HOW TO USE AUDIT REPORTS TO OVERSEE PUBLIC

PROCUREMENT

Hilda K. Mwesigwa – Ag. Director, Procurement Audit & Investigations- PPDA

EAAPAC AND SADCOPAC ACCOUNTABILITY CONFERENCE

3RD – 11TH MAY 2013

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Content• Historical perspective• Scope of PPDA Act & Procurement Audits• Conduct of procurement audits• Procurement Audit findings and

recommendations• Follow-up on Audit recommendations• PPDA linkages with oversight and enforcement

agencies • Way Forward

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Historical perspective of PPDA

• The process of procurement reforms in Uganda started in 1997 and in 2003 Uganda was among the first countries in Africa to enact a procurement law.

• The Public Procurement and Disposal of Public Assets Authority (PPDA) was established under the PPDA Act as the Regulator in February, 2003.

• Regulate Procuring and Disposing Entities (PDEs) are estimated at 312 (180 CG PDEs & 132 LG PDEs).

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Scope of PPDA ActPublic Finances of a Procuring and Disposing

Entity;Resources for national programmes under

development cooperation agreements such as: Counterpart transfers and Co-financing;

Procurement and disposal activities of Entities of Government within and outside Uganda;

Procurement and disposal activities of Entities not of Government but which benefit from public funds.

Only Exception is where the PPDA Act conflicts with an international agreement.

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Scope of Procurement Audits

• Section 7 (j) [iii] of the PPDA Act, 2003, mandates PPDA to conduct procurement and disposal audits in all government PDEs.

• The types of procurements audits include:o Procurement and Disposal Audits during the bid

preparatory process;o Contract audits in the course of the execution of an

awarded bid; o Performance audits after the completion of the

contract in respect of any procurement or disposal

• Since inception, PPDA has conducted 437 audits.

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Procurement Audits: FYs 03/04 – 12/13

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Conduct of procurement audits

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• The auditing process is guided by the Procurement Audit and Investigations Manual of April 2010. The process entails:-Planning phase Auditing phaseReporting phaseFollow-up phase

Conduct of procurement audits

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PPDA Audit Process

1. PLANNINGAudit scope

Audit objectivesSelecting casesAudit sampling

Engagement letter

2. EXAMINATIONEntry MeetingAudit evidence

Audit observationAudit conclusion & ranking

Audit closure/exit

3. REPORTINGAudit report

Management Response

Board approval Releasing final

Audit report/Website4. FOLLOW-UP

Immediate corrective action

Assessment for the progress made

Reporting Results

Common Audit findings• Conducting of procurements outside the procurement plan. • Delayed initiation of procurement requirements leading to poor

implementation of the procurement plan• Use of the direct method of procurement without sufficient

adequate justification.• Poor evaluation including non notification of bidders of

corrections of arithmetic errors in their bid proposals and conducting only financial comparison of prices without evaluating the preliminary and technical stages.

• Failure by Contracts Committee to approve Evaluation Committees and short lists of bidders.

• Contracts Committees grant retrospective approvals.• Use of wrong evaluation methodologies / criteria

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Audit findings cont…• Lack of appointment of Contract Managers and poor contract

supervision of projects• User Departments usurping functions of the PDU by soliciting

for bids.• Non approval of contracts above UGX 50m/= by Solicitor

General.• Missing contract management records namely; Contracts,

contract implementation plans, delivery notes and payment receipts.

• Signing of contracts without sufficient funds leading to stalling of contracts especially schools and health centres.

• Awarding contracts using the Engineer’s estimates and disregard the contract price by the bidders.

• Non appointment of boards of survey to identify obsolete items for disposal. 10

Key Findings from Procurement Audits

• District Stadium where the contractor was paid UGX 11,328,000 for a non-existent fence

Key Findings from Procurement Audits

• Abandoned site in a District but contractor was paid

Key Findings from Procurement Audits

• Construction of market abandoned after digging foundation

Key Findings from Procurement Audits

• Payment for wrong specifications at same cost

Key Findings from Procurement Audits

• Bridge abandoned

• Fencing of a slaughter slab paid for at UGX 2m

Key Findings from Procurement Audits

• Abandoned works for a coffee huller shed

Key Findings from Procurement Audits

ILI- 9th April 2013 17

• Abandoned works of aVIP Latrine

ILI- 9th April 2013 18

Key Findings from Procurement Audits

Key Findings from Procurement Audits

• Problems in disposal …..

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Trend – Proc Audits CG PDEs

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Trend – Proc Audits LG PDEs

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Common Audit Recommendations

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• All procurements should be subjected to competition.• Bidders should be notified of arithmetic errors.• Contracts Committees should ensure that the

necessary approvals are undertaken.• The Accounting Officer(s) should ensure

independence of functions within the Entity.• Contracts Committees should not award contracts

using Engineers’ estimates.• The User Departments should ensure that contract

management records are filed on their respective files once the procurement has been concluded.

• Accounting Officers should appoint boards of survey to identify obsolete items for disposal.

PPDA Recommendations to Competent Authorities

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• Suspension of Officers concerned.• Replacement of the head/member of the PDU.• Replacement of the Chairperson/member of the

Contracts Committee.• Disciplining of the Accounting Officer.• Transfer of Procurement & Disposal function to a

third party provider or another PDE.• Withholding funds of the PDE.The PPDA Act also stipulates Offences and

penalties e.g. for failure to produce books/records, influence peddling & fraud etc

Trend – Implementation of Audit Recommendations

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Implementation of PPDA Recommendations

Implementation of PPDA recommendations – Out of a total of 1,371 PPDA recommendations made to 138 PDEs, 1,065 (79%) were implemented and 306 (22%) were not implemented.

• Recommendations not implemented relate to taking disciplinary action, records management and contract management.

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PPDA linkages with Oversight & Enforcement Agencies

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• Office of the Auditor General (OAG)• Inspectorate of Government IGG)• Directorate of Criminal Intelligence and

Investigation (CIID)• Directorate of Public Prosecutions (DPP)• Inter – Agency Forum of Anti- Corruption

Agencies (IAF)• Anti-Corruption Court• Head of Public Service• Secretary to the Treasury

PPDA submissions to OAG• Since PPDA does not report to Parliament, all the audit

reports are submitted to OAG for onward submission to PAC.

• During FY 2010/11, OAG reported that:- Procurements worth UGX 24,346,888,735 in LGs did not follow

PPDA Law. The direct method of procurements was used to purchase

goods worth 680,846,051/= in Oyam DLG without justification; Wrong method of procurement (selective) was used to contract

a firm for road works worth UGX 310,955,000 in Rukungiri District.

Iganga DLG failed to implemented PPDA recommendations for FY 2008-09 noting that the District continues to operate outside PPDA Law.

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PPDA submissions to IGGThe Authority refers corruption cases to the Inspectorate of Government for further investigations, for example, cases referred include:-Procurements worth UGX 261,201,285 in Amudat DLG with corruption related tendencies.

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PPDA submissions to CIID

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• The Authority refers missing files and cases of a criminal nature to the Criminal Intelligence and Investigations Directorate for further investigations, for example: Procurements worth UGX 261,201,285 did not have any

documentation in Kotido DLG; The District Engineer of Amudat DLG indicated that

construction works worth UGX 397,354,540 had been completed. However, some works were not done at all while others were partially done;

Ministry of Health failed to avail documentation for procurements worth UGX 1,331,764,294=.

Ministry of Health failed to show evidence of 58 double cabin pick-ups, 14-seater Omini Bus, 3 station wagons, 2 delivery trucks and 110,000 bicycles

PPDA submissions to DPP

• The Authority refers cases of a criminal nature to the Directorate of Public Prosecutions for prosecution. Examples include:Gulu Regional Referral Hospital: Capital

Development Fund of 7.5 billion shillings.MOLG – Procurement of 70,000 bicycles for

Chairpersons of parishes and village councils.

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WAY FORWARD

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Increased frequency and scope of Procurement Audits with emphasis on PDEs with high spend and are critical for service delivery.

Enhance capacity building of Entities. Focus on results from the procurement

process and not only on compliance with procedures in order to ascertain value for money and minimize possible financial loss.

Incentive scheme for good performers e.g WB municipality conditional grants and publication of poor performers.

Stronger collaboration of oversight agencies with Parliamentary Accountability Committees.

THANK YOU FOR YOUR ATTENTION

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