report of the auditor general on the …€¦ · on the financial statements of mityana municipal...

OFFICE OF THE AUDITOR GENERAL

THE REPUBLIC OF UGANDA

REPORT OF THE AUDITOR GENERAL

ON THE FINANCIAL STATEMENTS OF MITYANA MUNICIPAL COUNCIL

FOR THE FINANCIAL YEAR ENDED 30TH JUNE 2016

1

TABLE OF CONTENTS

LIST OF ACRONYMS ............................................................................................................................... 2

1.0 INTRODUCTION .............................................................................................................................. 6

2.0 ENTITY FINANCING ....................................................................................................................... 6

3.0 AUDIT SCOPE .................................................................................................................................. 6

4.0 AUDIT PROCEDURES PERFORMED .............................................................................................. 7

5.0 FINDINGS......................................................................................................................................... 8

5.1 Categorization of findings .............................................................................................................. 8

5.2 Summary of findings ...................................................................................................................... 8

6.0 DETAILED AUDIT FINDINGS ........................................................................................................ 8

6.1 Unaccounted for funds ................................................................................................................... 9

6.2 Understaffing ................................................................................................................................... 9

6.3 Lack of land titles ............................................................................................................................ 9

6.4 Failure to close Bank Accounts ................................................................................................... 10

6.5 Irregular Hire of Road Equipment .............................................................................................. 11

APPENDICES .......................................................................................................................................... 12

Appendix 1: Unaccounted for Funds ................................................................................................. 12

Appendix 2: Understaffing .................................................................................................................. 12

Appendix 3: Irregular Hire of Road Equipment ................................................................................ 15

2

LIST OF ACRONYMS

Acronym Meaning

ISA International Standards on Auditing

LGFAM Local Governments Financial and Accounting Manual

LGFAR Local Governments Financial and Accounting Regulations

PPDA Public Procurement and Disposal of Public Assets

RT. HON. Right Honorable

UGX Uganda Shillings

3

REPORT OF THE AUDITOR GENERAL

ON THE FINANCIAL STATEMENTS OF MITYANA MUNICIPAL COUNCIL

FOR THE YEAR ENDED 30TH JUNE, 2016

THE RT. HON. SPEAKER OF PARLIAMENT

Introduction

I have audited the financial statements of Mityana Municipal Council for the year ended 30th

June 2016. 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, 1995 (as amended) and

Section 45 of The Uganda Public Finance Management Act, 2015, the Accounting Officer is

accountable to Parliament for the funds and resources of Mityana Municipal Council. The

Accounting Officer is also responsible for the preparation of financial statements in

accordance with the requirements of the Local Governments Financial and Accounting

Manual, 2007, and for such internal control as management determines 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), section 87 of the Local Governments Act, 1997 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.

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

4

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.

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 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

Unaccounted for funds

Expenditure amounting to UGX.5,328,000 remained unaccounted for at the time of audit.

Consequently, I was unable to confirm that the funds were utilised for the intended

purposes.

Qualified Opinion

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

Opinion paragraph, the financial statements of Mityana Municipal Council as at 30th June

2016 are prepared, in all material respects, in accordance with the Local Government

Financial and Accounting Manual, 2007, Section 51(3) of The Public Finance Management

Act, 2015 and the Local Governments Financial and Accounting Regulations, 2007 and the

Local Governments Act cap 243 (as amended), of the Laws of Uganda.

5

Other Matter

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

presented or disclosed in the financial statements.

Understaffing

The Municipality has an approved staff establishment of 245 positions. However, only 99

(40%) positions were filled leaving 146 (60%) positions vacant.

Understaffing negatively impacts on service delivery.

John F.S. Muwanga

AUDITOR GENERAL

16th December, 2016

6

PART "B"

DETAILED REPORT ON THE FINANCIAL STATEMENTS OF MITYANA MUNICIPAL

COUNCIL FOR THE YEAR ENDED 30TH JUNE 2016

1.0 INTRODUCTION

In accordance with Article 163(3), of the Constitution of the Republic of Uganda,

1995 (as amended), I am required to audit and report on the public accounts of

Uganda and of all public offices, including the courts, the central and the local

government administrations, universities and public institutions of the like nature and

any public corporation or other bodies or organizations established by an Act of

Parliament. Accordingly, I carried out the audit of the Mityana Municipal Council to

enable me report to Parliament.

2.0 ENTITY FINANCING

Mityana Municipal Council is financed by grants (Conditional and Unconditional) from

the Central Government, donations and locally generated revenues from taxes, fees,

licenses and charges. During the year, the Municipal Council received grants totaling

to UGX.594, 647,374 from the Central Government, and UGX.447,361,834 from

locally generated revenues. The total revenue of UGX.1,042,009,208 constitutes

87.3% of its approved budget estimates of UGX.1,193,370,886.

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 procedures

as was considered necessary. The audit was carried out with regard to the following

objectives:-

a. To verify whether the financial statements have been prepared in accordance

with the requirements of the Local Governments Financial and Accounting

Manual 2007; and the Local Governments Financial and Accounting Regulations

2007; and fairly present the income and expenditures for the year and of the

financial position as at the end of the year.

7

b. To verify whether all the funds of the entity were utilized with due attention to

economy and efficiency and only for the purposes for which the funds were

provided.

c. To verify whether goods and services financed have been procured in

accordance with the PPDA Act 2003 (as amended)

d. To evaluate and obtain sufficient understanding of the internal control structure

of the entity, assess control risk and identify reportable conditions, including

material internal control weaknesses

e. To verify whether the management of the funds of the entity was in compliance

with the Government of Uganda Financial Regulations.

f. To verify whether all the necessary supporting documents, records and accounts

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

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

cashbooks and bank statements of the entity.

b. Expenditure

The payment vouchers of the entity were examined for proper authorization,

eligibility and budgetary provision, accountability and support documentation.

c. Internal Control System

Reviewed the internal control system and its operations to establish whether

sound controls were applied throughout the period

d. Procurement

Reviewed the procurement of goods and services under the various departments

during the period under review and reconciled with the approved procurement

plan.

8

e. Fixed Assets Management

Reviewed the use and management of the assets of the entity during the period

under review.

f. Financial Statements

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

the financial statements; assessed the accounting principles used and significant

estimates made by management; as well as evaluated the overall financial

statement presentation.

5.0 FINDINGS

5.1 Categorization of findings

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

prioritize the implementation of audit recommendations:

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.

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.

5.2 Summary of findings

No Finding Significance

6.1 Unaccounted for funds High

6.2 Understaffing High

6.3 Lack of land titles High

6.4 Failure to close Bank Accounts High

6.5 Irregular hire of road equipment Moderate

6.0 DETAILED AUDIT FINDINGS

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

my recommendations.

9

6.1 Unaccounted for funds

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

2007 requires administrative advances to Council employees to be authorized by the

Chief Executive and to be accounted for within a month. However, an amount of

UGX.5,328,000 had not been accounted for at the time of audit as shown in

Appendix 1.

Consequently, I was unable to confirm that the funds were utilized for the intended

purpose.

The Accounting Officer promised to ensure that all the accountability is obtained.

I urged the Accounting Officer to ensure that accountability is obtained or else to

recover the funds from the responsible officers.

6.2 Understaffing

The Municipal Council has an approved staff structure of 245 positions. However,

out of the approved structure, only 99 (40%) positions were filled leaving 146 (60%)

positions vacant as shown in Appendix 2.

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

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

to the community.

The Accounting Officer explained that Council had communicated the issue of

understaffing to the District Service Commission and is hoping that the vacancies will

be filled.

I advised the Accounting Officer to continue engaging the District Service

commission and ensure that the vacant posts are filled.

6.3 Lack of land titles

According to regulation 9 (j) of the Local Governments Financial and Accounting

Regulations, 2007, an Accounting Officer is required to ensure safe custody of all

assets of Council.

It was observed that Council lacked land titles to its properties as shown below;-

10

S/No Description

01 Abattoir land

02 Wabiruko land

03 Mityana Municipal Council Offices land

04 Magala Health Center II

05 Public toilet at Bbuye

06 Central market land (Plot No. 7-13 Mkt square)-

Lack of land titles creates a risk of encroachment and disputes.

The Accounting Officer promised to secure the titles from Uganda Land Commission.

I advised The Accounting Officer to expedite the process of acquiring the land titles.

6.4 Failure to close Bank Accounts

Mityana Municipal Council was established by an Act of Parliament and became

effective on 01/07/2015.

However, it was observed that four bank accounts are still in the names of Mityana

Town Council as shown below;-

S/N Account Name Balance as at

30/06/2016

01 Mityana Town Council LGMSDP (A/C No. 9030006339971) 1,267,181

02 Mityana Town Council Physical Planning (A/C No.

9030011559718)

658,639

03 Mityana Town Council (A/C No. 9010303144) 296,224

04 Mityana Town Council Ringebu (A/C No. 9028200007) 388,800

2,610,844

The Accounting Officer promised to effect closure of all bank accounts in the names

of Mityana Town Council.

This matter requires urgent attention.

11

6.5 Irregular Hire of Road Equipment

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.

It was observed that a sum of UGX.46,854,228 was spent on hiring road equipment

without solicitation from the regional centre or neighboring Local Government as

shown in Appendix 3.

The Accounting Officer explained that the Municipality will in future solicit road

equipment from the regional center and or neighboring district as required by the

guidelines.

I advised the Accounting Officer to always comply with the Force Account Guidelines.

12

APPENDICES

Appendix 1: Unaccounted for Funds

Date Vr No. Payee Details Amount Misstatement Remarks

30/6/2016 5/6/16 Kanaddi Trust Ent

additional works

incurred on construction

of pit latrine

1,134,000

1,134,000

no approval of additional

works, contract

agreement

on file

11/5/2016 068/05 Ssenyonjo

Dan

Engraving of

procured

items

582,000

582,000

no support

documents

attached

31/05/2016 011/05 Lugoloobi

JF

Refreshments

312,000

312,000

doubtful

expenditure; no support

documents

3/9/2015 22/9 Namuddu Rehema

Kilometrage allowance

140,000

140,000

No support documents

attached

17/2/16 034/02 Namuddu Rehema

Kilometrage allowance

140,000

140,000


attached

15/9/15 02/09 Mityana svc stn

Svcing of UAR 028Y

1,320,000

1,320,000


on file

20/5/2016 061/05 MBB 2000 Investments

Production of 2016/2017

budget 1,500,000

1,500,000

No LPO attached;

WHT not attached

3/5/2016 010/05 Medi

Kulayite

Salary

advance

200,000

200,000

Funds not

recovered

5,328,000 5,328,000

Appendix 2: Understaffing

MITYANA MUNICIPAL COUNCIL

STAFFING GAP

Job Title SCALE ESTAB Filled Gap

OFFICE OF THE TOWN CLERK

Town Clerk (Chief Township Officer U1SE 1 1 -

Personal Secretary U4 1 - 1

Driver U8 1 - 1

Sub-Total 3 1 2

ADMINISTRATION DEPARTMENT

Deputy Town Clerk (Deputy Chief Township Officer)

U1E 1 - 1

Senior Human Resource Officer U3 1 - 1

Assistant Town Clerk U4 1 - 1

Human Resource Officer U4 1 1 -

Information Officer U4 1 - 1

13

Records Officer U4 1 - 1

IT Officer U4 1 - 1

Stenographer Secretary U5 2 1 1

Senior law Enforcement officer U5 1 1 -

Assistant Inventory Management Officer (Stores Manager)

U5 1 1 -

Pool Stenographer Secretary U6 2 - 2

Office Typist U7 1 1 -

Office Attendant U8 4 2 2

Driver U8 4 2 2

Askari U8 4 1 3

Cemetery Attendant U8 2 - 2

Law Enforcement Officer U6 1 - 1

Sub-Total 29 10 19

FINANCE AND PLANNING

DEPARTMENT

Principal Treasurer U2 1 - 1

Senior Accountant (Revenue & Expenditure )

U3 2 1 1

Senior Planner/ Economist U3 1 - 1

Statistician/ Economist U4 1 1 -

Accountant U4 1 - 1

Senior Accounts Assistant U5 1 1 -

Accounts Assistant U7 2 1 1

Sub-Total 9 4 5

WORKS DEPARTMENT

Municipal Engineer (Principal Executive Engineer

U2 1 - 1

Senior Engineer (Civil) U3 1 - 1

Senior Assistant Engineering Officer (Roadsand Building)

U4 2 - 2

Physical Planner U4 1 1 -

Environment Officer U4 1 - 1

Assistant Engineering Officer (Water,

Electrical and Mechanical)

U5 3 - 3

Surveyor U5 1 - 1

Road Inspector U6 1 - 1

Land Supervisor U6 1 1 -

Plant Operator U8 4 - 4

Drivers U8 6 - 6

Plant / Motor Vehicle Attendant U8 7 - 7

Sub-Total 29 2 27

EDUCATION DEPARTMENT

Principal Education Officer U2 1 - 1

14

Senior Inspector of Schools U3 1 - 1

Inspector of Schools U4 1 - 1

Education Officer ( Guidance ands

Conselling)

U4 1 - 1

Sports Officer U4 1 - 1

Sub-Total 5 0 5

COMMUNITY BASED SERVICES

DEPARTMENT

Principal Community Development Officer

U2 1 1 -

Senior Community Development Officer

U3 1 - 1

Labour Officer U4 1 - 1

Sub-Total 3 1 2

INTERNAL AUDIT

Senior Internal Auditor U3 1 - 1

Internal Auditor U4 1 - 1

Sub-Total 2 0 2

PROCUREMENT AND DISPOSAL UNIT

Senior Procurement Officer U3 1 - 1

Procurement Officer U4 1 - 1

Sub Total 2 0 2

PRODUCTION AND MARKETING

Principal Commercial Officer U2 1 - 1

Senior Veterinary Officer U3 1 - 1

Agricultural Officer U4 1 1 -

Veterinary Officer U4 1 - 1

Fisheries Officer U4 1 - 1

Commercial Officer U4 1 - 1

Sub-Total 6 1 5

PUBLIC HEALTH DEPARTMENT

Medical Officer of Health Services

(Princ. Medical Off.)

U2 1 - 1

Principal Health Inspector U3 1 - 1

Health Educator U4 1 - 1

Health Inspector U5 1 1 -

Sub-Total 4 1 3

DIVISION COUNCIL FOR A

MUNICIPALITY: 3 DIVISIONS

Senior Assistant Town Clerk U3 3 1 2

Treasurer U4 3 1 2

Community Development Officers U4 3 1 2

Assistant Treasurer U5 3 1 2

Pool Stenographer Secretary U6 3 1 2

Law Enforcement Officers U7 3 - 3

Town Agents U7 15 13 2

Law Enforcement Assistants U8 15 - 15

15

Office Attendants U8 3 - 3

Drivers U8 3 - 3

Askaris U8 6 2 4

Sub-Total 60 20 40

TOTAL (Without Health Centres) 152 40 112

HEALTH CENTRES

HEALTH CENTRE III (3)

Senior Clinical Officer U4 3 2 1

Clinical Officer U5 3 3 -

Nursing Officer/ Nursing U5 3 2 1

Laboratory Technician U5 3 2 1

Enrolled Midwife U7 6 4 2

Enrolled Nurse U7 9 9 -

Laboratory Assistant U7 3 3 -

Health Assistant U7 3 3 -

Health Information Assistant U7 3 2 1

Nursing Assistant U8 9 9 -

Askari U8 6 - 6

Porter U8 6 - 6

TOTAL 57 39 18

HEALTH CENTRE II ( 4)

Enrolled Nurse U7 4 4 -

Enrolled Midwife U7 4 4 -

Nursing Assistant U8 8 8 -

Health Assistant U7 4 4 -

Askari U8 8 - 8

Porter U8 8 - 8

TOTAL 36 20 16

Overall total 245 99 14

6

Appendix 3: Irregular Hire of Road Equipment

Date PV Name Details Amount Remarks

28/06/2016 07/06 Genset equipments

Hire of road equipment Kayunga-Kanamba link

10,800,000

Irregular hire of road

Equipment


Hire of road equipment-Kinyankali-Kayunga Rd-

7,200,000


equipment


Hire of equipment (Bakunga grdns, Musajjatalemwa and

Mosque rds)

8,637,288


equipment

18/12/2015 06/12 Genset

equipments

hire of equipment (Bakunga

grdns, Musajjatalemwa and

Mosque rds)

2,752,540

Irregular hire

of road

equipment

18/12/2015 05/12 Genset hire of equipment (Danya Irregular hire

16

equipments Rd) 17,464,400 of road

equipment

Total

46,854,228

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