report of the auditor general on the financial statements ... · detailed report of the auditor...

THE REPUBLIC OF UGANDA

REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS

OF MINISTRY OF LOCAL GOVERNMENT

FOR THE FINANCIAL YEAR ENDED 30TH JUNE 2014

OFFICE OF THE AUDITOR GENERAL

UGANDA

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TABLE OF CONTENTS

LIST OF ACRONYMS .................................................................................................. iii

REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF MINISTRY OF

LOCAL GOVERNMENT FOR THE FOR THE YEAR ENDED 30TH JUNE, 2014 ...................... iv

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

2.0 BACKGROUND INFORMATION .......................................................................... 1

3.0 ENTITY FINANCING ........................................................................................ 1

4.0 FUNCTIONS OF THE MINISTRY ........................................................................ 1

5.0 AUDIT OBJECTIVES ........................................................................................ 2

6.0 PROCEDURES PERFORMED .............................................................................. 2

7.0 FINDINGS ...................................................................................................... 3

7.9 Local Government Sector Investment Plan (LGSIP) Account ................................ 9

7.10 Payments for domestic arrears ...................................................................... 9

7.11 Vacant Posts in the Establishment ............................................................... 10

7.12 Budget Performance .................................................................................. 11

7.13 Follow up of prior year audit reccommendations ........................................... 12

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LIST OF ACRONYMS

CHOGM Common Wealth Heads of Government meeting

DDP Duty Delivery Paid

DDP III District Development Programme III

ERT Energy for Rural Transformation

LED Local Economic Development

LGMSD Local Government Management and Service Delivery

LGSIP Local Government Sector Investment Plan

MOLG Ministry Of Local Government

MOFPED Ministry of Finance Planning and Economic Development

MoU Memorandum of Understanding

MoW &T Ministry of Works and Transport

MTEF Medium Term Expenditure Framework

NSSF National Social Security Fund

PAYE Pay As You Earn

PPDA Public Procurement and Disposal of Assets

PST Project Technical Team

TAI Treasury Accounting Instructions

TSSA Treasury Single Sub-Account

UGX Uganda Shillings

UNCDF United Nations Children’s Development Fund

UNDP United Nations Development Programme

UPF Uganda Police Force

URA Uganda Revenue Authority

WHT Withholding Tax

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REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF

MINISTRY OF LOCAL GOVERNMENT FOR THE FOR THE

YEAR ENDED 30TH JUNE, 2014

THE RT. HON. SPEAKER OF PARLIAMENT

I have audited the financial statements of the Ministry of Local Government for the year

ended 30th June 2014. These financial statements comprise of the Statement of Financial

Position, the Statement of Financial Performance, and Cash flow Statement together with

other accompanying statements, notes and accounting policies.

Management Responsibility

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

Section 8 of the Public Finance and Accountability Act, 2003, the Accounting Officer is

accountable to Parliament for the funds and resources of the Ministry. The Accounting

Officer is also responsible for the preparation of financial statements in accordance with

the requirements of the Public Finance and Accountability Act 2003, and 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.

Auditor’s Responsibility

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

(as amended) and Sections 13 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. 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

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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. 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 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 form part of my Annual Report to Parliament.

PART “A”

Basis for Qualified Opinion

Mischarge of Expenditure

The Ministry of Local Government charged wrong expenditure codes to a tune of

Shs.2,497,433,465. The practice undermines the intentions of the appropriating authority

and leads to incorrect financial reporting.

Qualified Opinion

In my opinion, except for the possible effects of the matter described in the basis for

qualified opinion paragraph, the financial statements of the Ministry of Local Government

for the year ended 30th June 2014 are prepared, in all material respects, in accordance

with the Financial Reporting Guide, 2008 and section 31(6) of the Public Finance and

Accountability Act, 2003.

John F.S Muwanga

AUDITOR GENERAL

KAMPALA

17th March, 2015

REPORT OF THE AUDITOR GENERAL AND SUPPLEMENTARY INFORMATION

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PART "B"

DETAILED REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS

OF MINISTRY OF LOCAL GOVERNMENT FOR THE FINANCIAL YEAR ENDED 30TH

JUNE 2014

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 Ministry of Local Government to enable me report to

Parliament.

2.0 BACKGROUND INFORMATION

The Ministry of Local Government (MOLG) headquarters is Located at Workers House

Pilkington Road 2nd-6th Floor. The mandate of the Ministry is derived from the

Constitution of the Republic of Uganda 1995, Chapter eleven and The Local

Government Act 2002 as amended in 2007 being the legal instruments creating the

entity. Its vision is “To have democratic and accountable local Governments capable

of delivering efficient and effective sustainable services to the people, thereby

bringing about social-economic transformation in the country.”

3.0 ENTITY FINANCING

The Ministry was financed by grants from Central Government. Grants totaling to

Shs.35,209,462,811 from Central Government were received. The Ministry also

received Shs.61,197,000 as miscellaneous revenue, bringing the total revenue to

Shs.35,270,659,811. The total grants revenue of Shs.35,209,462,811 constituted

72.8% of its approved budget estimates of Shs.48,411,342,011.

4.0 FUNCTIONS OF THE MINISTRY

The Ministry has the following objectives:-

“To guide, harmonize, mentor and advocate for all Local Government in Support of

the vision of Government to bring about socio Economic Transformation in the

country.”

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5.0 AUDIT OBJECTIVES

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

and accordingly included a review of the accounting records and agreed procedures

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

to establish:-

a. Whether the financial statements have been prepared in accordance with the

requirements of the Public Finance and Accountability Act 2003 and the

regulations, and fairly present the income and expenditures for the year and of

the financial position as at the end of the year.

b) Whether all the Ministry’s funds were utilized with due attention to economy

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

c) Whether goods and services financed have been procured in accordance with

the PPDA Act.

d) To evaluate and obtain a sufficient understanding of the internal control

structure of the Ministry, assess control risk and identify reportable conditions,

including material internal control weaknesses

e) Whether management was in compliance with the Government of Uganda

financial regulations.

f) Whether all necessary supporting documents, records and accounts have been

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

statements presented.

6.0 PROCEDURES PERFORMED

The following audit procedures were undertaken:-

a) Revenue

Obtained all schedules of all revenues collected and reconciled the amounts

to the Ministry’s cashbooks and bank statements.

b) Expenditure

The Ministry payments vouchers were examined for proper authorization,

eligibility and budgetary provision, accountability and support documentation.

c) Internal Control System

Reviewed the internal control system and its operations to establish

whether sound controls were applied throughout the period.

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d) Procurement

Reviewed the procurement of goods and services under the Ministry

during the period under review and reconciled with the approved

procurement plan.

e) Fixed Assets Management

Reviewed the use and management of the Ministry’s assets during the period

under review.

f) Financial Statements

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

in the financial statements; assessed the accounting principles used and

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

financial statement presentation.

7.0 FINDINGS

7.1 Mischarge of Expenditure

A review of the Ministry of Local Government’s expenditures revealed that the entity

charged wrong expenditure codes to a tune of Shs.2,497,433,465. This constituted

8% of total expenditure for the Ministry. Mischarges undermine the importance of

the budgeting process as well as the intentions of the appropriating authority and

lead to misreporting.

Management explained that this was caused by quarterly release limitations which

forced management to charge items with cash balances to fund urgent and critical

activities. Management further explained that insufficient budget allocations and

severe cuts in consumptive areas by MOFPED led to this situation.

I advised management to liaise with the relevant authorities to streamline the budget

process to ensure that sufficient funds are allocated to each account. Further,

authority should be sought for any reallocations.

7.2 Unaccounted for remittance to Uganda Police Force – Shs.137,542,000

It was observed that Shs.137,542,000 was remitted by the Ministry to UPF to cater

for training of Police Fire and Rescue personnel on Fire fighting equipment but this

payment was not supported with a Memorandum of Understanding between the two

parties specifying the outputs, responsibilities and accountability framework.

Furthermore, I could not confirm whether the activity was undertaken as no

accountability documentation or report was availed for verification.

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Management explained that UPF had been contacted to furnish them with the

accountabilities.

I advised management to ensure funds are accounted for in time and also have the

MoU in place before any remittance of funds to third parties is effected in the future.

7.3 Advances to Individual Personal Accounts –Shs.4,623,642,146

Non-Compliance with Treasury Accounting Instructions

Shs.4,623,642,146 was advanced to Ministry staff through their personal bank

accounts to undertake direct procurements and other activities of the Ministry

contrary to Sections 227,228 and 229 of the Treasury Accounting Instructions. Such

a practice of depositing huge funds on personal accounts exposes Government funds

to risk of loss, since the Ministry does not have any control over such funds

deposited on personal accounts.

Management explained that the advances mainly related to activities and workshops

undertaken upcountry with staff from other Ministries/Local Governments.

Management further explained that staff from the Ministry acted as Team leaders

who were responsible for allowances and other facilitations for the team members.

All activities were carried out and activity reports filed.

I advised management to ensure strict adherence with the requirements of the

Treasury Accounting Instructions.

7.4 Payments for beautification of Kampala

A local Company entered into a contract with Ministry of Local Government for

beautification of the Clock-Tower-Nsambya-Gaba/Munyonyo Road corridor in 2007

ahead of the CHOGM activities and final certification of works was issued in May

2008. A review of the payments to the contactor revealed several issues as follows;

(i) Nugatory Expenditure:

It was noted that Shs.107,989,414 has been outstanding since issuance of a

completion certificate by the consultant in May 2008. Because of that, interest

accrued on late payment rose to Shs.371,748,822 as at February 2012 (an increment

of 344%) leading to a payable sum of Shs.479,738,236. At the time of reporting,

the payable had been made good. The interest paid is considered nugatory.

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(ii) Interest computation basis:

Clause 43.1 and 43.2 of the contract provided for interest on late payment by the

client to the Contractor from the date by which the payment should have been made

up to the date when the late payment is made at the prevailing rate of interest for

commercial borrowing.

It was noted that the basis for the contractors interest rate was unknown since the

clause did not specify the Bank for “prevailing commercial interest” purposes. The

contractor seems to have exploited the loophole to compute interest using his own

banks interest rate that might have been higher than Bank of Uganda rate. Without

providing the schedule for interest computation, I could not confirm the accuracy of

the amount and whether the right rate was used in the computation.

Management explained that the transaction was incurred during the CHOGM and it

was inevitable that the payment had to be settled although it was not included in the

domestic arrears. The Ministry of Finance, obligated votes to settle outstanding

claims under their votes the basis upon which the payment was later made.

I advised management to avoid such losses in future by putting in place adequate

risk management controls, and paying suppliers and contractors promptly.

7.5 Motor vehicles and office equipment

7.5.1 Motor vehicle repairs and servicing

Shs.560,453,690 was spent on repairs and servicing of the Ministry’s motor vehicles

during the year. However the following issues were noted which require

management attention;

Payment for grounded vehicles

Shs.13,869,979 was spent on four vehicles that were confirmed as having been

grounded throughout the year and were ineligible for any repairs.

Cash payments

Cash payments to the tune of Shs.5,000,000 was paid to a staff for onward

remmittance to a pre-qualified supplier being funds to cater for repairs and

servicing Ministry motor vehicles instead of using direct EFT payment. This is

contrary to the financial regulations.

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Management explained that the grounded vehicles were earmarked for disposal but

the Ministry failed to acquire a new fleet and the same vehicles remained in use for

the time the expenditure was incurred. Management also explained that there was

an emergency activity and garages had refused to offer services without settlement

of outstanding dues which led to the utilization of cash to undertake the repairs.

I advised management to liaise with Ministry of Works and Transport and have

uneconomical motor vehicles boarded off.

7.5.2 Non-serviceable motor vehicles

An inspection of the Ministry’s stores and motor vehicle yard revealed that there

were a number of un-serviceable motor vehicles and office equipment which were

occupying valuable space. There was no evidence of any initiated process for

disposal. Some of the vehicles were found abandoned in privately owned service

garages where they were exposed to risk of vandalism and further loss of value.

Non-disposal of un-serviceable motor vehicles and office equipment may lead to loss

in value through vandalization or theft and creates shortage of valuable storage

space.

Management explained that the Ministry through an Auctioneer carried out the

process of disposing off all the old vehicles last year. Unfortunately the fleet

continues to depreciate and more vehicles became unserviceable. The Ministry has

again initiated the process to dispose them off.

I await management’s effort in the disposal process.

7.5.3 Nugatory payment of parking fees

As noted in my previous year report, it was observed that during the year under

review, Shs.33,040,000 was again paid to a parking space service provider as

parking fees for 16 Ministry motor vehicles parked in the basement of Uganda House

contrary to Chapter 7, paragraph 705 of the Treasury Accounting Instructions part

11-Stores that requires compilation of lists of unserviceable vehicles for onward

submission to the Accountant General requesting for their disposal. The payments

relate to the period January to June 2013 (Shs.15,292,800) and July to December

2013 (Shs.17,747,200). Inspection of the parked vehicles in the basement revealed

that these vehicles were grounded and therefore expenses incurred on them are

nugatory. There is risk of loss of the vehicles given the incomplete vehicle register

and vandalism which will reduce the disposal value.

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Management explained that the process of boarding off was in advanced stages.

I advised management to expedite the boarding off of grounded motor vehicles so

that wasteful funds paid for parking space is saved.

7.6 Non-deduction of Withholding tax

Section 120(1) of the Income Tax Act requires all Ministries to withhold tax from

supplies of any services of an amount or amounts in aggregate exceeding one million

shillings to any person in Uganda at the rate of 6% of the aggregate sums. Further,

section 124(1) of the Act requires a withholding tax agent to remit the tax within

fifteen days after month end.

Contrary to the above, I noted that withholding tax to the tune of Shs.93,970,920

from two payments was not deducted for onward remittance to URA. See the table

below;

S/N Description Gross amount (Shs.) 6% WHT

1 Rental payments to NSSF 1,354,050,785 81,243,047

2 Stationery purchases 245,453,819 12,727,873

93,970,920

The Ministry risks fines and penalties from URA that may be imposed for non-

adherence to the laws.

Management in response regretted the anomally and pledged to withhold tax from

the suppliers subsequent payments.

I advised management to ensure that due taxes are deducted and remitted to URA

as required by the Income Tax law.

7.7 Anomalies in Procurement

A sample of procurement files were selected to enable me audit the various stages of

the procurement process from initiation to contract management and a number of

observations ranging from undervaluation of taxes, bid and evaluation manipulation,

non-compliance to specifications in bid documents, defiance of Public service

authority, contract payments and limitation on bidders were noted. Details are as

below;

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a) Limitation on bidders on procurement of energy packages

PPDA regulations 142(1), (2) and (3) requires a shortlist to include sufficient bidders

to ensure effective and real competition. Further, it requires a PDU to use

information from four sources i.e. PPDA register, entity prequalified list, any other

PDU list and market knowledge.

Three bidders were invited using market knowledge and two submitted bids for the

above mentioned procurements worth Shs.123,679,500. However, it was noted that

there was limitation as the PPDA register had at least four providers for the service

who would have been invited to bid and widen competition. As such there was no

adequate competition in this respect.

b) Non-compliance to specification

Review of the evaluation worksheets revealed that a company that bided for supply

of vehicles and motor cycles was non-compliant on the 4WD station wagon of 3000cc

with regard to “minimum dimensions” as the company was silent on ground

clearance that was required of 0.22m and fell short on the required length of 4.9m

by submitting a bid of 4780mm. The company should have been eliminated at this

stage. The company however went on to win the contract.

Further, Government procedure requires authority from the Minister of Public Service

for procurement of vehicles. Authority on the procurement from the Minister of state

dated 31/3/2014 specified two double cabin pick-ups not exceeding 2800cc; however

the supplier was awarded to provide 3000cc vehicles.

Management explained that PDU’s knowledge of the market was one of the

recognized databases under Rule 142(2) (d) for development of provider shortlist

and that three providers on the shortlist were considered sufficient. Management

further explained that registered providers will be accorded priority in future.

With regard to non-compliance to specifications, the evaluation and review of

specifications offered by providers involved expertise from MoWT and that certain

non-conformity could be waived under R178 (4), (5).

I advised management to ensure that the Procurement and Disposal Unit and

Contracts Committee adhere to the PPDA Act and regulations are strictly adhered to.

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7.8 Local Government Sector Investment Plan (LGSIP) Account

The Ministry operates a Bank Account “Local Government Sector Investment Plan”

with Bank of Uganda. At the end of the financial 2012/2013 the Ministry had a

balance of Shs.852,593,754 and during the financial year 2013/2014 management

made several transfers totalling to Shs.440,697,837 from Treasury Single Sub

Account (TSSA) to this account for onward remittance to clearing firms. Audit review

of receipts and expenditures on this account revealed the following;

Rationale for maintenance of Bank account:

It was noted that the account has no project funding but rather receives transfers

from the Ministry Treasury Single Sub Account (TSSA) for onward remittance to

suppliers and Ministry staff which activities should have been effected from the TSSA.

It should also be noted that the Project closed some years back but Management did

not close the account. This is contrary to Treasury Accounting Instructions (TAIs).

Such accounts are easily susceptible to irregular activities.

Financial reporting:

The balance brought forward of Shs.852,593,754 and spent during the year was not

reflected in any performance report for the year since it was neither project funding

nor appropriated by Parliament.

Management explained that Local Government Sector Investment Plan was a Project

and as such its expenditure could not be reflected in the statement of financial

performance but rather end of year balances are disclosed in the schedule of Project

balances. I explained to management that projects have timelines, financing

agreements, project appraisal documents and annual audit reports which was not

the case.

I advised management to consider closing the account in line with Accountant

Generals guidelines.

7.9 Payments for domestic arrears

Treasury Accounting Instructions 2003 Part 1 chapter IV section 188 specifies that an

officer authorized to incur expenditure will ensure that no payments due in any

financial year remain unpaid at the end of that year. Further, the established

commitment control system requires management to commit the Ministry only when

funding is appropriated and has been confirmed.

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A review of the financial statements of the Ministry for the year ended June 2013

revealed that the Ministry had outstanding commitments of Shs.51,037,123.

However I noted that Shs.799,619,907 was paid to several companies for settlement

of arrears incurred in the previous financial years. This was a clear indication of non-

disclosure of full arrears. Summary of payments is as below;

S/N Description Amount (Shs)

1 Beautification – M/s Omega construction 479,738,236

2 Vehicle repairs 186,545,356

3 Clearing and forwarding 133,336,315

799,619,907

The Ministry misrepresented their indebtedness in the previous financial statements.

Furthermore, the Ministry did not budget and neither did it have a provision for item

321605 (domestic arrears) besides, supplementary funding was not requested

instead management mischarged already budgeted items. Under the circumstances

funds for planned activities appropriated by Parliament were diverted to settle

domestic arrears.

I advised management to adhere to the commitment control system and ensure that

domestic are verified, budgeted for and paid using the appropriate expenditure

account codes and are appropriately disclosed in the financial statements.

7.10 Vacant Posts in the Establishment

Ministry of Local Government has an approved establishment structure of 165 staff.

However a review of the established structure revealed that 16 posts were not yet

filled representing ten (10%) vacancy gap. Service delivery is hampered by delays in

filling the vacancies especially at senior management level and staff may be

overworked which may adversely affect their morale.

Management explained that some of the posts fell vacant because some staff were

interdicted while others were promoted to higher posts. Management further

explained that a submission had been made to Public Service Commission to have

the vacant posts filled.

I await management’s effort in filling the vacant posts.

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7.11 Budget Performance

Public Finance and Accountability Regulations 2.10(b) entrusts the Accounting Officer

with ensuring that all total controls such as those contained in the approved

estimates, warrants and others are strictly observed. Budget estimates are based on

outputs to be achieved for the financial year and during implementation, effort is

required to be made to achieve the agreed objectives or targets of the entity within

the availed resources.

Review of the budget performance for the year under review revealed that some

targets were partially or not achieved despite release of funds to the vote functions.

Details are in the table below:

Vote function output

Item description

Planned outputs/ Quantity

Amount (Shs) budgeted

Amount released (Shs)

Actual output/ Quantity

Remarks

Project 1089a-LGSIP Support to District Development

132172-government building and administrative infrastructure

Construction of Sub-county headquarters at Nabweru Wakiso district

300,000,000 113,400,000 No construction has started

37% of the funds were received but construction has not started

Project 1089b-LGSIP Support to local councils development

132272-Government buildings and administrative infrastructure

Construction of Local government offices supported pledges

200,000,000 130,400,000 None No construction has started

Project 1089d-LGSIP Support to policy, planning and support

134975-Purchase of Motor Equipment and other Transport Equipment

Procurement of Motor vehicle

200,000,000 133,400,000 None -No vehicle was procured despite receiving 67% of the funds

Service delivery is hampered and the appropriating authority’s objectives are not

met.

Management explained that funds were transfered to Mubende Town Council and

District for completion of a sanitation site and office block at district headquarters

respectively. Management further explained that funds for procurement of a vehicle

were used on vehicle maintenence.

I advised management to ensure that all activities are undertaken as planned.

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7.12 Follow up of prior year audit reccommendations

A follow-up of the issues was undertaken and the status of implementation of the

previous audit recommendations is presented below:

Audit Findings Prior Recommendation Status on

implementation

of

recommendations

Mischarge of Expenditure –

Shs.4,178,737,274

The entity charged wrong

expenditure codes to a tune of

Shs.4,178,737,274.

Management was advised to

desist from such a practice and

always request for reallocations

or virements, as provided for

under the TAI.

Repeated

Advances to Individual Personal

Accounts

Non-Compliance with Treasury

Accounting Instructions

Shs.1,840,727,530 was advanced to

Ministry staff through their personal

bank accounts to undertake direct

procurements and other activities of

the Ministry.


stop the practice and ensure

strict adherence with the

requirements under the

Treasury Accounting

Instructions.

Repeated

Advances to personal accounts

not accounted for

Personal advances to the tune of

Shs.67,700,200 were not accounted

for by the respective officials.


ensure that funds are accounted

for or recovery measures should

be initiated.

Not repeated

Unaccounted for Cash

Withdrawals

It was noted that Shs.77,896,691

was unaccounted for at the time of

audit.


ensure that all funds are

accounted for within the

statutory period or recovery

measures be enforced.

Not repeated

Payments for Hotel Services

Expenditure worth Shs.636, 362,171

for retreats and workshops lacked

attendance lists





measures be enforced.

Not repeated

Irregular borrowing from

Project Accounts

Contrary to section 42 (c) of the TAIs

the Ministry borrowed a sum of


ensure strict adherence to the

Commitment Control guidelines

and avoid borrowing from the

Not Repeated

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Shs.916,601,532 from eight (8)

project Accounts to fund Ministry’s

activities. At the time of the report,

the borrowings had not been

refunded.

project Accounts.

Unaccounted for borrowings

Shs.70,931,400 advanced in form of

fuel and allowances to staff to carry

out various activities remained

unaccounted for by the time of audit

contrary to section 120 of the TAIs.

I advised management to




measures considered on the

concerned officers.

Not repeated

Improperly vouched air tickets

expenditure

A sum of Shs.33,578,776 was spent

on air tickets for staff travelling

abroad. However the funds were not

properly accounted for as they

lacked supporting documents

contrary to section 120 and 181 of

the Treasury Accounting Instructions.




statutory period or consider

recovery measures.

Not Repeated

Irregular Inter-Account Transfer

A transfer of Shs.5,211,930,182 was

made from the Treasury General

Account in the last week of the

financial year 2011/2012 (29th June

2012). No authority from Treasury

for the transfer to the off-budget

account was availed for review. This

transfer could have been made to

circumvent the controls which

require unspent balances to be

returned to Treasury at the close of

the financial year.

I will await the outcome of the

efforts to close the account

Repeated

Payment for Protocol and

Presidential Pledges

During the year a total of

Shs.84,000,000, was paid to the

Ministry of Foreign Affairs

(Shs.59,000,000) and State House

(Shs.25,000,000) to facilitate

protocol activities and hosting of the

State banquet. However there were

no supporting documents


provide accountability or initiate

recovery measures.

Not repeated

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Diversion of GOU Counterpart

Funding

Shs.143,102,809 was diverted to

fund non-project related activities.

Management in response stated

that the omission had been

noted and that refunds will be

effected.

Not Repeated

Treatment abroad

Shs.120,872,000 was remitted to

Moroto Municipal Council for

treatment of the mayor in India for a

kidney transplant where he was to

spend 38 days with the kidney donor

and attendant. Included in

Shs.120,872,000 is US$.17,900 to

cater for hospital costs during

observation, operation and after

operation thus the officer was not

entitled to any per-diem. However,

contrary to the above requirement

the patient was paid per diem of

US$.13,680 (Shs.35,636,400) for all

the 38 days which he spent in the

hospital in India.


always refer to the standing

orders before such payments

are affected.

Not repeated

Support to Town Councils

Contrary to the above Government

funding frame work, it was noted

that the Ministry transferred

Shs.60,000,000 to 5 Town Councils

to open and grade urban roads

without budgets and criteria for

selecting the councils.


provide sufficient supervision to

the town councils so as to

ensure adequate absorption of

funds transferred to them.

Not repeated

Non-deduction of Withholding

Tax from Local Suppliers

It was noted that withholding tax to

the tune of Shs.26,606,383 was not

deducted from some payments for

onward remittance to URA contrary

to the regulations.

The Accounting Officer was

advised to adhere to the

requirements under the Income

Tax Act. The concerned

suppliers should be traced and

tax recovered.

Repeated

Wasteful Expenditure- Parking

fees for Grounded Vehicles


was paid to a company as parking

fees for 16 Ministry motor vehicles

parked in the basement of Uganda

House for more than a year.

Management explained that the

vehicles were in the process of

being boarded off.

I await the outcome of the

boarding off process by

management.

Repeated

15

Staff Welfare-Irregular

Allowances


was paid to Ministry staff as

automatic monthly allowances. I

observed that this allowance paid in

form of night subsistence was paid

irregularly because it was not

supported with any administrative

circulars/standing order instructions

from Ministry of Public Service.

Further, no taxes were deducted in

form of PAYE.


liaise with the Ministry of Public

Service to have the allowance

regularised.

Keep in view

16

APPENDIX 1

FINANCIAL STATEMENTS

report of the auditor general on the financial statements ... · detailed report of the auditor...

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