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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
ii
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
1
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.
Management was advised to
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.
Management was advised to
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.
Management was advised to
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
Management was advised to
ensure that all funds are
accounted for within the
statutory period or recovery
measures be enforced.
Not repeated
Irregular borrowing from
Project Accounts
Contrary to section 42 (c) of the TAIs
the Ministry borrowed a sum of
Management was advised to
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
ensure that all funds are
accounted for within the
statutory period or recovery
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.
Management was advised to
ensure that all funds are
accounted for within the
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
Management was advised to
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.
Management was advised to
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.
Management was advised to
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
It was noted that Shs.35,607,680
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
It was noted that Shs.624,920,000
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.
Management was advised to
liaise with the Ministry of Public
Service to have the allowance
regularised.
Keep in view
16
APPENDIX 1
FINANCIAL STATEMENTS