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i
THE REPUBLIC OF UGANDA
OFFICE OF THE AUDITOR GENERAL
ANNUAL REPORT OF THE AUDITOR
GENERAL
FOR THE YEAR ENDED 30TH JUNE 2011
VOLUME 1
PERFORMANCE REPORT
i
Table of Contents
List of Tables ..................................................................................................... iii
List of Acronyms ................................................................................................ iv
Executive Summary ........................................................................................... ix
1.0 Introduction .............................................................................................. 1
2.0 Performance of the Audit Function ........................................................... 5
2.1 Major Audit Focus during the year ............................................................ 5
2.2 Performance in Financial and Value for Money Audits ............................. 6
2.3 Audit of Central Government Entities ....................................................... 7
2.4 Audit of Statutory Corporations .............................................................. 10
2.5 Audit of Local Authorities ........................................................................ 13
2.6 Value for Money and Specialized Audits ................................................. 15
2.7 Support to Oversight Committees of Parliament .................................... 17
2.8 Information Technology and Audit Development ................................... 17
2.9 Audit Quality Control and Quality Assurance .......................................... 17
3.0 Performance of the Corporate Services Function ................................... 19
3.1 Human Resource Management and Development .................................. 19
3.1.1 Human Resource Policies ........................................................................ 20
3.1.2 Staff Recruitment and Promotion ........................................................... 20
3.1.3 Staff Trainings and Development ............................................................ 21
ii
3.1.4 International Trainings ........................................................................... 22
3.1.6 Restructuring of the Office ...................................................................... 22
3.1.7 De-linkage from Public Service ............................................................... 23
3.1.8 OAG Health Policies ................................................................................. 23
3.2 Administration, Communication and Judicial Matters ............................ 24
3.2.1 Records and Information Management .................................................. 24
3.2.3 Communication and Public Relations...................................................... 26
3.2.4 Legal Representation .............................................................................. 27
3.3 Financial Management and Internal Audit .............................................. 29
4.0 International Relations ........................................................................... 33
5.0 Registrations of Accountants .................................................................. 39
Appendix I: Unaudited Financial Statements of OAG for the year ended 30th
June 2011. ........................................................................................................ 41
Appendix II: Regional Branch Offices ............................................................. 56
iii
List of Tables
Table 1: Major Audit Focus in the FY 2010/11 ........................................................................................ 6
Table 2: Status of Audit Performance for the FY 2010/11 ..................................................................... 6
Table 3: Value of grants of credits issued during the FY 2010/11 ....................................................... 7
Table 4: Trends in the number of Professional Accountants since 2004/2005 ................................ 21
Table 5: Budget, Actual Releases and MTEF Projections (Billions) ..................................................... 31
iv
List of Acronyms
ACCA Association of Chartered Certified Accountants
ADB African Development Bank
AFROSAI African Organization of Supreme Audit Institution
AFROSAI-E Sub-Regional Organization of English Speaking AFROSAI
AG Auditor General
BFP Budget Framework Paper
Bn Billion
CAATS Computer Assisted Audit Techniques
CHOGM Common Wealth Heads of Government Meeting
COSASE Committee on Commissions, Statutory Authorities and State Enterprises
CPA Certified Public Accountant
DFID Department for International Development
DPAC District Public Accounts Committee
FINMAP Financial Management and Accountability Programme
GAO United States Government Accountability Office
GoU Government of Uganda
HLGs Higher Local Governments
HRMD Human Resource Management and Development
ICGFM International Consortium on Government Financial Management
ICT Information Communications Technology
IDI INTOSAI Development Initiative
IFMS Integrated Financial Management System
INTOSAI International Organizational of Supreme Audit Institutions
ISSAI International Standards of Supreme Audit Institutions
IT Information Technology
JICA Japan International Cooperation Agency
KCC Kampala City Council
v
KCCA Kampala Capital City Authority
LGMSD Local Government Management Service Delivery Programme
LGAC Local Government Accounts Committee
LLGs Lower Local Governments
MAAG Multilateral Audit Advisory Group
MCC Millennium Challenge Cooperation
MDA Ministries, Departments and Agencies
MTEF Medium Term Expenditure Framework
NAA National Audit Act
NAADS National Agricultural Advisory Services
OAG Office of the Auditor General
PAC Public Accounts Committee
PFAA Public Finance and Accountability Act
PPDA Public Procurement and Disposal Authority
ROM Results Oriented Management
RRHs Regional Referral Hospitals
SAI Supreme Audit Institution
Shs Shillings
VFM Value for Money
vi
Office of the Auditor General
Vision, Mission and the Core Values
Vision
“To be an effective and efficient Supreme Audit Institution (SAI) in promoting effective
public accountability”.
Mission
“To audit and report to Parliament and thereby make an effective contribution to
improving public accountability and value for money spent”.
Core Values
The Auditor General and the staff of the Office of the Auditor General in executing their
responsibilities are committed to live by the office’s core values of:
Integrity: Being upright and honest
Objectivity: To display impartiality and professional judgment
Professional competence: To act with diligence, proficiency and team spirit.
vii
Foreword by the Auditor General
In accordance with my mandate as stipulated under Article 163 of
the Constitution of the Republic of Uganda and as elaborated on by
the National Audit Act, 2008, it is my pleasure to present to you the
Annual Audit Report on the public accounts of Uganda for the
Financial Year 2010/2011 in five volumes.
The first volume of the report is about the general performance of the office as a whole,
while the second, third, fourth and fifth volumes are about the performance of the
external audit function. The executive summary which follows this foreword outlines the
content of the five volumes which constitute my annual report for the year 2010/11.
In the audit of the accounts of the FY 2010/11, the office adopted a sector approach in
order to improve on the quality and content of the audit reports. To achieve this, the
former directorates of Central Government and Statutory Corporations were collapsed
and reconstituted into the directorates of Central Government One and Central
Government Two. The central government directorates cover the audit of specific
sectors as defined by Government in the National Development Plan 2010-15.
The office planned to carry out a total of 1,888 Audits which included 1,872 financial, 12
Value for Money and 4 forensic audits. As at 31st March 2012, a total of 1,292 audits
were completed and reported on, while 591 were in progress. In addition, all the 1,059
sub county audit backlogs relating to FY 2009/10 were completed.
Under Value for Money and Specialized Audits, the office audited and reported on 12
audits as detailed in Volume 5 of my report.
The division of Corporate Services that supports and facilitates the performance of the
audit function successfully managed the budget process for the financial year. It
prepared and submitted for approval to Parliament a total budget of Shs 38.76Bn
viii
including a funding gap of Shs 5.25Bn. Parliament subsequently approved a total budget
of Shs 36.617Bn for the financial year 2011/12.
I would like to acknowledge the support from the Parliament of the Republic of Uganda
and its oversight committees, the Executive and the Development Partners who have
enabled me to successfully execute my statutory mandate.
My sincere gratitude is also extended to my staff for positively embracing the ongoing
developments in the office and for their efforts towards the achievements realized during
the year.
John F.S. Muwanga
AUDITOR GENERAL
ix
Executive Summary
Under Article 163(3) of the Constitution of the Republic of Uganda and Section 13 of the
National Audit Act 2008, the Auditor General is mandated to audit and report to
Parliament, on the public accounts of Uganda and of all public offices, including the
courts, the central and Local Government Administrations, Universities and public
institutions of like nature, and any public corporation or other bodies or organizations
established by an Act of Parliament annually, a report of the accounts audited for the
financial year immediately preceding.
It is in line with the above mandate that this report is herewith provided in five volumes:
Volume 1 - Annual Performance Report of the Office of the Auditor General;
Volume 2 - Audit Report on Central Government Ministries, Departments and
Agencies;
Volume 3 - Audit Report on Local Authorities including Regional Referral Hospitals;
Volume 4 - Audit Report on State Enterprises, Commissions and Statutory
Corporations;
Volume 5 - Value for Money and Specialized Audit Reports.
This Volume 1 of the report is presented in 5 sections as follows;
Section 1, covers a brief introduction of OAG, Mandate, Functions of the Auditor
General, Corporate Plan implementation, Current Macro Structure and Recent
Developments.
Section 2, presents a summary of the performance of the audit function as defined
under Article 163 of the Constitution of the Republic of Uganda and Section 13 of the
National Audit Act 2008.
x
Section 3, presents a performance review of the Corporate Services function in the
following areas: Human Resources Management and Development, Administration,
Communication and Judicial matters, Financial Management and Internal Audit.
Section 4, provides details of the performance of the office in international relations
and its obligations.
Section 5, presents a review of the performance of the Auditor General as Registrar of
Accountants as mandated under Section 18 of the Accountants Act, 1992.
1
1.0 Introduction
1.1 Brief History
External audit function in Uganda dates back to 1920s when Uganda as a protectorate
had its accounts audited by the Colonial Audit Office in London. It evolved overtime from
being headed by an Auditor in 1929 to an Auditor General appointed in 1952 in Kampala.
In 1962, the office started expanding progressively by opening regional offices. To-date,
a total of nine regional offices are operational in Gulu, Arua, Mbale, Soroti, Jinja,
Masaka, Mbarara, Fort Portal and Kampala. Plans are underway to open additional
regional offices to meet the ever increasing audit entities in Local Governments.
1.2 Mandate and functions of the Auditor General
Article 163 (3) of the Constitution and as amplified by Section 13(1) and Section 18 of
the National Audit Act 2008, the Auditor General is required to audit and report to
Parliament on the Public Accounts of Uganda and of all Public offices including the
Courts, the Central and Local Government Administrations, Universities and Public
Institutions of like nature, and any public Corporations or other bodies established by an
Act of Parliament and report to Parliament.
Article 163 (3) (b) requires the Auditor General to conduct Financial and Value for Money
audits in respect of any project involving public funds.
1.3 Corporate Plan Implementation
The Office of the Auditor General has been implementing a Five Year Corporate Plan for
the period 2006-11 which has since been updated to cover the period 2011-16.
The Strategic Objectives of OAG as stated in the above Corporate Plan have been:
To secure the financial and operational independence of the Auditor General
2
To improve the quality of both the OAG’s budget preparation and Monitoring
processes and management information systems.
To create an environment that enables the OAG to operate efficiently and recruit,
retain and motivate suitable staff.
To improve internal and external communications to raise the profile of the OAG
with staff and key stakeholders
To improve the quality of audit work by improving financial and value for money
audits and developing and implementing effective quality assurance
arrangements
To promote increased accountability, probity and transparency in the
management of public funds and resources by producing reports that add value
and make positive and practical recommendations.
The Corporate Plan provided policy direction in the preparation of the Annual
Operational Plans of the financial years since 2006/07. The assessment of performance
regarding achievements of the objectives runs through this performance report of the
office as contained in this Volume 1 of the OAG report.
The implementation of the 2006-11 OAG Corporate Plan expired on 30th June 2011.
During the same year, with support from the Financial Management and accountability
Program (FINMAP) under the Ministry of Finance Planning and Economic Development,
the office procured the services of the National Audit Office of the UK to assist in the
development of the next Corporate Plan for the period 2011-16. At the time of reporting
the new Corporate Plan was in place.
1.4 Current Macro Structure of the Office
The Office of the Auditor General (OAG) underwent a restructuring process which was
aimed at coming up with an appropriate structure which matches with the Audit
Workload. The new Strucure with a total establishment of 481 positions was approved
in the FY 2010/11. According to the new structure, the office has 5 Directorates, 4
3
Departments and 3 Units. The Office is headed by the Auditor General (AG) who is
assisted by the Assistant Auditor General (AAG) and Chief Operating Officer.
The Assistant Auditor General who heads the external audit function is assisted by 4
Directors of Audit.
The Chief Operating Officer who heads the Corporate Services function is assisted by the
Director Corporate Services.
The Macro-Structure of the OAG is as depicted below:-
4
1.5 Recent Developments
1.5.1 Automation of Audit Processes
The office has extended the use of ICT beyond facilitating internal and external
communications to automation of audit processes. The use of computerized audit tools
has taken root in financial audit directorates and currently 75% of the audit staff are
using teammate audit soft ware.
1.5.2 Adoption of Sector Approach to Audit
The Office adopted a sector wide approach to auditing with effect from the FY 2010/11.
This methodology aligns the audit process to the Government sector wide planning and
budgeting approach. This has contributed to knowledge accumulation and audit
efficiency.
1.5.3 Quality Assurance
In accordance with International Standards of Supreme Audit Institutions (ISSAI) 40, all
Supreme Audit Institutions are required to establish and maintain an appropriate quality
control system which covers all their work. The new structure provided for a Quality
Assurance unit and it was instituted during the year.
1.5.4 Corporate Services
The Corporate Services function that is responsible for supporting the external audit
function was strengthened by the recruitment of a Chief Operating Officer who is
responsible for ensuring that business operations within the office are efficient and
effective and that resources are properly managed.
1.5.5 Increased Audit Scope
The audit Scope has of recent increased to cover new Audits like, Energy, Oil and Gas,
Environment, Public Works, post primary schools and newly created Local Government
Councils.
5
2.0 Performance of the Audit Function
2.1 Major Audit Focus during the year
In determining the major focus for the FY 2010/11 audits, the office based its approach
on the following:
i. The National Budget Estimates for the FY 2010/11;
ii. Sector Priorities for the FY 2010/11;
iii. Major Findings in the Audit Report for the FY 2009/10.
iv. The OAG Corporate Plan 2006/07 – 2010/2011;
The two strategic objectives considered in the OAG Corporate Plan 2006/07 – 2010/2011
were:
i) To promote increased accountability, probity and transparency in the
management of public funds and resources by producing reports that add
value;
ii) To improve quality of audit work by improving financial and Value for
Money audits and having effective quality assurance arrangements.
In the FY 2010/11, the Accountability sector of which OAG is a member committed itself
to strengthening the adherence to compliance policies, service delivery standards and
regulations; promotion of the culture of public demand for accountability and value for
money as well as intensifying the fight against corruption. Hence, the major focus in the
Audits of the FY 2010/11 was as summarized in table 1 below:
6
Table 1: Major Audit Focus in the FY 2010/11
2.2 Performance in Financial and Value for Money Audits
In the Audit Period, the Auditor General planned to conduct a total of 1,872
Financial/regularity audits, 12 value for money and 4 forensic audits. However, it
completed a total of 2,339 financial audits including a backlog of 1,059 sub county
audits and 12 Performance audits respectively. The details are provided in table 2 below.
Table 2: Status of Audit Performance for the FY 2010/11
Directorate Entities Planned number of audit entities
Audits Completed
Percentage Audits in progress
Central Government
MDAs 97 92 95% 1
Projects 128 82 64% 20
Special Audits 10 5 50% -
Local Government HLGs 316 288 91%
LLGs 1,183 1,772 150% 550
Regional Hospitals
13 13 100%
Projects 0 5 100%
Special Audits 40 15 38% 13
State Corporations State Corporations
75 63 84% 7
Special Audits 10 4 40% -
Total 1,872 2,339 125% 591
Value for Money VFM Audits 12 12 100% -
Forensic Audits 4 -
Total 1,888 2,351 124.5% 591
Audits Major focus
Local Authorities Audits Service delivery with focus on Universal Primary Education, Health services and roads
Statutory Corporations Audits
Energy sector
Central Government Audits Public works, budget performance and consolidated financial statements
Value for money and specialized audits
Roads, electricity, agriculture, maternal health, tourism, communication services, environment, police and lands.
7
Grants of Credit Issued
Article 154 (3) of the Constitution of the Republic of Uganda requires the Auditor
General to approve withdrawals of all monies from the consolidated funds. Accordingly,
during the year 2010/2011, the Auditor General authorized withdrawals from the
consolidated funds amounting to Shs. 9,821,544,153,083. The details are in the table 3
below:
Table 3: Value of grants of credits issued during the FY 2010/11
Expenditure No. of Warrants Issued
Amount (Shs)
Recurrent 25 4,546,120,650,371
Development 17 3,836,396,733,773
Statutory 10 1,439,026,768,939
Total 52 9,821,544,153,083
2.3 Audit of Central Government Entities
This audit covered 92 MDAs and 42 projects and below are the major findings.
Summary of Major Findings
Implementation of the National budget
during the year was not properly
aligned with the National Development
Plan (NDP). Comparison of NDP
Sectoral allocations with the approved
budget allocation showed huge
variances at both budget and release
level.
Physical performance fell short of the
planned outputs in many sectors as a
result of budget cuts undertaken during
the year. This impairs the credibility of
the budget process.
Shs.10billion was released by MOFPED
to Microfinance Support Centre Ltd in
2011 to cater for the Presidential
initiative for market vendors and small
business operators. There were no
procedures in place to ensure proper
accountability and management of the
funds especially with respect to
Kampala based SACCOS.
8
Between March 2006 and May 2011,
UMEME offset shs.27.96 billion against
lease rentals payable to UEDCL in
respect of outstanding electricity bills
for government ministries, however,
there is no record showing the various
ministry accounts credited.
The Ministry of Local Government spent
a total of US$4,298,636 to open a
Letter of Credit (LC) for the supply of
70,000 bicycles for the chairpersons of
parish and village councils. 40% of the
LC representing US$1,719,454 was
fraudulently paid to the supplier since
the bicycles had not been delivered.
The fraudulently paid funds had not
been recovered by the time of audit.
Shs.10, 501,924,831were irregular
payments made to the contractor for
Kabale-Kisoro-Bunagana road as
compensation for change of prices of
basic materials and labour under the
“Price Adjustment” (VOP) clause in the
contract. Shs.837, 386,254 and Euros
255,124 were overpaid to various road
contractors resulting from inaccurate
measurements.
By year end, UNRA had not paid a total
of Shs.146, 264,347,800to various
contractors and consultants on a
number of roads because of failure by
government to meet the commitments
made during the year. This will attract
extra claims for interest by the
contractors resulting in nugatory
expenditure.
Ministry of works made irregular
payments amounting to Shs.4,
473,003,963 to contractors.
Shs.1, 214,590,305 to four contractors
was nugatory since it arose from
interest accrued on the delayed
payments for CHOGM 2007
infrastructure works maintenance
projects.
A case of loss (embezzlement) of
shs.521, 688,900 in a ministry that
occurred in 2007/2008 and involved a
number of employees in the Ministries
of Works & Transport, and Finance,
Planning and Economic Development
was dismissed by the magistrate
because the State failed to present
Police file in court throughout the
period the case was mentioned inspite
of overwhelming evidence available.
Government entered into a
memorandum of Understanding with an
unknown foreign firm for the sale of
9
Posta Uganda Ltd without the approval
of the Attorney General. The matter
needs further investigation to establish
the circumstances and the implications
to government.
Agreement for seven loans equivalent
to shs.1.1 trillion were signed before
their approval by Parliament contrary to
Article 159 of the Constitution of the
Republic of Uganda.
Government has not yet put in place a
policy or law to regulate and guide
compensations, particularly those
relating to war yet Ministry of Justice is
processing war debt compensation
claims for Northern Uganda (Acholi,
Lango, and Teso) in spite of similar
verifications undertaken earlier by the
Bigombe Team and another by the
Ministry of Defence.
A total of shs.906, 568,335 was granted
as incentives for hotel construction
when the facility had ended in
December 2010.
shs.150,284,885,491 had been paid to
the supplier for implementation of
National Security information Systems
(National Identity Card)project yet by
March 2012, only 400 cards had been
personalized. No funding of the
operational costs estimated at shs.72,
271,834,000 had been released
crippling the overall implementation of
the project. This project funded through
borrowing from BOU has attracted
interest costs of over shs.3,
227,538,712.
Since 2006 government has budgeted
shs.92 billion annually for subsidies for
electricity despite the fact that subsidies
have been much higher. This has
created a shortfall of shs.275 billion
since 2006 to date.
UMEME energy loss broken down into
technical and commercial losses is not
known yet over the years, UMEME
reported that its actual losses at 30%
which is higher than the target loss of
28%.
Audit undertaken of Production Sharing
Agreements have ascertained a total of
US$.492, 544,876 as recoverable
expenses to be borne by government
upon the commencement of oil
production. The Accountant General has
not yet prescribed the accounting
treatment of such expenses in the GoU
financial statements.
10
Challenges
The major challenges encountered were;
The organizational reforms (i.e)
restructuring, recruitment and re-
organization impacted on the
implementation of the agreed
operational plan. Staff had to adapt
to the new sector based approach to
audits. In addition new staff had to
adopt to the use of electronic
working papers.
Due to constraints in funding, key
areas of focus like public works had
to be undertaken on a sample basis.
Out of 225 contracts implemented
by UNRA the Directorate was able to
audit 25 with the funds that were
allocated for that purpose
2.4 Audit of Statutory Corporations
This audit covered 63 Statutory Corporations and 40 projects and below are the major
findings.
Summary of Major Findings
Based on the above scope and objectives, below is a summary of the Major finding for
the year:
During the year, Bank of Uganda
issued letters of comfort to various
commercial banks in favour of
borrowings by HABA Group
amounting to shs.153 billion. As at
30th June 2011, the Bank had paid
shs.82 billion to two of the
commercial banks following
nonpayment of HABA Group’s
borrowings as agreed with the
commercial banks. Other
commitments amounting to shs.71
billion for which letters of comfort
were issued were due to mature after
30th June 2011. The letters of
comfort were issued on the request
of the Minister of Finance, Planning
and Economic Development.
Parliamentary approval was not
obtained. The Bank has recognized a
financial loss of shs.153 billion in the
financial statements as it follows up
this matter with Government.
As at 30th June 2011, the Bank of
Uganda capital reserves after
excluding accumulated unrealised
foreign exchange gains (translation
11
reserves) was a net deficit of shs.168
billion. This indicates that the capital
of the Bank is eroded and there is
need for urgent corrective action.
Management of Uganda Broadcasting
Corporation disposed 53.283 acres
out of 59.1 acres of UBC land located
at Bugolobi in Kampala, between
2007 and 2011. However, the
disposal of this land was
characterized by a number of
irregularities. These included sale of
UBC core assets contrary to the
established policies, disposal of the
land without the prior approval of the
Minister, sale of the land at less the
market valuation, breach of contracts
of sale by the purchasers and undue
influence exerted by the Minister on
the Board in matters relating to land
disposal.
The Corporation Secretary of the
Electricity Regularity Authority (ERA)
did not seek the approval of the
Board before issuing a letter to a
thermal company amending the
terms of the license relating to the
power plant fuel consumption rates,
which action resulted into a loss of
US$4,078,329 to government.
Differences in the interpretation of
some of the provisions of the
Electricity Act 1999 by the Electricity
Regulation Authority (ERA) and the
Ministry of Energy and Mineral
Development (MEMD) has resulted
in the duplication of some of the key
functions of the Sector regulation in
respect of human resource
management, Electricity Sector
planning and tariff setting. This has
affected the effectiveness of ERA.
The duplication of roles resulted in
ERA seeking a legal opinion from the
Solicitor General whose response also
appears to be at variance with the
provisions of the Act.
Four parastatal bodies, three of them
wholly Government owned proposed
dividends totalling Shs.4,098,059,000
during the year under review.
However, the dividends had not been
remitted to the Government
Consolidated Fund Account by the
time of writing this report.
Government entered into a consent
judgment to settle Pension, Gratuity
and other costs to former employees
of UEB totalling Shs.47,972,421,017.
Out of this amount, a total of
Shs.17,953,672,247 in respect of
Interest (Shs.16,144,172,247) and
damages (Shs.1,109,500,000) could
have been avoided had the
provisions of Section 129 of the
Electricity Act been complied with by
the Privatization, Enterprise Reform
and Divestiture Unit (PU).
Contractual arrangements between
UEDCL and UMEME allow UMEME to
set off from lease rentals payable to
UEDCL amounts outstanding in
respect of GOU MDA bills. A sum of
Shs.27, 911,559,659 had been offset
against lease rentals between 15th
12
March 2006 to 15th May 2011,
however, because individual MDAs
are not informed of this
arrangement, they have continued
making full payment of their
Electricity bills. There is a risk of
double payment of these bills by
MDAs.
A private law firm was paid Shs.5.4
billion by Civil Aviation Authority
(CAA) as debt collection fees having
purportedly assisted CAA collect a
debt of shs.54 billion owed by
Government. This expenditure was
unnecessary, could have been
avoided given that Government had
already committed itself to pay it. I
have recommended that the matter
should be investigated further to
establish the circumstances under
which the transaction was handled
and any loss arising should be
recovered and action taken against
those response.
Ministry of Finance, Planning and
Economic Development through the
Privatization Unit paid an amount of
Shs.4.7bn to a local firm as an out of
Court settlement after directing
Kilembe Mines Ltd not to pursue a
court case in a matter that KML had
been assured by their lawyers that
they had a Good Case. This amount,
which KML was directed to recognize
as a loan in its books at an interest
rate of 9% was not approved by KML
Board of Directors. As at 31st
December, 2010 the Loan had
attracted accumulated interest of
shs.1,269, 000,000.
Challenges
The major challenges encountered were;
Delayed presentation of draft
accounts for audit by some
entities.
Failure by some entities to
provide timely responses to
management letters issued to
them.
Delayed start of the audits due to
unavailability of documents
withdrawn from some entities by
other investigative agencies e.g.
National Theatre, Cancer
Institute, etc.
13
2.5 Audit of Local Authorities
This audit covered 2,093 Local Authorities including 5 projects and below are the major
findings.
Summary of Major Findings
Basing on the above scope and objective, below is a summary of the major findings for
the year.
Accounts for 45% of HLGs and 45%
of LLGs were unqualified;51% of
HLGs and 42% of were qualified
while 4% for HLGs and 13% for LLGs
had disclaimer opinions.
Revenue performance of 87 councils
revealed that out of the budgeted
sum of Shs. 38,186,314,821 only Shs.
25,824,525,226 was realized resulting
into a short fall of Shs.
12,361,789,595 which is equivalent to
32.4% under collection. With regard
to the sampled Lower Local
Governments (Sub Counties) an
amount of Shs. 8,489,933,773
remained uncollected during the
period.
A review of Various Council records
revealed losses of funds amounting to
Shs 1,039,878,751. The losses were
in respect of misappropriated revenue
and unauthorized withdrawal of funds
from bank accounts.
Shs. 17,909,576,428 in respect of
HLGs comprising of administrative
advances, incompletely vouched
expenditure, un-vouched expenditure
and Doubtful expenditure remained
outstanding contrary to the
regulations.
Shs. 34,034,740,313 in Higher Local
Governments were balances in cash
unspent by year end. This represents
an increase of 17% from the previous
year. In addition Shs. 2,646,728,346
remained unspent in the sampled
Lower Local Governments.
A number of higher and lower local
governments accumulated
outstanding commitments amounting
to Shs. 9,629,524,558 and Shs
271,983,680
beyond their approved budget
estimates respectively .
A number of Local Governments
procured items and services worth
Shs. 24,346,888,735 without
following Public Procurement
Regulations and guidelines.
Shs. 12,306,938,816 and Shs.
1,322,057,657 was spent by higher
and sampled lower local governments
respectively in excess of provisions
14
authorized in the approved estimates
contrary to Financial Regulations. The
previous year’s unauthorized excess
expenditure for higher local
governments amounted to Shs.
6,944,000,005 implying an increment
of 77% in the current year.
A sum of Shs. 2,334,135,412 in
respect of conditional grants was
diverted by some Local Governments
to activities not prescribed in the
conditions and guidelines of the
grants in question. This represents
an increase of 1.3 billion from the
previous year.
Expenditure amounting to Shs
1,434,444,106 in some council was
utilized for activities that were not
beneficial to the Councils and hence
were considered wasteful. This
represents an increase of Shs.1.2
billion from the previous year.
With reference to Primary Leaving
Examinations for the academic year
2010 an average pass rate of 84%
and a failure rate of 16% were
observed. My inspection of schools
revealed the following as the major
shortcomings that negatively affect
service delivery in the education
sector: Lack of teacher’s
accommodation; Lack of lunch for
pupils and teachers; High Teacher to
pupil ratio of 1:83 compared to the
recommended 1:53; Inadequate
latrine facilities; Crowded class
rooms, a ratio of over 1:80 compared
to the recommended 1:53;Delayed
distribution of UPE funds; Poor
infrastructure such as old dilapidated
classrooms and toilets.
Inspection of Referral Hospitals,
District hospitals and Health centers
revealed a number of weaknesses
that hinder effective health services
which included: Severe staffing
shortages; inadequate transport
facilities; Lack of medical equipment;
inadequate delivery of medical
supplies; Expiry of drugs; Inadequate
patients’ wards; Dilapidated buildings;
Incomplete building structures;
Limited staff accommodation; Poor
record keeping and in some cases
non- availability of records; Minimal
support supervision; Inadequate
power supply; Lack of drug store
keepers
Review of the utilization of Uganda
Road Funds by 10 entities revealed
that out of disbursements of Shs.
14,097,342,554 only
Shs.2,600,728,856 was utilized
leaving Shs. 11,496,613,698 idle.
It was noted that various entities
lacked land titles for public land
occupied by schools, Health Centers
and administrative headquarters.
There is a risk of encroachment and
loss of the properties.
15
Challenges
The major audit challenges encountered were;
Increasing audit population;
Delayed submission of financial
statements and responses to audit
queries by Accounting Officer;
Shortages in staffing levels though it
has been solved.
2.6 Value for Money and Specialized Audits
Value for Money (VFM) audit examines the economy, efficiency, effectiveness and
environmental effects of government projects and operations. The audits endeavor to
evaluate if activities, programmes or projects involving public funds in audited
organizations have been managed and conducted with due regard to economy,
efficiency and effectiveness. During the FY 2010/2011, the VFM audits were conducted
in accordance with the International Organizations of Supreme Audit Institutions
(INTOSAI) standards.
During the year 2010/11, the Directorate of Value for money and specialized audits
carried out 12 studies and completed all of them. The detailed findings and
recommendations are in Volume 5 of the Auditor General’s report and in the individual
audit reports. The individual studies were as follows:
1. Regulation and Provision of Communication Services by Uganda Communications
Commission (UCC);
2. Production of Deed Plans and Maps by the Department of Surveys and Mapping in
the Ministry of Lands, Housing and Urban Development;
3. Rehabilitation and Maintenance of Feeder Roads in Uganda: A case study of
Hoima, Kumi, Masindi, Mukono and Wakiso Districts;
16
4. Conservation of Wildlife by the Uganda Wildlife Authority;
5. Management of Accommodation by the Uganda Police Force;
6. Implementation of Bujagali Interconnection Project by Uganda Electricity
Transmission Company Limited (BIP);
7. Management of Fisheries on Lake Victoria;
8. Management of National Agricultural and Advisory Services (NAADS): A case
study of Kabarole, Kasese, Lira, Manafwa, Mubende and Tororo Districts;
9. Protection of Central Forest Reserves in Uganda Implemented by National Forest
Authority (NFA);
10. Management of the Presidential Initiative on Banana Industrial Development
Project (PIBID);
11. Provision of Maternal Health Services by the Ministry of Health;
12. Management of Academic Programmes at Makerere University;
Challenges
The major challenges encountered were;
Delayed consideration of VFM audit reports by Parliament
17
2.7 Support to Oversight Committees of Parliament
In accordance with Article 153 of the Constitution of the Republic of Uganda, Parliament
through its oversight Committees, performs the oversight function over public funds and
requires the Executive to account for the public resources entrusted to them for
provision of the public services. The Accountability Committees include: the Public
Accounts Committee (PAC) for Central Government, the Local Government Accounts
Committee (LGAC) for Local Governments and the Committee on Commissions, Statutory
Authorities and State Enterprises (COSASE).
During the year 2010/2011, the Auditor General actively provided support to the
Committees during discussions.
2.8 Information Technology and Audit Development
In the OAG Corporate Plan 2006-2011, the Office of the Auditor General focused on
creation of an appropriate IT governance structure, development of IT infrastructure and
staff capacity to facilitate the adoption and rollout of automated audit tools for
improved audit business processes. The office also acquired software licenses for
teammate and IDEA data analysis soft ware and trained staff in the areas of IT audit,
network data back up and data management and structured query language (SQL).
2.9 Audit Quality Control and Quality Assurance
Besides the internal audit quality control and assurance through regular reviews by
supervisors, the office is also subjected to external quality review carried out after every
three years by the African Organization of Supreme Audit Institutions of the English
Speaking Countries (AFROSAI-E), Office of the Auditor General was carrying out.
18
During the year, AFROSAI carried out a quality control and assurance review on the
office by a high level team of eight reviewers drawn from five SAIs of Norway, Sweden,
South Africa, Kenya and Tanzania with representation from AFROSAI-E secretariat.
AFROSAI-E team poses for a group photo with the Assistant Auditor General Mrs. Keto N.
Kayemba (centre), the Chief Operating Officer (2nd row first from right) and the Director /
Corporate Support Executive (first from right)
19
3.0 Performance of the Corporate Services Function
The Corporate services function supports the external audit function by managing
financial and human resources; internal and external communications; other office
operations and administrative issues. The subsequent sections explain the achievements
during the year.
3.1 Human Resource Management and Development
The office of the Auditor General continued with the implementation of its strategic
objective of creating an environment that enables it to operate efficiently, Recruit, Retain
and Motivate suitable staff. During the year, the Human Resource Department managed
the restructuring process, implemented the new structure, and managed staff
performance, capacity building activities as well as staff welfare.
OAG Staff during the Annual Staff meeting held at Serena Hotel
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3.1.1 Human Resource Policies
The final OAG staff structure, the National Audit (Terms and Conditions of staff)
Regulation 2011 were approved by Parliament and is now operational.
3.1.2 Staff Recruitment and Promotion
The new staff structure with a total establishment of 481 provides for a total of 324
Audit staff and 157 non audit staff. The structure is being implemented in phases due to
financial and Office Accommodation Constraints. During the Audit year 2011/12, 68
Officers were recruited and 69 promoted. The 68 officers recruited included 55 Audit and
13 non Audit staff. At the time of reporting the staffing level was at 88% of which 74%
are audit while 13% are non audit staff.
Recently recruited OAG staff taking oath of secrecy following a pre-induction ceremony held in the Ministry of Finance
Planning and Economic Development Conference room.
21
3.1.3 Staff Trainings and Development
The office sponsored staff to pursue professional accounting and other qualifications. A
total of nine (9) officers completed various professional courses while 20 staff are yet to
complete. The number of professionally qualified staff increased from 52 in 2005 to 98
in 2010/11 as indicated below:-
Table 4: Trends in the number of Professional Accountants since 2004/2005
Year Number at the
beginning of the year
Increment* (Net
Adjustment)
Number at end
of year
2004/2005 48 4 52
2005/2006 52 6 58
2006/2007 58 5 63
2007/2008 63 7 70
2008/2009 70 6 76
2009/2010 76 7 83
2010/2011 83 15 98
Note:
The increment (Net adjustment) figure caters for staff who trained and qualified as well
as those who joined OAG with full professional qualifications.
In regards to other professions, at the time of reporting one staff had completed a
Masters Degree in Business Administration and total of 9 staff members were pursuing
various courses leading to the award of Masters, Post graduate Diplomas, Diplomas and
certificates.
In addition the office supported staff for skills development trainings. During the year,
staffs were trained in the following areas: procurement audit; forensic audit, IDEA,
Records Retention and Disposal, Advanced auditing, taxation auditing and treasury
management.
22
3.1.4 International Trainings
As one of the Capacity Building Strategy, Office of the Auditor General facilitates its staff
for attachment programs to other SAIs and relevant organizations abroad to learn, share
information and experiences. During the year of reporting: a team of 8 Officers were
trained in India in the areas of Performance Audit, IT Audit, Public Sector Audit and
Regularity Audit. The Internal Audit Unit staff attended an international Annual
Conference in Tanzania. Other officers from the office also attended the East and
Southern African Association of Accountant Generals Conference, in Swaziland. Two staff
attended training in Value for Money performance audit in Sierra Leone. Two staff in
Information security from Nairobi and 2 staff trained in IT management from National
Audit Office of UK.
3.1.5 Staff Performance Appraisal
The Office of the Auditor General is currently using the scalar rating method in
appraising staff performance. The office conducted appraisals for 358 staff members.
Initiatives were undertaken to adopt the Result Oriented Management but it could not
be fully implemented due to inadequate manpower in the Human Resource Department
to provide continued support and monitoring of staff performance, especially in the
regional Branch Offices.
However, as a result of the implementation of the new structure, the Staffing level in the
Human Resource Department increased from 4 staff in the year 2010/11 to 6 in the
audit year 2011/12. The two staff recruited included a Manager (HRMD) and a Senior
Personnel Officer.
3.1.6 Restructuring of the Office
To achieve objective 3 in the Corporate Plan 2006/2007 – 2010/2011 which is; to create
an environment that enables the office to operate efficiently, recruit, retain and motivate
suitable staff, it was envisaged that the OAG structure needed to be reviewed. During
the year 2009/2010 the Office outsourced the services of the National Audit Office of the
23
UK to conduct the restructuring exercise. The draft OAG restructuring report containing
findings and recommendations was submitted to Parliament for approval and
subsequently approved. The implementation of the approved structure commenced in
the year 2010/11 and is in progress
The structure is being implemented in phases due to financial and office accommodation
constraints. The new structure provided for the Directorate of Corporate Services,
Department of Technical Support Services under which the Quality Assurance Section
falls and the IT Department. During the year, a Chief Operating Officer, Director
Corporate Services and Manager IT were recruited. The Value for Money Audit
Department was also elevated to a Directorate in charge of Value for Money and
Specialized Audits and a Director Value for Money was recruited.
3.1.7 De-linkage from Public Service
Section 9 of the National Audit Act 2008 empowers the Auditor General to appoint and
manage staff of the office. However, to fully operationalise these provisions, there was
need to come up with OAG specific staff Rules and Regulations (TCS) to facilitate the
de-linkage of OAG staff from the Main stream Public Service. In the Audit year 2010/11,
The National Audit (Terms and Conditions) Regulations 2011 which operationalises the
above provisions were approved and appointments for all staff from the main stream
public service were regularized. At the time of reporting, the draft Human Resource
Manual was under review and it is expected to be approved by end of the year 2012.
3.1.8 OAG Health Policies
The office of the Auditor General Continued with the implementation of the HIV/AIDS
policy under which 27 staff and their spouses who live with HIV/AIDS as well as those
with life threatening illnesses like hypertension, cancer and diabetes are supported to
ensure that they live a useful life both to the nation in general and OAG in particular. In
addition, a health care scheme which covers the employee, their spouses and two
biological children was introduced in the year 2011.
24
3.2 Administration, Communication and Judicial Matters
3.2.1 Records and Information Management
The OAG Records Information Management (RIM) Unit comprises of the Central Registry
at the Headquarters where all current Human Resource Management and administrative
records are controlled, Records centre (Archives) where all semi-current and archival
records are managed, Resource Centre where all Library and knowledge resource
material are managed. There is also a Branch Registry at every Regional Audit Branch
Office managed by 9 Administrative Assistants.
Office of the Auditor General, like any other organization, needs records in the conduct
of current business, making decisions and taking actions. Where records are not properly
managed, the ability of government to deliver its programs and services while meeting
its accountability requirements is compromised. Poorly managed information can
increase the risk of OAG’s failure to make an effective contribution to improving public
accountability and value for money spent hence the need for effective means of
managing information.
During the Audit year 2011/12, the Resource Centre was stocked with 144 publications
including journals and various reports; the office boosted the storage capacity by re-
equipping every department with shelves, cabinets, desktops and acid-free file boxes
and a refresher training in Records retention and disposal for Administrative Assistants
was carried out.
However, the office continued to grapple with proliferation of paper documents in very
limited and expensively rented office space. Priority shall thus be apportioned to
electronic archiving and establishing an e-resource Centre for enhanced knowledge
management. As a step to the achievement of the above, a Senior Knowledge
management Officer was recruited and the resource center equipped with 8 Desk Top
Computers and a projector.
25
In the OAG Corporate Plan 2011-2016, the office has committed itself to strategically
re–organize information both manually and electronically. The knowledge and
information management function and staff will be rationalized under the Technical
Support Services Department. A robust records storage and retrieval system is to be
established with well developed mechanisms for automated knowledge management
and skills transfer with aim to benefit both internal and external stakeholders.
3.2.2 Information Communications Technology Development
The application of ICT in the office of the Auditor General has been extended beyond
facilitating internal and external communication to automation of audit processes;
modernization of training methods; facilitation of knowledge sharing and management of
Records and Information.
In the audit year 2009/2010, the OAG web site and the intranet were launched. The
intranet has continued to be an important communications tool in the Office with regular
updates on office activities on the net. In the audit year 2011/12, the OAG web site was
upgraded to improve on its user interface and the quality of the content.
At the time of reporting all OAG regional offices except Jinja and Mbale were connected
to the Wide Area Network and staff members have access to the intranet. The office
used to experience net work failures as the staffing levels increased due to limitations in
the band width and load shedding. During the year, band width for the head Office and
Regional Offices was upgraded from 1MB- 7MB and 128KB to 1 MB respectively. In a bid
to address the frequent load shedding which affect the operations of the Regional
Offices, power back up batteries were installed at Gulu, Soroti, Masaka and Fort Portal
Regional Offices.
With support from JICA, the Office developed its IT Strategic Plan for the period 2011-16
which covers both IT audit an ICT infrastructure development within the Office.
26
However, the efficient operation of OAG-ICT was hampered by several challenges. The
office has not been able to fully develop ICT infrastructure in the Rented Premises due
to the high installations costs involved. In addition due to budget constraints, the office
was not able to connect the newly commissioned Regional Offices in Jinja and Mbale to
WAN. Maintaining optimum link speed in our branches and Headquarters office provided
a challenge in the IT operations of the Office. Embassy house and Lourdel road were
seriously affected so were Soroti and Arua Offices. The measure to mitigate this
challenge include upgrading the Data Centre to provide better services.
3.2.3 Communication and Public Relations
The communications unit which falls under the technical support department is charged
with the responsibility of formulation, implementation, monitoring and review of the
internal and external OAG communication strategies. Through the execution of the
above stated functions the unit has assisted the office in raising its profile amongst the
stakeholders. Following the recruitment of the Senior Public Relations Officer last year,
internal communication has been boosted through the bi-monthly flyers which are
accessed by staff through the intranet. With the upgrade of the intranet, staff will now
be able to interact and chat by blogging. The suggestion box and the notice board were
also included on the intranet.
A draft Communications Policy was developed and at the time of reporting, it was under
review. In addition, the Senior Public Relations Officer maintained a close link with the
media to ensure accuracy and consistence of the information communicated to the
public.
The office undertook various social initiatives to support social causes which contribute
to community welfare. These initiatives were aimed at improving the corporate image of
the office.
27
In the year 2010/11, the office participated in the MTN marathon which is an annual
sports event hosted by MTN to mobilize resources to support various community health
programs like maternal health, water and sanitation and to assist the disadvantaged
persons in the war ravaged areas of Northern Uganda.
Through the OAG Women’s Forum the office contributed mattresses and baby cots to
Nakaseke Hospital. Through employee’s contributions, the office donated Shs. 2.77m for
clinical beds to Lungujja Community Health Caring Organization (LUCOHECO) which
provides health care and support to the vulnerable people of Lubaga Division especially
those infected and affected by HIV/AIDS, orphans, widows, and the elderly. In addition,
the office contributed Shs 1m towards Kyanja Community Health Center to help in the
fight against infant mortality.
Members of the OAG Women’s Forum led by the Assistant Auditor General Mrs. Keto N Kayemba (center) at Nakaseke
Hospital handing over baby cots and mattresses.
3.2.4 Legal Representation
The office has a Legal Unit/Chambers that is fully registered and operational with two
(2) staff members. This Unit is fully responsible for providing legal guidance and also
28
over seeing all legal issues that may arise against the office. In addition the Unit has
effectively represented the office as far as legal matters are concerned.
During the year, the unit created a mini-library that includes; Laws of Uganda 2000-2004
and subsidiary legislation and, Publications from renowned legal scholars. Furthermore,
the National Audit Regulations 2011 were enforced and are operational. The Legal and
Compliance Policy was drafted and at the time of reporting, it was under review by Top
Management. The Unit is also acknowledged for its conclusive disposal of 5 staff
disciplinary cases.
3.2.5 Professional Liability Indemnity Insurance
During the year 2010/2011, the office took a professional liability indemnity insurance
policy to protect itself in the probable event that the office is sued on the contents of its
audit reports.
3.2.6 Office Accommodation and Transport Equipment
The Office of the Auditor General Headquarters is accommodated partly in the Treasury
Building and in rented premises within Kampala. At the beginning of the financial year
2010/11, five Regional Offices of Arua, Gulu, Soroti, Fort Portal and Masaka were
accommodated in OAG premises while the other five Offices of Jinja, Mbale, Kampala,
Kampala City Council and Mbarara were accommodated in other Government
institutional buildings.
With support from FINMAP, the office secured funding for the construction of the Audit
House in Kampala and three Regional Offices in Jinja, Mbale and Mbarara Towns.
During the Financial year 2010/11, construction of two Regional office blocks in Jinja and
Mbale Towns were completed and the Offices handed over to the office and are now in
use. At the time of reporting, the construction of the Audit House and the development
of the detailed design for Mbarara Regional Office were in progress.
29
The Speaker of Parliament, Rt. Hon. Rebecca Alitwala Kadaga (left) officially breaking the ground for Kampala Audit
House. Looking on is the Auditor General, Mr. John F.S. Muwanga, the Chairman Parliamentary Committee on Finance
Hon. Frank Tumwebaze and the representative of the Contractor, M/s Seyani Brothers & Co. (U) Ltd.
Due to inadequate office space at the head quarters, some of the OAG staff members
were temporarily being accommodated in the premises of the Audit entities which was
envisaged to be a threat to their independence in execution of their statutory mandate.
To overcome the above threat, during the year, the office rented extra office space and
withdrew all its staff members from the premises of the Audit entities.
During the year 2010/2011, the office acquired a total of 4 vehicles. These vehicles were
deployed to the various Directorates to facilitate field operations.
3.3 Financial Management and Internal Audit
In accordance with the two strategic objectives of the OAG;
To improve the quality of budget preparation, financial management and budget
monitoring ;
To secure financial and operational independence of the Office.
During the year, the office used the Output Budgeting Tool (OBT) to prepare its Budget
Framework Paper, Draft Budget Estimates for the FY 2011/12 and the Quarterly
30
Progress Reports for the FY 2010/11 and submitted to the Ministry of Finance Planning
and Economic Development in time.
3.3.1 Budget Performance for the FY 2010/11
Pursuant to the National Audit Act 2008 section 33 which provides for the preparation
and submission of estimates for the year, of administrative and development
expenditures and estimates of revenues of the Office of the Auditor General, the office
prepared its budget for the financial year 2011/2012 and Submitted to Parliament. The
total budget approved for the office for the Financial Year 2010/2011 was Shs 33.397Bn
for both development and statutory recurrent expenditures including non resource taxes.
The total budget of Shs 33.397Bn included Shs 32.643Bn GoU funds and Shs 0.754Bn
donor funds. The allocation of Shs 33.397Bn GOU funding was as follows: Statutory
wage Shs 12.991Bn, non wage Shs 18.692Bn and Development Shs 0.960Bn including
taxes.
In addition, donor funds totaling to US$6.588m administered under FINMAP project
were allocated to the office for capacity building interventions which included
construction of the Audit House and a Regional Office in Mbarara, retooling and staff
training.
The OAG budget increased as compared to financial year 2009/10. Whereas the
approved budget for 2009/10 was 24.518Bn (with an actual outturn of Shs.22.5Bn) a
20% increment was given in the Financial Year 2010/11 to reach an approved budget of
Shs. 33.397Bn with an outturn of Shs. 32.348Bn.
31
A summary of the Budget, Actual Releases and MTEF Projections for three years is
shown in table 5 below:
Table 5: Budget, Actual Releases and MTEF Projections (Billions)
3.3.2 Internal Audit
The Internal Audits Unit is charged with the responsibility of verifying the effectiveness
of internal controls and advise Top management on risk management. The recruitment
of a Principal Internal Auditor strengthened the Capacity of the Unit which has enhanced
its performance. During the year, the unit was able to produce a draft copy of the
Enterprise Risk Management Frame work; a risk register and 2 Consolidated Internal
Audit Reports for the FY 2010/11.
3.3.3 Financial Reporting and Audit
In accordance with section 35 of the National Audit Act 2008 the office prepared and
submitted the financial statements for the financial year ending 30th June 2011 as per
the required statutory date of 30th September 2011. In regards to external audit of
accounts of the office, at the time of reporting, Parliament was handling the
procurement process for the external Auditor to audit the accounts of the Office of the
Auditor General for the Financial Years 2005/2006 to 2010/2011.
2009/10 2010/11 2011/12 MTEF Projections
Budget
Type
Approved
Budget
Actual
Outturn
Approved
Budget
Actual
Outturn
Approved
Budget
2012/13 2013/14
Recurrent 24.518 22.5 31.683 31.508 35.047 35.047 39.646
GoU Devt 0.900 0.8 0.960 0.810 0.76 0.66 0.726
Donor Devt 2.310 2.310 0.754 0.030 0.800 - -
Total 27.728 25.710 33.397 32.348 36.607 35.707 40.372
32
3.3.4 Procurement and Disposal
The Procurement and Disposal Unit is headed by the Senior Procurement Officer.
Together with the contracts committee, the unit is entrusted with handling the
procurement and Disposal function in the office.
In order to facilitate orderly execution of the procurement activities of the office, the
Unit consolidated the Procurement Plan for the year 2010/2011 which was executed.
As a statutory and compliance requirement, the Unit prepared and submitted the
monthly reports to PPDA in time; it updated the prequalification list of providers for
works, supplies and services which are of routine nature.
3.3.5 Assets Management
The office has continued to maintain an asset register that was installed in 2007/2008.
The register was updated with the details of all the office assets including vehicles,
furniture, motorcycles, buildings etc acquired during the year 2010/2011. Updates were
done in the assets register whenever there was any asset acquisition, transfer and
disposal. The assets were fully engraved in their respective categories including both
donated and GoU assets.
33
4.0 International Relations
During the year, the Office of the Auditor General maintained its relations with a number
of International Organizations for knowledge and experience sharing. Staff from the
office (OAG) made international visits to other relevant organizations and for
international conferences outside Uganda to learn from and share experiences with
them.
4.1.1 INTOSAI and IDI
INTOSAI is the International Organization of Supreme Audit Institutions. It is an
organization or association of Supreme Audit Institutions (SAIs) of countries who are
members of the United Nations (UN). IDI means International Development Initiative. It
is the training arm of the INTOSAI through which members of INTOSAI share
knowledge, skills and information through training.
The Office of the Auditor General subscribes to and is a permanent member of INTOSAI.
During the year, the Assistant Auditor General and the Director/Corporate Support
Executive attended a conference for INTOSAI working Group on environmental Audit in
Argentina.
4.1.2 AFROSAI and AFROSAI-E
AFROSAI is the African Organization of Supreme Audit Institutions. It is a continent
wide organization of Supreme Audit Institutions (SAIs) of Africa and a Regional African
continental member of the INTOSAI. Through participating in the programmes and
events of AFROSAI, member SAIs share knowledge, information and experiences on
public sector audit issues.
The Office of the Auditor General subscribes to and is a member of AFROSAI. During
the financial year, three staff (Chief Operating Officer, the Director/ Corporate Support
Executive and one Senior Principal Auditor) attended the Annual AFROSAI Technical
Update.
34
The Senior Public Relations Officer Gloria Namugera (left) poses for a photo with communication experts from SAI
Tanzania, SAI Namibia and SAI Swaziland during the AFROSAI-E Communication Workshop.
In addition, two staff attended a management development conference in South Africa;
the Principal Internal Auditor attended a conference on Risk Based Internal Auditing in
Swaziland and the Senior Public Relations Officer attended the communications
workshop on increasing knowledge and working with communication in supreme audit
institutions.
4.1.3 The Common Wealth Auditor Generals’ Conference
The Commonwealth Auditor Generals’ Conference is organized once every three (3)
years by the Countries who belong to the Commonwealth. The Office of the Auditor
General of Uganda is a member of the Commonwealth Auditor Generals’ Conference. In
the FY 2010/11, the office was represented by the Assistant Auditor General and
Assistant Director Audit in the 21st conference whose theme was “Pioneering Excellence
in Public Sector Auditing,” which was held in Windhoek, Namibia, April 2011. The next
conference will be hosted by the Malta National Audit Office in 2014.
35
4.1.4 United Nations Independent Audit Advisory Committee (UN-IAAC)
The Independent Audit Advisory Committee of the United Nations (UN-IAAC) is a
subsidiary body of the General Assembly of the United Nations (UN) established to serve
in an expert advisory capacity to assist the General Assembly of the UN in fulfilling its
oversight responsibilities.
The Auditor General of Uganda was appointed the Chairperson to the Committee and in
his capacity as Chairperson, he attended all the meetings of the Committee in the during
the year.
Secretary-General Ban Ki-Moon (4th from left) meets with members of the Independent Audit Advisory Committee
(IAAC). 2nd from right is the Auditor General of Uganda Mr. John F.S. Muwanga who is now the Chairman of the
Committee.
36
4.1.5 World Bank Multilateral Audit Advisory Group
The World Bank Group established a Multilateral Audit Advisory Group (MAAG) that is
specifically tasked with advising the Audit Committee of the World Bank (WB) on audit
requests from the Supreme Audit Institution (SAI) or other National Audit Offices. The
advice given (by MAAG) includes assessing compliance of the SAIs with the agreed
terms of references for the audit; assessing adherence to the agreed group rules, and
providing objective comments on the resulting audit reports. The Auditor General of
Uganda is a member of this Multilateral Audit Advisory Group (MAAG) of the World Bank.
4.1.6 International Consortium on Government Financial Management
(ICGFM)
The ICGFM works globally with Governments, Organizations and individuals who are
interested in developments in public financial management. The Consortium brings
together diverse Governmental Entities, Organizations and individuals who include
financial management practitioners in all levels of Government.
During the Financial Year 2010/11, the office sent four (5) Senior Officers to participate
in the Conference activities of the Consortium.
4.1.7 International Delegations
Due to the improvements in the quality of performance and autonomy of the Office of
the Auditor General and the successful adoption of efficient and effective audit tools and
methods in auditing computerized accounting and financial management Systems, (such
as the IFMS) the office started receiving a stream of International Delegations wishing to
share experiences and broaden their knowledge with SAI Uganda.
37
In the period of reporting, the office hosted International delegations from the following
SAIs and other institutions:
The National Audit office of Tanzania;
National Audit Office of UK;
Swedish National Audit Office.
Office of Comptroller & Auditor General of India;
Lesotho Revenue Authority;
Office of the Accountant General Somalia;
National Audit Office of Malawi
In addition, the office hosted the audit team comprising of members from SAI Kenya,
SAI Tanzania and SAI Cameroon for the joint Value for Money Audit of the Lake Victoria.
A team from SAI Tanzania, SAI Uganda, SAI Kenya with an observer from SAI Cameroon pose for photo following Joint Environmental Audit of Management of Fisheries on Lake Victoria. In the middle of the photo is Mr. John F.S.
Muwanga, the Auditor General.
4.1.8 JICA and OAG
JICA and OAG have related closely, with the former giving capacity building support to
the latter. During the year of reporting, JICA supported the office in three major areas:-
VFM, IT and Public works.
38
i. In the area of ICT it supported the following capacity building interventions:
The development of the IT strategy for the period 2011-2016;
Training 5 staff in IT audit;
Training 26 staff in IDEA and 137 staff trained in procurement Audit;
Training 30 staff in Teammate refresher course;
ii. In the area of Public Works it:
Supported the development of the Public Works Audit Strategy for the period
2011-2015;
Trained 2 auditors in public works audit in Japan.
iii. In the Area of Value for Money it;
Supported the development and production of the VFM Audit awareness
leaflets.
39
5.0 Registration of Accountants
Section 8 of the Accountants Act 1992 empowers the Auditor General to be the Registrar
of Accountants in Uganda. It requires the Auditor General to register and maintain a
register for the Accountants. During the year the Auditor General registered 190
Accountants. At the time of reporting 89 applications were in process.
40
41
Appendix I: Unaudited Financial Statements of OAG for the year ended
30th June 2011.
GOVERNMENT OF THE REPUBLIC OF UGANDA
REPORTS AND FINANCIAL STATEMENTS FOR
…OFFICE OF THE AUDITOR GENERAL …
FOR THE YEAR END 30th June 2011
Financial Statements for the Financial Year ended 30th June 2011
42
Statement of Responsibilities of the Accounting Officer
The financial statements set out on pages 1 to 22 have been prepared in accordance with the
provisions of the Public Finance and Accountability Act, 2003 [the Act]. The financial statements
have been prepared on the modified cash basis of accounting and comply with the generally
accepted accounting practice for the public sector.
In accordance with the provisions of Section 8 of the Public Finance and Accountability Act,
2003, [the Act], I am responsible for the control and personally accountable to Parliament for
the regularity and propriety of the expenditure of money applied by an expenditure vote, or any
provision funded wholly through the Consolidated Fund, and for all resources received, held or
disposed of.
Under the provisions of Section 31 of the same Act, I am required to prepare, sign and submit
financial statements to the Minister responsible for Finance, the Auditor General, and to the
Accountant General within a period of three months from the end of the Financial Year.
Accordingly, I am pleased to submit the required financial statements in compliance with the
Act. I have provided, and will continue to provide all the information and explanations as maybe
required in connection with these financial statements.
To the best of my knowledge and belief, these financial statements agree with the books of
account, which have been properly kept.
I accept responsibility for the integrity of these financial statements, the financial
information they contain and their compliance with the Public Finance and
Accountability Act, 2003.
…… Constant O Mayende ………….
Accounting Officer [Names & Signature]
………Office of the Auditor General…………………
Date: …31st August 2011….
Financial Statements for the Financial Year ended 30th June 2011
43
THE ROLE OF OFFICE OF THE AUDITOR GENERAL
The principal address of the Office is:
Office of the Auditor General
Plot 2/12 Apollo Kagwa Road
P.O Box 7083, Kampala
Tel; (+256-414) 344340/521
Fax: (+256-414) 345674
E-mail: [email protected]
Website: www.oag.go.ug
VISION: “To be an effective and efficient Supreme Audit Institution in promoting effective public
accountability”
MISSION: “To audit and report to Parliament and thereby make an effective contribution to improving
public accountability and value for money spent”
CORE VALUES
The Office is committed to upholding the following as its core values:-
Integrity – Being upright and honest.
Objectivity – Display impartiality and professional judgment.
Professional Competence – Act with diligence, proficiency and team spirit.
The Office is the Supreme Audit Institution (SAI) provided for under Article 163 (3) of the Constitution of
the Republic of Uganda. The Office is responsible for auditing and reporting on the public Accounts of
Uganda and of all public Offices including the Courts, the central and Local Government Administrations.
Universities and Public Institutions of like nature and Public Corporations or other bodies established by
an Act of Parliament also form the scope of this audit for reporting to Parliament.
Financial Statements for the Financial Year ended 30th June 2011
44
Commentary on the Financial Statements by the Head of Accounts
For 2010/11, the Office had an approved annual budget of Shs. 33bn including
development budget of Shs. 09bn. Being a statutory vote, a full release was made for
the expenditure items except salaries which are paid via Straight Thru Processing (STP)
payment method based on filled positions. Over 98% (Shs. 32.3bn)of the budgeted
funds for the financial year 2010/11 were received to facilitate the audit activities for
the period.
For the same financial year 2010/11, the office did not have any domestic arrears and
therefore there were no such payments in the accounts. All the unspent balances
carried forward from 2008/09 financial year up to 30th June 2011 have been
transferred to the Consolidated Fund and details of the transfers are contained in the
attached receipts of transfers.
I take full responsibility for the integrity of these Financial Statements, the financial information they
contain and their compliance with the PFAA 2003.
………Ambrose Promise……………..………..
Head of Accounts [Names & Signature]
……31st August 2011……….
Date:
Financial Statements for the Financial Year ended 30th June 2011
45
Statement of Financial Performance for the period ended 30th June 2011
[Based on classification of expenditures by nature]
Budget
2011
Shs
Notes Actual
30th June 2011
Shs
Actual
30th June 2010
Shs
Operating revenue
Grants from foreign governments 2 -
Grants from international organizations 3 -
Domestic Grants 4 -
33,200,720,000 Transfers received from the Treasury 5 32,317,943,278 23,458,997,707
Transfers received from other government units 6
Non-Tax Revenues 7 7,650,000 500,000
Other Revenue 8
33,200,720,000 Total operating revenue 32,325,593,278 23,459,497,707
Operating expenses
17,561,359,000 Employee costs 9 16,922,470,968 14,339,438,185
14,678,993,000 Goods and services consumed 10 14,573,991,722 8,195,625,960
960,368,000 Consumption of property, plant & equipments 11 806,080,326 869,221,553
Interest expense 12
Subsidies 13
Transfers to other Organizations 14 23,050,262 31,526,910
Social benefits 15
Other expenses 16
Foreign exchange losses (gains) 18
33,200,720,000 Total operating expenses 32,325,593,278 23,435,812,608
- Surplus/(deficit) from operating activities 0 23,685,099
Finance costs 17
Losses of cash only (refer to Statement of reported
losses)
Extraordinary items 19
- Net surplus/ (deficit) after extraordinary
items
0 23,685,099
The accounting policies and notes set out on pages 23 to 40 form an integral part of these financial statements.
The financial statements on pages 5 to 20 were approved by the Accounting Officer on 31st August 2011
…… Constant O Mayende ………
Accounting Officer [Names & Signature]
Financial Statements for the Financial Year ended 30th June 2011
46
Statement of Financial Position as at 30th June 2011.
Notes 30th June 2011
Shs
30 June 2010
Shs
ASSETS
Cash and Cash equivalents 20 0 671,418,781
Receivables 21
Inventories 22
Investments 23
Investment properties 24
Total Assets 0 671,418,781
LIABILITIES
Borrowings (interest bearing liabilities) 25 0 26,590,279
Payables 26
Pension liabilities 27
Total liabilities 0 26,590,279
NET ASSETS / (LIABILITIES) 0 644,828,502
REPRESENTED BY;
NET FINANCIAL WORTH 0 644,828,502
The accounting policies and notes set out on pages 23 to 40 form an integral part of these financial statements.
The financial statements on pages 5 to 20 were approved by the Accounting Officer on 31st August 2011
……… Constant O Mayende …………
Accounting Officer [Names & Signature]
Financial Statements for the Financial Year ended 30th June 2011
47
STATEMENT OF CHANGES IN EQUITY (NETWORTH) AS AT 30th June 2011
30th June 2011
Shs
30 June 2010
Shs Net worth Last Year (B/F) 644,828,502 623,313,031
Less: Transfers to the UCF account ( Balances) (668,507,017) -
Add: Treasury General Deficit (balances c/f & W/off to Reserves) 26,590,279 -
Less: Project Balances -
Adjustment : Under/Over Statement of Domestic Arrears of Past Years -
Less: Cash WHT to URA (Unrecoverable) - (2,619,628)
Add: Prior Year understated Cash balance refunded to TGA 2,911,764 450,000
Add: Surplus/ Deficit for the Year
- 23,685,099
CLOSING NET FINANCIAL WORTH 0 644,828,502
The accounting policies and notes set out on pages 23 to 40 form an integral part of these financial statements.
The financial statements on pages 5 to 20 were approved by the Accounting Officer on 31st August 2011
……… Constant O Mayende …………
Accounting Officer [Names & Signature]
Financial Statements for the Financial Year ended 30th June 2011
48
Cash Flow Statement for the year ended 30th June 2011 [Direct Method]
Notes 30th June 2011
Shs
30th June 2010
Shs
CASH FLOWS FROM OPERATING ACTIVITIES
Total receipts from operating revenues were (see below): 32,325,593,278 23,459,497,707
PAYMENTS FOR OPERATING EXPENSES:
Employee costs 16,922,470,968 14,339,438,185
Goods and services consumed 14,573,991,722 8,195,625,960
Interest expense
Subsidies
Transfers to other Organizations 23,050,262 31,526,910
Social benefits
Other expenses
Net Advances paid
Domestic arrears paid during the year
Pension Arrears paid during the Year
Losses of cash
Letters of Credit receivable
Extraordinary items
Total payments for operating activities 31,519,512,952 22,566,591,055
Net cash inflows/(outflows) from operating activities 806,080,326 892,906,652
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipments (806,080,326) (869,221,553)
Proceeds from sale of property, plant and equipments
Purchase of investments
Proceeds from sale of investments
Purchase of investment properties
Financial Statements for the Financial Year ended 30th June 2011
49
Proceeds from sale of investment properties
Net cash inflows/(outflows) from investing activities (806,080,326) (869,221,553)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from external borrowings
Repayments of external borrowings
Proceeds from other domestic borrowings
Repayments of other domestic borrowings
Net cash flows from financing activities - -
Net increase (decrease) in cash and cash equivalents - 23,685,099
The accounting policies and notes set out on pages 23 to 40 form an integral part of these financial statements.
The financial statements on pages 5 to 20 were approved by the Accounting Officer on 31st August 2011
…………… Constant O Mayende …………
Accounting Officer [Names & Signature]
Financial Statements for the Financial Year ended 30th June 2011
50
Cash Flow Statement for the year ended 30th June 2011 (continued)
For cash flow purposes receipts from operating revenue
comprise:
Notes 30th June 2011
Shs
30th June 2010
Shs
Operating revenue
Grants from foreign governments 2
Grants from international organizations 3
Equalization grants 4
Transfers received from the Treasury 5 32,317,943,278 23,458,997,707
Transfers received from other government units 6
Non-tax revenues 7 7,650,000 500,000
Miscellaneous 8
Advances Recovered
Deposits Received
Total receipts from operating activities 32,325,593,278 23,459,497,707
Reconciliation of movement of cash during the year
Notes 30th June 2011
Shs
30 June 2010
Shs
At the beginning of the year 671,418,781 649,903,310
Less: Transfers to UCF account (Balances) (668,507,017) -
Less: Overdrawn balance B/F -
Add: Bounced EFTs ( Stale cheques)
Less: WHT paid to URA - Unrecoverable - (2,619,628)
Add: Prior Year Cash balance understated refunded to TGA 2,911,764 450,000
Financial Statements for the Financial Year ended 30th June 2011
51
Net increase (decrease) of cash from the Cash flow Statement 0 23,685,099
At the end of the year 0 671,418,781
For purposes of the cash flow statement, cash and cash equivalents comprise
30th June 2011
Shs
30th June 2010
Shs
Cash and bank balances 20 0 671,418,781
Less bank overdrafts 25
Net cash and bank balances 0 671,418,781
The accounting policies and notes set out on pages 23 to 40 form an integral part of these financial statements.
The financial statements on pages 5 to 20 were approved by the Accounting Officer on 31st August 2011
……… Constant O Mayende ………………
Accounting Officer [Names & Signature]
Financial Statements for the Financial Year ended 30th June 2011
52
Statement of Appropriation Account [Based on services voted by Parliament]
Actual
30 June
2011
Shs.
Notes Actual
30th June 2011
Shs.
Budget
30th June 2011
Shs.
Variance
30th June
2011
Shs.
RECEIPTS
Grants from foreign governments 2
Grants from international organizations 3
23,458,997,707 Transfers received from the Treasury 5 32,317,943,278 33,200,720,000 882,776,722
Transfers received from other government
units
6
Non-Tax Revenues 7
Miscellaneous 8
23,458,997,707 Total receipts 32,317,943,278 33,200,720,000 882,776,722
EXPENDITURE- by services as per
appropriation
7,073,570,118 Prog 01 - Headquarters 11,443,294,412 11,488,582,000 45,287,588
3,936,218,844 Prog 02 – Directorate of Central Government 4,236,364,470 4,286,927,040 50,562,570
2,541,014,635 Prog 03 – Directorate of Statutory Authorities 3,102,490,105 3,105,885,000 3,394,895
6,505,898,674 Prog 04 – Directorate of Local Authorities 8,985,477,856 9,586,436,500 600,958,644
2,479,801,494 Prog 05 – Directorate of Value for Money and
Quality Assurance
3,728,835,847 3,772,521,460 43,685,613
869,221,553 Development Budget Expenditure 806,080,326 960,368,000 154,287,674
23,405,725,318 Total expenditure for services appropriated 32,302,543,016 33,200,720,000 898,176,984
The accounting policies and notes set out on pages 23 to 40 form an integral part of these financial statements.The
financial statements on pages 5 to 20 were approved by the Accounting Officer on 31st August 2011
……… Constant O Mayende ………
Accounting Officer [Names & Signature]
Financial Statements for the Financial Year ended 30th June 2011
53
Statement of Appropriation Account [Based on nature of expenditure for services voted]
Actual
30 June
2011
Shs
Notes Actual
30th June 2011
Shs
Budget
30th June 2011
Shs
Variance
30th June
2011
Shs
RECEIPTS
Grants from foreign governments 2
Grants from international organizations 3
23,458,997,707 Transfers received from the Treasury 5 32,317,943,278 33,200,720,000 882,776,722
Transfers from other government units 6
Non-Tax Revenues 7
Miscellaneous 8
23,458,997,707 Total receipts 32,317,943,278 33,200,720,000 882,776,722
EXPENDITURE-by nature of expenditure
14,339,438,185 Employee costs 9 16,922,470,968 17,561,359,000 638,888,032
8,197,065,580 Goods and services consumed 10 14,573,991,722 14,678,993,000 105,001,278
869,221,553 Consumption of property, plant & equipments
(fixed assets)
11 806,080,326 960,368,000 154,287,674
Interest expense 12
Subsidies 13
Transfers to other government units 14
Social benefits 15
Other operating expenses 16
Domestic arrears paid
23,405,725,318 Total operating expenses 32,302,543,016 33,200,720,000 898,176,984
Finance costs 17
23,405,725,318 Total Expenditure 32,302,543,016 33,200,720,000 898,176,984
The accounting policies and notes set out on pages 23 to 40 form an integral part of these financial statements.
The financial statements on pages 5 to 20 were approved by the Accounting Officer on 31st August 2011
………… Constant O Mayende …………
Accounting Officer [Names & Signature]
Financial Statements for the Financial Year ended 30th June 2011
54
Statement of reconciliation between total expenditure per Statement of Appropriation Account to
total expenditure in Statement of Financial Performance
Notes Actual
30th June 2011
Shs
Actual
30th June 2010
Shs
Total expenditure per Appropriation Account 32,302,543,016 23,405,725,318
Add:
Letters of credit receivable prior year but
delivered during the year
Transfers received from other government units -
Transfer to Treasury NTR 7,650,000 500,000
Transfer to Treasury Gross Tax 31,026,910
Transfer to Treasury – Unspent Balances 15,400,262
Accrued Expenditure
Foreign exchange losses (gains)
Sub-Total 32,325,593,278 23,437,252,228
Less:
Letters of credit receivable at year-end -
Transfers made to other government units - 1,439,620
Domestic Arrears paid -
Total Expenditure per Statement of Financial
Performance
32,325,593,278 23,437,252,228
The accounting policies and notes set out on pages 23 to 40 form an integral part of these financial statements.
The financial statements on pages 5 to 20 were approved by the Accounting Officer on 31st August 2011
…… Constant O Mayende ………
Accounting Officer [Names & Signature]
Financial Statements for the Financial Year ended 30th June 2011
55
Statement of Revenues collected during the year ended 30th June 2011
[Based on source of revenue] (Memorandum Statement)
Actual
30 June
2010
Shs
Notes Actual
30th June 2011
Shs
Budget
30th June 2011
Shs
Variance
30th June
2011
Shs
RECEIPTS
Non-tax revenues
Investment income
Dividends
Rent
Other property income
Income from Disposal of Assets
Administrative fees & licenses
Fines and penalties
500,000 Miscellaneous receipts 7,650,000 - (7,650,000)
500,000 Total Non-Tax Revenue 7,650,000 - 7,650,000
The accounting policies and notes set out on pages 23 to 40 form an integral part of these financial statements.
The financial statements on pages 5 to 20 were approved by the Accounting Officer on 31st August 2011
………… Constant O Mayende ………………
Accounting Officer [Names & Signature]
56
Appendix II: Regional Branch Offices
1. ARUA Regional Audit Branch Office
2. GULU Regional Audit Branch Office
3. FORTPORTAL Audit Regional Branch Office
4. JINJA Regional Audit Branch Office
5. KAMPALA Regional Audit Branch Office
6. MASAKA Regional Audit Branch Office
7. MBALE Regional Audit Branch Office
8. MBARARA Regional Audit Branch Office
9. SOROTI Regional Audit Branch Office