 236

6.8.3 IBANDA DLG ........................................................................................... 239

6.8.4 IBANDA TC ............................................................................................. 241

6.8.5 ISINGIRO DLG ....................................................................................... 242

6.8.6 ISINGIRO TC .......................................................................................... 243

6.8.7 KABEREBERE TC ..................................................................................... 243

6.8.8 KABUYANDA TC ...................................................................................... 245

ix

6.8.9 KABALE DLG ........................................................................................... 245

6.8.10 KABALE MC ............................................................................................. 248

6.8.11 KATUNA TC ............................................................................................. 249

6.8.12 KABWOHE-ITENDERO TC ...................................................................... 250

6.8.13 KANUNGU DLG ....................................................................................... 251

6.8.14 KANUNGU TC .......................................................................................... 254

6.8.15 KIHIHI TC ............................................................................................... 254

6.8.16 KIRUHURA DLG ...................................................................................... 255

6.8.17 KAZO TC.................................................................................................. 256

6.8.18 KISORO DLG ........................................................................................... 256

6.8.19 KISORO TC ............................................................................................. 261

6.8.20 MBARARA DLG ....................................................................................... 262

6.8.21 MBARARA MC ......................................................................................... 263

6.8.22 NTUNGAMO DLG .................................................................................... 263

6.8.23 NTUNGAMO MC ...................................................................................... 266

6.8.24 RUSHANGO TC ....................................................................................... 266

6.8.25 RUKUNGIRI DLG .................................................................................... 267

6.8.26 RUKUNGIRI MC ...................................................................................... 268

6.8.27 KAMBUGA TC .......................................................................................... 269

6.8.28 BUTOGOTA TC ........................................................................................ 271

6.8.29 SHEEMA TC ............................................................................................. 272

6.8.30 BUHWEJU DLG ....................................................................................... 273

6.8.31 NSIIKA TC .............................................................................................. 274

6.8.32 MITOOMA TC .......................................................................................... 275

6.8.33 RWASHAMAIRE TC ................................................................................. 276

6.8.34 RUBIRIZI DLG ........................................................................................ 276

6.8.35 RUBIRIZI TC .......................................................................................... 279

6.8.36 KATERERA TC ......................................................................................... 279

6.9 SOROTI BRANCH ....................................................................................... 280

x

6.9.1 ABIM DLG ............................................................................................... 280

6.9.2 AMUDAT DLG .......................................................................................... 281

6.9.3 AMUDAT TC ............................................................................................ 286

6.9.4 AMURIA DLG .......................................................................................... 286

6.9.5 BUKEDEA DLG ........................................................................................ 289

6.9.6 BUKEDEA TC ........................................................................................... 292

6.9.7 KABERAMAIDO DLG ............................................................................... 293

6.9.8 KABERAMAIDO TC ................................................................................. 294

6.9.9 KABOONG DLG ....................................................................................... 294

6.9.10 KATAKWI DLG ........................................................................................ 298

6.9.11 KOTIDO DLG ........................................................................................... 300

6.9.12 KOTIDO TC ............................................................................................. 302

6.9.13 KUMI TC ................................................................................................. 303

6.9.14 MOROTO DLG ......................................................................................... 304

6.9.15 MOROTO MC ........................................................................................... 304

6.9.16 NAKAPIRIPIRIT DLG ............................................................................. 305

6.9.17 NAKAPIRIPIRIT TC ................................................................................ 307

6.9.18 SOROTI DLG ........................................................................................... 308

6.9.19 SOROTI MC ............................................................................................. 308

6.9.20 NAPAK DLG ............................................................................................. 309

6.9.21 NGORA DLG ............................................................................................ 310

6.9.22 SERERE DLG ........................................................................................... 312

xi

Tables

Table 1: Details of Significant Cross cutting issues per OAG Branch Offices...........24

Table 2: Arua Branch Significant Crossing Cutting Issues …………………..………..25

Table 3: Fortportal Branch Significant Crossing Cutting Issues ……………………..26

Table 4: Gulu Branch Significant Crossing Cutting Issues …………………..………..27

Table 5: Jinja Branch Significant Crossing Cutting Issues …………………..………..28

Table 6: Kampala Branch Significant Crossing Cutting Issues …………..…………..29

Table 7: Masaka Branch Significant Crossing Cutting Issues ……………..………….30

Table 8: Mbale Branch Significant Crossing Cutting Issues …………………..………31

Table 9: Mbarara Branch Significant Crossing Cutting Issues ………………….……31

Table 10: Soroti Branch Significant Crossing Cutting Issues …………………..…….32

APPENDIX: Consolidated Financial Statements of The Government of The

Republic of Uganda For the year ended 30 June 2016……………………………....315

xii

List of Acronyms

AO Accounting Officer

BOQs Bills of Quantity

CAO Chief Administrative Officer

CIID Criminal Investigation & Intelligence Department

DA District Administration

DC District Council

DEC District Executive Committee

DLG District Local Government

DLG District Local Government

DPAC District Public Accounts Committee

DSC District Service Commission

GOU Government of Uganda

HC I Health Centre I

HC II Health Centre II

HC III Health Centre III

HC IV Health Centre IV

HLG Higher Local Government

IAS International Accounting Standard

IDP Internally Displaced People

IFRS International Financial Reporting Standard

INTOSAI International Organization of Supreme Audit Institutions

LC I Local Council One

LC II Local Council Two

LC III Local Council Three

LC IV Local Council Four

LC V Local Council Five

LGA Local Government Act

LGBFP Local Government Budget Framework Paper

LGDP Local Government Development Programme

LGFAM Local Government Financial and Accounting Manual

LGFAR Local Government Financial and Accounting Regulations

LGMSD Local Government Management of Service Delivery

LGPAC Local Government Public Accounts Committee

xiii

LLG Lower Local Government

LST Local Service Tax

MC Municipal Council

MoFPED Ministry of Finance Planning and Economic Development

MoLG Ministry of Local Government

MoPS Ministry of Public Service

NAA National Audit Act

NAADS National Agricultural Advisory Services

NDP National Development Plan

NSSF National Social Security Fund

OAG Office of the Auditor General

OPM Office of the Prime Minister

PAYE Pay As You Earn

PFAA Public Finance and Accountability Act

PHC

PPDA

Primary Health Care

Public Procurement and Disposal of Public Assets Authority

PFMA Public Finance Management Act

PSC Public Service Commission

PWDs People with Disabilities

SAI Supreme Audit Institution

SC Sub County

SFG School Facilitation Grant

TC Town Council

TC Town Clerk

UGX Uganda Shillings

ULGA Uganda Local Governments Association

UPE Universal Primary Education

URA Uganda Revenue Authority

URF Uganda Road Fund

USMID Uganda Support to Municipal Infrastructure Development Program

VAT Value Added Tax

VFM Value For Money

WHT Withholding Tax

YLP Youth Livelihood Programme

xiv

Definitions

Accountant General Means the person designated under Section 7 of the Public finance

and Accountability Act 2003.

Accounting Officer means a person designated under Section 8 of the Public Finance

and Accountability Act 2003 as Accounting Officer and Section

64(1), 65 (2) (a) and 69(2) of the Local Government Act 1997 Cap

243 of the Laws of Uganda as amended in respect of Chief

Administrative Officer of a District, Town Clerk of an Urban Council

and Sub-county Chief and Head teachers respectively.

Auditor General Means the Auditor General appointed under article 163(1) of the

Constitution.

Adverse opinion Means an opinion issued by the Auditor General whereby the

financial statements contain material misstatements or errors and

there is disagreement with management to the extent that it is

concluded that the financial statements do not represent a fair

presentation of the financial position of the entity as at the financial

year end.

Consolidated fund Means the consolidated fund of Uganda established under article

153 of the Constitution.

Disclaimer opinion Means an opinion issued by the Auditor General whereby the

financial statements contain material misstatements based on

limitations on scope of the audit work to the extent that there is

uncertainty on the fairness and truthfulness of the financial

statements and therefore an audit opinion cannot be given because

of the gravity of the uncertainty.

Doubtful Expenditure Means expenditure that has not been confirmed as genuine

considering the circumstances under which it was incurred.

Escrow account Means an account established in the custody of a third party to hold

revenues which will be disbursed upon the fulfillment of the

conditions specified.

xv

Emphasis of matter Refers to a matter that does not affect the Auditor’s Opinion but is

of such fundamental importance to users in understanding of the

financial statements so as to warrant its inclusion in the Auditor’s

report immediately after the opinion.

Financial year Refers to an accounting period of twelve months.

Force on account Means construction works undertaken by use of a procuring and

Disposing Entity’s own personnel and equipment.

Generally accepted

accounting practice

Means accounting practices and procedures recognized by the

accounting profession in Uganda and approved by the Accountant

General as appropriate for reporting financial information relating

to government, a Ministry or department, a fund, an agency or

other reporting unit and which are consistent with the Public

Finance and Accountability Act and any other relevant

appropriation Act.

Grade X Means Pupils who did not sit exams.

Grade U Means Children who failed or Un-graded.

Government Means the Government of Uganda.

Higher Local

Governments

Refers in the context of this report, Districts, Municipal Councils and

Town Councils.

Incompletely vouched Means expenditure that is not supported by adequate

accountability documents.

Internal audit Means a process to measure, evaluate and report to the

management of an entity on the efficiency of the system of internal

control used to ensure the validity of financial and other

information.

Internal control Means a set of systems to ensure that financial and other records

are reliable, complete and ensure adherence to the entity

Management policies, orderly and efficient conduct of the entity,

proper recording and safeguarding of assets and resources.

Local Government

Council

Means a council referred to in article 180 of the Constitution.

Nugatory Expenditure Means wasteful expenditure.

xvi

Qualified “except for”

opinion

Refers to the audit opinion issued by the Auditor General whereby

the material misstatements or errors are not pervasive and “except

for” these misstatements or errors being adjusted for the rest of

the financial statements fairly present in all material respects the

financial position of the entity.

Unqualified opinion Refers to the audit opinion issued by the Auditor General whereby

the financial statements contained no material misstatements or

errors.

Unvouched

Expenditure

Means funds spent without preparing vouchers or expenditure that

is not supported with payment vouchers.

1

LOCAL AUTHORITIES

PART I

1.0 INTRODUCTION

I am required by Article 163(3) of the Constitution of the Republic of Uganda, Section

13, 16 and 19 of the National Audit Act 2008, Section 87 of the Local Government Act

1997 as amended and Section 51(4) of the Public Finance Management Act 2015 to

audit and report on Local Governments.

Under Section 82(4) of the Public Finance Management Act 2015, I am now required

to submit to Parliament by 31st December annually a report of the Accounts audited

by me for the year immediately preceding. I am therefore issuing this report in

accordance with the above provisions.

Volume 3 of this Annual Report to Parliament covers financial audits carried out on

District Local Governments, Municipal and Town Councils and Lower Local

Governments.

Part 1 of this volume I give an overview of the financial audit work carried out, status

of completion of the audits, a summary of the audit opinions issued on the financial

statements of the entities audited and the major audit findings in Local Governments

arising from the results of the audits carried out.

Part II gives the Auditor General’s Report and Opinion of the consolidated financial

statements on Local Governments.

Part III gives the other significant audit findings on the Local Government entities

audited that need urgent attention.

I, therefore, urge all stakeholders to review this report with utmost interest and

concern to ensure effective implementation of the recommendations therein and

ultimately improve the lives of our people.

2.0 STATUS OF COMPLETION OF AUDITS

I am required to audit and report on a total of 1,786 accounts of Local Authorities,

Regional Referral Hospitals, Secondary Schools and Tertiary Institutions. I am pleased

to report that my office was able to audit and complete 1,168 accounts including all

the 307 Higher Local Governments (HLGs) and 440 Lower Local Governments (Sub-

2

counties) and 277 secondary schools and tertiary institutions. The table below shows

the number of entities and the audit completion status:

Table 1: Number of Entities and Audit Completion Status

Entities

Planned Number of Entities

Status

Audited Pending

Districts 111 111 -

Municipal Councils 22 22 -

Town Councils 174 174 -

Sub Counties and Divisions (FY 2014/2015)

1,189 440 749

Secondary Schools/Tertiary Institutions (Year 2014 and 2015

277 277 -

Total 1,773 1024 749

Audit of 1,189 sub-counties for the financial year 2015/2016 remain outstanding due

to lack of funds.

Similarly, I was only able to audit 277 secondary schools and tertiary institutions out

of a population of 1,280 schools and tertiary institutions due to limited funding

provided for the audit.

2.1 AUDIT OPINIONS

The table below shows a summary of the audit opinions of HLG for the financial year

under review including a comparison with audit opinions of the previous two years.

Table 2: Summary of Audit Opinions for the three financial years

2012/2013 2013/2014 2014/2015 2015/2016

Opinion1 Local Governments

Percentage

Local Governments

Percentage

Local Governments

Percentage

Local Governments

Percentage

Un qualified 116 37.4% 213 69.38

% 279 91 263 85.7%

Except for (qualified)

183 60% 91 29.64

% 27 8.7 43 14.0%

Disclaimer 7 2.3% 03 0.98% 01 0.3 1 0.3%

Adverse 0 0% 0 0% 0 0% 0 0

TOTAL 307 100% 307 100% 307 100% 307 100%

3

From the above, it is noted that unqualified opinions increased from 37.4% in

2012/2013 to 69.38% in 2013/2014 to 91% in 2014/15 and decreased to 85.7% in

2015/16. The qualified opinions decreased from 60% in 2012/2013 to 29.64% in

2013/14 to 8.7% in 2014/15 and then increased 14% in 2015/16. The disclaimer

opinions decreased from 2.3% 2012/2013 to 0.98% in 2013/14 to 0.3% in 2014/2015

and 2015/2016.

The details of audit opinions issued for each entity regarding financial statements of

2015/16 are shown on pages 33 to 354.

3.0 KEY AUDIT FINDINGS

A summary of the key findings arising from the audit of Local Governments is

highlighted below:-

Payroll Anomalies

Section (B-a) (7) of the General rules on Payment of Salaries in Public Service Standing

Orders,2010 requires salaries to be paid correctly, promptly and as a lump sum in

accordance with the approved salary structure for the Public Service.

However, Payroll analysis carried out revealed that a sum of UGX.11,390,722,259 was

paid irregularly. The irregularities include:-

No. Irregularities Amount UGX.

1 Over payment 1,163,414,641

2 Unsupported Pension Payments 9,569,870,082

3 Wrongly Paid Salaries 657,437,536

Total 11,390,722,259

The Accounting Officers attributed the irregularities to challenges encountered during

decentralization of salary payments on the Integrated Financial Management system

(IFMS) and Integrated Personnel and payroll system (IPPS) and outright errors during

the salary payment process. Many of the Accounting Officers explained that they had

initiated the process of recovering the overpaid amounts and training of staff to build

capacity and address the challenges. I await for evidence to that effect.

Procurement Anomalies

4

33 Local Governments procured items worth UGX.27,548,079,906 without following Public

Procurement Regulations and Guidelines. The amount is comprised of UGX.1,310,729,577

which lacked procurement files , UGX.21,225,982,459 where there was breach of

procurement procedures, UGX.4,695,910,417 involving inadequate contract management

and UGX.315,457,453 of unauthorized contract variations. Consequently, it becomes

difficult to ascertain whether value for money was achieved. The shortcomings were

attributed to lack of technical capacity, understaffing and deliberate flouting of PPDA

regulations. There is need for the Accounting Officers to develop capacity building

strategies and to engage the Ministry of Public Service to address the understaffing

problem. In addition Accounting Officers are encouraged to invoke the relevant sections

of the Law for noncompliance.

Funds not Accounted for

Expenditure amounting to UGX.3,896,976,469 was identified as funds unaccounted for.

Consequently, I could not confirm that the funds were utilized for the intended purposes.

The delayed submission of accountability may also lead to falsification of documents

resulting into loss of funds. This was caused by failure by accounting Officers to enforce

accountability controls and lack of advances ledger to monitor advances. There is need for

Accounting Officers to enforce controls relating to financial management and

accountability.

Under Collection of Local Revenue

Regulation 32 of the Local Governments Financial and Accounting Regulations, 2007

requires Councils to ensure collection of all budgeted revenue in an approved manner.

Review of revenue performance revealed significant under collection of Local revenue in

161 Councils amounting to UGX.17,165,844,562.

The shortfall in revenue collection was attributed to failure to carry out revenue

enumeration and assessments, non-enforcement of contracts with private revenue

collectors, understaffing and incomplete revenue records. There seems to be little effort

in ensuring effective collection of local revenue.

I advised the Accounting Officers to sensitize tax payers on the relevant taxes and to

develop strategies and enforce lawful measures to enhance revenue collections.

Understaffing

5

Staffing levels of vacant posts in Local Government has not significantly improved as

shown in the table below;-

No. Level of understaffing No of Entities

1 Above 40% 119

2 Between 20%-40% 45

3 Below 20% 143

The levels ranged from 10% in Kibuku District Local Government to 89% in Kamuli Town

Council.

Understaffing overstretches the available staff beyond their capacity, creates job-related

stress to the fewer staff and negatively affects the level of public service delivery to the

community.

This was attributed to limited wage bill and a ban on recruitment by the Ministry of Public

Service. The Accounting Officers are advised to continue engaging the Ministry of Public

Service, the Ministry of Local Government and the Ministry of Finance Planning and

Economic Development to address the challenge. Meanwhile government is advised to

address this phenomenon to ensure improvements in service delivery at local level.

Under-absorption/Unspent balances

The Public Finance Management Act (PFMA) Section 45 (3) of 2015 states that an

Accounting Officer shall enter into an annual budget performance contract with the

Secretary to the Treasury which shall bind the Accounting Officer to deliver on the activities

in the work plan of the vote for a financial year submitted under section 13 (15).

However, it was observed that 84 districts had failed to utilise UGX. 13,189,396,027 by

the end of the financial year.

The Accounting Officers attributed under absorption to IFMS failures, delayed delivery of

late releases of funds and delayed delivery of services by the contracted suppliers

I advised the Accounting Officers to engage Ministry of Local Government and Ministry of

Finance Planning and Economic Development to address the bottle necks.

Assets Management

6

Lack of Land Titles

Out of 307 Local Governments, 148 entities representing 48% of the Local governments

lacked land titles for the land where council properties are located. There is a risk that

council land is exposed to encroachment and disputes which later leads to litigation in

courts of law arising from land disputes between the Councils and the Communities.

The Accounting Officers attributed this to lack of funds to process land titles and the

absence of District Land Boards. There is urgent need for the Accounting Officers to

prioritize and allocate funds and ensure that the land titles are secured. The District

Councils are also advised to ensure that the District Land Boards are constituted.

Un-utilized Capacity Building Infrastructure Development Funds Under

(USMID)Project

It was observed that 14 Municipal Councils under the USMID project had not fully utilized

funds released to them amounting to UGX.94,783,335,602. The unutilized funds were

meant for settlement of VAT, Municipal Development (Municipal Development Grants) and

Capacity (Capacity Building Grants).

Failure to utilize the released funds reflects lack of effective implementation of project

programs disadvantaging the community who are intended to benefit from the program.

Management attributed the low absorption of the capacity Building funds to the failure

of the Municipal Councils to procure key retooling equipment for surveying, engineering

and environment among others partly due to lack of technical capacity to procure such

specialized equipment. In addition the delay to utilise the infrastructure development

funds was attributed to failure to attract responsive bidders for the jobs.

There is need to enhance the absorption capacity to ensure full utilization of the funds

released.

4.0 CROSS CUTTING ISSUES IN LOCAL GOVERNMENTS

The following cross cutting issues arose in the audit of Local Governments, namely:-

1. Revenue

Under collection of Local Revenue

Irregular levy of Development tax

7

2. Expenditure

Procurement anomalies

Payroll anomalies

Funds not accounted for

3. Internal control and Governance issues

Understaffing

Shoddy works/incomplete projects

Outstanding commitments

Lack of ICT policy

4. Assets management

Lack of land titles

Receivables

Un spent balances

Under absorption under USMID

The summary of these findings are in the table below and further detailed in table 8

on pages 24-32.

10

Table 1 Details of Significant Cross cutting issues per OAG Branch Offices

11

4.1 REVENUE

4.1.1 Under Collection of Local Revenue


requires Councils to ensure collection of all budgeted revenue in an approved manner and

the revenue banked intact in Council accounts. However, a review of revenue performance

of 161 Councils revealed that under collection of Local Revenue amounting to UGX.

17,165,844,562

This implies that all planned activities for the year were not implemented. This was

attributed to lack of revenue enumeration and assessment and failure to supervise

collection of contracted revenue. There is need for the Accounting Officers to carry out

revenue assessments, maintain proper revenue records, sensitize the tax payers and

strengthen controls relating to collection of revenue.

With regard to 108 Lower Local Governments (Sub Counties), an amount of UGX.

1,007,693,692 remained uncollected during the period.

The shortfall in revenue collection was attributed to; failure to carry out revenue

enumeration and assessments, non-enforcement of contracts with private revenue

collectors, understaffing and incomplete revenue records. There seems to be little effort

in ensuring effective collection of these revenue sources.

I advised the Accounting Officers to sensitize tax payers and develop strategies and

enforce lawful measures to enhance revenue collection.

4.2 EXPENDITURE

4.2.1 Procurement Anomalies

The Public Procurement and Disposal of Public Assets (PPDA) Act 2003, and the Local

Government PPDA Regulations 2006 require that all public procurement of goods, services

and works comply with the procurement law. However, 33 Local Governments procured

12

items and services worth UGX.27,548,079,906 without following Public Procurement

Regulations and guidelines as shown in the table below:

Table 4 Procurement Anomalies

Category Amount (UGX) %age

Breach of procurement procedures 21,225,982,459 77

Contract management weaknesses 4,695,910,417 17

Lack of procurement files and records 1,310,729,577 4.8

Unauthorized contract variation 315,457,453 1.2

Total 27,548,079,906 100

The shortcomings were attributed to lack of technical capacity, understaffing and

deliberate flouting of PPDA regulations. There is need for the Accounting Officers to

develop capacity building strategies and to engage the Ministry of Public Service to

address the understaffing problem. In addition Accounting Officers are encouraged to

invoke the relevant sections of the Law for noncompliance with the regulations.

4.2.2 Funds not Accounted for

Regulation 43 (2) of the Local Government Financial and Accounting Regulations 2007,

require Administrative advances to council employees to be authorized by the Chief

Executive and accounted for within a month. During the year under review

UGX.3,896,976,469 in respect of HLGs comprising of administrative advances,

incompletely vouched expenditure, unvouched expenditure and doubtful expenditure

remained outstanding as shown in the table below:-

Table 5 Funds not accounted for

Category Amount (UGX) Percentage

Unaccounted for Administrative advances 3,697,520,680

95

Incompletely vouched expenditure 126,878,410

3

Missing Vouchers 72,577,379

2

Total 3,896,976,469 100

13

In addition, UGX.1,081,996,613 remained outstanding in the 418 Lower Local

Governments (Sub Counties) audited as shown below;

Table 6: Funds not accounted for in 418 Lower Local Governments

Category Amount (UGX) Percentage

Incompletely vouched 575,329,158 53%

Unvouched expenditure 328,326,188 30%

Outstanding administrative advances 178,341,267 17%

Total 1,081,996,613 100


The delayed submission of accountability may also lead to falsification of documents

resulting into loss of funds. This was caused by failure by Accounting Officers to enforce

accountability controls and lack of advances ledger to monitor advances. There is need

for Accounting Officers to enforce controls relating to financial management and

accountability.

4.2.4 Payroll Anomalies




However, Payroll analysis carried out revealed that a sum of UGX. 11,390,722,259 was



1 Over payment 1,163,414,641



Total 11,390,722,259



(IFMS) and Integrated Personnel and payroll system (IPPS) and outright errors during the

salary payment process. Many of the Accounting Officers explained that they had initiated

14

the process of recovering the overpaid amounts and training of staff to build capacity and

address the challenges. I await for evidence to that effect.

4.2.5 Unsatisfactory Civil Works

Section 14 of the PPDA regulations require an Accounting Officer to have the overall

responsibility of the successful execution of the procurement, disposal and contract

management processes and ensure that implementation of the contract as per the agreed

terms. Audit inspection of the works in the roads, water, schools, health centres and other

buildings revealed that there were several projects with unsatisfactory construction works

amounting to UGX. 3,493,600,252. This implies that value for money may not have

been achieved. The Accounting Officers attributed this anomaly to inadequate technical

staff, delayed procurement process and inadequate capacity of the local contractors to

execute the works.

I advised the Accounting Officers to enhance monitoring and supervision of contracts to

avoid such reoccurrences and to source for competent contractors.

4.3 Internal Control and Governance Issues

4.3.1 Under Staffing

The audit revealed that high levels of vacant posts in Local Government have not

significantly improved as shown in the table below:-

No. Level of understaff Number of Local Governments

1 Above 40% 119

2 Between 20%-40% 45

3 Below 20% 143

4 Total 307

.

Understaffing overstretches the available staff beyond their capacity, creates job-related

stress to the fewer staff and negatively affects the level of public service delivery to the

community.

15

This was attributed to limited wage bill and a ban on recruitment by the Ministry of Public

Service.

I advised the Accounting Officers to continue engaging the Ministries of Public Service,

Local Government and Finance Planning and Economic Development to address the

challenge. Meanwhile government is advised to address this phenomenon to ensure

improvements in service delivery at local level.

4.3.2 Outstanding Commitments

Regulation 11(d) of the Local Government Financial and Accounting Regulations, 2007

requires the Head of Finance to ensure that commitments are not approved unless there

is sufficient and committed funds available. However, a number of Higher Local

Governments for the year under review failed to adhere to the commitment control system

which resulted in committing Councils beyond the available financial resources.

Consequently fifteen entities accumulated outstanding commitments amounting to

UGX.9,101,467,408

The outstanding commitments can lead to litigation or confiscation of Council assets if not

settled timely. The Accounting Officers attributed the anomaly to under collection of local

revenue and shortfall in release of grants from Central Government.

I advised the Accounting Officers to adhere to provisions of the commitment control

system to eliminate arrears and ensure financial discipline.

4.4 Assets Management

4.4.1 Lack of Land Titles

Regulation 9 (j) of the Local Government Financial and Accounting Regulations, 2007

require the Accounting Officers to ensure safe custody of all assets of Council. It was

observed that out of 307 Local Governments, 148 entities representing 48% of the Local

Governments lacked land titles for the land where council properties are located. There

is a risk that council land is exposed to encroachment and disputes. The Accounting

Officers attributed this to lack of funds to process land titles and absence of District Land

Boards. There is urgent need for the Accounting Officers to prioritize and allocate funds

16

and ensure that the land titles are secured. The District Councils are also advised to ensure

that the District Land Boards are constituted.

4.4.2 Receivables

Paragraph 2.3.2.3 of the Local Governments Financial and Accounting Manual 2007 states

that money owed to Council represents an asset that is idle, as it denies the Council the

opportunity of using the money to provide services promptly. Fifty seven (56) Local

Governments failed to collect outstanding revenue from different sources amounting to

UGX.11,294,653,082. This was attributed to laxity on the part of the Accounting Officers

to follow up collection of the debts.

Uncollected revenue adversely affect service delivery and have an additional risk of loss

of revenue. I advised the Accounting Officers to develop debt recovery strategies to

ensure that all outstanding debts are collected.

4.4.3 Unspent balances

Section 17(2) of the Public Finance and Management Act, 2015 requires a vote that does

not expend money that was appropriated to the vote for the financial year at the end of

the financial year to repay the money to the consolidated fund.

It was however, observed that in sixteen (16) entities an amount of UGX. 11,550,319,031

of conditional grants remained unexpended at year end.

The Accounting Officers attributed the shortcoming to the late release of funds and

promised to repay back the funds to the consolidated fund.

I advised the Accounting Officers to ensure that the funds are repaid to the consolidated

fund.

4.4.4 Unutilized Capacity Building Infrastructure Development Funds Under

(USMID)Project

It was observed that 14 Municipal Councils under the USMID project had not fully utilized

funds released to them amounting to UGX.94,783,335,602. The unutilized funds were

meant for settlement of VAT, Municipal Development (Municipal Development Grants) and

Capacity (Capacity Building Grants)

17

Failure to utilize the released funds reflects lack of effective implementation of project

programs disadvantaging the community who are intended to benefit from the program.

Management attributed the low absorption of the capacity Building funds to the failure of

the Municipal Councils to procure key retooling equipment for surveying, engineering and

environment among others partly due to lack of technical capacity to procure such

specialized equipment. In addition the delay to utilise the infrastructure development

funds was attributed to failure to attract responsive bidders for the jobs.

There is need to enhance the absorption capacity to ensure full utilization of the funds

released.

4.5 FINANCIAL REPORTING

4.5.1 Financial Statements for Secondary Schools, Primary Schools and Health

Centres

Regulations 61-64 of the Local Government Financial and Accounting Regulations 2007

require District Hospitals, Health Units, Secondary Schools and Primary Schools to prepare

and submit financial statements to the Chief Executive on regular basis as indicated below;

Table 7 Financial Statements for Secondary Schools, Primary Schools and Health Centres

Entity Period Chief Executive

District Hospitals Monthly and Annually Chief Administrative Officer

Health Units Monthly Sub-county Chief and copy

Administrative Units

Secondary Schools Each academic term and

Calendar year

Chief Administrative Officer

Primary Schools Each Academic term Sub-County Chief

The regulations further provide that where a head teacher and the in-charge of the

Primary Schools and Health centre respectively are unable to prepare the financial

statements, assistance may be sought from the sub accountant of the Sub-county.

Regulations 70 requires the Chief Executive to submit the accounts prepared in

accordance with these regulations to the Auditor General for audit.

18

In my three previous year audit reports, I observed that the entities lacked clear guidance

on the nature of books of accounts and specific financial statements to be prepared. The

primary schools and Heath Centres also lacked the necessary manpower to prepare the

books. These issues have not been addressed.

It is advised that the Ministry of Finance Planning and Economic Development together

with Ministry of Local Government issue relevant accounting manuals and guidelines for

preparation of financial records and statements in the schools and Health Centres.

4.5.2 Lack of Standard Financial Reporting Framework for Schools

It was observed again that there was no standard financial reporting framework for

secondary schools. This was attributed to lack of financial and accounting manual. As a

result, there was no uniform classification and coding of account balances, format and

presentation of financial statements. Section 29 (2) (b) of Education (Board of Governors)

regulations require the board to prepare within three months financial statements in the

form approved by the Minister or district secretary for Education. There is need for the

Minister or District Secretary for Education in consultation with the Accountant General to

prescribe the form of the financial statements for the Secondary Schools.

4.5.3 Financial Statements for Lower Local Governments

In my three previous year audit reports, I noted that there was still a problem with

presentation of financial statements in the Lower Local Governments. In the financial year

under review, the shortcomings were still identified. The anomalies include;

Non-adherence to presentation and disclosure requirements as per Local Government

Financial and accounting Manual 2007, for example, lack of cash flow statements,

schedule of commitments, and others.

Misstatement of account balances.

Non- preparation of primary books of accounts such as Ledgers, cash books, and vote

books.

Lack of Board of survey reports

Lack of Bank reconciliation statements and certificates of Bank balance.

Unbalanced Budgets

Lack of other statements, schedules and Notes to the accounts.

19

Missing budget figures in income and expenditure accounts.

Non-disclosure of losses.

Preparation of Financial statements is a stewardship role in which accountability for

application of resources entrusted to Accounting Officers is reported to the stakeholders.

Failure to present financial statements properly impairs interpretation and analysis of

entity performances. This is attributed to understaffing, lack of training, Low levels of

practical experience by clerks and non-adherence to the guidance provided in the Local

Governments’ Financial and Accounting Manual 2007 and other accounting standards.

Accounting Officers should liaise with responsible authorities to ensure the staffing gaps

are addressed and the necessary training undertaken.

PART II

5.0 REPORT AND OPINION OF THE AUDITOR GENERAL ON THE ANNUAL

CONSOLIDATED FINANCIAL STATEMENTS OF LOCAL GOVERNMENTS FOR

THE YEAR ENDED 30TH JUNE 2016

THE RT. HON. SPEAKER OF PARLIAMENT

I have audited the accompanying consolidated annual financial statements of local governments

for the year ended 30th June 2016. These annual consolidated financial statements comprise the

Statement of Financial Position as at 30th June 2016, Statement of Financial Performance,

Statement of Changes in Equity, Cash flow Statement together with other accompanying

statements, Schedules, Notes and accounting policies.

Management’s Responsibility for the Financial Statements

Under Article 164 of the Constitution of the Republic of Uganda, 1995 (as amended) and Section

45 of the Public Finance Management Act, 2015, the Accounting Officers are accountable to

Parliament for the funds and resources of the Votes/Entities under their control. The Accountant

General is also responsible for the preparation of Consolidated Financial Statements in accordance

with the section 52(1) (b) of the Public Finance Management Act, 2015, and the Financial

Reporting Guide, 2008, and for such internal control as management determines is necessary to

enable the preparation of financial statements that are free from material misstatement whether

due to fraud or error.

20

Auditor’s Responsibility

My responsibility as required by Article 163 of the Constitution of the Republic of Uganda, 1995

(as amended), section 87of the Local Governments Act cap243(as amended) and Sections 13,16

and 19 of the National Audit Act, 2008 is to audit and express an opinion on these statements

based on my audit. I conducted the audit in accordance with International Standards on Auditing

(ISA). Those standards require that I comply with the 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 risks of material misstatement of financial statements whether due to fraud or

error. In making those risk assessments, the Auditor considers internal control relevant to the

entity’s preparation and fair presentation of financial statements in order to design audit

procedures that are appropriate in the circumstances but not for purposes 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.

Except as discussed below, I believe that the audit evidence I have obtained is sufficient and

appropriate to provide a basis for my opinion.

Part “A” of this report sets out my qualified opinion on the consolidated 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 and will form

part of my annual report to Parliament.

21

PART “A”

Basis for Qualified Opinion

Payroll anomalies

An amount of UGX 11,390,722,259 was paid in respect of salaries and pension contrary to

the regulations. The amount included over payments, unsupported pensions payments and

wrongly paid salaries.

Unaccounted for funds

A total of UGX.3, 896,976,469 remained un-accounted for by the time of audit. Consequently

I could not confirm that the funds were utilized for the intended purposes.

Qualified Opinion

In my opinion, except for the possible effects of the matters described in the Basis for Qualified

Opinion paragraph, the consolidated annual accounts on Local Governments for the year ended

30th June 2016 are prepared, in all material respects, in accordance with the local government

financial and accounting manual,2007, the Public Finance Management Act, 2015,the Local

Governments Financial and Accounting Regulations ,2007 and the Local Governments Act

cap.243(as amended) of the Laws of Uganda.

Emphasis of matter

Without qualifying my opinion further, attention is drawn to the following additional matters which

are also included in part B of this report and my annual report to Parliament;

Unspent Balances

84 Districts had failed to utilize UGX 13,189,396,027 by the end of the financial year and the

amount should be returned to the Consolidated Fund as required by the Public Finance

Management Act.

Failure to utilize the funds as appropriated undermines service delivery.

22

Under Collection of Local Revenue

There was a significant under collection of Local Revenue in 161 Councils amounting to

UGX.17, 165,844,582.

Under collection of Local Revenue adversely affects the implementation of the planned

activities.

Other Matters

I consider it necessary to communicate the following matter other than those that are presented

or disclosed in the financial statements that, in my judgment, are relevant to the users’

understanding of the audit report.

Delayed Implementation of IFMS in Local Governments

Government in a bid to improve transparency and Accountability Developed Strategy on

installing IFMS in District Local Governments and Urban Councils by 2016/2017. However

since the start of the strategy in FY 2011/2012, only seventy three (73) Local Governments

out of 307 Local Governments have been integrated .

Delayed implementation affects the achievement of the overall objective of ensuring

improved transparecny, accountability and audit in Local Governments.

Outstanding Commitments

There were accumulated commitments in 15 Local Governments amounting to UGX

9,101,467,408 despite adopting the commitment control system. Delayed settlemnet of the

commitments may lead to litigation, fines and penalities.

John F.S. Muwanga AUDITOR GENERAL

22th December, 2016

23

PART "B"

DETAILED REPORT OF THE AUDITOR GENERAL ON THE ANNUAL CONSOLIDATED

FINANCIAL STATEMENTS LOCAL GOVERNMENTS FOR THE FINANCIAL YEAR ENDED

30TH JUNE 2016

This Section outlines the detailed audit findings, management responses and my

recommendations in respect thereof.

1.0 INTRODUCTION

Article 163 (3) of the Constitution of the Republic of Uganda, 1995 (as amended) requires

me to audit and report on the public accounts of Uganda and all public offices including

the courts, the central and 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

Consolidated Government of Uganda Financial Statements for the year ended 30th June

2016 to enable me report to Parliament.

2.0 BACKGROUND INFORMATION

Under Article 164 of the Constitution of the Republic of Uganda, 1995 (as amended) and

Section 45 of the Public Finance Management Act, 2015, an Accounting Officer shall be

responsible and personally accountable to Parliament for the activities of a vote.

The Accountant General is responsible for the preparation and fair presentation of the

annual Consolidated Financial Statements of Local Governments in accordance with the

requirements of the Public Finance Management Act, 2015, and the modified cash basis

of accounting.

The accompanying Consolidated Financial Statements on Local Governments provide a

record of Local Governments’ financial performance for the year 2015/16 and the financial

position as at 30th June 2016, in accordance with the Public Finance Management Act,

2015.

24

3.0 AUDIT SCOPE

The audit was carried out in accordance with International Standards on Auditing and

accordingly included a review of the accounting records and agreed on procedures as was

considered necessary. In conducting my reviews, special attention was paid to;

a. Establish whether the consolidated financial statements have been prepared in

accordance with consistently applied Accounting Policies and fairly present the

revenues and expenditures of government for the year and of the consolidated

financial position of the Consolidated Fund as at the end of the year.

b. Establish whether All funds were utilized with due attention to economy and

efficiency and only for the purposes for which the funds were provided.

c. Evaluate and obtain a sufficient understanding of the internal control structures of

government, assess control risk and identify reportable conditions, including

material internal control weaknesses.

d. Establish whether Management was in compliance with the Government of Uganda

financial regulations.

e. Establish whether all necessary supporting documents, records, and accounts have

been kept in respect of all activities, and are in agreement with the consolidated

financial statements presented.

4.0 AUDIT PROCEDURES PERFORMED

The following audit procedures were undertaken;

a. Revenue

Obtained schedules of all revenues collected and reconciled the amounts to the

entity’s cashbooks and bank statements.

b. Expenditure

The entity payment vouchers were examined for proper authorization, eligibility

and budgetary provision, accountability, and support documentation.

25

c. Internal Control System

Reviewed the internal control system and its operations to establish whether sound

controls were applied throughout the period audited.

d. Consolidated Financial Statements

Examined, on a test basis, evidence supporting the amounts and disclosures in the

consolidated financial statements; assessed the accounting principles used and

significant estimates made by management; as well as evaluating the overall

financial statement presentation.

5.0 Budget Performance

During the year under review, Local Governments realised revenue amounting to UGX.-

2,339,185,500,194 out of the projected amount of UGX.2,766,159,438,492 representing

85% the approved budget as summarized in the table below.

Table showing Budget Performance by Classification

Summary Approved Estimates

(Ugx)

Actual Released

(Ugx)

Performance

Percentage

District Councils 2,513,856,964,385 2,187,563,864,328 87

Urban/municipal Councils

252,302,474,107 151,621,635,866 60

Totals 2,766,159,438,492 2,339,185,500,194 85

6.0 FINDINGS

6.1 Categorization of Findings

The following system of profiling of the audit findings has been adopted to better prioritise

the implementation of audit recommendations;

Table showing categorisation of findings

No Category Description

1 High

significance

Has a significant/material impact, has a high likelihood of reoccurrence,

and in the opinion of the Auditor General, it requires urgent remedial

action. It is a matter of high risk or high stakeholder interest.

2 Moderate significance

Has a moderate impact, has a likelihood of reoccurrence, and in the opinion of the Auditor General, it requires remedial action. It is a matter

of medium risk or moderate stakeholder interest.

26

No Category Description

3 Low significance

Has a low impact, has a remote likelihood of reoccurrence, and in the opinion of the Auditor General, may not require much attention, though

its remediation may add value to the entity. It is a matter of low risk or low stakeholder interest.

Accordingly, the table below contains a categorized summary of the findings that follow

in the subsequent paragraphs of the report;

Table showing categorized summary of the findings

No Finding Significance

7.1 Funds not Accounted for High

7.2 Payroll Anomalies High

7.3 Outstanding Commitments High

7.4 Receivables High

7.5 Unspent balances High

7.6 Under Collection of Local Revenue High

7.7 Delayed implementation of IFMS In local governments High

7.8 Consolidation Anomalies High

7.0 DETAILED AUDIT FINDINGS

This section outlines the detailed audit findings, management responses thereof and my

recommendations.

7.1 Funds not Accounted for

Regulation 43 (2) of the Local Government Financial and Accounting Regulations 2007,

require Administrative advances to council employees to be authorized by the Chief

Executive and accounted for within a month. During the year under review

UGX.3,896,976,469 in respect of HLGs comprising of administrative advances,

incompletely vouched expenditure, unvouched expenditure and doubtful expenditure

remained outstanding as shown in the table below:-

Table 1 Funds not accounted for

Category Amount (UGX)

Unaccounted for Administrative advances 3,697,520,680

Incompletely vouched expenditure 126,878,410

Missing Vouchers 72,577,379

Total 3,896,976,469

27


The delayed submission of accountability may lead to falsification of documents resulting

into loss of funds. This was caused by lack of advances ledger to monitor advances and

failure by Accounting Officers to enforce accountability controls. There is need for

Accounting Officers to enforce controls relating to financial management and

accountability.

7.2 Payroll Anomalies




However, Payroll analysis carried out revealed that a sum of UGX. 11,390,722,259 was



1 Over payment 1,163,414,641



Total 11,390,722,259



(IFMS) and Integrated Personnel and payroll system (IPPS) and outright errors during the

salary payment process. Many of the Accounting Officers explained that they had initiated

the process of recovering the overpaid amounts. They indicated that they had also

embarked on training of staff to build capacity and address the challenges. I await the

outcome of the Accounting Officers commitment.

7.3 Outstanding Commitments

Regulation 11(d) of the Local Government Financial and Accounting Regulations, 2007

requires the Head of Finance to ensure that commitments are not approved unless there

is sufficient and committed funds available. However, a number of Higher Local

Governments for the year under review failed to adhere to the commitment control system

which resulted in committing Councils beyond the available financial resources.

28

Consequently fifteen entities accumulated outstanding commitments amounting to

UGX.9,101,467,408

The outstanding commitments can lead to litigation or confiscation of Council assets if not

settled timely. The Accounting Officers attributed the anomaly to under collection of local

revenue and shortfall in release of grants from Central Government.

I advised the Accounting Officers to adhere to provisions of the commitment control

system to eliminate arrears and ensure financial discipline.

7.4 Receivables

Paragraph 2.3.2.3 of the Local Governments Financial and Accounting Manual 2007

requires Council to minimize debtors by following up the collection of debts in a timely,

systematic and vigorous manner. However, it was observed that Fifty Seven (57) Local

Governments failed to collect outstanding revenue from different sources amounting to

UGX.11,294,653,082. This was attributed to laxity on the part of the Accounting Officers

to follow up collection of the debts.

Money owed to Council represents an asset that is idle, as it denies the Council the

opportunity of using the money to provide services promptly.

I advised the Accounting Officers to develop debt recovery strategies to ensure that all

outstanding debts are collected.

7.5 Unspent Balances

Section 17(2) of the Public Finance and Management Act, 2015 requires a vote that does

not expend money that was appropriated to the vote for the financial year at the end of

the financial year to repay the money to the consolidated fund.

It was however, observed that in sixteen (16) entities UGX. 11,550,319,031 in respect of

conditional grants remained unexpended at year end and was not returned to the

consolidated fund contrary to the law.

29

The Accounting Officers attributed the shortcoming to the late release of funds and

promised to repay back the funds to the Consolidated Fund.

I advised the Accounting Officers to ensure that the funds are repaid to the Consolidated

Fund.

7.6 Under Collection of Local Revenue


requires Councils to ensure collection of all budgeted revenue in an approved manner and

the revenue banked intact in Council accounts. However, a review of revenue performance

of 161 Councils revealed under collection of Local Revenue amounting to UGX.

17,165,844,562

Under collection of local revenue implies that all the planned activities for the year were

not implemented. This was attributed to lack of revenue enumeration and assessment and

failure to supervise collection of contracted revenue. There is need for the Accounting

Officers to carry out revenue assessments, maintain proper revenue records, sensitize the

tax payers and strengthen controls relating to collection of revenue.

I advised the Accounting Officers to sensitize tax payers and develop strategies and

enforce lawful measures to enhance revenue collection.

7.7 Delayed Implementation of IFMS in Local Governments

Government in a bid to improve transparency and accountability developed a strategy on

installing IFMS in District local governments and Urban councils by 2016/2017. However

since the start of the strategy in FY 2011/2012, only seventy three (73) local governments

out of 307 local governments have been integrated .

Delayed implementation affects the achievement of the overall objective of ensuring

improved transparecny, accountability and audit in Local Governments.

The matter requres urgent attention.

30

7.8 Consolidation Anomalies

Section 52(1) (b) of the PFM Act 2015 requires the Accountant General within three

months after the end of the financial year to submit consolidated annual accounts of the

Local Governments. However, the following anomalies have been identified:-

Incomplete Consolidation

It was observed that the annual consolidated accounts submitted for audit excluded

the financial statements of lower Local Government rendering the submission

incomplete.

Different Accounting Frame works

During the year the Accountant General issued two different accounting frameworks

to Local Government namely modified cash basis of accounting and accrual basis of

accounting to apply to Districts and Municipal Councils respectively. Consequently the

consolidation has two parts.

The matter requires urgent attention.

24

Table 2 Arua Branch Significant Crossing Cutting Issues.

25

Table 3 Fortportal Branch Significant Crossing Cutting Issues.

26

Table 4 Gulu Branch Significant Crossing Cutting Issues.

27

Table 5 Jinja Branch Significant Crossing Cutting Issues.

28

Table 6 Kampala Branch Significant Crossing Cutting Issues.

29

Table 7 Masaka Branch Significant Crossing Cutting Issues.

30

Table 8 Mbale Branch Significant Crossing Cutting Issues.

31

Table 9 Mbarara Branch Significant Crossing Cutting Issues.

32

Table 10 Soroti Branch Significant Crossing Cutting Issues.

33

PART III

6.0 OTHER SIGNIFICANT FINDINGS

6.1 ARUA BRANCH

6.1.1 ADJUMANI DLG

1. Lack of Adequate Classrooms

Section 2.1.2 (a) of the Local Government Management and Service Delivery (LGMSD)

Programme Operational Manual for Local Government, 2011 establishes the standard

for classroom pupil ratio 1:55.

However, an analysis of school enrolments in four (4) primary schools revealed

classroom pupil in excess of the standard as shown in Table 2.

School Name Class Male Female Current status

Minimum Quality Standards (MQS)

Biyaya P/S P 1 69 78 1: 147 1:54

P 2 65 59 1: 124 1:54

P 3 79 86 1: 165 1:54

P 4 93 96 1: 189 1:54

P 5 69 73 1: 142 1:54

P 6 59 67 1: 126 1:54

P 7 31 29 1: 60 1:54

Sub-Total 465 488 953 1:54

Unna P/S P 1 68 97 1: 165 1:54

P 2 60 68 1: 128 1:54

P 3 99 91 1: 190 1:54

P 4 93 119 1: 212 1:54

P 5 85 120 1: 205 1:54

P 6 50 77 1: 127 1:54

Sub-Total 455 572 1027 1:54

Pakele P/S P 1 68 88 1: 156 1:54

P 2 70 86 1: 156 1:54

P 3 80 98 1: 178 1:54

P 4 101 124 1: 225 1:54

P 5 89 67 1: 156 1:54

P 6 69 73 1: 142 1:54

P 7 32 38 1: 70 1:54

Sub-Total 509 574 1083 1:54

34

School Name Class Male Female Current status

Minimum Quality Standards (MQS)

Olia P/S P 1 54 60 1: 114 1:54

P 2 31 37 1: 68 1:54

P 3 56 34 1: 90 1:54

P 4 71 73 1: 144 1:54

P 5 33 34 1: 67 1:54

P 6 39 37 1: 76 1:54

Sub-Total 284 275 559 1:54

Failure to attain the requisite classroom Pupil ratio leads to congested classrooms that

do not provide a conducive learning environment.

The Accounting Officer explained that the classroom pupil ratio stands at 1:100 on

average due to influx of refugees.

I advised the Accounting Officer to liaise with the relevant authorities to address the

matter.

2. Non Disposal of Assets

Section 2.3.1.5 of the LGFAM, 2007 requires assets that are not in use to be disposed

of in accordance with the procedures in the Local Government Public Procurement and

Disposal of Assets (LGPPDA), 2006 regulations after recommendations from the Board

of Survey report.

It was however observed that a number of vehicles that were recommended for

boarding off had not been disposed off as shown below;

35

Abandoned cars parked at works department

Failure to dispose off these assets results in further deterioration of value.

The Accounting Officer explained that the district could not dispose of the vehicles

because their registration books were still with the line ministries.

I advised the Accounting Officer to expedite the process of disposal.

6.1.2 ARUA DLG

1. Salary Payment Anomalies

Section B (7) of the Uganda Public Standing Orders, salaries shall be fixed at annual

rates and paid correctly, promptly and as a lump sum in accordance with the approved

salary structure for the Public Service.

However, a review of the payroll data and IFMS payments, revealed that there was

salary over and under amounting to UGX.21,888,563. This could have been due to

failure to reconcile salary amounts to salary scales before effecting payment.

I advised the Accounting Officer to ensure that salary overpayments are recovered and

in future, necessary reconciliations are made before payments are effected.

6.1.3 KOBOKO DLG

1. Wasteful Expenditure

Regulation 9 (2) (b) of the Local Government Financial and Accounting Regulation

provides for the duties of the Chief Executive to include among others ensuring that

36

public properties and resources for which he is entrusted as an Accounting Officer are

properly managed and safe guarded.

A review of the records for the year under review revealed that the district paid M/S

Big G General Enterprises UGX.25,521,630 on payment voucher number 01/09/15/16

dated 1/9/2015 for construction of the park yard on a land belonging to Ministry of

Agriculture and Fisheries located at Oraba near the border of Southern Sudan. The

expenditure on the construction to date amounted to UGX 103,671,630 as shown in

the table below;

Vr. No Date Payee Amount F/Y

05/03/14/15 05/03/14/1

5

Big G General

Enterprises 18,526,370

2014/1

5

14/02/14/15 12/02/14/1

5 Big G General Enterprises

59,623,630 2014/1

5

01/09/15/16 01/09/15/1

6 Big G General Enterprises

25,521,630 2015/1

6

Total 103,671,63

0

However, it was observed that when the district sought retrospective permission to

use the land from the Ministry of Agriculture and Fisheries, the Permanent Secretary

in his letter dated 22nd October 2015 rejected the request stating that the land in

question is a gazetted animal quarantine station. Consequently, the expenditure

incurred is wasteful and a loss to the District.

The Accounting Officer explained that the park yard was meant to generate local

revenue for the district.

I advised the Accounting Officer that he should have sought prior permission of the

Ministry of Agriculture and Fisheries before undertaking the project.

2. Non Disposal of Assets

Regulation 122(6) of the Local Government Public Procurement and Disposal of Assets

(LGPPDA), 2006 requires the Accounting Officer to ensure that the assets of a council

are reviewed on an annual basis to identify those which are obsolete and be subject

to disposal and further requires the Accounting officer to appoint a Board of Survey to

verify the assets of the council to be boarded off.

37

It was observed that the obsolete assets that the Board of Survey report for 2014/15

recommended for disposal had not been disposed of at the time of writing this report

as shown below:

The delayed disposal of the assets may lead to further deterioration in value.

The Accounting Officer indicated that the process to dispose off the vehicles was on-

going.

I advised the Accounting Officer to ensure that the obsolete assets are disposed off.

3. Over Payment for a Motor Cycle

Regulation 24 (1) of the Local Governments Financial and Accounting Regulations,

2007 provides that expenditure for which there is insufficient or no provision in the

approved estimates shall not be incurred until a supplementary estimate has been

approved.

It was observed that UGX 19,352,000 was paid to M/s Nile Shipping Company Ltd on

payment voucher No PV-PN00014 for the Supply of Yamaha Motor cycle for the audit

department against the invoice value of UGX 15,500,000. Although the Head of

Finance attribute the over payment to error in the IFMIS system, there was no

evidence to show that management made efforts to recover UGX.3,852,000

erroneously paid to the supplier.

I advised the Accounting Officer to recover the fund over paid to the supplier.

4. Non Implementation of DPAC Recommendations

Section 88(7) of the Local Government Act 1997 requires the District Local Government

Public Accounts Committee to examine the reports of the Auditor General, Chief

Internal Auditor and any reports of commissions of inquiry and may, in relation to the

reports, require the attendance of any councilor or officer to explain matters arising

from the reports. Section 88(9) further provides for the Chairperson of the Council

and the Chief Administrative Officer or Town Clerk to implement the recommendations

of the Local Government Public Accounts Committee.

38

A review of DPAC report dated 30th December 2015 revealed that although District

Public Accounts Committee (DPAC) recommended the Accounting Officer to account

or recover advances totaling UGX.57,812,531 which was however still outstanding.

The Accounting Officer promised to submit the reports to the Council.

I advised the Accounting Officer to implement the District Public Accounts Committee

(DPAC).

5. Failure to meet the Minimum Standards of Health delivery at Koboko

Hospital

Section 2.1.1(D) of the Local Government Management and Service Delivery (LGMSD)

Programme Operational Manual for Local Governments 2011, prescribes minimum

standards of Health Centre IV/District Hospitals. However an audit inspection of the

hospital revealed the following shortcomings:-

Koboko Hospital

Basic Requirements Current status

Approved 190 posts 44 posts filled

Transport No vehicle

Running Water No running water

Electricity Only for emergency

Equipment Ultra-Sound machine has never been used

since it was donated due to lack of trained

staff

Mortuary Mortuary No mortuary attendant, no fridge

Pit Latrine Pit latrines were unhygienic

The Accounting Officer admitted the shortcomings and explained that the hospital had

not started using the Ultra sound machine due to lack of steady power supply and

trained manpower to operate the machine.

I advised the Accounting Officer to liaise with the relevant authorities to ensure that

the challenges are addressed.

6.1.4 MOYO DLG

1. Hospital Land under Dispute

It was observed that management of Moyo Hospital constructed the Out Patients

Department partly on a land belonging to the community neighboring the hospital and

on the road from the Town Council to the surrounding village before reaching an

39

agreement with members of the community and management of the Town Council.

Consequently, community opened a court case against the district but the Arua High

court Judge referred the case to the alternative dispute resolution. The District Council

under the council minute dated 22nd December 2015 agreed to pay UGX.665,333,864

to the community as a compensation for the land. Subsequently the district started

evicting members of the community from the land before compensation and in total

disregard of the advice from the judge. This case had not been resolved by the time

of writing this report hence causing a contingent liability to the district.

It was further observed that the pending settlement was neither recognized nor

disclosed in the district financial statements.

The Accounting Officer explained that the disputed land belonged to the hospital;

however it was erroneously given to the complainants by the District Land Board

sometime back with some condition, which the complainants failed to oblige. But the

Ministry of Health is willing to compensate the complainants.


6.1.5 NEBBI TC

1. Abandoned market shade at Namrwodho

The Town Council contracted MS Mola and Sons Trade Supplies Limited to construct a

market shade at Namrwodho at a contract sum of UGX.9,071,682 under Peace

Recovery and Development Plan (PRDP) funds. The start date was 12th August 2015

and end date was 12th November 2015. However, audit inspection revealed that the

market shade was in the bush and appeared to have been abandoned implying no

value for money spent as shown below.

Picture of the completed market shade that was left to waste and not put to use.

The Accounting Officer explained that the market shade was completed in June, 2016,

and that construction of the pit latrine was expected to start in the second quarter of

2016/17 financial year.

40


6.1.6 YUMBE DLG

1. Loss of Funds

Regulation 9 (2) b of the Local Finance and Accounting Regulations 2006 requires the

Accounting Officer to ensure that public monies, property and resources for which he

or she is responsible as Accounting Officer to be properly managed and safeguarded.

A report for criminal case dated 20th October 2015 issued by Clerk to Council revealed

that cash totaling UGX.23,000,000 was stolen from the UNICEF account.

However, according to the Accounting Officer the funds were not stolen from the

account but had been withdrawn to pay various teams on immunization campaign

exercise.


2. Inspection of Yumbe Health Center IV

An inspection of Yumbe Health Center IV carried out on 24th August 2016 revealed

several shortcomings as detailed below:


1. 25 Bed Female Ward Congested with 39 beds.

2 Mortuary No refrigerator

3 Compound Littered with garbage

4 Laboratory No refrigiration

5 Radiology Unit Unoperational due to poor standard

Lack of facilities adversely affects service delivery.

The Accounting Officer explained that the district no longer receives PHC development

funds hence the shortcomings.

I advised the Accounting Officer to engage the relevant authorities to address the

challenges.

6.1.7 ZOMBO DLG

41

1. Supply and installation of culverts at Nyandima Bridge

A review of district records revealed that funds to supply and installation of culverts

were received in January 2016 but signing of the contract agreement with the

contractor was done on 20th May 2016. This delay let to rolling over of the project to

the subsequent financial year. The contract was awarded at a contract sum of

UGX.49,864,065 and by 27th June 2016, UGX.39,993,480 representing 80% of the

contract sum had been paid to the contractor.

Inspection carried out on 15th September 2016 revealed the following shortcomings:

The Contract had long expired and the contractor had also abandoned the site

The road was not passable by the motorists

The design was poor and the culverts could not accommodate the water

during heavy rains. See the Picture below:

The Accounting Officer stated the contractor was requested to suspend the works

awaiting new design. The new design had been prepared and work is to commence

soon after approval by the Contracts Committee.

I advised the Accounting Officer to ensure that the works are properly compelled.

2. Undistributed Bicycles

Regulation 9(2)(b) of the Local Government Finance and Accounting Regulations 2007

requires the Accounting Officer to ensure that the public moneys, property and

resources for which he or she is responsible as accounting officer are properly

managed and safeguarded.

It was observed that the District procured 756 bicycles at UGX.170,856,000 for village

and Parish Chairpersons during the financial year 2013/14. It was however observed

that 117 bicycles costing UGX.26,442,000 remained undistributed.

42

I advised the Accounting Officer to ensure that the bicycles are distributed.

3. Construction of phase one OPD block at Alangi Health Centre III

The construction of phase one OPD block at Alangi Health Centre III was awarded to

Bosan Investment Uganda Limited at UGX 20,086,085 to be completed in three months

as per agreement dated 18th of May 2016. By the time of the audit a total of UGX

19,080,941 had been paid to the contractor but the following anomalies were noted

during audit inspection carried out on 16th September 2016;

The OPD block was still at foundation level, the contractor had abandoned the site

and the health centre was using a make shift structure as their OPD as shown in

the picture below:

There is no general ward and so cases that require admission are referred to Kango

HCIII and Zeu HCIII.

Patient mattresses were left lying on the compound.

The health centre was unattended to by the time of inspection.

The Accounting Officer explained that the district had an agreement with Baylor

Uganda to construct the OPD. However Baylor Uganda wounded up operations before

fulfilling the obligation.

I advised the health inspector to carry out close supervision on health facilities and

construction works.

6.1.8 ZOMBO TC

43

1. Irregular Payment of Council Emoluments

Section 4 of the First Schedule of the Local Governments Act states that the

expenditure of a Local Government Council in a financial year on emoluments and

allowances of chairperson, councilors, members of the district service commission, the

district tender board, the Local Government Public Accounts Committee and other

District Council Committees shall not exceed 20 percent of the total Local Revenue

collected by that Local Government Council in the previous financial year contrary to

the regulation, Council spent of UGX.4,668,400 above the authorized amount.

Excess payment of the emoluments suffocates implementation of the planned

activities.

The Accounting Officer attributed the expenditure to political pressure.

I advised the Accounting Officer to comply with the provisions of the law

6.2 FORT-PORTAL BRANCH 6.2.1 BULIISA TC

1 Non Compliance with Statutory Obligations

Section 119 (1) of the Income Tax Act, 1997 requires that where the Government of

Uganda, a Government Institution, a local authority, or any company controlled by the

Government of Uganda, pays an amount or amounts in aggregate exceeding one

million shillings to any person in Uganda for a supply of goods or materials of any kind;

or for a supply of any services, the payer shall withhold tax on the gross amount of

the payment. Further, Section 123 (1) of the same Act requires that a Withholding

Agent shall pay to Uganda Revenue Authority (URA) tax that has been withheld within

15 days after the end of the month.

It was however observed that UGX. 4,986,108 of Withholding Tax was not remitted to

the tax authority.

Non-compliance with the tax obligations may attract fines and penalties from the tax

body.

I advised the Accounting Officer to ensure that taxes are remitted to the Tax Authority.

44

6.2.2 BUNDIBUGYO DLG

1 Non Remittance of shared Local Revenue by the Sub-Counties

Section 85 (2) of the Local Governments Act 1997 requires that in rural areas, revenue

shall be collected by the Sub-County Councils, and a Sub-County Council shall retain

65 percent, or any other higher percentage as the District Council may approve, of the

revenue collected by it and pass the remaining percentage over to the district.

However, it was observed that the District had not received the 35% from its respective

Sub-Counties as required. Consequently the implementation of planned activities

funded by such revenue were not implemented.

The Accounting Officer explained that Council had set aside a vehicle to facilitate the

monitoring of revenue collection in sub-counties and enforce remittance.

I advised the Accounting Officer to ensure that the share of local revenue due from

the sub-counties collected.

2 Use of Non Prequalified Service Providers

Regulation 34 (7) of the LGPPDA, 2006 requires that only the pre-qualified providers

receive invitations to tender where prequalification is a requirement.

However, it was noted that procurements worth UGX 13,758,800 where

prequalification was a requirement were sought from un-prequalified suppliers.

Use of non-prequalified service providers is irregular.

I advised the Accounting Officer comply with the procurement law.

6.2.3 BUNDIBUGYO TC

1 Non Remittance of shared Revenue

Regulation 15 (A) of part V of the Fifth Schedule of the Local Government Act 1997

(as amended), requires a Town Council to remit 10% and 25% of the total local

revenue collected to Parish and Village Councils that make up the Town Council

respectively.

However, the Town council did not remit UGX 27,460,680 to Parishes and Village

Councils the shared local revenue as shown below:-

Amount Collected

(UGX)

35% Amount Due

(UGX)

Amount Remitted

(UGX)

Amount Unremitted

(UGX)

45

88,544,800 30,990,680 3,530,000 27,460,680

The Accounting Officer explained that the Town Council directly implemented some of

the Parish and Village Councils’ action plans instead of remitting cash to them.

This impairs the participation of Parish and Village Councils in the implementation of

community programs.

I advised the Accounting Officer to remit the shared local revenue as required by law.

6.2.4 NYAHUKA TC

1 Failure to Deduct and Remit Taxes

Section 123(1), 116(1) and 119 (1) of the Income Tax Act, 1997 as amended requires

the deduction of WHT and PAYE by withholding agents and prompt remittance of the

Tax to URA.

However, it was observed that tax deductions amounting to UGX.21,751,858 had not

remitted to URA by the time of audit.

Failure to remit tax may attract fines and penalties from the tax body.

The Accounting Officer explained that funds have been computed and they pledged to

remit them to Uganda Revenue Authority.

I await to see the outcome of the Accounting Officer’s promise.

6.2.5 KABAROLE DLG

1 Failure to Deduct and Remit Taxes



Tax to Uganda Revenue Authority (URA).

However, it was observed that tax deductions amounting to UGX 18,379,947 were not

or remitted to URA by the time of audit.

Failure to deduct or remit tax may attract fines and penalties from the tax body.

46

The Accounting Officer was advised to comply with the tax laws.

6.2.6 FORT-PORTAL MC

1 Non-remittance of Pay As You Earn (PAYE)

Section 116 (1) of the Income Tax Act 1997 as amended requires every employer to

withhold tax from a payment of employment income to an employee and Section 123

(1) of the same Act requires that a Withholding Agent shall pay to Uganda Revenue

Authority (URA) tax that has been withheld within 15 days after the end of the month.

It was observed that Council did not remit UGX.89,448,778 to URA, as shown in the

table below;

Table showing Monthly PAYE deductions & URA payments

Month Amount - UGX

July 48,931,647

August 51,046,136

September 53,686,457

October 50,921,934

November 52,019,526

December 52,538,339

January 52,026,624

February 52,350,281

March 51,977,155

April & May 103,954,310

June 55,191,608

Total PAYE deducted 624,644,017

Less: Total Payment to URA 535,195,239

Outstanding Liability to URA 89,448,778

Delayed payments of tax can attract fines and penalties from URA.

I advised the Accounting Officer to comply with the Tax Law.

6.2.7 RWIMI TC

47

1 Non Compliance with the Statutory Obligations

Section 123 (1) of the Income Tax Act 1997 requires that a Withholding Agent shall

pay to Uganda Revenue Authority (URA) tax that has been withheld within 15 days

after the end of the month.

However, it was observed that taxes in form of PAYE amounting to UGX 2,304,000

were not remitted to the Uganda Revenue Authority.

Failure to remit taxes may attract fines and penalties by URA.

I advised the Accounting Officer to comply with the tax law.

2 Non Remittance of Shared Revenue

Section 15 (A) of part V of the Fifth Schedule of the Local Governments Act 1997 (as

amended), requires a Town Council to remit 10% and 25% of the total Local Revenue

collected to Parish and Village Councils that make up the Town Council respectively.

However, it was observed that Council did not remit UGX.27,606,250 to Parishes and

Village Councils as shown below.

Amount Collected 35% Amount Due Amount Unremitted

78,875,000 27,606,250 27,460,680

This impairs the participation of Parish and Village Councils in the implementation of

Government programs.

The Accounting Officer explained that revenue collections from wards were found to

be too little and therefore, council resolved that wards be given one million as a one

off fund to facilitate their activities.

I advised the Accounting Officer to comply with the law.

6.2.8 RUBONA TC

1 Lack of a Master Development Plan

Section 32 (1) (b) (iii) of the Third Schedule of the Local Governments Act as amended

requires an Urban Council to have a master plan for its land.

48

It was however, observed that the Town Council does not have a master plan for its

land.

This creates a risk of uncoordinated developments in the Town Council.

The Accounting Officer explained that the development of a physical plan had been

incorporated in the Strategic plan for the subsequent five years but cited the shortage

of funds for frustrating earlier efforts to have one prepared.

I advised the Accounting Officer to liaise with the relevant authorities and ensure that

the master development plan for the Town Council is developed.

6.2.9 HOIMA DLG

1 Lack of a Fixed Assets Register

Regulation 58 (4) of the LGFAR of 2007, states that in order to comply with required

accounting systems, the properties, and assets of a local government, shall be properly

registered, titles issued, and valued and that requirement shall apply to both movable

and immovable properties and assets and it shall constitute a fixed asset register.

However, the fixed assets register was not presented for verification.

In the absence of a fixed assets register, the verification of the fixed assets was

rendered difficult.

The Accounting Officer was advised to present the fixed assets register for verification.

6.2.10 HOIMA MC

1 Un-Verified Top-up ON USIMID Funds

The audit noted that the MDG Account was credited with UGX.226,768,899 which was

supposedly a top-up as a result of foreign exchange difference (Ref: Vr D14/05/2015-16

dated 18/5/2016, transfer of USD.1,050,688.17 (equivalent2 to UGX.3,478,460,790).

2 Exchange rate of USD 1=UGX.3,310

49

Similarly the capacity building account received funds of UGX.27,566,199 as top up due

to variation of exchange rate in respect of amounts disbursed in dollars USD124.303,

equivalent to UGX.413,685,356, at a rate of USD 1 = UGX 3,328.04).

The detailed calculation of the top up and correspondences culminating to the decision

and thereafter the remittance of the said top-up funds were however not availed to the

audit team for verification. In the absence of which, audit cannot confirm whether there

was justification for the top-up and whether it was commensurate to the exchange losses.

I advised the Project Management to always accompany the top-up remittances with

breakdown of the losses suffered arising from the exchange rate fluctuations to ease

audit trail.

6.2.11 KAMWENGE DLG

1 Health Service Delivery

1.1 Failure to meet the Minimum Standards

Paragraph 2.1.1 (D) of the Local Government management and service delivery

(LGMSD) Programme operational manual for local Governments sets minimum

standards for the proper functioning of health centres. Inspection of the District

Hospital and Health Centres revealed failure to meet the standards of health service

delivery as shown below:

Health Centre National Standard Status Comment

Ntara HC IV Out Patient Department Small – does not accommodate the

numbers.

Health Centre was upgraded to HC IV but

structures remained

small

Mortuary None

Incinerator None

3 Doctors’ houses 1 Doctor’s house 2 houses lacking

Transport facility for emergency

None

Biguli HC III Establishment of 19 staff Only 11 staff in post 8 vacant posts

Essential drugs Out of stock

Transport facility None

Busiriba HC II Essential drugs Out of stock No explanation given


Establishment of 9 staff Only 5 in post 4 vacant posts.

Kyakarafu HC II Essential drugs Out of stock No explanation given


Establishment of 9 staff Only 4 in post 5 vacant posts.

Kiyagara HC II Essential drugs Out of stock No explanation given

50


Management attributed the inadequate standards to inadequate funding and explained

that negotiations with the Ministry of Health has been engaged to increase the funding

to address the inadequate standards.

I await to see the outcome.

2 Weak Internal Audit

Regulation 12 (a) of the LGFAR of 2007 requires that the Head of Internal Audit is

tasked to maintain an efficient and effective internal audit unit able to carry out the

functions of the unit.

However, it was observed that the unit does not design programmes for audit. There

is no documentation of work done. The planned audits were not carried out and their

scope is limited to a few departments at the District. It was also noted that there were

no reviews on books of accounts during the first quarter. Due to the above

observations the oversight role of the internal audit is compromised and the risks,

errors and misstatements may not be detected on time.

Management noted the recommendation and promised to improve.

I await to verify the results of the promised improvement.

3 Vacant Positions at the District

The Public Service Standing Orders, under para (A – a) Section 14, stipulate that “The

overall responsibility for ensuring proper implementation of Human Resource

Management procedures, policies, practices, structures, systems and terms and

conditions of service for the Public Service is vested in the Responsible Permanent

Secretary.”

I noted that the district had a number of key positions which have remained unfilled

for a long period. Given the seniority attached to these positions, continuing to go

unfilled will certainly negatively affect service delivery. The table below refers;

Table showing vacant posts

SN POST SN POST

51

1 Principal Internal Auditor 7 Staff Surveyor

2. District Engineer 8 Principal Veterinary Officer

3. Chief Finance Officer 9 Senior Fisheries Officer

4. Principal human resource officers 10 Senior Commercial Officer

5. Senior Labour Officer 11 Senior Planner

6. Senior Environment Officer 12 Senior Entomologist

The Accounting Officer explained that the district sought clearance from the Ministry

of Public Service to recruit people in these positions; however, approval has not yet

been granted.

I advised the Accounting Officer to continue liaising with the relevant stakeholders to

ensure that the vacant posts are filled.

6.2.12 KAMWENGE TC

1 Irregular Award of Revenue Collection Contracts

Regulation 51(3) of the LGPPDA 2006 requires that the Procurement and Disposal Unit

to compile and maintain a list of reserve prices approved by the contracts committee,

where applicable to which comparison may be made when awarding tenders.

Kamwenge Town Council entered into agreement with various contractors to collect

Revenue for the financial year 2015/2016 on behalf of the Town Council. However, it

was observed that Mamba Investment was contracted to collect Property tax at a

reserve or contract price of UGX.18,000,000 but only remitted UGX.3,000,000 to the

Council. The balance of UGX.15,000,000 has not been remitted to date.

Relatedly, the contract for revenue collection from the Bus/Taxi Park was awarded to

Kamwenge Tax Drivers Association at a price of UGX 42,000,000 despite the

recommended reserve price being 46,523,400. The Town Council lost UGX 4,523,400

from this contract. In both instances the Council lost revenue which is critical for

service delivery. This was attributed to poor Town Council policies of considering only

companies within Kamwenge for tender opportunities thereby denying tender

opportunities to other eligible companies outside Kamwenge. Management attributed

the anomaly to the District Procurement Unit which is the secretariat of the contracts

Committee.

The Accounting Officer is advised to comply with the Public Procurement and Disposal

of Assets regulations

52

2 Non Remittance of 35% Shared Local Revenue

Regulation 15 (A) of part V of the Fifth Schedule of the Local Government Act 1997

(as amended), states out how Locally Collected Revenue should be shared out among

counties, parishes and village councils.

It was observed that the Town Council did not remit an amount of UGX 30,923,770 to

the Lower Local Councils. Failure to remit the funds impairs the participation of the

lower local Councils in the implementation of community programs. The Accounting

Officer admitted the shortcoming and promised to remit funds in the financial year

2016/2017.


6.2.13 KASESE DLG

1 Lack of Personal Files for the Support Staff

Chapter (P-d) paragraph 5(b) of the Public Service Standing Orders, 2010 requires that

all officers including Support Staff irrespective of rank or terms of service shall have

an open personal file.

Contrary to the regulation, an amount of UGX.30,215,256 paid to support staff lacked

personal files.

The Accounting Officer explained that efforts have been made to have the personal

files in place.

The matter require urgent attention.

53

6.2.14 HIMA TC

1 Uninstalled Culverts – Nyakakindo Road

Section 5.4.1 of the Local Governments Financial and Accounting Manual (LGFAM)

2007 states that when there is need for goods or services in a department, the Vote

Controller shall raise a written request to the Chief Executive.

It was observed that UGX.4,138,200 spent on the purchase of eight (8) culverts for

Nyakakindo road. However, the culverts were not installed.

The Accounting Officer explained that the culverts had been procured but their

installation had been hampered by the budget cuts in respect of urban roads.

I advised the Accounting Officer to ensure that the culverts are installed.

6.2.15 KATWE KABATORO TC

1 Diversion of Public Library Funds

Regulation 37(2) of the Local Government Finance and Accounting Regulations of 2007

(LGFAR of 2007) requires that Conditional grants from the Government shall be part

of local government revenue but planned for, recorded and accounted for according

to the grant conditions.

However, it was noted that UGX. 8,179,000 received during the year as a Conditional

Grant for Public Libraries had been spent by the entity for other activities.

In this case, the funds were not used for public library activities as required.

The Accounting Officer should ensure that grants are spent as per grant conditions.

2 Unexecuted – Culverts Installation

During the Financial Year 2015/2016, the entity procured from Ms Jennex Enterprises

200 pieces of 600mm culverts at a cost of UGX. 41,000,000 vide Voucher number 10/6

under Roads Account. The items were to be used on planned works for various roads

that included; Kikasamba road, Kabatoro zone B roads, Kabatoro zone A roads and

Hambumbe road. However, it was observed that the items were not installed as

planned as shown in the pictures below:

54

The Accounting Officer explained that the culverts installation had been halted by

inadequate funding as a result of budget cuts.

I advised the Accounting Officer to ensure that the culverts are installed.

6.2.16 KIBAALE DLG

1 Outstanding Arrears

Section B, paragraph 25 of the Public Service Sanding Orders, 2010 provide that salary

arrears that accrue to a Public Officer within a financial year shall be paid through the

payroll within the same financial year.

Contrary to the above standing order, the district accumulated salary arrears

amounting to UGX.12,271,922 during the year.

Delayed payment of salaries demotivates staff and negatively impacts on service

delivery.

The Accounting Officer explained that employees temporarily missed salary because

of the loan and tax deductions exceeding 50% of their net salary which was later,

rectified and their salary arrears paid. However, no evidence of payment was availed

for review.

The Accounting Officer was advised to ensure that the arrears are paid.

2 Outstanding Rental Collections

Regulation 32 of the LGFAR, 2007, states that the Head of Finance is responsible for

ensuring that revenue collectors, defined under these regulations, carry out their

duties properly to ensure that all revenue due to the Council is promptly collected in

the approved manner and banked intact.

The District owns residential units which were allocated to selected staff at a subsidised

monthly rental fee.

55

However, out of ten staff currently occupying the houses, only one staff pays the rental

fees through monthly salary deduction while the other 9 are not paying as shown in

the table below:

Institutional quarters Title Monthly rental fee

Annual rental fee

Gordon Twesiime DE 50,000

600,000

DR Kyamanywa Dan DHO 50,000

600,000

Robert Mutungi DCAO 50,000

600,000

Balisanyuka Joseph CAO 50,000

600,000

Mary Mugisa Secretary 35,000

420,000

Peter Sentayi DPO 50,000

600,000

Mugoya Amma Information Officer 35,000

420,000

Nsekanabo M Secretary 35,000

420,000

Basirika Florence Secretary 35,000

420,000

390,000

4,680,000

Consequently, for the year under review, a sum of UGX.4,680,000 remained

uncollected.

The Accounting Officer explained that arrangements had been put in place to ensure

that recovery is made from the monthly salaries of the affected staff including arrears

effective from 1st July 2016 on the affected staff through the payroll to recover rent

from their monthly salaries including rental arrears effective from 1st July 2016.

I await for evidence regarding the recovery of the rental income.

6.2.17 KIBAALE TC

1 Non-Remittance of Shared Local Revenue

Regulation 15(A) of Part V of the Fifth Schedule of the Local Government Act, 1997,

(as amended) requires a Town Council to remit 10% and 25% of the total local revenue

collected to Parish/Wards and Village Councils that make up the Town Council

respectively.

However, Council did not remit an amount of UGX 36,177,291 to Parishes and Village

Councils contrary to the law.

56

The Accounting Officer explained that the Council directly implemented some of the

Parish and Village Councils’ action plans instead of remitting cash to them.

Failure to remit such funds impairs the participation of Parish and Village Councils in

the mobilization and implementation of Government programs.

I advised the Accounting Officer to remit the shared local revenue to the Lower Council

as required by law.

6.2.18 KAGADI TC

1 Internal Borrowing

Regulation 37(2) of the LGFAR 2007 requires that conditional grants from Central

Government are planned for, recorded and accounted for in accordance with the grant

conditions and guidelines.

Contrary to the provision, UGX.14,465,000 was borrowed from Local Government

Management Service Delivery Programme (LGMSDP) and Road Fund Accounts to

finance Council administrative activities. The borrowing meant that the planned

programs under those projects remained unimplemented. By the time of audit, the

refunds had not been paid back.

The Accounting Officer admitted the shortcoming and explained that UGX 10,000,000

(Ten million shillings only) was refunded but there was no evidence presented for audit

verification.

I advised the Accounting Officer to ensure that all the funds borrowed are refunded.

6.2.19 MUHOORO TC

1 Non-Remittance of Shared Local Revenue

Regulation 15(A) of Part V of the Fifth Schedule of the Local Government Act 1997 (as

amended) requires a Town Council to remit 10% and 25% of the total local revenue

collected to Parish/Wards and Village Councils that make up the Town Council

respectively.

It was observed that Council did not remit of UGX.28,470,610 to the Parishes and

Village Councils as required by the Act. Failure to remit shared local revenue impairs

57

the participation of Parish and Village Councils in the mobilization and implementation

of Government programs.

The Accounting Officer explained that the Council directly implemented some of the

Parish and Village Councils’ action plans as the legal status of LC 1 and LC 11 was not

clear.

I advised the Accounting Officer to ensure that the shared local revenue is remitted to

the lower units as requires by law.

6.2.20 MASINDI DLG

1 Lack of Management of Information Technology

Section 110(1) of the Local Government Finance and Accounting Regulations 2007

requires the Chief Executive to designate an officer to ensure that adequate

Information and Communication Technology policies are established and are applied

to enable adequate security and protection over computers and of data held on

computers or information systems operated by Council. Audit inspection observed that

despite the district having desktops, laptops and other computer equipments, it does

not have an IT policy to govern their control and management.

This may result into loss or misuse of IT equipment, software and information.

The Accounting Officer explained that a draft IT Policy was in place awaiting

approval.

I advised the Accounting Officer to ensure that an IT policy is developed and approved

expeditiously.

6.2.21 MASINDI MC

1 Salary Arrears

Section 25 (B-a) of the Public Service Standing Orders (2010) states that Salary arrears

that accrue to a Public Officer within a financial year shall be paid through the payroll

within the same financial year.

However, it was observed that there were salary arrears amounting to UGX.

87,338,360 at year end.

Delays to pay salary demotivates staff and adversely affects service delivery.

58

The Accounting Officer explained that they have made several correspondences to the

Permanent /Secretary to Treasury but funds meant to pay these salary arrears have

not been released.

I advised the Accounting Officer to engage the relevant authorities and ensure that

the arrears are cleared.

2 Poor Road Drainage Systems

Section B5 of the District Roads Technical Manual (Manual A) (2004) lays out the

standards, roles and descriptions of the different road drainage structures.

The following shortcomings were identified in respect of the drainage works executed

on the various Municipal roads during the year:

There were incomplete side drain works on Ntuuha Road on which an amount of

UGX.18,508,000 had been spent under PRDP programme during the year.

Culvert inlets and outlets at Ntuuha Road were also not supported with aprons which

might result in water bypassing the drainage system and damaging the road.

There were unused construction materials (Hardcore) and 13 uninstalled culverts along

Kijura Academy Road. The purchase price of these items was estimated at

UGX. 15,928,000 as shown below;

Incomplete stone pitching

works along Ntuuha road

Exposed culvert along

Ntuuha road

Eroded culvert surroundings

and base with water flowing under a culvert along Ntuuha

road

Uninstalled culverts lying along Kijura Academy Road

along side heaps of hardcore stones

Culvert rings being delivered at

the time of audit inspection for

works on Kijura Academy road

The Accounting Officer explained that the implementing unit of urban roads resealing

under Ministry of Works and Transport was still on ground and stone pitching works

are still on going up to the completion of the planned scope of 420m2and promised to

ensure that both quality and quantity are not compromised.


59

3 Poor Stores Management

Paragraph 2.3.2.2 (2) of the LGFAM of 2007 requires Local Governments to provide a

system of stores records that among other things registers the issuing of stores against

pre-numbered accountable stationery. On the same note, guideline 7.1 (h) of Revised

Guidelines for Manual and Mechanized routine and periodic road maintenance (2013)

requires the maintenance of documentation on tools and implements issuance and

other stores information.

However, it was observed that during the year, various items worth UGX.51,485,000

were purchased and issued out in respect of road works without stores requisitions or

issue vouchers.

The Accounting Officer explained that by the time of audit, the officer in charge of the

stores was not on station but the stores requisitions are available for verification.

However, they were not provided for audit verification.

I advised the Accounting Officer to ensure that the relevant documentation is

maintained for reference.

6.2.22 KYEGEGWA DLG

1 Irregular Direct Procurements

Regulation 40(1) of LGPPDA, 2006; allows the use of the direct procurement method

only where exceptional circumstances prevent the use of competition; and the

Contracts Committee shall approve a direct procurement method. The exceptional

circumstances include emergency cases, series are available from only one provider

and procurements where no advantage can be obtained by further completion etc.

It was observed that direct procurements worth UGX 28,204,000 were undertaken

without justification.

The Accounting Officer explained that the district used a direct method of procurement

under exceptional circumstances.

60

I advised the Accounting Officer to ensure that direct procurement method is applied

as required by regulations.

2 Lack of an Update Fixed Asset Register

Regulation 85, 86 and 87 of the LGFAR 2007 charge the heads of departments to

ensure proper recording and custody of all inventories of vehicles, light and heavy

plant, working equipment and loose tools.

However, it was observed that the register had not been updated in assets like digital

cameras, filling cabinets purchased during the year. This weakens controls over the

fixed assets.

I advised the accounting officer to ensure the fixed asset register is updated regularly.

6.2.23 KIRYANDONGO DLG

1 Outstanding Hospital Electricity Bills

Paragraph 3.11 of the LGFAM of 2007 requires that no expenditure is incurred on a

service which cannot be completed with the funds authorized for it within a financial

year.

It was observed that UGX 164,583,258 was outstanding as at June 2016 as shown

below.

DATE A/C No. AMOUNT INCURRED AMOUNT PAID BALANCE

Bal b/d (2014/15) 200372524

34,444,192

- 34,444,192

July (2015) 200372524

6,566,721 3,000,000 3,566,721

Nov (2015) 205278134

13,819,214 3,000,000 10,819,214

Feb (2016) 205278134

25,958,150 3,000,000 22,958,150

March (2016) 205278134

28,116,349 3,000,000 25,116,349

April (2016) 205278134

23,017,216

- 23,017,216

May (2016) 205278134

18,337,560

- 18,337,560

June (2016) 205278134

24,766,636

- 24,766,636

March (2016) 205395304

200,000

- 200,000

April (2016) 205395304

274,392

- 274,392

May (2016) 205395304

49,248

- 49,248

June (2016) 205395304

263,937

- 263,937

July (2016) 205395304

769,643

- 769,643

Total

176,583,258 12,000,000 164,583,258

61

The Accounting Officer explained that they are trying to settle the bill in instalments

and as a measure to reduce the bill further, staff houses shall be disconnected from

the hospital metre.


2 Lack of a Risk Management Policy

Regulation 103 (1&4) of the LGFAR of 2007, requires the Head of Finance to establish

a documented risk management system, since it is his/her the responsibility to advice

on risk management and effectiveness of internal control systems.

It was observed that the District does not have a risk management policy. This

weakens the internal control systems.

The Accounting Officer admitted the shortcoming and promised to constitute a task

force to draft the policy for tabling before Council.

I await to see the outcome of the Accounting Officer’s promise.

3 Failure to meet the minimum Education Standards

The Local Governments Management and Service Delivery (LGMSD) operational

manual 2.1.2 (a) requires Local Governments to deliver services in conforming with

Primary Education minimum standards of service delivery. However, it was observed

that the District is operating below the minimum standards as shown in table below:-

National Standard District Status

Teacher Pupil Ratio 1:53 1:65

Pupils Latrine Stance Ratio 1:25 1:54

Pupil Classroom Ratio 1:40 1:83

This was attributed to insufficient funding. The inadequacy in school facilitation

negatively impacts on service delivery.

The Accounting Officer explained that together with Government and the development

partners more classrooms will be constructed to help solve the problem.

62

I advised the Accounting Officer to continue engaging the various stakeholders and

ensure that the challenges are addressed.

6.2.24 KIRYANDONGO TC

1 Non Remittance of Shared Local Revenue

The Local Governments Act 1997 (as amended), fifth schedule, part V(15A), requires

a Town Council to distribute 5% and 20% of the total local revenue collected among

its parishes and village councils respectively.

However, the Town Council did not remit UGX.17,383,592 to the Lower Councils.

Failure to remit the share Local Revenue impairs the participation of the lower local

Councils in the implementation of community programs.

The Accounting Officer explained that the Town Council directly implemented the

Parish and Village Councils action plans instead of remitting cash to them, however,

there was no evidence confirm this.


the lower units.

6.2.25 KYENJOJO DLG

1 Doubtful Payment to Baylor

Paragraph 5.4.6 (1) of the LGFAM of 2007 requires that before any voucher is passed

for payment the Head of Finance shall ensure that the voucher and any supporting

documents are correct in all relevant particulars, and that sufficient provision is

available in the relevant item to meet the expenditure.

However, management paid UGX.5,928,000 to M/s. Baylor Uganda purportedly in

respect of an unaccounted for funds Baylor was demanding from various Health

Centres because a staff of Baylor had lost accountability. I was not availed the

Memorandum of Understanding(MoU) between the District and Baylor Uganda to

justify the expenditure. In the absence of the memorandum of understanding, the

payment made to Baylor is rendered doubtful.

63

The Accounting Officer claimed that the memorandum of Understanding was available

but it was presented for audit.

I advised the Accounting Officer to provide the Memorandum of Understanding with

Baylor Uganda for verification.

2 Delayed Deletion from the Payroll

Section 5.6.3 (2) of the Local Government Finance and Accountability Manual, 2007

requires that staff who have left the Local Government service should be immediately

deleted from the payroll.

However, it was revealed that some of the staff who left during the year continued to

access the payroll resulting into a financial loss of UGX.2,659,750. Delayed deletion

from the payroll causes financial loss to the entity.

Management acknowledged the oversight and promised to make recoveries from the

retirement benefits of the individuals identified.

I advised the Accounting Officer to ensure that the individuals identified are deleted

from the payroll and the accounts recovered from their retirement benefits.

6.2.26 KYENJONJO TC



amended) requires a Town Council to remit 10% and 25% of the total local revenue


The Town Council collected local revenue of UGX. 241,101,560 but failed to remit UGX.

56,475,390 to parishes and Village Councils as shown below:

Collected 25% amount due Amount remitted Amount Unremitted

241,101,560 60,275,390 3,800,000 56,475,390

The Accounting Officer claimed that the Town Council is strained by insufficient funds.

The failure to remit the shared local revenue impairs the participation of the lower

local councils in the implementation of community programs.

64

I advised the Accounting Officer to remit the shared local revenue to the lower

councils as required by law.

6.2.27 KYARUSOZI TC


Section 15 (A) of Part V of the Fifth Schedule of the Local Governments Act, 1997 (as

amended) requires a Town Council to remit 10% and 25% of the total Local Revenue


However, it was observed that Council did not remit UGX 14,964,042 to the Parishes

and Village Councils as required by the Law as shown below.

Collected 35% amount due Amount remitted Amount Unremitted

54,182,977 18,964,042

4,000,000 14,964,042

The Accounting Officer promised to remit the balance.

I await the outcome of the Accounting Officer promise.

6.2.28 KARAGO TC

1 Non-remittance of Shared Local Revenue

Section 15 (A) of Part V of the Fifth Schedule of the Local Government Act 1997 (as



The Town Council collected Local Revenue of UGX.47,213,500 but failed to remit UGX.

16,524,725 to parishes and Village Councils.

The failure to remit the shared Local Revenue impairs the participation of the lower


Management explained that the wards and parishes requested for the direct

implementation of the activities.

I advised the Accounting Officer to ensure that all monies due to wards are remitted

on time to aid implementation of Government activities.

65

6.2.29 NTOROKO DLG

1 Anomalies in the in Drilling of Four Boreholes

The construction of four boreholes were awarded to Sumadhura Technologies LTD at

a contract sum of UGX 109,538,220. Review of supporting documentations and

inspections revealed the following shortcoming;-

The water quality analysis, a report by NWSC was not presented for audit verification.

The inspection report dated 7th/April/2016 and the supporting measurement sheet,

revealed that the works verified to have been done to completion by the contractor

amounted to UGX 103,711,061. However, UGX 108,643,461 was applied on the

payment certificate to calculate amount due after deducting retention which is in

excess of verified works by UGX 4,932,400.

The Accounting Officer was advised to ensure that anomalies are rectified.

2 Irregular Levy of 3% Tax

Part IV, Other Revenues Section 13 (o) of the Fifth Schedule of the Local Government

Act, requires any other source of revenue to be approved by the Minister for Local

Government before its assessment and collection.

However, it was observed that the District levied 3% tax and collected UGX.2,043,607

from contracts funded by conditional grants without the Ministers approval contrary to

the law.

The Accounting Officer explained that Council had approved thee measures to raise

local revenue since taxes on produce had been suspended by the Minister and the

District had since abandoned its collection.

I advised the Accounting Officer to only levy taxes which are approved by the Ministry

as requires by the regulations.

6.2.30 KARUGUTIU TC



amended), requires a Town Council to remit 10% and 25% of the total local revenue


66

It was noted that Council collected UGX 52,182,828 as local revenue during the period

of audit. However, the Town council did not remit UGX 18,263,990 to Parishes and

Village Councils as shared local revenue as required by the Act as detailed below:

Collected(UGX) 35% amount due(UGX) Amount Unremitted(UGX)

52,182,828 18,263,990 18,263,990

The Accounting Officer explained that they have so far remitted UGX.3,000,000 and

will remit the rest before the end of the financial year.

I advised the Accounting Officer to ensure that all monies due to wards are remitted

on time to aid implementation of government activities.




Tax to URA.

However, it was observed that tax deductions amounting to UGX .3,022,559 had not

been remitted to URA by the time of audit.

Failure to deduct or remit tax attracts penalties and fines from the Tax body authority.

The Accounting Officer stated that so taxes had been paid on the contract sum,

however, there was no evidence to confirm the remittance.


6.2.31 RWEBISENGO TC


Section 15(A) of Part V of the Fifth Schedule of the Local Governments Act, 1997, (as



It was observed that Council did not remit UGX 5,724,909 to Parishes and Village

Councils as shared Local Revenue as required by the law as shown below:-

67

Collected 35% amount due

Amount

Unremitted

Amount

Unremitted

27,214,025 9,524,909 3,800,000 5,724,909

The Accounting Officer explained that the amount that was so far remitted had not

been accounted for and therefore could not remit more funds.

I advised the Accounting Officer to ensure that all the shared local revenue is remitted

to the lower units as required by law.

2 Lack of Up-to date Revenue Registers

Regulation 33 of the LGFARs of, 2007, provides for recording of revenue details in the

revenue registers and Paragraph 4.6.2 (2) of the LGFAM 2007 requires the

maintenance of each source of revenue in a separate revenue register.

However, it was observed that the revenue register incomplete and not up-to-date.

This weakens the controls over local revenue collections.

The Accounting Officer explained that an on job training on how to fully update the

revenue registers was going on in the district.

I advised the Accounting Officer to ensure that the revenue registers are regularly

updated.

6.2.32 KIBUKU TC


Section 119 (1) of the Income Tax Act, 1997 as amended requires that where the

Government of Uganda, a Government Institution, a local authority, or any company

controlled by the Government of Uganda, pays an amount or amounts in aggregate

exceeding one million shillings to any person in Uganda for a supply of goods or

materials of any kind; or for a supply of any services, the payer shall withhold tax on

the gross amount of the payment. Section 123 (1) requires that a Withholding Agent

shall pay to Uganda Revenue Authority (URA) tax that has been withheld within 15

days after the end of the month.

However, it was observed that withholding tax of UGX.7,593,266 was not deducted.

Non compliance with the tax law may attract fines and penalties from the tax body.

68



Regulation 15 (A) of Part V of the Fifth Schedule of the Local Government Act 1997

(as amended), requires a Town Council to remit 10% and 25% of the total local

revenue collected to Parish and Village Councils that make up the Town Council

respectively.

However, it was observed that Council did not remit UGX 2,325,227 to Parishes and

Village Councils as shown below:

Collected 35% amount due Amount Remitted Amount Unremitted

11,482,078 4,225,227 1,900,000 2,325,227

The Accounting Officer explained that the Town Council directly implemented some of

the Parish and Village Councils’ action plans instead of remitting cash to them but there

was no documentary evidence to this effect. This impairs the participation of Parish

and Village Councils in the implementation and mobilization of Government programs.

I advised the Accounting Officer to ensure that the share local revenue is remitted to

the lower units as required by law.

6.3 GULU BRANCH 6.3.1 AMOLATAR DLG

1. Capitation Grant anomalies

1.1 Failure to meet national minimum standards of service delivery in the

education sector

Paragraph 2.1.2 of the revised Local Government Management and Service Delivery

(LGMSD) Operational Manual, 2009, requires schools to meet specific standards as

follows:- one teacher for every 55 pupils; one class room for every 55 pupils; one desk

for every 3 pupils; and one latrine stance for every 40 pupils.

It was however observed that the district had schools that exceeded the required ratios

which has caused pupils to study in bad conditions.

There is a risk that the practice may lead to poor academic performance coupled with

sanitation challenges.

The Accounting Officer attributed the challenges to inadequate funding.

69


the national standards are met in all schools for better performance.

1.2 Variation in Pupils Enrolments

UPE guidelines require that a school should be given a grant of UGX.9,500 per pupil

per year basing on the number of enrolments at schools.

It was however observed that there were variance of 2,182 pupils between the

enrolment data submitted to the Ministry of 20,514 pupils and that held at schools of

22,696 pupils. Audit also noted that this led to an under-funding of UGX.36,782,962

from the sampled schools in the district.

Underfunding to schools leads to difficulties in running schools under UPE programme

by Head teachers.

Accounting Officer attributed the variances to the high rate of absenteeism and drop

out of pupils during rainy and harvest seasons which creates disparities in the

enrolment submitted to the Ministry and actual numbers established during head

count.

I advised the Accounting Officer to ensure that the correct enumeration data is

submitted to the Ministry of Education.

1.3 Inadequate UPE funding

Examination of budgets for Capitation grant of sampled UPE schools in the district for

the financial year 2015/16 revealed that, out of the total budget of UGX.184,593,429,

only UGX.161,933,351was realized leading to a shortfall of UGX.22,660,078

representing 11%.

There is a risk of funds not being sufficient to support the learners leading to poor

performance.

The Accounting Officer explained that the district has very little control if any on the

releases of funds other than those from the Ministry of Finance.

I advised the Accounting Officer to liaise with various stake holders to ensure

improvement in the UPE funding.

70

6.3.2 AMURU DLG 1.0 Health Service Delivery

1.1 Failure to meet minimum Health Standards by Atiak HC IV Paragraph 2.1.2 (D) of the Local Governments Management and Service Delivery

(LGMSD) Program Operational Manual for Local Governments sets minimum standards

for proper functioning of Health centers. An inspection of Atiak HC IV revealed the

following short comings:-

Items Minimum Standard

HC IV Current

Status

Audit Remarks

Maternity ward 1 1 Dilapidated

General wards 2 1 1 general ward shared by both children and adults, dilapidated structure

Medical waste

pit

1 0 The incinerator is in dilapidated state and out of

the HCIV land boundary

Placenta pit 1 1 The placenta pit is dilapidated and out of land boundary

Stance pit

latrine

2 blocks of

8 stance pit latrine

2 Only 1 block 2stance pit latrine

Theater 18 staff

establishment

0 There is no functioning theatre; however a

construction under the funding of World Bank was being made by the time of audit

Mortuary 1 0 No mortuary

Transport 1 1 One ambulance shared by all the centers in the district as indicated by the in-charge

Beds (Bed

capacity 30)

- 20 Children were observed sleeping on the floor

Inspection of the health facility revealed other anomalies as shown in the pictures

below;

Collapsing sealing board in the in-patient

ward

Hepatitis B machine not being used

because of lack of toner

Insufficient number of beds in children ward, admitted child sleeping on the floor

Open-door women’s toilet, broken doors

71

Goats roaming in OPD, HCIV not fenced

In patient ward with Broken windows

Abandoned medical supplies for general

ward since 2011

Abandoned general ward since 2011

The Accounting Officer explained that a committee had been appointed to inspect the

health facilities and identify the challenges so that measures may be devised to

improve their status.

I await the outcome of the Accounting Officer’s intervention.

1.2 Missing medicines at Atiak Health Centre IV

A reconciliation of the bin card recordings and the actual medicines was done on

1st/09/2016 to verify whether the stock balances as recorded on the bin-cards match

the actual quantities of medicines on the shelves.

It was however observed that there were variances between the bin-card stock records

and the actual medicines on the shelves as shown below;-

Sampled Drug Stock Card

Balance

Physical Count Variance

Cotrimoxazole 960

mgs

37000 35000 2000

Quinine tabs 2000 1000 1000

Artesunate 2370 1950 420

Metrogen 346 190 156

41,716 38,140 4,980

The variances were attributed to the Nursing Assistant who does not update bin cards

whenever medicines are issued from stores instantly.

The in-charge explained that the responsible officer is still new and not yet familiar

with proper stock-taking and documentation.

I advised the Accounting Officer to build capacity of the stores personnel responsible

for the medicines.

72

6.3.3 APAC DLG

1. Alleged theft of drugs from Apac Hospital

There was an alleged theft of 14 boxes of Lumartem (30 x 18), 112 boxes of Lumatem

(30 x 12), 169 boxes and 120 boxes of Artefan/Coatem (30 x 6) and Lumarten (30 x

24) in Apac Hospital. However, there were no efforts towards recovery of these

medicines by the hospital and district management, the matter was left in the hands

of the health monitoring team from Ministry of Health.

This was attributed to laxity in medicines supervision by hospital management and

District team.

I advised the Accounting Officer to follow up the issue till it is settled or medicines

recovered.

2. Outstanding utility bills for Apac Hospital

The Local Government Financial and Accounting manual 2007 requires all local

governments recurrent and capital development expenditure transactions to be

processed through the Commitment Control Systems (CCS)

However, it was observed that the hospital had outstanding electricity bill amounting

to UGX.211,791,268 as at 30th June 2016.

The hospital is at a risk of power disconnection by the utility company.

The Accounting Officer explained that efforts to settle outstanding bills were being

handled with Ministry of Health.

I advised the Accounting Officer to ensure that the outstanding bill is settled promptly

to avoid disconnection.

3. Lack of Information communication Technology (ICT) Policy

Regulation 110(1) of Local Government Financial and Accounting Regulation, 2007

provides that the Chief Executive shall designate an officer to ensure that adequate

information and communication technology policies are established and are applied to

enable adequate security and protection over computers and of data held on

computers or information systems operated by the council.

However, it was observed that there was no IT policy to guide staff on the use of IT

equipment, and the software.

73

I advised the Accounting Officer to develop an IT Policy.

4. Un-acknowledged Withholding Tax Remittances

Section 127(1) of the Income Tax Act 1997 ( as amended) requires a withholding

agent shall maintain, and keep available for inspection by the Commissioner, records

showing, in relation to each year of income - payments made to a payee; and tax

withheld from those payments.

However, it was observed that 6% withholding tax totaling to UGX.32,725,867

deducted from service providers and purportedly remitted to Uganda Revenue

Authority lacked acknowledgement receipts from the Tax Authority.

Non-remittance of taxes attracts fines and penalties from the tax body.

I advised the Accounting Oficer to obtain the acknowledgement receipts from URA and

present them for audit verification.

6.3.4 APAC TC

1. Lack of an up-to-date Valuation List

Section 4 of the Local Government (Rating) Regulations, 2006 requires a Local

Government to produce a valuation list every five years. However, it was observed that

the Town Council has never carried out valuation of its properties. Consequently, the

values applied may not be the prevailing market rates leading to under-collection of

local revenue.

The Accounting Officer explained that the Council uses values produced by valuers

procured by Central Government in 2006/2007 which were supposed to be reviewed

in 2011/2012 but due to financial constraints; the Council is unable to procure valuers.

I advised the Accounting Officer to ensure that an up-to-date valuation list is produced.

6.3.5 ADUKU TC

1. Lack of a Valuation List

Section 4 of the Local Governments (Rating) Regulations, 2006 requires a Local

Government to produce a valuation list every five years. However, the Town Council

did not have a valuation list. Consequently, there is a risk of under assessment of

taxes leading to under-collection of Local Revenue.

74

The Accounting Officer explained that Council will engage a professional valuer to value

all the properties for the appropriate taxation.

I advised the Accounting Officer to ensure that valuation of properties is carried out

and the values of the existing properties are ascertained as required by the regulations.

6.3.6 AGAGO DLG

1. Payment for no work done

Regulation 9.2 (b &c) of the local governments financial and accounting regulations,

2007 requires the accounting officer to ensure that the public moneys, property and


managed and safe guarded.

The district awarded contracts to two companies (Ms. Sri Balaji Industries EA Ltd and

Ms. Ebowa Investment Ltd) at contract sums of UGX.136,474,080 and

UGX.151,488,400 respectively for silting, drilling, pump testing, water quality analysis

and installation of deep boreholes during the period under review. The contracts start

and end dates were 10th March, 2016 and 10th June, 2016.

However, audit inspection carried out on 25th and 26th June, 2016 revealed that no

work had been done by the two contractors at the sites.

However, it was observed that Council made payments of UGX.129,534,780 and

UGX.138,650,400 respectively on 30th June, 2016 for no work done.


2. Irregular award of Contract

Regulation 43 (3) of the PPDA Local Governments Regulations requires all

procurements to be conducted in a fair manner to maximize competition and achieve

value for money, irrespective of the procurement method used or nature of the works.

It was observed that the Contracts Committee acted against the decision of the

Evaluation Committee which had recommended M/s. Icon Project Ltd for Sitting,

drilling, pump testing, water quality analysis, casting and installation of eight (8) deep

boreholes at a contract sum of UGX 152,000,000 in various areas within the District

and instead awarded the contract to M/s. Sri Balaji Industries (EA) at a contract sum

75

of UGX.136,474,080 which did not observe the execution period but got full payment

before work was done.

The reasons for disregarding the Evaluation Committee recommendation were not

disclosed.

I advised the Accounting Officer to investigate the matter and take appropriate actions

against the culprit if any.

3. Lack of Information Communication Technology (ICT) Policy









6.3.7 ALEBTONG DLG

1. Rehabilitation of Abedober- Obile Primary School Road

Ms Blesshand (U) LTD was contracted to rehabilitate 2 spots on Abedober- Obile

Primary School road at a contract sum of UGX 35,438,150 within the three months

starting on 29/1/16 and ending on 29/4/16. By the time of audit, the contractor had

been fully paid including retention although there were defects on the road as shown

below:-

Gravel and fill material being washed away

Sinkhole



76

Apron not constructed Cracked headwall

The defects were attributed to non-compaction of fill material and gravel leading to

rain water easily washing away the fill and gravel material.

The Accounting Officer admitted the shortcomings and promised to have the defects

rectified.

I advised the Accounting Officer to initiate measures and the defects are rectified.

6.3.8 PADIBE TC

1. Lack of an up-to-date revenue register

Regulation 33 (1) and (2) of the Local Governments Financial And Accounting

Regulations, 2007 requires various forms of revenue, to have revenue register showing

details of revenue due, revenue collected and all arrears, including a record of steps

taken to collect all arrears.

However, it was observed that Council did not update its revenue register to show

details of revenue due, revenue collected and revenue arrears as required by the

regulation.

Lack of an up-to-date revenue register weakens controls over revenue collections.

The Accounting Officer ackowledged the shortcoming and attributed it to shortage of

staff.

I advised the Accounting Officer to ensure local revenue registers are maintained and

updated regularly.

2. Lack of a Valuation list

Section 4 of the Local Governments (Rating) Act (Chapter 242) requires a Local

Government to produce the first valuation list and thereafter a valuation list, at least

once in every five years, or such longer period as the Minister may approve.

However, the town council has no valuation list to guide the council in assessment of

local revenue.

77

Consequently, there is a risk of under-assessment leading to under-collection of local

revenue.

The Accounting Officer attributed the lack of a valuation list to high costs of hiring a

Valuer to conduct the valuation exercise that will produce the valuation list.


and a valuation list produced.

6.3.9 DOKOLO DLG

1. Failure to meet minimum standards in UPE Schools


(LGMSD) Operational Manual, 2009 requires schools to meet specific standards as


for every 3 pupils; and one latrine stance for every 40 pupils.

However, it was observed that 17 primary schools inspected had inadequate

infrastructure which did not met the minimum basic requirements as shown below;

Name of schools No of

pupils

RATIOS

Teacher

1:55

Classroom

1:55

Desk 1:3 Latrine

stance 1:40

1 Kachung P/S 1037 1:69 1:58 1:6 1:130

2 Hassa Memorial P/S 851 1:65 1:85 1:19 1:106

3 Akwanga P/S 907 1:91 1:113 1:11 1:91

4 Angwenya P/S 946 1:86 1:105 1:4 1:63

5 Adeknino P/S 902 1:69 1:156 1:5 1:82

6 Atabu P/S 1149 1:82 1:104 1:6 1:115

7 Apye P/S 760 1:58 1:84 1:6 1;58

8 Agwata P/S 1153 1:82 1:105 1:8 1:77

9 Atur P/S 1208 1:81 1:101 1:4 1;81

10 Angwecibange P/S 1457 1:69 1:121 1:8 1:58

11 Alwitmac P/S 953 1:64 1:106 1:6 1:159

12 Dokolo P/S 1012 1:53 1:84 1:3 1:36

13 Akolodong P/S 778 1:49 1:56 1:5 1:32

14 Ageni P/S 1133 1:87 1:71 1:7 1:113

15 Apewotneki P/S 1105 1:79 1:65 1:6 1:55

16 Munamun P/S 1209 1:110 1:101 1:11 1:76

78

17 Awiri P/S 1090 1:68 1:68 1:3 1:109

Failure to meet the Ministry minimum basic standards may affect the overall academic

performance of the schools.

The Accounting Officer attributed the matter to insufficient funding under the School

Facilities Grant.

I advised the Accounting Officer to engage the Ministry of Education and to ensure

that funds are provided.

2. Lack of Information Technology Policy









6.3.10 GULU DLG

1. Missing motorcycles

Regulation 94 (1) of the Local Governments Financial and Accounting Regulations 2007

state that every officer who is in possession of any public moneys, stores, other assets,

land and buildings, is responsible for their safe custody and protection and for any

loss.

Regulation 94 (2) further states that an officer who has the duty to inspect, control or

supervise another officer in possession of any public moneys, stores, other assets, land

and buildings shall accept responsibility for a loss unless it can be demonstrated that

the loss was not facilitated by his failure or neglect to carry out his duty or to make

adequate arrangements to secure safe custody and protection.

79

A total of 13 motor cycles assigned to various officials could not be verified.

The Accounting Officer explained that Council had taken note and promised to make

a follow up and take appropriate action.


2. Failure to meet the Minimum Standards in UPE Schools

Paragraph 2.1.2 of the revised Local Governments Management and Service Delivery

(LGMSD) operational manual, 2009 requires schools to meet specific standards as


for every 3 pupils; and one latrine stance for every 40 pupils. However; it was observed

that some schools were operating above the required ratios as shown below:-

Name of

school

No

of

pupil

Teacher

pupil ratio

1:55

Class

pupil

ratio 1:55

Desk

pupil

ratio 1:3

Stance

pupil

ratio 1:40

Annual

UPE

funding per pupil

Teachers

houses

Gweng diya

p/s

821 1:68 1:59 1:7 1:55 7,464 4 units

Pageya p/s 1171 1:47 1:90 1:4 1:83 4,019 4 units

Cwero p/s 1133 1:60 1:125 1:4 1;113 16,420 nil

Laminto p/s 408 1:45 1:58 1:6 1:34 15,058 4units

Lapuda p/s 515 1:51 1:51 1:5 1:74 6,812 6 units

Aswa-Camp p/s

244 1:24 1:30 1:7 1:49 11,495 nil

Akonyibedo

p/s

932 1:67 1:466 1:4 1:92 7,839 6 units

Awach p/s 937 1:117 1:78 1:2 1:62 83,857 1 unit

Omoti Hill p/s

713 1:51 1:237 1:7 1:118 9,797 2 units

St. Martin

p/s

758 1:58 1:76 1:3 1:95 8,077 3 units

Kulu Opal p/sn

1017 1:68 1:92 1:7 1:101 6,934 5 units

Patiho

prison p/s

818 1:48 1:58 1:4 1:33 6,992 3 units

Angaya p/s 641 1:64 1:92 1:4 1:64 9,522 2 units

Gulu PTC Demon p/s

604 1:36 1:60 1:3 1:50 11,508 nil

Ogul p/s 560 1:47 1:93 1:2 1:112 11,386 4 units

Oguru p/s 752 1:58 1:68 1:4 1:75 7,891 2 units

Inadequate infrastructure negatively impacts on the academic performance of the

pupils.

The Accounting Officer agreed to the finding and promised to implement the audit

recommendation.

80

I advised the Accounting Officer to engage the relevant stake holders to mobilize

adequate resources to ensure that the minimum standards are met.

6.3.11 GULU MC

1. Lack of Risk Management Policy

Regulation 103 (1&4) of the LGFAR of 2007, requires the Head of Finance to establish

a documented risk management system, since it is his/her the responsibility to advice

on risk management and effectiveness of internal control systems.

It was observed that the Council does not have a risk management policy. This

weakens the internal control systems.

The Accounting Officer admitted the shortcoming and explained that the issue has

been discussed in the Technical Planning Committee (TPC) meeting and is being

forwarded to executive for consideration.

I advised the Accounting Officer to ensure that the policy is developed.

6.3.12 KOLE DLG

1. Un- acknowledged Tax Remittances

Section 127(1) of the Income Tax Act 1997 ( as amended to 2002) requires a

withholding agent shall maintain, and keep available for inspection by the

Commissioner, records showing, in relation to each year of income - payments made

to a payee; and tax withheld from those payments.

However, it was observed that 6% withholding tax totaling UGX.79,005,876 deducted

from payments to various contractors was purportedly remitted to Uganda Revenue

Authority (URA) but lacked acknowledgement receipts.

Non-remittance of taxes attracts fines and penalties leading to loss of funds.

I advised the Accounting Officer to obtain the acknowledgement receipts and present

them for audit verification.

6.3.13 KITGUM DLG

81

1. Delayed completion of construction of two classroom blocks at Potuke

Primary School

Ms. Lujong United Limited was contracted to construct a 2 class room block at Potuke

primary school in Kitgum Matidi Sub County at a contract sum of UGX.52,000,000. The

contract was expected to be executed in a period of 3 months ending 13th May

2016.The bill of quantities indicated that completed works should include installation

of shutters, doors, plastered and painted walls and cemented floors.

By the time of the audit, UGX.44,315,136 had been paid to the contractor representing

85% of the contract sum.

However, it was observed that the contractor had abandoned the site and there was

no door frames and the floor screed was not completed as shown below;-

The classroom block without doors and

shutters

Pupil occupying the incomplete structures

A section of the incomplete floor Sections of the incomplete veranda

The Accounting Officer explained that additional fund has been identified to complete

the work.

I advised the Accounting Officer to engage the contractor and address the defects.

6.3.14 KITGUM TC

1. Lack of a Valuation list

Section 4 of the Local Government Rating Act (Chapter 242) requires a Local

Government to produce the first valuation list and thereafter valuation list once at least

in five years or such longer period as the Minister may approve.

82

However, the town council has not carried out any property valuation to produce a

valuation list.


revenue.

The Accounting Officer attributed the matter to inadequate funding and indicated that

the Council has requested for support from the Ministry of Local Government.


and produce a valuation list to guide local revenue assessments.

6.3.15 LAMWO DLG

1. Doubtful expenditure on hire of equipment

Section 3.1 (c) and (d) of Force Account Guidelines Circular no. 3 of 2012 , states that

the Procuring And Disposing Entity is required to ensure that the supplies and works

undertaken are costed and budgeted for and works are supervised by a qualified

supervisor for the purposes of ensuring efficiency in the application of the Force

Account.

Contrary to the above, Ms. Northcross and Abayo Foundation were contracted to

supply equipment to Council and the following matters were noted;

• The department was manually recording the number of hours the equipment had

purportedly worked which was not reliable as there were no odometer readings.

Besides, there instances where manual recordings were not done.

• The manual recording of hours depicted a lot of forgery as it was overly crossed and

not consistent.

• Hire of motor roller (5days), Heavy duty motor grader (7days) and water bowser

(6days) for the 16.5km Lugwar-Paracelle Road had activities overlapping from

21/03/2016 to 24/06/2016 with hire of hydraulic excavator which had forged

accountability thus rendering the payment doubtful.

• Voucher number 19/16/2016 for Hire of lowbed for 2days and supply of 14 600mm

diameter culverts on Olebi-Lelabul road totaling to UGX.7,162,800 had an amount of

UGX.4,400,000 not approved by the engineer.

83

• There was no inspection report on the suppliers’ equipment yard by the engineer.

Consequently, I was unable to confirm the authenticity of the expenditure.

The Accounting Officer stated that odometers mounted on the equipments read hours

for which the engine has been running not necessarily the work done by the machine.

It was stated that management’s interest was hours of work by these machines.

The Accounting Officer further explained that management had assigned a staff on a

full time basis at the site for day-to-day supervision and documentation. His role was

to take note on the starting hours, breakdown hours, lunch break hours and closing

hours from which actual machine productive hours could be computed. However, given

my earlier observation on unreliability of the manual recording system, I found this

explanation unsatisfactory.

I advised the Accounting Officer to ensure that payment for hire of equipment is

supported by hour recordings of actual usage.

2. Audit Inspection of Kirombe-Kal road

Paragraph 3.5.4 (6) of the LGFAM (2007) requires each activity to have its own work

plan and budget. This is amplified by paragraph 5.4 of the Force on Account Guidelines

Revised (Planning for Mechanized Routine Maintenance). It was observed that Council

through the Engineering Department budgeted to execute road rehabilitation of 5km

on Kirombe-Kal Road. The scope of work included grading, drainage works, full

gravelling and completion of works at an estimated cost of UGX.132,780,300 under

PRDP funding.

However, audit Inspection of the works revealed the following matters;-

• The road was adjusted to 7.3km without seeking authorization and approval

from Contracts Committee.

• Gravelling was not done on Chainages 8.2-10.4(1.6km), and from 12.4 to 12.44

(0.4km) giving a total of 2km out of the 7.3km not graveled leading to a financial loss

of UGX.22,400,000.

• Although UGX.128,650,416 representing 97% of the estimated cost had

already been paid to the suppliers of culverts and gravels and to the Force Account

manager, the works were incomplete.

84

• Two project sign posts costing UGX.1,576,000 had not been installed by the

time of audit inspection on 28th/06/2016.

• The culverts purportedly installed worth UGX.23,622,200 were not visible on

site

• Summary of progress reports availed by the Engineering department indicated

the project as completed of 5km at UGX.132,779,000, contrary to the actual status

of the road and actual payment availed for audit giving a variance of UGX.4,128,584

which could not be traced.

• Shoddy work was observed at some sections of the road.

Road section completely not gravelled (2.4km). This road section is prone to

accidents

Bridge section where 19 pcs of 900 mm

diameter culverts were purportedly installed could not be seen, shoddy works observed

although the work is claimed to be completed

The Accounting Officer explained that management thought it would be prudent to

open up the entire road length for Public use rather than leaving a 2.3Km section

busy and impassable and that management had made submission to Contracts

Committee for approval of change of scope of work.

I advised the Accounting Officer to address the shortcomings above.

3. Health Service Delivery

3.1 Failure to meet the Health Minimum Standards

Paragraph 2.1.2 (D) of the Local Governments Management and Service Delivery


for proper functioning of Health centers. An inspection of Padibe HC IV revealed the

following matters;-

85

Item Minimum

Standard

HC IV Current Status

Padibe HC IV

General wards 2 1 General ward shared by both children and

adults

Medical waste pit 1 The incinerator is in dilapidated state

Placenta pit 1 The placenta pit is dilapidated

stance pit latrine 8 of 2 stance

pit latrine

Only one 3stance pit latrine

Beds(Bed capacity 36 - Only 14 beds available

Incinerator house in a poor condition

Dilapidated general ward

Dilapidated general ward

General ward in a sorry state

Poor storage of drugs as they are not put on shelves but

packed on the floor exposing them to damage.

The Accounting Officer stated that management had taken the advice of the Auditor

General to engage the relevant authorities.


issues identified.

4. Failure to meet the minimum Education Standards in UPE Schools




86

for every 3 pupils; and one latrine stance for every 40 pupils. However, it was

observed that the District is operating below the minimum standards as shown in table

below:-

Ratio National Standard District Status


Pupils Latrine Stance Ratio 1:40 1:54

Pupil Classroom Ratio 1:40 1:83

Desk: Pupil 1:3 1:20

• Inadequate Teachers Houses: - most schools either had one teacher house or none

with several grass thatched in a sorry state.

• Additionally some schools like Liri Primary school lacked a borehole the nearest one

being 2km away from the school

Inadequate infrastructure negatively impacts on the performance of the pupils as

already evidenced from the PLE results of 2015.

The Accounting Officer was in agreement with the audit observation and expressed

commitment to implement the audit recommendation.

I advised the Accounting Officer to engage the relevant stake holders to mobilize

adequate resources for infrastructural development in the schools.

6.3.16 LAMWO TC

1. Unapproved excess expenditure

Regulation 24(1) of the Local Governments Financial and Accounting Regulations 2007

states that expenditure for which there is insufficient or no provision in the approved

estimates shall not be incurred until a supplementary estimate has been approved.

However, it was observed that the Council spent UGX.596,666,967 against the

budgeted UGX.238,435,784 leading to an unapproved excess expenditure of

UGX.358,231,183.

The Accounting Officer explained that the amount was brought forward from the

previous financial year and used to implement the project of resealing, however; there

was an over sight that this balance was not provided for in the budget of the financial

year under review.

87

I advised Accounting Officer to seek Council’s approval before spending.

6.3.17 LIRA DLG

1. Unacknowledged Taxes

Section 127(1) of the Income Tax Act 1997 ( as amended to 2002) requires a

withholding agent shall maintain, and keep available for inspection by the

Commissioner, records showing, in relation to each year of income - payments made

to a payee; and tax withheld from those payments.

It was observed that Pay as you earn (PAYE) amounting to UGX.23,721,600 deducted

from councilors’ payments and remitted to Uganda Revenue Authority (URA) lacked

acknowledgement receipts.

Unremitted taxes attract fines and penalties from the tax authority leading to loss of

public funds.

The Accounting Officer explained that efforts were being made to obtain receipts from

URA head office in Kampala as they normally do not provide receipts promptly.

I advised the Accounting Officer to ensure that acknowledgement receipts are obtained

from URA.

6.3.18 LIRA MC

1. USMID Project

1.1 Diversion of Funds

Paragraph 3.6 of the USMID Operational Manual states that courses must be undertaken

in Uganda.

It was observed that UGX.7,722,000 was paid to Council staff as night allowance and

20 days out of pocket to attend a course on Capacity Building Program on Local

Administration for Uganda held from 3rd to 23rd April, 2016 in Seongnam and Wanju -

Republic of Korea contrary to the USMID operational manual rendering the expenditure

ineligible and tantamount to diversion of funds.

The Accounting Officer should institute recovery measures from the concerned officer.

88

2. Failure to meet Minimum National Standards of Service Delivery in the

Education Sector

Paragraph 2.1.2 (a) of the Local Governments Management and Service Delivery

(LGMSD) Program operational manual states that Local Governments will deliver

services in conformity to the standards as dictated by minimum national standards of

service delivery.

However, inspections carried out in Universal Primary Education schools revealed that

the current infrastructural status in the municipal schools fall below the minimum

standards in terms of classroom: Classroom: pupil ration, stance: pupil ratio and

house: teacher ratio.

The Accounting Officer explained that the Municipality has tried with the available

resources to improve the infrastructure in schools as they await for the Government

interventions.

I advised Accounting Officer to engage the relevant stake holders to mobilize adequate

resources for infrastructural development in the school.

3. Failure to meet the national minimum standards of service delivery at

Health Centres



for proper functioning of Health centers. An inspection of selected health centers

revealed the following short comings:-

Name of health

facility/required standard

Minimum

standards

Current

status

Audit remarks

AYAGO HCIII

One OPD block with community

shed

1 1 One OPD with no shed

One maternity ward 1 1 8 beds available

Two general ward 2 0 None, apportioned maternity ward to

act as a general ward, also has art

clinic and injection room

Two staff houses type 1 2 1 I block for the in charge

One staff house type 2 1 2 2 Blocks of twin house-PRDP and

NUSAF

Two staff houses type 3 2 0 None.

89

Eight two stance pit latrines 8 4 2 stance, water flash nun-functional

and another stances 2 doors .ie.4

functional stance

One medical waste pit 1 1

One placenta pit 1 1

One water source 1 1

Medical equipment Adequate 2 Microscope, fridge

Furniture Adequate

Appropriate level however some they

need replacement

Adyel HCIII

One OPD block with community

shed

1 1 No operational funds

One maternity ward 1 1 No operational funds

Two general ward 2 0 None

Two staff houses type 1 2 1 Insufficient

One staff house type 2 1 0 None

Two staff houses type 3 2 0 None

Eight two stance pit latrines 8 2 Insufficient

One medical waste pit 1 0 None

One placenta pit 1 1 No operational funds

One water source 1 0 None

Medical equipment Adequate 0 None

Furniture Adequate 0 None

3.1 Other issues at the health centers

Adyel Health Center III is not yet accredited though functional and as a result, the

staffs and drugs at the facility are re-allocated from other health centers.

Operational funds are borrowed from the neighboring health centers.

In Ayago the following were also noted

There are no toilets for patients

There is only one mid-wife

The Enrolled nurse is acting as the in-charge

No land tittles for both health facilities

The Accounting Officer attributed lack of patients’ toilet to failure to release PHC

development funds, but explained that the Council is in the process of acquiring land

titles for the health facilities.


the outstanding gaps are urgently filled.

90

6.3.19 NWOYA DLG

1. Failure to meet the Minimum Standards of Health Services at Alero HCIII


(LGMSD) program Operational Manual, 2009 and Guidelines for Designation,

Establishment and Upgrading of Health Units by Ministry of Health, 2011 sets out

Health Service Delivery packages or minimum standards for functioning of health

centres. However; Inspection carried out at Alero HC III and Koch Lii HC II revealed

the following shortcomings;-

Health Facility Basic requirement Current Status

Alero HC III OPD Block; Maternity, and General ward

Waste pit

Dilapidated OPD

Newly constructed waste pit was

already falling in while the old waste pit

had not yet been filled

Water source

The entity lacked a reliable and proper

water source i.e. the borehole was faulty

At least 1 pit latrine

There is no latrine for staff

Access to modern energy lighting for maternity and

laboratory

The maternity ward has no stable electricity

Lack of the minimum basic requirements adversely affects service delivery.


6.3.20 OTUKE DLG



(LGMSD) Operational Manual, 2009 requires schools to meet specific standards as



that some schools were operating below the required ratios as shown below;

91

SN School

Name

Sub

County

Enrollment Teacher:

Pupil

Classroom:

Pupil

Staff H:

Teacher

Pupil :

Latrine

stance

Pupil

:

Desk

1 Abilonyero Adwari 1043 1:69 1:208 0 1:104 1:35

2 Acane Adwari 653 1:72 0 1:9 1:65 1:6

3 Ader Adwari 610 1:61 1:203 1:5 1:61 1:7

4 Aliwang Adwari 1383 1:62 1:345 1:11 1:138 1:4

5 Okee Adwari 625 1:56 1:156 0 1:62 1:7

6 Okeremomkok Adwari 609 1:55 0 0 1:60 1:6

7 Okwong Adwari 715 1:51 1:357 1:3 1:71 1:3

8 Amele Okwang 725 1:65 1:145 0 1:145 1:4

9 Amunga Okwang 814 1:67 1:407 1:6 1:162 1:6

10 Baralegi Okwang 641 1:64 1:80 1:2 1:64 1:5

11 Bar Ocok Okwang 752 1:57 1:188 1:6 1:75 1:4

12 Ogoro Okwang 803 1:73 1:200 1:2 1:80 1:3

13 Anyalima Ogor 617 1:68 0 1:2 1:61 1:4

14 Arom Ogor 719 1:79 1:179 1:2 1:79 1:4

15 Ociro Ogor 701 1:70 1:233 1:2 1:70 1:5

16 Oderokech Ogor 683 1:48 0 1:3 1:68 1:4

17 Oluro Ogor 706 1:70 1:353 1:2 1:70 1:5

18 Omwonylee Ogor 723 1:80 1:90 1:4 1:72 1:3

19 Aleri Olilim 727 1:72 1:242 1:5 1:72 1:3

20 Aluga Olilim 614 1:76 0 1:2 1:61 1:8

23 Atirayon Olilim 640 1:71 0 1:4 1:64 1:4

25 Ikwee Olilim 675 1:61 1:337 1:5 1:67 1:9

26 Ogwete Olilim 545 1:60 0 1:2 1:77 1:5

27 Olilim Olilim 765 1:58 0 1:3 1:76 1:5

Inadequate infrastructure negatively impacts on the learning environment of the

pupils.

The Accounting Officer attributed this situation to low funding received by the

education sector.


the minimum standards are met.

2. Underfunding under UPE

A review of the approved budget revealed that some schools in the district were not

fully funded with UPE capitation grant based on the total enrollment and budget. Some

schools severely suffered to a tune of 49% shortfall.

92

Failure to receive sufficient funds affects the operations of the schools and may lead

to poor academic performance of the pupils and the schools at large.

I advised the Accounting Officer to liaise with the Ministry of Education and Ministry of

Finance Planning and Economic Development to ensure that UPE capitation grant is

released as budgeted.

6.3.21 OTUKE TC

1. Lack of Internal Audit Department

Section 90 (1) and (2) requires every local Government to have an Internal Audit

department and to prepare quarterly audit reports and submit them to council for

onward discussion.

However, it was observed that Council lacks an internal audit unit.

Lack of an internal audit function weakens the internal controls.

The Accounting Officer explained that efforts were being made to recruit the Head of

Finance to enable the acting Head of Finance resort back to his substantive

appointment as Head of Internal Audit.

I advised the Accounting officer to ensure that the internal audit department is

established.

6.3.22 OYAM DLG

1. Health service delivery

1.1 Suspected theft of Mosquito Nets in Anyeke Health Centre IV

Paragraph 5.4.4.1 of the Local Government Financial and Accounting Manual, 2007

requires all goods delivered to be inspected and received in stores.

It was observed that Anyeke Health Centre IV received 60 bales of long lasting

Insecticide treated mosquito nets from TASO, each bale containing 40 nets worth USD

6,960 from Crane health services as per delivery note No. 063.

However, Council loss report form revealed that 29 bales were stolen from the Health

Centre.

It was further observed that the nets were not supported by Goods Received Notes

nor were they received in stores. Besides, the loss was not disclosed in the financial

statements.

93

The Accounting Officer explained that the matter was in court.

I advised the Accounting Officer to follow up the matter and ensure that the loss is

disclosed in the financial statements.

2. Failure to meet the Minimum national standards of Education service

delivery

Section 2.1.2 (a) of the Local Governments Management and Service Delivery (LGMSD)

Operational Manual, 2011 requires Local Governments to deliver services conforming

to Primary Education minimum standards of service delivery. However, it was

observed that the District is operating below the minimum standards as shown in table

below:-

School Sub-county

Enrolment

Classroom:Pupil Ratio

Teacher:Pupil Ratio

Latrine: Pupil Ratio

House :Teacher Ratio

Minimum national standard 1: 40 1: 55 1: 40 1: 1

Anotoocao P.S

LORO

756 1:151 1:84 1:76 0:9

Omolo P.7 School

Loro 879 1:220 1:68 1:88 1:7

Angweta P.S.

Iceme 1,077 1:539 1:83 1:107 1:4

Acokara P.S.

Otwal 1,251 1:626 1:70 1:125 1:18

Lelapala P.S.

Aleka 1,373 1:687 1:92 1:137 1:15

Adel P.S Minakulu 1,656 1:166 1:75 1:166 1:7

Iyanyi P 7 School

Loro 1,068 1:534 1:59 1:134 0: 18

Aber P.S. Aber 1,943 1:278 1:84 1:130 1:8

Akwangi P.S.

Iceme 860 1:430 1:54 1:86 1:8

Adili P.S Iceme 889 1:222 1:68 1:89 1:7

The inadequate infrastructure in schools negatively impacts on academic performance

of the pupils.

The Accounting Officer explained that efforts were being made to address the

inadequate standards through Government interventions like SFG, PRDP funding and

other development Partners like World Vision and International Agencies.

I advised the Accounting Officer to engage the relevant authorities to mobilize

resources for infrastructural development of the schools.

94

6.3.23 OYAM TC

1. Lack of a Valuation List

Section 4 of the Local Government Rating Act (Chapter 242) requires a Local

Government to produce the first valuation list and thereafter valuation list once at least

in five years or such longer period as the Minister may approve.

However, the Town Council has not carried out a property valuation contrary to the

regulation.


revenue.

The Accounting Officer explained that most buildings in the town are incomplete and

is costly to hire government valuer.


and to produce a valuation list to guide local revenue assessments.

6.3.24 PADER DLG

1. Non submission of expenditure records

Section 87 (1) of the Local Government Act CAP 243 states that ‘The accounts of every

local government council and administrative unit shall be audited by the Auditor

General or an auditor appointed by him or her.

Contrary to the above requirements, management did not provide the expenditure

vouchers and records in relation to expenditure under the Production Department

amounting to UGX.81,684,200.

In absence of expenditure documents, I was unable to confirm whether the

expenditure incurred during the year in relation to the production department was

genuine and for the intended purpose.

The Accounting Officer explained that the matter was being investigated and the

expenditure documents had been taken by the Criminal Investigation and Intelligence

Department of the Police.

95

I await the outcome of the investigations.



provides that the Chief Executive designates an officer to ensure that adequate




However, it was observed that there was no ICT policy to guide staff on the use of IT

equipment and software.








School Name Enrollment Teacher: Pupil Ratio

C/Rooms: Pupil Ratio

Desks: Pupil Ratio

Latrine Stances: Pupil Ratio

Standard Ratios 1:55 1:55 1:3 1:40

St Joseph Ogan P/S

523 1: 75 1:75 1:10 1:52

Papaa P/S 1055 1: 75 1:88 1:5 1:53

Gore P/S 759 1:127 1:108 1:7 1:152

Amilobo P/S 518 1:74 1:74 1:5 1:104

Olambyera P/S 536 1:77 1:77 1:8 1:54

Pagwari P/S 546 1:78 1;78 1:5 1:55

Paipir P/S 1149 1:82 1:96 1:6 1:57

Opolacen P/S 516 1:74 1:74 1:12 1:103

Ogom P/S 462 1:66 1:66 1:6 1:46

Amoko Lagwai P/S

489 1:70 1:70 1:5 1:49

Lacekocot P/S 1591 1:84 1:159 1:6 1:106

Lamogi O'k'mac P/S

751 1:107 1:107 1:9 1:150

Laguti P/S 559 1:93 1:56 1:4 1:56

Pajule P/S 1050 1:58 1:175 1:5 1:70

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Dure P/S 849 1:77 1:94 1:6 1:57

Wanduku P/S 879 1:110 1:110 1:10 1:88

Lanyatido P/S 794 1:113 1:113 1:11 1:99

Failure to meet the required standards may lead to poor academic performance.

I advised the Accounting Officer to engage the relevant authorities to ensure that the

challenges are addressed.

6.3.25 KALONGO TC

1. Borrowing of Uganda Road Fund

Regulation 37(2) of the Local Government Financial and Accounting Regulations

(LGFAR) 2007 requires that conditional grants from Central Government are planned

for, recorded and accounted for in accordance with the grant conditions and

guidelines.

It was observed that UGX.2,087,000 was lent out from the Uganda Road Fund account

to finance activities under the Operation Account. However by the close of the financial

year, the funds had not been refunded to the Uganda Road Fund Account.

I advised the Accounting Officer to ensure the funds are refunded.

6.4 JINJA BRANCH 6.4.1 BUGIRI DLG

1. Health Sector

1.1 Lack of Health Management Committees

Section 5.4 of the Ministry of Health Guidelines requires the Health Management

Committee to meet at least quarterly to conduct health related business. However, all

Health Units did not have the Management Committees.

I advised the Accounting officer to ensure that the Management Committees are

constituted.

1.2 Understaffing in the Health Department

The Health Department has an approved structure of 646 staff. However, out of the

approved staffing structure of 350 employees, only 329 (53%) are filled leaving a

97

staffing gap of 328 positions, representing 47% understaffing as shown in a table

below;

UNIT APPROVED FILLED VACANT

DHOs Office 11 8 3

Bugiri Hospital 190 144 46

HC IV 58 38 20

HC III 190 118 72

HC II 207 42 165

Total 656 350 306

The Accounting Officer attributed the gap to inadequate payroll budget by the center.

Understaffing overstretches the available staff beyond their capacity, creates job-

related stress to the fewer staff and negatively affects the level of public service

delivery to the community.

I advised the Accounting Officer to continue engaging the relevant Ministries to ensure

that the vacant positions are filled.

2. Failure to meet the minimum standards of Education Service Delivery

Guideline 2.1.2 (a) of the Local Governments Management and Service Delivery

Program (LGMSD) Operational Manual for Local Governments 2009 prescribes

minimum national standards of service delivery for primary education as shown below;

SN Indicator MNSSD District Ratios

1 Teacher Pupil ratio 1:55 1:65

2 Classroom Pupil ratio 1:55 1:95

5 Desk pupil ratio 1:3 1:7

6 Permanent teacher accommodation

At least 4 teachers 1:25

7 Latrine stance pupil ratio 1:40 1:55

This is attributed to inadequate funding. The inadequacy in school infrastructure

negatively impacts on education service delivery.

I advised the Accounting Officer to follow up the matters with Ministry of Education

and Sports for more funds so that minimum standard requirements are complied with.

98

3. Failure to pay Salary Arrears

Section (B-a) paragraph 25 of the Public Service Standing Orders 2010 requires that

salary arrears to a public officer be paid through the payroll within the same financial

year.

A review of the payroll revealed that a number of staff had not been paid salary

amounting to UGX.12,093,701.

The Accounting Officer explained that all the salaried staff were fully paid. He

undertook to investigate why the salaries in question were not received.

Failure to pay salaries greatly demoralizes and may hinder service delivery.

The Accounting officer should ensure that all officers access the payroll and are paid

promptly.

6.4.2 BUYENDE DLG

1. Unaccounted for funds

Section 43(2) of LGFAR, 2007 requires that, "Administrative advances to council

employees shall be authorized by the Chief Executive and shall be accounted for within

a month."

An amount of UGX.162,829,016 had not been accounted for at the time of audit.

In the absence of the accountability, it was difficult to confirm that the funds were

utilized for the intended purposes.

I advised the Accounting Officer to ensure that the accountability documents are

obtained or else effect recovery from the responsible officers.

2. Missing Receipt books

Regulation 108 (2) of the Local Government Financial and Accounting Regulations,

2007 requires that the Auditor General shall have rights of access to all documents

and information necessary for reaching an audit opinion. The district is required by law

to have possesion of the used receipt books before new ones are issued to revenue

collectors.

The district reported UGX.105,762,724 as local revenue collected during the financial

year 2015/2016. However, the revenue receipt books were availed for audit

verification.

99

in the absence of the used receipt books, it becomes difficult to confirm the

completeness and accuracy of the reported figures of local revenue collected.

I advised the Accounting Officer to avail the revenue documents for audit verification.

3. Procurement anomalies

3.1 Procurement using non-pre-qualified firms

Regulation 18 sub section (1) (3) of PPDA Regulations, 2014 stipulates that a procuring

and disposing entity may use pre-qualification under open domestic or open

international bidding to obtain a shortlist of bidders.

It was observed that the evaluation committee in its sitting of 14th and 15th July 2015

evaluated companies for pre-qualification and a report was submitted to and approved

by the contracts committee.

However, from a sample of 15 procurements 9 companies were reported as best

evaluated yet they did not appear on the evaluation report for pre-qualification as

shown in the table below;

Details Category

SIMU Tech Enterprise Construction work

KALISA Devine enterprise Construction work

MWAMBA General Services Construction work

Joseph Associates Construction work

Bukose Bulaire General company Construction work

BATWAK General Investments Construction work

Interlipath systems limited Computer accessories

Alticom services limited Supply of MV tyres and tubes

Kamuli General Enterprise Supply of drugs

In addition, the PDU awarded Ms. SIMU Tech enterprise and Ms. Bukose Bulwaire

General Enterprise contracts worth UGX.4,822,200 and UGX.17,303,619 respectively

without going through the tendering process.

I advised the Accounting Officer to comply with the PPDA law.

3.2 Lack of evaluation reports for contracts

PPDA Regulation (evaluation) 2014 Section 35 (1) the evaluation committee shall

prepare an evaluation report which shall indicate

It was observed that the district awarded contracts for the provision of goods and

services worth UGX.1,624,912,120 and revenue tenders amounting to

100

UGX.152,611,000 to various companies and individuals. However, audit was not

availed with approved evaluation reports, evaluators score sheet (LG PP Form 12 C)

and submission to contracts committee (request for approval of evaluation report LG

PP Form 13) in complete disregard to the Procurement Regulations.

I advised the Accounting Officer to ensure that the procurement records are presented

for verification.

4. Non-remittance of Local service tax to Lower Local Governments

Section 2.6.1 Option 2; Local Service Tax, 2008, the total LST accruing from all the

entities shall be shared as 35% to the residential LG and the remaining 65% to all LGs

hosting the venture in proportion to the contribution to the total revenue of the

proprietor.

It was observed that Council did not remit UGX.13,792,605 to the lower councils as


Amount received 52,264,585

Amount to be transferred to LLG 18,292,605

Actual transfers 4,500,000

Under remittance 13,792,605

Failure to remit taxes to Lower Local Governments negatively affects service delivery

at the Lower Local Councils.

The Accounting Officer promised to pay in the current financial year.


the Lower Local Governments as required by law.

5. Lack of effective Internal Audit Function

The approved structure of the internal audit unit has 7 approved positions. However,

only one post of Auditor is filled as shown in the table below;-

Category Scale Number Status

District Internal Auditor U2 1 Not filled

Senior Internal auditor U3 1 Not filled

Internal Auditor U4 1 Filled

Examiner of Accounts U5 3 One Vacancy

Office Typist U7 1 Not filled

This weakens the internal control system.

101

The Accounting Officer explained that Council had sought for authority to recruit and

fill the positions.


the vacant positions are filled.

6. Payroll anomalies

An amount of UGX.34,924,410 was paid to individuals who had ceased to serve the

District as shown below;-

Category Amount

Retired staff 8,466,152

Abandonment cases 467,685

Resigned 3,744,000

Transfers to other entities 6,467,636

Non-deleted staff from payroll 15,778,937

TOTAL 34,924,410

The Accounting Officer promised to make recoveries.


6.4.3 IGANGA DLG

1. Unpaid salary arrears

Section B, Paragraph 25 of the Public Service Standing Orders, 2010 provides that

salary arrears that accrue to a public officer within a financial year shall be paid through

the payroll within the same financial year.

It was noted that some staff in the district had accumulated salary arrears in financial

year 2013/14 amounting to UGX 47,369,822 and 2014/15 amounting to UGX

74,430,015 giving a total of UGX 121,799,837 as shown in the summary below;

Financial Year 2014/2015 2013/2014 Total arrears

Primary 54,194,635 26,974,849 81,169,484

PHC 671,547 3,709,504 4,381,051

Traditional 4,241,804 2,362,848 6,604,652

Tertiary 2,304,648 0 2,304,648

Secondary 13,017,381 14,322,621 27,340,002

Grand Total 74,430,015 47,369,822 121,799,837

102

The Accounting Officer attributed it to delays by some staff in accessing the payroll

due to transfers, promotions, under payments due to system errors and loan

deductions. Failure to pay salaries demotivates staff leading to poor

outputs which negatively impacts on service delivery.

I advised the Accounting Officer to liaise with the line Ministry of Public Service and

the Ministry of Finance Planning and Economic Development to ensure that staff salary

arrears are paid.

2. Failure to meet minimum standards in Primary Schools


manual section 2.1.2 (a) requires Local Governments to deliver services in conformity

with Primary education minimum national standards of service delivery.

Analysis of the statistics for the schools in the District revealed that the standards

were below minimum as shown in the table below:

Standard Minimum standard Current standard

Classroom pupil ratio 1:55 1:95

Latrine Stance Pupil ratio 1:40 1:65

Teacher Pupil ratio 1:55 1:44

Desk pupil ratio 1:3 1:6

Teacher House Ratio 1:4 1:10

This is attributed to inadequate funding. The inadequacy in school infrastructure

negatively impacts on education service delivery.



3. Failure to meet minimum standards in the Production Service Delivery


manual, 2009 section 2.1.2 (e) requires Local Governments to deliver services in

conformity with production sector minimum national standards of service delivery.

It was noted that Iganga district is operating below the set minimum standards.

This is attributed to inadequate funding and understaffing in the department. This

inadequacy negatively impacts on agriculture service delivery.

103

The Accounting Officer is advised to follow up the matters with Ministry of Agriculture

for more funds so that minimum standard requirements are complied with.

4. Failure to meet minimum standards in the Health Service Delivery

Paragraph 2.1.2 (b) of the Local Governments Management and Service Delivery


for proper functioning of health centers while Paragraph 2.1.2 (D) shows the required

Health Service Delivery Packages.

4.1 Accommodation

A sample of the health centres in the District revealed accommodation gap of 60

housing units as shown in a table below shows;

Health Centre Minimum Standard

No of staff Accommodated

Variance (Gap)

Busesa HC IV 11 6 5

Bugono HC IV 11 4 9

Iganga T/C H/C III 5 0 5

Busembatia HC III 5 1 4

Lubira HC III 5 4 1

Igombe HC III 5 0 5

Bulamagi HC III 5 0 5

Busowobi HC III 5 2 3

Nakalama HC III 5 0 5

Nambale HC III 5 0 5

Kasambika HC III 5 2 3

Nawandala HC III 5 0 5

Bunyiiro HC III 5 0 5

77 19 60

The Accounting Officer acknowledged the above shortcomings and attributed them to

inadequate funding.

5. Unreplaced furniture at Iganga Hospital

The Ministry of Health in 2012 contracted Sino Africa Medicines and Health Limited

under procurement reference number MOH-UHSSP/SUPLS/2010-11/00014(D) to

supply medical furniture which was delivered to the hospital on 15th/08/2013 (delivery

104

note number UHSSP/LOT4/IGANGAH1. National Advisory Committee on Medical

Equipment(NACME) made an inspection of the supplies and some were rejected on

grounds of poor quality. The supplier was instructed to withdraw all the rejected items

and make replacements in a letter dated 22nd/06/2015 from the Ministry Permanent

Secretary. However, the items have never been replaced. The withdrawn items are

listed in the table below;

Item’s Description Quantity supplied Quantity withdrawn

Filling cabinets 10 3

Steel cupboards 8 5

Instrument trolleys 11 5

Patient trolleys 11 9

Instrument cupboards 4 3

Examination couch 2 1

Patient beds 43 31

Patient screens 14 4

Bowl stand 20 12

The newly constructed laboratory lacks furniture among other units.

I advised the Accounting Officer to engage the Ministry of Health to have the above

issues on health service delivery addressed.

6.4.4 IGANGA MC


Regulation 110 of the LGFARs of 2007 requires the Chief Executive to designate an

officer to ensure that adequate Information and Communication Technology policies

are established and applied to enable adequate security and protection over computers

and data held thereon or Information Systems operated by the Council.

There is no ICT policy to guide staff on management of IT equipment, security of

hardware and data. In addition there are no general and application controls to ensure

proper logical, physical access and security over data. The Accounting Officer

acknowledged the audit recommendation.

There is a risk of loss of data and equipment.

I advised the Accounting Officer to develop an IT policy.

105

2. Lack of revenue registers

Regulation 33 (1) of the Local Governments Financial and Accounting Regulations

(LGFAR), 2007 requires that a prescribed revenue register to be used to show details

of revenue due, revenue collected and all arrears, including a record of steps taken to

collect all arrears.

However, it was observed that council did not maintain revenue registers for the

different local revenue sources. The Accounting Officer attributed this to capacity gaps.

The absence of revenue registers weakens controls of revenue collection.

I advised the Accounting Officer to establish the revenue registers.

3. Low bidder participation

Section 43(3) of PPDA Local Governments Regulations provides that all procurement

and disposal shall be conducted in a manner to maximize competition and achieve

value for money irrespective of the method of procurement used or the nature of the

works, services or supplies to be procured.

However, a review of procurement records revealed that ten (10) procurements were

carried out using open bidding process with a low bidder turn out. It was observed

that only one bidder turned out for each of the contracts.

The Accounting Officer explained that Council had used open bidding.

In the absence of competition, value for money may not have been achieved.

I advised the Accounting Officer to comply with the PPDA regulations.

6.4.5 JINJA DLG

1. Failure to meet the minimum national standards of Health Service Delivery



for proper functioning of health centers.

The following shortcomings were identified;-

106

a) Health Services Accessibility indicators

Post National standard Jinja District

Doctor 1:24,000 1:45,449

Nurses 1:1,700 1:3,289

Midwife 1:900 1:944

b) Accommodation

Staff without housing shown in the table below and in Appendix 1.

Unit No. of

HCs

National

standard

Jinja status Variance

HC IV 3 33 20 13

HC III 7 35 14 21

HC II 9 18 11 7

Total gap 86 45 41

The Accounting Officer attributed the shortcoming to the financial constraints

occasioned by the removal of Capital Development Fund from the budget but pledged

to close the accommodation gaps in a phased manner whenever funds will be

available.

Inadequate accommodation adversely impacts on service delivery as patients cannot

access the health workers as and when circumstances warrant.


challenge.

2. Failure to meet the minimum national standards of Education Service

Delivery



with Primary Education Minimum National Standards of Service Delivery.

A review of the District school infrastructure and staffing levels as compared to the

National standards set by the Ministry of Education and Sports revealed standards

below the minimum.

The Accounting Officer attributed this to inadequate funding and a recruitment ceiling

for teachers in the respective schools.

107

The inadequacy in school infrastructure and staffing negatively impacts on Education

service delivery.

I advised the Accounting Officer to follow up the matter with the Ministry of Education,

Science, Technology and Sports so that more funds are allocated to the district. This

will go along way in enabling the district to meet the minimum standard requirements.

3. Lack of a Land Board

Section 56 (I) of the Uganda Land Act 1995 as amended requires that every District

must have a nominated and fully constituted Land Board for the effective management

of the District land.

However, it was observed that the term of the members of the District Land Board

expired on 25 October 2015 and by the time of audit in September 2016 a new board

had not been constituted.

The Accounting Officer explained that the members had been nominated for

appointment to the District Land Board these were under investigation by the IGG’s

Office and the courts of Law.


District Land Board is constituted.

4. Payroll audit

4.1 Multiple Payments

An employee was paid more than once with the employee receiving payments totaling

to UGX.730,292.

This was attributed to weak controls in the management and processing of the payroll.

This could result in a loss of funds to government if not recovered.

The Accounting Officer explained that the incident was an isolated case that occurred

in error and that a recovery shall be made in subsequent months.

I await the Accounting Officer’s action.

108

6.4.6 JINJA MC

1. Failure to meet the minimum standards of Education Service Delivery

Guideline 2.1.2 (a) of the Local Government Management and Service Delivery

Program (LGMSD) Operational Manual for Local Governments 2009 prescribes

minimum national standards of service delivery for primary education as indicated

below;

School Classroom: Pupil Latrine: Pupil

Standard 1:55 1:40

Walukuba East P/S 1:81 1:79 (boys) 1:83

(girls)

Kiira P/S 1:64 1:50

Jinja Army Boarding P/S 1:61 1:36

Walukuba West P/S 1:62 1:54

Mpumudde Estate P/S 1:64 1:64

Masese Co Educ. P/S 1:65 1:75

Lake Site P/S 1:60 1:90

This is attributed to inadequate funding.

The inadequacy in school infrastructure negatively impacts on education service

delivery as revealed in the analysis of UPE performance for the previous years.

2. Failure to Update the Contracts Register

Section 5.4.7 (2-3) LGFAM 2007 provides that every PDU should maintain contracts

information in one central repository, showing key information relating to the

contracts, contract number, and contract manager, key dates of the contract and

details of payments made on each contract.

However, it was observed that the contracts register had not been updated with details

of the payment to contractors as shown in the table below.

PROCUREMENT REF

NO.

CONTRACT

DETAILS

CONTRACTOR CONTRACT SUM

(UGX.)

JMC 755/WRKS/15-

16/00055

Construction of a 2

Classroom block at Lake site P/s

Batuli Investments

Ltd

58,114,174

JMC 755/WRKS/15-

16/00054

Construction of a 2

Classroom block at

Walukuba East P/s

Zebra Associates

Ltd

56,317,919

109

JMC 755/SUPLS/15-

16/00001

Revenue collection

from Lubas road market

Lubas Road market

Traders

5,076,000

JMC 755/SUPLS/15-

16/00012

Revenue collection

from Tobacco Parking

Jimflo Building Co

Ltd

11,664,000

JMC 755/SUPLS/15-16/00003

Revenue Collection from Abattoir

Jinja Abattoir traders Association

35,160,000

The Accounting Officer acknowledged the shortcoming and promised to update the

register.

In the absence of an up-to date contracts register, it becomes difficult to monitor and

supervise the contractors effectively.

I advised the Accounting Officer to ensure the contracts register is updated on a

regular basis.

6.4.7 BUGEMBE TC

1. Missing Revenue Receipts

Section 4.2.5 of the LGFAM, 2007 requires a revenue collector to safeguard stocks of

receipt books entrusted to him or her and to produce them for official inspection and

audit.

It was observed that 2 revenue receipts books no. GR 3101-3150 and GR 4701- 4750

went missing from the Council stores.

There is a risk that the receipts could have been misused.

The Accounting Officer attributed the shortcoming to lack of a designated Stores

Officer.


2. Failure of Revenue Contractors to honor their obligations

Section 104 (b & c) of the Local Governments Public Procurement and Disposal of

public Assets (PPDA), 2006, states that the user departments shall be responsible for

performance of the contracts.

110

It was observed that there was poor contract management leading to under-collection

of UGX.10,685,500 in local revenue as detailed below;-

Contract details Contractor Assessed

Amount

Total collection

for the year

Shortfall

Management of revenue

collection from Hotel tax in

Bugembe TC

Kiwanuka

Stephen

22,320,000 13,434,500 8,885,500

Management of revenue

collection from sign posts

in Bugembe TC

Kiwanuka

Stephen

2,000,000 200,000 1,800,000

Total 10,685,500

The Accounting Officer attributed the shortcoming to the District which offered the

tender.

I advised the Accounting Officer to engage the contractors to ensure that they honours

their obligations.

6.4.8 KAKIRA TC

1. Incomplete civil Works

The contract for construction of the floor at Kakira Market was awarded to Mercy

Commercial Agencies at UGX.41,200,000 on 1st/3/2016 for a contract period of three

months.

However, inspections carried out on 7th/November/2016 revealed that the works had

been abandoned by the contractor.

The Accounting Officer reported that the contractor had abandoned the site claiming

to have under-quoted for the construction.

I advised the Accounting Officer to follow up the matter and ensure that the works are

completed.

111

6.4.9 KALIRO DLG

1. Failure to meet minimum national standards of production service delivery


manual section 2.1.2 (e) requires Local Governments to deliver services in conformity

with production sector minimum national standards of service delivery.

The production department in the District is meant to provide support to the farmers

in the district to ensure that there is adequate food production both for home

consumption and for commercial purposes.

It was observed that the district is operating below the set minimum standards.


inadequacy in both funding and staffing negatively impacts on agriculture service

delivery.

I advised the Accounting Officer to lobby the relevant Ministries for more funds so that

the staffing gaps are closed and the minimum standard requirements are complied

with.

2. Failure to meet minimum standards in Primary Schools




Analysis of the statistics for the schools in Kaliro District revealed that the District

standards were below the national minimum standards as shown in the table below:


Classroom pupil ratio 1:55 1:132

Latrine Stance Pupil ratio 1:40 1:95

Teacher Pupil ratio 1:55 1:52

Desk pupil ratio 1:3 1:14


The inadequacy in school standards negatively impacts on education service delivery.

The Accounting Officer explained that effort had been made to present data regarding

infrastructure and staffing levels to the Central Government for redress. he further

explained that measures are being initiated to improve on pupils’ performance.

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I advised the Accounting Officer to follow up the matter with the Ministry of Education,

Science, Sports and Technology and Ministry of Finance, Planning and Economic

Development to address the matter.

3. Failure to meet minimum national standards in the water sector

Paragraph 2.1.1 (C) of the Local Governments Management and Service Delivery


for proper functioning of water sources.

The following shortcomings were identified;-

3.1 Water Service coverage

Minimum Standards for Service Delivery (MSSD), the Service Coverage which set the

percentage of people served by a water source at 77% by 2015. However, the

percentage rural safe water coverage in the district is 55% which is below the national

target.

3.2 Unserved Communities

According to the Minimum National Standards of Service Delivery every LC 1 should a

water source. However, it was noted that some villages within Kaliro District do not

have water sources and this has contributed to the low service coverage mentioned

above. Un-served communities stand at 45%.

3.3 Latrine coverage

The Minimum National Standards of Service Delivery, set a minimum rural latrine

coverage should be 90%. It was however, noted that the latrine coverage in Kaliro

district is at 67%.

Management attributed the failure to attain the minimum national standards in the

areas highlighted above to inadequate funding but pledged to improve the situation

when funds will be available.


challenges.

113

4. Non-remittance of shared local revenue

Section 85(4) of the Local Governments Act states that a district council may with the

concurrence of a Sub county collect revenue on behalf of the sub county council but

shall remit 65% of the revenue so collected to the relevant sub county. In addition,

regulation 39(2) of the Local Government Financial and Accounting regulation states

that the Chief Executive of a higher local government shall ensure that revenue

collected by the higher Local Government is remitted to the lower local government.

It was however observed that the District did not remit UGX.85,015,225 to the lower

councils contrary to the law.

Non-remittance of revenue to the Lower Local Governments negatively impacts on

service delivery to the community.

The Accounting Officer explained that the challenge was lack of LST data base per

Lower Local Governments to guide in computation of the 65% due.


the lower councils as required by law.

5. Failure to meet minimum standard of Health service delivery



for proper functioning of health centers.

5.1 Patient Load

An analysis carried out on the District health services revealed that the District has a

huge patient load compared to the set national standards which has slowed down the

progress of the District in meeting the national development goals as well as those on

the international level like the World Health Organization (WHO) goals as shown in

the tables below;

Post WHO Standard National standard Kaliro District

Doctor 1:600 1:24,000 1:63,512

Nurses 1:500 1:1,700 1:7,057

Midwife 1:500 1:900 1:2,087

114

This has been attributed to inadequate wage bill to recruit more health workers.

However, inadequate accommodation for staff in the health facilities may also have

contributed to health workers’ shunning the job offers in those facilities.

I advised the Accounting Officer to lobby for more funds from the relevant stake

holders to increase the wage bill and construct more staff houses which may attract

health workers to these facilities.

5.2 Staff Accommodation

A sample of the health centers in the District revealed shortage of staff accommodation

as shown below;

Health Facility Standard Status Variance

Bumanya HCIV 11 10 1

Gadumire HCIII 5 3 2

HC II

Budomero HCII 2 0 2

Kaliro Town Council HCII 10 0 10

Total 28 13 15

This has resulted in absenteeism and late coming by staff since most of them live in

rented houses in trading centers or their villages which in most cases are distant from

the health facilities. This adversely impacts on service delivery as patients cannot

access the health workers as and when circumstances warrant.

The Accounting Officer attributed this to financial constraints occasioned by removal

of capital development fund from the budget but pledged to close the accommodation

gaps in a phased manner whenever funds are available.

I advised the Accounting Officer to engage the relevant Government agencies and

Donors so that more accommodation can be availed to the health workers.

5.3 Lack of an IT Policy

Section 110 of the Local Government Financial and Accounting Regulation (LGFAR)

(2007) requires the chief executive to designate an officer to ensure that adequate

Information and Communication Technology Policies are established and are applied

to enable adequate security and protection over computers and data held on

computers or information systems operated by the District.

115

However, no IT policy has been developed to guide staff on the measures to regulate

the use of IT resources. This can lead to abuse and loss of data.

The Accounting Officer attributed this to lack of an IT expert but has pledged to work

on it.

I advised the Accounting Officer to designate an officer to develop an IT Policy.

6.4.10 KAMULI DLG

1. Health Sector

1.1 Kamuli District Hospital

Section 2.1.2 of the revised Local Government Management and Service Delivery

Program Operational Manual, (LGMSD), 2009 sets out the minimum standards

required. However, inspections of Various Health Centre’s within the district

revealed the following shortcomings;

Key Facility Observation

190 staff 174 staff

Equipment No xray and utra sound machines

Proper infrastructure Shortage of Hospital Infrastructure as

shown in Appendix 2

Ambulance No ambulance

A proper waste disposal No waste disposal at the hospital

Lack of adequate facilities at the Health Centre adversely affects service delivery.

The Accounting Officer explained that the PHC Grant has remained stagnant for the

past five years yet the patient load has kept on swelling.

I advised the Accounting Officer to continue lobbying the relevant authorities in order

to have the matter addressed.

2. Failure to meet minimum standards of Health Service delivery in

Nankandulo Health Centre IV

Key Facilities Observation

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Incinerator None

The Accounting Officer explained that they had budgeted for the incinerator in the

current year.


3. Failure to meet minimum standards of Health Service delivery in

Namwendwa Health Centre IV

Facility Existing

Store None

Incinerator medical waste None

I advised the Accounting Officer to follow up with Ministry of Health, and Ministry of

Finance, Planning and Economic Development to ensure the shortcomings are

addressed.

4. Follow up on previous years Audit recommendations

a) Non Functional X-ray and Ultra sound machines

Kamuli General Hospital became functional in 2005 with the different departments

including Radiology which was equipped with x-ray and ultrasound machines.

However, during the Inspections of the General hospital for the financial year 2015/16,

Audit inspections observed that at the time of Commissioning of the hospital in 2005,

Ultra sound machines and X-ray had been delivered to the Radiology department with

the help of the Spanish Grant at an estimated cost of UGX.200 million. However, the

machines have never worked since 2005 since the time of delivery, installation and

commissioning of the hospital.

No functional x-ray at the hospital

Several appeals were made to the Central Government through the Ministry of Health

for the repair of the machines and promises were made that they would be worked

on.

117

The Hospital made an attempt at repairing them contacting private biomedical

engineers who came on the ground to assess the equipment’s and they were willing

to repair the machines, but they needed a lot of money which the Hospital could not

raise.

The residents of the five surrounding Districts remain unserved.


5. Production Service Management

5.1 Failure to meet the Minimum set standards


manual section 2.1.2 (e) requires Local Governments to deliver services in conformity

with production sector minimum national standards of service delivery.

The government set up the production department at every district to boost agriculture

through extension services. Agricultural activities carried out include dairy farming,

fishing, bee keeping, crop and animal production.

It was noted that the district is operating below the set minimum standards.

It was further noted that the district has 12 veterinary extension workers and 14

extension workers against the 85,348 farming households. The extension worker to

farmer ratio was 1:7,112 for veterinary, 1:6,096 for crops and 1:7,112 for animal

production and entrepreneurship compared to the standard of 1:500 as per the

MNSSD.

The Accounting Officer attributed the shortcoming to inadequate funding and

understaffing in the department. This inadequacy negatively impacts on agriculture

service delivery.

I advised the Accounting Officer to follow up the matter with the Ministry of Agriculture

so that more funds are made available to ensure that minimum standard requirements

are complied with.

118

6. Education Service Management

6.1 UPE Infrastructure and Staffing Levels

Ministry of Sports and Education has set minimum infrastructure standards. It

was noted that in all the sample of schools inspected, performance was below

the set national standards as detailed in the table below:

SN Indicator MNSSD District Ratios

1 Classroom Pupil ratio 1:55 1:76

2 Latrine stance pupil ratio 1:40 1:201

The ratios for the district are way above the national recommended ratios for schools

to perform to the expected standards.

The Accounting Officer attributed the shortcoming to inadequate funding. The

inadequacy in school infrastructure negatively impacts on education service delivery.



6. Water service Delivery

a. Dry Wells

Section 6 of the Statement of requirements of the contract between the district and

the siting and supervision contractor states that the Consultant shall use the best

professional judgement to ensure that all boreholes sited have a minimum yield of 500

l/hr. In case 15% or more of the boreholes sited yield less that 500 l/hr, the consultant

shall pay the Client an equivalent of the Cost of silting and drilling supervision for each

of the failed source above the 15% limit.

The district awarded Aquatech Enterprises (U) Ltd a contract for silting and drilling

supervision of 9 boreholes Lot 2. However 6 dry wells were successful and 3 were not

representing a 33% failure rate.

Dry borehole Dry borehole

119

The Accounting Officer explained that the technology used by the contractors is never

perfect since it is basically an approximation with un acceptable provision for up to 2%

failure rate.

I advised the Accounting Officer to ensure that the costs above are recovered from

the Consultant.

7.1 Walking distance for water sources in Bugabula and Buzaya counties

Chapter 2.1.2 Section F Part A (SN1) water and sanitation Minimum National Standards

of Service Delivery sets out the maximum walking distance to a water source for a

community to be one kilometre.

It was however observed that the average walking distance for communities in Kamuli

district to a water source is 1.46km contrary to the guidelines. Attention should be

drawn to Namasagali and Kagumba sub-county with an average distance of 1.8KM.

Details are presented in the table below

Sub county Standard distance Current Status

Nabwigulu 1.0km 1.4 km

Balawoli 1.0km 1.4 km

Kagumba 1.0km 1.8 km

Namasagali 1.0km 1.8 km

Butansi 1.0km 1.2 km

Magogo 1.0km 1.2 km

Average distance 1 1.46 km

Inadequate water facilities lead to poor sanitation and as a result, a high disease

prevalence.

The Accounting Officer indicated that they are lobbying for funding from Non-

Government Organisations.

I advised the Accounting Officer to lobby for more funds from other Government

Agencies to provide more boreholes and shallow wells closer to people.

7.2 Functionality status of protected water sources in Bugabula and Buzaaya

counties

LGMSD Chapter 2.1.1 Section C water service delivery package requires.

i) Geographical survey before deciding on the location to establish the water yield

120

ii) Water quality testing during the design stage of the water facility

It was noted that Bugabula and Buzaaya counties have 40 non-functional bore holes

and 44 abandoned boreholes in the areas.

There are 14 non-functional shallow wells and 47 abandoned shallow wells in the same

counties.

The non-functional boreholes and shallow wells can be repaired but there were no

enough funds to do so. Details in the table below;-

Status Functional Non functional Abandoned

Boreholes 653 40 44

Shallow wells 392 14 47

Protected springs 12 0 0

The Accounting Officer reported that they were lobbing for funding from stakeholders.

He also noted that the boreholes and shallow wells had been abandoned because they

had poor quality water yield and some were dry.

I advised the Accounting Officer to lobby for more funds from other government

agencies to repair boreholes and shallow wells that were non-functional in different

areas.

8. Encroachment of Local Forest Reserve

Section 3 of the Forests Act Chapter 146 mandates the Minister to issue statutory

order, declaring any area to be a central/ local forest reserve.

It was however, noted that the District is located on a local forest reserve land contrary

to the regulations.

Management explained that efforts are underway to relocate the forest reserve as

advised by the Ministry of Lands, Housing and Urban Development.

The occupation of land belonging to a forest reserve is illegal and may attract fines

and penalties to the District.

I advised the Accounting Officer to expedite the process of finding alternative land for

the forest or account for the encroachment so far made.

121

6.4.11 KAYUNGA DLG


1.2 Delays in Accessing the District Payroll

According to the Standing Orders 2010 - General rules on Payment of Salaries (B - a)

11, the Accounting Officer shall ensure that the public officer accesses the payroll

within four (4) weeks from the date of assumption of duty.

However, it was observed that by 30th June, 2016, a number of employees had not

accessed the IPPS and were not receiving salary.

The Accounting Officer explained that after the district was given clearance to recruit,

the exercise was done but the delayed release of additional funds delayed entry of the

new employees onto the payroll.

I advised the Accounting Officer to ensure that staff accesses the payroll in accordance

with the regulations.

2. Failure to meet the Minimum Standards of District Health Service Delivery

2.1 Doctor/Nurse-Patient Ratio

An analysis carried out on the District health services revealed that the District was

not meeting the required Doctor/nurse patient ratio as shown in tables below;

Cadre WHO Standard National Standard Kayunga District

Doctor 1:600 1:24000 1:41673

Nurses 1:500 1:1700 1:3410

The Accounting Officer indicated that the situation was improving and had requested

for the Ministry of Health and Ministry of Finance, Planning and Economic Development

to recruit.

I advised the Accounting Officer to make a follow-up and ensure that the required

number of doctors and nurses are recruited.

2.2. Staff accommodation

Review of Health Service delivery report revealed that some health centres in the

District had acute accommodation gaps while other centres have no accommodation

facilities at all as shown in table below;

122

Health Centre Standard

accommodation

requirement

No of staff

Accommodated

Variance (Gap)

Kayunga Hospital 142 86 56

Kangulumira HC IV 11 07 4

Bbaale HC IV 11 11

Ntenjeru HC III 5 08

Busaana HC III 5 02 3

Nazigo HC III 5 07

Galiraya HC III 5 05

Lugasa HC III 5 08

Wabwoko HC III 5 03 2

Nkokonjeru HC III 5 04 10

Kawongo HC III 5 08

Total 168 102 66


The Accounting Officer explained that whereas capital development projects had

earlier on been carried out, the Ministry of Health had since retained PHC funds which

as a consequence had left the district with no funds to undertake capital development.

3. Failure to meet the Minimum National Standards of Education Service

Delivery





Classroom Pupil Ratio 1:55 1:85

Latrine Stance Pupil Ratio 1:40 1:83


Desk Pupil Ratio 1:3 1:5

Text Book Pupil Ratio 1:3 1:5


This was attributed to inadequate funding. The inadequacy in school infrastructure

negatively impacts on the academic performance.

The Accounting Officer is advised to follow up the matters with Ministry of Education

and Sports to address the challenges.

123



officer to ensure that adequate Information and Communication Technology (ICT)

policies are established and applied to enable adequate security and protection over

computers and data held thereon or information systems operated by the Council.

However, it was observed that there is no ICT policy to guide staff on use of IT

equipment, hardware and data.

There is a risk of data loss and unauthorized manipulation due to the inadequacy of

physical controls over the computer system.


6.4.12 LUUKA DLG

1. Failure to meet the Minimum Health Standards of service delivery

1.1 Kiyunga Health IV


(LGMSD) Program Operational Manual for Local Governments 2009, sets minimum

standards for proper functioning of health centre IV. However, audit inspection of

Kiyunga Health Centre revealed that the Health Centre did not meet the minimum

standards as shown below;

Standard

Parameter

Minimum Standards Status

Transport Reliable No ambulance

Theater 1 None functional

Electricity 2 sources None existent

Lack of proper infrastructure negatively affects service delivery.

I advised the Accounting Officer to lobby for funding and ensure that health service

delivery is improved.

2. Production Service Delivery


manual, 2009 section 2.1.2 (e) requires Local Governments to deliver services in

conformity with production sector minimum national standards of service delivery.

124

It was observed that the district is operating below the set minimum standards.


inadequacy negatively impacts on agriculture service delivery.

The Accounting Officer was advised to engage the Ministry of Agriculture and ensure

that the issues are addressed.

6.4.13 MAYUGE DLG


1.1 Non-Remittance of PAYE

Section 19(1) (a) of Income Tax Act Cap 340 provides for taxation of employment

income in form of PAYE (Pay As You Earn). In addition, Section 123 (1) of the Income

Tax Act requires that a withholding agent shall pay to the Commissioner any tax that

has been withheld or that should have been withheld under this part within fifteen

days after the end of the month in which the payment subject to WHT was made by

the agent.

Contrary to the above, it was observed that deductions in respect of PAYE amounting

to UGX.168,646,621 withheld from staff salaries for the month of June 2016 had not

been remitted to the tax body by September 2016. Besides, the figure is not reflected

as a payable in the financial statements.

Delayed payments of the deductions can attract penalties of up to 2% per month from

when payment fell due, which would be a financial loss to the district. In addition,

none disclosure of the deducted taxes payable to URA implies that the accounts are

misleading.

The Accounting Officer acknowledged the observation but informed me that there was

no release made from the Ministry of Finance for that purpose by the time of the audit.

I advised the Accounting Officer to pay all outstanding tax arrears to avoid

accumulation of late payment penalties and to have the financial statements adjusted

to that effect.

1.2 Poor storage of personnel records

According to Regulation 9 (j) of the LGFARS 2007, the Accounting Officer is required

to establish proper storage facilities with accounting and financial control systems to

125

ensure efficient receipt, issue and safe custody of stores, vehicles, plant and other

assets.

During the audit inspection, it was observed that personnel files are stored in the

registry with no restricted access. In addition, files are stacked on top of the cabinets

and others on the ground as shown in the photos below;

The Accounting Officer explained that there is a challenge with office space but the

district is soon getting more space that will resolve this issue.

I advised the Accounting Officer to ensure proper and safe storage of files to avoid

loss of records.

2. Failure to meet the minimum standards of health service delivery


(LGMSD) Program Operational Manual for Local Governments sets Minimum National

Standards of Service Delivery (MNSSD) for proper functioning of Health Centers.

However, inspection of the Health Centers revealed the following shortcomings:-

a) Kigandalo Health Center IV

Package Minimum standard

Observation Remarks

Operation Theatre 1 1 Non Functional due to lack of

personnel

Means of Transport Reliable 0

Staff Houses 11 4 13 staff accommodated while 10 staff

are not

Waste Pit 1 1 Garbage littered all around

OPD 1 1 No shade for patients

Incinerator Functioning 1 Not functioning

Mortuary Functioning 0 No plans to construct one

b) Kityerera Health Center IV

Package Minimum standard

Observation Remarks

126

Operation

Theatre

1 1 Non Functional due to lack of personnel

Means of Transport

Reliable 0

Staff Houses 11 4 8 staff accommodated out of 36

OPD shade 1 1 No shade for patients

Water Source Reliable 0

Incinerator Functioning 0 No plans to construct one

Mortuary Functioning 0 No plans to construct one

c) Other Indicators

Name KIGANDALO HC IV

KITYERERA HC IV

Aggregate for all the HC 3

Remarks

MNSSD Actual MNSSD Actual MNSSD Actual

Doctor Patient

Ratio

1;600 1;34,981 1;600 1:49,378 NA NA One doctor averages

40,000 patients

Nurse Patient

Ratio

1;500 1:5,830 1;500 1 : 4,580 1;600 1 : 4,774

One Nurse averages 4000

patients

Target Population

Served

100,000 32,643 100,000 49,378 20,000 44,003

HC 4 are underutilized

yet HC III are over utilized

Failure to meet the minimum national standards adversely affects service delivery.

I advised the accounting officer to engage the relevant authorities to ensure that the


3. Failure to meet minimum national standards in the Education service

delivery

Section 2.12 (a) of the Local Governments Management and Service Delivery (LGMSD)

Programme, Operational Manual for Local Governments, 2011 prescribes Minimum

National Standards as Service Delivery (MNSSD). However, it was observed that the

minimum standards had not been met as detailed below;-

Indicator Current status MNSSD

Teacher ; Student 1: 61 1:55

Student ; Classroom 1 ; 100 1:55

Teacher ; House 1 : 76 1:3

Pupil: Latrine stance ratio: 1:95 1:40

Pupil: Desk ratio: 1:7 1:3

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Pupil: Textbook ratio: 1:6 1:3

Drop-out rate: 42% O

The low standards adversely affect the academic performance of schools.

I advised the Accounting Officer to engage the Ministry of Education and Sports to


4. Lack of an ICT policy



Information and Communication Technology policies are established and are applied

to enable adequate security and protection over computers and of data held on

computers or Information Systems operated by the council.

However, it was observed that there was no ICT Policy to guide staff on the use of IT


I advised the Accounting Officer to develop an ICT Policy.

6.4.14 NAMUTUMBA DLG

1. Failure to meet minimum standards at Nsinze Health Centre IV


(LGMSD) Program Operational Manual, 2009, sets out Health Service Delivery

packages or minimum standards for functioning of health centres. However, audit

inspection carried out at Nsinze Health Centre IV revealed lack of basic requirements

as shown below;-

MNSSD CURRENT STATUS

MNSSD stipulates 2 staff houses No staff house

One mortuary None

Two doctors houses One exists

One operating theatre The theatre is not operational due to lack of a doctor and

an Anesthetic officer

Ten two stance pit latrine Six two stance lined pit latrines exist

Means of transport No functional ambulance

Equipment Lacks equipment (Details in Appendix III)

Dental Services Lacks equipment (Details in Appendix IV)

128

I advised the Accounting Officer to liaise with the responsible Ministry and National

Medical Stores to improve the conditions of the Health Facilities for better health

services.

6.4.15 NAMAYINGO DLG

1. Poor Water Coverage

The District Development Plan (DPP) for the period ended 30th June 2016 set out

Sector objectives of increasing water coverage to 77%.

However, a review of water supply and sanitation status shows that the rural Water

coverage in the District was only 34% which is far less the set target of 77%. Further,

the review of the District water coverage and functionality report reveals that the

functionality rate was 21% as shown below;

Sub County Total Population

Boreholes

Total Population

Served

Coverage %

Functional

ity

None

Functionali

ty

Banda 55,100 62 16 78 13,302 24

Buhemba 32,600 53 28 81 9,346 29

Buswale 33,600 59 13 72 20,530 61

Buyinja 25,800 49 8 57 12,366 48

Mutumba 48,800 25 10 35 14,466 30

Namayingo

TC

14,900 30 10 40 9,245 62

Sigulu 42,000 61 5 66 8,018 19

Total 252,800 339 90 429 87,270 34%

The low water coverage exposes the communities to unsafe water hence a risk of

water borne diseases.

The Accounting Officer explained that the District Water Development plan had been

developed and would enable management to lobby for financial support.

I advised the Accounting Officer to expedite the process as the matter needs urgent

attention.

7. Failure to meet the minimum standards of Health Services

129

Section 2.1.2 of the Local Government Management and Service Delivery Programe

Manual (LGMSD), 2009 states that Local Governments will deliver services in

conformity to the standards as dictated by the laws and regulations of Uganda.

Under Section 2.1.1, health service delivery packages or minimum standards for proper

functioning of health centres were set.

Facility/ Package Minimum standard

Available Remarks

BUYINJA HCIV

Water The health centre lacks running water.

Ambulance None

Separate

wards for male, female

and Children

shared The children wards are being used by

both children and old female patients.

11 staff houses

7

Mortuary Small

Functioning Incinerator

Non functional

Functioning

Generator

Non

functional

The generator has not been functional

for over two years.

SIGULU HC III

Adequate

beds

Broken beds

Reliable Power

Faulty solar system

Reliable

Transport

Boat only

Water

none Lack of running water in the labour suite

and the laboratory

The Accounting Officer admitted the shortcoming and promised to lobby for funding

to address them.

I advised the Accounting Officer to lobby for funding and ensure that health service

delivery at the Health Centres is improved.

6.5 KAMPALA BRANCH 6.5.1 BUIKWE DLG

1 Under Deduction of Local Service Tax

Paragraph 3(1) of The Local Governments (Amendment)(No.2) Act, 2008 requires that

Local Service Tax on persons in gainful employment and earning a monthly take-home

130

salary exceeding UGX.100,000 to be levied in various bands up to a maximum of

UGX.100,000.

However, my review of the payrolls prepared for 2015/16 showed that deductions

made from several staff were less than the rates prescribed in the above-mentioned

provision, leading to under deduction of UGX.962,500. Failure to apply the correct

rates implies that the concerned local governments were denied the much-needed

revenue to implement their programs.

The Accounting Officer in response attributed this lapse to a number of factors

including new staff who joined the payroll in the middle of the year, leavers and staff

who absconded from duty. I advised the accounting officer to strictly follow the law

regarding the deduction of Local Service Tax as well as to ensure that recoveries are

made of the said amounts from subsequent payments.

2 Delayed Payment of Pension

It was noted that payment of pensioners was decentralized to districts in January 2014.

However, at the time of audit (September 2016) more than 24 months later, 17

pensioners had not yet accessed pension payroll.

The Accounting Officer attributed this to several reasons among which approval by the

Ministry of Public service featured prominently. Delays to pay gratuity and monthly

pension denies the retired staff their entitlement and negatively impacts on their

livelihoods. In addition, non-payment of pension leads to accumulation of pension

arrears.

I advised management to liaise with the responsible stakeholders, particularly Ministry

of Public Service in order to ensure the timely payment of pension for all entitled retired

staff.

3 Delayed Civil Works

During the review; it was noted that funds totaling to UGX.63,706,900 was released

to Sacred Heart SS, Najja in the financial year 2011/2012 for the completion of a two

(2) classroom block at the school. At the time of inspection in July 2016, the classrooms

had not been completed as they lacked windows and doors and the floor had not been

screeded, while the classrooms had not been painted as shown below;

131

Incomplete Classrooms at Sacred Heart SS

The unfinished work was attributed to misappropriation of the funds released to the

school amounting to UGX.27,985,741 by the then management of the school.

The Accounting Officer explained that the then Headmaster of the school has since

disappeared but the matter was being handled by the Criminal Investigation

Department.

I advised the Accounting Officer to complete the classroom block while awaiting for

outcome of the police investigation.

4.0 Health Services

4.1 Failure to meet minimum standards at Kawolo Hospital





centres.

Inspection carried out at Kawoolo Hospital, revealed the following shortcoming;


Kawoolo Hospital

Funding Underfunding of Hospital operations;

Staffing

- Several critical staff positions like a mortuary attendant,

Radiographer, a pharmacist, a dental surgeon, and medical

Officers special grade like Community Health, Obstetrics,

Internal medicine, surgery and pediatrics were lacking.

132

X-Ray Services Lack of X- Ray services;

- The X-ray machine has not been working for some time due to a reported mechanical problem.

Electricity

Outstanding Electricity bill;

- The hospital had an outstanding electricity bill of UGX.80,659,997

The Accounting Officer attributed the current situation of the hospital to inadequate

funding.

I advised the accounting officer to engage the Ministry of Health and Ministry of

Finance Planning and Economic Development (MOFPED) to address the matter.

4.2 Lack of Monitoring of Government Grants to NGO Hospitals by the District

During the period under review, of UGX.316,328,000 was released to three (3) Non-

Governmental Hospitals of Nyenga, Nkokonjeru, St. Charles Lwanga and seven lower

level Non-Governmental Health Units in the district. However, it was observed that

there was inadequate monitoring of government grants by the district in all these non-

governmental organization Hospitals. For instance at St. Charles Lwanga Hospital, it

was noted that the Hospital did not open a separate account for the government grant

and therefore funds were comingled with other Hospital funds. Consequently, there

were no books of accounts maintained, no financial reports and no work plans in

respect of Government grants.

Lack of monitoring of Government grants may lead to misuse.

The Accounting Officer explained that within its means, the district had been

supporting the NGO Hospitals through regular integrated support supervision, training

and human resource support.

I advised the Accounting Officer to strengthen monitoring of the Government grant.

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6.5.2 BUIKWE TC

1 Lack of Garbage Dumping Site

Section 5 of the public health Act Cap 281 require every local authority to take all

lawful , necessary and reasonably practical measures to safeguard and promote public

health One of the major functions of an urban council is to collect and manage

garbage. However, it was observed that the Town Council does not own a garbage

dumping site. Consequently, refuse collected were dumped in a wet land within the

Town Council.

Garbage represents a threat to human health if not handled or disposed off properly.

The Accounting Officer explained that the Town Council was in the process of acquiring

a joint landfill with Lugazi Municipal Council.


2 Lack of a Physical Development Plan

Section 25(1) and (6) of the Physical Planning Act 2010 requires an urban council

physical committee to cause preparation of a physical development plan and the same

to be submitted to the National Physical Planning Board for approval. It was however

observed that the town council has not prepared a physical development plan for

approval by the National Physical Planning Board. Lack of an approved physical

development plan may result into development of slums.

The Accounting Officer explained that the Council did not have resources to develop

the physical development plan and management had on several occasions written to

the relevant authorities for both financial and technical assistance to have the Town

planned.

I advised the Accounting Officer to priorities the development of a physical

development plan for proper planning.

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6.5.3 BUVUMA DLG

1 Non Operational Medical Equipment at Buvuma District Health Centre IV Paragraph 2.1.1 (D) of the Local Governments Management and Service Delivery

(LGMSD) Program Operational Manual 2011 for Local Governments requires Health

Centres IV to have functional medical equipment. However, inspection of Buvuma

District Health Centre IV revealed that there were medical equipment supplied by the

Ministry of Health to Buvuma District Health Centre IV which were not in use as shown

below.

S/R ITEM Quantity

1 Hot Air Ways 2

2 Guerdon Air ways 2

3 Incubator, culture 1

4 Infant, incubator 3

5 Infant warmer 1

6 Microscope binocular 1

7 Otoscope 4

8 Oxygen therapy apparatus 3

9 PH meter 1

11 Pulse oximeters 2

12 Refrigerator, Blood Bank 1

13 Stool surgeon 3

14 Bed pediatric 1

15 Microscope binocular 1

16 Otoscope 1

17 Oxygen therapy apparatus 1

18 Examination couch 6

19 Photocopying machine 1

20 Auto clave 1

21 Tuttnayer Auto Clave 1

22 Scanning Machine 1

23 Oxygen concentrator 1

24 Weighing scale (Adult) 1

The Accounting Officer explained that the equipment could not be used because

electricity was still lacking in Buvuma District.


the equipment is put to use.

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2 Failure to meet the minimum standard of Primary Schools

Paragraph 2.2.1 of the revised Local Government (LGMSD) Operational Manual, 2011,

provides minimum service delivery package for a primary school. However, inspection

carried out at Kitiko primary school revealed the following shortcomings:-


Kitiko Primary School

Class rooms: pupil ratio 1:55

P1, P2 and P3 pupils were studying in one classroom.

See the picture below;

Some class rooms were made of Papyrus as shown in the picture below;

latrine stance : pupils 1:40

An old pit latrine was shared by teachers and pupils as shown in the picture below;

Poor standards negatively affects the learners’ performance.

The Accounting Officer explained that a request had been made to the Ministry of

Education and Sports requesting for additional funding to address the challenges of

infrastructure in schools.

I advised the Accounting Officer to take up the matter with the relevant authorities to


3 Non-disposal of obsolete Assets

Regulation 122 (1) of the PPDA Regulations 2006, requires disposal of Council assets,

including assets identified by a board of survey to be carried out in accordance with

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the Act, Regulations and the guidelines. However, it was observed that there were

several obsolete assets which had not been boarded off by the year end.

Delayed disposal of the assets may lead to further deterioration in value.

The Accounting Officer explained that the annual board of survey where

recommendations for the disposal were made was submitted to council seeking for

resolution to dispose off the assets.



Section 2.4.1 of the LGFAM, 2007 states that the Head of Finance is responsible for

advising on risk management and effective systems of internal controls so as to ensure

compliance with all applicable legislation and regulations and other relevant

statements of best practice and ensure that public funds are properly safeguarded,

used economically, efficiently and effectively. Contrary to the regulation Council had

not developed a risk management policy to guide the process.

This weakens the Internal Control System.

The Accounting Officer admitted the shortcoming and indicated that Council was to

develop one.

The accounting officer was advised to ensure that a risk management policy is

developed.

5 Lack of Information Technology (IT) Policy

Section 110 of the LGFRA (2007) requires the Chief Executive to designate an officer

to ensure that adequate information and communication technology policies are

established and are applied to enable adequate security and protection over computers

and of data held on computers or information systems operated by the council.

However, it was observed that Council had not formulated effective procedures to

ensure proper use of the IT resources.

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This creates a risk of misuse of computer equipment, software, loss of data.

The Accounting Officer promised to develop the IT policy.


6.5.4 BUVUMA TC

1 Non Remittance of Shared Local Revenue to Lower Local Councils

Section 15 (A) of the Local Governments Act (as amended), Fifth Schedule requires a

Town Council to distribute local revenue collected to the Parishes (5%) and villages

(20%). However, it was observed that the Council did not remit UGX.5,153,558 to the

respective wards contrary to the law. This leads to failure of the lower Council to

implement their work plans.

The Accounting Officer explained that revenue collections were affected by a very

sharp decline which affected almost all budgeted items that was mostly due to political

pronouncements during the electioneering period but indicated that efforts have been

put in place to ensure that as revenue stabilizes, disbursements will be made.

I advised the Accounting Officer to remit the shared local revenue to the respective

parishes in accordance with the law.

6.5.5 GOMBE TC

1 Lack of a Valuation List

Section 3(1) of the Local Authority Rating Act provides that every local authority shall

levy such rates as it may determine on the basis of the rate able value of properties

within a rating area. Section 4 of the same Act states that the local authority shall

cause to be made for every rating area, within its limits the first valuation list and

thereafter a valuation list once at least in every five years, or such longer period as

the minister may approve. It was however, observed that no valuation list has ever

been carried out. This has resulted into the council realizing low returns from property

rates as the properties are not valued.

The Accounting Officer explained that the Council was still mobilising resources to

secure the services of a competent valuer to undertake property valuation.

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I advised the Accounting Officer to ensure that valuation list is in place to guide on the

collection of property rates.

2 Lack of a Physical Development Plan


physical committee to cause to be prepared a Physical Development Plan and the same

to be submitted to the National Physical Planning Board for approval. It was however,

observed that the Town Council had not prepared a physical development plan for

approval by the National Physical Planning Board. Lack of an approved Physical

Development Plan may result into unplanned developments resulting in slums and their

associated challenges.

The Accounting Officer explained that the Council lacks a structural plan mainly due to

resource deficiencies but indicated that the Ministry of Local Government promised

some start-up funds to the cause.

I advised the Accounting Officer to ensure that the Physical Development Plan is

developed.

6.5.6 GOMBA DLG

1 Un-Receipted Revenue

Section 4.5.1 of the LGFAM, 2007, states that each Revenue Collector must immediately

in the presence of the payer count the cash and issue an acknowledgement receipt for

the revenue collected. However, it was observed that revenue from market/gate charges

of UGX.27,958,000 was not receipted. Lack of revenue acknowledgement receipts may

lead to under-declaration of revenue.

I advised the Accounting Officer to ensure that all revenue received by the District is

acknowledged.

2 Failure to Meet the Minimum Standards of Health Service Delivery



139



centres. However, audit inspection carried out at Bulwadda Health centre II, Maddu

Health Centre IV and Kanoni Health Centre III in Gomba District revealed the following

shortcoming:-

Minimum Standards Current status

Bulwadda Health centre II in Kabulasoke Sub County findings

Basic Requirements Staffing

- The health centre had three (3) staff but only one was found at the station.

OPD, block. - The health centre operates in one small building

Limited space

Maddu Health Centre (1V) in Maddu Sub-county

Means of transport - The ambulance was non–functional.

Modern energy

lighting, Laboratory and basic equipment

- The Generator was not operational due to the reported high fuel

expenses. - There was no power as it was reported disconnected.

- The fridge for drugs was not functioning.

Operating Theatre - The theatre room was being used as a store as shown in the pictures below;

Kanoni Health centre III

Staffing - There was only one nurse on duty out of the 19 staff that were

supposed to be at the Health centre with no duty roster.

Medical Some hospital beds were lying outside the staff houses.

Staff Housing Units - The staff houses were dilapidated

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Lack of essential facilities adversely affects service delivery at the health centre.

I advised the Accounting Officer to follow up the matter with relevant authorities to

ensure that the minimum standards of Health service delivery are achieved.

3 Audit Inspection of Schools

Paragraph 2.2.1 of the revised Local Governments (LGMSD) Operational Manual

provides minimum service delivery package for a primary school. The package includes;

Classrooms; Pupil desks, Pit latrines (for pupils and teachers), Teachers desks, Teachers

chairs, Teachers houses and water availability. Inspection of a sample of 5 UPE schools

in Gomba district (Bulwadda C/U, Nsambwe P/s, Kifampa P/s, Kandegeya P/s and Kyayi

P/s) revealed the following shortcoming;

a) Nsambwe Primary School

Basic Requirements

Current status

Classrooms

- Some school structures were in a sorry state as shown in the pictures

below;

The old structures

There is a risk that these could collapse any time and injure staff and pupils.

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Library

- The Library has no glasses in the windows which exposes the books

to theft and destruction by rain as shown below;

No glasses in classrooms and Library room.

Staff Houses

- There were no staff houses

Kifampa Primary school in Kabulasoke

Classrooms - The classrooms were dilapidated as shown below:-

Old classroom at the verge of collapsing

Desks

- There were insufficient desks in classes

Latrine stance

1:40

- The school has a 5 stance pit latrine which is used by both the male

and female pupils and the staff.

- There was no facility for washing hands after visiting the latrine.

The above shortcomings were attributed to inadequate funding.

I advised the Accounting Officer to take up the matter with the relevant authorities.

6.5.7 LUWERO DLG

1 Allocation of Land Titles in the Forest Reserve

Section 32 (1b) of the National Forest and Tree Planting Act, 2003 prohibits clearing,

usage and occupancy of any forest reserve for agricultural, recreational, commercial,

residential, industrial or hunting purpose without a license. However, it was observed

that the District Land Board allocated land titles within the forest reserve contrary to the

Act as shown below;

Plot Number Area in hectares

Remarks

1322 16.339

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1323 207.40 Sub divided into plots 2487 to 2507

1507 12.117 Sub divided into plots 2851 to 2852 & 2854

1508 4.047

1509 4.047

1510 4.047

1511 0.809

1512 0.405

1513 0.405

1514 0.617

1515 13.588

2851 6.414

2852 9.710 Residue by computation

2854 1.039 Residue by computation( road)

2507 12.502 Residue by Balance

The Accounting Officer explained that the information regarding those who were given

leases/freehold titles was not at the district but rather at the Ministry of Lands in

Kampala where it can be obtained on request. The matter requires urgent attention.

2 Failure to meet the Minimum Standards in UPE Schools






Name of school

No of

pupils

RATIOS

Teacher

1:55

Classroom

1:55 Desk 1:3

Latrine

stance

1:40

Bombo Umea Primary School 786 1:56 1:79 1:11 1:157

Makonkonyigo Primary School 673 1:67 1:96 1:16 1:112

Kyangabakama C/U Primary School 527 1:59 1:75 1:13 1:105

Kamira C/U Primary School 557 1:56 1:93 1:9 1:186

Lukole Umea Primary School 861 1:62 1:123 1:6 1:144

Namakofu C/U Primary School 653 1:65 1:93 1:8 1:109

Mulajje Mixed Primary School 638 1:64 1:64 1:7 1:128

Kkalwe Primary School 758 1:69 1:95 1:7 1:126

Mazzi Primary School 444 1:56 1:56 1:11 1:63

St. Kaloolo Katagwe Primary School 503 1:63 1:126 1:10 1:50

St. Jude Katagwe Primary School 603 1:60 1:86 1:10 1:60

Timba Primary School 597 1:60 1:100 1:17 1:85

Failure to meet the required standards may lead to poor academic performance of the

schools in question.

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The Accounting Officer attributed the shortcomings to inadequate School facilitation

Grant funding and high attribution rate and the seven (7) teachers plus one (1) policy

where all schools are supposed to have eight (8) teachers irrespective of the numbers

of pupils in a class and one extra teacher per additional 55 pupils.

I advised management to engage the relevant authorities to ensure that education

policies are harmonized to national standards.

3 Inspection of the Primary Schools Infrastructure

The audit inspections revealed the following shortcomings:-

a) Mamuli R/C Primary School

The School is located in Kigombe Parish, Katikamu Sub County. The inspection

revealed the following shortcoming;

The school had one classroom block that was dilapidated and lacked windows as

shown below;

There were many broken desks heaped in classrooms as shown below;

There was no administration block and staff room;

The latrines constructed by an NGO had caved in and dangerous to pupil lives.

Although the school was in an isolated area it lacked a fence and below is a pictorial

description of some of the structures of the school.

The poor state of infrastructure may impact negatively on the pupils academic

performance and service delivery by the teachers.

The Accounting Officer explained that the district planned to construct two (2)

classroom blocks at the school during the FYR 2016/17 and stated that the school also

144

received 37 desks in the financial year under review. It was further stated that the

district authorities have encouraged the Head teacher to mobilize the School

Management Committee to repair the broken desks and latrine due to inadequate

funding from the centre.

b) Koko Primary School

The school is located in Kalagala Sub-county with a population of 589 pupils. The

inspection revealed the following shortcoming;

Lack of a staff quarters

Lack of a playground and a fence.

Lack of desks

The Accounting Office attributed the state of affairs of the school to inadequate

resources.

I advised the Accounting Officer to engage the relevant authorities to improve on the

state of infrastructure in the school.

4 Non Operational anaesthetic Machines Supplied by NMS

Health Center IVs were supplied with anesthetic machines (the detex Ohameda GE

9100C) to ensure that patients in the operating theatre had an accurate and

continuous supply of medical gases. However, it was observed that the machines

require the use of anesthetic vapors which were not supplied by NMS rendering the

machines un-operational.

The Accounting Officer explained that the anesthesia machines require anesthetic

vapors(halothane) and pressurized oxygen to function which are expensive and usually

out of stock in NMS. The HC IVs use local anesthesia (spinal anesthesia) which is

regarded to be the safest, Cheaper and faster.

I advised the Accounting Officer to take up the matter with NMS and Ministry of Health.

5 Failure to meet the minimum standard of Health Services



145



centres. However; Inspection carried out at Luwero HC IV, Nyimbwa HC IV, Magala

HC IV and Kigole HC II showed some anomalies and lack of basic requirements as

shown below;

Health Facility Basic requirement Current Status

Luwero HC IV OPD Block; Maternity Ward; Operating theatre

Dilapidated Structures Lack of air conditioning

Nyimbwa HC IV Placenta Pit Operating theatre Running Water

Placenta Pit broken Roof is leaking No Water supply

Magala HC IV Staff houses Dilapidated

Kigobe HC II Staff houses Electricity Grid or solar

No staff houses

Solar has no battery

The Accounting Officer promised to follow up the matter with Ministry of Health.


the shortcomings are addressed.

6 Inactive District Road Committee

Section 25 (2) of the Uganda Road Fund Act 2008 requires Districts, as designated

agencies of Uganda Road Fund to have District Road Committees (DRCs), comprising;

the district chairperson or mayors of every local authority in the districts, all Members

of Parliament from the districts, the Chief Administrative Officer, the District Road

Engineer and the Secretary for works. However, it was observed that the district lacks

fully functioning district road committee.

Lack of an active District Road Committee makes it difficult to track and monitor work

programs and may lead to utilization of funds on non-priority roads.

The Accounting Officer explained that the District Road Committee was finally

constituted. There were no minutes of the Committee.

I advised the Accounting Officer to ensure that the Committee is active.

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6.5.8 WOBULENZI TC

1 Non Remittance of shared Local Revenue to Lower Councils

Part V (15A) of the Local Governments Act 1997 (as amended) requires a Town Council

to distribute 5% and 20% of the total shared revenue to Parishes and Village Councils

respectively. However; it was observed that the Town Council did not remit the shared

Local Revenue amounting to UGX. 69,945,092 to Parishes and Village Councils as

shown in the below:-

Total Collections 316,867,519

Less Property tax 37,087,150

Total sharable 279,780,369

25% for LLGs 69,945,092

Failure to remit revenue to the lower Councils impacts negatively on service delivery

at the lower units.

The Accounting Officer explained that Council was implementing activities in all LC.1

areas which projects were identified during participatory planning.

I advised the Accounting Officer to ensure that shared local revenue is remitted to the

lower councils as required by law.

2 Lack of Information Communication Technology Policy

Section 110 of the LGFAR (2007) requires the Chief Executive to designate an officer

to ensure that adequate Information and Communication Technology policies are


and data held on computers or information systems operated by Council.

It was observed that the Council did not have an IT Policy to regulate the use of IT

resources.

The Accounting Officer admitted the shortcoming and explained that the new staff

structure provided for the IT officer and it is expected that the IT Officer will be

recruited in 2017/2018.


147

6.5.9 MPIGI DLG

1 Underfunding of UPE Schools

According to Universal Secondary Education (USE) guidelines students enrolled by

each Universal Secondary Education (USE) school are funded by the Ministry of

Education and Sports. However, during the review it was observed that some schools

were underfunded by UGX.52,421,976 during the calendar year 2015 as shown below:-

School Number of Students

Budget Actual release obtained

Deficit

Buyiga Seed Secondary School 57 7,011,000 3,900,000 3,111,000

Cardinal Nsubuga S.S.S- ,Kitakyusa 503 64,794,000 58,500,000 6,294,000

Bulaamu Seed Secondary School 627 86,013,000 62,195,951 23,817,049

Kibuuka Memorial S.S 443 61,860,000 60,666,090 1,193,910

St. Phillip’s Equatorial S.S- Nabusanke

415 54,429,000 36,442,983 18,006,017

Total 2,045 274,107,000 221,705,024 52,421,976

Underfunding USE schools affects both the school operations and academic

performance of the students.

I advised the Accounting Officer to liaise with the ministry of Education and MOFPED

to ensure for adequate funding in order to realize governments objectives under this

programme.

2 Failure to Board off Old Vehicles

Section 2.3.4.1 of the Local Governments Financial and Accounting Manual (LGFAM),

2007 requires the Accounting Officer to constitute a board of survey to recommend for

boarding off of stores and fixed assets that have become redundant, obsolete or

unserviceable through normal wear and tear. On the contrary; mdistrict vehicles were

grounded and wasting away without being disposed of as shown in the Pictures below;

148

Failure to board off old vehicles leads to further deterioration in value.

The Accounting Officer explained that a request was made to the Chief Government

Valuer to conduct a valuation of the items recommended for boarding off and promised

to follow up on the valuation report to facilitate the disposal process.

I advised the Accounting Officer to expedite the process of disposing off the assets.

6.5.10 MPIGI TC

1 Un-updated Valuation List

Section 4 of the Local Government (Rating) Regulations, 2006 requires the Local

Government to produce a valuation list every five years. It was however observed that

property valuation in Mpigi Town Council was last done in 2008. Consequently, taxes

may not be charged at the prevailing market rates. Besides, all the premises

established after 2008 are not included on the property valuation list and therefore not

charged.

The Accounting Officer attributed failure to update the list to lack of funds yet the

exercise requires certified valuers who are expensive to engage.

I advised the Accounting Officer to ensure that funds are mobilized and the exercise

is undertaken.

6.5.11 MUKONO DLG

1 Failure to meet the Minimum Standards at the Health Centres




Health Service Delivery packages (Minimum Standards) for functioning of health

149

centres. However, audit inspection carried out at Kojja Health centre IV, Kasawo

Health centre III and Nakifuma Health Centre III revealed the following shortcoming

as shown below;


Kojja Health Centre

Essential Apparatus/Equipment

The following equipment were lacking; - Hematology machine

- Chemistry machine

- Radiography machine

- Ultra sound scan. - Dental equipment

Ambulance - No ambulance.

OPD, Maternity and General wards

The Wards lacked; - Separate areas for male and female patients; - IV stands - Water in the bathrooms.

Storage facility and Records management

Lack of a storage facility

Kasawo Health Center III

Modern energy lighting, Laboratory and basic equipment

- No Autoclave for sterilizing equipment in maternity ward

- No Refrigerator - No Glucometer strips were lacking

Nakifuma Health Center III

Essential Apparatus/Equipment

No ultra sound machine Dental lack dental equipment.

Lack of essential equipment negatively affects health service delivery.

The Accounting Officer explained that some health centres were earmarked to receive

grant medical equipment on top of the construction works while the lack of medical

equipment was communicated to the Ministry of Health.

I advised the Accounting Officer to follow up the matter and ensure that the challenges

are addressed.

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6.5.12 MUKONO MC

1 Failure to meet the Minimum Standards in UPE Schools

Paragraph 2.1.2 of the Revised Local Government Management and Service

Delivery (LGMSD) operational manual, 2009 requires schools to meet specific

minimum standards of one class room for every 55 pupils; and one latrine stance

for every 40 pupils. However, it was observed that 18 primary schools had

inadequate infrastructure which did not meet the minimum basic requirements as

shown below;

Name of School Students classrooms Latrines stances

RATIOS

Classroom to pupil 1:55

Latrine stance to Pupil 1:40

Mukono Town Moslem 964 9 9 1:107 1:107

Kiwanga UMEA 770 8 8 1:96 1:96

Nyenje 462 7 7 1:66 1:66

Bishop West 556 5 12 1:111 1:46

St Peters Nantabulirwa 739 7 8 1:106 1:92

Mother Kevin 871 10 7 1:87 1:124

Mokono Boarding 832 13 12 1:64 1:69

Misindye C/U 542 8 10 1:68 1:54

Kiwango Umea 451 7 7 1:64 1:64

Kyesereka 426 7 8 1:61 1:53

Bishops Central 710 11 14 1:65 1:51

Jinja Misindye 514 7 8 1:73 1:64

Seeta Umea 958 8 9 1:120 1:106

Ngandu 421 7 8 1:60 1:53

Kiwanga C/U 391 7 9 1:56 1:43

Namilyango Junior Boys 1309 17 35 1:77 37

Bishop East 447 7 12 1:64 37

St Augustine 633 7 8 1:90 1:79

Failure to meet the Ministry minimum basic standards may affect the overall

academic performance of the schools.

The Accounting Officer attributed the shortcoming to insufficient funding under

the School Facilities Grant.

151

I advised the Accounting Officer to engage the Ministry of Education and to ensure

that funds are provided to address the anomaly.

2 Poor Health Service Delivery at Mukono Health Centre IV


(LGMSD) program operational manual for Local Governments 2009 provides

service delivery package for proper functioning of Health centres. However, audit

Inspection of Mukono Health Centre IV revealed the following shortcomings as

shown below :-

Item Current status/Conditions

Placenta pit Placenta pit was full and not in use

Maternity ward The maternity ward had insufficient beds. Consequently, some mothers in labor were sleeping outside.

Medical equipment There were only four (4) delivery sets despite the health center handing over 20 deliveries a day.

No functioning thermometer and weighing scale No functioning inclinator. Consequently, medical waste

was being heaped at various locations of the health

facility.

Electricity (grid and

solar) and generator

The sterilizer in the maternity wing was not being used

due to the reported high cost of electricity;

OPD block The OPD was congested with some patients standing

while others waiting from outside. The dispensary room was also used as the injection

room, wound dressing and at times staff changing room;

Means of transport The Ambulance had broken down

The Accounting Officer explained that when the Health Centre was elevated from

level III to level IV, the infrastructure was not enhanced to match the level.

However, requests were made to Ministry of Health to elevate the Health Centre

to a general hospital that is better funded, staffed and equipped.

I advised the Accounting Officer to follow up the matter with Ministry of Health.

6.5.13 NAKASEKE DLG

152

1 Lack of up-to-date Property valuation List

Section 4 of the Local Governments (Rating) Regulations, 2006 requires the Local

Government to produce a valuation list every five (5) years. However, the district last

carried out this exercise in 2007 which means that all new premises established after

2007 have never been included on the property valuation list. This may result in the

Council losing revenues.

The Accounting Officer explained that the valuation exercise is very expensive for the

district.

I advised the Accounting Officer to mobilize resources and carry out valuation exercise

to enhance revenue collection.

2 HEALTH SECTOR

2.1 Failure to meet the Minimum Health Standards

Paragraph 2.1.1 (d) of the Local Governments Management and Service Delivery

(LGMSD) Program Operational Manual for Local Governments provides the minimum

Health Service Delivery standards. However, inspection of Semuto HC IV and Kikamulo

Health Centre III revealed the following shortcoming:-

Health Facility Health Service Delivery Packages

Status / Condition at the Health Facility

Semuto HC IV Medical Equipment No suction machine

No scissor set/kit to aid in operations

No sterilizers in OPD

No blood bank / reserves

No oxygen gas

Means of transport No ambulance

Staff houses Inadequate staff accommodation

Kikamulo HC III

Two staff houses type 1 One staff house type 2

Two staff houses type 3

No staff houses

One maternity ward Maternity ward lacks beds

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The Accounting Officer promised to engage the relevant authorities to address the

matter.


3 Non deduction of Local Service Tax

Section 80 (1a) (b) of the Local Governments Act, Amendment No.2, 2008 requires

local service tax to be levied on all persons in gainful employment or who are practising

any profession. My review of the payroll revealed that Local service tax worth

UGX.1,725,000 was never levied on 69 district staff for the FY 15/16. Non-deduction

of LST resulted into loss of revenue.

The Accounting Officer acknowledged the error of non-collection of local service tax.

I advised the Accounting Officer to recover the undeducted tax from future payments

to staff and address the control weakness that resulted in this lapse.

4 Failure to recover prior year overpayments

Section B (16) of the Uganda Public Standing Orders requires the Accounting Officer

to deduct any monies due to Government from an Officer’s salary.

In my previous report to parliament I indicated that Nakaseke Local Government had

effected overpayments worth UGX.34,581,251 and the Accounting Officer promised to

recover the funds from the affected staff. However, a year later, the funds remained

unrecovered and are not disclosed in the financial statements as receivables.

The Accounting Officer did not provide response on this matter.

I advised the Accounting Officer to initiate recovery measures, and open individual

personal advance accounts to record the amount due to the District.

5 Poor Primary Leaving Examination Results

Analysis of performance of the Universal Primary Education (UPE) for the past five (5)

years revealed that the performance of UPE was not good with the highest number of

pupils passing in Divisions two (2), three (3), four (4) and U. Although Division one

showed a steady increase in performance; the grades were still few compared to other

grades as shown below;

Year Division 1 Division 2 Division 3 Division 4 U X Total

2013 188 1627 917 503 549 173 3957

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2014 233 1640 945 543 530 236 4127

2015 294 1661 938 611 715 183 4402

Total 715 4928 2800 1657 1794 592 12,486

The pupils who obtained grades U and X are unable to proceed to the next level of

Education which limits their future career development. Poor performance was

attributed to poor class attendance of pupils and a high labour turn-over of teachers

in the education sector due to lack of teachers’ accommodation in the district.

The Accounting Officer explained that the District faces many challenges including

transport facilities for DEO and school inspectors, inadequate teachers’ houses,

inadequate classrooms and seats and inadequate funding to UPE schools.

I advised the Accounting Officer to engage with the relevant authorities to address the

matter.

6.5.14 NAKASEKE TC

1 Lack of an approved Physical Development Plan


physical committee to cause to be prepared a physical development plan and the same

to be submitted to the National Physical Planning Board for approval. However, it was

observed that the Town Council had not prepared a physical development plan for

approval by the National Physical Planning Board. Lack of an approved physical

development plan may lead to unplanned developments.

The Accounting Officer explained that the Town Council submitted its physical

development plan to the National Physical Planning Board for approval.

I advised the Accounting Officer to ensure that a physical development plan is

approved.

6.5.15 NAKASEKE-BUTALANGU TC

1 Non Remittance of Local Revenue to Lower Local Councils

Section 15A of the Local Governments Act (as amended), Fifth Schedule requires a

Town Council to distribute local revenue collected to the Parishes (5%) and villages

(20%). However, it was observed that the Council did not remit UGX.3,030,200 being

155

25% of shared to the respective wards. Failure to remit shared local revenue to lower

councils adversely impacts on implementation of activities at the lower levels the locally

required services.

The Accounting Officer indicated that a communication was made to the Local councils

but there was no response.

I advised the Accounting Officer to always remit the funds to Lower Councils promptly.

2 Lack of Street Lights

Paragraph 2.1.2 of the Local Government management and service delivery (LGMSD)

Program operational manual for local Governments provides urban roads minimum

national standards of service delivery of 10% street lighting coverage of an interval of

25m along the street. However, it was observed that the Council remained without

street lights contrary to the standard.

The Accounting Officer explained that the council is constrained with funds to cater

for street lighting.

I advised the Accounting Officer to plan and ensure installation of street lights in

accordance with the operational manual of Local Governments.

6.5.16 NAKASONGOLA DLG

1 Health Service Delivery in the District

1.1 Failure to meet the Minimum Health Standards

Paragraph 2.1.1(D) of the Local Governments Management and Service Delivery

(LGMSD) Program Operational Manual for Local Governments provides the minimum

Health Service Delivery standards. However, inspection of Njeru Health Centre II,

Kiwambya Health Centre II, Kalungi Health Centre III and Nakayonza Health Centre

III revealed that there were a good number of operational deficiencies and lack of

basic requirements as summarized below;


156

Njeru Health Centre II,

Sanitation - There was no medical porter and the sanitation condition of the unit was in a sorry state.

Transport facilities - The unit's motorcycle is grounded thus affecting movement of staff and service delivery.

Kiwambya Health Centre II

Management of Resources

- The current In-charge, took over office without a formal handover report from his predecessor.

- Funds transferred to the unit were being spent with no authority from the Health Unit Management Committee besides; there was no approved work plan in place.

Kalungi Health Centre III;

Management of Resources - There was lack of a physical plan and land title.

- The Public Health Assistant was not at the unit and the cash book was not posted up to date.

Nakayonza Health Centre III;

- Funds were being spent with no authority from the Health Unit Management Committee as indicated by lack of approved work plan.

Management of Resources - Minutes of the Health Unit Management Committee were not availed for review.

The above challenges were attributed to inadequate supply of essential health items

National Medical Stores.


the shortcomings are addressed.

2 Unauthorised Expenditure

Regulation 24(1) of the LGFAR requires that expenditure for which there is insufficient

or no provision in the approved estimates should not be incurred until a supplementary

estimate has been approved while Regulation 25(1) of the Local Governments

Accounting Regulations 2007 requires appropriate authorization of re-allocations in

compliance with the legislative framework. Contrary to the above, the council spent

UGX.5,455,128 on repairs of water borne toilets at district headquarters and ceiling for

CAO’s office under works department without approval of the Council or reallocation

authority rendering the expenditure un-authorized.

Unauthorized expenditure is an indication of budgetary control indiscipline.

157

The Accounting Officer explained that maintenance of district buildings was planned

and budgeted for in the works department work plan for FYR 2015/2016 under

maintenance of water borne toilet and office ceiling but no evidence was availed during

verification to support the expenditure.

I advised the Accounting Officer to always observe financial guidelines.

3 Non Disposal of boarded off Vehicles

Section 2.3.4.1 of the LGFAM, 2007 requires the Accounting Officer to constitute a

board of survey to recommend for boarding off of stores and fixed assets that have

become redundant, obsolete or unserviceable through normal wear and tear. It was

however observed that various council vehicles were grounded and wasting away as

shown below without being disposed of.

Ford Ranger D/Cabin Toyota Hilux Vigo

Suzuki Car

These assets have continued to lose value and or revenue that would have been

earned due to further deterioration caused by delayed disposal. Besides; the assets

are prone to vandalism, theft or loss.

The Accounting Officer explained that the vehicles that were recommended for

disposal by the board of survey were undergoing the process of valuation.

I advised the Accounting Officer to expedite the process.

158

6.5.17 WAKISO DLG 1 Irregular Procurement of Contractor for Seguku-Kasenge-Buddo - 10Km

Contrary to section 43 of the PPDA 2003, all procurements should be conducted in a

manner that promotes transparency, accountability and fairness and in a manner to

maximize competition and achieve value for money.

It was noted that a firm was awarded a contract to work on Seguku-Kasenge-Buddo

(10 Km) and Lubowa Quality Super market Hill view close (2.1km), at a contract price

of UGX.15,188,224,517, instead of awarding it to a firm that had bided for the same

works at UGX.9,871,635,060, leading to apparent overspending by

UGX.5,316,589,450. It was observed that the lowest bidder was eliminated due to the

failure to back the schedule of general experience with signed agreement forms and

certificates of completion despite verification letters by some of the contracting entities

(Ministry of works and Transport, and Uganda investment Authority) that the firm had

been contracted before, for similar works. The evaluation team on the other hand

waived off a major criteria of financial performance that required applicants to have

an average turnover of UGX.20 Billion for the last 3 years citing noncompliance by all

participants but the awarded bidder had an average turnover of UGX.14 billion far

below the other bidders with average turnover of UGX.41.8 Billion and UGX.2 Trillion

respectively.

It was also observed that the firm awarded lacked the experience of having 2

successfully and substantially (70%) completed contracts in the last recent 3 years

each with a value of at least UGX.12 billion as the company only attached certificates

amounting to below UGX.4 Billion and UGX.12 Billion, which was only 10% completed

works. The waiver gave an unfair advantage to the awarded firm leading to unfair

competition and apparent overspending of UGX.5,316,589,450.

The Accounting Officer acknowledged the finding adding that the Evaluation team

waived off some criteria under Financial Performance under average annual turnover

in line with the job being undertaken and the firm in question did not meet both the

general experience of having contracts in the last recent 5 years prior to the bid

submission deadline with activity in at least 8 months in each of the last recent 5 years

(2011, 2012, 2013, 2014& 2015). This was considered a deliberate override of

regulations by the evaluation and contracts committees.

159

I advised the Accounting Officer to abide by the basic principles of procurement as laid

down in regulation 43 and follow up this matter for possible action on whoever is found

to have been responsible for this loss to government.

2 Irregular award of Framework Contracts

Regulation 94(1) of the PPDA Regulations requires Council to enter into framework

contracts for repetitive supplies but where the quantity and timing of the requirement

cannot be defined in advance. This is meant to reduce procurement costs or lead times

for a requirement which is needed repeatedly or continuously over a period of time by

having them available on a "call off" basis.

However a review of a sample of the districts’ frame work contracts revealed that, call

off orders were made for procurements amounting to UGX.146,429,768 for items that

were not repetitive in nature and whose need could be defined in advance, thus not

fitting within the definition of framework contracts. Similarly, procurement of repair

services amounting to UGX.67,823,485 were procured by the district without holding

mini competitions to perform financial comparison of quotations from the various

suppliers prior to issue of the call off orders.

The Accounting Officer explained that items that have standardized costs can be

procured under framework contracts for easy procurement. It was observed however

that the practice may have been used to circumvent the requirement for proper

procurement procedures, thus compromising value for money in the procurement.

I advised the Accounting Officer to ensure that going forward, conditions governing

framework contracts are always observed.

3 Budget Performance

Regulation 18(3) of LGFAR, 2007 requires budget estimates to be based on objectives

to be achieved in the financial year and during the implementation, efforts to be made

to achieve the agreed objectives or targets as per programs of Council.

It was noted that out of the approved budget of UGX.74,355,833,259, a total of

UGX.71,603,629,091 was received resulting into a shortfall of UGX.2,445,480,341

which represents an underperformance of 3.3%. This was largely attributed to a

shortfall in GOU releases of UGX.906,916,693, as well as transfers from other

government units (especially lower Local Governments) of UGX.1,644,946,275 as


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Table summarizing the District Revenue Outturn

Source Budget (Ugx) Actual (Ugx) Variance (Ugx)

Local Revenue 2,483,699,969 2,479,238,002 4,461,967

GoU releases 64,377,818,568 63,470,901,875 906,916,693

Donor funds 521,777,000 632,621,594 110,844,594

Transfers from other

government units

6,972,537,722 5,327,591,447 1,644,946,275

Total 74,355,833,259 71,910,352,918 2,445,480,341

Furthermore, collection of revenue by the lower local governments, as well as budget

cuts by the Ministry of Finance Planning and Economic Development, across the entire

government might have also affected budget performance.

In response, management explained that this was a direct result of non-realization of

funding from the observed sources, adding that this issue is perennial, sometimes

results into failure to fully implement approved work plans for planned service delivery.

I advised the Accounting Officer to carry out a deep analysis of the budget

performance with a view of devising mechanisms to address such shortcomings,

especially those affecting revenue collection by the lower local governments.

4 Irregular Contract Award

Regulation 102(1 and 3) of the Local Government PPDA regulations, 2006, requires a

security to be in a form and from an institution that is wholly acceptable to the Bank

of Uganda and valid for a period prescribed in the tender documents.

It was noted that two construction firms submitted bids for the renovation of Makindye

Sabagabo Sub-county offices (now Makindye Municipal council), at bid prices of

UGX.163,300,355 and UGX.181,689,257. However, the Best Evaluated Bidder

submitted a bid security in form of a cheque of UGX.500,000 in favor of Wakiso DLG

(Stanbic bank, dated 5/2/16) which does not qualify as a bid security, as per the above

regulation.

A review of the standard bid document and the instruction to bidders (clause ITB 18.1),

however, exclusively stated that "A Bid security shall not be required". It was however

noted that the lowest price bidder was evaluated as non-compliant basing on failure

to submit a bid security. This appeared contradictory.

161

In view of the above, the disqualification of the lowest priced bid on such grounds and

the award of contract in favor of a higher bid is considered irregular and resulted into

an excess expenditure that could have been avoided.

The Accounting Officer stated that the unsuccessful bidder did not provide evidence

of experience of handling contracts of more than one hundred million or works of

similar complex nature and would not pass the technical evaluation stage.

I advised the Accounting Officer to follow the regulations and also exercise due care

in scrutinizing the evaluation reports before accepting the recommendations of the

evaluation and contract Committees.

5 Information Technology (IT) Policy

Section 110 of the LGFAR (2007) requires the chief executive to designate an officer


established and are applied to enable adequate security and protection, over

computers and of data held on computers or information systems operated by the

Council.

It was observed that the district has a number of computers and their accessories

meant to improve processing of information. However, there are no proper procedures

formulated to guide use of this equipment and there is no designated officer to handle

IT matters contrary to the law. Consequently, there was no effective general and

application controls in existence in the District that would ensure proper logical and

physical access and security over data. Absence of IT controls, poses a risk of wastage

and loss of vital information.

In his response, the Accounting Officer promised to have an information policy in place

to address this issue by end of the financial year.

I advised the Accounting officer to expedite the process of formulating IT policies, to

guide in management of IT resources and also fully harness the use of ICT as a

business enabler.

6 Review of Internal Audit Function

Section 90 of the Local Government Act, 1997 as amended, requires every District,

City, Municipal and Town Council to provide for an Internal Audit Department who

should prepare quarterly audit reports and submit them to the Council giving a copy

to the District Public Accounts Committee (DPAC) LGFAR, 2007. In addition, ISSAI

162

1610 allows the External auditor to place reliance on the work of the internal auditor

in accordance with ISA 315 after consideration that the Internal Audit is likely to be

relevant to the Audit.

However, our review of the internal audit department and its operations revealed that

the department was weak. While the district establishment of the department indicated

nine (9) staff, only two (2) were in place. In addition, according to internal audit, the

actual operational funds availed to the department of UGX.169 Million (about 0.001%

of the district budget of UGX.74 Billion) appear to be meagre, given the extent of audit

work they would have to undertake across the District. I further noted the absence of

internal audit plans and inadequacies in internal audit reports. In the absence of a

strong and functional internal audit department, the risk of the existence of weak

internal controls cannot be understated.

The Accounting Officer stated that the audit staff were assigned duties in newly

created Municipalities and Town Councils, but they were in a process of formalizing

appointments for internal audit staff.

I advised the Accounting officer to ensure that the Internal Audit Department is

strengthened to enhance the internal control system of the district.

6.5.18 WAKISO TC

1 Unauthorized Over Expenditure

Regulation 27 of the Local Government Financial and Accounting Regulations (LGFAR),

2007 requires the Chief Executive to submit the application for re-allocation to the

Executive Committee for approval before he/she issues a re-allocation warrant to the

vote controller concerned to incure expenditure where there is insufficient or no

provision in the approved estimate. However, it was observed that the Council

incurred over expenditure of UGX.371,516,550 under works department without

seeking approval of the Executive Committee as shown below;

Description Approved budget

2015/16 (page 3)

Financial statements

2015/16(page 12) Variance

Works 359,339,000 730,855,550 371,516,550

This is irregular.

163

I advised the Accounting Officer to always seek approval of the Executive Committee

for excess spending.

2 Payment of VAT without- Tax Invoice

Sec 29 (1) of the Value Added Tax Cap 349 states that a taxable person making a

taxable supply to any other person shall provide that other person, at the time of

supply with an original tax invoice for the supply. It was however observed that

supplies whose contract sums were VAT inclusive of UGX.10,662,660 were paid using

Non Tax Invoices as shown in the table below;

Date V. No

Chq No. Payee Details Amount Remarks VAT

Development

account

12/10/20

15

02/

10

126/1

27

Kasse Construct

ion and contracto

rs Ltd

Supply of gravel

materials

13,000,00

0

VAT of 2,972,160 was

charged but the invoice is not a

tax invoice

2,972,160

Roads a/c

14-

Sep-15

08/9 238

Kasse

Consultants &

Contractors

Nayasa -

Kasengejje rd-Supply

of 1150tonne

s of marram

27,692,000

No tax invoice yet VAT of

UGX.4,450,500 was charged.

4,450,500

1-

Sep-

15

02/

09 232

Amalgamated

Engineeri

ng svrs

Nayasa - Kasengejje

rd, Supply

of gravel

17,790,00

0

Tax invoice not

attached yet VAT of

UGX.3,240,000

Was charged.

3,240,000

Total

10,662,660

Consequently, I was unable to confirm that the value added tax was paid by the

contractors.

The Accounting Officer stated that management had taken on the advise for proper

usage of Tax Invoices.

I advised the Accounting Officer to always pay VAT to only VAT registered suppliers

using VAT invoices.

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3 Lack of Garbage Dumping Site

Section 5 of the public health Act Cap 281 require every local authority to take all

lawful , necessary and reasonably practical measures to safeguard and promote public

health and one of the major functions of an urban council is to collect and manage

garbage. However, it was observed that the Town Council does not own a garbage

dumping site. Consequently, refuse collected were dumped in a wet land within the

Town Council as shown below;

Wakiso Town council truck dumping the

rubbish in swamp and in the road.

Rubbish in the swamp and road

Garbage posses a threat to human health if not handled or disposed off properly.

The Accounting Officer explained that management was finding it hard to supervise

garbage collection and disposal and hence decided to engage service providers in

2016/17.


6.5.19 ENTEBBE MC

1 Non-Disposal of Assets

Section 122(1) of the Local government’s PPDA Regulations 2006, stipulates that

disposal of Council assets, including assets identified by a board of survey, and shall

be carried out in accordance with the Act, these Regulations and the Guidelines.

However, I noted that the Council had a number of assets in the yard which have not

been disposed of as shown below;

No Name Number plate Location Condition

1 Tata Lorry Green LG-0039-34 Council Yard vandalized

2 Tractor Duetz UX0815 Council Yard vandalized

3 Suzuki UM0122 Council Yard vandalized

4 Emptier UPG Council Yard Vandalized

5 Emptier UPG Council Yard vandalized

6 Suzuki M/cycle UE 883 Council Yard Scrap

7 Suzuki M/cycle No Number plate Council store Scrap

165

8 Vespa No number plate Council store Scrap

9 Old engine Council store Scrap

10 Old Skips Council store Scrap

11 Old Boiler Pipes Council store Scrap

Obsolete items in the council yard

The delay to dispose off the assets may lead to further deterioration in value. The

Accounting Officer explained that the Council had written to the Chief Mechanical

Engineer to value the assets in preparation for disposal.

I advised the Accounting Officer to make a follow up and ensure the obsolete assets

are disposed.

2 Lack of an Information Communication Technology (ICT) Policy

Section 110 of the LGFAR (2007), requires the Chief Executive to designate an officer



and of data held on computers or information systems operated by Council.

However, there are no proper procedures formulated to guide the use of IT equipment.

In addition there was no designated officer to handle IT matters contrary to the

regulation.

Consequently, there is no effective general and application controls in existence that

would ensure proper logical and physical access and security over data.

166

The Accounting Officer explained that an IT unit would be incorporated in the proposed

Municipal Council structure that is awaiting approval by the relevant authorities and

that the ICT policy awaits Council approval.

I advised the Accounting Officer to ensure that an ICT policy is developed.

6.5.20 KAKIRI TC

1 lack of up-to-date Valuation List

Section 4 of the Local Government (Rating) Regulations, 2006 requires the Local

Government to produce a valuation list every five years. It was however observed

that property valuation was last done in 2009 which means that the current values

may not be at the prevailing market rates and that all the new premises established

after April 2009 were not included on the property valuation list.

Lack of un-updated valuation list may lead to under collection of local revenue.

The Accounting Officer explained that a request had been made to the District

Procurement unit for the identification of a valuer to carry out the valuation exercise.

I advised the Accounting Officer to expedite the process of producing a current

valuation list.

6.5.21 KIRA MC

1 Failure to meet the Minimum Standards of the Health Centres





centres. However, audit inspection carried out at various Health Centres revealed the

following shortcomings;

Health Facility

Basic requirement

Current Status

Kira HC

III

OPD Block; Maternity Ward;

- Old delivery bed

- Lack of bathroom in the labour ward

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Medical Equipment,

Laboratory Running water Ambulance

- Lack of running water in the laboratory

- Lack of Ambulance

Kimwanyi

HC II

OPD Block; Maternity Ward; Running water; Security and cleaning

- The facility needs serious face lifting in terms of

painting and re-roofing

- Lack of constant running water - Lack of security guards and cleaners

The Accounting Officer attributed the inadequate standards to budgetary constraints.



2 Non Disposal of Obsolete Assets

Regulation 122 (1) of the PPDA Regulations 2006, requires disposal of council assets,

including assets identified by a board of survey to be carried out in accordance with

the Act, these Regulations and the guidelines. However, a number of old assets were

observed deteriorating in the council’s yard. Delays to dispose off the assets may

lead to further deterioration of value.

The Accounting Officer explained that Ministry of Works and Transport sent a team to

value the vehicles for boarding off in June, 2016 and the report is awaited.



Section 2.4.1 of the LGFAM, 2007 states that the Head of Finance is responsible for

advising on risk management and effective systems of internal controls so as to ensure

compliance with all applicable legislation and regulations and other relevant

statements of best practice and ensure that public funds are properly safeguarded and

used economically, efficiently and effectively. Contrary to the above; however, there

was no risk management policy to guide staff on management of risks.

The Accounting Officer explained that a draft policy has been prepared by the Head of

Finance and discussed by Technical Planning Committee ready to be presented to the

Executive Committee and finally to Council for approval.

168

I await the outcome of the Accounting Officer promise.

6.5.22 NANSANA MC

1 Lack of an up-to-date Valuation List

Section 4 of the Local Government (Rating) Regulations, 2006 requires a Local

Government to produce a valuation list every five years. However, it was observed that

property valuation by the Council was last produced in 2007. The values applied may

not be at the prevailing market rates. Besides, all the new premises established after

2007 were not included on the property valuation list. Consequently, there is a risk of

under assessment leading to under collection of Local Revenue.

The Accounting Officer explained that the valuation exercise was costly but indicated

that the process of sourcing for a service provider was under way and hoped to

complete the valuation by end of the subsequent financial year.

I advised the Accounting Officer to ensure that an up-to-date valuation list is produced.

2 Non Disposal off Assets

Section 2.3.4.1 of the Local Governments Financial and Accounting Manual (LGFAM),

2007 requires the Accounting Officer to constitute a board of surveys to recommend

for boarding off of stores and fixed assets that have become redundant, obsolete or

unserviceable through normal wear and tear. However; it was observed that two

council vehicles wasting away without being disposed off as shown below:-

LG-0028-55 Tata pick-up LG-0060-55 Tata pick-up

The delayed disposal of the assets may lead to further deterioration in value.

169

The Accounting Officer explained that arrangements were underway to have the assets

disposed off.

I advised the Accounting Officer to expedite the process of disposing off the vehicles.

6.5.23 KAKOOGE TC

1 Un-updated Valuation list

Section 3(1) of the Local Authority Rating Act provides that every local authority shall

levy such rates as it may determine on the basis of the rateable value of properties

within a rating area. Section 4 of the same Act states that the local authority shall

cause to be made for every rating area, within its limits the first valuation list and

thereafter a valuation list once at least in every five years, or such longer period as

the Minister may approve. However, it was observed that property valuation by the

town council was last done in the FYR 2007/2008 (eight years ago) implying that the

rateable value for the council properties may have been under estimated.

Besides; all the new premises established after 2007/2008 have not been included on

the property valuation list. Consequently, the Council is losing potential revenue from

undervalued/unvalued properties.

The Accounting Officer attributed failure to update valuation list to insufficient funding

yet the process is very costly. I advised the Accounting Officer to plan and update the

list for effective collection of revenues from rate payers.


2 Non Remittance of Shared Revenue

The Local Governments Act 2007 Fifth schedule provides that 25% of the Town

council's total revenue collections shall be remitted to Lower Local Councils with

villages getting 20% and wards 5%. However, It was observed that the lower Local

Governments’ share of UGX. 5,800,222 was not remitted. Contrary to the law.

170

Non remittance of share revenue to the Lower Local Councils, impacts negatively on

service delivery at the grass roots. The Accounting Officer attributed the matter to

non-existence of elected leaders for the Lower Local Governments in the Town Council.

I advised the Accounting Officer to remit the shared local revenue to the Lower

Councils as required by law.

6.5.24 MIGEERA TC

1 Lack of an approved Physical Development Plan

Section 25(1) of the Physical Planning Act 2010 requires an urban council physical

committee to cause to be prepared a physical development plan. Sub section (6)

requires a Town Council Physical Development Plan adapted by the respective physical

planning committee to be submitted to the National Physical Planning Board for

approval. However, it was observed that The Town Council’s Physical Development

Plan has not been approved by the National Physical Planning Board. Lack of an

approved physical Development Plan may lead to unplanned developments within the

Town Council.

The Accounting Officer explained that the Town Council development plan was

submitted to the National Physical Planning Board for approval.

I advised the Accounting Officer to make a follow up on the matter and ensure that a

Development is approved.

2 Outdated Valuation List of Property Tax

Section 4 of the Property ratings Act, states that a Local Government shall cause to be

made for its area of jurisdiction a first valuation list and there after a valuation list once

at least in every five years, or such longer period as a local government may determine.

However, it was observed that the council valuation list was last updated in 2007/2008.

This may result in council realizing low returns from property tax.

The Accounting Officer explained that the council planned for the valuation of

properties in the current five year development plan.

171

I advised the Accounting Officer to update the valuation list to improve on local

revenue collection performance.

6.5.25 MASULITA TC

1 Non deduction and Remittance of Withholding Tax

Section 119 of the Income Tax Act Cap 340 (Withholding Tax on Goods and Services)

states that where Government of Uganda, a Government institution, a local authority,

a company in which Government has interest or any person designated in a notice

issued by the Ministry of Finance pays amounts in aggregate exceeding one million

shillings to any person in Uganda for the supply of goods, materials of any kind or

services, the payer is required to withhold 6% of the gross amount. The withholding

agent is required by law to remit to URA the tax withheld (or that should have been

withheld), within 15 days after the end of the month in which the payment was made.

Contrary to the law, the Town Council did not deduct 6% withholding tax of

UGX.1,908,270 as shown below;

Date VR No

particulars Payee Amount 6% WHT un deducted

17/02/16 128 supply & installation of

culverts

Rockfront Investments Ltd

2,650,000 159,000

25/02/16 127 supply &installation of culverts


3,400,000 204,000

27/5/16 3048 supply of gravel material &fill material

Jabana Enterprises Ltd

18,700,000 1,122,000

27/6/16 203 repair of Tractor LG0022-109

Ssenge Garage & Spare parts

1,954,500 117,270

17/5/16 3111 supply &installation of culverts


5,100,000 306,000

TOTAL 31,804,500 1,908,270

Failure to deduct tax may lead to fines and penalties by Uganda Revenue Authority.


172

6.6 MASAKA BRANCH

6.6.1 KALANGALA DLG

1. Low absorption of Production and Marketing Grant

Section 3.0(i) of the guidelines for Use of Production and Marketing Grant (PMG) by

Local Governments provides that 55% of the PMG to be incurred on Development/

Capital Expenditure which will be for infrastructure undertakings and other

development projects such as slaughter slabs, cattle markets, cattle dips, water

reservoirs, fisheries infrastructure, irrigation demonstrations etc.

Contrary to the guidelines, the district allocated only UGX.2,000,000 towards

development expenditure instead of UGX.45,425,050 leading to under expenditure of

UGX 43,425,050.

Failure to adequately utilize the Production and marketing grant for capital expenditure

undermines the infrastructure developments; and the grant may fail to achieve its

intended objectives.

The Accounting Officer explained that the PMG guidelines for the period under review

were not specific as in relation to today and work plans were customized to Local

Government Sector needs and approved. But today the guidelines have been specific

and this is what is being implemented. The earlier guidelines management talked about

were never availed to me to confirm the assertion.


2. Low Coverage during Child Days Immunization Program

The Government of Uganda under delivery of Health services earmarked Child days as

a special immunization program for children less than five years of age. The target

numbers was over 95% of the age group.

However, in Kalangala the coverage has been so low that the expenditure of

UGX. 30,000,000 is rendered worthless.

During a review, it was observed that the National set standard of over 95%

coverage was not achieved.

173

This was caused by a strategy that was not tenable to the population in Kalangala as

it is a hard to reach area.

The strategy applied may have been inappropriate to meet the requirements of the

Child days of over 95% coverage which was eventually at 45%

I advised the Accounting Officer to adopt a strategy that compels the population to

embrace the immunization program.

6.6.2 BUKOMERO TC

1. Lack of Revenue Registers

Regulation 33(1) of the LGFARs of 2007 requires every Local Government Council to

maintain revenue registers showing all forms of revenues and steps taken to collect all

arrears.

However, the Town Council did not maintain revenue registers contrary to the

regulations. The absence of revenue registers weakens controls over local revenue

collection.

The Accounting Officer explained that they were instead preparing abstracts of

revenue which could give the same information but regretted the failure to prepare

revenue registers.

I advised The Accounting Officer to ensure that the revenue registers are established.

6.6.3 LYANTONDE DLG

1. Failure to Prepare Bills of Quantities on Force on account

Guideline 5.3.2 and 5.4 of the Force Account Guidelines, 2013 requires that

management shall budget for road works to be executed using the BOQ concept to

capture details of equipment, labour and road construction materials to be used as

detailed in the program schedule for force account works Form – A, Annex 14.

On the contrary, it was observed that management executed road works of

UGX.151,460,000 without BOQs as shown in the table below;

PROJECT NAME AMOUNT

Emergency works on Kikasa Swamp 30,480,000

174

Periodic Maintenance of Kalyamenvu – Mpumudde – Buyaga-

Kyemamba-Kabingo Road (28.8km)

60,980,000

Nakinobe- Kyewanula-Kasese – Buyanja Road (11km) 20,000,000

Kabuula – Kinuuka – Kaliiro (11km) 40,000,000

TOTAL 151,460,000

Failure to prepare BOQs casts doubt on the correctness of the expenditures incurred

by the district in respect of executed road works.

The Accounting Officer explained that using the Force Account methods, the Works

department prepares work-plans and scope of works as per B.O.Qs.

I advised the Accounting Officer to always document the scope of works in respect of

the executed road works.

2. Non-disposal of grounded vehicles

Section 2.3.1.5 of the Local Government Finance and Accounting Manual, 2007

requires that Assets are supposed to be disposed off after recommendations from the

Board of Survey Report and using procurement procedures which are provided for

under the Local Governments (Public Procurement and Disposal of Public Assets)

Regulations, 2006 so as to maximize the value realized by Council on disposition of the

assets.

However, it was observed that the district has a number of grounded vehicles in the

parking yard.

The delay to dispose them off may lead to further deterioration of value.

The Accounting Officer explained that Council constituted a team involving the District

Engineer, Planner and Examiner of Accounts to conclude the exercise.

I urged the Accounting Officer to expedite the process of disposal.

6.6.4 LYATONDE TC

1. Non-remittance of shared local revenue to Lower Local Governments

Part V of the Local Governments Act, 1997 as amended requires a Town Council to

remit 5% and 20% of the total Local Revenue collected to parish and village councils

respectively; that make up the Town Council.

175

It was observed that Council did not remit an amount of UGX.51,941,985.

Failure to remit shared revenue to lower councils adversely affects implementation of

community programmes.

The Accounting Officer explained that although the law provides for remittances to the

lower local councils, a Memorandum of Understanding (MOU) was made between

Lyantonde Town Council and the lower local councils under which it was agreed to

retain part of their revenue because bulk of services delivered to the local residents

was borne by Lyantonde Town Council.

I advised the Accounting Officer to ensure that the shared local revenue due to the

lower councils is remitted as required by law.

6.6.5 MASAKA DLG

1. Poor Contracts Management

Sec 119(3) of Local Governments Public Procurement and Disposal of Assets

Regulations (LGPPDA), 2006 states that upon receipt of a copy of a contract, the

contract supervisor shall prepare a contract implementation plan and forward a copy

to the head of user department, secretary of the contracts committee among others

for monitoring purposes. Additionally, section 119 (10) (f), requires the contract

manager to submit reports on the progress or completion of a contract as required by

PDU or the Accounting Officer.

It was, however, observed that contract managers did not prepare the implementation

plans on file for the contract undertaken during the year of UGX.538,930,579.

Poor management of contracts may result in shoddy works and poor service delivery.

I advised the Accounting Officer to comply with the PPDA regulations.

6.6.6 MASAKA MC

1. Non-compliance with the statutory obligations

Paragraph 5.6.3 (5) (b) of the LGFAM of 2007, requires all payments for PAYE to be

submitted to Uganda Revenue Authority (URA) with the schedules of payers not later

than the 15th day of the following month.

176

However, it was observed that an amount of UGX.91,956,469 was not remitted.

Failure to remit taxes may attract penalties and fines from Uganda Revenue Authority

(URA).


6.6.7 MITYANA DLG

1. Poor state of infrastructure in Primary Schools

Inspection of four PLE schools in the District revealed that a number of schools had

dilapidated infrastructure as shown below;

Name of School Photograph

Kabule COU P/S

Kiryokya COU P/S

Bbambula COU P/S

Bbambula COU P/S

The poor state of infrastructure in primary schools adversely affects proper learning.

The Accounting Officer attributed the poor state of the infrastructure to under-funding.

I advised the Accounting Officer to prioritize the rehabilitation of the structures

mentioned above.

177

2. Procurement anomalies

2.1 Failure to rotate members of the evaluation committee

Regulation 27 of the Local Government Public Procurement and Disposal of Public

Assets Regulations (LGPPDAR), 2006 requires Procuring and Disposing Entities (PDE)

to have an Evaluation Committee for each bid consisting of Technical Officers and

persons recommended by the Procurement and Disposal Unit (PDU) and approved by

the Contracts Committee.

However, a review of procurement files worth UGX.559,556,019 revealed that the

district maintained the same evaluation committee across several bids with limited

representation of the user departments.

The Accounting Officer explained that it was not possible to change the committee for

each bid.

I advised the Accounting Officer to ensure that Evaluation Committees are appointed

for each bid and are rotated in compliance with the regulations.

2.2 Failure to invite bidders for selective tendering

Section 38 (2) of the Local Governments Public Procurement and Disposal of Public

Assets Regulations, 2006 on selective national tendering provides that the invitation

to tender under selective national tendering shall be addressed to a limited number of

potential tenderers on a short list without advertising the opportunity in a tender

notice. The shortlist shall include sufficient tenderers to ensure effective and real

competition.

Inspection of procurement files for procurements amounting to UGX.287,344,171

lacked evidence of invitation of other shortlisted bidders to bid for the various

procurements.

Failure to invite other bidders defeats the principle of competition.

The Accounting Officer explained that bidders on the short list were called upon and

also e-mailed but no documentary evidence was provided to support the explanation.

I advised the Accounting Officer to ensure that there is adequate invitation to bidders

to comply with the regulations.

178

2.3 Failure to verify the authenticity of performance securities

Regulation 59 (1) of the LGPPDAR, 2006 on due diligence test on tenderers provides

that a P rocuring and D isposing Entity (PDE) may at any time during a procurement

and disposal process carry out a due diligence test on a tenderer and shall not be

confined to the pre or post-qualification stage or the procedure or content relating to

these stages.

There was no evidence that the Procurement and Disposal Unit (PDU) verified the

authenticity of submitted performance securities for procurements amounting to

UGX.438,868,346 where this was a requirement.

Failure to verify the authenticity of performance securities may lead to the entity

relying on documents which are not genuine thereby leaving it unprotected in case

of failure to perform the contract by the provider.

I advised the Accounting Officer to always document the verification of the authenticity

of Performance Securities.

6.6.8 MUBENDE DLG

1. Hire of Road Equipment without following the Force account guidelines

Section 5.7.4 of the Force Account Guidelines, 2013 (Scheme for maintenance of

District and Urban Roads using own equipment and Road gangs) requires the local

authorities to solicit road equipment from a regional centre or neighboring Local

Government.

However, it was observed that UGX.306,763,736 was spent on hiring road equipment

before soliciting from the regional centre or neighboring Local Government as required

by the Guidelines.

Failure to follow Force Account guidelines may lead to excessive costs and failure to

attain the intended objectives.

The Accounting Officer explained that authority to use force account and hire of

equipment was sought and granted. He also stated that hiring of road equipment is

179

justified by long road network which cannot be worked upon by only two graders, one

which is constantly breaking down.

I advised the Accounting Officer to always adhere to Force on Account guidelines.

6.6.9 MUBENDE MC

1. Uncollected park fees

Section 2.1 of the signed contract between the Mubende Municipal Council & Ms.

Jjemuva Enterprises Limited for collection of park fees required that the contractor

pays in advance on a quarterly basis an amount of UGX 3,500,000 to the Municipal

Council Account.

It was observed that only UGX.6,637,500 was remitted leaving a balance of

UGX.7,362,500.

The Accounting Officer explained that during the year under review, there was political

pronouncement during the campaign which caused the tax payers to refuse to pay

taxes and the contractors refused to remit money to the Council claiming that the tax

payers had refused to pay. Management further explained that when they sued the

Contractor, the Chief Administrative Officer intervened and dictated the amount he

should pay to the Municipal Council.

I advised the Accounting Officer to ensure that the outstanding amount is

recovered.

6.6.10 BUTEMBA TC

1. Non-Remittance of shared local revenue

Paragraph 16, of Part V of the Fifth Schedule of the Local Governments Act, requires

25% of the total of what a town council collects to be distributed among the village

councils within its area of jurisdiction, and 10% among the parish or ward councils.

On the contrary, it was observed that Council did not remit the 25% amounting to

UGX.8,837,500 to the villages and parish councils.

Failure to remit local revenue to Lower Local Government Councils negatively affects

service delivery at the lower units.

180

The Accounting Officer explained that leaders of the respective councils were consulted

and agreed on development activities that would benefit the entire community.

I advised the Accounting Officer to remit the shared local revenue to the lower councils

as required by law.

6.6.11 BUKOMANSIMBI DLG

1. Irregular Utilization of Road Fund

Section 22 of the Road Fund Act 2008, requires road funds to be applied to routine

and periodic maintenance of existing roads.

However, it was observed that the District instead used UGX.10,540,000 to open up a

new road, Nsololo – Kagologolo – Bitelero contrary to the Road Fund Act.

The Accounting Officer attributed his action to the need of the road to serve those

communities.

I advised the Accounting Officer to comply with the URF Act or seek authority of the

Road Fund in case of the need for opening new roads.

6.6.12 KALUNGU DLG

1. Under-absorption of Lake Victoria Environmental Management Project

(LVEMP) funds

The District received funds from LVEMP to carry out; enhancement of local forest

reserves at Kalongo, Nabijolla, Avenue tree planting, construction of pier at

Kamuwunga landing site, environmental catchment management plan at Bwesa and

Kalumagga valley tanks in Lwabenge and promotion of fuel wood energy saving stoves

in institutions.

it was observed that UGX.134,375,649 was received from for LVEMP but by the end

of the year, only UGX.41,090,836 had been utilized leaving a balance of

UGX.93,909,164.

Failure to absorb the funds denied services to the community.

181

The program coordinator explained that the low absorption level was attributed to the

recommendation from the Permanent Secretary who advised the District to halt all

activities and payments under LVEMP due to earlier shoddy works.


2. Poor state of infrastructure in Primary Schools

Inspection of a sample of four (4) UPE schools in the District revealed a number of

shortcomings as shown below:-

Name of School& Facility Photo

Kabungo Primary School

The school was established in 1933.

The existing structures are very old.

Kyamusoke Primary

School The structures are in a poor state and

soon collapsing.

Pit Latrines The school has a 2 stance pit latrine

serving a population of 689 pupils. The administration decided to improvise a

structure pictured below as a urinal

and bathroom for girls

St. Charles Lwanga Kisitula

Primary School The block is incomplete with no

windows and doors, the floor is not

cemented.

Mukoko Muslim Primary

School

The latrines were in a sorry state, full and at the verge of collapsing.

The poor infrastructure in schools impacts negatively on pupils’ learning.

The Accounting Officer explained that the poor infrastructure is a result of inadequate

funding.


the infrastructure is rehabilitated.

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3. Items not taken on charge

Section 5.4.4.1 of the Local Governments Financial and Accounting Manual 2007

requires that when the supplier delivers goods to the Council stores or to any other

location as may be directed by the Council, the storekeeper shall count them and check

their conformity with the LPO, and then raise a Goods Received Note for

acknowledgement. In addition, all supplies shall be recorded in the stores ledger.

It was observed that items amounting to UGX.15,495,250 were not recorded in the

stores ledger nor were Goods Received Note raised for them.

Failure to record stores may pose a risk of stock pilferages and misuse of items.

Management attributed this to inadequate staffing.

I advised the Accounting Officer to ensure that store records are always kept up to

date.

6.6.13 KALUNGU TC

1. Failure to maintain revenue registers

Paragraph 4.6.2 (2) of the Local Government Financial Accounting Manual, 2007 and

Section 33 (1) of the Local Government Finance and Accounting Regulations, 2007

requires management to maintain each revenue source in a separate register.

To the contrary, it was observed that the Town Council did not maintain revenue

registers for the different local revenue sources as required by the regulations.

Failure to maintain revenue registers weakens controls over revenue collection.

The Accounting Officer attributed the failure to the shortage of staff in the finance

department.


6.6.14 LUKAYA TC

2. Non-remittance of shared local revenue

Part V (15A) of the Fifth Schedule of The Local Government Act 1997 (as amended)

provides that a Town Council is required to distribute 5% of the total local revenue

collected amongst its parishes and 20% amongst its Village Councils.

Council budgeted and actually collected UGX.305,431,626 as local revenue.

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However, it was observed that Council did not remit UGX.76,357,907 to the parishes

and villages contrary to the law.

Failure to remit local revenue to Lower Local Government Councils negatively affects

service delivery at the lower units.

The Accounting Officer explained that for the last 10 years there has been no election

of the Local Council Committees which renders it difficult for the Town Council to

transfer funds to these entities as it would be impossible to account for these funds.


6.6.15 LWENGO DLG

1. Dilapidated Classroom Structures at Kitooro Primary School

Indicator 2 (d) (i) of the minimum standards indicators for Education institutions 2010

requires a school to have buildings that meet occupational safety standards set in

various laws.

However, the inspection of Kitooro Primary School revealed that there is a dilapidated

classroom structure which is a danger to the lives of both the students and staff. The

classrooms were also overcrowded as shown in the pictures below;-

Dilapidated classrooms Overcrowded classrooms

The Accounting Officer explained that Kitooro is one of the schools which are supposed

to benefit from World Bank project; and construction is about to commence since

procurement process has started.


2. Abandoned Borehole at Kyananganzi

During the year, management contracted Samadhula Engineering to construct a

borehole at Kyananganzi at a cost a of UGX.21,000,000.

However, audit inspections revealed that the water had turned salty and the users

have abandoned it.

184

The Accounting Officer explained that during the construction, water was tested and

it was of good quality. However, about two months after construction water impurities

of iron were observed leading to salty taste. Management indicated that plans are

underway to construct an iron removal pant (Low cost Technology) to reduce on

salinity of water.

I advised the Accounting Officer to speed-up the process of constructing an iron

removal pant.

6.7 MBALE BRANCH 6.7.1 BUDAKA DLG

1 REVENUE

1.1 Failure to conduct Local Revenue Assessment and Enumeration

Section 4.3 of the Local Governments Financial and Accounting Manual (LGFAM), 2007

requires Councils to conduct proper assessment of their revenue starting with the

enumeration exercise.

However, the District did not present the revenue assesment and enumeration

reports for the period under review for audit verification. This was attributed to lack

of Tax assessment Committee.

Failure to properly assess the local revenue may lead to under collection of local

revenue.

I advised the Accounting Officer to appoint a Tax assessment Committee to ensure

regular assessment of the council's local revenue sources to enhance the District local

revenue collections.

2 FIXED ASSETS MANAGEMENT

2.1 Failure to dispose obsolete assets

Section of 2.3.2.2 of the Local Government Financial and Accounting Manual (LGFAM),

2007 requires that assets that are not in use be disposed of in accordance with the

procedures in the Local Government Public Procurement and Disposal of Public Assets

(LGPPDA), 2006 regulations, after recommendations from the Board of Survey.

185

It was observed that several assets which had been recommended for disposal by the

board of survey during the previous financial year had not been disposed off.

The delays in disposing off the items can lead to further deterioration in value of the

assets.

The Accounting Officer explained that council was committed to disposing of the said

assets but lacked ownership rights as log books were still with the line Ministries.

However, council had written to the concerned ministries for authority to dispose of

the assets but had not received any response.


3 Doubtful Tax Remittance

Regulation 123 of the Income Tax Act, 1997, requires a withholding agent to pay to

Uganda Revenue Authority (URA) any tax that has or should have been withheld within

fifteen days after the end of the month in which the payment subject to withholding

tax was made. It was however observed that, UGX.1,492,133 deducted from suppliers

as WHT and PAYE from councilors allowances lacked acknowledgement receipts from

Uganda Revenue Authority (URA).

Non remittance of tax may attract fines and penalties from Uganda Revenue Authority

(URA).

I advised the Accounting Officer to ensure that the acknowledgement receipts are

obtained from URA and presented for audit verification.

4 Weak Internal audit Function

Section 2.3.4 (1) (d) of the Internal Audit Manual, 2007 requires the Internal Auditor

to maintain a Permanent File, Control File and Current Audit (Working Paper) File as a

minimum. However the records were not presented for audit verification being

maintained.

Consequently, I could not assess the work work of internal audit.

This weakens the Internal Audit Function.

The Head of Internal Audit was advised to ensure that audits are carried out to an

acceptable standard.

186

5 Audit of Medicine Supply Chain Management by National Medical Stores

5.1 Failure to meet the Minimum Health Standards of the Health Centres

Paragraph 2.1.1 (D) of the Local Governments Management and Service Delivery (LGMSD)

program Operational Manual, 2009 set out in the Health Service Delivery packages or minimum

standards for functioning of health centres. However, audit inspection carriedd out at

Budaka Health Centre IV and Katira Health Centre III revealed the following

shortcomings:-

Budaka Health Centre IV


- Operating Theatre

Not operational due to lack of equipment.

- One medical waste pit

- Lacks a medical waste pit

- 18 Housing Units + Ancillary structures.

- The HC has 16 units of which 10 were in poor state.

Medical Equipment - Lacks an x-ray machine.

Means of transport -No ambulance making referrals especially at night very difficult.

- The HC constructed to cater for 100,000 people.

- Currently serves a population of 23,000 people.

Katira Health Centre III

Security - Lacks a fence.

The Accounting officer attributed the general poor condition of the health facilities to

inadequate funding.


6.0 Failure to meet the minimum Education Standards

6.1 Bulalaka Primary School

Section 2.1.1(A) of the LGSMD service delivery packages for Primary schools provides

that for a school to be fully functional it should have a classroom pupil ratio of 1:55

and permanent teacher accommodation of at least four teachers. However, physical

inspection carried out on 20th July, 2016 revealed the following shortcomings:-

The school has a classroom: pupil ratio of 1:163. The primary classes were

conducted under trees.

Teachers have no accommodation.

The school lacks a staff room and teaches conduct their business under trees.

The Accounting Officer explained that the district has had a declining trend in funding

of education instructions making it difficult for the district to construct the basic

infrastructure.

187



6.7.2 BUDAKA TC

1 Diversion of Local Government Management and Service Delivery (LGMSD)

Program funds

Regulation 37(2) of the Local Government Financial and Accounting Regulations, 2007,

requires that conditional grants from Central Government are planned for, recorded and

accounted for in accordance with the grant conditions and guidelines.

It was however observed that the Town council borrowed an amount of UGX.15,488,950

from the Local Government Management Service Delivery (LGMSD) to finance operations

and refunded UGX.2,200,000 leaving UGX.13,288,950 outstanding as shown in the table

below;

Date Voucher No.

Refund Borrowing

17/03/2016 01/03/2016 Un authorized Borrowing to Operations from LGMSD

6,000,000

09/12/2015 09/12/2015 Authorized Borrowing to Operations from LGMSD

8,488,950

14/10/2015 04/10/2015 Un authorized Borrowing to Operations from LGMSD

1,000,000

Total borrowing 15,488,950

23/05/2016 46/5/16 Refund to LGMSD 1,200,000

09/11/2015 53/11/15 Refund to LGMSD 1,000,000

2,200,000

Outstanding

13,288,950

Failure to refund Local Government Management Service Delivery (LGMSD) funds imply

that some of the planned activities were not implemented.

The Accounting Officer explained that above funds were borrowed to address crucial

issues of Town Council including; payment of power (UMEME), repair of water pipes

and renovation of the office block.

I advised the Accounting Officer to ensure that the funds are refunded.

2 Non remittance of Shared Local Revenue

According to the Local Governments Act, 1997, (as amended), fifth schedule, Part V

(15A), a Town Council is required to distribute 5% of the total local revenue collected

amongst its parishes and 20% amongst its village councils. However, it was observed

188

that the Town Council did not remit an amount of UGX.11,115,000 to be remitted to

the parishes and villages.

Failure to remit funds to lower local governments undermines service delivery at the

grass root levels.

The Accounting Officer explained that Town Council had urgent commitments to attend

to including implementing some projects in various wards.

I advised management to comply with the law.

6.7.3 BUDUDA DLG

1 Failure to meet Minimum Standards at Bududa Hospital



Establishment and Upgrading of Health Units by Ministry of Health, 2011 set out Health

Service Delivery packages or minimum standards for functioning of health centres.

However, audit inspection carried out at Bududa Hospital and Bushika Health Centre

III on 21/09/16 indicated lack of basic requirements as shown in the table below;

Bududa Hospital


Operating theatre The operating theatre was non-operation due to lack of substantive

an aesthetician.

Staff houses Eleven (11) Staff houses were in a dilapidated state.

Medical Equipment No functional X-ray unit

Storage of Drugs Stores lacked shelves for drugs

Incinerator The hospital lacks an incenerator.

Running water The hospital lacks running water. The existing Gravity Flow scheme tanks are not functional.

Electricity grid Power supply is unreliable with black out some times lasting for a

whole week.

Generator house The available generator only supports the new OPD and the theatre.

Means of transport The hospital lacks an operational vehicle.

Staffing Only 102 of the required 191 staff are employed at the hospital. This represented 53%.

Failure to meet minimum standards negatively impact on the capacity of the hospital to deliver health services.

189

The Accounting Officer attributed the shortcomings to inadequate funding and further

explained that management was working with all relevant stakeholders to improve

health services at the hospital.

I advised the accounting officer to continuously liaise with the relevant authorities to

address the challenges.

2 ASSET MANAGEMENT

Failure to Dispose of Obsolete Assets

Regulation 122(1) of Local Government Public Procurement and Disposal of Assets

requires eligible assets identified by the board of Survey to be disposed off. It was

observed that several items recommended by the Board of survey for disposal had not

been disposed off.

Failure to dispose off these assets may result to further deterioration in value.

The Accounting Officer explained that the process to have the asset disposed off were

ongoing.

I advised management to implement all the recommendations of the board of survey

to avoid further diminution in the value of the assets.

3 Lack of Risk Management Policy

Section 103 (1) of the Local LGFAR, 2007 stipulates that the Head of Finance requires

the Head of Finance to establish a documented risk management and effective internal

control system and also establish it for future review. It was however observed that

the District had not developed a risk management policy.

This weakens the Internal Control Systems.

The Accounting Officer admitted the anomaly.

I advise management to develop a risk management policy.

4 Road Works

4.1 Poor Road Works

The district spent UGX.14,510,000 on gravelling of Bumasata-Bushiyi and Bududa-

Busano road. However audit inspection done on 22/09/16 revealed shoddy works on

190

Bududa -Busano 7.6km Road. The gravel poured on the road was not well compacted

and as a result was being eroded by running water as can be seen in the photograph

below.

Un- compacted gravel being carried

Shoddy works results in wasteful expenditure as the road deteriorates faster requiring

re- works.

The Accounting Officer attributed the defects to inadequate funding and equipment

including a compactor and consequences of heavy rains in the region.

I advised the Accounting Officer to ensure that all the defects are rectified.

4.2 Rehabilitation of Buwakhata-Namutembi 2.5km section on Namutembi-

Buwakhata road

During the year under review (2015/2016) the District contracted Ms Greenland

building Contractors and Civil Engineers Co. Ltd to carry out rehabilitation of

Buwakhata-Namutembi 2.5km road at a contract price of UGX.54,970,743. At the time

of audit, UGX.49,453,022 had been paid out leaving retention amount of

UGX.5,507,721. However audit inspection carried out on 22/09/16 revealed the

following shortcoming:-

Whereas the bills of quantities provided a total of UGX.13,359,375, for gravelling

works (Item No.5.2), the gravel did not appear to have been enough by the

growing vegetation was visible in the middle of the road. (Photograph No. 3)

Deep potholes were seen in some parts of the road. The road was also bushy as

can be demonstrated by the photograph below( Photograph No. 2)

Some culverts lacked headwalls as shown by the photograph below (Photograph

No. 1)

191

1- One of the culverts without head walls

2-A section of the road with deep

potholes

3- Growing bush in the middle of the road suggesting inadequate

gravel

The Accounting Officer explained that the scope of works increased making it difficult

for the contractor to complete the entire road. He however indicated that he had

written to the contractor to correct the defects.

I advised the Accounting Officer to ensure the identified defects are rectified before

payment of retention money.

6.7.4 BUDUDA TC

1 Doubtful Tax Remittances


URA any tax that has or should have been withheld within fifteen days after the end

of the month in which the payment subject to withholding tax was made. However, it

was observed that payments amounting to UGX.I,045,650 purportedly paid to URA

lacked acknowledgment receipts.

In the absence of the acknowledgement receipts, I could not confirm that the funds

were received by Uganda Revenue Authority.

Non-compliance with the tax law may attract fine and penalties.

I advised the Accounting Officer to obtain the receipts from the tax authority and

present them for audit verification.

2 Long Outstanding Advances

Regulation 42 and 43 of Local Governments Financial and Accounting Regulations,

2007, require funds to be properly vouched and accounted for within a period of a

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month. However, administrative advances amounting to UGX.2,171,200 had been

outstanding for more than one year.

Delayed accountability can lead to falsification of documents.

The Accounting Officer explained that Council had opened advance ledgers and written

to the staff concerned to pay back the money.

I advised the Accounting Officer to recover the funds from the salary of the responsible

offers.

6.7.5 BUKWO DLG

1 Failure to meet the minimum Health Standards



for proper functioning of health centers. However, inspection of Bukwo hospital and

Kapkoloswo health center 111 revealed a number of shortcomings as shown below;

1.1 Bukwo Hospital

Inspection of the hospital revealed the following shortcomings:-

Minimum Standard Current Status

Administration Block None

One OPD with Community shed None

Drug store with HSD Office None

Mortuary -The hospital lacks a mortuary

One medical waste pit None

Incinerators None

Kitchen, Laundry, Askari’s house and fence

None

Staff Houses Five staff houses type 1-

None

Two staff house type 2- None

Two staff houses type 3- None

Medical Equipment - Essential equipment like an x-ray and scanning machines are lacking at the hospital.

Electricity grid -The Hospital and the district as a whole was not on the electricity grid.

Means of transport -The hospital has only one functional vehicle, an ambulance

Reg. No UG 4492M which serves as an ambulance for patients on referral. The other vehicle UG 4052M is non-functional having broken down for over a year now and cannot be repaired due to inadequate funds.

Staffing -The hospital currently has only 112 out of the required 237 staff establishment representing 47% establishment.

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1.1.2 Kapkoloswo Health Center III

Minimum Standard Observation

- One maternity ward - Construction of the maternity ward that started Two (2) years ago is incomplete.

Two general wards

None

One medical waste pit None

One placenta pit None

Staff accommodation


- One staff house type 2

- Two staff houses type 3

The health center lacks adequate accommodation. It has only 4 units which are not enough to house its 14 staff.

Transport facilities The health center lacks an ambulance and has no other mode of transport in case of referral.

Drugs availability -There was shortage of drugs. It was noted that at the time of inspection, there were no stocks for essential medicines including; Panadol, Amoxicillin de worming tablets Alberdazole and mabendazole, ARV drugs were out of stock for adults.

The Accounting Officer attributed the shortcomings to inadequate funding and further

explained that Council was using every possible means to improve health services in

the district.

I advised that Accounting Officer to continue engaging the Ministry of Health and

Ministry of Finance, Planning and Economic Development to provide funds to improve

the infrastructure of the hospital.

2.0 District Education Services

2.1 Failure to meet the Minimum Standards in Primary Schools

Section 2.1.2 (a) of the Local Government Management and Service Delivery (LGMSD)

Programme Operational Manual 2011, sets minimum national standards of service

delivery in the education sector.

A review on statistical data provided by the District Inspector of Schools revealed that

the level of service delivery in the primary schools significantly fell short of the Ministry

of Education Minimum National Standards as shown in the table below;

S/No Bukwo DLG Total Number Ratio to Pupil National Ratio

1 Pupils 35,883

2 Teachers 506 1:70 1:53

3 Classroom 271 1:126 1:53

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4 Latrine Stances 329 1:104 1:50

5 Desks 4,353 1:7 1:3

6 Staff Houses 26 1:9 1:3

Inadequacy of facilities adversely affect academic performance of the schools.

The Accounting Officer attributed the poor state of schools in the district to declining

funding. He indicated that while the school enrollment was going up, funding was

going down. He further explained that the district was working with all stakeholders

to improve the status of schools in the district.

I advised the Accounting Officer to continue engaging the relevant stakeholders to

have the poor infrastructure in primary schools addressed.

3 Academic performance at Primary Leaving Examinations (PLE)

A review of the 2013, 2014 and 2015 PLE results revealed that the district has been

registering very bad performance over the years. It was observed that out of the 2764

candidates who sat for PLE, only 19 (0.6%) passed in Division I,370 (13.3%) in

Division II, 625 (22.6%) in Division III, 533(19.2%) in Division IV, while (44%)

candidates failed i.e. scored either grade U or X. Trend analysis also indicated that the

standards were declining as can be demonstrated by analysis in the table below;

Year Div 1 Div 2 Div 3 Div 4 Div U Div X Total

2013 21 574 579 390 659 63 2286

2014 37 559 574 470 877 45 2564

2015 19 370 625 533 1153 64 2764

The poor performance implies that the district will continue to lag behind in

development. It also means that candidates who obtained Grades U and X could not

proceed to the next level thereby limiting their future career choices.

The Accounting Officer explained that a stakeholders meeting was conducted to

discuss strategies for improvement and the recommendations were now being

implemented.

I advised that the Accounting Officer in consultation with the district council should

continue to investigate the causes of poor performance and institute practical

measures for improvement.

195

4 Lack of Information and Communication Technology (ICT) Policy


officer to ensure that adequate Information and Communication Technology policies

are established and applied to enable adequate security and protection over computers

and data held thereon or information systems operated by the Council.

However, it was observed that there was no designated IT focal person and no

documented policy to guide staff on management of IT equipment, and hardware.

This creates a risk of loss of equipment and data maintained thereon.

The Accounting Officer explained that he had assigned the senior planner to assist in

the management on information technology Hardware and software as the district

they waited for recruitment of an IT officer.


5 Lack of documented Risk Management Policy

Local Government Financial and Accounting Regulation, 2007 section 103 (1&4)

require management have established and documented management Policy.

It was observed that management had not have not developed policy on risk

management by the time of audit.

This weakens the internal control system.

The Accounting Officer explained that council had written to head of finance to guide

council on mitigation measures on risks to ensure economy, efficiency and

effectiveness of the institution including service delivery.


6.7.6 BUKWO TC

1 Non- remittance of shared local revenue

According to the Local Government Act 1997 (as amended), fifth schedule, Part V

(15A), a town council is required to remit 5% of the total Local Revenue collected to

parishes and 20% to village councils. The Town Council collected local revenue of

UGX.11,931,500 but failed to remit UGX.2, 982,875 to parishes and Village Councils.

196

The failure to remit the shared local revenue impairs the participation of the lower


I advised the Accounting Officer to remit the shared local revenue to the lower councils

as required by law.

6.7.7 BUSIA DLG

1 Failure to meet the Minimum Health Standards





However, audit inspection carried out at Masafu Hospital in Busia District revealed the

following shortcomings:-

ASAFU HOSPITAL BUSIA

Basic requirements Current status

Medical store -The hospital had a very small medical store that cannot accomadate all the drugsand medical supplies. - No shelves in the store. Drugs are just piled on the floor as can be demonstrated in the photograph below;

80 housing Units+ Ancillary structures

- The hospital had only 15 housing unit

Means of transport

- No functioning motor. The available ambulance had had been out of function for several months after it developed a mechanical fault.

Medical Equipment - The X-ray machine and baby incubators have not been functional since 2009. - Two anasytic machines delivered to the hospital two years ago but had never been utilised alledgedly due to lack of small comopnents namely; T-juctions to attach them to oxygen cylynders, and the theater lights.

Medical waste pit/Placenta pit

The hospital lacks an appropriate medical waste disposal pit and had no incinerator.

2 Failure to Dispose of Obsolete Assets


of in accordance with the procedures in the Local Government Procurement and

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Disposal of Assets (LGPPDA), 2006 regulations, after recommendations from the Board

of Survey.

On the contrary, a review of the board of survey report revealed that items

recommended for board off in 2014/2015 financial year, had not been boarded off at

the time of audit in September, 2016 as shown in the table below;

Item Condition Recommendation

Mitshibishu truck LG 0012-08 Non functional To be boarded off

Motor cycle UG 2656R Non functional To be boarded off

Filling Cabinet Poor condition To be boarded off

Desktop computers Non functional To be boarded off

The delays to disposing off the assets may lead to further deterioration in value.

The Accounting Officer explained that the district was planning to carry out valuation

of the assets before tabling it to council for approval.

The Accounting Officer is advised to ensure that the absolete assets are disposed off.

6.7.8 BUSIA MC

1 Health Sector

An audit inspection carried out at Busia Health Center IV revealed the following

shortcomings:

1.1 Failure to meet the Minimum Standards of Health Service Delivery





However, audit inspection carried out at Busia Health Centre IV on 21/10/16 revealed

lack of basic requirements as shown in the table below;

Busia HCIV


-One OPD block with community shed

The existing OPD block lacks a waiting shed, No eye clinic

- Treatment rooms in OPD lacked mattresses

- Mortuary No mortuary

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- Drug store with HSD office No medical store

- 18 Housing Units + Ancillary

structures.

- 8 housing units

Medical Equipment - Anaesthetic machine non functional for 2 years

- No Incubators - No chemistry analyser

- No humatology analyser - No dental equipment.

Means of transport - Ambulance and the pickup had broken down.

Uniform Staff lacked uniforms.

Furniture -No furniture in the laboratory

Lack of bank requirements, negatively impact on the district health service delivery.

The Accounting Officer attributed the low standards of health services to inadequate

funding.




Section 123 of the income tax act, 1997 requires a withholding agent to pay URA any

tax that has or should have been withheld within fifteen days at the end of the month

in which the payment subject to WHT was made. However, vouchers

amounting to UGX.3,577,500 in respect of PAYE were not supported by

acknowledgement receipts from URA as shown in Appendix IV.

Non remittance of tax may attract fines and penalties from Uganda Revenue Authority

(URA).

I advised the Accounting Officer to ensure that all acknowledgement receipts are

obtained from URA.

3 Failure to meet the Minimum Standards of UPE Schools

Paragraph 2.1.2 of the Local Governments Management and Service Delivery

Operational Manual requires Local Governments to deliver services in conformity with

Primary Education Minimum National Standards of service delivery.

The audit inspection of Buchicha Primary School revealed the following

shortcomings:

ITEM MINIMUM STANDARDS CURRENT STATUS

1 Desks 1:3 1:4.1

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2 Classrooms 1:55 1:103

3 Toilets 1:50 1:137

It was further observed that the school lacked a staff room, the few existing pit

latrines and the classrooms were also in a dilapidated state as below;

The inadequacy in the school infrastructure negatively impacts on education service

delivery.


challenges.

4 Lack of IT Policy

Regulation 110 (1) of the LGFAR 2007, requires the Chief Executive to designate an

officer who should ensure that adequate Information and Communication Technology

(ICT) policies are established and are applied to enable adequate security and

protection over computers and of data held on computers or information systems

operated by the council.However, it was observed that the district had failed to

formulate an IT policy despite the matter having been pointed out in prior year reports.

The Accounting Officer explained that management was waiting to recruit an IT officer

to guide the process of developing the policy formulation.

I urged the Accounting Officer to ensure that an ICT policy is developed.


Section 2.4.1 of the Local Governments Financial and Accounting manual 2007 requires

the Head of Finance to be responsible for advising on risk management and effective

systems of internal control. This role is expected to be carried out in collaboration with

the Internal Audit function. However, the Municipal Council did not have a risk

management policy.


200

The Accounting Officer explained that the Audit Department had been tasked to

develop a risk management policy.

I advised the Accounting Officer to expedite the process of developing the risk

management policy.


Regulation 9(2b) of the Local Governments Financial and Accounting Regulations

(LGFAR), 2007 require the Accounting Officer to ensure that the public monies,

property and resources for which he or she is responsible as Accounting Officer are

properly managed and safeguarded.

During the financial year 2013/2014, a contract worth UGX.1,807,699,504 was

awarded to M/s Engineering Trade Links Ltd to construct the main office block at Busia

Municipal Council with a completion date of 29th December 2016.

The contractor abandoned the work after being paid a total of UGX.482,164,902.

The audit inspection revealed that the civil works were behind schedule as shown in

the photos below;

Abandoned site

The Accounting Officer explained that whereas termination of the contract had been

mooted and the contractor informed, the decision was reviewed on the advice of the

Council Lawyer after the contractor wrote threatening letters to Council.


6.7.9 BUSOLWE TC

1 REVENUE MANAGEMENT 1.1 Non- Remittance of Shared Local Revenue

According to the Local Governments Act, 1997, (as amended), fifth schedule, Part V

(15A), a Town Council is required to distribute 5% of the total Local Revenue collected

201

amongst its parishes and 20% amongst its village councils. However, it was observed

that the Town Council did not remit UGX.9,736,575 to the Wards and Village Councils

contrary to the law.

This undermined service delivery at Parishes and Wards.

The Accounting Officer explained that the Executive Committee and Technical Planning

Committee agreed to use the hitherto monies to the Lower Councils to fund the street

lighting.

I advised the Accounting Officer to ensure adherence to the Regulations and remit

shared revenues.

6.7.10 BUTALEJA DLG

1 District Health Services

1.1 Failure to meet the Minimum Standards of the Health Centres





The audit inspections revealed the following shortcomings:-

S/N

Minimum required Standard

Current Status

BUSOLWE HOSPITAL

1 Running Water The hospital lacks running water. This seriously compromises the hygiene at the hospital.

2 Medical Equipment The hospital lacks functional x-ray and ultra sound machines.

3 Prompt disposal of expired drugs

There were expired drugs and medical waste- that had not been destroyed due to non- functional incinerator.

4 Staff structure-(190 staff) Only 121 filled leaving 69 vacant representing 63%.

5 Adequate drug supplies The hospital experiences inadequate drug supplies. Out of the required budget of 114million required per cycle, only UGX. 56.1 million is allocated leading to drug stock outs. (Appendix IV).

NABIGANDA HEALTH CENTRE IV

1 Running water No running water in maternity ward and Out Patient Department(OPD)

2 Medical equipment - No operating ultra sound machine, x-ray among others.

3 operating threatre -No operating theatre

4 - 18 Housing Units + Ancillary structures.

- Only 6 units available

4 - Operating theatre The theatre constructed 4 years ago has never been functional due to lack of the requisite equipment(thetre bed, surgical equipment etc).

5 -Mortuary - The Health center lacks a mortuary

6 Transport -The hospital neither has an ambulance nor other vehicle to facilitate operations.

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7 Approved staffing structure

of 48 staff

- Only 26 positions filled representing 54%

8 Adequate drug supplies - The HC experiences drug stockouts. For example the HC on average receives 100 patients who are treated with amoxlyicine, but only 15 tins (enough to treat only 30 patients) is allocated.


2 Education Services

2.1 Status of Universal Primary Education Schools

A review on statistical data provided by the District Education Officer and the physical

inspections carried out revealed that the level of service delivery at the schools

significantly fell short of the Ministry of Education Minimum National Standards.

S/No Butaleja DLG Ratio to Pupil National Ratio

2 Teachers 1:64 1:53

3 Classroom 1:122 1:53

4 Latrine Stances 1:85 1:50

The inspection revealed that primary school children of P1 & P2, P.3 & P.4 were sharing

classes, the teachers and pupils were sharing the toilets. This negatively affects the

performance of the schools.

The Accounting Officer explained that the resource envelope is not adequate to

procure enough facilities and therefore central government should intervene.


3 Lack of Information Technology Policy






However, it was observed that the district continues to operate without an IT policy to

guide staff on the use of IT equipment, and the software.

The Accounting Officer attributed the shortcoming to lack of an IT officer to spear

head the process pf developing the policy.

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I once again advised the Accounting Officer to ensure that IT policy is developed.

4 Lack of Documented Risk Management Policies

Section 103 (1&4) of the Local Government Financial and Accounting Regulation, 2007

require management have established and documented management Policy.

It was noted management did not have a documented risk policy at the time of audit.

This weakens the Internal Controls Systems.

The Accounting Officer indicated in his response that efforts were being made to

develop the policy but failed to provide evidence.

I advised the Accounting Officer to ensure that a risk management policy is developed.

6.7.11 KAPCHORWA DLG

1 Lack of Documented Risk Management Policy

Section 103 (1) of the LGFAR, 2007 stipulates that the Head of Finance is responsible

for advising on risk management and effectiveness of the internal control system and

also establish it for future review. According to LGFAR, “Risk management” means the

establishment of policies, procedures and practices to identify, analyse, quantify,

monitor, and control financial and other exposures of the Council so as to minimize

potential losses. It was however observed that management had not developed a

risk management policy.


The Accounting Officer explained that Council had initiated the process of developing

the policy.

I advised the Accounting Officer to develop a risk management policy.

2 Failure to meet the Minimum Standards in UPE


(LGMSD) operational manual provides minimum service delivery package for a primary

school. However, review of the education services in Kapchorwa District carried out on

a sample basis revealed serious shortfalls as outlined below;

Facility: Pupils Recommended ratio

Current status Remarks

Kapsirikwo P/S

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Classroom: Pupils ratio

1: 50 1: 77 Below the required standard for efficient learning

Toilet: Pupils ratio 1:48 1: 100 “

Teacher: pupil Ratio 1:50 1:67 “

Kobil P/S


1: 50 1: 81 Below the required standard for efficient learning

Toilet: Pupils ratio 1:48 1: 95 “

Teacher: pupil Ratio 1:50 1:52 While the school enjoys a good teacher: pupil ratio, the advantages cannot be realised due to limited classrooms.

The inadequacies in School Infrastructure negatively impact on education service

delivery.

I advised the Accounting Officer to liaise with the Ministry of Education for more funds

so that the minimum standard requirements are complied with.

3 HEALTH SERVICES

3.1 General Standards of the District Hospital

PHC guidelines for 2015/16 set out Health Service Delivery packages and minimum

standards for functioning of district hospitals. However, audit inspection carried out at

Kapchorwa hospital indicated lack of basic requirements as shown in the table below;

KAPCHORWA DISTRICT HOSPITAL

Basic Requirements- PHC guidelines Current status

- One OPD department

The existing OPD does not have a dental unit, clinical rooms and a laboratory as separate units.

- One maternity ward

-The maternity wards were congested with 25 beds instead of the required standard of fifteen (15). - The hospital has only two delivery beds yet it delivers fifteen (15) mothers on average daily.

Operation Theatre (2) - One operating theatre which lacked functional oxygen concentrators and other essential equipment including; C-section sets, laparotomy sets, skin grafting instruments, and boilers.

80 housing units

Only 20 very old dilapidated units as shown in the photograph below;.

Means of transport Only one ambulance and lacks a vehicle for

administration/operational purposes.

Established structure of 199 staff Only 138 out of the required 199 staff. representing 69%

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6.7.12 KIBUKU DLG

1 FIXED ASSETS MANAGEMENT

1.1 Failure to dispose of obsolete assets

Section of 2.3.2.2 of the LGFAM, 2007 requires assets that are not in use to be disposed

off in accordance with the Local Government Public Procurement and Disposal of

Assets (LGPPDA), 2006 regulations, on recommendation by the Board of Survey.

However, the district had not disposed off a number of vehicles as shown below;

The delay to dispose off the assets may lead to further deterioration in value.

The Accounting Officer explained that the grounded vehicles were given to the District

by the mother district without logbooks and therefore disposal became difficult since

the district did not legally own them.


6.7.13 KIBUKU TC


According to the Local Governments Act 1997 (as amended), fifth schedule, Part V

(15A), a town council is required to distribute 5% of the total local revenue collected

amongst its parishes and 20% amongst its village councils. However, the council failed

to remit UGX.4,785,875 to parishes and village councils.

206

The failure to remit funds impaired the participation of the lower local councils in the

implementation of council programs which affects service delivery at lower councils.

The Accounting Officer admitted the shortcomings and explained that Council had

started to remit the funds as required.

I advised the Accounting Officer to remit the shared local revenue to the villages and

parishes as required by law.

6.7.14 KWEEN DLG

1 Failure to meet the Minimum Standards of the Health Services


(LGMSD) program Operational Manual, 2009 sets out Health Service Delivery packages

or minimum standards for functioning of health centres. However, audit inspection

carried out at Kaproron Health center IV and other health centers III revealed the

following shortcomings.

a) Kaproron Health Center IV

Minimum required Standard

Current status

Approved structure of 36 positions

28 posts were filled.

Medical equipment - The unit lacks an X-ray machine. - Ultra sound machine was not functional due to lack of a technical staff to operate it.

Transport No ambulance

- Operating theatre No operating theater


- Six (6) housing units

- Drug Supplies An antibiotic (amoxicillin ) was not supplied.

b) Binyinyi Health center III

Item Observation

- Two general wards

No ward

Eight two stance pit latrines

- (2) stance pit latrines

1O housing Units + Ancillary structures

4 units

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Staffing structure of 19 approved positions

12 staff

Means of transport - No ambulance

Drug supplies Erythromycin, Amoxicillin, cciphenicol, ampicillin

Antiprotozoal- I.V Metronidazole

Injectable 3rd generation Certrofraxone

Antimalarial prophylaxis (fansider)

Antihemithetic – Mebendazole

Analgesic- paracetamole, ibrofen.

c) Kaptum Health center III

Item Observation

Staffing Gaps -The unit has 9 staff out of the approved 19 staff

Means of transport - No means of transport including an ambulance

One maternity wards

- No maternity ward

Two general wards - No male, female and pediatric wards.

Medical buildings

- The HC is housed in a very small temporary structure as can be shown in the photograph below;

Semi-permanent structure housing Health Centre

a temporary toilet

- 1O housing Units + Ancillary structures

None

Drugs supplies The Health center had excess drugs. This was because it does not admit patients yet it receives drugs like any other health Centre III which has admissions.

The Accounting Officer admitted the shortcomings and explained that the commitment

to providing better services was limited by inadequate funding and facilitation.

I advised the Accounting Officer to engage relevant Ministry to ensure that the


2 Failure to meet Minimum Standards of UPE Schools

Inspection of various UPE schools revealed that there was shortage of teachers,

inadequate and inferior latrine facilities, inadequate desks and classrooms among

others and this negatively affects the performance of pupils in the schools.

208

A review on statistical data provided by the District Education Office revealed that the

level of service delivery at the schools fell short of the Ministry of Education Minimum

National Standards as shown below:

S/No Kween DLG Total Number Ratio to

Pupil National Ratio

1 Pupils 22,202

2 Teachers 430 1:51 1:53

3 Classrooms 266 1:83 1:53

4 Desks 5181 1:4 1:3

5 Latrines 220 1:100 1:50

6 Staff Houses 24 1:17 1:3

These conditions negatively affect learning and pupils’ overall performance.

The Accounting Officer attributed the poor standards in schools to inadequate

funding.

I advised the Accounting Officer to engage the Ministry of Education and technology

and Sports and ensure that the challenges are addressed.


Local Governments Financial and Accounting Regulation, 2007 section 103 (1&4)

require management to establish and document management Policy.

It was noted management did not have an established and documented policy by the

time of audit. This weakens the Internal Control Systems.

The Accounting Officer explained that Council had designated the The Chief Finance

Officer to take lead in establishing risk management policy.

The Accounting Officer was advised to develop the Risk Management Policy.

4 Management of Information and Communication Technology

Regulation 110 of the Local Government Financial and Accounting Regulations (LGFAR)

of 2007 requires the Chief Executive to designate an officer to ensure that adequate

Information and Communication Technology policies are established and applied to

enable adequate security and protection over computers and data held thereon or

information systems operated by the Council.

209

It was however observed that whereas there was a designated IT focal person the

district lacked a policy to guide staff on management of IT equipment, security of

hardware and data.

Lack of ICT policy may lead to misuse of IT facility.

The Accounting Officer explained that the IT Focal Point Person was tasked to spear

head the process of developing the policy.

I advise management to ensure that an ICT policy is developed.

6.7.15 MANAFWA DLG

1 PAYROLL ANOMALIES

1.1 Under Payment of Salaries

An analysis of the payroll revealed that some staff had salary under payments totalling

to UGX.38,665,484.

This was also attributed to failure to reconcile salary amounts to salary scales before

effecting payment. Such underpayments demotivate the affected staff and lead to

accumulation of salary arrears.

In response, the Accounting Officer attributed this to insufficient human resource to

manage the payroll but asserted that they had now boosted the section for better

performance. I advised the Accounting Officer to streamline the payroll management

process by ensuring proper verifications are undertaken before effecting salary

payments. I further advised that he should initiate a process make good the salary

underpayments in question.


Section 2.3.1.5 of the Local Government Financial and Accounting Manual (LGFAM),

2007 requires assets that are not in use to be disposed of in accordance with the

procedures in the Local Government Public Procurement and Disposal of Assets

(LGPPDA), 2006 regulations. It was however observed that many grounded vehicles

and motor cycles had not been disposed of despite the recommendation of the Board

of Survey.

Failure to dispose of these assets may lead to further deterioration in value.

210

I advised the Accounting Officer to ensure that obsolete assets are disposed of in a

timely manner.

3 Failure to meet the minimum education standards


(LGMSD) Program operational manual provides minimum service delivery package for

a primary school. However, review of the education services in Manafwa revealed the

following shortcomings:

Nuusu primary School

Facility: Pupils

Recommended ratio

Current status

Remarks


1: 50 1:101 - Shortage of classrooms lead to some of the classes to be conducted under trees. Existing classes are also in a bad shape as can be illustrated below;

Pupils studying under the tree

Status of the existing classrooms

Toilet: Pupils ratio

1:48 1:202 - The existing latrines are shared among the pupils and teachers and are in bad condition.

SAAMBA PRIMARY SCHOOL


1: 50 1:128 Below the required standard for efficient learning

Toilet: Pupils ratio

1:48 1:153 “

Congested classes, fewer teachers and lack of adequate toilet facilities undermine

effective learning and hence poor academic performance.

211

The Accounting Officer attributed the poor facilities in schools to inadequate funds.

The Accounting Officer pledged to continue lobbying the Ministry of education to

increase the level of funding.

I advised the Accounting Officer to continuously engage the Ministry of Education and

Sports to ensure that conditions of the facilities are improved for better service

delivery.

4 Inadequate District Health Services

Bubulo Health Centre IV

a)Lack of a Medicine Procurement Plan

Section 5.2 (VI) of the Primary Health Care (PHC) guidelines requires local

governments to prepare detailed procurement plans for medicines for the whole

financial year and submit to National Medical Stores (NMS) with copies to Ministry of

Health (MOH). However, the procurement plans for the financial year were not

provided for audit.

There is a risk of National Medical Stores supplying inadequate drugs and medical

supplies to the district.


b) Non -operational Health Centre II’s

A status review of health centers in Manafwa district revealed that five (5) health

Centers were constructed by the district using various sources of government

funding but remained non-operational due to lack of operational financing as

shown in table below:

S/N Health Center Sub-County

1 Kitongo Bukhaweka S/C

2 Nangetsa Mukoto S/C

3 Sisatsa Busukuya S/C

4 Namunyali Namabya S/C

5 Buwuma Lwakhakha TC

Failure to functionalize the Health Centre’s also means that potential beneficiary

communities will have to continue to travel to move long distances to access health

services.

212

The Accounting Officer attributed the anomaly to change of government priorities

and limited funding where new Health Centre IIs are not being funded.


c) Failure to meet the minimum standards of the Health Centres


(LGMSD) program Operational Manual, 2009 sets out Health Service Delivery

packages or minimum standards for functioning of health centres. However, audit

inspection carried out at Bubulo Health Centre IV and Bukhabusi Health Centre

indicated lack of basic requirements as shown in the table below;

Bubulo Health Centre IV

BASIC REQUIREMENTS CURRENT STATUS

Medical Buildings

-One OPD block with a community shed.

-The health centre does not have a community shed

and dental unit.

- Operating Theatre

- The operating theatre which was constructed four (4) years ago remains un operational due to lack of

equipment.

- Mortuary - The health centre lacks a mortuary

- 18 housing units - Only 8 very old dilapidated units.

Medical Equipment - The medical equipment was reportedly inadquate.

These include; PB machines, trolleys kidney dishes, Gully pots.

- The, maternity ward has only one delivery bed.

Running water -The health centre lacks running water. The existing borehole has been down for more than a year.

Generator house - No generator

Staff establishment of 48 personnel.

The HC is understaffed with only thirty one (31).

Bukhabusi health centre III

- Eight two stance pit latrines

Dilapidated Latrines - The health centre has only one 3-stance latrine which

is shared between the patients and hospital staff and

is in a dilapidated state as shown below;

The above shortcomings negatively impact on the district health service delivery.

The Accounting Officer explained that management was aware of the existing situation

but was limited by funding. He indicated that management was making a follow-up

with the line Ministry for better facilitation.

213

I advised the Accounting Officer to continue liaising with the responsible Ministry and

National medical stores (NMS) to improve the conditions of the health facilities for

better health services.

5 Lack of Risk Management Reports

Section 2.4.1 of the Local Government Financial and Accounting Manual (LGFAM),

2007 requires that the Head of Finance to be responsible for advising on risk

management and effective systems of internal control. This role is expected to be

carried out in collaboration with the Internal Audit function. These arrangements need

to ensure compliance with all applicable legislation and regulations, and other relevant

statements of best practice, and ensure that public funds are properly safeguarded

and used economically, efficiently, and effectively in accordance with the statutory and

other provisions that govern their use.

Contrary to the above regulation, no risk management reports were presented for

audit verification.

This weakens the internal control systems.

The Accounting Officer explained that Council was closely working with other districts

and the Ministry of Finance Planning and Economic Development (MoFPED) to come

up with the policy on the matter.


6.7.16 MANAFWA TC

1 Irregular Cash Procurements

S.119 (1) of PPDA regulations provides that a procurement process under direct

procurement shall follow the procurement rules and processes. Sub-section (2) further

provides that a contracts committee shall approve a direct procurement method prior

to the commencement of a procurement process using this method.

However, it was noted that procurements worth UGX.55,340,000 were made by the

Town council in cash.

Cash procurements are prone to abuse and do not lead to achievement of Value for

Money (VFM) as they lack the element of competition.

214

The Accounting Officer is advised to ensure that procurements are made in a

competitive manner to realize full value for the money spent.

6.7.17 MBALE DLG

1 Poor state of Kigezi Health Centre II

Section 2.1.2 (b) of the Local Government Management and Service Delivery (LGMSD)

Programe Operational Manual, 2011 require Health Center IIs to have an Out Patients

Department (OPD).

Inspection of Kigezi Health Centre II revealed that the health center was operating in

a dilapidated building made of mud and wattle. It was further observed that the walls

and floor had developed deep cracks and holes which render the building unsafe for

patients and medical workers as shown below:

Deep holes on the floor

Collapsing walls and deep holes in the interior

Dilapidated building formed of Mud

The Accounting Officer explained that the district had included construction of an Out

Patients Department (OPD) in its development plan and would be constructed in F/Y

2018/2019 under Primary Health Care (PHC) development grant.

I advised the Accounting Officer to engage the Ministry of Health and other relevant

authorities to ensure that the hospital infrastructure is rehabilitated.

2 Ineffective District Public Accounts Committee (DPAC)

Section 16 (1) &(2) of the LGFAR 2007 requires the Local Governments Public Accounts

committee to examine the reports of the Auditor General, the Head of Internal Audit

and any other reports of commissions of Inquiry in accordance with section 88 of the

Act and produce reports for submission to the council and the minister.

Contrary to the regulation, the LGDPAC did not discuss reports from the head of the

internal audit for the financial 2015/16

Failure to review internal audit and Auditor General Reports weakens the overall

oversight function of the committee.

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The Accounting Officer explained that DPAC was busy clearing the backlog of reports

from the Municipality, Town Councils and Sub Counties. He however indicated that the

review had been planned to be handled in the second quarter of F/Y 2016/2017.

I advise the Accounting Officer to ensure that DPAC discharges its oversight role.

3 Salary Payments to Retired Officers

General rules on payment of Salaries (B - a) section 12 of the Uganda Public Service

Standing Orders 2010 requires payment of a salary to a Public officer to be stopped

immediately the officer ceases to render services to Government under whatever

circumstances including death. However, comparison of the list of retired officers and

the Bank of Uganda salary payment register for the year 2015/16 revealed that the

district paid salaries amounting to UGX.13,446,684 to officers who had hit the

retirement age of 60 years.

The anomaly was attributed to inefficiencies in the human resource function.

The Accounting Officer acknowledged the anomaly and promised to effect. He

indicated that recovery.

I await for evidence regarding the recovery of the funds.

4 Works Services

4.1 Poor contract works at Budwale Primary school

Inspection of the school carried out in September, 2016 revealed that newly

constructed three class room block had defects already. It was observed that the iron

sheets had started rusting barely one year after construction as can be demonstrated

by the photograph below;

3 classroom block Rusted iron sheets

It appears there was poor contract management.

216

The Accounting Officer explained that he had communicated to the contractor (Kiinars

Company Limited) to correct the defects.

The accounting officer is advised to strengthen contract management processes to

achieve high value for money on future projects. In the meantime, contract managers

should take responsibility for the mess.

5 Delayed Completion of Civil Works

The district signed an agreement with Mirembe General Enterprises on the 29th June

2011 for UGX.158,400,000 to construct sub county chiefs’ house, kitchen and two

bedroomed staff house at Wanale Sub County. The project was expected to be

completed on the 24th April 2013. However, inspection of the project carried out on

the 15th September 2016 revealed that the project had stalled for three (3) years as

shown below:-

The Accounting Officer indicated that contract had been terminated and another

contractor was yet to be appointed.

I advised the Accounting Officer to expedite the process of sourcing for another

contractor.

6.7.18 MBALE MC

1 USMID PROJECT

1.1 Extra cost incurred on road works

As stated above, the contractor was awarded the road works contract at initial cost of

UGX.10,345,941,339, however extra cost of UGX.1,969,296,209 was incurred resulting

in increase in the total contract price by 19% to UGX.12,315,237,548.

This arose from delays due to the halting of works to enable the Council authorities

conduct a design review. It was also noted that the initial engineering design on these

roads was not properly done as it caused the overflow of running water into shops and

other residential buildings adjacent to the roads. Owing to the fact that the authorities

217

ought to have undertaken proper design before commencing the construction, the extra

cost of UGX.1,969,296,209 therefore is nugatory expenditure and a financial loss to

Government.

The project management should always ensure that proper designs are done before

projects are embarked on to avoid incurring extra costs.



Uganda Revenue Authority (URA) any tax that has or should have been withheld within


tax was made. However, it was observed that payments amounting to UGX.48,484,813

purportedly paid to Uganda Revenue Authority lacked acknowledgment receipts.

Non-compliance with the tax law may attract fines and penalties.

I advised the Accounting Officer to obtain the receipts from Uganda Revenue Authority

and present them for audit verification.


Section 2.4.1 of the Local Governments Financial and Accounting Regulations (LGFAM),

2007 requires the Head of Finance to be responsible for advising on risk management

and effective systems of internal control. This role is carried out in collaboration with

the Internal Audit function. These arrangements need to ensure compliance with all

applicable legislation and regulations, and other relevant statements of best practice,

and ensure that public funds are properly safeguarded and used economically,

efficiently, and effectively in accordance with the statutory and other provisions that

govern their use.

Contrary to the above regulation, it was observed that the Municipal Council did not

have a documented risk management policy in place.


The Accounting Officer admitted the anomaly but promised to develop one in future.

I advised the Accounting Officer to develop the risk management policy.

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6.7.19 PALLISA DLG

1 HEALTH SERVICES

1.1 Non- operational Health Centres

Pallisa district spent a total amount of UGX.860,722,127 on construction and

improvement of health centre IIIs and IIs between the period 2011/2012 and

2012/2013 as shown below.

S/N NAME PERIOD OF CONSTRUCTION

TOTAL COST OF CONSTRUCTION

1 Opwateta HC III 2011/2013 173,100,402

2 Akisim HCIII 2011-2013 120,849,381

3 Chelekura HCIII 2011-2013 152,292,200

4 Olok HC III 2011-2013 137,538,625

5 Nasuleta HCII 2011-2013 95,792,830

6 Aolai HC II 2011-2013 86,258,657

7 Kadokolene HC II 2011-2013 94,890,032

TOTAL 860,722,127

However, the health centres remain non-operational to-date allegedly due to lack of

operational funds.

The Accounting Officer explained that Council had written to Permanent Secretary

Ministry of Health to plan and operationalize the facilities.


1.2 Failure to meet the Minimum Standards of Health Service Delivery





However, audit inspection carried out at Pallisa Hospital and Butebo Health Centre IV

indicated lack of basic requirements as shown in the table below;

Pallisa Hospital


- Operation Theatre [2 rooms]

-lacks operating light; - The two existing autoclaves had broken down. -A machine for controlling breeding, which was supplied over two years ago by DHSSP project of Ministry of Health has not been utilised because it lacked a component

Mortuary

- The existing mortuary was in a dilapidated state, lacks a working table on which to carry post-mortem, does not have refrigeration facilities and is very small as it can only handle one body at a time.

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- Ancillary structures

- Only 30 units which are in a dilapidated state.

- In service training, consultation and research to community based health care programmes

No activity

Security

- The hospital lacks a fence.

Staffing requirement- 195 personnel.

-139 staff.

Five(5) consultants

No Consultant

- Pharmacist, Aesthetician, physiotherapist and an occupational therapist.

- No pharmacist, Aesthetician, physiotherapist and an occupational therapist.

Running water - The available reservoir (tank) was installed in 1969 when the hospital was constructed. It’s very old and leaking.

Butebo Health Centre IV

Transport No ambulance

Lack of proper facilities hinder effective service delivery.

I advised the accounting officer to engage the relevant authorities and ensure that the


1.3 Failure to meet the Minimum Standards of Education Service Delivery

Paragraph 2.2.1 of the revised Local Governments Management Service Delivery

(LGMSD) operational manual provides minimum service delivery package for a primary

school. The package includes; Classrooms; Pupil desks, Pit latrines (for pupils and

teachers), Teachers desks, Teachers chairs, Teachers houses and water availability.

However, documentation review and the inspection carried on a sample of schools

revealed the following:-

2 Chelekura Primary School

It was observed that the district constructed a four (4) stances pit latrine for the boys

at Chelekura Primary School. However, the inspection revealed that the pit latrine was

yet to be handed over by the contractor. Consequently, children continue to use the

old one which is in a dangerous state.

3 Kanyum Primary School

The inspection revealed the following;

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The roof of the classroom one block which was accommodating P.1, P.2, P.3 and

P.4 was blown off by a stormy rain in March, 2016. The classes affected are now

being conducted under trees around the school.

One pit latrine of 5 stances had collapsed.

The head teacher lacked an office.

The structures were dilapidated and require rehabilitation.

The Accounting Officer explained that the parents and sub counties had been engaged

to make contributions to address the issues of pit-latrine in the school. The district also

planned to provide for a two classroom block, an office and a store in the coming

financial year to beef up the existing ones.


4 Failure to dispose off obsolete assets

Section of 2.3.2.2 of the Local Governments Financial and Accounting Manual (LGFAM),

2007 requires assets that are not in use to be disposed of in accordance with the

procedures in the LGPPDA, 2006 regulations, after recommendations from the Board

of Survey. However, physical inspection of assets and board of surveys report revealed

that three (3) Pickups vehicles; UG-1114A, LG-0009-40 and four (4) graders had been

grounded for long without being disposed of as shown below;

Failure to dispose of the assets may lead to further deterioration in value

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The Accounting Officer explained that the process of valuation had begun with the

Ministry of Works but the disposal plans for the road equipment had been stayed with

the hope that funds for repair would be found.

I advised the Accounting Officer to expedite the process of disposing of the assets.


Section 103 (1) of the LGFAR, 2007 stipulates that the Head of Finance is responsible

for advising on risk management and effectiveness of the internal control system and

also establish it for future review. According to LGFAR, “Risk management” means the

establishment of policies, procedures and practices to identify, analyse, quantify,

monitor, and control financial and other exposures of the Council so as to minimize

potential losses. It was however observed that management had not established and

documented risk management policies.


The Accounting Officer explained that Council had tasked the Head of Finance and

Planning Unit to come up with a draft.


6.7.20 SIRONKO DLG



URA any tax that has or should have been withheld within fifteen days after the end

of the month in which the payment subject to withholding tax was made. It was

however noted that UGX.6,289,455 deducted from suppliers as WHT and PAYE from

councilors lacked evidence of remittance to URA.

Non compliance with the tax low may attract fines and penalties from the tax body.

The Accounting Officer was advised to comply with the tax law.

2 Lack of a District Medical Store

Regulation 9(j) of the LGFAR, 2007 specify the duties of the chief executive to include,

among others establishing proper storage facilities with accounting and financial

222

control systems to ensure efficient receipt, issue and safe custody of stores, vehicles,

plant and other assets.

However, physical inspection carried out at the district revealed that the Council lacked

a substantive store for drugs. The items were scattered in different rooms at the

District Health Office and corridors.

This creates a risk of drugs either being stolen or damaged.

The Accounting Officer attributed the shortcoming to inadequate development funding

available for the health sector.



Section 103 (1) of the LGFAR, 2007 stipulates that the Head of Finance require the Head

of Finance to establish a documented risk management and effective internal control

system and also establish it for future review. It was however observed that

management had not developed a risk management policy.


The Accounting Officer promised to develop the policy during the F/Y 2016/2017.

The Accounting Officer was advised to develop the risk Management Policy.

6.7.21 TORORO DLG

1 Failure to meet the Minimum Health Standards





However, audit inspection carried out at Tororo Hospital and Mulanda Health Centre

IV and Kiyeyi Health Centre III and SopSop Health Centre II revealed the following

shortcomings:-

a) Tororo Hospital


- 80No. Housing Units+ Ancillary structures

The hospital has only 32 housing units in a very poor state as shown in the photographs below;

223

Equipment -. A scannner and Exray machine broke down in year

2009.

Security - The hospital lacks a fence

b) Mulanda Health Centre IV

- One maternity ward - Overcrowded

- Mortuary - No mortuary


- Only Three (3) units were available

Medical Equipment - An Aesthetic machine which was supplied in the year 2013 remained unoperational due to lack of a trained person (an aesthetician) to operate it. - Other non-functional equipment include; weighing scales, beds, refrigerators and height boards.

Means of transport - No ambulance.

Security - Not fenced.

Staffing - Only 28 of the required 48 staff are employed at the health centre. This represented 42%

c) Kiyeyi Health Centre III

Medical equipment - Lacks sterilising equipment (An autoclave and gas cylinder).

Established structure of Nineteen (19) staff

- Ten (10). This representing 53% capacity.

Security - No security personnel

c)Sop sop Health Centre II

-Furniture - There is lack of office furniture

Power source -No power

Staffing levels of Nine(9) - The Health Centre had only two(2) staff

The Accounting Officer admitted the shortcomings and explained that the commitment

to providing better services was limited by inadequate funding and facilitation.

I advised the Accounting Officer to engage the relevant Ministry and ensure that the


224

2 Failure to meet the Minimum Education Standards

Paragraph 2.2.1 of the revised Local Government LGMSD operational manual provides

minimum service delivery package for a primary school. The package includes;

Classrooms; Pupil desks, Pit latrines (for pupils and teachers), Teachers desks,

Teachers chairs, Teachers houses and water availability. However, the audit

inspections revealed the following shortcomings:-

a) St. Jude Kachinga Primary School

The school revealed that the school did not have a single classroom for its total

population of 631 pupils. It was observed that the pupils study under trees as shown

below;

One of the classes being conducted under a tree. Besides is the church that accommodates P6

Another class being conducted under the tree

The head teacher attributed the state of affairs to lack of support from the relevant

authorities and further explained that efforts to have the district allocate at least one

classroom block had been futile. The head teacher however, indicated that the

districtwill include the school under Scool Facilitaton Grant (SFG) construction in the

FY 2017/2018.

The lack of classrooms has affected learning especially in the rainy seasons where the

school closes immediately there are any signs of rains.

I advised the Accounting Officer to make continuous follow up as the situation is of an

urgent nature.

3 Delayed Execution of Civil works

Section (14 of the PPDA regulations require an Accounting Officer to have the overall

responsibility of the successful execution of the procurement, disposal and contract

management process and ensure that implementation of the contract as per agreed

terms. Audit inspection revealed that several projects were behind schedule.

This delay was attributed to inefficiencies on the side of the contractor and lack of

proper supervision.

225

The delayed completion of the civil works may lead to extra administrative costs.

I advised the Accounting Officer to ensure that contractors execute the contracts in

accordance with the contract terms and conditions.


Section of 2.3.1.5 of the LGFAM, 2007 requires assets that are not in use to be disposed

of in accordance with the procedures in the Local Government Public Procurement and

Disposal of Assets (LGPPDA), 2006 regulations, after recommendations from the Board

of Survey report. However, it was observed that a number of vehicles and motorcycles

had not been disposed off.

Failure to dispose off the assets may lead to further deterioration in value.

The Accounting Officer attributed the shortcoming to failure to secure response from

the Government valuer.

I advised the Accounting Officer to ensure that obsolete assets are disposed off.

6.7.22 MALABA TC

1 Non- Remittance of Shared Local Revenue

According to the Local Government Act 1997 (as amended), fifth schedule, Part V

(15A), a Town Council is required to remit 5% of the total Local Revenue collected to

parishes and 20% to village councils. However, during the year, Council collected

UGX.447,884,004 but failed to remit UGX.22,394,200 to the wards and

UGX.89,576,801 to the village councils respectively.

The failure to remit the shared Local Revenue to the lower units impairs service

delivery at the grass roots.

The Accounting Officer attributed the shortcomings to failure by the ward Agents to

submit bank accounts details. He promised to remit the funds.

I advised the Accounting Officer to ensure compliance with the law.

2 Outstanding Advances

Regulation 42 and 43 of Local Governments Financial and Accounting Regulations,

2007, require funds to be properly vouched and accounted for within a period of a

226

month. However, administrative advances amounting to UGX.15,085,000 had been

outstanding for more than one year.

Delayed accountability can lead to falsification of documents.

The Accounting Officer explained that the recovery of these advances had been

difficult because most of the affected payees were no longer staff of the Town Council.

I advised the Accounting Officer to make efforts to recover the funds.

6.7.23 NAGONGERA TC


Section 123 of the Income Tax Act, 1997, requires a withholding agent to pay to URA

any tax that has or should have been withheld within fifteen days after the end of the

month in which the payment subject to withholding tax was made. It was however

observed that UGX.3,156,750 deducted from suppliers as WHT and PAYE was not

remitted to URA.

Non-remittance of tax exposes the Council to the risk of penalties and fines from tax

Authority.


2 Poor road Works on Ochola, Kopoi and Abattoir Roads

The Council spent a total of UGX.79,675,330 on opening and maintenance of Ochola,

Kopoi and Abattoir Roads. However, inspection of the roads revealed a number of

defects as shown below;

Culverts were poorly installed with no headwalls.

Some of the culverts had cracks.

The road had already developed potholes as shown below:-

Potholes and open culverts on Ochola road Cracks, open culverts on Kipoi

road

227

No head wall on Abbatoir road

This was attributed to lack of effective supervision and monitoring of projects by

management.

The Accounting Officer attributed the defects to hash weather conditions.



Section 103 (1&4) of the Local Government Financial and Accounting Regulation, 2007

require management to have established and documented a risk management Policy.

It was observed that Council did not have documented risk policy at the time of audit.


The Accounting Officer promised to develop the risk management policy.

I advised the Accounting Officer to ensure a risk management policy is developed.

6.7.24 BULAMBULI DLG

1 Lack of up to-date Contracts Register

Regulation 5.4.7 (2) and (3) of the Local Governments Financial and Accounting

Manual (2007) require that a Procurement and Disposal Unit should keep a contract

register to record all the contract details including payments, retention monies and

penalties, if any. However, contrary to the regulation, the Procurement Unit did not

maintain an up to-date contract register.

Lack of an up-to-date weakens controls over contracts management.

228

I advised the Accounting Officer to ensure that contracts register is regularly updated

to enable effective monitoring of the contracts.

2 Failure to carry out Local Revenue Assessment and Enumeration

Section 4.3 of the Local Governments Finance and Accounting Manual 2007 requires

the accounting officer to carry out assessment of the council's revenue base regularly.

However, the District did not present the Local Revenue assessment and enumeration

reports for audit verification.

The Accounting Officer explained that revenue assessment was carried out and that

the district had annual revenue enhancement plan.

I advised the Accounting Officer to regularly carry out the local revenue assessment

as required by the regulations.

3 Staff acting beyond the required statutory period

The Uganda Public Service Standing Orders 2010, Section A regarding appointment

procedures (A-c) (9) requires that an appointment on acting basis is expected to last

not more than six months and is subject to direction by the Appointing Authority. It

further provides that any period of acting appointment beyond six months is irregular,

unless the Appointing Authority extends the appointment for another period of six

months, but shall not exceed 12 months in total.

It was however observed that some posts had not been substantively filled for more

that the statutory period.

The Accounting Officer explained that staff files had been forwarded to the District

Service Commission for action.


4 Inadequate performance of the Local Governments Public Accounts

Committee (LGPAC)

Regulation 16 (1) and (2) of the Local Government Financial and Accounting

Regulations 2007 requires Local Governments Public Accounts Committee (LGPAC) to

examine the reports of the Auditor General, the Head of Internal Audit and any other

reports of commissions of inquiry in accordance with section 88 of the Act. In

229

additional, the Local Governments Public Accounts Committee shall produce reports

for submission to the council and the Minister.

However, the District Local Government Public Accounts Committees (LGPAC) did not

hold meetings to deliberate on reports of Internal Audit during the financial year under

review.

This weakens the oversights and internal control systems at the district.

The Accounting Officer explained that the District Public Accounts Committee sits on

Quarterly basis but was still handling backlog.

The Accounting Officer is advised to ensure that District Public Accounts Committee

(DPAC) is facilitated to discuss the internal audit reports.


Section 2.4.1 of the LGFAM, 2007 requires the Head of Finance to be responsible for

advising on risk management and effective systems of internal control. This role is






However, no report on risk management was presented for audit verification.

The Accounting Officer promised to address the matter in the current financial year

(2016/2017).

The Accounting Officer was advised to develop a risk management policy.

6 Lack of Audit Committee

Section 49(1) of the Public Finance and Management Act 2015 requires the Minister to

establish an audit committee for each sector of Government and audit committees for

a number of votes in Local Governments. The committee is meant to assist the

accounting officer in carrying out the oversight responsibilities relating to financial

230

practices, internal controls, corporate governance issues, compliance with laws, ethics

audit matters and risk management.

It was however observed that the audit committee had not been established.

The Accounting Officer explained that Ministry of Finance had not yet constituted the

committee.


7 Failure to meet Minimum Standards of Health Services





However, audit inspection carried out at Muyembe Health Centre IV, Buyanga Health

Centre III and Bunambutye Health Centre III revealed the following shortcomings:-

BASIC REQUIREMENTS CURRENT STATUS

Muyembe Health Centre IV

Operating Theatre

The aesthetic machine) was not functional.

Drug store with HSD office

The drug store lacks shelves. Drugs were found piled on the floor.

Mortuary

The mortuary lacks water supply and power.

18 Housing Units + Ancillary

structures.

The HC has only 9 housing units.

Medical Equipment No resuscitation equipment kit (equipment that is used to supply oxygen to new born babies with breathing

complications)

Means of transport The ambulance broke down.

Buyaga Health Centre III

Medical pit No Medical pit

Eight two stance pit latrines One (2 stance) pit latrine

Two general wards One general ward.

One maternity ward No maternity ward

One placenta pit No planeta pit.

One medical waste pit No medical waste pit

1O housing Units + Ancillary

structures

No staff housing units.

Medical equipment No resuscitation machine and no baby weighing scales. No Blood pressure (BP) machine.

Bunambutye Health Centre III

Power No electricity in maternity ward, OPD and delivery room.

Security The unit lacks a fence

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1O housing Units + Ancillary

structures

Only six rooms available

Medical Equipment The HC lacks Blood pressure machine, resuscitator,thermometers, stethoscope and artery

forceps for dressing wounds.

The shortcomings were attributed to inadequate funding.

I advised the Accounting Officer to engage the relevant Ministry to address the

matters.

8 Poor Education Services at Bulaago Primary School

Inspection of Bulaago Primary School revealed the following shortcomings:-

The classrooms had deep cracks and at the verge of collapsing.

The school lacks adequate facilities and some pupils were sitting on the floor with

no desks,

Classes were overcrowded with an average of 7 pupils sharing a desk as shown in

the photograph below;

Deep holes in

classroom

Pupils sitting on the

floor

Crowded classroom

The conditions negatively affect learning and pupils’ performance.

The matters require urgent attention.

6.7.25 BULAMBULI TC



Officer who should ensure that adequate Information and Communication Technology



operated by the Council. However, it was observed that the Town Council did not

have an ICT policy.

232

This could expose the organization to risks of misuse, loss of data and physical

equipment.

The Accounting Officer explained that plans are under way to submit a request for the

recruitment of an IT officer who will spear head the process of developing and

implementing the ICT policy.

I urged the Accounting Officer to expedite the process of developing the ICT policy.

6.7.26 BULEGENI TC

1 Lack of Physical Development Plan

Section 11 &12 of the Physical Planning Act, 2010 provides that each urban authority

or city shall establish an urban physical planning committee which shall cause to be

prepared urban and local physical development plans and detailed plans; to

recommend development applications to the board for change of use of land and to

determine the development application relating to location, dumping sites or sewerage

treatment which may have injurious impact on the environment among other

responsibilities. However, it was observed that the Town Council lacked a physical

development plan.

The absence of a physical planning undermines orderly and organised town

development.

The Accounting Officer explained that the Town Council had sought technical support

from the Ministry of Lands, Housing & Urban and was waiting for the response.

I advised the Accounting Officer to ensure that a Physical Planning Committee is

undertaken.

6.7.27 NAKALOKE TC


Section 2.4.1 of the LGFAM, 2007 requires the Head of Finance to be responsible for

advising on risk management and effective systems of internal control. This role is



233




Contrary to the above regulation, the Town Council did not have a documented risk

management policy.

This weakens the internal controls.

The Accounting Officer explained that council had facilitated the Internal Auditor to

attend a Risk Management Workshop in Moroto as a first step towards developing the

policy.

I urged management to expedite the process and ensure that a risk management

policy is developed.

2 Lack of an Information Connection Technology (ICT) Policy





operated by the council. The Town Council had various IT equipment and an ICT

focal person. However, council does not have a policy to guide staff on use and

management of IT equipment, and the hardware.

This creates a risk of misuse and loss.

The Accounting Officer explained that management of the Town Council had

developed a draft policy which was yet to be approved by Council.

I urged the Accounting Officer to ensure that an ICT policy is developed and approved

by the Council.

234

6.8 MBARARA BRANCH 6.8.1 BUSHENYI DLG

1 Loss of a District Motor Cycle

Paragraph 2.3.4.8 of the Local Governments Financial and Accounting Manual

(LGFAM), 2007 requires the head of department in which a loss has occurred to make

immediately on discovery of the loss, a report of loss and preliminary report to both

the head of internal audit and the Head of Finance and a copy to be sent to the

Accounting Officer.

It was observed that a motorcycle registration number UDX 356Y valued at

UGX.15,000,000 was lost and no report of loss was presented for audit verification.

The Accounting Officer explained that the case was reported to Sheema Police

immediately the incident occurred and recovery measures instituted.


2 Non-disposal of obsolete assets


of in accordance with the procedures in the Local Governments Public Procurement

and Disposal of Assets (LGPPDA), 2006. However, a number of district vehicles had

been grounded and in a deplorable state as shown in the pictures below:

Failure to dispose of the vehicle may result in further deterioration in value.

The Accounting Officer explained that the grounded vehicles were recommended for

boarding off by the Board of Survey.

I advised the Accounting Officer to ensure the assets are disposed off.

235

3 Unaccounted for funds under USE Schools

Paragraph 217 of Part 1 of the Treasury Accounting Instructions (TAI) 2003 requires

advances to be accounted for within 60 days from the date of payment.

A review of expenditure of funds under Six (6) Universal Secondary Schools (USE)

revealed that UGX.83,377,409 remained unaccounted for at the time of audit.

This was mainly attributed to the shortage of financial management skills in USE

Schools.

The Accounting Officer promised to organize trainings for head teachers and bursars

in financial management.

I urged the Accounting Officer to ensure that the promised action is implemented.

4 Lack of a District Land Tribunal (DLT)

Section 74 (1) and (2) of the Land (Amendment) Act, 2004 establishes the Office of

District Land Tribunal (DLT) consisting of a Chairperson and two (2) other members

who shall be persons with knowledge and experience in land matters, appointed by

the Chief Justice (CJ) on the advice of the Judicial Service Commission (JSC). It was

observed that the district is engaged in land disputes on land boundaries and did not

have a District Land Tribunal.

Consequently, land disputes cannot be settled expeditiously.

The Accounting Officer explained that the district land tribunal was going to be

constituted before December 2016 in consultation with the Judicial Service

Commission.

I await the Accounting Officer’s promised action.

5 Salary account periodic reconciliations

Paragraph 6.4.2.6(2) of the Local Governments Financial and Accounting Manual, 2007

requires bank reconciliation statements to be prepared and entered into the cash book

not later than fifteen days after the end of each month. The statement shall be certified

as correct by the Head of Finance.

Contrary to the above provision, it was noted that periodic reconciliation statements

for the district salary bank account were not being prepared and approved. This was

attributed to laxity amongst the accounts staff involved in payroll management. I

236

informed management that this presents a risk of errors and fraud going undetected

for long periods.

In response, the Accounting Officer regretted this anomaly and promised to have it

addressed going forward.

I advised that there is need to observe strict adherence with the provisions in the

Accounting Manual.

6.8.2 BUSHENYI-ISHAKA MC

1 Untaxed Retention Allowance

Section 19 (1) (a) of Income Tax Act Cap 340 as amended defines employment income

to include among others wages, salary, gratuity, bonus, or other allowance. Audit of

payrolls for the months of July 2015 to March 2016 revealed that UGX.27,000,000 paid

as retention allowance to medical doctors was not subjected to Pay As you Earn (PAYE)

worth UGX.8,100,000 as shown below: -

Period Employee First Name

Last Name Monthly Retention Allowance

Annual Retention not taxed

PAYE Due

Jul 15-Mar 16

000000000854941 AARON KASULE

1,500,000

13,500,000

4,050,000

Jul 15-Mar 16

000000000863239 VIOLA NINSIIMA 1,500,000 13,500,000 4,050,000

Total 3,000,000 27,000,000 8,100,000

Non compliance with tax law may attract fines and penalties from Uganda Revenue

Authority.

The Accounting Officer explained that after payroll decentralization, it was realized that

retention allowances for medical officers was not taxed and promised that the unpaid

tax from July, 2015 to March, 2016 will be recovered from the affected officers

The promised action of the Accounting Officer is awaited.

2 Lack of up to date Valuation List

Section 4 of the Local Governments (Rating) Act requires Council to review its valuation

list at least once in every 5 years, or such longer period as the Minister may approve.

However, it was observed that Council did not have an up-to-date valuation list since

the valuation lists used had expired.

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This creates a risk that property rates as a source of local revenue might not be

exploited to its full potential and besides the applied rates may be below the current

market rates.

The Accounting Officer explained that the shortcoming was due to lack of funds to

update valuation list.

I advised the Accounting Officer to update the valuation list.

3 Failure to meet minimum health standards in Health Centres


(LGMSD) Operational Manual for Local Governments sets minimum standards for

health service delivery by health centres. The inspection of the health centres revealed

the following shortcomings:-

Bushenyi Health Centre IV

Package Minimum

standard Status Remarks

Operational Theatre 1 1 Not operational due to Lack of Equipment.

Doctors’ House 2 1

Staff House Type 3 2 1 Inadequate making some staff rent outside the Health Centre

Two Stance Pit Latrine 10 6

Generator House 1 0 No generator to House the Generators; at the health Centre

Means of Transport (Not to

be funded by LGMSD) 1 0 No Ambulance

Incinerator Functioning 0 Not Available

Ruharo HC III

Package Minimum

standard Municipality

Status Remarks

Maternity 1 0 No Maternity Ward General Ward 2 0 No Ward 2 Stance Pit Latrine

8 1 Inadequate Pit Latrines

Staff Houses type

1 2 1 Inadequate Accommodation making

some staff rent outside the health Centre

Staff Houses type

2 1 0 No Staff House making some staff

rent outside the health Centre One Placenta Pit 1 0 No Placenta Pit Laboratory 1 0 No Laboratory

The lack of minimum requirements adversely affects service delivery.

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I advised the Accounting Officer to engage the Ministry of Health to ensure that the

issues affecting the Health Services are addressed.

4 Failure to meet minimum standards for UPE Schools

Section 2.1.2(a) of the Local Governments Management and Service Delivery (LGMSD)

Operational Manual provides minimum national standards of education service

delivery. Documentation review revealed that the Municipal standards are below the

national standards as shown below-

Particular Standard Municipal Council achieved level

Minimum Standard

Remarks

Text books Text book Pupil ration

1:5 1:3 Inadequate books hindering learning

Stance latrines Pupil latrine ration 1:60 1:40 Unhygienic, teachers share with pupils

Number of desks

Desk pupil ratio 1:16 1:3 Congestion impairs learning

Number of staff houses

Teacher to staff house ratio

1:10 1:4 Inadequate Accommodation

The high ratios imply that the learning environment may make it difficult for teachers

to deliver and pupils to adequately learn.

The Accounting Officer attributed the low standards to inadequate funds and indicated

that the standards will improve when they receive more funds.

I advised the Accounting Officer to liaise with all stakeholders with a view of soliciting

for more funds for improvement of education service delivery.

5 Poor Book Keeping and Financial Management of UPE Funds

Regulation 64(4) of Local Governments Financial and Accounting Regulation, 2007

requires primary Head teachers to maintain a cash book for recording receipts, and

payments of the school transactions and the cash book to be monthly reconciled to

the bank statement. During the year under audit, UGX.30,971,493 was released to

eight (8) UPE schools in the Municipal Council. However, review of records revealed

the following shortcomings:-

Payment vouchers were not numbered sequentially

Requisitions are not used to initiate payments

Non display of release charts

There were instances of over payment and under payment of capitation grant

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The above weaknesses may lead to non-achievement of the objectives for which the

UPE program was established.

The Accounting Officer pledged to have the head teachers trained in book keeping.

I urged the Accounting Officer to ensure that the promised action is implemented.

6.8.3 IBANDA DLG

1 Non Deduction of PAYE

Section 19(1) (a) of Income Tax Act Cap 340 requires that tax (Pay As You Earn) be

deducted from all employment income. In addition, Section 5.6.3 (3) of The Local

Governments Financial and Accounting Manual, 2007 requires staff in the salaries

subsection to ensure that staff advances recovery and other deductions are made

before salaries are paid.

It was however observed that retainer allowances were paid to staff without

deduction of PAYE of UGX.18,000,000. This exposes the district to a risk of fines and

penalties from Uganda Revenue Authority.

The Accounting Officer explained that Council had written to the Ministry of Public

Service requesting that the retention allowance of medical officers be taxed and to

automate recoveries for the same, however, this was not done. He further explained

that they have instituted measures to recover all unpaid taxes from staff. I advised

that there is need to strengthen the payroll processing system to include verifications

before effecting payments.

In the meantime, I await the outcome of the Accounting Officers commitment.

2 Non-deduction of Local Service Tax (LST)

Section 80 (1a) (b) of the Local Governments Act, Amendment No.2, 2008 requires

local service tax to be levied on all persons in gainful employment or who are

practicing any profession.

Review of the district payroll revealed that Local service tax totaling UGX.2,710,000

was not levied on 60 district staff for the FY 15/16.

The Accounting Officer attributed the shortcoming to failure by the Ministry of Public

Service to activate the codes for deduction of LST on the system. Management also

assured me that they have since begun the process to recover the un-deducted tax

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from district employees. It should however be noted that these codes are active for all

other districts.

I await the outcome of the management action.

3 Payment of Salary to Absconded Staff

Section (A-n) (19) of the Uganda Public Service Standing Orders provides that in the

absence of communication from an officer and failure to resume duty within 30 days,

the officer shall be deemed to have abandoned duty. As such, officers in this category

should be deleted from the payroll.

Review of personal files for selected staff revealed that some members of staff

abandoned their duties and this was communicated to management by line managers;

however, the district delayed to remove them from the payroll leading to a financial

loss of UGX.2,741,085, as shown below:-

Table Showing Abscondment cases

Employee Number

Date of first notification of abscondment Amount paid - UGX

836338 22nd October 2014 2,068,887

836342 23rd September, 2015 672,198

Total 2,741,085

The Accounting Officer attributed their reluctance to delete the staff names off the

payroll to the ongoing process by the disciplinary committee as any deletions may later

lead to legal action.

I advised management to put in place measures so that disciplinary proceedings are

dealt with in a timely manner by the responsible committees. In addition, the

Accounting Officer should also consider suspension of payments as they await

outcomes of the disciplinary committees.


Regulations 103 (1) of LGFAR, 2007 requires the Head of finance to advise on risk

management and effective systems of internal controls. However, it was observed that

Council did not have a documented risk management policy.


The Accounting Officer explained that the district had embarked on risk assessment

so as to come up with a comprehensive risk management policy.

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I advised the Accounting Officer to ensure that a Risk Management Policy is developed.

5 Failure to meet the Minimum Standards under Primary Education

Section 2.1.2 (a) of the Local Government Management and Service Delivery

Operational Manual provides Guidelines for Primary Education Minimum National

Standards of Service Delivery. The analysis of data from schools revealed the

following shortcomings:-

Particular Sample Standard Current

Ratio

Minimum

Standard

Pupils (No) 30,959 Classroom to Pupil Ratio

1:81 1:55

Latrine stances 412 Latrine to Pupil Ratio 1:75 1:40

Number of text

books

185,754 Test book to Pupil

ratio 1:6

1:3

Number Of Desks 5,699 Desk to Pupil Ratio 1:54 1:3

The schools facilities are inadequate and this negatively affects the academic

performance.

The Accounting Officer attributed the inadequate school facilities to inadequate

funding.

I advised the Accounting Officer to follow up the matter with Ministry of Education and

Sports and ensure that the challenges are addressed.

6.8.4 IBANDA TC


Regulations 103 (1 & 4) of the LGFAR, 2007, requires the Head of finance to establish

a documented risk management policy. However, it was observed that management

has not developed a documented risk management policy as required.

This weakens the Internal Control System.

I advised the Accounting Officer to develop a risk Management Policy.

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6.8.5 ISINGIRO DLG

1. Failure to Meet the Minimum Standards for Education in Primary Schools

Guidelines 2.1.2 of the Local Government Management and Service Delivery (LGMSD)

Guidelines, 2009 provides the Minimum National Standards of Service Delivery for UPE

schools. Analysis of statistics for the schools in the district revealed a number of

shortcomings as shown in the table below:

Details Standard District achieved level

Minimum standard

Number of class rooms

Classroom pupil ration 1:70 1:55

No of Text Books Text book Pupil ration 1:8 1:3

Stance latrines Pupil latrine ration 1:49 1:40

Number of desks Desk pupil ratio 1:7 1:3

Failure to meet the minimum standards of Education Service delivery negatively

impacts on academic performance of pupils.

The Accounting Officer explained that measures are being put in place to solicit for

more funds from the relevant authorities and Non Governmental Organisations as well.


2 Poor Infrastructure in Primary Schools

The audit inspection carried out in three schools of Mpambazi, Guma Memorial and

Kyanza Primary Schools located in Birere Sub-County, Isingiro Town Council and

Nyamuyanja Sub-County revealed the following shortcomings:-

School Facilities (With Pictures) Remarks

Mpambazi Primary School

349 pupils, 8 teachers

Lack of furniture

Inadequate space as the Head

Teacher shares his office with the library.

Dilapidated Staff Quarters

Guma Memorial Primary

School 185 pupils, 5

teachers

Temporary structures were put

up to accommodate pupils for lessons.

Unfinished Structures which were also being used for

lessons due to limited space.

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Inadequate Furniture in

Classroom where five (5) pupils were sharing a desk

Kyanza Primary

School

299 pupils, 7 teachers.

Inadequate Infrastructure

where the Head Teacher

shared his office with library

Pupils were having lessons under a shade.

Lack of Latrines for Pupils at the School

The poor infrastructure negatively affects students learning.


6.8.6 ISINGIRO TC

1 Lack of up to date Valuation Lists

Section 4 of the Local Governments (Rating) Act requires the Council to review its

valuation list at least once in every 5 years, or such longer period as the Minister may

approve. However, it was observed that the Council did not have an up-to-date

valuation list. There is a risk that the local revenue base might not be exploited to its

full potential.

The Accounting Officer attributed this to limited local revenue to facilitate valuation of

businesses but indicated that it had been provided for in the budget of financial year

2017/2018.

I advised the Accounting Officer to ensure that the valuation list is updated.

6.8.7 KABEREBERE TC

1 Lack of Valuation Lists

Section 4 of the Local Governments (Rating) Act requires the Council to review its

valuation list at least once in every 5 years, or such longer period as the Minister may

approve. However, it was observed that the Council did not have an up-to-date

valuation list since the valuation lists used had expired. There is a risk that property

rates as a source of local revenue might not be exploited to its full potential and besides

the applied rates may be below the current market rates.

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The Accounting Officer explained that since valuation of property for property tax is

expensive, they have engaged the Chief Administrative Officer to contact valuer on

behalf of the Town Councils.

I urged the Accounting Officer to ensure that the valuation list is updated.

2 Uncollected Local Service Tax (LST)

Regulation 32 of the Local Governments Financial and Accounting Regulations

(LGFAR), 2007 requires the Head of Finance to collect all budgeted revenue and bank

it intact. A review of the financial statements indicated that the Town Council budgeted

for local service tax of UGX.4,400,000 but only received UGX.773,000 resulting in a

shortfall of UGX.3,627,000. The shortfall constituted 82% of the budgeted LST

collections.

The Accounting Officer attributed the uncollected local service tax to the failure by the

District to remit the collected LST.

I advised the Accounting Officer to follow up the matter with the District to ensure that

LST is collected.

3 Lack of Information Communication Technology (ICT) Policy

Regulation 110(1) of the LGFAR, 2007 requires the Chief Executive to designate an




operated by the Council. It was observed that the Town Council neither designated an

Officer to be in charge of ICT management and to develop an ICT policy to guide staff

in handling IT equipment and information.

The Accounting Officer promised to develop the Information Communication

Technology Policy.


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6.8.8 KABUYANDA TC

1 Lack of full details about the assets in the Assets Register

Paragraph 2.3.1.4(2) of the Local Governments Financial and Accounting Manual,

2007, requires the maintenance of a fixed assets register that contains information

such as detailed description of the asset, invoice reference, historical cost of

acquisition, date of acquisition, name of supplier, warranty details, estimated life and

estimated date of retirement and maintenance records. It was observed that the Assets

Register did not show full details of the assets like asset value, date of purchase and

location.

This renders the verification of assets difficult.

I advised the Accounting Officer to ensure that the Assets Register is updated with the

details about the assets.

6.8.9 KABALE DLG

1 Salary payment anomaly

The Public Service Standing Orders, General Rules on Payment of Salaries (B - a)1

requires salary payment to be paid to bonafide employees who execute official work

in the Public Service and Section 12 stipulates that officers who have ceased

employment have their salaries stopped. In addition, Section (P-d) 4 states that “all

documents which affect the official record on a public officer must be kept properly

regardless of the source.”

It was observed that a total of UGX.25,832,974 was paid to six (6) individuals who

lacked personnel files at the district as shown below:

Name of staff Amount paid - UGX

1 Akankwasa Judith 5,476,496

2 Akunda John Willy 3,840,988

3 Akatwijuka Julius 4,132,404

4 Atuhaire Winnie 4,395,087

5 Atukwase Prudence 4,675,505

6 Aturinde Esau 3,312,494

TOTAL 25,832,974

I advised the Accounting Officer to present the personnel files for the individuals for

audit verification.

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2 Failure to meet the minimum health standard at the Health Centre IV

Paragraph 2.1.1 (D) of the Local Government Management and Service Delivery

Guidelines provides the frame work for the minimum standards for health service

delivery. However inspections of Muko Health Centre IV revealed a number of

shortcomings.

The Accounting Officer attributed shortcomings to the retention of the 80% funds for

infrastructure at the ministry meant for capital development.

I advised the Accounting Officer to engage the Ministry of Health and other

stakeholders and ensure that the health service delivery is improved.

3 Detected losses of medicines

Chapter 5 of the management of medicines and health supplies manual requires

physical count to verify the stock levels of medicines. However, a physical count

carried out revealed variations in a number of medicines as shown below:-

Kabale District Health Store:

DRUGS STORES RECORD

AUDIT STOCK COUNT

VARIANCE

Liponavir Ritonavir 57 89 (32)

Fancidar 8 6 (14)

Mabendazole 24,150 96,000 (71,850)

Clotrimazole 17 15 2

Diazipam 11 22 (11)

piriton 5 0 5

Glibenclamid 19 1 18

Paracetamol 15 10 5

Total 24,282 96,143 (71,877)

This is an indication of poor record keeping and stores management.

I advised the Accounting Officer to establish an effective stores control system and to

ensure that proper records are maintained.

4 Lack of Contract Implementation Plans

Regulation 119 (2) & (3) of LG Public Procurement and Disposal of Assets (PPDA)

Regulations, 2006 requires the user departments to nominate a member of staff with

appropriate skills and experience as a contract supervisor and inform the Accounting

Officer in writing and copy to internal audit department, secretary contracts committee

and any other relevant stakeholders informing them of the delegated contract

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supervisor who shall take full responsibility. A contract manager is required to prepare

a contract implementation plan and give copies to Head of procurement and disposal

unit, Secretary Contracts committee, and internal audit for monitoring purposes.

Contract implementation plans for the contracts amounting to UGX.1,406,538,664,

were not presented for audit verification.

Failure to undertake contract supervision may lead to delayed completion of projects

and shoddy works.

I advised the Accounting Officer to always ensure that contract managers prepare the

implementation plans for proper supervision and monitoring of contracts.

5 Failure to meet the minimum standards in Primary Schools

Paragraph 2.1.2 of the Local Government Management and Service Delivery Guidelines

provides the minimum national standards of education service delivery. Analysis of the

statistical data for the schools in the district revealed the following shortcomings:-

Particular Standard District achieved

level

Minimum Standard

Remarks

Stance latrines Pupil latrine ration 1:59 1:40 Poor hygiene

Number of

desks

Desk pupil ratio 1:16 1:3 Congestion, poor

learning environment

Number of staff houses

Teacher to staff house ratio

1:6 1:4 Late coming/absenteeism.

I advised the Accounting Officer to follow up the matters with the Ministry of Education

and Sports and ensure that the shortcomings are addressed.


Regulation 110 of the Local Governments Financial and Accounting Regulations

(LGFAR), 2007 requires the Chief Executive to designate an officer to ensure that

adequate information and communication technology policies are established and are

applied to enable adequate security and protection over computers and of data held

thereon or information systems operated by the council. A review of the IT general

and application controls revealed that management has not formulated an IT policy.

The Accounting Officer explained that a staff had been assigned as system

administrator and expects improvements in general and application controls for proper

logical and physical access and security over data.

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I advised the Accounting Officer to develop the IT policy


Regulation 103 (1 and 4) of the LGFAR, 2007 requires that, the Head of Finance

establishes a documented risk management system. However, it was observed that

the Head of Finance had not provided guidance for proper planning, appraisal,

authorization and controlling of their operations in order to achieve continuous

improvement on economy, efficiency and effectiveness and for achieving their financial

performance targets.

This weakens the Internal Control system.

The Accounting Officer admitted the shortcoming and promised to develop the risk

management policy in the following financial year.

I advised the Accounting Officer to expedite the process of developing the risk

management policy.

6.8.10 KABALE MC 1. Non Remittance of Shared Local Revenue to the Divisions

Section 14(1) Part V of the Fifth Schedule, of the Local Government Act 1997 (as

amended), states that the minimum of 30 percent of the total revenue collected and

remitted by all city or municipal divisions to a city or municipal council shall be

distributed as grants to division councils. Contrary to this provision, the Municipal

Council did not remit the 30% shared of local revenue of UGX.83,560,563 to divisions.

Non remittance of shared revenue negatively affects the implementation of the

planned programmes by the divisions.

The Accounting Officer explained that remittance to Divisions had started and so far

UGX.20,000,000 had been remitted.

I advised the Accounting Officer to ensure that all outstanding shared local revenue is

remitted to the Divisions as required by the law.

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2. Failure to meet minimum standards of health service delivery


(LGMSD) Guidelines provides the frame work for the minimum standards for health

service delivery. However, audit inspection carried out at Kamukira Health Centre IV

revealed several shortcomings.

The Accounting Officer explained that the lacking equipment and the construction of

the building which houses the theatre stalled due to limited funding.

I advised the Accounting Officer to engage relevant authorities to address the

challenges.

3. Failure to meet the minimum standards for Primary Schools

Paragraph 2.1.2 of the Local Government Management and Service Delivery (LGMSD)

Guidelines provides the minimum national standards of education service delivery.

Analysis of data for the schools in the Municipality revealed a number of shortcomings

as shown below:-

Particulars Standard Municipal Council achieved level

Minimum standard

Remarks

Text books Text book Pupil

Ratio

1: 5 1: 3

Number of

teachers

Teacher Pupil

Ratio

1: 24 1: 55 Inadequate delivery

by teachers

Stance latrines Latrine Pupil Ratio 1: 23 1: 40 Health hazard

The Accounting Officer explained that Council budgeted for rehabilitation of teachers`

house at Kabale Preparatory School in Financial Year 2016/2017 and other schools

would be renovated in subsequent years.

I advised the Accounting Officer to ensure that funds are secured to improve facilities

in Primary Schools.

6.8.11 KATUNA TC 1. Lack of a Master Plan

Section 32, Part 1 (b) Third schedule of the Local Governments Act, Cap 243 requires

an urban Council to have a master plan for proper land use and coordinated

development. Katuna Town Council was formed in 2010/11. Since that time,

250

management has not secured an approved master plan for the town council from the

Ministry of Lands Housing and Urban Development (MLHUD). This exposes the Town

Council to risks of unplanned developments.

The accounting Officer attributed the lack of a master plan to inadequate funds for its

expedition.

The Accounting Officer explained that the exercise proved expensive for the town

Council and had requested Ministry of Lands for possible assistance.

I advised the Accounting Officer to engage the relevant authorities and ensure that a

master plan is developed.

6.8.12 KABWOHE-ITENDERO TC

1 Stalled Office block construction

The Town Council entered into a contract with a local firm, M/s Arber Contractors Ltd

to construct an office block at a contract sum of UGX.198,289,000. The start date and

completion dates were 13th January 2015 and 13th May 2015 respectively. By the time

of audit in November 2016, UGX 108,000,000 had so far been paid to the contractor

which was equivalent to 54% of the contract price. However, the works had been

abandoned at foundation stage as shown in the pictures below;

The Accounting Officer explained that funds were exhausted at phase 1 of the Office

block construction.


2 Lack of Revenue Registers

Regulation 33(1) of the Local Governments Financial and Accounting Regulations, 2007

requires every Local Government Council to maintain revenue registers showing all

forms of revenue and a record of steps taken to collect all arrears. However, I observed

that Council did not maintain revenue registers for the different local revenue sources.

Lack of revenue registers weakens the controls over revenue collection.


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3 Irregularities in application on Force Account mechanism

During the year, UGX.38,220,250 was paid for routine mechanized maintenance on a

number of roads under the Force Account. However, the following shortcomings were

identified:-

The supervisor did not submit detailed work program and management work plan to

the Accounting Officer for the executed works.

There was no evidence of supervision of the progress of works and no completion

certificates were issued for road works executed as there were no

monitoring/supervision reports attached on payments.

The Force Account manager did not fill in daily work sheets indicating resources used

and amount of works executed, and also did not submit to the supervisor, periodic

reports and final reports after completion of works.

There was no master roll for road workers which should be kept and maintained by

the head man.

Movement charts for the grader to show distances travelled and fuel consumed on

a daily basis were not maintained.

Log books for operational vehicles were also not maintained

Failure to adhere to Force Account guidelines may lead to misuse of funds.

The Accounting Officer explained that records regarding Force Account were mixed up

during the formation of Sheema Municipality.

I advised the Accounting Officer to follow up the matter and ensure that the records

are presented for audit verification.

6.8.13 KANUNGU DLG

1 Delayed Payroll Deletions

Paragraph 5.6.3(2) of the Local Governments Financial and Accounting Manual, 2007

requires that the Personnel Officer should ensure that staffs that have left the service

of the Local Government are removed immediately from the payroll.

It was observed that payroll deletions had been delayed for two (2) officers leading to

the District paying UGX.8,098,138.

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The Accounting Officer explained that Council had written to all heads of departments

and Heads of institutions instructing them to always report cases of death, transfers

out and abscondment early enough for timely payroll cleaning to avoid loss.

I advised Accounting Officer to ensure prompt deletions of staff who have left service

and to ensure recovery of funds..

2 Unapproved Supplementary Budget

Regulation 24 of the Local Governments (financial and accounting) Regulations, 2007

requires that expenditure for which there is insufficient or no provision in the approved

estimates shall not be incurred until a supplementary estimate has been approved by

Council.

In a letter dated 24th June 2015 to the Permanent Secretary/Secretary to Treasury,

Ministry of Finance and Economic Development (MoFPED), the Accounting Officer

requested for an additional wage for newly recruited staff totalling to UGX.664,733,340

to cater for staff who were appointed after preparation of the June payroll. This request

was honoured and funds were subsequently remitted to the district Salary account in

Bank of Uganda for utilisation. However, this was done without the knowledge of the

District Council as there was no evidence of deliberation and approval by the Council.

I informed management that the practice is in contravention of the above regulation

and undermines the authority and controls of Council.

I advised the Accounting Officer to always seek approval from Council for

supplementary funds requirements.

3 Payroll Audit

3.1 Un-deducted PAYE from staff salaries

Section 5.6.3 (3) of the Local Governments Financial and Accounting Manual, 2007

requires that staff in the salaries sub-section must ensure that staff advances and

other deductions are deducted before the payment is made.

However, a review of the payrolls revealed that a total of UGX.2,667,360 in form of

Pay as You Earn (PAYE) was not deducted from some employees’ salaries.

253

I explained to the Accounting Officer that failure to deduct PAYE exposes the district

council to penalties and fines that can be imposed by Uganda Revenue Authority.

The Accounting Officer explained that Council had written to the Ministry of Public

Service IPPS Administrators to correct the anomaly.

I advised that the district ought to recover the taxes in question from future salaries

and remit the same to the tax body.

3.2 Non Deduction of Taxes

Section 123 (1) of the Income Tax Act, 1997 requires a withholding agent to pay

Uganda Revenue Authority any tax that has or should have been withheld within fifteen

days after the end of the month in which the payment subject to Withholding Tax was

made.

It was observed that taxes amounting to UGX.894,300 in respect of 6% withholding

tax was not deducted from the supply of goods and services.

Non-deduction of tax exposes Council to the risk of penalties and fines from URA.

The Accounting Officer admitted the shortcoming and promised to take action.


4 Poor record keeping at the UPE Schools

Regulation 64(4) of Local Governments Financial and Accounting Regulation, 2007

require primary head teachers to keep proper cash books in respect to all sums of

money received and expended by the school and the matters in respect of which

receipt and expenditure take place. During the year under audit, UGX.457,126,475

was released to different UPE schools in the district.

However, documentation review of the sample of 9 schools revealed the following

shortcomings: -

Payment vouchers were not numbered sequentially

Requisitions were not used to initiate payments

Non-display of release on the charts

The Accounting Officer explained that Council has been issuing guidance on

accountability of funds to Head teachers and issued warning letters to those that do

not comply.

254

I advised the Accounting Officer to facilitate training in book keeping and financial

reporting for the Head Teachers.

6.8.14 KANUNGU TC


Regulation 110(1) of the LGFAR, 2007 requires the Accounting Officer to designate an

officer to ensure that adequate Information and Communication Technology (ICT)

policies are established and applied to enable adequate security and protection over

computers and data held thereon. However, It was observed that the Town Council

lacked an ICT Policy to regulate the use of ICT resources. This exposes the Town

Council to risk of loss of information and equipment.

The Accounting Officer attributed the lack of an ICT policy to the absence of an ICT

officer who is not recognized in the staff establishment.

I advised the Accounting Officer to ensure that an ICT Policy is developed.

6.8.15 KIHIHI TC

1. Non Remittance of Shared Local Revenue

The Local Governments Act 1997 (as amended), Fifth Schedule, Part V (15a), requires

the Town Council to distribute 5% and 20% of the total local revenue collected

amongst its wards and village councils respectively. Contrary to this provision, the

Town Council did not transfer UGX.51,872,713 to Wards.

Non remittance of shared local revenue denies the Lower Local Governments the

opportunity to fully implement the planned Government programmes.

The Accounting Officer attributed the non-remittance of local revenue to a court ruling

that ruled against the operations of Local Councils.

I advised the Accounting Officer to ensure that the funds are remitted to the Wards

and Village Councils in accordance with regulations.

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2. Lack of Information Communication Technology Policy





operated by the Council.

It was observed that the Town Council had neither designated an officer to be in

charge of ICT management, nor developed an ICT policy to guide staff in use of IT

equipment and information.

The Accounting Officer explained that the staff establishment of Town Councils does

not provide for an IT officer.

I advised the Accounting Officer to designate an officer to be responsible for

developing the IT Policy.

6.8.16 KIRUHURA DLG

1 Non compliance with the statutory obligations

Section 19 (1) (a) of Income Tax Act Cap 340 as amended defines employment income

to include among others wages, salary, gratuity, bonus, or other allowance. The payroll

audit for the months of July 2015 to March 2016 revealed that UGX.55,164,367 paid

as allowance to medical doctors was not subjected to pay as you earn (PAYE)

amounting to UGX 12,600,000.

The District risks fines and penalties from Uganda Revenue Authority.

The Accounting Officer explained that the mechanism to deduct PAYE under IPPS is

embedded in the system. However, at the time of introducing Retention Allowance on

payroll, the system had been not upgraded to tax Retention Allowance until April 2016.

The monies will be recovered through the payroll.


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2 Lack of an Up-to-Date Fixed Assets Register


requires the maintenance of a fixed assets register to show; location, title number/

reference, description, cost, additions and disposals for each item of the fixed assets.

However, it was observed that the fixed assets register lacked information on location,

title number or reference, description, cost, additions, disposals contrary to the

regulations.

In the absence of an up to date fixed assets register, the verification of the assets was

rendered difficult.

The Accounting Officer attributed this to man power gaps and indicated that some of

the districts assets require revaluation to derive their true values but the district does

not have a Government Valuer in place to facilitate the process.

I advised the Accounting Officer to ensure the fixed assets register is updated.

6.8.17 KAZO TC

1 Doubtful Tax Remittance to Uganda Revenue Authority

Section 123(1) of the Income Tax Act, 1997 as amended provides that a withholding

agent shall pay to the Commissioner any tax that has been withheld or that should

have been withheld within 15 days after the end of the month in which the payment

subject to withholding tax was made by the withholding tax agent. However, an

amount of UGX.3,020,160 purportedly remitted to URA lacked acknowledgement

receipts.

Failure to remit taxes may attract fine and penalties from Uganda Revenue Authority.

I advised the Accounting Officer to obtain the acknowledgement receipts from URA

and present them for audit verification.

6.8.18 KISORO DLG

1 Shortfall in Government Releases

257


requires budget estimates to be based on objectives to be achieved for the financial

year and during implementation, effort should be made to achieve the agreed

objectives or targets as per the programs of Council. It was observed that Council

budgeted for UGX.29,905,338,615 however, only UGX.27,885,334,819 was released

leading to a shortfall of UGX.2,020,003,796.

The shortfall negatively affects service delivery.

I advised the Accounting Officer to liaise with the Ministry of Finance to ensure that all

budgeted funds are released to enable implementation of all the planned activities.

2 Failure to meet the minimum Education Services Standards


Operational Manual provides minimum standards for education service delivery in

health schools. Inspections carried out in a sample of 40 schools revealed a number

of challenges that affect provision of education services as shown below;

Particular Sample Standard Current Ratio Minimum Standard

Pupils (No) 72,540 Classroom Pupil Ratio 1: 70 1:55

Latrine stances 1,071 Latrine Pupil Ratio 1:70 1:40

Number of Classrooms 969 Desk Pupil Ratio 1:5 1:3

Number of Desks 16,068

The Accounting Officer attributed the current state of affairs to insufficient funding by

the Central Government which is not commensurate with the growing population and

enrolment in the primary schools. For the last 5 (five) years the School Facilities Grant

to Kisoro District Local Council had remained constant at UGX. 210,000,000 annually.

I advised the Accounting Officer to follow up the matter with the Ministry of Education

and Sports and ensure that the challenges are addressed.

a. HEALTH SERVICE DELIVERY


Operational Manual provides minimum standards for health service delivery in health

units.

258

Inspections carried out at Kisoro Hospital revealed the following shortcomings:-

a) Congested Wards

The maternity wards were designed to accommodate 25 patients at a time. However,

at the time of inspection, It was observed that the ward was accommodating 36

patients with some of them sleeping on the floor.

It was also observed that there was an acute shortage of mattresses.

The congestion was attributed to preference of patients to access the medial services

at the hospital rather than Health Centre’s which lacked some services and the fact

that the hospital also serves people from the neighboring countries of Democratic

Republic of Congo and Rwanda. Congested patient wards do not provide a healthy

environment for the patients and may cause more spread of diseases.

I advised the Accounting Officer to liaise with the relevant authorities to improve on

the services of the lower health centers.

b) Sorry state of the Wards

It was observed that most of the wards were in poor state with urgent need of

rehabilitation as shown in the male ward below:-

The windows were broken and with no fasteners.

The poor state of the wards may cause more health problems to the patients.

The Accounting Officer explained that hospital was constructed in 2001 and since then

there has been no renovations done. However, bills of quantities (BOQs) were

prepared and sent to Ministry of Health for consideration for renovation and there has

been no response to date.

I advised the Accounting Officer to follow up the matter with the Ministry of Health.

259

c) Non-Functional Medical Equipment

A number of critical medical equipment were found non-functional. The hospital had

several autoclaves which were not functional due to lack of spares and its only X-Ray

machine had been locked by the Atomic Energy Centre because of the failure to pay

the subscription fees as shown below:-

Non-functional auto clave due to lack of spare

parts.

A non-functional X-Ray machine locked

with a chain and padlock.

The patients who require X-ray services have to seek the services from private

hospitals.


3.1 Understaffing in the Health Centre’s The health sector has an approved staff establishment of 444 positions; only 318

positions were filled leading to a shortage of 126 which is 30% as shown below:-

Health Centres/Hospital

Grade Doctors Clinical Officers

Nurses Other Staff

E AS V E AS V E AS V E AS V

Kisoro Hospital Hospital 11 2 9 6 6 0 111 78 33 78 48 30

Rubuguri HC IV 2 2 0 2 2 0 8 8 0 27 18 9

Chahafi HC IV 2 2 0 2 2 0 8 8 0 27 18 9

Busanza HC IV 2 2 0 2 2 0 8 8 0 27 18 9

Gasovu HC III 0 0 0 2 2 0 6 6 0 11 8 3

Nteko HC III 0 0 0 2 2 0 6 6 0 11 8 3

Nyabihuniko HC III 0 0 0 2 2 0 6 6 0 11 8 3

Nyakinama HC III 0 0 0 2 2 0 6 6 0 11 8 3

Bunagana HC II 0 0 0 0 0 0 2 2 0 7 3 4

Gapfurizo HC II 0 0 0 0 0 0 2 3 -1 7 4 3

Busengo HC II 0 0 0 0 0 0 2 2 0 7 4 3

Gitovu HC II 0 0 0 0 0 0 2 2 0 7 4 3

Zindiro HC II 0 0 0 0 0 0 2 2 0 7 4 3

Total 17 8 9 20 20 0 169 137 32 238 153 85

Key

E - Establishment AS- Actual Staffing V - Vacancies

260

Under staffing negatively affects service delivery.

I advised the Accounting Officer to engage the Ministries of Public Service and Health

to have more staff recruited and posted to the health centres and the hospital.

3.2 State of Health Centre’s The following Seven health centres were inspected in the course of audit;

Health Centres Grade Location

Rubuguri HC IV Kirundo S/County

Busanza HC IV Busanza S/County

Buhozi HC III Busanza S/county

Nteko HC III Nyabwishenya S/County

Kagano HC III Kanaba S/County

Nyarubuye HC III Nyaurubuye S/County

Gitovu HC II Busanza S/County

The following shortcomings were identified:-

All the health centres did not have the improved energy stoves for

sterilization and the autoclaves were non-functional.

There was lack of access to lighting energy in all the facilities visited.

The Accounting Officer explained that renovation of health facilities was being

budgeted for on PHC development but for the financial year under review there were

no allocations to PHC development for Kisoro District.

I advised the Accounting Officer to engage the relevant authorities to ensure

improvement of conditions of the health centers.

4 Non submission of list of Revenue Arrears to the District Executive

Committee

Paragraph 4.8 of the Local Governments Financial and Accounting Manual, 2007

requires the Head of Finance to prepare a list of revenue arrears at the year end and

to submit it to the District Executive Committee for action. However, it was observed

that the Head of Finance did not submit to the District Executive Committee a list of

arrears amounting to UGX.89,124,694. Council is exposed to loss of revenue due to

failure to take enforcement measures on the defaulters.

The Accounting Officer explained that the list of revenue arrears was presented to the

District Executive and had also sought advice of the Solicitor General to recover the

funds.

261

I advised the Head of Finance to initiate measures and ensure that all the revenue

arrears due to the Council are collected.

5 Irregular Payment of Allowances

Section (E-A), Paragraph (1) of the Uganda Public Service Standing Orders, 2010

defines an allowance as a payment payable to an officer to facilitate the proper

execution of an assignment or duty. However, a review of the payroll for the financial

year revealed that a total of UGX.20,378,736 in form of consolidated, lunch and

hardship allowance was paid to staff on study leave.

The payments are irregular.

The Accounting Officer attributed the payments due to a system error and promised

to recover all the funds from the officers.



Regulations 103 (1&4) of the LGFAR, 2007, requires that the Head of Finance

establishes a Documented Risk Management Policy. However, it was observed that

management has not established and documented the risk management policy as

required. This weakens the Internal Control Systems.

I advised the Accounting Officer to ensure that a Risk Management Policy is developed.

6.8.19 KISORO TC

1. Lack of Documented Risk Management Policy

Regulations 103 (1 & 4) of the LGFAR, 2007, requires the Head of Finance to establish

a documented risk management policy. However, it was observed that management

has not developed a risk management policy.


The Accounting Officer explained that the development of the policy was in progress.

I advised the Accounting Officer to expedite the process of developing a Risk

Management Policy.

262

6.8.20 MBARARA DLG

1. Shortfall in Central Government Grants

Regulation 18(3) of the Local Governments Financial and Accounting Regulations, 2007

requires budget estimates to be based on objectives to be achieved for the financial

year and during implementation, effort should be made to achieve the agreed

objectives or targets as per the programs of Council. Whereas a total of

UGX.30,307,751,004 was budgeted for in respect of Central Government Grants, only

UGX 26,799,740,834 (88%) was realized, leading to a shortfall of UGX 3,508,010,170

i.e 12%.

This was due to budget cuts from the Ministry of Finance, Planning and Economic

Development.

Shortfall in government grants leads to failure to implement all the planned activities

thus affecting service delivery to the community.

I advised the Accounting Officer to engage the Ministry of Finance, Planning and

Economic Development to ensure that funds are released as budgeted.

2. Failure to dispose off Assets

Regulation 122(2) of the LGPPDA Regulations, 2006 requires the Accounting Officer to

appoint a Board of Survey to verify the assets of Council to be boarded off. The Board

of Survey recommended boarding off vehicles and motorcycles. However, the assets

had not been disposed off by the time of audit.

Failure to dispose boarded off assets may lead to further deterioration in value.

The Accounting Officer explained that boarding off was on-going for vehicles that

belonged to the district but some line ministries objected the request to board off

ministry vehicles.


263

6.8.21 MBARARA MC


Regulation 103 (1 & 4) of the LGFAR, 2007 requires that the Head of finance

establishes a documented risk management policy. However, it was observed that

management has not established and documented the risk management policy as

required by the regulations.

This weakens the Internal Controls.

The Accounting Officer explained that a committee had been constituted to prepare

the policy and preliminary consultations with various stakeholders had been done.

I advised the Accounting Officer to ensure that a Risk Management Policy is

developed.

2 Un-verified top-up

The audit noted that DG Account was credited with UGX.298,797,411 on 15th of July

2015 which was supposedly a top-up as a result of foreign exchange difference.

Although management explained that the top-up arose from foreign exchange

differences, owing to remittances by Bank of Uganda in US dollars, the correspondences

with leading/culminating to the decision and thereafter remittance of the said top-up

were however not availed to the audit team for verification. In the absence of which,

audit could not confirm whether there was justification for the top-up and whether it

was commensurate to the exchange loss.

The Project Management Unit should always justify the top-up remittances with

breakdown of the losses suffered arising from the exchange rate fluctuations to enable

audit verification.

6.8.22 NTUNGAMO DLG

1 Procurement anomalies

1.1 Purchases not Taken on Charge Paragraph 5.4.4.1 of the Local Governments Financial and Accounting Manual, 2007

requires that on receipt of goods delivered, the store keeper shall count them and

check for conformity with the local purchase order (LPO) and raises goods received

note (GRN) for acknowledgement and take the goods on charge. However, it was

264

observed that, purchases totalling to UGX.33,669,130 were not recorded in the stores

ledger.

Consequently, I was unable to confirm that the items were supplied.

I advised the Accounting Officer to always ensure that all purchased items are recorded

in the stores ledger and the issues properly documented.

1.2 Lack of Confirmation of receipt of bid documents from tenderers

Regulation 66(4) of Local Governments Public Procurement and Disposal of Public

Assets Regulations (LGPPDAR), 2006 requires a procuring and disposing entity to

obtain a signed receipt or other confirmation of receipt of the documents from a

tenderer to whom the documents are sold or issued. However, no evidence of receipt

by invitation of tenderers for procurements worth UGX 172,463,903 were presented

for audit verification.

I advised the Accounting Officer to comply with the PPDA law.

2 Failure to meet the Minimum Standards of Health Services


(LGMSD) Guidelines provides the frame work for the minimum standards for health

service delivery. However, inspection of Itojo Hospital revealed the following

weaknesses;

Particular Standard Itojo

Hospital

Minimum

standard

Comments

Operating Theatre

Number of operating

theatres

2 1 The operating theatre lacked

sufficient lighting and operating

equipment

Mortuary

Number of mortuaries 1 1 The mortuary has no

refrigeration, this poses a

challenge in storage of dead

bodies

Doctors’

Houses

Number of doctor’s

houses

1 2 The available houses are in bad

state and in dire need for

renovations

Staff Houses Type 2

Number of two stance

staff houses type 2

1 2 The staff houses are not

enough. Most Junior level staff

share a unit with 2 or 3 families

Electricity (Grid Or Solar)

Whether connected to

electricity and source

At the time of audit on

9/9/2016, The hospital owed

UMEME LTD UGX 219,208,544

in unpaid electricity bills and

this posed the threat of being

cut off electricity supply

265

Medical

Equipment

Adequacy of medical

equipment (State the

available number and

the variance if any)

Not

Adequate

Yes The operating theatre lacked

sufficient lighting and operating equipment.

Lack of adequate facilities in the Health Centre negatively affects service delivery.

I advised the Accounting Officer to engage with the Ministry of Health to ensure that

health service delivery is improved.

3 Staff on Interdiction for More than 3 Months

Section (F-s) Paragraph 8 of the Public Service Standing Orders, 2010 states that

interdiction is the temporary removal of a public officer from exercising his or her

duties while an investigation over a particular misconduct is being carried out. This

shall be carried out by the Responsible Officer who shall ensure that investigations are

done expeditiously in any case within (three) 3 months for cases that do not involve

the Police and Courts and 6 months for cases that involve the Police and Courts of

Law. However, It was observed that 5 staff remained on interdiction beyond 3 months

for cases that did not involve the police and courts of law and for more than 6 months

for cases with the police and courts of law.

Failure to expeditiously dispose of the cases may result in litigation.

The Accounting Officer was advised to liaise with the District Service Commission to

expeditiously dispose of the cases.

4 Non Disposal of obsolete Assets

Paragraph 2.3.4.1 of Local Governments Financial and Accounting Manual, 2007 states

that when stores and fixed assets have become redundant, obsolete or unserviceable

through normal wear and tear, they shall be written off accordingly. A board of survey

should be convened to examine and recommend their boarding off. I noted that many

motor vehicles were grounded in the district yard without disposing them of.

The delayed disposal may lead to further deterioration of value.

The Accounting Officer explained that the Chief Government Valuer (CGV) valued the

vehicles and other obsolete assets and Council is waiting for the report.

I advised the Accounting Officer to ensure that the assets are disposed off.

266

6.8.23 NTUNGAMO MC

1 Non Deduction of Local Service Tax

Section 80(1) (a) & (b) of the Local Governments Act, Amendment No.2, 2008

established Local Service Tax (LST) to be levied on all persons in gainful employment

or who are practicing any profession. However, a review of payrolls for the months of

July 2015 to October 2015 revealed that the Municipality did not levy, charge and

collect LST worth UGX.7,700,000.

Non-deduction of Local Service Tax results into loss of revenue to the Municipality.

The Accounting Officer explained that Local service Tax is a statutory deduction and

the deductions from the affected staffs were done in the subsequent months.

I urged the Accounting Officer to ensure that LST deductions are always effected in

accordance with the regulations.

6.8.24 RUSHANGO TC

1 Shortfall in Government Releases

Regulation 18(3) of the Local Governments Financial and Accounting Regulations

(LGFAR), 2007, requires budget estimates to be based on objectives to be achieved

for the financial year and during implementation, effort should be made to achieve the

agreed objectives or targets as per the programs of council. It was observed that

Council received grants of UGX.288,190,920 against a budgeted amount of

UGX.771,814,402 leading to a shortfall of UGX 483,623,482 (63%).

The shortfall leads to non-implementation of some of the planned activities.

The Accounting Officer explained that a follow up will be made with the Ministry of

Finance, Planning and Economic Development regarding the unreleased funds.


the full budgeted amount is released.

2. Lack of Documented Risk Management Policy

Regulations 103 (1 & 4) of the LGFAR, 2007, requires the Head of finance to establish

a documented Risk Management Policy. However, it was observed that management

has not established and documented the risk management policy.

267


The Accounting Officer explained that a risk management policy will be put in place so

as to strengthen the internal controls.


6.8.25 RUKUNGIRI DLG

1 HEALTH SECTOR

1.1 Failure to meet the Minimum Standard of Health Services

Paragraph 2.1.2 of Local Governments Management and Service Delivery Operational

Manual 2009 provides guidelines for minimum standards of health service delivery.

However, it was observed the Health Centre IVs in the district do not meet the

standards as shown below:-

Requirement Status

Mortuary None

Two Doctors’ Houses None

Two staff house type 2 None

Two staff houses type 3 None

Lack of the minimum health facilities adversely affects the quality of service delivery.

I advised the Accounting Officer to engage the Ministry of Health to address the

matter.

1.2 Lack of Land Title for Kebisoni Health Centre (IV)

Regulation 58 (4) of Local Governments Financial and Accounting Regulations, 2007

requires properties and assets of a Local Government including land to be properly

registered. It was observed that Kebisoni Health centre IV did not have a title to the

land where it is located.

Lack of land title for the health facility poses a risk of loss of its land to encroachers.

268

The Accounting Officer promised to budget funds for processing of land titles and to

fence off.

I advised the Accounting Officer to expedite the process of securing the land title.

6.8.26 RUKUNGIRI MC

1 Non disposal of obsolete assets

Paragraph 2.3.1.5 of the Local Governments Financial and Accounting Manual, 2007

requires assets to be disposed of after recommendations of the board of survey.

However, it was observed that there are Council trucks and trailers which appear to

have been long abandoned as shown in the pictures below:-

Failure to timely dispose of the assets may lead to further deterioration in value.

The Accounting Officer explained that Council had communicated to the Ministry of

Works requesting for a government valuer and was still awaiting response.

I advised the Accounting Officer to follow up the matter with the Ministry of Works

and have the assets disposed of.

269

2 Audit of Supply Chain Management of Drugs

2.1 Failure to meet the minimum Health Standards

Paragraph 2.1.1(D) of Local Government Management Service Delivery (LGMSD)

Operational Manual for Local Governments, 2009 spells out service delivery packages

for a Health Centre IV. It was however observed that Rukungiri Health Centre IV did

not have the required facilities as shown in the table below:-

Standard Required Status Variance Remark

Mortuary 1 0 1 Challenges to store dead bodies

Doctors’ house 2 0 2 Doctors inaccessible at night

for emergency cases

Staff houses type 1 5 2 3 Staff inaccessible at night for

emergency cases

Staff houses type 2 2 0 2 Health Centre staff inaccessible at night for

emergency cases


2 0 2 Health Centre staff inaccessible at night for

emergency cases

Two stance pit latrines 10 1 9 Poor hygiene at the facility

Generator house 1 0 1 No standby power source

Lack of the required facilities affects service delivery.

The Accounting Officer explained that the policy guidance for operationalization of HC

IV lies with the Ministry of Health.

I advised the Accounting Officer to liaise with the Ministry of Health to address the

challenges.

6.8.27 KAMBUGA TC 1. REVENUE

1.1 Non Remittance of Shared Local Revenue



amongst its Wards and Village Councils respectively. However, it was observed that

the Town Council did not transfer UGX.7,211,074 to Wards.

Non remittance of shared revenue denies the Lower Local Governments an opportunity

to fully implement the planned Government programmes.

270

The Accounting Officer explained that they had entered into an agreement with the

Lower Local Councils to pay them after completion of a debt the Town Council had on

renovation of the Town Council office block.

I advised the Accounting Officer to ensure that the funds are remitted to the Wards

and Village Councils in accordance with the regulations.

1.2 Central Government Grants

Regulation 18(3) of the LGFAR, 2007 requires budget estimates to be based on

objectives to be achieved for the financial year and during implementation, effort

should be made to achieve the agreed objectives or targets as per the programmes of

Council. Whereas a total of UGX.293,672,159 was budgeted for in respect of Central

Government Grants, only UGX.264,067,355 was realized, leading to a shortfall of

UGX.29,604,804(10%). This leads to failure to implement planned activities in the

town council, thus affecting delivery of service to the communities.

The Accounting Officer attributed the shortfall in Government Grants to budget cuts

by the Ministry of Finance, Planning and Economic Development.

I advised the Accounting Officer to liaise with the Ministry of Finance, Planning and

Economic Development for timely releases of funds to ensure that planned projects

and activities are implemented.

1.3 Lack of a Master Urban Development Plan

Section 32 Part 1 (b) Third schedule of the Local Governments Act 243 requires an

urban Council to have a master plan for proper land use and coordinated development.

However, it was observed that there was no approved structural plan for the Town

Council. This exposes the Town Council to a risk of unplanned developments.

The Accounting Officer explained that the Council did not have enough funds and

budgeted for the activity in the financial year 2017/2018.

I advised the Accounting Officer to ensure that the Town Council develops a master

plan.

271

1.4 Lack of Information Communication Technology Policy





operated by the Council.

It was observed that the Town Council neither designated an officer to be in charge

of ICT management nor put in place an ICT policy to guide staff in IT equipment and

information.

The Accounting Officer explained that the staff establishment of the Town Councils

does not provide for an IT Officer.

I advised the Accounting Officer to ensure that an officer is designated to develop an

IT Policy.

6.8.28 BUTOGOTA TC 1. Non Remittance of Shared Local Revenue



amongst its wards and village councils respectively. However, It was observed that the

Town Council did not transfer UGX.11,452,588 to Wards.

Non remittance of shared local revenue negatively affects implementation of planned

Government programs.

The Accounting Officer explained that they agreed with Local Council I and IIs that

they keep using this percentage as co funding for projects in their wards.

I was not availed evidence of the agreement.

I advised the Accounting Officer to ensure that funds are remitted to the wards and

Village Councils as per the law.

2. Lack of a Master Development Plan

Section 32 Part 1(b) Third schedule of the Local Governments Act 243 requires an

Urban Council to have a master urban development plan for proper land use and

272

coordinated development. However, there was no approved master plan for the Town

Council. This exposes the Town Council to a risk of unplanned developments.

The Accounting Officer explained that the Town Council lacks adequate funds to

develop a master urban development plan.

I advised the Accounting Officer to allocate resources and ensure that a master

development plan is in place.


Regulation 110(1) of the LGFAR 2007 requires the Chief Executive to designate an




operated by the council. It was observed that the Town Council neither designated

an officer to be in charge of ICT management nor put in place an ICT policy to guide

staff in use of IT equipment and information.

The Accounting Officer explained that the staff establishment of Town Councils did not

provide for an IT officer.

I advised the Accounting Officer to liaise with the Ministries of Local Government and

Public Service with a view of addressing the need of IT staff in Local Government

structures.

6.8.29 SHEEMA TC

1 Lack of Local Revenue Assessment

Paragraph 4.3 of the Local Governments Financial and Accounting Manual, 2007

requires the Accounting Officer to regularly carry out proper assessment of the Town

Council’s local revenue. The tax assessment is supposed to be carried out by a Tax

Assessment Committee which should be established by the Town Council. It was

observed that local revenue assessment had not been conducted for the last 2 years.

It was also observed that the Town Council had not constituted a Tax Assessment

Committee.

273

Failure to conduct revenue assessment could lead to ineffective collection of local

revenue.

The Accounting Officer explained that the process of revenue assessment had started

with identification and enumeration. He also stated that Local Service Tax and trading

license had been assessed.

I urged the Accounting Officer to ensure that revenue assessment is conducted

regularly.

2 Lack of full details about the assets in the Fixed Assets Register


requires the fixed assets register to contain information such as detailed description of

the asset, invoice reference, historical cost of acquisition, date of acquisition, name of

supplier, warranty details, estimated life and estimated date of retirement and

maintenance records. It was observed that the Town Council assets register did not

show details of the assets like asset value, date of purchase, location e.t.c.

Lack of full details about the fixed assets in the register weakens controls over the

fixed assets.

The Accounting Officer promised to update the fixed assets register.


6.8.30 BUHWEJU DLG

1 Poor State of the infrastructure (UPE) Schools

The Local Governments Management and Service Delivery (LGMSD) Operational

Manual provides guidelines for minimum standards of education service delivery. Audit

inspection in the sample of 2 schools dilapidated are shown below:-

Nyakahita UPE School in

Burere Sub County

Muddy collapsing classroom block for P3 and P4.

No chairs Karende UPE School in

Bihanga Sub County

collapsing classroom block

No chairs

274

The poor infrastructure negatively affects the academic performance.

I advised the Accounting Officer to engage the relevant authorities to ensure that

school infrastructure is improved.

2 Lack of Equipment and Facilities at Health Centre IV

Section 3.0 of the Ministry of Health Guidelines on standard equipment for health

centres II – IV, district, and regional referral hospitals, 2003 defines the facilities that

are supposed to exist at the Health Centre IV. Audit inspection of Nsiika Health Centre

IV revealed several shortcomings.

Lack of adequate facilities and equipment at the health center denies the community

effective health service delivery.

The Accounting Officer explained that the district management has plans to expand

the health centre but lacks funds.

I advised the Accounting Officer to engage the relevant authorities so as to improve

on the facilities at the Health Centre.

6.8.31 NSIIKA TC

1. Lack of a Master Urban Development Plan

Section 32 Part 1 (b), Third schedule of the Local Governments Act 243 requires an

Urban Council to have a master plan for proper land use and coordinated development.

However, it was observed that there was no approved master urban development plan

for the Town Council. This exposes the Town Council to a risk of unplanned

developments.

The Accounting Officer explained that the Town Council lacked adequate funds to

develop a structural urban development plan.

275

I advised the Accounting Officer to allocate resources and ensure that a master urban

development plan is developed.

2. Lack of Information Communication Technology Policy





operated by the Council. It was observed that the Town Council neither designated



The Accounting Officer explained that the staff establishment of Nsiika Town Council

did not provide for an IT officer.

I advised the Accounting Officer to designate an officer to develop an IT Policy.

6.8.32 MITOOMA TC


Section 123(1) of the Income Tax Act, 1997 as amended provides that a withholding

agent shall pay to the commissioner any tax that has been withheld or that should

have been withheld within 15 days after the end of the month in which the payment

subject to withholding tax was made by the withholding tax agent. However, it was

observed that an amount of UGX.3,523,856 was purportedly remitted to Uganda

Revenue Authority. However, the acknowledgment receipts from URA were not

presented for audit verification.

Consequently, I could not confirm that the funds were received by the tax authority.

The Accounting Officer promised to obtain the acknowledgement receipts from the tax

body.

I advised the Accounting Officer to obtain the receipts and present them for audit

verification.

276

6.8.33 RWASHAMAIRE TC


Section 123(1) of the Income Tax Act CAP 340 requires a withholding agent to pay the

Commissioner any tax that has been withheld or that should have been withheld within


tax was made by the withholding agent. I observed that pay as you earn (PAYE)

amounting to UGX.1,469,054 was not deducted from staff allowances.

I also observed that withholding tax of UGX.1,123,151 was not deducted from

suppliers.

Non deduction of taxes exposes Council to the risk of penalties and fines.

The Accounting Officer promised that the acknowledgement receipts for the taxes

deducted and remitted will be availed.

I urged the Accounting Officer to always ensure that acknowledgements are obtained

from URA.

2 Lack of a Master Plan


Urban Council to have a master plan for proper land use and coordinated development.

Rwashamaire Town Council came into existence in 2010/11 financial year. Since that

time, management has not secured an approved structural plan for the town council

from the Ministry of Lands Housing and Urban Development.

This exposes the Town Council to a risk of unplanned developments.

The Accounting Officer explained that the process has been started on and by end of

the financial year, the plan would have been gazetted for approval.

I urged the Accounting Officer to follow up the matter with Ministry of Lands, Housing

and Urban Development to have an approved master plan for the Town Council.

6.8.34 RUBIRIZI DLG

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1 Health Sector

1.1 Inadequate Storage Space for the Medicines

During audit inspection of Rugazi Health Centre IV, I observed that the facility had

inadequate storage space for the medical supplies. There is one store being used to

all assets including medicine as shown below:-

Such a practice may contaminate drugs.

The Accounting Officer explained that GAVI promised to construct a store at the district

headquarters which is expected to improve the situation.


1.2 Understaffing in Health Sector

The health sector has an approved staff structure of 173 Positions. However, out of

the approved 173 positions only 107(62%) were filled leaving 66(38%) positions

vacant as shown below:-

Health Sector Establishment Filled Vacant %Percentage of Vacant

to Establishment

Health Centre IV 49 39 10 20%

Health Centre III 58 40 18 31%

Health Centre II 66 28 38 58%

Total 173 107 66

The Accounting Officer explained that submissions were made to the district but the

district could not proceed due to inadequate wage.


vacant positions are filled.

1.3 Lack of Ambulances at the Health Centres

During audit inspections, it was noted that the Health Centre’s within the District lacked

ambulances making it hard to transport patients in critical conditions. A case in point

is Rugazi HCIV that had 423 referrals during the year with no proper means of

278

transport. The double cabin improvised by the health Centre is currently grounded due

to high maintenance costs.

Grounded vehicles at Rugazi Health Centre IV

Grounded vehicle at Rugazi HCIV which had been used as an ambulance but now grounded.

The Accounting Officer explained that the budget for vehicle maintenance is high and the

vehicle is becoming old (acquired in 2005) The district has made the necessary

communication to Government.

I advised the Accounting Officer to liaise with the relevant authorities to enable

possible acquisition of an ambulance.

1.4 Non-Disposal of Grounded/Obsolete Vehicles

Paragraph 2.3.1.5 of Local Governments Financial and Accounting Manual, 2007

stipulates that disposal of assets is done after recommendation by the Board of Survey.

It was observed that a number of assets including vehicles are grounded at the district

compound and had been recommended for boarding off in the Board of Survey report

for financial year 2013/14 as shown below:-

Delays to dispose them off may lead to further deterioration in value.

The Accounting Officer explained that some of the vehicles don’t belong to the district;

but permission to dispose of had been sought though it had not been received.

279


2 Dilapidated Infrastructure in Primary Schools

The audit inspection of Kyambura and Mugyera Primary Schools revealed the

dilapidated buildings with cracked and unfinished walls as shown in the pictures

below:-

Kyambura Primary School Mugyera Primary School

The schools had no proper staff houses. There were structures that are plastered with

mud and this may demotivate staff thus affecting their morale and performance.

Such infrastructure demotivates both learners and teachers.

The Accounting Officer promised to work on the structures in the subsequent planning

and budget executions.


6.8.35 RUBIRIZI TC

1 Lack of Valuation lists

Section 4 of the Local Governments (Rating) Act requires Council to review its valuation

list at least once in every 5 years, or such longer period as the Minister may approve.

However, it was observed that the Town Council did not have an up-to-date valuation

list and the valuation lists used had expired. There is a risk that Local revenue might

not be exploited to its full potential.

The Accounting Officer explained that Council had not yet valued the properties due

to lack of funds.

I advised the Accounting Officer to ensure that the funds are allocated to update the

valuation list.

6.8.36 KATERERA TC

280

1 Lack of a Master Urban Development Plan


urban Council to have a master plan for proper land use and coordinated development.

However, there was no approved master plan for the Town Council. This exposes the

Town Council to a risk of unplanned developments.

The Accounting Officer attributed the failure to put in place a master urban

development plan to lack of funds.

I advised the Accounting Officer to ensure that a master urban development plan is

developed.






operated by the Council. It was observed that the Town Council had neither designated



The Accounting Officer explained that the Town Council staff structure does not include

ICT personnel.

I advised the Accounting Officer to designate an officer to develop an ICT Policy.

6.9 SOROTI BRANCH 6.9.1 ABIM DLG

1 Irregular Payment of Hard to Reach Allowances

Paragraph 8 of the Public Service Standing Orders (E-a) 2010 requires Accounting

Officers to ensure that payment of allowances is done in a very transparent, fair and

equitable manner following the laid down procedures.

However, UGX 17,820,287 was irregularly paid in respect of hard to reach allowances

to ineligible staff who were teaching in Abim Town Council schools.

281

The Accounting Officer promised to recovery of the funds before close of financial year

2016/2017.


2 Failure to Dispose off Assets

Paragraph 2.3.1.5 of the Local Governments Financial and Accounting Manual 2007

requires the council to dispose of assets after getting recommendations from the Board

of Survey report to realise some revenue which may contribute to the cost of acquiring

new assets.

However, the district did not dispose off assets that were recommended for board off

at the end of financial year 2014/15.

Delayed disposal of assets may lead to loss of value due to physical deterioration and

obsolescence.

The Accounting Officer explained that the District is facing a challenge to have a

Government valuer to value the assets but promised to continue reminding the line

Ministry to send the Government valuer.

I urged the Accounting Officer to ensure that the process of disposing off the assets

is expedited.

6.9.2 AMUDAT DLG

1 Payment for no Work Done

1.1 Construction of the District Council Chamber

The District contracted a local firm to construct the District Council Chamber Hall at a

contract price of UGX 224,849,100. The contract start and end dates were 31/03/2015

and 15/10/2015 respectively. By the time of this audit in September 2016, UGX

213,606,645 (95% of the contract price) had been paid leaving a balance of UGX

11,242,455 as retention.

However, audit inspection revealed that civil works valued at UGX 91,525,000 as per

bills of quantities had not been done yet payments had been effected as shown in the

table below.

282

S/No. Item Amount (UGX) Remarks

1 Doors and windows 12,496,500 Not fixed

2 Internal finishes 51,526,800 Not done

3 External finishes 21,881,700 Not done

4 Electrical installation 5,270,000 No installation done

5 Engravement 350,000 No engravement done

Total 91,525,000

Refer to Photos below;

External and internal sections of the council hall that has not been worked on.

Payment for no work done denies services to the community.

The Accounting Officer attributed it to change in specification of the roof upon which

on payment affected the continuation with the rest of the work. However, no evidence

of approval of the design alteration was provided.

The mater require urgent attention.

1.2 Shoddy Routine mechanized maintainance of Amudat-Katabok road

During the financial year 2015/16, the district planned to do Routine mechanized

maintenance of Amudat-Katabok road (18km) at a cost of UGX 240,000,000 under

PRDP. By the time of this audit in September 2016, UGX 253,505,000 (105.6%) had

been spent in respect of fuel, hire of road equipment, materials and labour.

However, a review of the accounting records and field inspections revealed the

following:

Payment for hire of road equipment amounting to UGX 76,600,000 was not supported

with daily worksheets.

UGX. 13,505,000 (5.6%) had been overspent above the planned cost.

Fuel supplies worth UGX 76,400,000 were not supported with fuel consumption

statements and fuel orders.

283

Field inspections revealed that some sections of the road were not well compacted and

out of the 12 culverts that were supplied, only 4 culverts were installed leaving 8

culverts lying alongside the road.

The Accounting Officer promised to ensure that all the works in the road are

completed.


1.3 Maintenance of Akorikeya-Nakipom Road

Regulation 9 (2b) of the Local Government Finance and Accounting Regulations, 2007

state the duties of the Accounting officer among which is to ensure that the public

moneys, property and resources for which he or she is responsible are properly

managed, safeguarded.

During the financial year under review, the District paid for works totalling to UGX

37,565,900 without evidence of any work done.

The Accounting Officer explained that contractors had been given notices to complete

the works.

I advised the Accounting Officer to follow up the matter and ensure that the works are

completed.



state the duties of the Accounting Officer among which is to ensure that the public


managed, safeguarded and value for money obtained.

However, civil works worth UGX 124,160,795 had remained uncompleted beyond the

scheduled dates.

The delays to complete the Civil works may lead to extra administrative costs.

This was attributed to late procurement processes and engaging incompetent

contractors without sufficient working capital to execute the works within the contract

periods.

284


3 Non-Remittance of Taxes

According to Section 123(1) of Income Tax Act 1997, a withholding agent should effect

the requisite payment to Uganda Revenue Authority of taxes withheld within 15 days

after the end of the month in which the taxes were withheld.

However, there was no evidence to show that 6% WHT totalling to UGX 40,006,487

was withheld from contractors and suppliers was remitted to the Authority as required

by the Income Tax Act.

Failure to pay taxes may attract fines and penalties from the Tax Authority.

I advised the Accounting Officer to ensure that the withheld taxes are always remitted

to the Tax Authority in a timely manner.

4 Diversion of Funds


requires that conditional grants from Central Government are planned for, recorded

and accounted for in accordance with the grant conditions and guidelines.

A review of the accounting records revealed that a total of UGX 46,000,000 in respect

of Local Government Management Service Delivery (LGMSD) was diverted to general

fund account and spent on activities not prescribed in the guidelines of the grant

without council approval as shown in the table below;

Date Vr. No. Payee Description

Amount

UGX.

Account

14/09/2015 3/9 General Fund A/c Internal borrowing 4,000,000 LGMSD

14/09/2015 5/9 General Fund A/C Internal borrowing 3,000,000 LGMSD



TOTAL 46,000,000

However, only UGX 33,271,423 was refunded leaving a balance of UGX 12,728,577 un

refunded.

285

The Accounting Officer was advised to ensure that the funds are recovered and be

utilised for the intended purpose.

5 Lack of Books of Accounts at the UPE Schools

Regulation 64 of the Local Government Financial and Accounting Regulations (LGFARs)

2007 requires the Head Teacher to maintain a cash book for recording receipts and

payments of the school transactions and prepare monthly financial statements for

submission to the sub-county chiefs.

However, the Head teachers of the following primary schools did not maintain cash

books for the financial year 2015/16 neither did they submit financial statements for

their academic terms to the respective sub-county chiefs as shown below;

N0. School name Enrolment Total release(q1+2+4) UGX.

1 kalas girls p/s 471 3,949,410

2 kalas boys p/s 566 4,473,715

3 katabok p/s 186 2,376,495

4 cheptapoyo p/s 538 4,319,183

5 loroo p/s 496 4,087,385

6 nabokotom p/s 238 2,663,483

7 karita p/s 578 4,539,943

8 katikit p/s 357 3,320,244

9 alakas p/s 593 4,622,728 4,550 39,961,024

The Head teachers explained that they lacked technical knowledge in basic book

keeping and accounting.

The Accounting Officer promised to organise for refresher trainings for Head Teachers

to enhance their financial and accounting skills in quarter three of financial year

2016/2017.

The Accounting Officer was advised to arrange the training programmes.

6 Failure to maintain a Fixed Assets Register

Regulations 85-88 of the LGFARs of 2007, requires management of Local Governments

to maintain a proper up to date assets registers.

286

The district did not maintain an assets register. This weakens controls over the fixed

assets.

The shortcoming was attributed to the responsible officer’s failure to maintain and

regularly update the assets register

I advised the Accounting Officer to establish a fixed assets register.

6.9.3 AMUDAT TC

1 Delayed completion of Civil Works


states the duties of the Accounting Officer among which is to ensure that the public

moneys, property and resources for which he or she is responsible as Accounting

Officer are properly managed, safeguarded and value for money obtained.

The Council awarded a contract to a local firm to construct an OPD block at Amudat

Health Centre II at a contract price of UGX 64,804,000. The estimated completion

date was 30th June 2016. By the time of audit in September 2016, the contractor had

been paid UGX.41,178,190 (63%) of the contract price.

However, the audit inspection revealed that the civil works were behind schedule by 3

months. The delays in completion of the civil works may lead to extra administrative

costs.


6.9.4 AMURIA DLG

1 Nugatory Expenditure

Regulation 9 (2) of the Local Governments Financial and Accounting Regulations, 2007

requires the Accounting Officer to reduce cases of apparent waste, extravagant

administration or failure to achieve value for monies.

287

However, the district paid legal fees and court fines totalling to UGX 42,919,000 to

various persons which was not budgeted for and considered avoidable.

The expenditure resulted from the District Service Commission faulty recruitment

procedures, compensation for wrongful interdiction of water officer and delay in

payment of contractors like Pool Investments.

The Accounting officer attributed the expenditure to unavoidable circumstances.

The Accounting Officer was advised to ensure that due care is exercised to avoid

nugatory expenditure.

2 Unrecorded Stores

Section 83(2) of the Local Government finance and accounting regulation, 2007

requires that the stores control officer shall ensure that all accounts and procedures in

respect of the stores in his or her charge are operating efficiently and effectively.

However, procurements worth UGX 54,557,000 were not charged to stores. This made

it difficult to verify the deliveries and utilisation.

The Accounting Officer was advised to ensure that all inventory supplies are charged

to stores and be properly accounted for.

3 Direct Procurements

Regulation 40 (1&2) of the LG-PPDA Regulations, 2006, states when direct

procurement method can be used.

The District used the direct procurement method in procurements worth UGX.

50,767,200 without justification.

Direct procurements limit competition and may result in failure to realise value for

money spent.

The Accounting Officer admitted the shortcoming and promised to forward future

procurements for approval by contracts committee.

The Accounting Officer was advised to always adhere to LG-PPDA procurement

regulations.

288

4 Uncompleted Civil Works

Regulation 18 (3) LGFAR, states that the budget estimates shall be based on the

objectives to be achieved for the financial year and efforts shall be made to achieve

the agreed objectives or targets, as programmed by the District.

It was observed that, projects worth UGX. 1,303,448,630 remained incomplete while

others had defects by the time of audit in July 2016.

Incomplete and defective works denies the communities the much needed services.

The Accounting Officer was advised to ensure that all civil works are completed timely.

5 Lack of Contracts Register

Regulation 121 of the Local Governments Public Procurement and Disposal of Public

Assets (LGPPDA) regulations, 2006 requires the procurement and disposal unit (PDU)

to keep records of all contracts placed in a contract register for effective monitoring.

However, the district did not maintain a contract register. This weakens control over

contract monitoring.

The Accounting Officer was advised to establish a contract register.

6 Failure to conduct Revenue Assessment

Regulation 4.3 of the Local Governments Financial and Accounting Manual, 2007

requires the District to carry out proper assessment of the Council’s revenue and record

all the sources of income.

However, no revenue assessment was conducted for the year under review. Failure to

properly assess revenue can lead to under collection of revenue.

The Accounting Officer promised to put in place a Revenue Task Force that will come

up with strategies to improve on revenue performance.

The Accounting Officer was advised to ensure that revenue assessment is undertaken

as required by the regulations.

289

6.9.5 BUKEDEA DLG

1 Procurement Anomalies

1.1 Casting and Installation of 7 Bore Holes

The district signed a contract with a local firm to cast and install 7 bore holes at

different sites in the district at a cost of UGX.43,652,700 financed under Poverty Action

Fund and Poverty Reduction and Development program funds. By the time of audit,

UGX.18,339,560 (42%) had been paid.

However, the following shortcomings were identified:

This was a direct procurement contrary to section 40(3) of the LG-PPDA Regulations

2006 which requires use of direct method where exceptional circumstances prevent

the use of competition. This limited competition for better quality and cheaper cost.

Some of the boreholes were supposed to have trees planted around them and soak

pits at a cost of UGX. 1,800,000 but these were no trees planted at Kamuge Manga.

Boreholes at Kamuge Manga and Kokulutum had not been fenced by the water user

committees as required by PRDP guidelines.

The Accounting Officer promised to take action to ensure that the works are

completed.


1.2 Construction of a Classroom block with an Office at Abitbit P /School

The district paid a local firm UGX.15,608,670 to construct a classroom block at Abitibit

Primary School. The contract start and end dates were on 13th October 2014 and 12th

April 2015 respectively. Documentation review and field inspections revealed the

following shortcomings:

Retention amounting to UGX. UGX.3,586,317 had been paid before the defect

liability period ended making it difficult to compel the contractor to rectify.

The veranda had started cracking as shown in the photos below

290

Cracked Veranda with no marble plaque fitted.

This was attributed to poor supervision.

The Accounting Officer promised to strengthen supervision of contracts of Civil works.

I advised the Accounting Officer to compel the contractor to correct the defects.

1.3 Construction of a 4 Classrooms and Office at Kokolotum Pri School

The district signed a contract with a local firm for the construction a 2 Classrooms

and an office block at Kokolotum Primary School at a contract price of UGX.64,192,000

funded under School Facilitation Grant funds. By the time of audit in June 2016, UGX.

53,838,993 (84% of the total contract sum) had been paid to the contractor.

However, the following shortcomings were identified:

There is no evidence to show that the procurement method and bid documents

had been approved by the contracts committee contrary to section 17(1d) of the

LG-PPDA regulations 2006 which requires the contracts committee to approve all

contract documents and amendments.

Direct procurement method was used without justification contrary to section 40(3)

of the LG-PPDA Regulations 2006 which requires use of sole source procurement

method where exceptional circumstances prevent the use of competition.

The structure had not been handed over to the users at the time of audit.

I advised the Accounting Officer to comply with the LGPPDA regulations and to ensure

that the defects are corrected and the facilities are handed over to the users.

2 Failure to meet the set minimum standards

Section 2.1.2 of Minimum National Standards of Service Delivery of the Local

Government Management and Service Delivery (LGMSD) Program Operational Manual

requires that primary schools must conform with the following ratios:

Classroom Pupil ratio 1:55 Teacher accommodation of 1:4 However, audit inspection revealed poor performance as shown in the table below;

School Enrollment

No of Teachers

No of Permanen

t

No of Permanen

t

Pupil per Classroom

ratio

Teacher per

house

ratio

291

Classroom

s

Teachers

Houses

Kakere- Gagama P/ S 516 12 2 0 258 N/A

Kamutur P/

S. 615 13 4 6 154 2

Abitibit P/ S 412 11 2 0 206 N/A

Jalwin P/ S 557 9 2 0 279 N/A

Kagoloto P/ S 260 9 2 0 130 N/A

Okungoro P/

S 575 11 6 2 96 6

Below are the photos showing the poor state of accommodation for the teachers and

poor classroom structures;

Name of

School

Issue Photos

Kakere-

Gagama

Primary School

Grass thatched

classroom

structures and

dilapidated

teachers

accommodation

that are risky to

the users.

Kamutur

Primary School.

Poor teachers

accommodation

Structures

Abitibit Primary

School

Pupils having their

lessons under

trees in the

compound due to

lack of classroom

structures.

Jalwin Primary

School

Poor teachers

accommodation

Structures

Kagoloto

Primary School

Poor

accommodation

and classroom

structure

Okungoro

Parents School

Poor

accommodation

and Classroom

Structure.

292

Students were

having classes

under trees.

The Accounting Officer attributed the challenges to limited funds disbursed by the

Central Government.

I advised the Accounting Officer to liaise with relevant authorities to ensure that

resources are allocated to improve the school facilities.

6.9.6 BUKEDEA TC

1 Late Submission of Financial Statements.

The Public Finance Management Act 2015 section 51(1) states that an Accounting

Officer shall within two months after the end of each financial year prepare and submit

to the Auditor General the accounts and relevant information.

It is a requirement that Council should submit the financial statements to the Auditor

General by 31st August of each year for audit. However, the accounts were submitted

late on 22nd December 2016. Consequently, I was unable to audit the accounts and

report by 31st December 2016.



2.1 Non Deduction of PAYE

Section 116 (1) of The Income Tax Act requires that every employer shall withhold tax

from a payment of employment income to an employee as prescribed by regulations.

A total of UGX. 14,682,000 was paid to several employees of the Town Council without

deducting PAYE totalling to UGX. 4,493,300 as shown in appendix ii.

Failure to with hold taxes may attract fines and penalities from the Tax Authority.

293

2.2 Non-Remittance of 6% WHT

Section 124 (1) of The Income Tax Act states that a withholding agent who fails to

withhold tax in accordance with this Act is personally liable to pay to the Commissioner

the amount of tax which has not been withheld and recover this amount from the

payee.

There was no evidence to show that 6%WHT totaling to UGX. 1,471,488 recovered

from a sum of UGX. 24,524,800 was remitted to URA. See Appendix iii.

Failure to with hold taxes may attract fines and penalities from the Tax Authority


6.9.7 KABERAMAIDO DLG

1 Direct Cash Procurements

Regulation 40(1&2) of the LG-PPDA Regulations, 2006, states when direct

procurement method can be used.

The District used the direct procurement method in procurements worth UGX.

26,484,580 without justification as shown in the table below;

V/no. Date Payee Description Amount

362/06 06/01/2016 SC Hardware Connection of Water

5,300,000

448/06 30/6/2016 Rima (EA) Limited

Purchase of Medical

Equipment. 10,918,000

449/06 30/6/2016 Power Consults Engineering Services

Connection of Electricity 10,266,580

TOTAL

26,484,580

Direct procurements limit competition and may result in failure to realise value for

money spent.

The Accounting Officer acknowledged the anomaly but attributed it to force account

procurements.

294

6.9.8 KABERAMAIDO TC

1 Lack of Revenue Register.

Section 33(1) of the LGFAGs, 2007, states that In respect of the various forms of

revenue, including taxes, rates, fees, rents and other income, prescribe revenue

registers shall be used to show details of revenue due, revenue collected and all

arrears, including a record of steps taken to collect all arrears.

However, the Town Council did not maintain a revenue register contrary to the

regulations. This weakens controls over local revenue collection.

The Accounting Officer admitted the shortcoming and attributed this to inadequate

technical knowledge and promised to provide a budget line for training of accounts

staff.

I advised the Accounting Officer to establish a revenue register.

6.9.9 KABOONG DLG

1 Doubtful Expenditure

Paragraph 9 (b) of the Local Governments Finance and Accounting Regulations

(LGFAR),2007 states the duties of the accounting officer among which is to ensure

that the public moneys, property and resources for which he or she is responsible as

accounting officer are properly managed and safeguarded.

The district paid UGX. 97,439,000 for no work done as shown in the table below;

S/no Project Amount UGX Details Inspection Remarks by September 2016

1 Grading Nawokosiyai-Kachikol road 13km

54,839,000 Grading of Nawokosiyai-Kachikol road of 13 km under force account .

no bills of quantities, work sheets and work schedules detailing works done for the grader operators and allowances for manual workers making it difficult to verify payments.

2 Rehabilitation of Kotome drift.

20,600,000 Emergency

rehabilitation of

Kotome drift along

No evidence that work had been done on the drift.

295

Lopedo Junction-

Morulem road

3 Re-alignment of Lolelia-Lowakuju-Karenga black spot 7.2km

22,000,000 realignment of black spots on Lolelia-Lowakuju-Karenga road

No work sheets and work schedules detailing works done by the grader operators & fuel usage making it difficult to verify the payments made.

Total 97,439,000

The Accounting Officer attributed the delay to complete the works to heavy rains and

promised to execute the works in the next financial year 2016-17.

The outcome of the promised action of the Accounting Officer is awaited.

2. Works Sector

2.0.1 Incomplete and Shoddy works

Paragraph 9 (b) of the Local Governments Finance and Accounting Regulations

(LGFAR),2007 states the duties of the accounting officer among which is to ensure

that the public moneys, property and resources for which he or she is responsible as

accounting officer are properly managed and safeguarded.

Nine contracts for civil works worth UGX.63,140,000 had shoddy and incomplete

works.

Failure to complete work in time was due to lack of capacity and inadequate

supervision by management.

The Accounting Officer promised to engage the contractors to complete the works and

to rectify the defects.


2.0.2 Caked Cement

Kaabong district contracted a Local firm to supply 500 bags of cement valued at UGX

21,000,000 for road works during the financial year 2015-2016.

296

During audit inspection, it was observed that 232 bags of cement valued at UGX

9,744,000 had caked in the district store.

This was attributed to delays in implementation of the road works and the poor storage

conditions.

The Accounting Officer explained that the cement was procured for construction of

Kiteelore drift but the district failed to procure local materials required for the works

and drift construction was suspended leading to caking of the cement.

I advised the Accounting Officer to ensure proper planning to avoid wastage.

2.1 Inadequate Budgeting for the Wage Bill for the Year 2015/16

The Output Budgeting Tool (OBT) requires a district to plan for their staff by capturing

all the necessary data for effective management of the payroll and the Accounting

Officer is required to participate in the exercise.

During the year under review, it was noted that the district planning department did

not capture all the staff data as required by the OBT tool and as a result, the final

wage bill calculated and released was much less than the amount that was required

to pay salary for all the staff. Indeed, most of the district staff in June 2016 did not

receive their salaries by the end of that month. Refer to table below;

Table showing Misstatement of payroll expense

Initial budgeted

figure for employee costs - UGX

Actual figure for

employee costs - UGX

Variance -

UGX

6,560,142,000 6,811,310,509 251,168,509

The Accounting Officer explained that this was an oversight at the time of planning at

the beginning of the previous year, and stated that attempts were being made to get

a supplementary release for both the previous and the current year 2016/17.

I advised the Accounting Officer to ensure that realistic budgets are compiled based

on actual data from user departments.

297

2.2 Non- Remittance of 6% withholding tax

Section 124 of the Income Tax Act, 1997 requires withholding agents to deduct and

remit taxes to URA by the 15th of the following month. Deductions totaling to UGX

7,862,452 was not remitted to URA.

Failure to remit taxes may attract fines and penalties from the Tax Authority.

I advised the Accounting Officer to comply with the Tax law.

2.3 Healthy Sector

Regulation 9(2b) of the Local Governments Financial and Accounting Regulation

(LGFAR) 2007 the Accounting Officer to ensure that the Public Monies, property and

resources for which he or she is responsible as Accounting officer are properly

managed and safeguarded. However, inspection of Kaabong Hospital revealed the

following shortcomings;

3.0 Non Operating Equipment

Item Remark /Observation

X-ray Machine - Lack of power supply - Lack of protection aprons

Scanner - Obsolete - Lack printing paper

Solar Fridges - Faulty solar batteries

ID printing machine

- Idle in store

The shortcomings were majorly attributed to absence of reliable power supply to the

hospital and failure to maintain the medical equipment’s leading to equipment failures

that affects service delivery.


4. Lack of Adequate Stores Space

Section 83 (1) LGFAR,2007, states that, there shall be a stores section for every District

and Urban Council and every District and Urban Council shall employ a suitably

qualified and experienced officer to be the stores control officer and Head of that

298

section. It was noted that despite having a stores control officer, the district store is

too small to accommodate all inventories leading to congestion and difficulty in

monitoring of inventory. See photos below

Congested stores Dusty stores at district

The Accounting Officer promised to construct a drug store in the financial year

2017/2018.


6.9.10 KATAKWI DLG

1 Diversion of Rural transport Infrastructure (RTI) Funds

Regulation 38 (1) of the Local Government Financial and Accounting Regulation, 2007

requires Local Government to spend conditional grants on specific objectives and

activities.

During the year under review, the district received UGX,511,996,729 for the Rural

transport Infrastructure(RTI) project. It was observed that UGX.102,424,997 meant

for low cost sealing of Katakwi - Toroma road was diverted to maintenance of

equipment.

The Accounting Officer explained that management decided to borrow the RTI funds

to repair the grader to enable other road works to continue otherwise the District would

risk returning both the RTI and URF funds.

I advised the Accounting Officer to ensure that the funds are recovered and utilized for

the intended purpose.

5 Incomplete Projects and Shoddy Works

Section 18(3) Local Governments Financial and Accounting Regulation (LGFAR), 2007

states that the budget estimates shall be based on the objectives to be achieved for

299

the financial year and efforts shall be made to achieve the agreed objectives or targets,

as programmed by the district.

However, various projects planned and undertaken during the financial year and

expected to have been completed before the closure of the year were still on going at

different stages or abandoned and with some elements of substandard works noted

as shown in the table below:

Project Procurement details

Start date

End date

Contract Amount Payment to date

Inspection Remarks

KATA522/WRKS/14-15/00006 Construction of Maternity Ward at Omodoi HC II BY: M/s Babone Bigere Company Ltd

11/5/15 5/8/15 79,639,100

74,472,686

-not furnished -inadequate power supply by the solar system(one panel & one batery) -not yet handed over

ROADS

Reshaping Odoot-Ngariam Rd Force on account

NO. BOQ 17,777,043 -Only grading done, -Poor works on drainage with deep potholes developing

Grading Adacar-Arengecora rd Force on account

NO. BOQ 28,433,900 -Works ongoing, Out of 16km planed 2km was covered

Construction of administration block for Ongongoja sub county

Started during 2011

Not provided.

n/a No specified The project was under Northern Uganda Support programme and was abandoned in the bush, no value for the money spent on the project.

Incomplete works deny the communities the intended services. The Accounting Officer

promised to have all the projects completed.

I advised the Accounting Officer to compel the contractors to complete the projects or

rectify all defects in the projects.

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6.9.11 KOTIDO DLG

1 Education Sector

1.1 Incomplete Classroom block at Mary of God Primary School

Paragraph 9(2)(b) of the Local Government Finance and Accounting Regulation, 2007

state the duties of the accounting officer among which is to ensure that the public



During FY 2014/15, the District contracted a local firm to construct a 4 classroom

blocks at Mary Mother of God P/S at a contract sum of UGX. 121,248,400. The contract

was to start on 17/02/2015 and end on 30/05/2015 but later on rolled over to 2015/16

financial year.

At the time of inspection in July 2016, the contractor had been paid UGX.96,430,000

(79.5%). However, it was observed that works amounting to UGX 65,283,700 as per

bills of quantities were incomplete yet payments had been made as shown in the table

below.

S/No. Item Amount (UGX) Remarks

1 Painting and wall finishies

18,876,000 Not done

2 Floor finishes 7,296,000 Not done

3 Roofing 21,881,700 Poorly made and not suitable for use.

4 Lightening conductor. 6,840,000 Not fitted correctly.

5 Windows and door

glasses

10,390,000 Not properly fitted and has

defects

Total 65,283,700

Payment of un-finished works denies services to the community.

The Accounting Officer promised to terminate the contract due to incompetence.

I advised the Accounting Officer to ensure that the work is completed and to ensure

proper supervision of contracts.

1.2 Education Sector

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1.2.1 Un delivered beds to Panyangara Secondary School

The contract for supply of double decker beds to Panyangara Secondary School was

awarded to a local firm at a cost of UGX 19,520,000.

However, audit revealed the following shortcomings:

The contract was signed without reference to the specific number of beds to be

supplied.

The contractor supplied 50 double decker beds contrary to Local Purchase Order

dated 15/06/2015 requiring 100 double decker beds.

The full contract sum of UGX 19,520,000 was paid for the 50 double decker beds

instead of 100 beds.

Out of the beds supplied, several beds had already broken down.

The Accounting Officer explained that the bill of quantities (BOQ) indicated 100 beds

and this was erroneously written but should have been “50 double decker beds”, which

is synonymous with 100 beds.


1.2.2 Irregular Supply of Furniture to Mary Mother of God primary school

The contract for supply of school furniture (86-three seater desks, 4 tables & 4 chairs)

to Mary Mother of God Primary School was awarded to a local firm at contract sum of

UGX 21,500,000.

The following shortfall were identified

The deliveries were made to Kacheri Secondary School instead of Mary Mother of

God Primary School.

In a related development, (86 desks, 4 tables & 4 chairs of used furniture) were

transferred from Kacheri SS as a replacement to Mary Mother of God primary

school of which only 12 desks were in good condition and the balance of 74 desks,

4 tables and 4 chairs were broken and rejected by the school .

The Accounting Officer explained that the diversion was as result of delivery of a wrong

size of desks for a primary school.

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I advised the Accounting Officer to ensure the contractor delivers the right size of

desks or recover the funds.

2 Water Sector

2.1 Drilling of 15 hand boreholes

The contract for drilling, casting and installation of 6 production boreholes was

awarded using admeasurement contracts to two local firms at a contract sum of UGX

27,000,000 and UGX 290,030,000 for drilling & installation of the 6 boreholes

respectively. The contract start and end dates were 05/02/2016 and 30/06/2016

respectively.

However, the following anomalies were observed during audit inspection in July 2016;

Only 7 (46%) boreholes were successfully drilled and 8 (54%) boreholes were dry

wells.

UGX 49,627,558 was paid for seven successful boreholes in excess of contract price

by UGX 19,335,000.

The contractor charged 18% VAT twice as shown in table below:

Detail One borehole 16 boreholes

Preliminaries & General 945,000 15,120,000

Borehole construction 9,594,000 153,504,000

Platform casting and pump installation 3,525,000 56,400,000

Add 18% VAT 2,532,000 40,512,000

Total for one bore hole 16,596,000 263,258,466

Added extra 18% VAT 2,987,280 47,386,524

Total contract price 19,583,280 310,555,000

The Accounting Officer explained that changes in estimated depth, length and hard

rock led to contract variations and paying for dry wells. The Accounting Officer also

promised to recover the erroneously paid VAT from the contractor.


6.9.12 KOTIDO TC

1 Improper Maintenance of Roads

Section 4.4 of Force Account guidelines, 2013 requires that Town Councils employ one

road worker to maintain 2km of gravel roads.

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However, it was observed that the district employed nine workers to maintain 16.1

kms of the urban roads.

The Audit also revealed that the roads were not properly maintained leading to silted

and blocked drains, eroded road slopes and un weeded shoulders despite payments

of UGX.8.500,000 for the purpose as shown below

This was attributed to lack of proper supervision of the civil works.

The Accounting Officer promised to improve on the supervision of roads next financial

year.


6.9.13 KUMI TC

1 Unauthorized Excess Expenditure

Regulation 18(7) of the Public Finance and Management Regulations (PFMA), 2015

states that any expenditure which is in excess of the appropriated budget of a vote

and which is not in accordance with this section shall be treated as loss of public funds

as provided for under section 79 (1) of the Act.

However, the Council incurred excess expenditure of UGX 61,849,741 on various

activities without approval by Council.

The Accounting Officer explained that the excess expenditure was due to elevation of

the town council to municipal status hence increasing operational costs.

I advised the Accounting Officer to ensure that all expenditures are duly approved

and authorized by the designated Authority before they are incurred.

Senior Quarter lane-with blocked drainage

Senior quarters road-culverts heads not covered

Uncleaned road drainage causing blockage to one of the roads in town council

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6.9.14 MOROTO DLG

1 Payment for shoddy works at Acherer Primary school.

Regulation 14 of the PPDA regulations 2006 require an Accounting Officer to have the

overall responsibility of the successful execution of the procurement, disposal and

contract management processes and ensure that implementation of the contract as

per the agreed terms.

The District contracted Kolir youth Development group for construction and

completion of a 5 stance VIP latrine at Acherer Primary school at a contract sum of

UGX.15,238,020. The contract start and end dates were 11/09/2015 and 11/02/2016

respectively. By the time of audit, July 2016 the contractor had been fully paid.

However, the following defects were identified as shown in the table below;

S/No Items Amount

1 The walls are developing cracks 4,717,000

2 Shoddy painting 194,000

3 Delapidating walls 1,820,000

4 Poor finishing 1,955,900

5 2 doors were not properly fitted 771,250

Total 9,458,150

This was due to lack of close supervision and monitoring of the works.

The Accounting Officer promised to follow up with the contractor to rectify the defects.

I await the outcome of the Accounting Officer’s promise.

6.9.15 MOROTO MC

1 Delayed completion of Out-Patients Department Block at DMO’s Clinic

Paragraph 9(b) of the Local Governments (Financial and Accounting)Regulations, 2007

requires the Chief Executive Officer to ensure that the public moneys, property and



Council signed a contract with a local firm to construct an Out-Patients Department

Block at DMO’s Clinic at a contract price of UGX.195,352,245 funded under PRDP

funds. The contracts start and end dates were 15th January 2016 and 6th May 2016

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respectively. By the time of audit in August 2016, UGX. 91,629,065 (47%) had been

paid, however, the contractor failed to complete the civil works in the stipulated time.

The delays deny services to the community.

I advised the Accounting Officer to ensure that the civil works are completed promptly.

6.9.16 NAKAPIRIPIRIT DLG

1 Failure to carry out routine road maintenance of district roads

Section.2.1 of the Ministry of Works and Transport guidelines 2012, requires routine

maintenance activities on roads to be conducted on annual basis, sometimes several

times a year and even weekly depending on physical, environmental or climatic

conditions.

A review of the annual work plan for road maintenance submitted to Uganda Road

Fund revealed that the District planned to execute routine road maintenance of 59 km

with a total budget of UGX 51,016,000.

However, the following shortcomings identified;

Only UGX 3,074,000 (51% of the budgeted allocation of UGX 6,000,000) was utilized

for routine maintenance of Nakapiripirit-Tokora road (8km). In addition, only UGX

2,476,000 (25% of the total budgeted allocation of UGX 10,000,000) was utilised for

routine maintenance of Nakapiripirit-Kakomongole road (16km).

No routine maintenance works were executed on four roads of Namalu-Nabulenger

rd (8km), Namalu-Loreng road (15km), Namalu-Kaiku rd (2km) and Amudat-Lemusui

road (10km).

The roads were bushy and most of the culverts had silted and not cleaned

The funds for routine road maintenance totaling to UGX 30,412,850 was spent on

unplanned mechanical repairs.

The District Engineer explained that the excess expenditure on mechanical repairs was

due to frequent breakdown of road equipment.

I advised the Accounting Officer to ensure that the Uganda road funds are utilised

according to the approved budgets and work plans.

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2 Delays in Completion of Civil Works

Regulation 9 (2b) of the Local Governments Finance and Accounting Regulations, 2007

states the duties of the accounting officer among which is to ensure that the public

moneys, property and resources for which he or she is responsible as accounting

officer are properly managed, safeguarded and value for money obtained.

However, it was observed that civil works totalling UGX.544,279,098 were not on

schedule.

The delays in completion of the civil works may lead to extra administrative costs.

The Accounting Officer attributed the delays to mainly procurement process and

promised to expedite the procurement process during the next financial year

2016/17.


3. Excess Expenditure on Technical and Operational Budget under PRDP road funds

Section 7.2 of the Peace Recovery and Development Plan (PRDP 2) Grant guidelines

for Local Governments 2012 requires that only 5% is used to cater for technical

supervision of infrastructure projects and operational expenses.

During the financial year 2015/16, UGX 634,255,000 was released to the district as

PRDP funding of which UGX. 31,712,750 (5% of 634,255,000 ) was to be spent on

technical supervision and monitoring. However, an amount of UGX 152,090,130 was

spent on operational expenses resulting in excess expenditure of UGX 120,377,380.

This was irregular.

The excess expenditure was attributed to frequent breakdown of road equipment and

blacking out of the solar power system at the works department that required

immediate repairs and replacement of solar batteries.

The Accounting Officer was advised to ensure that funds are utilised in accordance

with the operational guidelines.

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4. Irregular Payment of Hardship Allowance to ineligible Staff

Circular standing instruction number 2 of 2010, paragraph 5 from Ministry of Public

Service requires payment of 30% of basic monthly salary to staff living and working in

hard to reach areas.

During the audit, it was explained by the Ag. Principal Human Resource Officer that

with the exception of Nakapiripirit District Headquarters and Town Council staff, all the

other district employees are entitled to hard to reach allowance.

Examination of the district payroll revealed that staff at the district headquarters and

town Council were paid UGX.16,886,676 in respect of hard to reach allowances.

This was also attributed to absence of proper verification of the payrolls before

payments are effected.

The Accounting Officer acknowledged this matter and promised to recover the funds.

I await the outcome of the commitment by the Accounting Officer in regard to recovery

of the amount in question.

6.9.17 NAKAPIRIPIRIT TC

1 Unauthorised Expenditure


states that if new or additional funds are required over and above the approved

budgetary provisions, which cannot be met by virement re-allocation, the vote

controllers concerned shall apply to the Chief Executive for a Supplementary provision.

Contrary to the above section, it was noted that UGX.30,713,887 was incurred in

excess of the budgeted amounts on various votes.

The Accounting Officer attributed excess spending to limited staff capacity gaps.

I advised the Accounting Officer to ensure that no excess expenditure is incurred

without the necessary approval.

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6.9.18 SOROTI DLG

1 Failure to Dispose off Assets.

Section of 2.3.1.5 of the LGFAM, 2007 requires assets not in use to be disposed off in

accordance with the procedures in the LGPPDA, 2006 regulations.

However, it was observed that vehicles that had been recommended for disposal by

the board of survey report of 2012/2013 were still grounded at the district works yard.

The Accounting Officer explained that the vehicles will be considered for board off in

the financial year 2017/2018.

I advised the Accounting Officer to expedite the process of disposing off the assets.

6.9.19 SOROTI MC

1 Irregular Direct Procurements

Regulation 40 (3) of the LG - PPDA, 2006 prescribes circumstances under which direct

procurement should be undertaken. These include emergency circumstances, where

supplies are available from one provider or where on advantages would be obtained

by further competition etc.

However, UGX. 24,928,000 was spent on direct procurement of stationary, catering,

machine services and construction works without justification.

The Direct Procurements were therefore irregular.

The Accounting Officer promised to follow the PPDA regulations in future.

I advised the Accounting Officer to always adhere to LG - PPDA Regulations.

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6.9.20 NAPAK DLG

1 Unauthorized Excess Expenditure

Regulation 25 of the Local Government Financial and Accounting Regulations (LGFAR),

2007 states that expenditures for which there is insufficient provision in the approved

estimates are not allowed.

However, the District spent an excess expenditure of UGX.728,774,262 on

administration, production, health and Education above the budgeted without approval

by the Council.

Excess expenditure is irregular.

I advised the Accounting officer to ensure that all excess expenditures is always

approved by the Council as required by the regulations.

2 Failure to Monitor Universal Primary Education (UPE) Funds

Section 23 (d) and (e) of the Public Finance Management Act 2015 requires entities to

report on amounts of financing received as grants and the financial and physical

performance of the grants.

A follow up on capitation grants of UGX.22,108,250 received by a sample of eight (8)

primary schools revealed the following shortcomings:-

Failure to submit annual work plans to the Ministry.

Failure to display the amounts received and spent to the Public.

Lack of accounting skills by the staff who manage the funds.

Failure to prepare budgets

Lack of basic books of account like cash book and receipt books

Lack of segregation of duties, head teacher handles all the accounting work

Delays in release of Grants by the Ministry.

These shortcomings were majorly attributed to capacity gaps.

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The Accounting Officer admitted the shortcomings and indicated that Council has

planned capacity building training for the head teacher and their deputies on planning

and financial management in the financial year 2016/17.

The outcome of the promised action of the Accounting Officer is awaited.

3 Lack of an up-to-date Fixed Assets Register

The Local Government Financial and Accounting Manual, 2007 paragraph 2.3.1.4(2)

requires the Fixed Assets Register to be maintained.

However, a number of assets like vehicles, motorcycles, furniture, IT equipment etc.

acquired during the financial year under audit were not recorded in the Fixed Assets

Register.

This was attributable to capacity gaps.

In the absence of an up-to-date Fixed Assets Register, the verification of the Fixed

Assets was rendered difficult.

I advised the Accounting Officer to ensure that the Fixed Assets Register is regularly

updated.

6.9.21 NGORA DLG

1 Health Service

1.1 Incomplete Construction of General Paediatric Ward at Ngora H C IV

The District signed a contract with a local firm for the construction of General Paediatric

Ward at Ngora Health Centre IV at contract price of UGX.137,771,602 funded under

PRDP. The contract start and end dates were 14th March 2016 and 14th June 2016

respectively. By the time of audit in August 2016, UGX. 137,469,401 had been paid

representing 100% of the total contract sum.

However, the following shortcomings were identified.

An additional works valued at UGX.13,771,048 (9%) had been paid for without

approval by contracts committee.

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Works totalling to UGX. 29,188,000 was paid for with no work done as shown in the

table below:-

BOQ Item No Item Amount (UGX) Remarks

7 Internal doors 3,390,500 Not fixed

8 fixtures and fittings 6,344,000 Not fixed

6 supply and fixing of windows 10,268,500 Not fixed

10 electrical installation and fixing of lightening protection

9,185,000 Not installed

Total 29,188,000

Delay in completion of the theatre affects service delivery.

The Accounting Officer explained that the incomplete items were rolled over to the

financial year 2017/2018.

I urged the Accounting Officer to ensure that the works are completed.

1.2 Idle equipment at Ngora Health Centre IV

Theatre Equipment including an operating bed, Autoclave Machine and Anaesthetic

Machine supplied to Ngora Health Centre IV in February 2015 by a local firm at a cost

of UGX.34,670,000. However, audit inspection revealed that the equipment had not

yet been put to use 18 months after delivery.

The Accounting Officers attributed the failure to utilize the equipment to lack of

power connection to the theatre.

I advised the Accounting Officer to follow up the matter and ensure that the power is

connected to the theatre.

2 Non Compliance with Statutory Obligations.

Section 116 (1) of The Income Tax Act requires that every employer shall withhold tax

from a payment of employment income to an employee as prescribed by regulations.

Similarly the Income Tax Act states that a withholding agent who fails to withhold tax

in accordance with this Act is personally liable to pay to the Commissioner the amount

of tax which has not been withheld and recover this amount from the payee.

It was observed that, the district deducted PAYE totalling to UGX. 3,145,807 which

was not remitted to URA.

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This was attributed to management’s failure to adhere to statutory regulations. Failure

to remit taxes may attract fines and penalties from the Tax Authority


6.9.22 SERERE DLG

1 Failure to meet minimum Health standard at Serere Health centre IV

Section 2.1.1 (D) of the Local Governments Management Service Delivery Program

Operational Manual 2011 sets minimum national standards to be met by a Health

Centre IV.

However, audit inspection of Serere Health Centre IV revealed the following:

Standard Minimum Service Observations

Maternity Ward

Inadequate space to accommodate all patients.

Dilapidated structure that require renovation.

Open electric wires not insulated.

Brocken window glasses

Operating Theatre

Boylese athetic machine (admisnisters drugs during operation) is not functional

Oxygen concetration machine not working also

X-Ray Department There is no X-ray machine, all cases that require x-ray are reffered to Soroti

Medical Waste pit Non functional incinerator which stopped working about 20 years back.

The incinerator was abandoned in bush.

Open disposal of wastes which so dangerous to people around the hospital.

Stance pit latrines Dilapidated non-usable toilets with in the hospital compound.

Hospital Mortuary

No access road to the motuary

It is in a bushy enviroment

No refrigration in the mortuary

Staff Houses Staff residing in condemned houses

Drug Store

Congested drug store and drugs still parked in the boxes

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Running water and electricity There is no utilities such as power and water

The Accounting Officer attributed the poor standards to limited financial resources and

promised to embark on improving the standards next financial year.

I advised the Accounting officer to engage the relevant authorities and ensure that the


local authorities...6.9.12 kotido tc..... 302 6.9.13 kumi tc..... 303 6.9.14 moroto dlg..... 304...

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