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THE REPUBLIC OF UGANDA
OFFICE OF THE AUDITOR GENERAL
ANNUAL REPORT OF THE AUDITOR GENERAL FOR THE YEAR ENDED 30TH
JUNE 2013
VOLUME 2
CENTRAL GOVERNMENT
ii
iii
Table Of Contents
LIST OF ACRONYMS AND ABREVIATIONS................................................................................ viii
1.0 INTRODUCTION .................................................................................................................. 1
2.0 REPORT AND OPINION OF THE AUDITOR GENERAL ON THE GOVERNMENT OF
UGANDA CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30TH
JUNE, 2013 ........................................................................................................................ 14
ACCOUNTABILITY SECTOR ....................................................................................................... 34
3.0 TREASURY OPERATIONS ............................................................................................... 34
4.0 MINISTRY OF FINANCE, PLANNING AND ECONOMIC DEVELOPMENT .................... 37
5.0 DEPARTMENT OF ETHICS AND INTEGRITY ................................................................. 70
WORKS AND TRANSPORT SECTOR ......................................................................................... 73
6.0 MINISTRY OF WORKS AND TRANSPORT ..................................................................... 73
7.0 UGANDA NATIONAL ROADS AUTHORITY ..................................................................... 92
8.0 THE UGANDA ROAD FUND ........................................................................................... 150
JUSTICE LAW AND ORDER SECTOR ...................................................................................... 155
9.0 MINISTRY OF JUSTICE AND CONSTITUTIONAL AFFAIRS ........................................ 155
10.0 MINISTRY OF INTERNAL AFFAIRS ............................................................................... 198
11.0 UGANDA POLICE FORCE .............................................................................................. 204
12.0 UGANDA PRISONS SERVICES ..................................................................................... 214
13.0 JUDICIARY DEPARTMENT ............................................................................................ 225
14.0 JUDICIAL SERVICE COMMISSION ............................................................................... 233
15.0 UGANDA LAW REFORM COMMISSION ....................................................................... 237
16.0 UGANDA HUMAN RIGHTS COMMISSION .................................................................... 240
17.0 DEPARTMENT OF PUBLIC PROSECUTIONS .............................................................. 241
18.0 UGANDA REGISTRATION SERVICES BUREAU - OPERATIONS ............................... 247
19.0 UGANDA REGISTRATION SERVICES BUREAU – LIQUIDATION ACCOUNT............ 248
20.0 NATIONAL CITIZENSHIP AND IMMIGRATION CONTROL .......................................... 249
PUBLIC SECTOR MANAGEMENT.............................................................................................. 262
iv
21.0 MINISTRY OF LOCAL GOVERNMENT .......................................................................... 262
22.0 OFFICE OF THE PRIME MINISTER ............................................................................... 317
23.0 MINISTRY OF PUBLIC SERVICE ................................................................................... 364
24.0 PUBLIC SERVICE COMMISSION .................................................................................. 372
25.0 LOCAL GOVERNMENT FINANCE COMMISSION ........................................................ 374
26.0 KAMPALA CAPITAL CITY AUTHORITY ......................................................................... 379
27.0 ELECTORAL COMMISSION ........................................................................................... 394
LEGISLATIVE SECTOR ............................................................................................................. 395
28.0 PARLIAMENTARY COMMISSION .................................................................................. 395
SECURITY SECTOR ................................................................................................................... 407
29.0 MINISTRY OF DEFENCE ................................................................................................ 407
30.0 OFFICE OF THE PRESIDENT ........................................................................................ 412
31.0 STATE HOUSE ................................................................................................................ 417
AGRICULTURE SECTOR ........................................................................................................... 418
32.0 MINISTRY OF AGRICULTURE, ANIMAL INDUSTRY AND FISHERIES ....................... 418
33.0 NATIONAL AGRICULTURAL RESEARCH ORGANISATION (NARO) .......................... 446
ENERGY SECTOR ...................................................................................................................... 469
34.0 MINISTRY OF ENERGY AND MINERAL DEVELOPMENT ........................................... 469
HEALTH SECTOR ....................................................................................................................... 478
35.0 MINISTRY OF HEALTH ................................................................................................... 478
36.0 UGANDA BLOOD TRANSFUSION SERVICES.............................................................. 484
37.0 UGANDA AIDS COMMISSION ....................................................................................... 484
38.0 HEALTH SERVICE COMMISSION ................................................................................. 486
39.0 BUTABIKA MENTAL REFERRAL HOSPITAL ................................................................ 488
40.0 UGANDA CANCER INSTITUTE ...................................................................................... 490
41.0 UGANDA HEART INSTITUTE ......................................................................................... 494
42.0 MULAGO REFERRAL HOSPITAL COMPLEX ............................................................... 496
v
43.0 ARUA REGIONAL REFERRAL HOSPITAL .................................................................... 498
44.0 MBALE REGIONAL REFERRAL HOSPITAL .................................................................. 502
45.0 KABALE REGIONAL REFERRAL HOSPITAL ................................................................ 506
46.0 LIRA REGIONAL REFERRAL HOSPITAL ...................................................................... 510
47.0 GULU REGIONAL REFERRAL HOSPITAL .................................................................... 512
48.0 MBARARA REGIONAL REFERRAL HOSPITAL ............................................................ 517
49.0 FORT PORTAL REGIONAL REFERRAL HOSPITAL ..................................................... 521
50.0 JINJA REGIONAL REFERRAL HOSPITAL .................................................................... 524
51.0 SOROTI REGIONAL REFERRAL HOSPITAL ................................................................ 530
52.0 MASAKA REGIONAL REFERRAL HOSPITAL ............................................................... 532
53.0 MUBENDE REGIONAL REFERRAL HOSPITAL ............................................................ 534
54.0 MOROTO REGIONAL REFERRAL HOSPITAL .............................................................. 543
55.0 HOIMA REGIONAL REFERRAL HOSPITAL .................................................................. 546
56.0 CHINA-UGANDA FRIENDSHIP HOSPITAL NAGURU .................................................. 548
EDUCATION SECTOR ................................................................................................................ 553
57.0 MINISTRY OF EDUCATION AND SPORTS ................................................................... 553
58.0 EDUCATION SERVICE COMMISSON ........................................................................... 577
58.1 Fraudulent access to the Government payroll by personnel in Post Primary Institutions577
59.0 MAKERERE UNIVERSITY .............................................................................................. 579
60.0 MAKERERE UNIVERSITY BUSINESS SCHOOL .......................................................... 586
61.0 UGANDA MANAGEMENT INSTITUTE ........................................................................... 590
62.0 MBARARA UNIVERSITY OF SCIENCE AND TECHNOLOGY ...................................... 592
63.0 KYAMBOGO UNIVERSITY ............................................................................................. 595
64.0 BUSITEMA UNIVERSITY ................................................................................................ 603
65.0 GULU UNIVERSITY ........................................................................................................ 610
WATER AND ENVIRONMENT SECTOR .................................................................................... 617
66.0 MINISTRY OF WATER AND ENVIROMENT .................................................................. 617
vi
67.0 MINISTRY OF TRADE, INDUSTRY AND COOPERATIVES.......................................... 636
68.0 MINISTRY OF TOURISM WILDLIFE AND ANTIQUITIES .............................................. 639
LAND SECTOR ............................................................................................................................ 641
69.0 MINISTRY OF LANDS, HOUSING AND URBAN DEVELOPMENT ............................... 641
70.0 UGANDA LAND COMMISSION ...................................................................................... 644
INFORMATION AND COMMUNICATION SECTOR ................................................................... 647
71.0 MINISTRY OF INFORMATION AND COMMUNICATIONS TECHNOLOGY ................. 647
PUBLIC ADMINISTRATION SECTOR ........................................................................................ 649
72.0 MINISTRY OF FOREIGN AFFAIRS ................................................................................ 649
73.0 EAST AFRICAN COMMUNITY AFFAIRS ....................................................................... 651
MISSIONS .................................................................................................................................... 654
74.0 UGANDA EMBASSY, ABU DHABI .................................................................................. 654
75.0 UGANDA HIGH COMMISSION, ABUJA ......................................................................... 656
76.0 UGANDA, EMBASSY ADDIS ABABA ............................................................................. 661
77.0 ANKARA EMBASSY ........................................................................................................ 664
78.0 UGANDA, EMBASSY BEIJING ....................................................................................... 666
79.0 UGANDA EMBASSY, BERLIN ........................................................................................ 668
80.0 UGANDA EMBASSY BRUSSELS ................................................................................... 669
81.0 UGANDA HIGH COMMISSION, BUJUMBURA .............................................................. 673
82.0 UGANDA EMBASSY, CAIRO .......................................................................................... 674
83.0 UGANDA HIGH COMMISSION, CANBERRA ................................................................. 674
84.0 UGANDA EMBASSY, COPENHAGEN ........................................................................... 677
85.0 UGANDA HIGH COMMISSION, WASHINGTON ............................................................ 679
86.0 THE PERMANENT MISSION OF THE REPUBLIC OF UGANDA TO THE UNITED
NATIONS AND OTHER INTERNATIONAL ORGANIZATIONS IN GENEVA ................. 683
87.0 UGANDA CONSULATE, GUANGZHOU, CHINA............................................................ 690
88.0 UGANDA EMBASSY JUBA ............................................................................................. 692
vii
89.0 UGANDA EMBASSY, KHARTOUM ................................................................................ 694
90.0 UGANDA HIGH COMMISSION, KIGALI ......................................................................... 695
91.0 UGANDA EMBASSY, KINSHASA ................................................................................... 698
92.0 UGANDA HIGH COMMISSION, LONDON ..................................................................... 700
93.0 UGANDA EMBASSY, MOSCOW .................................................................................... 705
94.0 UGANDA HIGH COMMISSION, NAIROBI ...................................................................... 708
95.0 UGANDA HIGH COMMISSION, NEW DELHI ................................................................. 710
96.0 UGANDA HIGH COMMISSION, OTTAWA ..................................................................... 717
97.0 UGANDA EMBASSY, PARIS .......................................................................................... 718
98.0 UGANDA HIGH COMMISSION, PRETORIA .................................................................. 725
99.0 UGANDA EMBASSY, ROME .......................................................................................... 727
100.0 UGANDA EMBASSY TOKYO ......................................................................................... 731
101.0 UGANDA EMBASSY, TRIPOLI ....................................................................................... 734
viii
LIST OF ACRONYMS AND ABREVIATIONS
BFP Budget Framework Paper
CEMAS Computerized Education Management and Accounting System
FY Financial Year
ICT Information and Communications Technology
LANs Local Area Networks
NBI National Backbone Infrastructure
NTC National Teachers College
PIC Planning Investment Committee
WAN Wide Area Network
MoFPED Ministry of Finance, Planning and Economic Development
PFAA Public Finance and Accountability Act
NMS National Medical Stores
ESC Education Service Commission
MDAs Ministries, Departments and Agencies
MoES Ministry of Education and Sports
PAC Public Accounts Committee
DSCs District Service Commissions
HSC Health Service Commission
UGX Uganda Shillings
KYU Kyambogo University
NTR Non Tax Revenue
PPDA Public Procurement & Disposal of Assets
PAYE Pay As You Earn
OAG Office of the Auditor General
EAC East African Community
ESAAG East and Southern African Association of Accountant Generals
MEACA Ministry of East African Affairs
MICT Ministry of Information and Communications Technology
ICT Information Communication Technology
BOU Bank of Uganda
ix
LC Letter of Credit
TAI Treasury Accounting Instruction
CHOGM Commonwealth Heads of Governments Meeting
ICGR International Conference for Great Lakes Region
MoFA Ministry of Foreign Affairs
JLOS Justice, Law and Order Sector
KCCA Kampala Capital City Authority
MoGLSD Ministry of Gender, Labour & Social Development
MOU Memorandum of Understanding
PFAR Public Finance and Accountability Regulation
PWD People With Disability
ULC Uganda Land Commission
USD United States Dollar
M&E/MIS Monitoring & Evaluation/Management Information System
CAO Chief Administrative Officer
CDC Center for Disease Control
CIID Criminal Intelligence and Investigations Department
DHO District Health Officer
EFT Electronic Funds Transfer
GoU Government of Uganda
HC Health Centre
IAS International Accounting Standards
IFMS Integrated Financial Management System
JCRC Joint Clinical Research Center
JMS Joint Medical stores
LCs Letters Of Credit
MKCCAP Mulago Kampala Capital City Authority Project
MoH Ministry of Health
NDA National Drug Authority
x
NHIS National Health Insurance Scheme
NWSC National Water and Sewerage Corporation
PS Permanent Secretary
PS/ST Permanent Secretary/Secretary to the treasury
UNICEF United Nations International Children's Emergency Fund
URA Uganda Revenue Authority
MoLHUD Ministry of Lands, Housing and Urban Development
IAS International Accounting Standards
MFPED Ministry of Finance Planning And Economic Development
MTIC Ministry of Trade, Industry and Cooperatives
WRS Warehouse Receipt System
COMESA Common Market for Eastern & Southern Africa
ULC Uganda Land Commission
PSC Public Service Commission
MoTWA Ministry of Tourism Wildlife and Antiquities
MUBS Makerere University Business School
MUK Makerere University
FOC Faculty of Commerce
NCBS National College of Business Studies
FAR Fixed Asset Register
MUECCA (A) Makerere University Establishment of Constituent College Order Amended
COBAMS College of Business and Management Sciences
COVAB College of Veterinary Medicine and BioSecurity
CEDAT College of Engineering Design Art and Technology
CAES College of Agriculture and Environment Sciences
CONAS College of Natural Sciences
COCIS College of Computing and Information Sciences
xi
CHS College of Health Sciences
CEES College of Education and External Studies
CHUSS College of Humanities and Social Sciences
ED Executive Director
HSC Health Service Commission
MNRH Mulago National Referral Hospital
PPS Private Patients Services
BTC Belgium Technical Cooperation
ITFC Institute of Tropical Forest Conservation
MUST Mbarara University of Science and Technology
PSU Pharmaceutical Society of Uganda
FIEFOC Farm Income Enhancement and Forest Conservation
MWE Water and Environment
UAC Uganda AIDS Commission
CUFH China Uganda Friendship Hospital
ART Anti-Retroviral Therapy
AIDS Acquired Immunodeficiency Syndrome
HIV Human Immunodeficiency Virus
UBTS Uganda Blood Transfusion Services
L.T.C ward Lymphoma Treatment Centre
OPD Out Patients Departments
S.T.C ward Solid Tumor Centre ward
UCI Uganda Cancer Institute
UNHRO Uganda National Health Research Organisation
UHI Uganda Heart Institute
xii
1
1.0 INTRODUCTION
I am required by Article 163(3) of the Constitution of the Republic of Uganda and
Section 13 and 19 of the National Audit Act 2008 to audit and report 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.
Under Article 163 (4) of the Constitution, I am also required to submit to
Parliament by 31st March annually a Report of the Accounts audited by me for the
year immediately preceding. I am therefore, issuing this report in accordance with
the above provisions.
This is Volume two of my Annual Report to Parliament and it covers financial
audits carried out on Central Government Ministries, Departments, Agencies,
Universities and Uganda Missions abroad.
In this introduction, I give an overview of the financial audit work carried out,
status of completion of the audits, summary of the audit opinions issued on the
financial statements of the entities audited and a summary of the key audit
findings arising from the audit.
Section 2 presents my findings and audit opinion on Government of Uganda
Consolidated Financial Statements including major observations.
Section 3 contains the detailed audit findings on each entity audited.
1.1 STATUS OF COMPLETION OF AUDITS
1.1.1 Financial Audits
A total of 103 entities comprising of Ministries, Agencies, Commissions,
Departments, Uganda Missions abroad, Public Universities, Referral Hospitals and
2
the Consolidated Government of Uganda Financial Statements, were audited
during the year ended 30th June 2013. Accordingly, separate audit reports were
issued for each of them.
Out of the 103 entities audited, 60 entities had unqualified opinions, 39 had
qualified opinions and 4 had disclaimed opinions. The basis used to arrive at the
audit opinion is described in the separate reports issued on individual entities. The
table below summarises the types of audit opinions issued on each of the entities
audited:-
Table showing type of opinion for each of the audited entities
UNQUALIFIED OPINION
QUALIFIED OPINION
1 INSPECTORATE OF GOVERNMENT 1 ETHICS & INTEGRITY
2 NARO 2 MINISTRY OF FINANCE (MOFPED
3 MINISTRY OF AGRICULTURE ANIMAL INDUSTRY & FISHERIES
3 MINISTRY OF DEFENCE
4 OFFICE OF THE PRESIDENT 4 UNRA
5 STATE HOUSE 5 OFFICE OF THE PRIME MINISTER
6 UGANDA ROAD FUND 6 KAMPALA CAPITAL CITY AUTHORITY
7 MINISTRY OF WORKS AND TRANSPORT
7 GOU CONSOLIDATED FINANCIAL STATEMENTS
8 PUBLIC SERVICE COMMISSION 8 TREASURY OPERATIONS
9 HOIMA REGIONAL REFERRAL HOSPITAL
9 MINISTRY OF LOCAL GOVERNMENT
10 JINJA REGIONAL REFERRAL HOSPITAL 10 LOCAL GOVERNMENT FINANCE COMMISSION
11 KABALE REFERRAL HOSPITAL 11 PARLIAMENTARY COMMISSION
12 LIRA REFERRAL HOSPITAL 12 MINISTRY OF INTERNAL AFFAIRS
13 MOROTO REGIONAL HOSPITAL 13 JUDICIARY DEPARTMENT
14 JUDICIAL SERVICE COMMISSION 14 LAW REFORM COMMISSION
15 UGANDA HUMAN RIGHTS COMMISSION
15 DPP
16 UGANDA POLICE 16 NATIONAL CITIZENSHIP AND IMMIGRATION
17 UGANDA PRISONS 17 BUSITEMA UNIVERSITY
18 UGANDA REGISTRATION SERVICES BUREAU
18 KYAMBOGO UNIVERSITY
19 BUTABIKA MENTAL REFERRAL HOSPITAL 19 MINISTRY OF EAST AFRICAN COMMUNITY AFFAIRS
20 EDUCATION SERVICE COMMISSION 20 MINISTRY OF HEALTH
3
Table showing type of opinion for each of the audited entities
UNQUALIFIED OPINION
QUALIFIED OPINION
21 HEALTH SERVICE COMMISSION 21 MINISTRY OF LANDS, HOUSING AND URBAN DEVELOPMENT
22 MINISTRY OF INFORMATION AND COMMUNICATIONS TECHNOLOGY
22 MULAGO NATIONAL REFERRAL HOSPITAL
23 MINISTRY OF EDUCATION AND SPORTS 23 MINISTRY OF WATER AND ENVIRONMENT
24 MINISTRY OF FOREIGN AFFAIRS 24 UGANDA HEART INSTITUTE
25 MINISTRY OF GENDER, LABOUR AND SOCIAL DEVELOPMENT
25 UGANDA LAND COMMISSION
26 MINISTRY OF TOURISM WILDLIFE AND ANTIQUITIES
26 UGANDA EMBASSY, COPENHAGEN
27 MAKERERE UNIVERSITY BUSINESS SCHOOL 27 UGANDA EMBASSY, JUBA
28 MAKERERE UNIVERSITY 28 THE UGANDA EMBASSY IN PARIS
29 MBARARA UNIVERSITY OF SCIENCE AND TECHNOLOGY
29 UGANDA EMBASSY, ROME
30 UGANDA AIDS COMMISSION 30 UGANDA HIGH COMMISSION - TRIPOLI
31 UGANDA BLOOD TRANSFUSION SERVICES 31 SOROTI REFERRAL HOSPITAL
32 UGANDA CANCER INSTITUTE 32 ARUA REFERRAL HOSPITAL
33 UGANDA MANAGEMENT INSTITUTE (UMI 33 FORT PORTAL REFERRAL REGIONAL HOSPITAL
34 LAKE VICTORIA ENVIRONMENTAL MANAGEMENT PROJECT PHASE II
34 GULU REGIONAL REFERRAL HOSPITAL
35 UGANDA EMBASSY, ABU DHABI 35 MASAKA REGIONAL REFERRAL HOSPITAL
36 UGANDA HIGH COMMISSION - ABUJA 36 MBALE REGIONAL HOSPITAL
37 UGANDA EMBASSY - ADDIS ABABA 37 MBARARA REFERRAL HOSPITAL
38 UGANDA EMBASSY, ANKARA 38 MINISTRY OF PUBLIC SERVICE
39 UGANDA EMBASSY, BEIJING 39 MINISTRY OF ENERGY AND MINERAL DEVELOPEMENT
40 UGANDAN EMBASSY-BERLIN DISCLAIMER
41 UGANDA EMBASSY, BRUSSELS 1 MINISTRY JUSTICE & CONST. AFFAIRS
42 UGANDA HIGH COMMISSION - BUJUMBURA
2 NEW DELHI MISSION
43 UGANDA EMBASSY, CAIRO 3 MUBENDE REGIONAL REFERRAL HOSPITAL
44 UGANDA HIGH COMMISSION, CANBERRA 4 NYABYEYA FORESTRY COLLEGE
45 UGANDA HIGH COMMISSION, DAR ES SALAAM
46 THE PERMANENT MISSION OF UGANDA TO THE UNITED NATIONS AND OTHER INTERNATIONAL ORGANIZATIONS IN GENEVA
4
Table showing type of opinion for each of the audited entities
UNQUALIFIED OPINION
QUALIFIED OPINION
47 UGANDA CONSULATE, GUANGZHOU
48 UGANDA EMBASSY, KHARTOUM
49 UGANDA HIGH COMMISSION, KIGALI
50 UGANDA EMBASSY, KINSHASA
51 UGANDA EMBASSY, MOSCOW
52 UGANDA HIGH COMMISSION - NAIROBI
53 UGANDA HIGH COMMISSION, OTTAWA
54 UGANDA HIGH COMMISSION, PRETORIA
55 UGANDA EMBASSY - TEHRAN
56 TOKYO MISSION
57 UGANA EMBASSY WASHINGTON
58 UGANDA PERMANENT MISSION TO THE UN, NEW YORK
59 UGANDA HIGH COMMISSION, LONDON
60 ELECTORAL COMMISSION
The table and graphs below provide a breakdown of the types of opinions issued:-
Types of Opinions issued since 2010 by numbers and percentage:-
Types of
Opinions
Year ending 30th June
2010 % 2011 % 2012 % 2013 %
Unqualified 40 39.6 61 59.22 47 45 60 58
Qualified 58 57.43 41 39.81 51 48 39 38
Disclaimer 3 2.97 1 0.97 7 7 4 4
Adverse 0 0 0 0 1 1 0 0
5
Figure showing the types of opinions issued for 2012/2013:-
58%
38%
4%
Types of Audit Opinions Issued (2013)
UNQUALIFIED 60
QUALIFIED 39
DISCLAIMER 4
Figure showing Trends of Types of Opinions Issued since 2009/2010:-
0
10
20
30
40
50
60
70
2009/2010 2010/2011 2011/2012 2012/2013
Pe
rce
nta
ge
Trends of Opinions Issued Since 2009/2010
UNQUALIFIED
QUALIFIED
DISCLAIMER
ADVERSE
6
Figure showing comparision of types of opinions issued since 2010:-
0
10
20
30
40
50
60
70
2009/2010 2010/2011 2011/2012 2012/2013
Pe
rce
nta
ge
Comparison of Types of Opinions Issued Since 2010
UNQUALIFIED
QUALIFIED
DISCLAIMER
ADVERSE
1.1.2 Special Audits
During the period under review, I undertook the following twelve (12) special
audits and the status is as below:-
Special Audits Status
1 Peace Recovery and Development Plan (PRDP) Activities Completed
2 The GIZ/GTZ Funded PRPD Activities Completed
3 Mbarara University of Science & Technology IT Systems Audit Completed
4 Individual reports to CIID Completed
5 Construction of Fish Landing Centres under MAIIF Completed
Special Audits still ongoing
6 Government Payroll Validation Ongoing
7 Bujagali Plant Cost Verification Ongoing
8 Kyambogo University Forensic Audit Ongoing
9 National Theatre Forensic Audit Ongoing
10 National Housing & Construction Corporation Ongoing
11 Verification of Terminal Benefits for Kilembe Mines Ongoing
12 Other individual Reports to CIID Ongoing
The reports for the above special audits have been issued separately.
7
1.2 KEY AUDIT FINDINGS
A. CENTRAL GOVERNMENT AUDITS
The Constitution of the Republic of Uganda 1995 (as amended) requires
the Public Service Commission (PSC) to consist of a chairperson, Vice
chairperson and seven members appointed by the president. However, it
was noted that all the nine (9) commission member’s contracts had
expired and the commission activities were at a standstill. Without a
constituted commission, recruitments, promotions and handling of
disciplinary cases under Government entities could not take place. This
has greatly affected service delivery in the MDA's. There is need to
urgently put the commission in place.
The Parliamentary Accounts Committee recommended that UNRA
harmonizes with OAG the variation of price (VOP) position on all contracts
where anomalies had been noted. By the time of writing this report (31st
March 2014), this exercise was underway and the VOP position for two
contracts had been ascertained by the two parties. The joint verification
exercise established that a total of Shs.33,207,607,133 had been certified
as excess in respect of these two contracts.
Despite adopting the commitment control system, the total value of
domestic arrears payable have continued to increase over the years as
shown in the table below:-
Table 1: domestic arrears for the last three years
Details Amounts (UGX)
2010/2011 2011/2012 2012/2013
Domestic arrears 473,654,629,150 763,186,161,377 1,127,241,181,530
The current status shows a steady increase in the domestic arrears
figures, clearly indicating that the current approaches to address the
problem are not working. The debt figure may become unmanageable as
it appears to be spiralling out of control.
8
A total of UGX.32,353,289,676 and Euros.2,474.05 was paid to various
contractors for works that had not been executed. Of this amount, UGX
1,289,505,648 was for works not executed whereas UGX 31, 063,784,028
was for costs that should have been avoided if proper contract
management procedures had been followed.
In my previous year audit report, I observed that a number of accounting
officers were paying various irregular allowances such as: consolidated
allowances, weekend allowances and monthly allowances to cater for
extra income for staff. During the year under review, several MDAs
continued with this practice and paid periodic consolidated allowances to
staff with no proper justification as these were not activity based,
rendering such a practice irregular. The Ministry of Public Service
indicated that it was currently discussing options to motivate public
officers given that government had failed to implement the pay policy of
2006 due to financial constraints. I advised the Accounting Officer to
ensure that this matter is comprehensively addressed since it is affecting
the whole service. It is important that the Ministry of Public Service
(MOPS) and Ministry of Finance Planning and Economic Development
(MoFPED) explore options and propose to government a viable course of
action to address the pay issue and stop the payment of consolidated
allowances outside the provisions of the Standing Orders.
Expenditures from various entities totalling to UGX.97,896,448,777 were
charged on items which do not reflect the nature of the expenditure. Such
a practice impacts on the credibility of the financial statements, since the
figures reported therein do not reflect true amounts expended on the
affected expenditure items. I however, noted an improvement where by
the previous year’s mischarges amounted to UGX.256,976,089,113. There
is still need for accounting officers to enforce strict adherence to the
provisions regarding reallocation of funds.
A number of accounting officers advanced a total sum of
UGX.16,284,144,090 to their staff, through their individual personal
accounts. I noted a reduction of 76% as compared to the previous year
amount of UGX.67,085,008,004. Although there has been an improvement
9
in absolute terms, I advised the accounting officers to avoid the practice
as it is contrary to regulations, highly risky and exposes government
funds to loss since accounting officers have no control over individual’s
bank accounts.
A total of UGX.65,862,390,381 advanced to staff to carry out activities in
various entities remained un-accounted for by the time of audit contrary
to the Public Finance and Accounting Regulations. Delays in accounting
for funds may encourage falsification of documents.
During the year under review, a total of UGX.49,816,466,501 was repaid
to various development partners as a refund for their misappropriated
funds that happened in the Office of the Prime Minister during the last
previous year. It was noted that although government obtained a
supplementary appropriation for the refund in question, there is need to
ensure that the appropriate organs of government follow up this matter in
order to eventually recover the funds from the responsible officials.
Review of the Loan portfolio revealed that as a result of low levels of loan
disbursements, these loans were attracting high commitment fees which
could have been avoided. This is because, the more money that remains
undisbursed, the more commitment fees that accrues from such a loan.
Accordingly, commitment fees paid during the year 2012/2013 have
increased by 40% from UGX.9.023 billion in 2011/2012 to UGX.12.7
billion in 2012/2013.
It was observed that the judiciary has key vacant positions that are likely
to affect the provision of judicial services. These vacant positions noted
include that of the Chief Justice and head of Court of appeal, 8 Justices of
Court of appeal, 4 Justices of the Supreme Court and 8 High Court Judges.
There is an urgent need to have the vacancies filled.
In August 2010, the Ministry of Public Service (MoPS) engaged a
consultant to conduct a comprehensive review and restructuring of
Government Ministries, Departments and Agencies (MDAs), aimed at
addressing structural redundancies, inconsistencies, weaknesses,
duplications and performance gaps in key service delivery sectors of
Government. However, two and a half years later in April 2013, the
10
Ministry of Finance Planning and Economic Development informed MoPS
that the recommendations of this exercise could not be implemented as a
result of budget constraints. Accordingly, the Ministry and other MDAs
were unable to implement the recommendations of the review and
restructuring exercise and this has impacted on their ability to perform
efficiently and effectively.
During the year under review, a number of MDAs did not remit taxes
amounting to UGX.28,306,339,889 contrary to the requirements of the
Income Tax Act. This un-paid tax included UGX.26,890,278,456 relating to
WHT deductions from payments to suppliers UGX.116,155,137 PAYE and
VAT UGX.1,135,189,149. The failure to deduct and remit taxes directly
impacts on collections by the Uganda Revenue Authority.
Tax refunds totalling UGX.49,056,655,413 are due on behalf of Ministry of
Finance Planning and Economic Development. The refunds arise from tax
incentives to various entities; however, the ministry lacks documented
criteria in selecting and approving the tax incentive beneficiaries. There is
need to streamline this process by providing clear guidance to avoid
haphazard selection of beneficiaries.
A total of UGX.231,426,034,484 was spent by various government
Ministries, Departments and Agencies on repairs and maintenance of
motor vehicles without technical pre and post inspections to determine
the extent of the defects on the vehicle and thus the repairs required. This
was attributed to lack of proper guidelines on how this activity was to be
carried out. Lack of technical pre-repair and post repairs
inspections/certificate of completion exposes the entities to risks of loss
of funds through over invoicing, payment for no work done and recycling
of old parts by the garages. During discussions with the accounting officer
of MOWT, I advised that the ministry expedites the review currently being
undertaken regarding the motor vehicle repairs and maintenance
guidelines to enable Accounting Officers comply with the requirement.
Uganda Road Fund Act required management to collect road user charges.
However, Uganda Revenue Authority is collecting this revenue on their
behalf and remitting the funds to the UCF. Due to this conflict, the
11
management of URF has failed to operationalise the provision of the Act
which hampered the activities of other entities.
In support to the Agriculture Sector value chain (Textile sub-sector),
Government has been paying import taxes on raw materials. It was noted
that two companies instead imported semi/finished textiles (Bed sheet
material, Bales polyester and viscose rayon staple fiber, cartons polyester
viscose, texturized yarn and polyester bed sheet material etc.). A total of
paid UGX.642,902,785 as taxes for these imports. This is against the
purpose for which the incentive was established.
Uganda Good Governance (UGOGO) under judiciary planned to
spend UGX.4,018,000,000 to undertake various activities during the year.
The records regarding the receipts of expenditure and details of activities
undertaken were not accessed. Discussions with management revealed
that the Accounting Officer does not have control over the project and
despite the intervention of the PS/ST, the project management remains
outside the set recommended government structures. There is need to
have the operations of this project streamlined to enable proper
government operation and scrutiny.
I observed that only 28 out of the 230 prisons found country wide had
water borne toilets. The prisoners continue to use the bucket system as a
toilet facility. This system is not only unhygienic but also humanly
degrading. The accounting officer indicated that in order to address the
issue, Uganda Prisons Service requires UGX.2.64 billion to improve the
living conditions of the prison community. Government should consider
providing resources for this activity.
The arrears figure for court awards and compensations rose by 200%
from UGX.82b in the year 2011/12 to UGX.164bn in the year under audit.
This raises the question of the extent to which government is making
efforts to minimize court awards and compensations. Discussions with the
accounting officer attributed this to laxity on the part of the concerned
entities to provide the necessary information for the cases. He further
stated that it was important for government to decentralize the payments
of court awards and compensations to the entities where the causation of
12
the award/compensation is. This would enable linkage of payment/loss
directly with the cause of the loss and would resultantly enhance
accountability.
It was observed that a number of Government contracts/projects for a
total of UGX.99,768,530,540, Us$.8,688,122.11 and Euros.940,720 that
had been ongoing or were started during the financial year lagged behind
schedule or demonstrated signs of failure. It was noted that a number of
these contracts/projects had exceeded their completion dates while
others had been abandoned. There appeared to be inadequate supervision
by the responsible entities and laxity in enforcing contract terms. This
could have resulted into losses to Government and failure to achieve the
objectives for which such contracts/projects were entered into.
Government owns land through a number of Government entities. These
entities are however facing challenges of protecting this land from illegal
claimants/encroachers. The challenges include lack of titles and the
inability to physically secure the properties due to inadequate resources.
The most affected institutions are NARO, LDC, Prisons, Gulu University,
and NAGRIC among others. Firm action to protect and secure government
land needs to be undertaken.
I observed that a number of Government assets that are not in use or
require repair have remained in stores or garages idle. This leads to
further loss and in certain instances theft of parts of these items. There is
need to adhere to the recommendations of Board of Surveys in order to
dispose off the uneconomical assets.
There has been continued deterioration of Government
properties/Buildings due to inadequate maintenance. The most affected
are the police, prisons, Judiciary, NARO, UBC, Health and Missions abroad,
which have structures that require major overhauls or maintenance. The
Accounting officers attributed this to inadequate allocation of capital
development fund to address the matter. There is need for Government to
deliberately address infrastructure needs of Government agencies.
UGX.294,721,969,000 was spent under Uganda Global Fund to fight Aids,
Tuberculosis and Malaria Project –Malaria Round 10 component. The
13
amount was meant for medicines and Pharmaceutical products and
equipment and for procurement supply and chain management. Records
on the utilization of the funds were not availed for audit.
Parliament appropriated a total of UGX.10.769 trillion for MDAs during the
year under review. However, a total of UGX.8.246 trillion was actually
released leading to a shortfall of UGX.2.523 trillion (23% of the budget).
A total of 66 government entities were affected.
I noted that there were several inter project borrowings and these
borrowings involved donor funded projects while others were
Government of Uganda projects. For Instance in UNRA and MOLG the
borrowings amounted to UGX.189,122,590,242 and UGX.916,601,532
respectively. Although in most cases funds would be refunded, this
practice could lead to delays in implementation of Government projects.
14
2.0 REPORT AND OPINION OF THE AUDITOR GENERAL ON
THE GOVERNMENT OF UGANDA CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR ENDED 30TH
JUNE, 2013
THE RT. HON. SPEAKER OF PARLIAMENT
I have audited the GoU Consolidated financial statements for the year ended 30th June,
2013, as set out on pages 10 to 76. These financial statements comprise of the Statement
of Financial Position as at 30th June 2013, Statement of Financial Performance, Statement
of Changes in Equity, Cash flow Statement together with other accompanying statements,
notes and accounting policies.
Management Responsibility for the Financial Statements
Under Article 164 of the Constitution of the Republic of Uganda, 1995 (as amended) and
Section 8 of the Public Finance and Accountability Act, 2003, the Accounting Officers are
accountable to Parliament for the funds and resources of the Votes/Entities under their
control. The Accountant General is also responsible for the preparation and fair
presentation of Consolidated Financial Statements in accordance with the requirements of
the Public Finance and Accountability Act 2003, and the modified cash basis of
accounting, and for such internal controls as management determines is necessary to
enable the preparation of financial statements that are free from material misstatement
whether due to fraud or error.
Auditor’s Responsibility
My responsibility as required by Article 163(3) of the Constitution of the Republic of
Uganda, 1995 (as amended) and Sections 13 and 19 of the National Audit Act, 2008, is to
audit and express an opinion on these statements based on my audit. I conducted the
audit in accordance with International Standards on Auditing. Those standards require
15
that I comply with the ethical requirements and plan and perform the audit to obtain
reasonable assurance whether the financial statements are free from material
misstatement.
An audit involves performing audit procedures to obtain evidence about the amounts and
disclosures in the financial statements as well as evidence supporting compliance with
relevant laws and regulations. The procedures selected depend on the Auditor‘s judgment
including the assessment of risks of material misstatement of financial statements
whether due to fraud or error. In making those risk assessments, the Auditor considers
internal controls 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
controls. 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.
Except as discussed below, I believe that the audit evidence I have obtained is sufficient
and appropriate to provide a basis for my qualified opinion.
Part ―A‖ of this report sets out my qualified opinion on the financial statements. Part ―B‖
which forms an integral part of this report presents in detail all the significant audit
findings made during the audit which have been brought to the attention of management
and will form part of my Annual Report to Parliament.
PART “A”
Basis for Qualified Opinion
Mischarge of Expenditure – UGX.97,896,448,777
Expenditures from various entities totaling to UGX.97,896,448,777 were charged on items
which do not reflect the nature of the expenditure. Such a practice impacts on the
credibility of the financial statements, since the figures reported therein do not reflect true
amounts expended on the affected expenditure items.
16
Unaccounted for Advances - UGX.65,862,390,381
A total of UGX.65,862,390,381 advanced to staff to carry out activities in various entities
remained un-accounted for by the time of audit contrary to the Public Finance and
Accounting Regulations. Delays in accounting for funds may encourage falsification of
documents.
Unspent Balances Returned by Local Authorities
A total of UGX.34,476,655,956 returned to Treasury as unspent balances from local
authorities was wrongly classified as Non Tax revenue.
Promissory Notes – UGX.10,108,612,787
Included under Note 21(1), Treasury Bills and Bonds is a figure of UGX.10,108,612,787 in
respect of promissory notes. I was not provided with documentation to support existence
of this liability.
Unreported Cash Balances – UGX.254,729,519,172
A total of UGX.254,729,519,172 relating to 21 bank accounts was not included in the
schedule for cash and bank balances, thereby understating the cash balance in the
financial statements by the same magnitude.
Qualified Opinion
In my opinion, except for the effects of the matters pointed out in the basis for qualified
opinion paragraph;
The financial statements together with the notes thereon fairly present in all material
respects the consolidated financial position of Government of Uganda as at 30th June,
2013 and its financial performance and cash flows for the year then ended, and
comply in all material respects with the Public Finance and Accountability Act, 2003
and the modified cash basis of accounting described under note 2 (a).
The expenditure and receipts have been applied in all material respects for the
intended purpose.
17
Other Matters
Without qualifying my opinion further, your attention is drawn to the following additional
matters:-
Underfunding of MDAs
Parliament appropriated a total of UGX.10.769 trillion for MDAs during the year under
review. However, a total of UGX.8.246 trillion was actually released leading to a shortfall
of UGX.2.523 trillion (23% of the budget). The shortfalls affected the full implementation
of planned activities by MDAs.
Classified Expenditure
Included in the expenditure for goods and services consumed is UGX.335,408,394,623
which relates to classified expenditure, as explained under note 7 to the financial
statements. In compliance with Regulation 12 of the Public Finance and Accountability
(classified Expenditure) Regulations, 2003, this expenditure was audited separately and a
separate audit report will be issued.
Refund of Misappropriated Funds to donors – UGX.49,816,466,501
During the year under review, a total of UGX.49,816,466,501 was paid to various
development partners as refund for misappropriated funds that happened in the Office of
the Prime Minister. It was noted that although government obtained a supplementary
appropriation for the refund in question, there is need to ensure that the appropriate
organs of government follow up this matter in order to eventually recover the funds from
the responsible officials.
John F.S. Muwanga
AUDITOR GENERAL
KAMPALA
27th March, 2014
18
PART "B"
DETAILED REPORT OF THE AUDITOR GENERAL
This Section outlines the detailed audit findings, management responses and my
recommendations in respect thereof.
2.1 INTRODUCTION
In accordance with Article 163(3), of the Constitution of the Republic of Uganda I
am required to audit and report on the public accounts of Uganda that is to say,
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. I carried out the audit of the Government of Uganda Consolidated
Financial Statements to enable me report to Parliament.
2.2 BACKGROUND INFORMATION
Under Article 164 of the Constitution of the Republic of Uganda and Section 8 of
the Public Finance and Accountability Act, 2003, the Accounting Officers are
accountable to Parliament for the funds and resources of the Votes/Entities under
their control. The Accountant General is appointed as the Accounting Officer and
Receiver of Revenue for the Consolidated Fund. He is responsible for establishing
and maintaining a system of Internal Controls designed to provide reasonable
assurance that the transactions recorded are within the authority and properly
record the use of all public funds by the Government of the Republic of Uganda.
Accordingly, the Accountant General is responsible for the preparation and fair
presentation of Consolidated Financial Statements in accordance with the
requirements of the Public Finance and Accountability Act, 2003, and the modified
cash basis of accounting.
2.3 OBJECTIVES FOR PREPARATION OF CONSOLIDATED FINANCIAL
STATEMENTS
The overall objective for preparation of Statutory Central Government
Consolidated Financial Statements is to indicate the extent to which Government
19
has adhered to the budget objective through compliance to the Appropriation Act
and Statutory provisions. The statements provide a record of the Government‘s
financial performance over the financial year under review.
2.4 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. In conducting my reviews, special
attention was paid to establish whether:-
a. The consolidated financial statements have been prepared in accordance
with consistently applied Accounting Policies and fairly present the
revenues and expenditures of government for the period and of the
consolidated financial position of the Consolidated Fund as at the end of
the period.
b. All funds were utilized with due attention to economy and efficiency and
only for the purposes for which the funds were provided.
c. A sound internal control structure is in place and internal controls were
consistently applied throughout the period.
d. Management was in compliance with the Government of Uganda financial
regulations.
e. All necessary supporting documents, records and accounts have been kept
in respect of all activities, and are in agreement with the consolidated
financial statements presented.
2.5 FINDINGS
2.5.1 Mischarge of Expenditure – UGX.97,896,448,777
The Government Chart of Accounts defines the nature of expenditure for each
item code. The intention is to facilitate better and consistent classification of
financial transactions and also track budget performance per item in line with
parliamentary appropriation. Audit noted that during the year under review, a
number of entites charged a total of UGX.97,896,448,777 on items which do not
reflect the nature of the expenditure.
20
A summary of the mischarged expenditure per entity is shown in the table below:-
ENTITY
Amount mischarged
(UGX)
1 National Environmental Management Authority 190,157,114
2 Ministry of Information Communication Technology 232,267,708
3 Ministry Of Lands Housing And Urban Development 2,013,594,374
4 Ministry Of Tourism, Wild Life And Heritage 249,642,817
5 Ministry Of Water And Environment 9,438,526,861
6 Uganda Land Commission 274,007,650
7 Uganda Tourism Board 435,791,355
8 Ministry Of Public Service 2,245,336,970
9 Ministry Of Energy 9,200,543,112
10 Ministry Of Health 13,431,161,682
11 Ministry Of East African Affairs 631,272,089
12 Ethics & Integrity 753,056,165
13 Ministry of Finance (MOFPED 1,506,161,379
14 Inspectorate of Government 3,589,303,382
15 Uganda National Bureau of Statistics (UBOS) 231,015,454
16 Ministry of Agriculture Animal Industry & Fisheries 293,224,592
17 Dairy Development Authority 709,967,100
18 ATAAS (Grant) EU, WB and DANIDA 195,700,610
19 UNRA 2,480,827,360
20 Ministry of Works & Transport 118,176,248
21 Office Of The Prime minister 27,629,053,148
22 Ministry Of Local Government 4,178,737,274
23 Local Government Finance Commission 244,029,386
24 Parliamentary commission 4,132,998,534
25 Northern Uganda Social Action Fund 19,059,510
26 Ministry Justice & Const. Affairs 1,356,763,496
27 Ministry of Internal Affairs 4,132,998,534
28 Judiciary Department 4,701,073,327
29 Judicial Service Commission 284,300,282
30 Law Reform Commission 373,406,461
31 DPP 692,574,586
32 Uganda Police 563,783,138
33 Uganda Prisons 717,151,659
34 National Citizenship and Immigration 650,785,420
Total 97,896,448,777
The practice impacts on the credibility of the financial statements, since the
figures reported therein do not reflect the true amounts expended on the
21
respective items. It further undermines the intentions of the appropriating
authority.
2.5.2 Unaccounted for Advances – UGX.65,862,390,381
During the year under review, several Ministries, Departments and Agencies
(MDAs) had a total of UGX.65,862,390,381 that remained unaccounted for
contrary to financial regulations that require all expenditure to be accounted for by
the year end. These expenditures were in form of advances to individuals and
departments and expenditure lacking adequate supporting documents. I was not
able to obtain reasonable assurance that the funds were applied to the intended
activities. The entities concerned included the following:-
Entity Amount outstanding
(UGX)
BUSITEMA 9,744,000
Ministry Of East African Community Affairs 758,031,287
Ministry Of Energy And Mineral Development 459,491,843
Ministry Of Health 13,052,912,535
Ministry Of Public Service 558,566,020
Ministry Of Water And Environment 506,022,340
Ethics & Integrity 96,000,000
National Planning Authority 29,754,500
Uganda Investment Authority 283,467,282
Uganda National Bureau of Statistics (UBOS) 93,814,114
Uganda National Council of Science and Technology 6,000,000
Uganda Privatization & Utility Sector Reform /
Privatization Unit (Divesture)
13,900,000
Uganda Panel Survey Project 1,500,000
Support to Firm Data Generation (SFDG)-BIS 9,117,142
Dairy Development Authority 434,615,989
National Animal Generic Resource Centre and Data 8,496,000
22
Entity Amount outstanding
(UGX)
Bank (NAGRIC)
Office of the President 7,155,000
Luwero Industries 30,891,769
Uganda Road Fund 12,415,977,407
Ministry of Works & Transport 304,731,200
Office Of The Prime minister 2,838,631,501
Ministry Of Local Government 2,186,587,558
Local Government Finance Commission 7,105,600
Parliamentary commission 717,605,650
Northern Uganda Social Action Fund 30,642,929,605
Law Reform Commission 107,180,981
Strengthening Evidence Based Decision Making II-
UBOS
255,489,148
Avian Influenza Preparedness Project 26,671,910
TOTAL 65,862,390,381
Delays in accounting for expenditures are caused by laxity by Accounting Officers
to enforce timely accountability and weaknesses in controls in regard to advances.
This may lead to falsification of accountability documents and loss of government
funds.
The Accounting Officers have been advised to enforce strict controls as provided
for in the public Finance and Accounting regulations, including enforcing the
requirements of not advancing additional funds before accounting for the previous
advances and eventual recovery on failure to account.
2.5.3 Differences in Cash and Bank Balances - UGX.254,729,519,172
A total of 21 bank accounts with a total cash balance of UGX.254,729,519,172
were not included in the schedule for cash and bank balances of the consolidated
23
financial statements. This implies that the cash balance in the financial statements
is understated by the same magnitude.
Some of the omitted accounts ought to have been closed and the balances
transferred to the consolidated fund, while others should have their balances
regularly transferred to the consolidated fund.
2.5.4 Unsupported Promissory Notes - UGX.10,108,612,787
Included under Note 21(1), Treasury Bills and Bonds is a figure of
UGX.10,108,612,787 in respect of promissory notes. However, I was not provided
with documentation to support existence of this liability, though management
explained that the funds are owed to Bank of Uganda. Review of Bank of Uganda
financial statements revealed that the bank did not disclose any receivable from
Government in form of promissory notes. Under the circumstances, Treasury is
recognizing a liability whose existence is doubtful.
Management explained that this amount originated from Bank of Uganda many
years back but the bank subsequently wrote it off as a result of having no
supporting documentation. Management promised to derecognize the liability after
consultations with the bank.
2.6 Re-capitalization of BoU
In a letter to the Governor Bank of Uganda (referenced MEP84/137/01 dated 10th
May, 2013), the Minister of State for Finance, Planning and Economic
Development (Privatization) authorized Bank of Uganda to issue interest earning
debt instruments amounting to UGX.410 billion for re-capitalizing the bank.
Section 14-4 of the Bank of Uganda Act allows Government to furnish the Bank of
Uganda with securities to make good of any impairment. I noted from the financial
statements of Bank of Uganda that during the year ended 30th June 2013, the
bank recognized a receivable from government of UGX.140 billion in respect of
letters of comfort that were made to various commercial banks for loans extended
to M/S Haba Group of Companies. Bank of Uganda however made a provision for
impairment losses for the entire amount of UGX.140 billion, implying that recovery
24
was highly unlikely. The effect of the write off is that the bank‘s capital was
impaired to the magnitude of the impairment losses.
The recapitalization of the Bank therefore, is partly influenced by the above
impairment losses. No evidence was presented to me to confirm that the bank had
exhausted all available means to recover the funds. In addition, no information
was provided to explain the basis of the extent of recapitalization.
In response, management explained that although the recapitalization was done in
compliance with the law, government would continue to push for the recovery of
the money from Haba group of companies. I have advised that information to
support the extent of recapitalization should be provided and that management
also needs to push for recovery of the funds advanced to Haba Group of
Companies.
2.7 Underfunding of MDAs
Parliament appropriated a total of UGX.10.769 trillion for MDAs during the year
under review. However, a total of UGX.8.246 trillion was actually released leading
to a shortfall of UGX.2.523 trillion (23% of the budget). The key MDAs affected
included the following:-
Entity Approved Budget (Shs)
Actual Releases (Shs)
Under Funding (UGX)
%age of shortfall
Ministry of Energy and
Minerals
1,275,471,299,400 128,046,465,607 1,147,424,833,793 90
Uganda National Roads Authority
1,577,690,331,078 840,760,027,310 736,930,303,768 47
Uganda Heart Institute 5,049,683,764 2,641,202,052 2,408,481,712 48
Ministry of Agriculture, Animal Industry and
Fisheries
85,193,613,248 59,362,107,195 25,831,506,053 30
Office of the Prime Minister
98,861,028,772 77,973,474,055 20,887,554,717 21
Ministry of Justice and
Constitutional Affairs
52,034,141,174 36,868,184,164 15,165,957,010 29
Ministry of Finance, Planning and Economic
215,370,128,888 160,117,882,737 55,252,246,151 26
Ministry of Local
Government
70,063,866,699 57,250,084,238 12,813,782,461 18
25
Entity Approved
Budget (Shs)
Actual
Releases (Shs)
Under
Funding (UGX)
%age of
shortfall
Ministry of Health 63,996,436,682 52,493,621,441 11,502,815,241 18
Ministry of Works & Transport
104,741,368,124 75,384,591,639 29,356,776,485 28
Ministry of Water &
Environment
160,724,031,928 111,322,634,336 49,401,397,592 31
Ministry of Communication & ICT
20,225,476,812 13,985,958,421 6,239,518,391 31
Electoral Commission 66,470,283,145 59,668,080,128 6,802,203,017 10
Uganda Industrial Research Institute
13,839,732,839 11,543,195,681 2,296,537,158 17
Busitema University 14,206,909,656 12,824,836,836 1,382,072,820 10
Uganda Road Fund 280,283,996,052 237,184,885,805 43,099,110,247 15
National Citizenship &
Imm Ctrl
62,403,706,890 47,485,167,010 14,918,539,880 24
KCCA 100,071,685,633 88,160,309,889 11,911,375,744 12
Mbarara University 14,772,457,297 13,319,099,418 1,453,357,879 10
National Agricultural
Research Org
51,455,612,347 34,304,918,634 17,150,693,713 33
Uganda Bureau of Statistics
30,160,888,707 25,590,324,419 4,570,564,288 15
National Environment
Mgt Auth.
5,799,827,494 4,681,353,889 1,118,473,605 19
National Agricultural Advisory Service
53,909,554,551 43,712,450,630 10,197,103,921 19
Public Procurement &
Disposal of Assets
6,981,405,510 5,951,686,973 1,029,718,537 15
Uganda National Bureau of Standards
11,210,133,142 9,839,522,292 1,370,610,850 12
The shortfalls affected the full implementation of planned activities by MDAs.
2.8 Accounting for Net Domestic Financing
The approved revenue and expenditure estimates for 2012/2013 provided for a
fiscal framework under which the budget deficit of UGX.988.6 billion would be
financed by way of net domestic financing. This was further broken down into,
UGX.763.6 billion to be realized through bank financing and UGX.225 billion
through non-bank financing. However, the financial statements put the net
domestic financing at UGX.1,472 billion creating an unapproved variance of
UGX.483 billion. This implies that the Treasury borrowed from the domestic
market way beyond what was approved.
26
In addition, a report from the Macroeconomics department of Ministry of Finance
quoted the net domestic financing for the year as UGX.717 billion. No schedule
was provided to reconcile the two figures.
The Macro Economics Department, Accountant General and Bank of Uganda need
to jointly reconcile the amounts for domestic borrowing.
2.9 Contingencies Fund
Section 10 (1), (2) and (3) of the Public Finance and Accountability Act 2003,
states that ―there shall be a contingencies fund for national emergencies into
which shall be paid all sums appropriated by Parliament for the purposes of the
fund. The Minister may, if he or she is satisfied that an urgent need has arisen for
expenditure which could not have been foreseen, and which cannot be postponed
to the detriment of public interest, authorize by a warrant under his or her hand,
addressed to the Accountant General, advances from the fund for purposes of
meeting such expenditure. Where such advance is made, a supplementary
estimate for the purpose of replacing what was advanced shall be laid before
Parliament at its next sitting‖.
I reviewed the Contingencies Fund account and observed that the opening and
closing balance had been static at UGX.976,950 during the financial year
2012/2013. I also noted that prior to this, the fund had a balance of
UGX.235,000,000 which was advanced to the Office of the Prime Minister in
response to a disaster years back. Under the law, a supplementary budget should
have been presented to Parliament for approval and money should have been
released and paid back to the contingency fund. In the circumstance, the fund has
for long been depleted exposing the country to a risk of failure to fund emergency
disasters as required under the Act.
Management explained that Government could not operationalize the
Contingencies fund due to the absence of regulations to guide its implementation.
They further indicated that the issue will be addressed upon the enactment of the
new Finance Bill. I await this action.
27
2.10 Domestic Arrears
Audit reviewed the status of domestic arrears as at 30th June, 2013 and noted the
following matters:-
a. In a letter dated 27th January 2014, to Accounting Officers of Central
Government Ministries, the PS/ST stated that the verified domestic arrears
as at 30th June 2013 was UGX.604,903,600,743. However, the reported
figure in the consolidated financial statements is UGX.1,127,241,181,530
resulting into an unexplained difference of UGX522,337,580,787..
b. Since the expiry of the debt strategy three (3) years ago, Treasury does not
have an approved debt strategy to guide its operations.
c. Despite adopting the commitment control system, the total value of
domestic arrears payable has continued to increase over the years to an
astounding UGX.1.13 trillion. This is illustrated in the table and graph
below:-
Table 1: domestic arrears for the last three years
Details Amounts (UGX)
2010/2011 2011/2012 2012/2013
Domestic
arrears
473,654,629,150 763,186,161,377 1,127,241,181,530
Graph showing the domestic arrears trend
28
The current status shows a steady increase in the domestic arrears figures, clearly
indicating that the current approaches to address the problem are not working.
The debt figure may become unmanageable as it appears to be spiralling out of
control.
In response, management stated that the Commitment Control System cannot
control certain types of expenditures such as the contractual obligations of rent,
wage and contributions to International organizations. This is further complicated
by the budget credibility issues whereby certain Accounting Officers may not
budget adequately for some of the known expenditures. Sometimes even when
they budget adequately, in cases where budgets are cut to finance supplementary
budgets, arrears can be created. I have advised that Treasury needs to come up
with a detailed strategy on how it intends to address the problem of the increasing
domestic arrears.
2.11 Disclosure of Escrow Accounts
The Government of Uganda maintains a number of Escrow accounts in the Central
Bank and various commercial banks where funds are held for guarantee purposes.
Any draw-downs from these accounts are contingent on the failure by a
government agency to undertake its obligation. Best practice would require
government to have an accounting policy that would provide for the accounting
treatment and disclosure requirements for all Escrow accounts. Some of the active
Escrow accounts included the following:-
Table 2: Escrow Accounts
Account Tittle Name of the Bank
Bujagali liquidity facility Bank of Uganda
Agriculture Credit Guarantee scheme Bank of Uganda
Umeme Escrow Citi Bank
Eskom Escrow Stanbic Bank
Bujagali line Escrow Bank of Uganda
Bujagali resettlement Escrow Bank of Uganda
29
Mbarara- Tororo line Escrow Bank of Uganda
UETCL Mbarara – Nkenda and Tororo-Lira transmission
line
Bank of Uganda
Kampala Institutional and infrastructure Development
Project
Bank of Uganda
It was however noted that Treasury does not have an appropriate accounting
policy relating to the operations and recording of the Escrow account activities. In
addition, there is no comprehensive list of Escrow accounts that is maintained and
that the consolidated financial statements do not disclose the annual movements
of the escrow accounts in question. Under the circumstances, I was unable to
establish the number of Escrow accounts held at the year-end as well as the
movements on the accounts in question.
In response, Management noted the audit observation and promised to follow up
the matter accordingly. I await the outcome of this management commitment.
2.12 Accounting for Development Finance Schemes
The Government of Uganda secured funds for development finance schemes
managed by Bank of Uganda. Review of the management and reporting of
Development Finance Schemes revealed that there was no formal policy regarding
the management and reporting of funds under the Development Finance Schemes.
Accordingly, the operations of the schemes in question are not properly monitored
and reported upon.
In their response, management explained that the current government policy on
Development finance schemes is to transfer all credit schemes implemented by
BoU to UDBL. Some transfers have since been made and for those that are yet to
be moved, government awaits full reconciliation to be undertaken by BoU before
transfers to UDBL can be sanctioned. I await the outcome of this management
commitment.
2.13 Accounting for Proceeds from Oil Fund Investments
30
Review of the Bank of Uganda financial statements for the year under review
revealed that the bank had invested part of the Oil Tax Fund in short term money
market deposits. According to the bank, only Us$.171 million was invested during
the year which yielded interest of Us$.246,344 equivalent to UGX.640,060,834.
The note further states that the oil fund is ring fenced for future development
expenditure.
However, I was not provided with the investment instructions by PS/ST
authorizing the bank to invest part of the fund and giving directions on utilization
of interest earned. Under the circumstances, there is a risk that the bank may
undertake unauthorized investments which are not in tandem with the underlying
laws applicable to utilization of oil revenues.
Management explained that in the absence of Investment guidelines, Bank of
Uganda invests GoU deposits in short-term but secure portfolios which are rolled
over. However, Government was in the process of developing guidelines
regarding investment of oil revenues. I have advised that this process be
expedited so as to have the guidelines in place before the oil revenues fully start
flowing in.
2.14 Non-Performing Loans
Review of the Loan portfolio revealed three (3) loans which have never disbursed
since signing. There is no indication of any steps taken to either start
disbursement or terminate the loans in question. The table below indicates the
details of the affected loans:-
Table 3: non-performing loans
Effective
Date
Loan Name Creditor Amount Current
Status
31/10/201
1
Construction and
Equipping of Technical institute in Nakaseke
District.
Arab Bank For
Economic Development in
Africa(BADEA)
Us$.
5,000,000
No
disbursements so far
9/11/2011 Agricultural Technology and Agribusiness
Advisory Services Project
International Fund For Agricultural
Development
SDR. 9,300,000
No disbursements
so far
31
Effective
Date
Loan Name Creditor Amount Current
Status
3/9/2003 Financing part of costs of
community vocational training polytechnics
project
Islamic
Development Bank
ID.
2,015,000
No
disbursements so far
In addition, I noted a number of loans with low levels of disbursements yet their
deadline for final disbursement is nearing. The table below shows the details:-
Table 4: loans with low levels of disbursements
Deadline For Disbursement
Loan Name
Amount Disbursed (UGX)
Amount Outstanding (UGX)
% Commitment Fees FY
2012/13
31/12/13 Electricity Transport (Mbarara-Nkenda)
33,102,654,516 172,139,936,840 19 1,026,760,846
31/12/14 Post Primary Educ. Training IV
70,204,148,570 133,055,923,196 35 859,377,584
31/12/14
Kampala sanitation program
33,091,956,371
100,310,380,098
33 544,456,571
136,398,759,457 405,506,240,134 541,904,999,591
As a result of low levels of disbursements, these loans were attracting high
commitment fees which could have been avoided. This is because, the more
money that remains undisbursed, the more commitment fees that accrues from
such a loan. Accordingly, commitment fees paid during the year 2012/2013 have
increased by 40% from UGX.9.023 billion in 2011/2012 to UGX.12.7 billion in
2012/2013. This was not consistent with the 16% increase of the total foreign
debt from UGX.8.023 trillion to UGX.9,373 trillion over the same period.
In addition, the above analysis may imply that one of the major drivers for
commitment fees is low absorption levels. Failure to implement the above projects
as scheduled, affects the attainment of the intended project objectives.
Management explained that the major cause for non-performance arises out of
procurement related challenges and that Government currently holds regular
reviews with development partners and project implementers so that any
32
bottlenecks to the implementation process are identified and addressed early
enough. I however noted that projects have continued to perform poorly in spite
of the stated remedial measures. Government is advised to explore ways of
expediting project implementation processes so as to improve on their absorption
capacities.
2.15 Accounting for Investments in Shares
The government of Uganda has invested in a number of companies and corporate
entities. According to the accounting policy, government recognizes its portion of
the net worth in the consolidated financial statements of companies in which it has
shares. A sum of UGX.1,672,235,933,637 is reported as the total net worth of
domestic investments as at 30th June 2013, up from UGX.341,856,667,295
reported in the previous year. I reviewed the accompanying schedule and noted
that the reported net worth for all the entities was not properly supported as there
was no evidence provided to confirm this position. Under the circumstances, I
cannot confirm whether the balance for domestic investments is properly stated.
In their response, management explained that they were unable to obtain audited
accounts for all the investments for the period under review and that some of
these Investments have a different accounting period from that of government.
They further stated that the Public Finance Bill has a provision that will compel all
government entities to align their financial years to the government fiscal year. I
have advised management to always ensure that they adhere to the accounting
policies adopted or else consider changing such policies or disclosing such
instances of departure from the policy.
2.16 Refund to Development Partners – UGX.49,816,466,501
Following the financial impropriety in the Office of the Prime Minister which also
included funds contributed by donors, a number of development partners
demanded for refunds by Government of Uganda of the amounts that had been
contributed and misappropriated. Accordingly, Government of Uganda sought and
obtained approval from Parliament of a supplementary expenditure. Subsequently,
a total of UGX.49,816,466,501 was refunded to Development Partners during the
33
year under review. Government committed to have these funds recovered from
individuals found culpable.
However, I have not been availed with the current status in regard to recovery of
misappropriated funds from the culpable individuals. I have advised management
to ensure that the appropriate organs of government follow up this matter in order
to eventually recover the funds from the responsible officials.
34
ACCOUNTABILITY SECTOR
3.0 TREASURY OPERATIONS
3.1 Accounting for Investments in Shares
The government of Uganda has invested in a number of companies and corporate
entities. According to the accounting policy, government recognizes its portion of
the net worth in the consolidated financial statements of companies in which it has
shares. A sum of UGX.1,672,235,933,637 is reported as the total net worth of
domestic investments as at 30th June 2013, up from UGX.341,856,667,295
reported in the previous year. I reviewed the accompanying schedule and noted
that the reported net worth for all the entities was not properly supported as there
was no evidence provided to confirm this position. Under the circumstances, I
cannot confirm whether the balance for domestic investments is properly stated.
In their response, management explained that they were unable to obtain audited
accounts for all the investments for the period under review and that some of
these Investments have a different accounting period from that of government.
They further stated that the Public Finance Bill has a provision that will compel all
government entities to align their financial years to the government fiscal year. I
have advised management to always ensure that they adhere to the accounting
policies adopted or else consider changing such policies or disclosing such
instances of departure from the policy.
3.2 Non-Performing Loans
Review of the Loan portfolio revealed three (3) loans which have never disbursed
since signing. There is no indication of any steps taken to either start
disbursement or terminate the loans in question. The table below indicates the
details of the affected loans:-
35
Table 1: non-performing loans
Effective
Date
Loan Name Creditor Amount Current
Status
31/10/2011 Construction and
Equipping of Technical institute in Nakaseke
District.
Arab Bank For
Economic Development in
Africa(BADEA)
Us$.
5,000,000
No
disbursements so far
9/11/2011 Agricultural Technology and Agribusiness
Advisory Services Project
International Fund For Agricultural
Development
SDR. 9,300,000
No disbursements
so far
3/9/2003 Financing part of costs
of community vocational training
polytechnics project
Islamic Development
Bank
ID.
2,015,000
No
disbursements so far
In addition, I noted a number of loans with low levels of disbursements yet their
deadline for final disbursement is nearing. Table 2 below shows the details:-
Table 2: Loans with low levels of disbursements
Deadline For Disbursement
Loan Name
Amount Disbursed (UGX)
Amount Outstanding (UGX)
Commitment Fees FY 2012/13
31/12/13 Electricity Transport (Mbarara-Nkenda)
33,102,654,516 172,139,936,840 1,026,760,846
31/12/14 Post Primary Educ.
Training IV
70,204,148,570 133,055,923,196 859,377,584
31/12/14
Kampala sanitation program
33,091,956,371
100,310,380,098
544,456,571
136,398,759,457 405,506,240,134 541,904,999,591
As a result of low levels of disbursements, these loans attract high commitment
fees which could have been avoided. This is because, commitment fees are
charged on undisbursed loan amounts. Accordingly, commitment fees paid during
the year 2012/2013 have increased by 40% from UGX.9.023 billion in 2011/2012
to UGX.12.7 billion in 2012/2013. This was not consistent with the 16% increase
36
of the total foreign debt from UGX.8.023 trillion to UGX.9.373 trillion over the
same period.
The above analysis may imply that one of the major drivers for commitment fees
is low absorption levels. Failure to implement the above projects as scheduled,
affects the attainment of the intended project objectives.
Management explained that the major cause for non-performance arises out of
procurement related challenges and that Government currently holds regular
reviews with development partners and project implementers so that any
bottlenecks to the implementation process are identified and addressed early
enough. I however noted that projects have continued to perform poorly in spite
of the stated remedial measures. Government is advised to explore ways of
expediting project implementation processes so as to improve on their absorption
capacities.
3.3 Refund to Development Partners
Following the financial impropriety in the Office of the Prime Minister which also
included funds contributed by donors, a number of development partners
demanded for refunds by Government of Uganda of the amounts that had been
contributed and misappropriated. Accordingly, Government of Uganda sought and
obtained approval from Parliament for supplementary expenditure. Subsequently,
a total of UGX.45.50 billion was refunded to Development Partners during the year
under review. Government is committed to recover these funds from individuals
found culpable.
However, I have not been availed with the current status in regard to recovery of
misappropriated funds from the culpable individuals. I have advised management
to ensure that the appropriate organs of government follow up this matter in order
to eventually recover the funds from the responsible officials.
37
4.0 MINISTRY OF FINANCE, PLANNING AND ECONOMIC
DEVELOPMENT
4.1 Mischarge of expenditure
The Government Chart of Accounts defines the nature of expenditures for each
item code. The intention is to facilitate better the classification of financial
transactions and also track budget performance per item. It was noted that a sum
of Shs.1,506,161,379 was charged on items which do not reflect the nature of the
expenditure. Mischarge of expenditure impacts on the credibility of the financial
statements since the figures reported therein do not reflect true amounts
expended on the respective items.
Management explained that IFMS items were not linking properly with the output
budgets. For example, what appears to be mischarged expenditure is office
imprest which is not tied to particular chart of accounts but rather a combination
of related items in accordance with TAIs.
I advised management to liaise with Accountant General and resolve the de-
linkage.
4.2 Un-supported Gross Tax payments-Shs.1,468,868,156
A sum of Shs.10,431,635,839 was spent from the Gross Tax account during the
year, out of which Shs.1,468,868,156 was un-supported. The import documents
and URA tax assessments against which the payments from the gross tax account
were based were not availed. In the circumstances, I was unable to confirm that
the gross tax payments were eligible.
I advised management to always ensure that payments from the gross tax
account are properly supported, otherwise funds are recoverable.
4.3 Gross Tax Payments for Non-Qualifying Items – Shs.642,902,785
38
Government in support to the Agriculture Sector value chain (Textile sub-sector),
has been paying import taxes on raw materials for the manufacture of textiles.
The Ministry paid Shs.642,902,785 as taxes for these imports. This is against the
purpose for which the incentive was established. Importation of already ginned
cotton (yarn), bed sheets materials and other fibre, will not benefit the local
cotton farmers as had been intended.
It was noted that the beneficiary companies instead imported semi/finished
textiles (Bed sheet material, Bales polyester and viscose rayon staple fiber, cartons
polyester viscose, texturised yarn and polyester bed sheet material etc.).
The Accounting Officer explained that the list for qualifying items in the textile
sector is provided by URA and is the basis for payments on behalf of the textile
sector. The companies imported fabric for further transformation into finished
products which is consistent with the authority granted by the Minister. Evidence
to the effect was not provided.
I advised management to restrict tax payments to only raw materials as was
intended by Government policy for the textile sub-sector and also initiate recovery
measures for all payments made in respect of finished products (bed sheet
materials).
4.4 Amounts due to URA not disclosed in MoFPED Financial statements
Receivables of Shs.2,017,372,495 were disclosed in the URA financial statements
as due from the Ministry. This payable was not disclosed in the Ministry financial
statements. The nature and amounts of the liabilities are indicated the table
below:
Beneficiary
Tax
head Period
Amount Due
from MoFPED
Ministry of Finance, Planning
& Economic Development
Excise
Duty 2007/2008
7,185,936
Ministry of Finance/BPAFS
Outstanding VAT 2006 - 2009
1,886,054,911
39
Ministry of Finance a/c
Lantech (Africa) Ltd VAT
01/2006 -
12/2011
124,131,648
TOTAL
2,017,372,495
The Ministry‘s liabilities are therefore understated. This may mislead the users of
the financial statements.
Management responded that they are in consultation with URA on the matter
before arriving at the decision to adjust the financial statements.
The outcome is awaited.
4.5 Unlicensed Gaming and Pool Betting Businesses
A review of the tax payer register/payment schedule of URA for the period
2012/13 revealed that a number of companies were registered and are
subsequently remitting taxes to URA. It is the responsibility of Ministry of Finance
to issue licenses to betting companies. However, it was noted that 24 companies
did not have operating licenses in the period in which they transacted business.
There is a likelihood that over Shs.24 million was lost in uncollected license fees.
Management explained that these companies did not qualify under the Gaming
and Pool Betting Act and are operating illegally. URA has been notified of this
illegality and the lottery board has began closing down offices until they comply.
I advised management to continue to liaise with URA to ensure that all operating
businesses in the sector are registered.
4.6 Inadequate budgeting and management of gross tax account
During the period under review the Ministry budgeted for Shs.26bn out of which
Shs.15 bn was received as gross tax amount available to settle import related
taxes. Out of the total release, management paid for taxes of only
Shs.10,431,635,839. This reflects inadequate budgeting. It also locks up scarce
resources which would have been applied elsewhere.
40
Also noted was the gross tax balances of Shs.4,568,364,161 transferred to the
UCF, despite having outstanding tax obligations with URA of Shs.3,657,635,260
arising from import related taxes.
I advised management to budget properly for gross tax and obediently meet its
tax obligations on time to enable URA also achieve its objectives.
4.7 Un-clear criteria for selecting and recommending firms for tax incentives
and lack of information in that regard
It was noted that there was no guidance given in the criteria to be used in the
selection and recommending firms for tax incentives by the tax policy desk in the
Ministry. Further, there is lack of clear and readily available information to the
public/players in the economy regarding specific sectors of the economy which
have been earmarked to benefit from tax waivers.
For instance, the Hotel industry, Steel manufacturing and textile among others
have been benefiting from tax incentives without any documented criteria in place
which is open to all players in such sector to enable equal opportunities to access
the tax incentives. This creates un-fair competition in the market. It‘s worth noting
that the beneficiaries of the tax incentive (e.g. BIDCO) charge similar oil prices as
non-beneficiaries (e.g. Mukwano) without consideration of any returns in benefits
to the economy as would have been expected.
Lack of a documented criteria and method used in selecting and approving the tax
incentives beneficiaries poses the risk of handpicking without following a uniform
selection check list of conditions to be fulfilled.
Management explained that a criterion has been developed for the textile sector
and the criteria for the other sectors have been drafted pending approval.
I urged management to expedite the approval process and have the criteria in
place.
41
4.8 Lack of repair post inspection reports
S.816 of the TAIs requires that, a motor vehicle should be inspected by the
mechanical supervisor before and after repair and a certificate of completion or
inspection report should be prepared by the mechanical supervisor confirming that
the vehicle has been repaired, all spares installed and in a good mechanical
condition. However, during the financial year, a sum of Shs.889,964,805 was
spent on repair and servicing of various vehicles but there were no certificates of
completion/inspection reports prepared for the serviced vehicles. I could not
therefore confirm the authenticity of the payments in absence of certificates or
inspection reports.
Management explained that the vehicles were being repaired by the suppliers as
part of policy to use genuine parts and maintain the cars in good mechanical
conditions.
I advised management to liaise with Ministry of Works and Transport and have the
vehicles inspected prior and post repairs.
4.9 Capitalization of institutions
During the period under review Parliament appropriated Shs.25,079,000,000 for
capitalization of EADB, UDB, IDB and PTA. Examination of the activity revealed the
following;
The EADB board of directors and governing council made a decision on 15th
March, 2012 that each member state pays an amount of USD 4.5 Million each
year towards capital subscription. At the time of audit, USD4,119,822 was still
outstanding. Failure to make timely contributions is likely to affect the
attainment of the intended aims/objectives.
Uganda being a member state was supposed to make annual capital
contribution of USD 1,632,024. However, only USD 930,000 was paid leaving a
balance of USD 8,050,872 as at 30th June 2013.
It was also noted that arrears continue to attract interest at a rate of 8% per
annum and by 30th June 2013 this had accumulated to USD 820,752. Failure to
remit contribution may affect the attainment of intended objectives.
42
Management explained that Government has outstanding obligations with PTA
Bank caused by insufficient budget provisions.
I advised management to seek for sufficient budget appropriations and endeavor
to pay all above the outstanding obligation.
4.10 Budget Performance
According to the annual budget performance report for 2012/13 for the Ministry,
Shs.225.05 billion was budgeted, Shs.207.04 billion was released and Shs.207.01
billion was actually spent. The table below shows an analysis of the releases
against the actual expenditure and budget.
Vote Approved
budget
Released Spent %budget
/spent
%
release/
spent
1401: Macroeconomic Policy
and Management
75.75 40.56 40.55 53.5% 100%
1402:Budget Preparation,
Execution and Monitoring
11.73 10.29 10.49 89.4% 101.9%
1403: Public Financial
Management
44.66 51.89 51.91 116.2% 100.0%
1404: Development Policy
Research and Monitoring
28.08 31.78 31.78 113.2% 100.0%
1406: Investment and Private
Sector Promotion
21.53 30.57 30.57 142.0% 100%
1408: Microfinance 24.97 19.74 19.73 79% 100%
1449: Policy, Planning and
Support Services
18.34 22.22 21.98 119.9% 99.0%
Total for vote 225.05 207.04 207.01 92% 100%
In 4 instances, funds released and spent was above the approved budget. See
table above. From the annual budget performance report, a number of activities
were budgeted for but activities were not fully performed.
Management explained that the variance between approved budget and
expenditure was due to supplementary for FINMAP due to suspension of donor
43
funding for data centre enhancement, reallocations for IFMS upgrade,
International Conference on Inter-Governmental Committee of Experts, funding
Scientists and outstanding taxes.
I advised management to always seek authority for reallocations.
4.11 IRISH AID SUPPORT TO GENDER & EQUITY BUDGETING (EDUCATION
SECTOR AND KARAMOJA SUB-REGION)
(a) General Standards of Accounting and Internal Control Systems
A review was carried out on the project‘s financial management system. It was
noted that management had instituted adequate controls to manage project
resources except for the following matter;
(i) Lack of critical information on payment vouchers
It was noted that all payment vouchers did not contain signatures of the payees
as evidence of receipt of the money paid. There is a risk that irregular transactions
could go undetected and payments could go to un-intended persons.
Management explained that payees did not acknowledge receipt of funds as funds
were disbursed directly to their accounts.
I advised management to ensure that all payees should acknowledge receipt of
funds to ensure payments are made to the intended beneficiaries.
(b) Compliance with Financing Agreement and GoU Financial
Regulations
It was noted that management had complied in all material respects with the
financing agreement and GoU financial regulations except for the following matter;
(i) Non remittance of Local Service Tax (LST)
It was noted that Local Service Tax (LST) was not remitted at all during the year.
Non-compliance could attract penalties based on the existing regulation.
Management explained that the Local Service Tax was not paid during the year,
but promised to follow the law in the next financial year 2012/13. I advised
44
management to always adhere to pensions of the LST to avoid unnecessary costs
associated with non-compliance.
4.12 FINANCIAL MANAGEMENT AND ACCOUNTABILITY PROGRAMME
(FINMAP)
(a) Compliance with programme financing agreement and government
financial regulations
The Programme complied with the covenants with Programme agreement and
Government Financial Regulations except for the following matters;
(i) Statutory Deductions
Withholding tax deducted from suppliers of goods and services and paid during
the year under review was not remitted to the relevant authority on timely basis
i.e. by the 15th day of the following month. Also noted was that all PAYE & NSSF
returns were filled late. Non compliance with the provisions of the Income Tax Act
and NSSF Act may lead to heavy penalties and interest being imposed on the
programme.
Management explained that late remittance was attributed to lack of sufficient
funds and funding constraints experienced during the year 2012/13. They further
explained that it was an oversight not to withhold tax from the two companies but
a request would be made for IFMS to update the system and have the WHT
deducted automatically.
I advised management to comply with all the provisions of the tax laws in order to
avoid associated penalties and interest.
45
(ii) Expenditure re-allocation
I noted a number of expenditure re-allocations done by project management
without prior approval from the development partners. Expenditure re-allocation
renders the budgetary control ineffective. Examples include the following:
Date Voucher
No
Description Amount
(Shs)
Classified as
2/4/13 5970 Tuition at the
International Law
Institute.
9,629,916 Allowances for
activity
facilitation
15/2/13 5453 Tuition at the
International London.
13,301,569 Allowances for
activity
facilitation
28/11/12 4654 Motor Vehicle servicing 2,752,300 Information and Communication
Management explained that due to insufficient budgetary provisions during the
year, there were budget over-runs on some expenditure items yet related
activities were still on-going.
I advised management to seek authority to reallocate prior to spending.
(b) General Standard of Accounting and Internal Control
A review was carried out on the programme system of financial management and
the following weaknesses were noted;
(i) Staff advances
I noted cases where salary advances were made to project staff in excess of Shs.1
million and recovered over a period exceeding three months. Such advances could
be construed as interest free loans in accordance with the Income Tax Act Cap
340 (Section 7 of the 5th Schedule). This would give rise to a taxable benefit on
which PAYE should have been accounted for on a monthly basis.
I advised management that payment of salary advances in excess of Shs.1 million
should be handled in accordance with the Income Tax Act.
46
(ii) Payment vouchers
It was noted that a number of payment vouchers and their support documents
were not stamped ―PAID‖ or cancelled after payment to deter reuse. No other
indicative mark was put on these vouchers to indicate that they have been paid.
There is a risk that the supporting documents could be paid again resulting into
double payments.
I advised management to ensure that all payment vouchers and the supporting
documents are stamped or marked ―PAID‖ after payment.
(iii) Project Stores
A surprise visit to the project store revealed that for all the sampled items
subjected to a spot physical count, the bin card balances differed from the
physical counts. Besides, reconciliation for the variances was not provided. There
was no proper store‘s ledger and the bin cards used in place of the stores ledger
were incomplete.
It was further noted that all accounting records in the store were not reviewed by
an independent person and therefore the project risks errors going unnoticed.
Management explained that they have instituted controls to ensure confirmation of
delivery by the internal audit unit and that all dispatches to users were duly
authorized and recorded in the issues register. I advised that store bin cards are
regularly updated and any variances between the physical count and the bin card
balance reconciled to minimize errors in the store.
(iv) Field Visits
During a visit to the IFMS sites and the local government sites – tier 2 IFMIS roll
out, the following observations were noted;
47
Site visited Issue noted Risk/Implications Responses
In house Training
Facility (ITF)
The server
room is not secure since the door lock
is faulty and as such the door is left
open for most of
the time.
It was also
noted that the ITF had no store and as
such, there are a
number of equipments and
many empty boxes which are kept in
the server room.
There was no
visitors‘ book to
record all people accessing the
server room and
the purpose for their visit.
There are
two keys to the server room door,
one kept by the
responsible official at ITF and the
other by the Principal Systems
Officer (PSO) who
sits at the ministry. We were told that
the PSO accesses the server room as
and when, even without the
knowledge of the
ITF officials. The reason for doing it
like this could not be ascertained.
Inadequate
security measures pose the risk of loss
through theft, damage,
deterioration,
financial loss coupled with
inevitable replacement costs
and more importantly
tampering with the
data.
This can be a
potential risk in case of a fire outbreak.
This makes it
hard to track those
who visit the server room and be able to
fix responsibility in case of a problem.
This subjects the
server room to un authorized access.
Management explained that measures were underway to replace the digital lock. Management explained that the ITF has fire proof filing cabinets for storage purposes Management explained that the Visitors book wais in place, it could have been an omission of not providing visitors‘ book to the Auditors. The PSO is the technical officer in-charge of the server room and is obliged to go in as and when necessary.
Diary
Development
There was no
visitors‘ book to
This could
make it hard to track
Server Rooms are under the
48
Authority record all people
accessing the
server room and the purpose for
their visit.
The server
room was also used
as the store.
The server
supplied by FINMAP and the UPS are
not in use, instead
they are using their computer server.
those who visit the
server room and be
able to fix responsibility in case
of a problem.
There can be a
potential risk in case of a fire outbreak.
I could not
ascertain if there was
value for money realized.
supervision of the Accounting Officers of the votes as stipulated in the Memorandum of Understanding guiding IFMS implementation. This has been brought to the attention of the Accountant General for follow up.
Uganda Cotton
Development Authority
The server
room is also used
as the store.
There is no
visitors‘ book to
record all people
accessing the server room and
the purpose for their visit.
This can be a
potential risk in case
of a fire outbreak.
This makes it
hard to track those
who visit the server
room and be able to fix responsibility in
case of a problem.
Server Rooms are under the supervision of the Accounting Officers of the votes as stipulated in the Memorandum of Understanding guiding IFMS implementation. This has been brought to the attention of the Accountant General for follow up
Uganda Registry
Services Bureau
The server
room is also used as the store.
There was no
visitors‘ book to
record all people accessing the
server room and
the purpose for their visit.
This can be a
potential risk in case of a fire outbreak.
This makes it
hard to track those
who visit the server room and be able to
fix responsibility in
case of a problem.
Server Rooms are under the supervision of the Accounting Officers of the votes as stipulated in the Memorandum of Understanding guiding IFMS implementation. This has been brought to the attention of the Accountant General for follow up
IFMS Disaster
Recovery Site
The installed
equipment not
engraved.
Equipments
not engraved can
easily be taken or
used for private
(i) It is the practice to engrave all equipment. This omission will be
49
Some
equipment still in
boxes and not installed.
The
old/decommissione
d equipment not
well arranged.
No asset
register of the equipment at site
facility
business.
Benefit to
which the equipment were purchased not
maximally utilized.
Lack of control
over the assets since no register is
maintained
addressed however this is often delayed to allow for installation and testing of some equipment. (ii) Delayed installation of the equipment arose from unforeseen delay in the upgrade of the Oracle application. This meant some of the equipment could not be deployed hence the continued storage in boxes. (iii) However, with the successful upgrade in October 2013, deployment and installation will now be undertaken. (iv) The issue of decommissioned equipment will be taken up with the PDU. An Asset Register will be established at the DRS
I advised management to address the inadequacies noted during the inspection.
4.13 STRENGTHENING EVIDENCE BASED DECISION MAKING – FINANCE
COMPONENT 2013
(a) Compliance with the key Covenants of DFID Funding Agreement
and GOU Financial Regulation
It was noted that the management had in all material respects complied with the
covenants contained in the Memorandum of Understanding and Government of
Uganda financial regulations except for the following matter;
50
(i) Tax of Shs.9,251,795 paid from SEBDEM II Project Fund
It was noted that Shs.9,251,795 was paid from project funds to cater for taxes as
shown below;
Date Invoice No Product or Services Amount VAT paid
5/10/12 897 Maintenance 428,300 77,094
18/10/12 3678 Stationary 124,800 22,464
1/10/12 1569 Printing PPA report 34,102,000 6,138,360
4/10/12 950 Repair 298,516 68,313
20/9/12 17988 Conference facilities 12,350,000 2,223,000
24/9/12 0129 Batteries 222,000 39,960
7/8/12 AD318597 Field work supervisors 1,665,254 299,746
31/8/12 0120 Stationary 1,498,000 269,640
17/9/12 0123 Training material 710,000 127,800
9,251,795
Use of project funds to pay taxes contravenes section 7 of the Memorandum of
Understanding (MoU) which prohibits the use of project funds to pay taxes levied
on goods or services imposed directly or indirectly by Government.
I have advised management to claim reimbursement of Shs.9,251,795 from
MOFPED.
4.14 SECOND PRIVATE SECTOR COMPETITIVENESS PROJECT (PSCP II)
(a) Compliance with the Credit Agreement and Government financial
regulations
It was noted that the management had in all material respects complied with the
covenants contained in the credit agreement and government of Uganda financial
regulations except for the following matter;
(i) Non Deduction of Withholding tax
The Income Tax Act requires withholding tax agents to make monthly withholding
tax returns and submit details of their suppliers from whom tax has been withheld
51
and remitted to URA. However, it was also noted that withholding tax amounting
to Shs.128,722,558 was not deducted from payments to suppliers:
I was not availed any documentation exempting the suppliers from withholding
tax. The practice is contrary to the law and could lead to penalties. I advised
management to comply with the requirements of the Income Tax Act.
(b) General Standards of Accounting and Internal Control
It was noted that management had instituted adequate controls to manage
project resources except in the following matters;
(i) Discrepancy between quarterly reports and financial statements
It was observed that total expenditure in quarterly financial statements submitted
to the bank was not in agreement with total expenditure included in the annual
financial statements. There was a discrepancy of Shs.8,241,678,840 as shown in
the table below;
FINANCIAL STATEMENTS IUFR DIFFERENCE
Description UShs. USD UShs. USD UShs. USD
1(a) Works for Part A.1
103,756,881 44,807 103,756,881 44,807 0 0
1(b) Works for Part C.1 (a)&(d)
2,631,043,666 1,012,727 2,631,043,666 1,008,306 0 0
2(b) Goods for Parts B.3 B.4&C
23,045,510,186 8,918,709 15,518,158,912 6,008,306 7,527,351,274 2,910,403
3(b) Consult Serv B3, B4
2,447,600,438 929,469 3,676,959,665 1,390,705 -1,229,359,227 -461,236
4 Training 176,027,368 67,729 176,027,368 67,729 0 0
7 Instit’al Grants A.2(a)&A.2C
129,745,697 51,846 129,745,697 51,846 0 0
8 operating costs
715064,989 274,756 708,316,159 272,091 6,748,830 2,665
TOTAL IDA 29,248,749,225 11,300,044 22,944,008,348 8,848,211 6,304,740,877 2,451,833
GoU counterpart funding
2,862,453,506 1,104,131 925,515,543 355,116 1,936,937,963 749,015
GRAND TOTAL
32,111,202,731 12,404,175 23,869,523,891 9,203,327 8,241,678,840 3,200,848
52
The disagreement between two implies quarterly financial statements were not
accurately prepared.
Although management explained that the variances were mainly caused by the
difference in the reporting dates and errors during preparation of these
statements, I noted that one of the causes of the discrepancies was that
management did not prepare the last quarter interim report contrary to the World
Bank requirements. I advised management to ensure timely reporting and
reconciliation of the quarterly reports and financial statements.
(i) Payments to Wrong supplier
It was noted that a payment meant for Charles Koojo was credited to Peter
Kasyoka‘s account because the bank account quoted on the payment instruction
was for Mr. Peter Kasyoka. At the time of audit, US $ 15,980 had been recovered
from Peter Kasyoka on 7th June, 2013. The unrecovered balance of US $ 15,111
was included in receivables in the financial statements.
Management explained that there was an error and that the project had been
following up and was hopeful that all the money would be refunded before the
end of the year.
I informed management that the unrecovered balance is an ineligible expenditure
under the financing agreement and therefore should be recovered and refunded to
the project bank account.
(ii) Mis-procurement
Management contracted a company to undertake Government Land Inventory at a
cost of US $ 1,889,828 including taxes. Accordingly, US $ 882,200 was paid as
advance for the activity. However, it was determined by the World Bank that the
contract had been irregularly awarded and therefore considered ineligible for
which Government was required to refund the advance payment to the bank.
Further, it was noted that the contractor was unable to complete execution of the
activity. I find this advance doubtful as the payment guarantee expired.
53
Although management explained that the value of work executed under the
advance amounted to US $ 460,257 and that only US $ 427,943 is recoverable, I
consider the amounts loss to government in absence of recovery. I advised
management to consult with the Solicitor General for guidance on the matter.
(iii) Outstanding project liabilities
The project closed on 28th February 2013 with nil cash balances. However, it was
noted that it had unsettled liabilities amounting to Shs.2,053,917,000. It was not
clear how these project liabilities were to be settled given that the project had
exhausted all funding available in the financing agreement.
Management explained that it had written to Ministry of Finance, Planning and
Economic Development to avail funding to settle the commitments entered under
the PSCP II, which is in line with the subsidiary agreement. I advised management
to follow up the matter with the concerned authorities to ensure funds are availed
to settle the outstanding obligations.
(iv) Land Information System (LIS)
The implementation of the National Land Information System was reviewed and
the following were noted;
(i) Some zones (Masaka and Wakiso) were experiencing problems in carrying
out subdivisions on some parcels of land.
(ii) The Wakiso district land office did not have enough equipment including
scanners, printers and computers to handle the volume of work that was
available. Because of the volume of scanning being done at the moment,
the scanners are sometimes overwhelmed and malfunction.
(iii) Transaction processing was not timely. Processing a land transfer takes up
to five months in some instances.
Management explained that the failure to undertake land sub divisions was due to
a delay in vectorising and geo-referencing the cadastal sheets owing to the nature
of how data was captured on these sheets at varying scales e.g insets.
54
Management also indicated that measures were being developed to deal with the
weaknesses noted above. I await the outcome of the measures to address the
anomalies identified.
4.15 SIDA SUPPORT TO COMPETITIVENESS INVESTMENT CLIMATE
STRATEGY (CICS) PROJECT
(a) Compliance with the SIDA/GOU Financing Agreement Provisions
and GOU Financial Regulations
It was noted that management had in all material respects complied with the
covenants contained in the financing agreement and Government of Uganda
financial regulations except for the following matters;
(i) Human Resource Issues
Un approved staff titles
According to the project organogram, a provision was made for 10 staff whose
titles are indicated below;
Title No. of positions
National Coordinator. 1
Personal Assistant. 1
Senior Competitive Analyst 1
Competitive Analysts (Different Specialization) 4
Accounts & Administrative Officer 1
Assistant Competitive Analyst-IT 1
Driver/Office Assistant 1
Contrary to the above approved structure, the project had an additional three
Research Assistants earning a total monthly salary of Shs.4,575,470.
Management explained that the project from time to time hires temporary staff to
carry out duties which can not ordinarily be done by only permanent staff and that
55
their stay is reviewed on an annual basis depending on their performance and
need.
I advised management to adhere to the original set project employment structure
or seek approvals for any new recruitments.
(ii) Non-remittance of Un-utilized project funds
Article 4 section 5 of the agreement signed between Sweden and GoU for support
to the competitiveness investment climate strategy secretariat requires that funds
transferred to Uganda and not utilized by 30th June, 2013 shall be repaid to
Sweden within three months of that date. However, it was noted that as at 30th
June, 2013, the project had a cash balance of Shs.47,010,645. At the time of
audit, a period of more than four months, these funds had not been remitted to
Sweden.
I advised management to adhere to the project financing agreement by returning
the un-utilized funds to the donors.
(iii) Procurement of hire of reality TV production services
On 26th November 2012, the project national coordinator in his communication to
the Swedish Embassy requested for no objection to use direct procurement while
procuring services of hiring of reality TV production. This was to be undertaken
through the use of the Ministry‘s prequalified firms that previously supplied similar
goods and services to the Ministry. The Embassy responded with a no objection
but indicated that it was a one off and not the rule. On 11th January 2013, the
project management signed a contract agreement with Explode 360 for a contract
price of Shs.48,050,000 for the hire of reality TV production service.
The following anomalies were noted:
Hiring of TV production services had been estimated at Shs.45,000,000 as
opposed to Shs.48,050,000 which was eventually contracted. The no objection
for the extra Shs.3,050,000 was not provided.
56
The request for no objection indicated that the project was to use direct
procurement using the Ministry‘s pre-qualified firms however, this procurement
was not approved by the contracts committee as recommended by PPDA
regulations (Sec.119 (2)).
The contractor was paid the full amount without deducting the 6% WHT
worth Shs.2,883,000 from the supplier.
I urged management to adhere to the requirements of the PPDA regulations and
the Income Tax Act.
(iv) Overspent items
It was established that actual expenditure on three items was beyond the
budgeted amounts by Shs.52,747,730 as indicated in the table below:
Details Budget Actual Spent Over
Expenditure
Strengthening CICS staff Capacity 26,000,000 27,098,623 1,098,623
The 6th National Competitiveness Forum 75,000,000 75,716,568 716,568
CICS II Communication & Outreach
strategy
130,153,461 181,086,000 50,932,539
231,153,461 283,901,191 52,747,730
I was not provided with the authority to spend beyond budget.
I advised management to always ensure that expenditure is in accordance with
the budget or seek authority for reallocations where necessary.
(b) General Standard of Accounting and Internal Control
A review of the following areas was carried out:-
Accounting system and policies.
Book keeping.
Management and control of both bank and cash accounts.
Purchases and payments.
57
Fixed assets management.
It was noted that management‘s control structure environment, accounting system
and policies and control procedures were generally adequate to ensure prudent
use of, and accountability in the project.
4.16 AGRICULTURAL CREDIT FACILITY PROJECT
(a) Inadequate monitoring and supervision of the scheme by the
Administrator
The Bank of Uganda internal quarterly report for the period ended 30th June,
2013 highlighted the following delinquent accounts but there was no evidence that
the Administrator had reviewed and taken action on these cases. Details in table
below:
S/NO
PFI
Project/ Beneficiary
Amount (Ushs)
1
DFCU
Bunya SACCO
18,251,164
2
DFCU
Kahunga Investments
702,223,587
3
Stanbic Bank
Mr. & Mrs. Byensi
105,919,095
4
Post Bank
Herdoh Ltd
41,666,667
TOTAL
868,060,513
Inadequate monitoring and supervision increases the risk of loss of scheme funds
arising from delinquent accounts.
Management explained that it would not monitor or evaluate the use of funds as
this was not consistent with BoU mandate to provide prudential regulation of the
financial system. Consequently, monitoring and supervision is done through the
quarterly reports submitted by the Participating Financial Institutions (PFIs).
58
I advised management that an independent body should be set up to carry out
monitoring and supervision of the scheme operations to avoid any eventual losses.
(b) Non-compliant use of ACF funds
It is a requirement under clause 2.1 (vi) of the Memorandum of Understanding
that the primary security for the credit facility should be the machinery and
equipment financed. However, it was noted that one of the beneficiaries – Sugar
and Allied Industries – the eligible beneficiary diverted a loan facility worth
Shs.424,000,000 to another company – Steel Rolling Mills Ltd, which then
purchased the machinery and equipment. The loan facility of Shs.424,000,000 is
therefore not secured since the purchased machinery and equipment is not owned
by the eligible beneficiary.
The BoU management explained that all loan disbursements from BOU are made
directly to the PFIs and not to loan beneficiaries after obtaining proof or
confirmation of disbursements from the PFI that eventually pass on the funds to
the loan beneficiaries. In this particular case, Bank of Baroda submitted
information to the extent that the project was eligible and upon receipt of proof of
disbursement to the borrower by the bank, the refinance was made.
I advised management to put in place mechanisms that ensures that only
applicants eligible as stipulated under the Memorandum of Understanding receive
and utilise loan facilities.
(c) Non participation of Micro Finance deposit taking institutions (
MDIs)
The Memorandum of Understanding signed on 13th October, 2009, provides for
the Micro Finance Deposit taking Institutions (MDIs) to take part in the Scheme.
However under the current Project portfolio, there is no evidence that MDIs are
involved in the scheme. The MDIs that were signatories to the MOU included the
following:
• Finca Uganda
• Pride Micro Finance Limited
59
• Uganda Finance Trust
Information obtained from interviews conducted with some of the licensed MDIs
revealed that the interest rate of 12% charged on loans under the scheme is on
the high side compared to the rate of 6% that the MDIs normally charge their
customers.
There is a risk that the project scope is limited and may not achieve its intended
objective of supporting and modernizing agriculture and its involved stake holders.
Management of BoU explained that although the MDIs are accredited to
participate, actual participation is upon their discretion. I advised that the
Government reviews the interest rate so as to encourage licensed Micro Finance
Deposit taking Institutions to participate in the Scheme.
(d) Lack of detailed report’s review and feed back by management of
MoFPED
It was noted that there was no evidence of a detailed review and feedback by the
management of Ministry of Finance, Planning and Economic Development
(MoFPED) on periodic reports. There could be a missed opportunity to realize the
benefits arising from the quarterly reporting process.
I advised management to take necessary follow-up so that the project reports are
periodically reviewed and officially responded to.
(e) Delays in the implementation of decisions.
A review of correspondences between the parties in the MoU indicated that
whereas the Minister of Finance, in a letter dated 28th August, 2012 agreed to
increase the interest rate chargeable by the participating financial institutions from
10% to 12%, implementation of the decision by the Fund‗s administrator and the
signing of the new addendum took place seven months later (March, 2013).
60
Delays in implementation of the agreed upon decisions may adversely affect the
overall performance of the Project.
Management of BoU explained that the delay was attributed to consultations with
different stakeholders. This process took time for the PFIS to complete. I urged
the fund administrator to always ensure prompt implementation of the decisions
made with regards to critical issues.
(f) ACF Program Implementation Status -Field work
I carried out field work inspection and noted that some beneficiaries were partially
or not complying with the loan provisions.
Detailed Beneficiary
Description
ACF Total Loan
Amount Shs.
Audit Finding
Project name: Sesaco Limied
Proprietor : Nsubuga
Charles & Nsubuga Juliet Location: Kampala-
Kyengera
15,210,000 Compliance Status: Non-compliant.
Audit Issue: The beneficially
refused to cooperate by denying Auditors accessibility to his project.
Project name: Fence-
Construction Proprietor : Eseza
Kyasimire & Irumba
Location: Kiruhura – Kazo
40,000,000 Compliance Status: poor
Audit Issue: Non-compliant with the Mou.
The money was diverted and used
to set up a Veterinary drug shop in breach of the terms of the MoU.
Clause 2.1 (iv) of the MoU provides that the scheme shall not be used
for financing working capital for
trading in agriculture commodities. And clause 2.1 (vi) states that the
primary security for the credit facilities shall be machinery and
equipment financed. Accordingly,
this loan facility of Shs.40,000,000 is not secured.
Project name: Rainbow
Ind’s Ltd Proprietor : Panjwani
Ahmed & Ameer Ali Jasani
Location: Mukono
715,468,750 Compliance Status: Non-
compliant Audit Issue: The beneficiary
refused to cooperate by denying Auditors accessibility to his project.
Project name: Maina Speedy
2,785,068,024 Compliance Status: fair Audit Issue: From observation,
61
Proprietor : Tom
Mugenga & Sarah
Mugenga Location: Kisoro
the equipment and the constructed
infrastructures on site did not
match the loan taken.
4.17 RURAL FINANCIAL SERVICES PROJECT
(a) Technical Oversight by the Programme Steering Committee
The IFAD loan agreement required that a programme steering committee be
formed to provide the program with technical expertise and therefore be
responsible for approving annual work plans and budgets, review semi-annual
reports and suggest ways to implement and improve the programme operations.
The loan agreement further required that this committee meets at least three
times during the year and on an adhoc basis as and when necessary. It was
however noted that there were no meetings held by the steering committee thus
no technical expertise was provided during programme implementation.
The programme administration unit may not achieve the set objectives and targets
in the absence of technical oversight that is supposed to be provided by the
steering committee.
I advised management to ensure that the management of the project is in
accordance with the loan agreement.
(b) Employee code of conduct
It was noted that as much as employees are inducted at the point of recruitment
in the expected practices of the organization, there is no follow up training or
communication from management intended to remind employees of what is
expected of them as per the guidelines set in the programme‘s code of ethics. In
the absence of refresher trainings and regular communications from management
about the code of ethics, employees may act contrary to the policies and
procedures and thus expose the programme to actions of unethical behaviour.
Management responded that there were delays in conducting refresher training
but will always ensure the delivery of trainings on time.
62
I advised management to continually conduct refresher trainings for all employees
on a regular basis so as to maintain a culture of honesty and ethical behaviour
among the employees.
(c) Staff appraisals for PAU staff
I noted that the program did not carry out any staff appraisals for employees
during the year and therefore could not tell with certainty the extent to which
each employee has achieved their goals or contributed to the achievement of the
overall goals and objectives of the program. In the absence of performance
appraisals, management may not be able to identify training gaps and
improvement areas for employees.
Management responded that appraisals for the staff of RFSP are normally done by
the Human Resource Department of the Ministry of Finance. It was further stated
that the said staff appraisals have since been conducted, and the appraisals are
now updated.
I have urged Management to ensure that all staffs are appraised on a timely basis.
(d) Inadequate controls over fuel usage
It was noted that whilst fuel is a major expense of the project, management does
not have sufficient controls in place to monitor the reasonableness of fuel usage
especially by programme vehicles. No analysis is done in terms of the fuel usage
per kilometer vis a vis the specific trips done by the vehicle. The laxity in
monitoring may result into misuse of organizational vehicles to carryout personal
activities which may lead to unnecessarily high fuel expenses.
Management noted the audit findings and explained that PAU will put up measures
to mitigate the risk, which will always be reviewed periodically.
The action is awaited.
(e) Inadequate review of system exchange rates.
63
During my review of exchange rates, I was not able to obtain any evidence that
the exchange rates input into the system were reviewed by a more senior person
to ascertain their accuracy. This may result into misstatements if wrong exchange
rates are input into the system.
I advised management to put in place a process that ensures that all exchange
rates entered into the pastel accounting system are reviewed by a more senior
person to avoid misstatements.
(f) Dormancy of Board committees
It was observed that whilst the SACCOs boards have formed committees charged
with particular responsibilities such as the supervisory committee and the credit
committee, there was no evidence of this activity being implemented in some of
the SACCOs visited. There were no minutes of any such meetings held by these
committees. It was further noted that some loans were approved by the SACCO
manager instead of the credit committee which further confirms that the
committee did not participate in the approval process.
Failure of these committees to discharge their duties may result in a lack of
segregation of duties as management staff take on an oversight role on top of
their day to day roles.
Management explained that RFSP will work with FEWs and MTIC to educate
SACCOs to comply through continuous mentoring.
The action is awaited.
(g) Deficiencies in SACCO loan registers
A review of the loans register at the Bukigayi SACCO in Bududa revealed the
following exceptions:
• The register was insufficiently detailed as it only showed the loan amounts
disbursed to each recipient and the tenor of the loan but no information on
amounts repaid to date and hence the outstanding balances. Management was
64
therefore not in a position to reconcile its outstanding loan portfolio as
declared by the SACCO manager in Min 4/08/012 of our meeting.
• It was also noted that there were several inconsistencies in attempting to
reconcile the loan register to the approved loan application forms examples of
which are summarized below;
Name of recipient Details on application form Details in loan register
Bilah Wanzababa Ushs 70,000 for 1 month Ushs 100,000 for 4 months
Nataka Milton Ushs 200,000 for 1 month Ushs 200,000 for 4 months
Naboko Kadija Ushs 50,000 for 2 months at 6% per
month No record seen
• Generally, poor record keeping practices were noted characterized by poor
filing of loan records. Tracing a disbursement right from origination (loan
application form) to signing of a contract and eventual disbursement proved
futile.
Failure the properly track loans disbursed reduces chances of recoveries and may
result in financial loss to the SACCO. This in turn affects its ability to continue
operating.
Management responded that the programme will undertake continuous education
and mentoring to address the audit concerns.
The above actions are awaited.
(h) Insufficient staffing
It was noted that some SACCOs did not have adequate staffing to ably perform
the tasks of accepting deposits and advancing micro loans from and to the
members respectively since they operate as village banks. This was especially the
case for SACCOs such as Butonde and Kubumbu that have only two staff; a
manager and a cashier either of whom acts as a loans officer from time to time.
65
There were also SACCOs like Bungokho Fukirisa that did not have a security
guard.
The inadequacy of the staff numbers mean that certain activities are neglected
thereby hindering the growth of the SACCO such as mobilization of members and
loan recoveries.
Management explained that staffing decisions are normally SACCO specific
responsibilities but RFSP through its implementing agencies will continue
encouraging SACCOs to adopt best practices that are suited to their individually
unique environments.
I advised management together with implementation agencies to sensitize the
SACCOs on the benefits of having adequate staffing and its link to growth and
sustainability.
4.18 CREDIT REFERENCE BUREAU DISPOSITION FUND – BOU
(a) General Standards of Accounting and Internal Control Systems
A review was carried out on the project‘s financial management system. It was
noted that management had instituted adequate controls to manage project
resources except for the following matters;
i) Bank reconciliation statements
It was noted that bank reconciliation statements for both special accounts; that is,
the dollar and Shilling accounts are not prepared on a monthly basis. There is
therefore a risk of errors and frauds going unnoticed on the project‘s bank
accounts.
Management explained that the reconciliation of the KfW CRB Special accounts is
done periodically when accounting for utilized funds. KfW replenishes funds based
on funds spent as required in the Separate Agreement signed between KfW,
MOFPED & BOU. Nevertheless, BOU would henceforth prepare monthly bank
reconciliation statements for both special accounts.
66
I advised management to ensure that bank reconciliation statements were
prepared and reviewed by a senior independent person who should evidence this
by a signature.
67
ii) Payment vouchers
It was noted that although some of the supporting documents to the payments
made during the year were stamped ―PAID‖/‖EXECUTED‖, the invoices and
receipts from Compuscan and claim letters from the participating institutions were
not and yet these are some of the major requirements for the claims to be
reimbursed. Unless this is done, the project risks these support documents being
used for double payment and there may be contention at the time of
reimbursement.
Management assured us that the accounts department would ensure that all
supporting documents to the payments made are stamped ―PAID/EXECUTED‖.
I advised management to ensure that all the accompanying support documents to
payments should be cancelled or stamped ―PAID‖/‖EXECUTED‖ to deter reuse.
4.19 PRIVATISATION AND UTILITY SECTOR REFORM PROJECT OPERATIONS
ACCOUNTS
(a) Human Resource Management
i) Vacant posts
It was noted that the entity had 48 approved posts out of which 36 (75%) were
filled and 12 (25%) were vacant. Some of the vacant positions included the one
of Chief Accountant (Head of Finance). Inadequate level of staff affects service
delivery.
The Accounting Officer explained that the Ministry halted recruitment in order to
undertake consultations on the restructuring and or, realignment of PU to manage
PPP initiatives. The PPP Bill which has since been forwarded to Parliament.
68
I advised management to liaise with the responsible authorities to ensure that the
vacant posts especially the key ones are filled.
ii) Lack of internal audit department
Best practice requires an organization to have an internal audit unit to assess and
recommend on the organization internal controls. However it was noted that the
entity does not have this unit. The risk is that checks and balances with the
organization systems were not effectively carried out.
Management explained that they are consulting with MoFPED on how to resolve
the matter.
I urge the administration to consider establishing an internal audit department in
the organization.
iii) Failure to conduct staff appraisals
Sections 10 to 18 (A –m) of The Uganda Public Service Standing Orders, January
2010 requires the staff to be apprised annually. Contrary to the above sections of
the Uganda Public Service Standing Orders, a review of staff files revealed that the
staffs of the entity were not appraised during the calendar year 2012. Failure
to undertake staff performance appraisals hinders measurement of performance of
staff and the related decisions on promotions and dismissal.
Management explained that appraisals were not conducted due to staff continuity
uncertainties.
I advised management to ensure that staffs are periodically appraised.
(b) Doubtful fuel consumption
Section 40(1) of the PU guidelines requires that all PUSRP staff shall be entitled to
the use of pool vehicles only while on PUSRP work wherefore the requisition of
vehicle shall be authenticated by the relevant head of department and shall clearly
state the purpose of the journey, destination and duration of the journey. Contrary
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to this, Shs.16,031,025 was consumed at various shell service stations across the
country without the users showing the purposes, destinations and duration of the
journey and without producing activity reports to justify the consumption of the
fuel. There is a risk that the fuel was used for private purposes.
I advised management to follow guidelines as and when fuel requisitions have
been entered. Fuel consumed should be accounted for or recovery measures be
instituted.
(c) Lack of approved annual training program
Section 15 (4) (a) of the PU staff guidelines requires that management shall
prepare an annual training program which shall be submitted to the Permanent
Secretary/Secretary to the Treasury (PS/ST) for approval and that all subsequent
changes shall be subject to further approval from the PS/ST in accordance with
the project implementation manual. Furthermore, Section 15 (5) (a) requires that
at the beginning of each calendar year, the administrative officer in collaboration
with the project director/heads of departments, shall be responsible for designing
and preparing an integrated annual training program as per training guidelines in
place based on the training and development needs for the PUSRP and its
contracted staff as identified in the annual staff evaluation confidential reports.
Contrary to the above sections Shs.71,242,291 was spent on training in Public
Private Partnership of PU staff without an approved annual training program.
There was no prior annual training program prepared by management and
submitted to PS/ST. There is a risk that the training undertaken was not beneficial
to the entity and the individual staff.
It was explained that expedited interim PPP training was undertaken on an adhoc
basis mainly to prepare for the transformation of PU into a PPP agency.
I advised management to undertake training needs assessment to enable proper
training plans to be prepared and accordingly seek approval from the authorities
as required by the guidelines.
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(d) Repairs not supported by pre and post inspection repair reports
Payments worth Shs.34,960,341 for motor vehicle repairs were not supported by
pre inspection and post repair inspection reports. In absence of the inspection
assessment reports it was difficult to confirm whether the vehicles required the
necessary repairs and that the repair works were duly undertaken.
I advised management to ensure that all vehicles due for repair are subjected to
pre and post repair inspections.
5.0 DEPARTMENT OF ETHICS AND INTEGRITY
5.1 Mischarged Expenditure-Shs.753,056,165
The Parliament of Uganda appropriates funds in accordance with the needs of the
country and this appropriation is implemented through the budget in which funds
are tagged to particular activities and outputs using account codes and MTEF
codes. A review of the Directorate‘s expenditures revealed that the entity charged
wrong expenditure codes to a tune of Shs.753,056,165. Such a practice is contrary
to the intentions of the appropriating authority and leads to incorrect financial
reporting.
The Accounting Officer attributed this to inadequate budget on some codes and
yet work had to proceed. Management also attributed the problem to the
delinkage between IFMS and output budgeting.
I advised management to desist from such a practice and always request for
reallocations or virements, as provided for under the TAI. I also advised
management to contact the Accountant General to resolve the delinkage.
5.2 Funding gap-Shs.281,287,468
According to the statement of appropriation account based on services voted by
Parliament, the Directorate had budgeted to receive transfers from treasury worth
Shs.4,228,503,691 but only Shs.3,947,216,222 was received, creating a funding
gap of Shs.281,287,468. The shortfall directly affected the procurement of
Video cameras, still cameras, soft wares, boxes of CDS, wireless routers,
network switches and voice recorders to facilitate investigations
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Conclusion of the National ethical value policy for ethical direction and
management
L.C bill to guide operations and management of Local Councils and
Printing of corruption bill to disseminate to various stake holders which were
planned but were never procured as per the procurement plan.
The Accounting Officer explained that the PS/ST had been requested to provide
explanation for the funding gap but no response had been received.
I advised management to continue liaising with Treasury for purposes of ensuring
the appropriated resources are released.
5.3 Human Resource Issues
(a) Vacant positions
A review of the Directorate approved structure/establishment indicated that
whereas 54 posts were approved, only 43 had been filled by the year-end leaving
11 vacant posts unfilled. The most affected departments were the information
centre and the legal department as indicated in the table below.
Post Tile Approved Filled Vacant Salary
Legal Department
Commissioner Legal Services 1 0 1 UIE
Legal Officer 2 0 2 U4
Information Center
Principal Information Scientist 1 0 1 U2
Communications Officer 1 0 1 U3
Information Scientist 3 2 1 U4
Lack of such essential staff may negatively impact on the entity's service delivery.
The Accounting Officer explained that the delay in recruitments was caused by
lack of the Public Service Commission in place.
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I advised management to liaise with the responsible authorities and ensure that
the key vacant posts are urgently filled.
(b) Irregular payment of allowances
Monthly top up allowances amounting to Shs.247,786,000 were paid to entity staff
on a monthly basis. These payments are irregular because they are not supported
by any administrative circular or standing order instruction from the ministry of
public service. In addition, PAYE deductions were not effected.
The Accounting Officer explained that the payments were to minimally meet the
daily cost incurred by staff such as lunch, transport, telephone and overtime.
I urged management to seek authority from Public Service before such payments
are made.
5.4 Un-accounted for fuel funds deposited with Standard Chartered Bank
Shs.96,000,000 was deposited with Standard Chartered Bank through advantage
card system to cater for official fuel and motor vehicle servicing as per details in
the table below:
Invoice Description /Purpose Amount Supplier
R 0101/8
Fuel Advance for the 1st
qtr 21,000,000
Advantage Card
Disburse
R 054/11
Operational fuel
expenses for DEI 20,000,000
Advantage Card
Disburse
R 171/11
Operational fuel
expenses for DEI 10,000,000
Advantage Card
Disburse
R 025/02
Fuel Advance for Jan.
2013 45,000,000
Advantage Card
Disburse
96,000,000
The following were observed:
Copies of fuel orders to the supplier and supporting fuel consumptions
statements from the bank were not availed for audit verifications.
Beneficiaries staffs, breakdown of the entitled amount, purpose and vehicles
that consumed fuel were not availed too.
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I could not confirm that the fuel was served to only entity vehicles and used for
official purposes.
I advised management to trace the fuel accountabilities for future use or recovery
measures be instituted.
WORKS AND TRANSPORT SECTOR
6.0 MINISTRY OF WORKS AND TRANSPORT
6.1 Advances to Individual Personal Accounts - Non Compliance with
Treasury Accounting Instructions – Shs.1,247,860,600
Sections 227, 228 and 229 of the Treasury Accounting Instructions (TAIs),
provides that all payments should be made by the Accounting Officer directly to
the beneficiaries. Where this is not convenient, an imprest holder should be
appointed by the Accounting Officer with the approval of the Accountant General.
On the contrary, Shs.1,247,860,600 was advanced to Ministry staff through their
personal bank accounts during the year to undertake direct procurements and
other activities of the Ministry. I explained to management that such a practice of
depositing huge funds on personal accounts exposes Government funds to risk of
loss since the Ministry does not have any control over such funds deposited on
personal accounts.
In response, management explained that this has since stopped following the
PS/ST‘s communication to the Accounting Officer.
I urged management to continue adhering to the instructions.
6.2 Losses reported
Shs.932,773,100 was reported as losses at the end of the previous year. The
amount comprised of Shs.571,007,200 in cash losses and Shs.361,765,900 in
stores. The cash losses remained outstanding even at the end of the current year.
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In response, management explained that the case is before courts of law. I await
the outcome of the court process.
6.3 Mischarge of Expenditure – Shs.118,176,248
The Parliament of Uganda appropriates funds in accordance with the needs of the
country and this appropriation is implemented through the budget in which funds
are tagged to particular activities and outputs using account and MTEF codes. A
review of the Ministry‘s expenditures revealed that wrong expenditure codes to a
tune of Shs.118,176,248 were wrongly charged on budget lines to fund activities
that were not meant to be paid from the affected budget lines. This practice
undermines the importance of the budgeting process as well as the intentions of
the appropriating authority and leads to incorrect financial reporting.
Management was advised to request for reallocations before such payments are
incurred as provided under the TAI.
6.4 In adequately Supported Expenditure- Shs.304,731,200
Funds amounting to Shs.304,731,200 were subvented to Ntungamo District Local
Government for emergency repairs of Ahakabale bridge and rehabilitation of some
roads. However, by the time of this report, the accountabilities for the funds had
not been received. In the circumstances, I was unable to confirm whether the
funds were utilized for the intended purpose.
In response, management explained that the accountabilities had not been
submitted to the Ministry despite several reminders to the Accounting Officer of
the District. I advised management to ensure the funds are accounted for.
6.5 Budget Performance
a) Underperformance
Out of the total approved budget of Shs.104,741,368,124 for the year,
Shs.75,384,591,639 was released translating into 71.9%, leaving a total of
Shs.29,356,776,485 (28%) un released.
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The entity had a total operating revenue of Shs.76,692,469,139 including NTR of
Shs.1,307,877,500. As at 30th June, 2013 funds to the tune of Shs.5,456,807,327
including Gross tax balance of Shs.2,790,628,441 remained un utilized translating
into underperformance. Despite the availability of the above funds, I noted that a
number of key activities were not undertaken as highlighted below:
Procurement of land for the vehicle master testing center and the heavy
vehicle inspection lane.
Procurement of the drilling rig under Development and strengthening Quality
Management and
Renovations of upcountry laboratories.
In response, management explained that this happened due to procurement
related challenges. As a measure, management indicated it has developed a
monitoring and evaluation framework for monitoring sector performance.
I await the outcome of management‘s commitment.
6.6 Culverts loaned to UNRA
During the mid-year rainy season of 2012, most of the bridges in Karamoja region
were washed away and this necessitated emergency repairs. A decision was made
that UNRA carries out emergency repairs of the Bridges on Force Account basis. It
was observed the type of culverts that were technically required for the works
were only available in the Ministry stores and therefore the Ministry loaned UNRA
the culverts to carry out the works.
Verification of stores ledgers revealed that culverts worth Shs.316,000,000 which
were loaned to UNRA way back in 2012 had not been returned as detailed below:
Size Quantity
Issued
Date Station destined for Remarks
2100MM 66 M 31/8/2012 UNRA Karamoja Region
2500MM 88 M 31/8/2012 UNRA KARAMOJA
1500MM 110M 31/8/2012 UNRA KARAMOJA
1500MM 36 M 7/9/2012 EXEC. Director UNRA (Awoja Bridge)
2100MM 16M 24/4/2013 NYANSOZI-IBOROOGA However the
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RD, F.Portal (Road under
Kabarole District Local
Government
requisition from the
station Engineer Fort
Portal to the regional manager (West)
quotes 600mm diameter and not
2100m. Despite the issue of
16m culverts, it was
noted that a payment was made on
D449/4/13 ON EFT 2512888 of UGX.
77,663,000 being a full
payment inclusive of the culverts.
Management explained that UNRA is in the process of procuring the culverts and
delivery is expected in May 2014.
I advised management to follow up the matter and ensure full recovery of the
culverts.
6.7 Procurement of ferries and construction of landing sites
Office of the Prime Minister (OPM) released a sum of Shs.8,600,000,000 in
financial year 2011/2012 to Ministry of Works for procuring two (2) ferries and
construction of two(2) landing sites at Lakes Bisina and Kyoga. By end of the year
(30th June 2012), one (1) ferry had been procured and delivered to the Chief
Mechanical Engineer, MoW. A balance of Shs.5,245,466,352 remained unspent on
the account. No evidence was provided on how the funds were utilized during the
year. I was unable to confirm the utilization of the funds.
Management explained that one ferry was procured for Lake Bisina. Management
further explained that the procurement of the second ferry and contractors to
construct the landing sites was unfortunately mired by the procurement processes.
The process also affected the procurement of the consultant for the construction
supervision and as a result, there was low absorption of funds.
I advise management to implement activities as planned.
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6.8 Payments not Acknowledged by URA – Shs.296,696,703
It was noted that the Ministry withheld PAYE from the employees and WHT from
suppliers/contractors totalling to Shs.296,696,703 however, there was no evidence
to prove remittance. In the circumstances, I was unable to confirm whether the
funds reached the intended beneficiary.
I advised management to always comply with the tax law.
6.9 Lack of Technical Support and Guidance on Repair of Vehicles to Various
Ministries
Treasury Accounting Instructions section 816 requires a Government entity to
maintain an operating records/register for each vehicle to record its history,
performance, servicing, overheads and repairs among other things, in sufficient
details for periodic assessments to be made of its performance compared to its
cost of up keep.
During the year, various Ministries, Departments and Agencies (MDAs) paid out
funds to service providers and staff in respect of repairs and servicing of vehicles.
A review of the transactions revealed the following anomalies:
The MDAs did not have a policy on fleet management to provide guidance to
the Transport officer.
There were no internal mechanisms in place for a competent Engineer to carry
out internal assessments of vehicles that are due for repairs.
Repair needs were based on the assessments done by the respective drivers
which should not have been the case.
In very few instances, pre and post vehicle inspections were done by a
seconded engineer to confirm that repairs are done as specified in the repair
orders; instead it was the senior driver who confirmed the repairs done.
No maintenance charts were used to show the history of the repaired and
serviced vehicles.
The Ministry of Works provided limited technical support to the MDAs.
No guidelines been developed to provide guidance/standards for the repairs.
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It was also noted that at the Ministry of Works as an entity there was lack of
motor vehicle documented procedures and operating records and inadequate
guidance on repairs and servicing of vehicles. As a result, Shs.475,167,710 spent
by the Chief Mechanical Engineer was not supported with pre and post inspection
certificates for the serviced vehicles. Lack of segregation of duties in the process
of purchase of spares and repair of motor vehicles was also noted. I could
therefore not confirm the authenticity of the expenditure on the repairs and
servicing in absence of certificates or inspection reports.
I explained to management that in the absence of a proper motor vehicle system,
I was unable to verify the authenticity of repairs done. Funds may be lost through
recycling vehicles for similar repairs.
Management explained that the Ministry in conjunction with the Ministry of Public
Service is reviewing the entire motor vehicle repair and maintenance guidelines
that will ensure proper control of the repair and maintenance of the Government
fleet. I advised management to expedite the review process and have the
guidelines in place.
I advised management to expedite the process and have the policy guidelines in
place. This should be able to guide the users on the extent to which the MDA
attached engineers should be verified.
a) Lack of Segregation of duties
Lack of segregation of duties in the process of purchase of spares and repair of
motor vehicles.
In response, management explained that the Ministry is reviewing the entire
process of vehicle service/repair and developing guidelines that will ensure proper
control of Government fleet maintenance/repair activities.
I await the outcome of management commitment.
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6.10 Inspections
I carried out inspections to a number of institutions that support the entity and the
following were noted;
a) MT. Elgon Labour Based Training Centre (MELTEC)
Mt. Elgon Labour Based Training Centre was inspected and below are the findings:
i) Failure to Implement the Business plan
A local company entered into an agreement with the Centre for the consultation
and preparation of a four year business plan (2012-15) and the company was paid
Shs.49,995,000 for the consultancy. I noted that the Business Plan was completed
and handed over to the centre but the MOWT has never approved the plan. I
explained to management that operating without a business plan indicates that
the centre is operating without defined strategic objectives which could
demotivate interested funders/donors to the centre. At the time of reporting, the
plan was remaining with two (2) years for implementation. Delay in approving
this plan could be the likely cause of waste of government funds.
Management explained that the consultant submitted the Business plan which was
presented to the technical team for final review before approval by the Ministry‘s
Top management.
I await the outcome of management commitment.
ii) Unpaid Fees – Shs.26,000,000
It was noted that some of the Districts and Companies‘ engineers sent for training
had not cleared all the school dues by the time of this report (March 2014) totaling
to Shs.26,000,000. Some of them trained way back in 2009. The chances of
recovery appear to be remote.
In response, management explained that concerted efforts were made to recover
the monies, via reminders clearly reiterating the stand that training certificates are
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only issued to those fully paid up. Management indicated they will continue
pursuing the matter until all outstanding dues are recovered.
I await for the outcome of the management commitment.
iii) Obsolete Stock
It was noted that the station has obsolete stock in form of accumulated scrap.
This included; old vehicles and equipment in form of used spare parts which are
overdue for boarding off. This consumes space that would otherwise be used for
other useful stock (new/useful equipment) causing unnecessary congestion in the
store. Besides, the prolonged storage leads to further deterioration of old
equipment which denies the entity economic benefits that would accrue from an
early disposal. I further noted that ownership of some of the old vehicles that
were handed over to the Ministry by DANIDA had not been transferred to the
Ministry of Works though the centre was in possession of the Log books. I
explained to management that the Ministry could face challenges when it comes to
boarding off these assets.
In response management explained that a comprehensive list of items
recommended for boarding off had been prepared ready for the disposal process.
I await the outcome.
b) Gulu Regional Mechanical Workshop
i) Lack of land title for the office block
It was noted that the Ministry was carrying out the renovation and remodeling of
the office buildings as evidenced by the pictures below:
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However during the review, I noted the following anomalies;
The regional workshop offices are shared between Gulu Regional Mechanical
Workshop and Uganda National Roads Authority- Gulu Station and there is no
demarcation of land or buildings between the two entities;
None of the two entities has a land title to the land where the offices are
located. I could not establish whether the land in question is for Ministry of
Works and Transport or Uganda National Roads Authority or Gulu District.
I explained to management that renovation and remodeling of the office buildings
without land titles pose a risk of loss of funds in the event that ownership is
contested.
In response, management stated that the Office of the President (OP) took note of
the problem under the auspices of the Steering Committee of Inspection Agencies
spearheading the exercise to survey and title all Government Land.
I advised management to follow up the matter with OP and have the proper
demarcation of land to enable the process of acquisition of titles.
c) East African Civil Aviation Academy
i) Lack of a Stand by Generator at the Academy
It was noted that during the financial year 2011/2012 the Ministry supported the
Academy by rehabilitating the buildings and installing a Simulator. The Simulator is
used to train Pilot students before carrying out actual flight lessons. However
during the review, I noted that there was frequent power disruption that may
affect the performance of the machine and this may be costly to the Academy if
the machine is damaged because of power disruptions. I explained to
management that lack of a stand by generator results into the Academy going into
black out which may lead to damaging the expensive equipment.
Management acknowledged the challenge and indicated that a stand by generator
for the Academy has been budgeted for in the FY 2014/2015.The outcome of the
above action is awaited.
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ii) Maintenance of a Fixed Assets Register
In the previous audit report of the financial year 2011/12, it was noted that the six
recently acquired Airplanes, operated and maintained by the Academy were not
properly posted in the Fixed Assets Register. These were: 5X – KYO, 5X – SRI, 5X
– VIC, 5X – ELG, 5X – RWE, 5X – CEA all of Model Cessna 1725 acquired during
2010. The following were noted:
No acquisition cost was attached to each aero planes acquired.
The accumulated depreciation and depreciation rates were not provided for.
The Assets Register did not show the maintenance costs of the assets since
acquisition.
I explained to management that failure to consider the above could lead to
challenges in estimating the life span of the aircrafts.
I advised management to liaise with the Accountant General for guidance on
preparation of a fixed asset register.
d) Bugembe Mechanical Workshop
i) Obsolete stock
It was noted that the workshop had obsolete stock which was overdue for
boarding off. Inspection of the stores revealed that most of the stock was scrap
and not operational as indicated in the schedule below:
ITEM (Obsolete Stock) Serial Number STATUS
1 MTS Cargo Truck UG 045OW Scrap
2 Pick UP UG 0778W Scrap
3 KMTSU – Motor Grader UG 0782W Scrap
4 Isuzu Pick Up UG 0810W, UG0812W,
UG0814
All Scrap
7 Trax-Cavator UG 0823W Scrap
8 Mercy Fugerson Tractor UG 0830W Scrap
9 Mercy Fugerson Trailer UG O831W Scrap
10 MTS –Crane Truck UG 0833W Not operational
11 MTS- Dump Truck UG0880 W Not operational
12 Isuzu Station wagon UG 0907W Not operational
13 MTS- Station Wagon UG 0927W Not operational
14 Komatsu Motor Grader UG0303 W Scrap
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15 Shibaura .Wheel Tractor UG0304W Not operational
16 Low loader Nissan Diesel UW1321 Not operational
17 Yamaa 175 Motor Cycle ( 9 of them) UG 0981W, UG 0982W, UG
0983W, UG0984 W, UG
0992W, UG 0994W, UG
0996W, UR0353, UG1000W
Scrap
26 Monitor and key Board AP64005 Not Operational
28 Printer P14PA Not Operational
29 Type Writer -Electric Not Operational
30 Printer 102567 Not Operational
31 Monitor 63TT130154253 Not Operational
32 Key Board 6531331 Not Operational
33 CPU 55-0162152 Not Operational
34 Monitor 1751402 Not Operational
35 Stabilizer AM63FAM Not Operational
36 Stabilizer SVR-600ND Not Operational
37 Pager Telephone 2pcs Not Operational
38 Micrographics 3601 Not Operational
39 Printer XA1425888 Not Operational
40 UPS PLUS 650 Not Operational
41 Printer XAL2424624 Not Operational
42 Switch Board with 3 receivers SW/BPX2/2B MICI Not Operational
43 Assorted Tyres 168 Used
I explained to management that the old stock occupies the storage space that
would otherwise be occupied by the useful/new stock posing challenges to the
mechanical workshop staff in execution of their duties. Besides; the more the old
stock is kept, the more obsolete it becomes and hence loss of economic benefits
to the Ministry that would accrue from early disposal.
Management explained that the list of items to be boarded off has already been
compiled, awaiting constitution and advice of the board of survey.
I await the outcome of management‘s commitment.
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ii) Unfilled Posts
It was noted that some posts including stores clerk, senior mechanic, driver and
security guard were vacant. I explained to management that the vacant posts
create a vacuum in the daily operations of the mechanical workshop that could
result into poor performance, hence non-fulfilment of the workshop objectives.
In response management explained that the Ministry has initiated a recruitment
process to fill the vacant posts.
I await the outcome of management‘s commitment.
(i) Human Resource Matters
(i) Vacant posts
Following the creation of the Uganda National Roads Authority in 2008, a number
of employees transferred their services from the Ministry of Works and Transport
to the new organization. This led to the restructuring exercise in the MOWT by
Public Service Commission where in its 2009 report it recommended that the
established posts be reduced from 718 to 582. A review of the
establishment/Staff List for the period ended June 2013 indicated that 198
approved established posts were still vacant at the time. I noted that some of the
vacant posts relate to critical areas in the operations of the Ministry, hence leaving
them vacant is likely to affect the general performance of the Ministry.
The vacant posts were submitted to Public Service Commission and so far thirty
seven (37) posts have been filled. In addition, the Ministry of Public Service has
cleared sixty six (66) vacant posts awaiting constitution of the Commission.
The continued existence of vacant posts at senior levels is due to the fact that the
Ministry has experienced challenges in attracting suitable candidates for technical
posts such as engineers and surveyors at the level of Director, Commissioner,
Assistant Commissioner and Principal Officer level.
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I advised management to take up the matter with appropriate authorities to
ensure the vacant posts are filled.
(ii) Over establishment
I noted an over establishment of 106 posts in the entity. While the restructuring
report indicated a maximum of 582 posts, the staff list had 688 posts.
I informed management that the Ministry is likely to pay for services of redundant
personnel.
Management explained that the over establishment was a result of inclusion of
staff of the East African Civil Aviation Academy - Soroti.
I advised management to harmonize the staffing position in line with the
Restructuring Report.
e) Engineering Audits
A sample of four civil projects was selected for technical /engineering audit. The
projects selected included:
(i) Upgrading works on Kakungulu Roads-Phase II from km 0+000 - 1+400
(1.4km) and km 2+400 to 3+300 (0.9km)- Total Length 2.3km
(ii) Construction of Agule Ferry Landing Site in Kumi District
(iii) Construction of Okokor Bridge in Kumi District
(iv) Construction of Nyagak Bridge in Zombo District
Below is the summary of key findings arising from the Engineering Audit:
6.11 Irregular payments (UGX 418 ,234,691)
It was noted that in some cases, payments made for quantities in the BoQs were
in excess of the approved quantities and for works not yet executed. A total of
Shs.418,234,691 was paid in respect of these anomalies as explained below;
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a) Excess payment (Shs.371,423,580)
For Nyagak Bridge, the contractor was advanced Shs.495,231,440 instead of the
guaranteed Shs.123,807,860 hence an excess payment of Shs.371,423,580. This
created a risk of losing the money to the contractor who had done no work and
only guaranteed a lower amount. This amounted to pre-financing the contractor
contrary to the contract conditions.
b) Over payments (UShs.43,100,000)
An overpayment of Shs.43,100,000 was made to the contractor for Okokor Bridge
However, there was no evidence to show that efforts had been made to recover
the amounts as works had been abandoned by the contractor.
c) Payment for excess quantities (Shs.3,711,111)
It was observed that some items in the BoQs for Agule Ferry Landing site were
overpaid with the biggest items being for the passenger shed.
The Accounting Officer should ensure that the irregular amounts paid are
recovered from the parties responsible.
6.12 Abandoned works
During the inspection of Okokor bridge site, it was observed that the works had
stalled following the abandonment of works by the contractor; access to the actual
construction site was not possible since the diversion had cut off the bridge site
from Kumi side. In addition, the Embankments at the diversion had begun giving
way posing a risk to the pedestrians. The Ministry had since repossessed the site
without terminating the contract.
The Accounting Officer explained that the Ministry was preparing final accounts in
order to have the works repackaged.
It is recommended that the Ministry considers termination of the contract in
accordance with the contract provisions and safety risks on the abandoned site
rectified.
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6.13 Quality of works
Generally, the overall quality of the works on the projects audited varied from
good to poor. Despite the acceptable quality of concrete at Nyagak Bridge, it was
hard to differentiate the free end of the bridge from the fixed end of the bridge.
The alignment of the weep holes on the abutments and the deck drainage pipes
were not done according to the drawings. For Okokor Bridge the Embankments at
the diversion had begun giving way and there were cracks in the diversion
embankment beginning to manifest.
The Ministry should put in place sound quality control mechanisms, to ensure that
the defects relating to Okokor and Nyagak Bridges are rectified. For Nyagak
Bridge, the Ministry should carry out an as-built design of the constructed facility.
In addition contractors who persistently perform substandard work should be
penalized in accordance with the contract provisions and also reported to PPDA for
appropriate action.
6.14 Supervision and Contract Management
There were weaknesses noted in supervision of some aspects of the projects that
were reviewed.
For Okokor Bridge, whereas there were correspondences pertaining to
repossession of site by the Ministry, actual take over was not demonstrated.
For Nyagak Bridge, some aspects of the civil works were not in accordance
with the approved design drawings and there was also lack of quality
assurance in the reporting. For example, notably guard rails were reported as
handrails.
For Agule Ferry Landing Site, the contract periods for both the contractor and
consultant had long expired without formal extensions yet the works were on-
going and still being supervised by the same consultant.
The Accounting Officer should ensure that projects are supervised properly and
contract management effectively carried out; termination of Okokor Bridge
contract should be considered and safety risks addressed; cost implications of
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revised designs for Agule Ferry Landing site should be comprehensively studied to
avoid a scenario of failure to complete works due to insufficient funds.
6.15 Summary of Key Findings per Project
The key findings for each of the projects audited are presented in the table below
Road Project/
Contractor
Amount
Key findings
Construction of Agule Ferry
Landing site in Kumi District
at
UGX 1,653,530,183
Consultancy is shorter than the works contract The Terms of Reference of the consultant do not cover the defects
liability period. Works still on-going, despite expiry of the contract completion date
without formal extension of the contract and consultancy periods.
A significant component of the works being implemented is different from what was designed.
Payment had been made for lime stabilised base material yet the works were still at sub-base level.
Construction of Okokor
Bridge in Kumi
District
Abandoned and Inaccessible bridge construction site, The embankments at the diversion were beginning to give way posing
a safety risk to the pedestrians. In addition, it was difficult for the
locals to cross the diversion while carrying heavy loads In the Auditor general‘s reports, it was reported that the contractor
had been overpaid by UGX 43,100,000. There is no evidence that efforts to recover this money have been made yet the works were
abandoned by the contractor.
Whereas there were correspondences pertaining to repossession of site, actual take over was not demonstrated.
Upgrading of
Kakungulu Estate Roads-
Phase 2 UGX 1,659,975,900
Localised edge failures, loose chippings on access roads, localised
excess bitumen and unsealed edges. There is a possibility of traction problems along some sections of the road.
A section of silted drain and a few cracked culverts
Construction
of Nyagak Bridge in
Nyapea Sub-
county, Zombo Disrict.
UGX 619,039,300
Noncompliance with procurement regulations i.e. PP Form not used,
gaps in evaluation and absence of key documentation on procurement file,
The contractor was advanced UGX 495,231,440 instead of the guaranteed UGX 123,807,860 hence an excess payment of UGX
371,423,580. This created a risk of losing the money to the contractor who had done no work and only guaranteed a lower amount.
The beam depth from the bottom of the deck (down stand) was
realised to have a lower depth of 260mm compared to the required 500mm. The deck was also found to be thicker than the required
depth of 250mm i.e. 750mm. This increase in deck depth implies an increase in dead weight which might have not been catered for in the
design.
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6.16 EAST AFRICA TRADE AND TRANSPORT FACILITATION PROJECT
(EATTFP)
(a) Compliance with the Financing Agreement and Government of
Uganda Provisions
A review was carried out on the project compliance with the credit agreement
provisions and GoU financial regulations and it was noted that the project
complied in all material respects with the provisions in the agreement and applied
GoU regulations except in the following matter;
i) Unreleased Project funds
During the year under review, Government of Uganda was expected to contribute
counterpart funding amounting to Shs.2,160,000,000. However, only
Shs.1,549,516,666 was received leading to a shortfall of Shs.610,483,334 (28%). I
explained to management that the shortfall in funding could affect implementation
of planned activities that translates into failure to achieve the project objectives.
In his response, the Accounting Officer attributed that the shortfall to budget cuts
by the Ministry of Finance, Planning and Economic Development (MoFPED) during
the year. The Accounting Officer also indicated that a letter had been written to
MoFPED requesting for additional funding to the project during FY 2013/14 so that
implementation of project activities is not impeded.
I advised management to closely follow up on the matter to ensure the required
resources are provided.
(b) Project implementation
i) Budget Performance
It was noted that out of the total budget of Shs.15,206,457,000, only
Shs.2,801,416,177 was spent translating into 82% underperformance during the
year. Further, actual expenditure amounted to only Shs.2,801,416,177 against
receipts of Shs.4,757,394,295. I explained to management that failure to execute
activities as per the set targets could lead to failure to achieve the project
objectives within the stipulated project period.
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In his response, the Accounting officer explained that underperformance was
attributed to delayed procurements for the construction of One Stop Border Post
(OSBP) facilities at Malaba, Busia, Katuna and Mutukula border posts which
constitutes over 60% of the total credit amount. The civil works contracts for the
construction of OSBP facilities were awarded at the beginning of FY 2013/14 and
civil works are on-going which is believed will boost project budget performance
(both GOU and IDA) to over 90% during the period 2013/14.
I advised management to ensure implementation of the outstanding activities is
carried out within the remaining project time to avoid project extension costs.
ii) Inspection of Inland Container Depot –Mukono construction
works
The contract for construction works of the Railway Inland Container Depot (ICD)
at Mukono was awarded to M/S China Jiangi Corporation for International
Economic and Technical Cooperation at a contract sum of USD 8,688,112.11.
Contract commencement date was December 10th 2012, for a period of one year.
Inspection of works in October 2013 revealed the following:
a. Delayed construction activities
It was noted that 80% of the construction period had elapsed yet physical work in
progress was estimated at only 30.22%. The expected date of completion had
been set for 10th December 2013. There was a delay in implementation of this
activity.
In his response, the Accounting Officer attributed the slow progress on the
following:
i) Delay by the contractor to submit an acceptable bank guarantee which was a
pre-condition for contract effectiveness that resulted into late commencement
of civil works in April 2013;
ii) The original contract that suffered an arithmetic error and excluded provisional
sums and contingency that led to loss of time during the process of amending
the initial contract to include provisional sums and contingency;
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iii) The contractor having received an interim order from the Chief Magistrate‘s
Court of Mukono stopping the demolition of the existing ware houses allegedly
owned by Mukono District Council that resulted into partial possession of the
site by the contractor which affected his program of work; and
iv) The poor weather that could not favour the construction especially during the
months of March, April and October 2013, which affected the program of work.
The Accounting Officer further clarified that the contractor applied for a time
extension of 6 months (up to 10th June 2014) to enable completion of the works.
The outcome from the above action is awaited.
b. Land wrangles between URC and Mukono MDA
It was observed that the structures (old warehouses) on site that were supposed
to be demolished in order for the contractor to fully take over the site were not
demolished. This did not occur due to the reported land wrangles between Uganda
Railways Corporation (URC) and Mukono District Administration (MDA). I explained
to management that this was a limitation to the contractor‘s work and a setback to
project completion.
The Accounting Officer explained that the contractor had commenced on
demolition of the existing warehouses to pave way for construction of verification
shed for loose cargo but demolition was halted by MDA claiming ownership of the
structures. In the meantime, the legal teams of URC and MDA are working
together for an amicable solution to resolve the matter.
The outcome of management commitment is awaited.
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7.0 UGANDA NATIONAL ROADS AUTHORITY
7.1 Valuation of Fixed Assets – Shs.7,656,068,462,696
It was noted that the fixed assets disclosures as reflected in the financial
statements was based on the Uganda Road Agency study of 2012 which did not
reflect the fair position of the assets contrary to the requirements of IAS 16 that
requires property, plant and equipment to be re-valued with sufficient regularity.
Accordingly the assets were not fairly stated.
In response, management acknowledged the concern and explained that UNRA
took over the fixed Assets from the Ministry of Works and Transport included the
Assets in the Fixed Assets Register based on the historical values that were
reported in the Handover Report. However, a procurement of an Independent
consultant to verify and revalue these Assets has started and adjustments to the
Fixed Assets Register will be done when the Consultancy Report is concluded.
I have advised management expedite the revaluation exercise and have the issue
resolved.
7.2 Foreign Exchange Losses Shs.36,791,744,898
It was observed that the Authority incurred foreign exchange losses equivalent to
Shs.36,791,744,898 due to foreign exchange translations and currency
adjustments as at the end of the financial year contrary to sect.2 of the UNRA Act
2006 which requires management to conduct UNRA Affairs in a businesslike nature
and cost effective manner and in accordance with modern management practices.
I noted that UNRA does not seem to have tried to hedge against the risks of
foreign exchange transactions.
In response, management explained that although they would have liked to set up
a Treasury function and hedge against exchange movements in compliance with
the Act, this practice has been discouraged by the Ministry of Finance in a way
that it contravenes the Public Finance and Accountability Act 2003. They further
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indicated that with the current position of Treasury Single Account, there is no
provision for Hedging.
I advised management to work towards minimizing exchange losses through
application of best practices.
7.3 Non-performing contract for the supply of Ground engaging tools
A letter of credit (LC) was opened in favor of a local company towards the delivery
of ground engaging tools at a contract price of USD 177,713.00, out of which a
contract sum of US $ 124,399.10was paid leaving an outstanding balance of US $
53,313.90. Irrespective of the payment, supplies worth $ 102,644 were delivered.
It was observed that one of the three containers was reported lost at Mombasa
port hence delaying the delivery of the remaining quantities worth USD 75,070.00
as indicated in the schedule below:
Item Contract
quantity
Deliveries
made
Undelivered
items
Value of delivery
Cutting edge
5D -9558
1,200 pieces 810 pieces 390 $102,462
Bolt 3F -5108 17,160 pieces 120 pieces 17,040 $115
Nut 4K – 0367 17,160 pieces 120 pieces 17,040 $67
Total Total $102,644
Interview with management indicated that the supplier filed a case against Kenya
Revenue Authority and it was ruled in the suppliers favour. However as at 30th
June 2013, the supplier had not yet delivered. There is a risk that the supplier may
not deliver as expected.
In response, management explained that UNRA has initiated the process of
terminating the contract and ensuring that recovery of the funds (30%) under an
existing LC from Stanbic Bank is done. Management further indicated it would be
in position to recover the unsettled advance though they would not be able to
collect the amounts for Liquidated damages.
I await the results of Management effort.
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7.4 Outstanding payables – Shs.431,953,293,985
a) Outstanding Commitments for year – Shs.184,415,152,158
As at 30th June 2013, a total of Shs.431,953,293,985 was reported by the
Authority, as outstanding in payables, representing an increment of 74%
(Shs.184,415,152,158) from the payables figure of Shs.247,538,141,827 reported
as at 30th June 2012.
I noted there was a gradual rise in outstanding commitments. Last year‘s
increment was 67% as compared with the current position of 74%.The
outstanding commitments alone contribute to 29% of the total income received
during the year. I explained to management that this unpleasant situation is a
threat to the budget of the Authority if not checked early enough. Besides, there is
a risk that the accumulation of outstanding commitments could result into higher
costs in terms of interest and litigation by suppliers and contractors.
In response, management expressed fear that the outstanding commitments could
become unmanageable and stated that the increase in the debt situation every
financial year was mainly due to the budgeting process and funds are allocated to
UNRA based on provisions in the Medium term Expenditure Framework (MTEF)
irrespective of UNRA activities on the ground. Often the funds required to pursue
UNRA‘s Road Development and Maintenance programme exceed the funds
allocated in the Budget. These activities are ongoing and contractors continue
working and generate certificates every month yet the funds to pay off these
Interim Certificates are inadequate. Furthermore; the procurement process for
both Road Development and Maintenance contracts always take unnecessarily too
long about a year and yet during the implementation period prices for material
inputs are often above those that were included in the contractor‘s bid leading to
escalation of construction costs through variation of price.
I advised management to develop a strategy of settling the outstanding
commitments before they become unmanageable.
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b) Outstanding Taxes/NSSF unremitted –Shs.964,495,554
It was noted that Shs.964,495,554remained outstanding as at 30th June 2013in
unremitted statutory obligations (NSSF and PAYE) contrary to the provisions of the
Income Tax Act and the NSSF Act as indicated below:
Category of Statutory
obligation
Amount in
sHS.
Managment
PAYE 471,539,839 PAYE was deducted by Ministry of
Public Service (MoPS) but not
remitted to URA. It was explained that UNRA‘s payroll at the time was
managed by the Ministry of Public Service (MoPS). Through the Straight
through Process System (STP) and despite reminders to the MoPS, this
obligation has not been cleared.
5% NSSF not deducted from
salaries by Public Service
238,135,254 The amounts in question referred to
overpayments to UNRA staff as a
result of non-deduction of 5% NSSF. UNRA‘s payroll during the year was
managed by MoPS through the IPPS. Since the payroll has since reverted
to UNRA, it undertakes to make the
necessary recoveries from the affected staff and remit it to NSSF.
5% NSSF deducted by Public Service but not remitted to NSSF
254,820,461 The mentioned amounts relate to February, March and April 2013.
Deductions were not made on some
staff by the MoPS and UNRA on numerous occasions notified MoPS of
the continued anomaly but there has not been any response. With the new
arrangement of the UNRA managing
its payroll, the necessary recoveries would be made from the concerned
staff. Total outstanding as at 30th June 2013
964,495,554
I explained to management that there is a possibility that the authority could
attract penalties for failure to remit taxes and NSSF deductions on time.
I advised management to endeavour to remit statutory deductions in time and
within the provisions of the law to avoid penalties.
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c) Receivables outstanding Shs.4,324,360,299
During the review, it was noted that receivables worth Shs.4,324,360,299 had not
been received by the Authority and were therefore still outstanding as summarized
below:
Description of the nature of the Receivable Amount
Shs.(Receivables)
Outstanding letters of Credit that have performed 3,686,481,596
Cash compensation funds still with the Consultant 102,736,943
staff advances deducted from staff salaries by Public Service 13,037,501
Funds still held in ABC Capital Bank 173,701,010
Staff advances outstanding 348,403,249
Total 4,324,360,299
I noted that some of the staff who had not accounted for previous balances had
continued to receive upfront advances. At the time of reporting (February 2014)
there was no indication of any plan to recover the funds in the near future. I
explained to management that there is a risk that the activities for which these
advances were received may not have been carried out and this could affect
implementation of planned activities.
In response, management explained that it is standard practice at UNRA that
when a member of staff is advanced funds and fails to provide accountability
these funds are then deducted from the Individual staff salary. However, UNRA
experienced challenges during this period because the payroll was being managed
by the Ministry of Public Service. As a result; it was not possible to deduct funds
from staff salaries in a timely manner.
In regard to the receivable from ABC Capital Bank, a reminder to Bank of Uganda
to help in the recovery of Shs.173,701,010 was sent and that police completed its
investigations and the file is now with the Director of Public Prosecution to initiate
court proceedings on the culprits.
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I advised management to expedite the recovery process and have all the
receivables recovered.
7.5 Mischarge of Expenditure –Shs.2,480,827,360
Parliament appropriates funds in accordance with the needs of the country and
this appropriation is implemented through the budget in which funds are tagged to
particular activities and outputs using account codes and MTEF codes. During the
review, it was observed that expenditures totalling to Shs.2,480,827,360 were
wrongly charged on budget lines to fund activities that were not meant to be paid
from the affected budget lines. This practice renders the budgeting process
redundant and is not in line with the intentions of the appropriating authority. The
expenditure balances in the financial statements could be misrepresented.
In response, management acknowledged the matter and explained that in future
UNRA will ensure that funds are spent on the expenditure lines as stated in the
budget allocation. Management further indicated that requests for reallocations
where necessary will always be sought on a quarterly basis in situations where the
activities on the ground are no longer in line with budgetary provisions.
I await the outcome of management‘s commitment.
7.6 Budget Performance
a) Uncompleted planned activities
During the year under review, UNRA planned to undertake a number of activities.
A review of the reported performance revealed that some key planned activities
were not fully executed despite having received adequate funding as detailed
below:
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Planned Activities 2012/13
Expected Outputs 2012/13
Actual outputs 2012/13
Deviation Management Response
Paved Roads - Mechanized Maintenance (1,611 Km)
Approved: Shs.8.250 BN. Released: Shs.6.187 BN
Actual Expenditure UGX 6.200 BN 1,500 Km completed
111 Km not worked on.
Contractors were procured for mechanized maintenance but at higher rates than those estimated at the time of budgeting. However, works are on-going with several contracts at different levels of execution. Contractors faced several challenges like scarcity of equipment for hire, delayed mobilization, personnel challenges and delayed submission of advance
guarantees.
Unpaved Roads - Mechanized Maintenance (11,370 Km)
Approved: UGX 85.328 BN. Released: UGX 59.070 BN
Actual Expenditure UGX 59.103 BN.10,362 Km completed
1,008 Km not worked upon
Contractors were procured for mechanized maintenance but at higher rates than those estimated at the time of budgeting. At the time of audit, works were on-going with several contracts at different levels of execution. Contractors faced several challenges like scarcity of equipment for hire, delayed mobilization, personnel challenges and delayed submission of advance guarantees.
Unpaved Roads –
Re-gravelling (855 Km)
Approved:
UGX 22.000 BN. Released: UGX 15.375 BN
Actual
Expenditure UGX 15.320 BN. 502 Km completed
353 Km not
worked upon
Contractors were procured for
mechanized maintenance but at higher rates than those estimated at the time of budgeting. At the time of the audit, works were on-going with several contracts at different levels of execution.
Output 025104 : UNRA Support Services on Project 0298 Accident black spots on Jinja - Kampala
To conduct Workshops for taxi and bus drivers and to Procure the consultant to prepare road safety strategy and action plan
No road safety activity was implemented during the quarter
Activity not implemented
Road safety has been streamlined and is being implemented.
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Planned Activities 2012/13
Expected Outputs 2012/13
Actual outputs 2012/13
Deviation Management Response
Output :715104: Acquisition of land by Government on Project 0957 : Design the New Nile Bridge at Jinja. Budget: Shs.500m
To procure 1 hectare of land.
There was no land acquired
Set Target not met
The one hectare of land was not acquired because it was an additional land take arising out of the construction work by the contractors and also access roads for affected persons. Since the contractor had not yet been procured, the acquisition was not carried out. However it has so far been valued and upon approval of the report by the Chief Government Valuer, compensation will be paid and the acquisition concluded.
Output : 715104
Acquisition of Land by Government on Project 0955 Upgrade Nyakahita-Ibanda-Fort Portal (208km)
10 hectares
of land including properties to be acquired.
3.87 Hectares
of land and properties there in were acquired.
Set Target not
met
Supplementary reports were
prepared by the three Consultants on the project to cater for extra land. So far the project affected persons have been paid and the land acquired.
Output: 715104 Acquisition of Land by Government on Project 1180 : Kampala Entebbe Express Highway Budget GOU 85bn Donor 151.797bn
200 hectares and properties to be procured.
50.47 Hectares of land and properties therein were acquired out of the annual target of 200 hectares. Actual Releases
Gou 100bn Donor 186.122
The cumulative progress since the project start was 7.1% against releases of 117.6 % by Gou and over 100% by donor.
No explanation of the deviation was given by management.
Upgrading Gulu –Atiak road (74km)
Approved Budget GOU 1BN Donor 36
Released GOU 1.35bn Donor 26.13Bn Cumulative progress 18.08%
The project commenced in February 2012 and by June 2013, the cumulative progress since the project start was 18.08%. against releases of 135% from GOU and 72.6% from the Donors
One key issue was the need to clear Land mines along the road project which took longer because it had to be undertaken by UPDF. Initially, there was lack of effective site control on part of the Contractor. With keen monitoring, the Contractor has improved performance which stood at 57.3% against planned on 58.14%. There are still challenges with acquisition of site for the Gulu Town Road and Atiak Trading centre which UNRA is trying to resolve. The supplementary valuation report for these areas have been approved by CGV and payment should commence soon.
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Planned Activities 2012/13
Expected Outputs 2012/13
Actual outputs 2012/13
Deviation Management Response
(VI)Upgrading Vurra – Arua-Oraba road (92kms)
Approved Budget Gou 5 bn Donor 39.558 bn
Released Gou 7.712bn Donor 34.9 bn
The project commenced in January 2012. The cumulative progress was 36.03%. against a release of 154.3% GOU and 88.2% Donor
The evaluation of causes of delay is not completed but is anticipated to be due to; 1 delayed NEMA approval of Quarry/crusher site at Lokoze, 2 Contractor‘s own inherent management weakness; 3 Delayed acquisition of land in some sections. A supplementary valuation has been prepared for outstanding issues and awaits approval of the CGV.
Upgrading Ishaka- Kagamba road (35.4kms)
Approved Gou 22bn
Actual released Gou 25.5
The amount spent was 115.9% against a current
cumulative progress since project start of 20.09%.
The Design review commenced in December 2011, whereas the civil Works commenced in
February 2012. The current progress, at 100% of the time is 31%. The delay is attributed to a combination of factors as follows: -Unforeseen heavy/continuous rains in the project location, -Increase in the earthwork quantities as a result of the design review, -Additional land requirements/acquisition at the high hill cut sections (Km 13 – Km 14 & Km 21 – Km 24), This has subsequently been valued and paid and site availed. -Escalation of the utility service lines relocations, -High turnover of the key Contractor‘s site staff, -Inadequate equipment mobilization/utilization -Inadequate planning of the Contractor‘s activities
Rehabilitating Jinja – Kamuli road (60kms)
Budget Gou 20bn
Actual Released Gou 20.445% which was 102% of the budgeted funds. 30% of the works were completed.
This project commenced in August 2011 and by June 2013, 42.91% of road works had been completed. Works are expected to be completed by June 2014.
No explanation of the deviation was given by management.
I advised management toenforce monitoring of its operations to ensure that set
targets are achieved.
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b) Under funding of Maintenance Program –Shs.43,104,110,247
Uganda Road Fund finances maintenance of roads through disbursement of funds
to UNRA on a quarterly basis so that implementation is done. During the financial
year under review, UNRA planned to spend Shs.181,875,000,000 under the
maintenance program however, only Shs.138,770,889,753 was released to the
Authority leaving a balance of Shs.43,104,110,247 (24%) unreleased. I noted that
the current position is unpleasant in light of the heavy capital injected in the
construction of roads. If adequate maintenance of the roads is not carried out,
there is a risk that all the capital injected will go to waste. Lack of adequate
funding affected implementation of some of the maintenance activities.
UNRA expressed concern over the received inadequate funds for the capital
investment for Road maintenance from the Uganda Road Fund during the year
and added it would continue engaging the Ministry of Finance and the URF to
provide sufficient funding for UNRA Road Maintenance activities.
I advised management to continue following up the matter with the appropriate
Authorities to ensure all budgeted road maintenance funds are released and on
time.
c) Supplementary Expenditure Review –Shs.155,000,000,000
Towards the end of the financial year, the Accounting officer requested for a
supplementary of Shs.309bn out of which Shs.155bn was released. This was on
top of the original GOU Development budget of Shs.669bnfor the financial year
under review. UNRA‘s annual Development budget was to be exhausted in the
third quarter and management made a cash flow projection of Shs.309bn billion
for quota 4 hence requesting for a supplementary budget of Shs.200bn.This
request was for settlement of bills for a list of Projects mainly from the Transport
corridor project (code 1056). In June 2013, the Authority received a
supplementary appropriation for the development budget of Shs.175bn to cater
for the mentioned projects.
I noted that out of the above warrants, cash limits issued were only Shs.155 billion
as indicated below:
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Date of Receipt of Release Amount (Shs.)
13/06/2013 154,000,000,000
25/06/2013 1,000,000,000
Total 155,000,000,000
The cash limits were for various roads and bridges including; upgrading Moyo-
Afoji (Phase-1 Bridges), Improvement of Ferry Services (KIS Project), upgrading
Kampala-Gayaza-Zirobwe , upgrading of Fort Portal –Bundibugyo-Lamia and
various others.
From the review of the expenditure transactions and interim payment certificates
in respect of the funds, the following were noted:
d) Payment of Prolongation Costs Shs.1,617,803,400
Analysis of expenditure and claims raised by Contractors showed that UNRA paid
Shs.1,617,803,400 to Energo Projekt being compensation for time extension on
Kampala-Gayaza-Zirobwe Road. I regarded this expenditure nugatory as it could
have been avoided. This situation was caused by inadequate planning because of
the incomplete designs at the time of signing the contract which led to the
extension of the contract duration resulting into a claim for prolongation costs.
Prolongation costs are a waste of Government resources which accelerates the
costs of road construction.
In response, management explained that prolongation costs arose due to
extension of time granted on the contract mainly to allow the Contractor handle
the necessary additional scope on the project to accommodate unforeseen road
frontage and other developments that had occurred since completion of the
Kampala-Gayaza-Zirobwe design in 2002 and project commencement in 2008. The
scope included changing the Kalerwe section connecting the Kampala Northern
Bypass (KNBP) to Kampala City from the designed single carriageway standard to
dual carriageway standard so as to accommodate traffic to/from KNBP and others.
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I advised management that before contracts are entered into with the contractors,
designs should have been agreed on and approved to avoid unnecessary delays
that cause wasteful expenditure.
e) Expenditure incurred beyond what was applied for
The entity paid Shs.23,210,098,824 more than what was requested on two of its
projects as indicated in the table below;
Project Actual
expenditure
Requested
Amount
Difference
Kampala-Gayaza-Zirobwe 3,185,751,990 2,000,000,000 1,231,033,460
Upgrade Hoima-Kaiso -
Tonya
41,879,065,364 20,000,000,000 21,979,065,364
Total 23,210,098,824
I explained to management that this amount was paid without authority which
was irregular and is contrary to the financial regulations. The practice suffocates
other planned activities.
In response, management explained that UNRA required Shs.308.98 billion to
meet its commitments to 30th June 2013 but the MoFPED was only able to avail
50% of the funds required, so it was difficult to match the payments to the
accounting warrants because there was a significant glaring gap in financing. The
projects were at critical stages of implementation and urgently required funds.
I advise management to adhere to the budgeting guidelines and payment
principles.
f) Unapplied for Expenditure – Shs.11,578,596,573
I noted that payment to one of the Construction company worth
Shs.11,578,596,573 for Transport Corridor Nsangi- Kamengo had not been
applied for in the approved supplementary. The expenditure was therefore not
authorized.
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In response, management acknowledged the mentioned funds were paid to the
Company because the contractor was implementing works on the Northern
Corridor which is a key and sensitive component of the National Road Network.
UNRA owed the company a lot of money and this company had threatened to stop
working if they did not receive additional payment from Government, thus
management thought it was prudent to make this additional payment to the
Contractor to avoid the contractor stopping work on a key section of the National
Road Network.
I advised management to always adhere to financial regulations.
g) Interest on delayed payments – Shs.38,735,973
It was noted that a payment of Shs.38,735,973 in interest was made to a
construction company due to delayed payment on one of its certificates of
Shs.1,512,388,615. I explained to management that this resulted into diversion of
funds that were meant for other projects.
Management explained that the interest was a result of a delay in payments to the
contractors due to delayed release of funds and under funding of the Road
Development and Maintenance programme. Management further clarified that this
payment was made to avoid paying any further interest (Interest on interest)
which would be deemed to be nugatory expenditure.
I advised management to plan and avoid such payments in advance.
h) Unreleased supplementary Funds – Shs.20bn
It was noted that out of the supplementary appropriation of Shs.175bn only
Shs.155bn was released leaving Shs.20bn unreleased. Failure to release all the
funds to the Authority affects planned road construction projects.
Management explained that they had contacted Ministry of Finance on the matter.
I await the outcome of management actions.
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7.7 Governance issues
a) Lack of a Board of Directors
Section 8 (1) of the UNRA Act 2006 states that the Authority shall have a Board of
Directors, which shall be the governing body of the Authority to oversee the
operations of UNRA. However during the review, I noted that the Authority was
operating without a Board for almost 1 year which created gaps in policy
formulation. I explained to management that absence of a Board poses a high
risk in implementation of the strategic plan towards fulfilment of the Authority‘s
mandate. Absence of the Board meant that there was no audit and risk
management committees that are extremely key to the operations of UNRA.
In response, management explained that at the beginning of the financial year,
there was a board which was dissolved on the 1st of November 2012 and a new
one was inaugurated in February 2014.
I advise that the relevant committee are constituted and audit reports reviewed
for further action.
The new development was noted.
b) Lack of an Approved Strategic Plan
It was noted that the Authority did not have a strategic plan to guide management
in the operations and implementation of its activities. This means the Authority
operated without medium and long term plans to facilitate the management and
operations of the Authority. Lack of a strategic plan implies that implementation of
activities aimed at achieving the entity‘s mission and long term objectives may not
be properly guided. Besides, the performance measurement criteria could be
questionable.
In response, management explained that a draft Strategic Plan had been prepared
and was awaiting approval by the Board in April 2014 prior to the formal launching
of the plan.
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I advised management to expedite the process and have the plan approved.
7.8 Staffing - Vacant posts (126 Vacancies)
A review of the staffing position of the Authority revealed that out of the 1109
approved positions, only 963 positions were filled leaving 126 positions unfilled. I
noted that the most affected directorates include; Directorate of operations and
procurement which are key in execution of UNRA‘S mandate. Considering the
magnitude of the works meant to be carried out at the Authority, shortfalls in
capacity are likely and the implementation of the activities is affected.
In response, management explained that the recruitment process for the vacant
staff positions was substantially concluded. However, the engagement of the staff
was delayed due to fixed wage bill challenges.
I advised management to conclude up the matter and have the posts substantially
filled.
7.9 Fuel Payments
During the review, it was established that UNRA had an arrangement with Shell
(U) Ltd and Total (U) Ltd where the two fuel companies supplied fuel in advance
to the twenty two (22) UNRA Fuel Stations using advantage cards. The fuel
Companies would issue fuel consumption statements and fuel invoices which
UNRA would use as a basis of payment for fuel consumed during the period. A
review of the fuel transactions revealed the following:
a) Fuel drawings in excess of fuel capacities
It was noted that there were fuel drawings in huge amounts from a fuel company
around Kampala. Fuel drawings were in hundreds of litres at a time and I noted
that vehicles owned by UNRA and run by the stations have a capacity of not more
than one hundred litres. Drawing two hundred (200) litres and above creates
suspicion that cash could have been drawn instead of fuel.
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Management explained that there are some cases where this is necessary
especially when operations are to take place in hard to reach areas. In the
circumstances, stations pack fuel in containers after filling the vehicle tanks.
I advised management to strengthen controls over use of fuel to minimize on the
risks of misuse of Government funds.
b) Funds over paid to a fuel company
It was noted that fuel consumed as per the fuel consumption statements and the
fuel prices indicated could not match with the amount billed and paid by UNRA. As
a result, it was noted that Shs.102,500,004was overpaid to one of the fuel
company.
Management explained that at the time of audit, UNRA had started a reconciliation
exercise with the fuel company and that the two parties agreed that any over
payments would be offset from the outstanding invoices that were not settled
since September 2013.
I advised management to recover the funds and remit the funds to the
consolidated fund.
7.10 Avoidable Interest Payments to Contractors –Shs.525,488,501
Section 5 (43) (1) of the General Conditions of Contract between UNRA and
Contractors provides for payment of interest if UNRA delays to pay a particular
approved contract certificate. It was established that management delayed to pay
some approved certificates resulting into uncalled for payments in form of interest
worth Shs.525,488,501 to the contracted companies. These payments were made
from the Maintenance Account and Stanbic Head Office Account as indicated
below.
Voucher
Number
Date Payee Amount (Shs.) Remarks
AB211090 22/11/2012 Construction Co 31,552,837 Payment of Interest to CCC as a
result of delayed payment by UNRA on Cert 1(Euro 9,363.46@3,366.58)
Mbarara-Kikagati Road
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Voucher
Number
Date Payee Amount (Shs.) Remarks
AB211089 22/11/2012 Construction Co. 43,084,168 Payment of Interest to CCC as a result of delayed payment by UNRA
oncert.1($16,261.92@2,6949.39) Mbarara –Kikagati road
AB211088 22/11/2012 Construction Co. 41,480,183 Payment of Interest to CCC as a result of delayed payment by UNRA
on Cert 1 (Local currency) Mbarara-
Kikagati Road.
AB209063 18/09/2012 Construction Co. 39,744,342 Payment of Interest to CCC as a
result of delayed payment by UNRA
on Kitgum – Orom road
AB 209004 3/9/2012 Construction Co. 24,689,437 Payment of Interest to JB United
Civil Engineering as a result of delayed payment by UNRA on
Palabek-Padibe road
AS208042 31/07/2012 Construction Co. 103,530,050 Payment of Interest to SBI as a result of delayed payment of IPC
42-45 on Kabale-Kisoro -Bunagana
Road. US Dollar component - $ 41,002
AS208043 31/07/2012 Construction Co. 241,407,484 Payment of Interest to SBI as a result of delayed payment of IPC
42-45 on Kabale- Kisoro -Bunagana
Road. Shs. component.
Total 525,488,501
I explained to management that this translates into loss of Government funds that
would have been used to implement other road maintenance activities or
undertake new projects. The expenditure was therefore nugatory as it could have
been avoided with proper planning.
In response, management explained that UNRA engages contractors on Road
development and maintenance jobs and the contractual arrangements provide for
Interest on delayed payments. The Road development and Maintenance
programme are underfunded and sometimes funds are not released in time which
leads to claims from contractors for interest on delayed payments.
I advised management to always plan ahead to avoid such delays which lead to
wasteful expenditure.
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7.11 Delayed completion of maintenance of National Roads Contracts
Specific conditions of the contracts signed between UNRA and contractors specify
the duration of the contracts which should be observed by both parties to ensure
efficient and effective management of the works contracted. However during the
review, I noted that works on gravel roads spread over three years yet
management had not taken any action to invoke the contract agreement
provisions for their termination in accordance with PPDA Regulations. Refer to the
details below.
Voucher
No
Amount paid Details of the
payment
Project Name Contract
Amount
Duratio
n of the Contract
AB207136 dated 31/7/12
322,265,098 Supervison of mtnce works IPC 2 & date of Contract 30/11/2010
Consultancy services for supervision of maintenance of 202Km of selected National Roads Package 16(UNRA/SERVICES/2009-10/00002/01/13
929,960,000 Twelve(12 ) Months after signing the Contract
AB207126 Dated
31/7/12
103,639,925 Urgent repairs Cert 2
And date of contract 21/3/2011
Isunga -Bugwara -Kikwaya &
Kyenzige- Rugashari -Mabaale.UNRA/RMM/10/11/098 OR UNRA/RMM/10/11/066
Five (5) Months
after signing the Contract
Total 425,905,023
I explained to management that delays in contract implementation leads to
increased project costs associated with management, monitoring and
supervision which could have been avoided if a project is completed in time.
In response, management explained that when contract implementation delays
UNRA charges liquidated damages and in some instances as a last resort; the
Authority has terminated some of the contracts.
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I advised management to review implementation of all delayed projects with a
view of taking decisive action against delayed works by contractors.
7.12 Expenditure on Training –Shs.450,236,188
Expenditure totaling toShs.450,236,188 was paid from UNRA Stanbic bank
Account for staff training. Examination of the expenditure revealed the following:
a) Lack of an approved Training and Career Development Policy
UNRA Human Resource Management Manual (HRMM) requires UNRA to have an
approved training and career development policy. In addition Chapter 5 (a)
stipulates that the goals and objectives of the training and career development will
involve ensuring that employees have knowledge, skills and attitude needed to
perform the current job effectively. However during the review, it was noted that
UNRA lacked an approved training and career development policy that provides a
framework for managing the Authority training.
During the year; I noted that the Authority spent over Shs.2.4bn without an
approved training policy. It was further noted that the present system involves
individual staff sourcing for training programs from the internet without the
involvement of the Human Resource Department. I explained to management that
this kind of system was unfair to staff who may not have had the initiative and
time of searching for training programs through the internet. Besides, there is a
risk that the selected programs may not be beneficial to the Authority resulting
into non achievement of the Authority goals.
In response, management explained that the Training Policy was formulated by
the Human Resource Department and circulated to the different Directorates for
consideration and comments. It was indicated that training courses are sourced in
line with training needs of individual directorates and training programmes.
However, due to the absence of the Board of Directors for more than a year, the
policy has not been finalized for approval. Despite this fact, training in UNRA has
been guided by the Draft Training Policy. Management indicated that the
recommendation would be adopted as soon as possible.
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I await management‘s commitment towards this effort.
b) Lack of an active training Committee
Chapter 5 of the HRMM requires that a training committee be established for the
purpose of administering the training policy and ensuring that guidelines are
followed and enforced. The Training Committee is required to have a responsibility
of maintaining equity in training and regularly reviewing the rules and regulations
governing training and career development. During the year it was noted that the
entity operated without an active training committee to oversee the training policy
and guidelines. I explained to management that there is a possibility that equity in
training was not properly observed.
In response, management explained that the training Committee was actually
established and is comprised of representatives from all the Directorates.
However, due to understaffing in the entire organization, the Committee members
have been very busy and the Committee has not been active resulting into delays
in accomplishing its activities. Management indicated that the activities of the
Committee would resume with immediate effect.
I await the outcome of the management commitment.
c) Lack of an Annual Training Plan/Program
Chapter 5 of the Human Resource Management Manual (HRMM) requires that
arising from the Training Needs Assessment and the Performance Management
Exercise, the Human Resource Manager will prepare an annual Training Plan. This
will be reviewed by the Training Committee which will prioritize all the training and
agree on the training and career development activities to be carried out in the
coming year. The Committee is also required to cost all the training and prepare a
schedule that forms the Annual Training Plan/Program.
I noted that the Authority lacked an approved training program. The Training
Needs Assessment and the Performance Management Exercise was therefore not
being done as desired. I explained to management that there is a risk that large
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sums of funds utilized on training may not be addressing the needs assessment
and performance management needs.
In response, management explained that training Needs Assessment was
conducted by each Directorate and the respective training requirements submitted
by Directorates to the HR Department for implementation. Unfortunately, the
consolidated plan was still being finalized for approval.
I advised management to adhere to the existing regulations and have the
consolidated plan finalized.
7.13 Land and Property Compensation
a) Compensations on Entebbe Express Highway – transfer of titles
The compensation program to all affected people within the corridor of the new
Entebbe – Kampala Express Highway was administered by a Consultant Mott
MacDonald on behalf of UNRA. The compensation process required to carry out
an evaluation of all the property and land with a compensation Report. The
claimant was then required to fill a Claimants‘ Form, (Forms A,B and C). Copies of
relevant documents were to be verified by the Consultant, LC 1 Chairperson,
District lands officials and other stakeholders. A review of the compensation
exercise carried out on the highway revealed that some beneficiaries are still
holding on the land titles. Although the Transfer Forms were dully attached, they
were not filled and therefore not signed by the Purchaser (UNRA) posing a threat
of a third party falsely claiming ownership of the same land. Details are in the
schedule below:
Mailo land claims without Transfer Forms
NAME AMOUNT VALUATION REF. NO.
VILLAGE Transfer Form
Other Remarks
Compesator 279,596,249 KEEW01-188A KINAAWA No Form No Transfer Form filled
Compesator 45,760,000 KEEW01-397 BANDWE Not filled Transfer Form not filled and not signed by Purchaser (UNRA)
Compesator 11,856,000 KEEW01-398 BANDWE Not filled Transfer Form not filled and not signed by Purchaser (UNRA)
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Compesator 11,024,000 KEEW01-228B BANDWE Not filled Transfer Form not filled and not signed by Purchaser (UNRA)
Compesator 1,622,400 KEEW01-264B BANDWE Not filled Transfer Form not filled and not signed by Purchaser (UNRA)
Compesator 686,400 KEEW01-219 BANDWE Not filled Transfer Form not filled and not signed by Purchaser (UNRA)
TOTAL 350,545,049
I advised management to ensure that transfer forms are signed to minimize the
risks of losing land that has been compensated.
b) Valuation of land
It was noted that UNRA does not have its own valuer/surveyor to make an input in
the whole process or advise the entity on certain valuation matters. Management
depends only on the figures calculated by the consultant and the expert advice of
the Chief Government valuer is only given and considered. I explained to
management that there is a risk that UNRA cannot easily support or reject any
position provided by the private consultant which serves as the basis of the Chief
Government valuer‘s (CGV) considered opinion. There is a risk that UNRA could be
over or undervaluing land.
In the circumstances, I could not satisfy myself that these land compensation
payments were worth what was paid and/or supposed to be paid.
Management explained that the entity uses its Internal Auditor who performs
some audit checks especially before payments are made.
I advised management to review the current compensation system and ensure
UNRA has a technical person who contributes/checks what the consultant does in
the compensation assignments.
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c) Land compensation funds transferred to Kampala station
Shs.73,491,633,132
Maintenance of National roads is financed by URF that releases Funds to UNRA on
a quarterly basis. Implementation of the maintenance function is carried out by
UNRA through UNRA Stations. UNRA through execution of its mandate
compensates land owners that are affected by road construction and the Road
reserves. I noted that during the year, UNRA Headquarter transferred
Shs.73,491,633,132 to UNRA Kampala Stanbic Account being compensation funds
for Land Property Owners that were effected during the construction of various
roads. From the review, the following anomalies were noted:
a) End of Financial Year closing procedures
It was noted that at the end of the financial year, end of year closing procedures
destabilize the compensation exercise. I noted that the process of Land
Compensation is a continuous exercise that should not be disrupted by the end of
year closing procedures.
b) Co-mingling of compensation funds
The objective of opening up UNRA Kampala Station was for management and
implementation of maintenance activities for which funds are released on a
quarterly basis. It was however noted that compensation funds released to
Kampala station were mixed up with the station funds for road maintenance yet it
also holds NTR receipts. Comingling of funds creates reconciliation problems, and
can also result into diversion of funds hence affecting the planned activities for
which the account was established.
c) Mandate to pay compensations
UNRA Kampala does not have the mandate to pay compensations which is more of
a central function. I noted that Payment of Compensation Funds is a responsibility
of UNRA Headquarter and not UNRA Kampala Station. Besides, this is not under
the jurisdiction of the Station Engineer. I explained to management that the
compensation role stifles the engineer‘s role.
115
In response, management explained that UNRA has requested the Accountant
General to open up a bank account in a commercial bank specifically for Land and
Property Compensation but no positive response from the office of the Accountant
General has been received yet. If this account is opened, the commingling of
funds for Land and property compensation with funds for Road maintenance will
cease and UNRA Headquarters will take full responsibility.
I have advised management to continue following up the matter with the
Accountant General to ensure that it is given the consideration it deserves.
7.14 Procurement
a) Consultancy Services for review of the UNRA organization and
setup
Contract for the Consultancy Services for review of the UNRA organization and
setup was entered into on the 29th May 2013 at a contract sum of
Shs.201,906,000 between M/s Ernst and Young (the Contractor) and the entity.
Review of the procurement process revealed the following:-
b) Lack of a contract implementation plan
PPDA regulations, section 258 (3) states that upon receipt of a contract, a contract
manager shall prepare a contract implementation plan, using PP Form 60 in the
Ninth Schedule, and forward a copy to the procurement and disposal unit for
monitoring purposes. Contrary to the above, UNRA signed the contract on 29th
May 2013 and appointed a team to manage the contract but the contract
management team appointed did not prepare a contract implementation plan. I
explained to management that this implied that the monitoring and evaluation of
the contract may not have been adequately carried out as stipulated in the PPDA
Regulation 258 (5).
I advised management to abide by the procurement regulations.
c) Delayed procurement process (18 Months)
The objective of this procurement was to undertake a self-assessment process to
evaluate where UNRA was, and where it needed to go. The view was that, whilst
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good progress had been made, a change point had been reached and initiatives
were required to support further change in the culture and direction of the
organization. This was to be done within a short time because there was limited
time to expiry of staff contracts (June 2012) and the need to renew staff contracts
by March 2012.
I noted that the procurement process took too long beyond the initial time it was
intended to take thus not achieving one of its objectives of using the report for the
organization review to renew staff contracts by March 2012. The PP form 20 was
initiated on 12/12/2011 and the contract was signed on 29th May 2013. This
implies that several staff contracts were renewed without the report. There was
therefore no value for money in this contract.
Management indicated that it was establishing a procurement tracking and
monitoring system to control delays.
I await the outcome of management‘s commitment.
d) Application of an inappropriate method of procurement
Contract for workers‘ compensation policy for UNRA employees was signed
between UNRA and an Insurance Company on the 1st of November 2010for a
period of two years. Two payments were effected in the financial year 2012/13.
Further Shs.246,322,915 from Treasury General Account.
All the payments were made based on the original compensation policy
no.010/110/1/001619/2009.Contrary Reg106 (4) of the PPDA Regulations 2003,
which requires open bidding to be used if the estimated value of the services
exceeds Shs.50,000,000 or US$ 25,000 whichever is greater; I noted that in this
case, director procurement method was used instead of open bidding as
required.
Management was aware that the procurement process was lengthy but seemed to
have waited for the contract to expire instead of planning to procure the services
early enough. Further review revealed the following:
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Only one bidder was invited and the solicitation document was only issued to
one company.
The approval of the procurement method was reportedly done by the
Contracts Committee but no evidence was availed for review.
The initial requirement for the service originated from the nonuser department
who initiated the procurement process i.e the legal department instead of the
Human Resource department.
The procurement was not in the approved Procurement plan for the financial
year 2012/13.
There was no contract manager and no contract management file was in
place. There was no evidence of appointment of a contract manager to
monitor implementation of the contract/service.
There were a number of claims to the tune of Shs.55,000,000that were earlier
not settled by the service provider translating into poor performance.
In the justification for extension, it is clear that the specifications/terms of
reference were tailored to suit the Insurance company nominated.
I explained to management that failure to observe PPDA regulations and
guidelines denies the Authority benefits of value for money through competition.
Management explained that direct procurement method was used on the grounds
of contract extension (2003 PPDA Reg. 112 for continuation with the existing
provider) as the new procurement for selection of a provider was not finalized.
The contract was urgently required to be in place to cover UNRA staff as per
statutory requirement. Further, management explained that in regard to the
claims to the tune of Shs.55,000,000, action would be taken to enhance contract
management.
I advised management to always follow PPDA regulations in all future
procurements.
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e) Supply and delivery of Heavy Road Maintenance Equipment Lot1
(Motor Graders)
Contract for the supply of eight (8) Motor graders was signed between UNRA and
the supplier on 28/06/2013 and the specific conditions to the contract provided for
completion period within five months after contract signing. By the time of this
report, the contracted company had not delivered the eight motor graders
registering a delay of 6 months. I explained to management that failure to adhere
to the major conditions of the contract may lead to the entity failing to repair
national roads in time. Besides, there was no evidence that Management had
charged liquidated damages as provided for in the specific conditions of the
contract.
Management explained that shipping of the eight (8) graders delayed the delivery
however the provider will be charged liquidated damages (as per clause GCC 27.1
of the General Conditions of Contract) at the time of making payments for the
supplies.
I advised management to ensure compliance with the stipulated conditions of the
contract.
7.15 Lack of Operators for New Road Equipment
I noted that road equipment worth Shs.10bn was procured during the year under
review. These included graders, bull dozers, excavators, and rollers among others.
However, no recruitment of plant operators had taken place and a few who are on
the ground seem to require further training due to the technological advancement
in the manufacture of these road equipment. The equipment has not been put to
use.
Management explained that UNRA has initiated the process of restructuring that
shall result into identification of the critical staffing levels and wage requirements
that can enable UNRA manage its operations.
I await the outcome of the above management commitment.
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7.16 Ferry Operations
It was noted that funds to the tune of Shs.7,536,489,901 were paid to Kalangala
Infrastructure Services (the company) for Bukakata ferry of which
Shs.1,975,020,975 was covering the period August to December 2012 and
Shs.5,567,468,926 was advance support payments covering the calendar year
2013.A review of the records availed and interview with Management in reference
to the ferry revealed the following:
(i) Breach of terms on monitoring and verification
Review of the conditions of the contract showed that UNRA was in breach of the
conditions in the agreement, Amendment No.1 to the implementation agreement
between GOU and Kalangala Infrastructure Services Ltd dated Nov. 2011 Schedule
1, that pertained to monitoring and evaluation of the contract.
There were no metering or recording devices installed on the ferry yet.
There was no confirmation of the information provided by the company in
relation to the claim for payments of support payments.
The audit noted that there were no independent reports made and this led to
loss of audit trail.
In response, management explained that UNRA has recommended installation of a
GPS tracking technology on the ferry to allow for real time and more independent
monitoring. This technology is affordable. An independent monitor was also
identified.
I await management implementation on the above matter.
(ii) Other irregularities noted include:
Advance payments to Kalangala Infrastructure Services (KIS)
I noted that the ferry support payments were being paid in advance but it is not
stated how the advances were secured. Under normal circumstances, advance
payments must be supported with an advance guarantee from the beneficiary.
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In response, management explained that UNRA noted the concern and
communicated the anomaly to MOFPED in January 2013 and that no response has
been provided by MOFPED to date.
(iii) Staff requirements for Procured Ferries
A review of the operations of the ferries revealed that there was staff shortage at
all the eight of the nine ferries operating. The affected ferries included: Kiyindi,
Laropi, Masindi Port, Mbulamuti, Nakiwogo, Wanseko, Obongi and Lwampanga.
Interview with management revealed that the minimum number of required staff
would be:
On each Ferry
Ferry master 1
Ferry mechanics 2
Ferry operators 4
Ferry deckhands 2
Ferry workshop
Mechanical supervisor 1
Mechanics 3
Welders 2
Electricians 1
However, I noted that there was a shortfall on each of the operating ferries except
Bukakata. Details of the shortfalls identified are indicated in the table below:
Ferry
master
Ferry
mechanics
Ferry
operators
Ferry
deckhands
Kiyindi 3
Laropi 3
Masindi Port 2
Mbulamuti 1 3 2
Nakiwogo 3 1
Wanseko 2
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Obongi 1 2 4 2
Lwampanga 1 2 4 2
Total
shortfall
2 5 22 9
In addition, I noted that the ferry workshops lack welders and electricians who are
key in the maintenance and major repairs of the ferries hence maintenance and
repairs might not be done satisfactorily. Interview with management indicated that
staffs get fatigued due to longer hours on duty without enough rest and some
work more than six days a week. I explained to management that in such
circumstances, the chances of accidents occurring are high.
I response, management responded that it was the desire of UNRA to recruit
additional staff in all its business areas but this has been hampered by the limited
wage budget provided by Government. It was indicated that Ministry of Finance,
has consistently indicated unavailability of additional resources to increase the
wages bill. The entity is however undergoing restructuring and it is hoped that
after this exercise, a comprehensive staff requirement, aligned position
requirements and a well justified wages requirement will be pre-determined. At
this point the entity will be in position to engage Government and have the audit
issue resolved.
I advised management to expedite the exercise and recruit additional staff for
smooth operations of the ferries and ferry workshop.
7.17 Inspection of UNRA Stations
I carried out an inspection of 13 out of the 22 UNRA stations. These included
Kampala, Mpigi, Luwero, Gulu, Kitgum, Jinja, Hoima, Mbarara, Soroti, Moroto,
Kotido, Mbale and Kasese and below is a summary of the findings:
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a) Un-released funds to the stations – Shs.15,383,130,019 and
unimplemented road maintenance activities
Analysis of budget performance for year based on the approved budget estimates
and the actual funds released to the 22 Stations revealed that out of
Shs.57,376,958,816 budgeted for under maintenance program only
Shs.41,993,828,797 was disbursed to the stations leaving a balance of
Shs.15,383,130,019 undisbursed. Management of the inspected stations indicated
that this was a challenge that affected implementation of maintenance program
resulting into a number of activities not fully undertaken. Non-release of funds led
to creation of liabilities. Non-release of funds affected the state of some roads as
indicated below:
Mpigi-Kanoni Road; The road was inspected and some sections have started developing potholes and in other areas water was running along the road surface creating a channel as shown in the picture below:
Road from Gulu to Aswa; Some parts of the road are in a bad state as seen from the picture below. There is need for opening of the road banks for water to flow off the road.
In response, management explained that there was a budget cut from the URF in
the last quarter of the financial year 2012/2013 amounting to Shs.43,809,282,976
significantly affecting UNRA‘S cash flows for the fourth quarter and in turn
affecting the delivery of the station.
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I advised management to dialogue with URF and MoFPED for timely and full
release of budgeted funds.
b) Dilapidated Station Road Equipment
During inspection, it was observed that a number of road equipment were old and
in dire need of repair. The main stations affected by this challenge included Gulu,
Jinja, Soroti as evidenced in a few sampled pictures below:
Old Road Equipment at Gulu station
At Jinja station, the equipment and machinery that was old and in a bad state
included the following:
Reg. No. Type Year Make Remarks
UG.0105W Crane Truck 1987 Mitsubishi Poor. Broken down. Requires new crane assembly
UG.1199W Pick-up Single cabin
2001 Nissan S/cabin Broken down Due for disposal, uneconomical to repair
UG.1086W Pick-up Double cabin L200 2WD
2000 Mitsubishi D/cabin
Broken down Requires engine repairs
UG.1268W Pick-up Double cabin
2003 Mitsubishi D/cabin
Broken down. Requires engine overhaul
UG.0965W Motor Grader GD521A
2000 Komatsu
Broken down Requires repairs to leakages. Replacement of Starter motor Replacement of alternator
CDP 0244 Pedestrian Roller 2003 Dynapac
Broken down Requires renewal of hydraulic pump assembly and hydraulic hose pipes.
CDP 0123 Roller single drum
2000 Bomag Broken down.
UG.0102W Tipper model FM515
1986 Mitsubishi
Grounded Uneconomical to repair.
UN.REG. Diesel generator Honda Grounded
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UG.1011W M/cycle CT 200 2000 Honda Grounded
WBR/002 Pedestrian roller 2010 Weber Nonoperational due to lack of service parts
UG.1010W M/cycle CT 200 2000 Honda Grounded
UG.1071W M/cycle 2006 Honda Broken down.
UG.1040W M/cycle 2001 Suzuki Grounded
3003109 Plate compactor 2011 Hatx Nonoperational due to lack of service parts
UG.1145W Grader Fiat-Hitachi Non Operational Requires repair of fuel system Requires new tyres
At Soroti Station, the old equipment and machinery included:
EQUIPMENT MECHANICAL STATUS
UG-1171W Toyota Hillux Pickup Poor Moving Condition
UG 1309W Ford Ranger Broken Down
UAB-051z Nissan Single Cabin Broken Down
UG-0357W Mitsubishi Tipper Grounded
UG-0358W Mitsubishi Tipper Poor moving condition
UG -0427-0427w Cat wheel loader
Need engine overhaul and replacement of body
parts
Phoenix bitumen boiler Grounded
CDP AIR COMPRESSOR SCRAP
UG0025 YAMAHA WATER PUMP SCRAP
UG-1007W HONDA MOTORCYCLE SCRAP
UG-1042W SUZUKI MOTORCYCLE SCRAP
UG-1013W HONDA MOTOR CYCLE SCRAP
UG-0891W NISSAN D/CAB PICK UP SCRAP
UG-0897W NISSAN D/CABIN SCRAP
Management of the stations visited explained that the releases do not provide for
buying and replacing new equipment as this remains a responsibility of UNRA
Head Office. They explained that the machines and equipments were always
breaking down causing the stations to hire privately owned road equipment. The
privately owned equipment that is commonly hired include motor graders, bull
dozers, crane trucks and Water Bowser to carry out road maintenance work. The
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inspected stations spentShs.1,866,606,385 on hiring privately owned equipment
as summarized below:
Station Amount (Shs.)
Kampala 26,000,000
Soroti 87,656,000
Mbarara 42,995,859
Gulu 157,749,640
Jinja 89,335,000
Kasese 4,826,886
Mbale 48,087,500
Kotido 408,939,500
Moroto 101,864,400
Kitgum 540,353,600
Mpigi 358,798,000
Total 1,866,606,385
The problem of old equipment becomes so acute during the rainy season when
most roads become impassable and need urgent repair and opening up which the
old equipment cannot handle. It was also noted that hiring of privately owned
equipment is expensive and negatively affects maintenance of the old equipment.
Management explained that the entity has compiled a list of this equipment and
will soon constitute a board of survey to dispose the obsolete and un-economical.
It was indicated that procurements for 71 earthmoving equipment and 88 trucks
are in progress to replace the old equipment. One of the new excavators has been
allocated to Mbale.
I advised management to expedite the disposal process and save government of
the costs related.
c) Other Equipment Related Challenges
It was noted that some stations have operational vehicles and equipment that
require spares of standard specifications which are not readily available upcountry
and in the country for example the ISUZU DMAX D/CAB PICKUPS Parts. This
affects the maintenance program. I further observed that some stations like Mbale
126
lacked specialized equipment to handle the terrain like excavators which in many
instances affects timely interventions. This station has insufficient supervision
vehicles to cover the operational areas.
I advised management to always procure equipments on condition that the
supplier offers after sales support services.
d) Fuel consumption
Drawing of huge amounts of fuel through one transaction -
A review of the fuel transaction statements revealed that there were fuel drawings
in huge amounts some time in excess of 5,000 litres. These appeared unusual.
Station Quantity Amount (Ug.sh)
Gulu 19,138 64,530,000
Jinja Station 15,993 51,907,350
Kitgum 20,354 67,590,500
Luwero station 46,503.72 161,540,508
UNRA MPIGI 6,750 22,450,000
Total 108,739 368,018,358
I noted that these drawings seem to have been intended to remove the money
from the cards and deposit it with various fuel stations which would then be
utilised using other control mechanisms such as fuel coupons and ledgers at the
various fuel stations.
I explained to management that there is a possibility that fuel could have been
misused and/or diverted for unofficial business.
I advised management to put in place adequate controls to regulate fuel
consumption and ensure fuel is not misused.
127
e) Fuel paid by UNRA Head Office but not recorded in Station fuel
ledgers
It was established that UNRA had an arrangement with two (2) petrol
stations to supply fuel in advance to UNRA Stations using advantage cards. The
two fuel companies would issue fuel consumption statements and fuel invoices to
UNRA head office which documents would be used as a basis of payment for fuel
consumed during the period. A review of the fuel transaction statements which
were used as a basis of payments by UNRA Head office and the fuel ledgers for
the Stations revealed that some fuel bills paid by UNRA head office were not
recorded in the Stations fuel ledgers as indicated below:
There is a risk that fuel may not have been consumed and therefore wasted.
Management explained that in order not to cripple operations due to delayed
payments, invoices were being settled and verification done later by Regional
Accountants. This was basically because the supplier would issue only one invoice
combining consumption of all the UNRA Stations and therefore all the 22 Stations
STATION AMOUNT
1 MBARARA 33,323,032
2 HOIMA 35,789,500
3 KAMPALA STATION 29,150,000
4 GULU 82,052,500
5 KITGUM 45,071,400
6 MPIGI 41,350,000
7 LUWERO 51,461,000
8 MBALE 94,935,170
9 SOROTI 83,167,200
10 KOTIDO 106,920,000
11 MOROTO 42,458,000
TOTAL 645,677,802
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would ideally have had to verify their consumption before that specific invoice is
paid.
The system has however changed and at the moment each station is receiving its
own invoices and all of them (fuel invoices) are being verified by the Station
Engineers first, and the Regional Managers, the Director of Operations, before any
payments are recommended for settlement. In addition, reconciliations with the
supplier for the past period are now being done. I advised management to put in
place adequate systems for processing of such fuel transactions.
f) Understaffing
A review of staffing at the stations inspected showed a number of unfilled posts in
the approved structure. These included among others the road overseers, road
inspectors, plant operators and a procurement officer. I explained to management
that staffing gaps have a negative effect on the general performance of the
Authority. Furthermore, I noted that in most stations the executive assistants were
handling PDU work which should have been done by an independent procurement
staff with the knowledge and skills in procurement. It was noted that Mbale
Station‘s organizational structure appeared inadequate with only 2 mechanics. The
station lacked specialized personnel like welders and electricians which affects the
station‘s operations.
In response, management explained that most Directorates are still understaffed
due to limited wage provision. Lobbying for more funds is ongoing. Further more,
the entity is undertaking an organizational review which will come up with the
ideal staffing levels to be used to justify the request for additional funds for
wages. During the organizational review, it is expected that the positions of
qualified procurement staff will be provided for each one of the stations.
I advised management to urgently review the stations‘ structures and staffing
positions to ensure they are appropriately staffed for improved performance.
g) Road Reserve Markings
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The UNRA Act 2006, requires the entity to maintain all national roads and this
forms part of the main objectives for the creation of the authority. During
implementation of its functions UNRA is obliged to carry out road reserve markings
in the area of its jurisdiction. However, it was noted that most of the road
networks under some stations like Mbarara station were not marked.
Encroachment on the road reserves makes the work under force account and
Labor based Contracts difficult and affects effective road maintenance. I explained
to management that failure to mark the road reserves could lead to unnecessary
claims by encroachers.
Management explained that Road Reserve Marker posts have been executed on
some of the road network for example; Kampala Northern Bypass, Mbarara-
Ibanda, Mityana-Mubende-Kyenjojo-Fort Portal, Kawempe-Luwero-Kafu, Gayaza-
Kalagi and others. Six (6) contracts are on-going while others are under
procurement. The Program of road reserve marker posts shall be gradually rolled
to the entire network.
I advised management to mark all road reserves to avoid issues of encroachment.
h) Obsolete Stock at Stations
During inspection, it was noted that all the stations had obsolete stock in form of
accumulated scrap, old vehicles, old equipment overdue for boarding off and so
many used spare parts. Given the storage facility which is limited, the mechanical
staffs have a challenge of storing the new/useful equipment. I explained to
management that Limited storage availability may lead to loss of new items since
they are all mixed up with scrap.
In response, management explained that the old stock have now been separated
from the new stock. List of items from stations are being compiled for submission
to PDU to initiate the disposal process.
I advised management to plan to dispose of the unwanted stock so as to provide
enough space for the newly acquired items.
i) Status of structures/buildings
130
I noted that most of the stations structures were in poor state. In Mbale station
the roof of the main office block is seriously leaking and in a sorry state which
requires immediate/urgent repairs. The Buildings are dilapidated and not safe for
working conditions. Ownership the buildings could not be ascertained as there was
no land title:
At Moroto station; the stores were located in structures which are overdue for
maintenance and is mainly occupied by obsolete items which are due for
disposal.
At Soroti station, the roof of the mechanical offices and service yards were
leaking and in a sorry state that requires urgent repairs. The mechanical
workshop was dilapidated and poorly equipped and needed refurbishment.
In Kasese; the only structure utilized as a mechanical section has been
operating without a roof for a period of 3 years. It was further observed that
the mechanical staffs do not have the mandatory tools required in the
mechanical section. The station uses a lot of money to hire equipments yet
such funds could have been utilized on other road maintenance activities.
In response, management explained that at the time of audit, procurement for the
refurbishment of nine stations and 5 regional offices was underway. At the
moment, four contracts have been signed.
I advised management to expedite the procurement process and have the stations
renovated. Similarly, mechanical tools should be provided to the mechanical staff.
j) Delays in Supply of Road Materials
UNRA Headquarters took up the responsibility of purchasing and supplying road
material especially Bitumen to UNRA Stations. During inspection, it was noted that
there were delays of distribution of road material to the stations and this affected
the planned works. The bitumen supplied was at times too little to accomplish a
given task at the road sites.
Untimely distribution of road materials may lead to delays in completion of
specified road maintenance tasks or substandard work.
131
Management explained that sometimes delays in the procurement of road
maintenance materials occur due to procurement challenges. These materials are
however always received and utilized by the stations on the network. Quantities of
materials procured at a time are usually limited by the available resources.
I advised management to aim at making timely and sufficient quantity supplies
with a view of avoiding shoddy and delayed completion of works.
k) Uncompleted Routine Mechanized Maintenance projects
A review of the routine mechanized maintenance projects at Jinja station showed
that most of the projects had stalled as indicated below:
i. Nawandala - Nambale - Namalemba - Bugobi – Kisiro .
ii. Kaitabawala - Lubanyi - Kisozi - Busota, Mbulamuti railway access, Kamuli
railway access
iii. Kaliro - Namwiwa, Bulumba - Buyonjo - Wataka - Saaka, Kaliro Railway access
and Namaganda Access road
Despite the failure by the contractors to perform, management had not considered
the provisions of the contracts. I explained to management that the objectives of
the above projects have not been achieved in addition to loss of resources.
In response, management explained that UNRA has initiated the process of
concluding these contracts but it should be noted that this process is long
involving re-measurement of works so far done, use of the Contracts Committee
and forwarding the decision to the contractor. Quite often this process is stopped
by the contractors through court injunctions. UNRA also considers the financial
implication of the actions, its effects on the road network in the interim, the
required intervention in the interim, and the length of the procurement process to
secure another contractor.
I advised management to consider termination of the contracts invoking clause
59.2 sub section (a) of the General conditions of contract.
7.18 Failure to Dispose Old Equipment
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It is good practice that assets that are no longer of economic value to the
organization be disposed of, and the profits or losses that accrue from such sales
subsequently disclosed in the financial statements. Inspection of the stations and
stores of the Authority revealed that a number of items including Road equipment,
Motor vehicles (33 old vehicles at Kyambogo), Old tyres at various places including
UNRA Head quarter -Lourdel road did not seem to be of any further use. Below is
a sample of picture items/equipment/vehicles due for disposal taken from various
stations:
Vehicles parked/grounded at Kyambogo
Pictures taken at Soroti Station.
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Tractor UG 0364W due for boarding off Nissan D/Cabin Pickup UG 0897W due for
boarding off.
Nissan D/cabin Pick- up UG 0891 W recommended due for boarding off
Tipper FUSO due for boarding off.
A CPD air Compressor ready for
boarding off
Yamaha water pump Generator ready for
boarding off
Motor cycle UG 1013W ready for
boarding off
Motor cycles UG 1007W and UG 1042W
ready for boarding off.
GULU Station
134
These items occupy space that would otherwise be occupied by more valuable
stocks. Besides; the items are likely to deteriorate further, leading to loss of any
possible value that could be recovered from their sale.
In response, management explained that many stations have old equipment.
UNRA has compiled a list of this equipment and will soon constitute a board of
survey to dispose the obsolete and un-economical.
I advised management to repair these items if possible to make use of them or
dispose them urgently to avoid continued loss of benefits that would accrue from
the disposal.
7.19 Poor Management of Overloaded Trucks Plying the Ugandan Roads
UNRA is mandated to weigh suspected overloaded trucks plying the Ugandan
roads and in order to achieve this, several weigh bridges including Busia, Bisitema,
Jinja, Likaya, Luwero, Mbale, Mbarara and Mubende were setup along the major
roads susceptible to damage due to overloaded trucks. In a communication dated
6th December, 2013 to URA, the Minister of State for Works raised concern
regarding (25) pulling trucks which had overstayed parked at URA yard at Cyanika
border for fear of being reprimanded in Rwanda because they were overloaded.
It was noted that these trucks had already crossed several weigh bridges along
their way to Cyanika from Kenya and Kampala without any penalties or
reprimands from UNRA as would have been expected. This position is supported
by the Minister‘s revelation in the above communication that over 90% of the
trucks parked at Cyanika had 100% excess weight despite passing several Uganda
weigh bridges un-detected.
135
There is a risk that several other overloaded trucks have been plying Ugandan
roads without any reprimands or penalties and fines being imposed. In the
circumstances, I could not therefore establish the purpose for which the weigh
bridges were installed.
Management explained that the entity has hired a consultant to develop an axle
management strategy including reviewing the management of axle load control
and make recommendations on the necessary changes to the legislation to make
enforcement of axle load control more effective.
I advised management to expedite the consultancy and have all vehicles weighed
to avoid road destruction.
7.20 Inter-Project Borrowings
During the year under review, a total of Shs.189,122,590,242 was borrowed from
various projects while Shs.188,283,626,047 was lent out (or refunded). The table
below shows the opening balances of borrowed and refunded funds during the
period and amounts that remained un-refunded by the end of the financial year:
Project name
Opening balance (Shs)
Amount lent to other Projects (Shs)
Amount borrowed from other Projects during the year / refunds (Shs)
Closing balance (Shs)
Kabale - Kisoro
24,898,556,522 13,354,508,215 49,203,115,057 (10,950,050,320)
TSDP 1,821,997,500 20,509,194,388 22,436,154,638 (157,272,127)
Maintenance (6,365,728,078) 26,781,613,388 14,359,263,942 6,056,621,368
HoimaKaiso Tonya
(7,836,006,681) 8,190,403,332 20,580,833,262 (20,226,436,610)
Kla-Ebb Expressway
3,168,905,322 15,979,285,957 40,377,457,980 (21,229,266,683)
Mbarara-Kikagati
(18,824,164,254) 12,645,940,955 4,800,269,038 (10,978,492,337)
Fort Portal-Bundibugyo
(2,747,254,898) 0 40,436,441 (2,787,691,339)
Transport Corridor
8,608,307,581 90,281,691,682 36,426,370,299 62,463,628,964
Nyakaita-Kazo-Kamwenge
(3,860,205,842) 540,988,130 898,689,585 (4,217,907,297)
Totals 188,283,626,047 189,122,590,242
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I explained to management that the practice exposes the Projects to the risks of
loss and dispute in case the borrowing Project does not repay or in case the
Development partners do not approve the borrowing.
Management explained that a bold step to ensure that inter Project borrowings are
minimized has been taken. This however shall affect the speed at which projects
are implemented and lead into payment of interests for delayed settlement of
Interim Payment Certificates.
I advised management to ensure that the funds disbursed for Project activities are
specifically used for the intended activities and not co-mingled with other Projects‘
funds. In situations where borrowing or lending is needed, prior approval by the
Board should be sought.
7.21 Fraudulent Fuel Transactions
It was established that over Shs.1.1 billion was wrongfully paid to a fuel company
as a result of wrongful acts by some individuals during the period 1st July 2012 to
31st April 2013. From the review, the following anomalies as highlighted by
internal audit were noted:
The fuel company was supplying excess fuel and lubricants to UNRA stations
as compared to the quantities and amounts ordered for by UNRA through the
Director Finance and Administration for each station.
In the period from 1st July 2012 to 30th April 2013, the fuel company over
invoiced UNRA Shs.1,416,937,242 for fuel and lubricants which UNRA stations
did not download from fuel stations. This figure was made up of the excess
fuel in bullet one above.
Out of Shs.1,416,937,242 over invoiced to UNRA, the fuel company had
already been paid Shs.1,142,115,230 for the period from 1st July 2012 to 28th
February 2013. These payments excluded Masaka and Gulu where the auditors
did not get access to information in time.
Most of the disputed fuel and lubricants by UNRA stations appearing on the
monthly statements of accounts was downloaded outside the operational areas
of the respective stations.
137
Some of the over invoiced fuel was for fuel stations that had not dealt with any
of the UNRA stations.
In most cases the excess fuel and lubricants were downloaded just before
stations made their first transaction using the fuel card. At all the stations,
ordered for fuel allotted and lubricants were not tampered with.
Some of the withdrawals were so abnormal to the extent that the same fuel
card was used to make downloads at the same time or span of 5 times on the
same day from different fuel stations which were 400 km apart from each
other.
It was noted that the fuel company interchanged code numbers for dome fuel
stations to cover up the fraud. example; one of the branches had two code
numbers, 239 and 238 that were used interchangeably.
I noted that under the circumstances, UNRA incurred a financial loss of over Shs.1
billion under fraudulent transactions.
In response, management explained that this was an issue of over invoicing by
the fuel company which was initially found out during the routine process of
verification and confirming the correctness of the invoices submitted to UNRA for
payment. Based on this initial finding, preliminary communication was made to the
fuel company over the same subject culminating into a full process of
reconciliation of all fuel supplies by the fuel company. This process of
reconciliation was later reinforced by the Internal Audit Report referred to above.
Management indicated that once concluded, they will be able to establish the
amount that is not supported and action shall then be taken. In order to ensure
action, UNRA is withholding payment of invoices to this company amounting to
over 3.5 billion pending the conclusion of the investigation.
I advised management to institute deeper investigations into the matter.
7.22 Engineering Audits
A sample of seven road contracts was selected for the audit constituting a total
sum of Shs.501,503,491,123 and Euro 61,187,335. Below is the summary of key
findings arising from the Engineering Audit:
138
a) Irregular and nugatory payments (Shs.27,374,522,509 and
€2,474.05)
A total of Shs.27,374,522,509and Euro.2,474.05 was paid to the various
contractors for works that had not been executed (Shs.1,289,505,648
&€2,474.05), and for costs that should have been avoided (Shs.26,085,016,861) if
proper contract management procedures had been followed. The summary of the
irregular and nugatory payments is shown in the table below.
Contract / Contractor/Amount
Payment in Shillings
Unexecuted works1
Nugatory2 Totals
Staged Reconstruction of Mbale
– Soroti Road – Lot E (103Km) by M/s Dott Services at
Shs.108,124,833,428
1,228,816,248
26,085,016,861
27,313,833,109
Reconstruction of Priority sections on the Kampala-
Mbarara Road: Package C:
Nsangi – Kamengo, Lukaya- Masaka and Katonga Bridge by
M/s Reynolds Construction Company (Nigeria) Ltd at Euro
61,187,334.90
€ 2,474.05
€ 2,474.05
Periodic Maintenance of Lumbugu – Lwamagwa -
Lyantonde Road (50Km) by M/s
Abubaker Technical Services & General Supplies Ltd at
Ushs.1,916,903,400
58,833,000
58,833,000
Term maintenance of 29 No selected National roads –Lot 6:
Iganga-Mayuge road (20km), Mayuge- Musita road (14km),
Mayuge- Nankoma Road (23km)
and Mayuge- Bugadde- Bwondha roads (39.8km) by M/s
Tegeka Enterprises Ltd at Shs.2,878,302,000
1,856,400
1,856,400
1Works that have been certified and paid yet they have not been executed by the contractors
(Shs.1,289,505,648 and €2,474.05). 2 Works paid but would have been avoided (Shs.26,085,016,861).
139
The nugatory expenditure (Shs.26,085,016,861) relates to additional costs arising
from the revision of rates as a result of delays in execution of the contract caused
by delayed provision of design documents to the contractor.
The Accounting Officer has indicated that some of the above payments were
under verification while the nugatory payments were unavoidable given the
circumstances surrounding Mbale-Soroti Road.
The Accounting Officer should ensure recovery of all monies irregularly paid to
contractors and take responsibility for the nugatory expenditures.
b) Variation of Price (VoP) had been certified in excess and /or
Overpaid by Shs.33,207,607,133
Like in the previous three audit reports, payments for price adjustment or revision
of price has continued to be of concern and UNRA has not resolved this matter
fully. The Parliamentary Public Accounts Committee recommended that UNRA
harmonises with the OAG the VoP position on all the contracts where anomalies
had been noted. By the time of this report (31st march 2014), this exercise was
underway and the VoP position for two contracts had been ascertained and agreed
by the two parties. The joint verification exercise established that a total of
Shs33,207,607,133 had been certified in excess in respect of VoP on the two
contracts for Kazo – Kamwenge road and Fort Portal –Bundibuyo –Lamia road as
indicated in the table below.
Project IPC Vop certified and/
or paid by UNRA, Shs
VoP certified in
excess, Shs
Kazo – Kamwenge
road
As of IPC No.30 32,652,903,974 4,260,642,802
Fort Portal –
Bundibugyo –Lamia road
As of IPC No.41 74,998,204,698 28,946,964,331
Total 33,207,607,133
A joint calculation for Kampala- Mbarara Road: Package C and other contracts will
be concluded and reported in due course.
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The amounts ascertained to have been certified in excess or overpaid should be
recovered from the contractors. The Accounting Officer should also ensure that in
future VoP clauses are made clearer to both parties prior to contract signing.
The Accounting Officer has indicated that further payments for VoP on Kazo-
Kamwenge and Fort Portal – Bundibugyo –Lamia roads have been withheld
pending the results of the joint verification exercise.
c) Poor Implementation and Monitoring of Social Safeguards on
Projects
It was observed that for a number of projects audited, road safety issues were still
not being strictly enforced yet Safety Officers continued to be paid. It was also
observed that a number of regulatory and informative signs on roads were being
vandalised or maliciously damaged. For example on Fort Portal – Bundibugyo
road such road signs were burnt. Other road furniture like reflectors were being
stolen.
Important aspects to curb the environment like restoration of borrow pits for
gravel and fill material was not considered in the bills of quantities for some
contracts e.g. Periodic Maintenance of Lumbugu – Lyantode.
It have recommended that the Accounting Officer takes due care the social
safeguards deserve and enforce them on all projects. All future project designs
and bills of quantities should incorporate such measures to prevent, minimize and
mitigate potential adverse environmental and social effects of projects.
d) Supervision and Contracts Management
There has been significant improvement compared to previous audits in regard to
certification and payment for works. However, there are still cases like Mbale-
Soroti road where irregularities have been cited. Most of the projects are
supervised by hired Consultants and a handful projects are still being manned by
in-house technical staff at the stations.
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The Accounting Officer explained the new Consultant is carrying out their services
very well.
I have expressed to the Accounting Officer the need for UNRA to exercise more
control over project supervisors to ensure quality works are delivered and funds
are not misused through payments for un-executed quantities of work since these
triangulate to illegal advances to contractors. Contractors, Supervising
Consultants and UNRA Project Managers who do not deliver should be penalised in
accordance with the regulations.
7.23 Summary of Key Findings per Project:
The key findings for each of the projects audited are presented in the table below:
Road Name/ Contract Amount
Key Findings
Staged Reconstruction of Mbale – Soroti Road – Lot
E (103Km) by M/s Dott Services at
Shs.108,124,833,428
Poor record keeping evidenced by absence of key documents like variation order in contract management and PDU files limiting the scope of audit.
Contractor‘s financial inability to handle the project
which is evidenced by inherent slow progress, continuous requests to wave contract clauses like
payment of materials on site and minimum amount of IPC.
Non recovery of advance payment from the
contractor upon achieving 30% of the cumulative value of works in so doing frustrating other projects where
contractors have not been paid for work done.
Nugatory expenditures of Shs.24,415,692,861 due
to delayed provision of design documents to the
contractor which resulted in higher rates for executing the works
Overpayment of Shs 899,780,748 for works done
within the original contract period which should not have been affected by the revised rates.
Overpayment of Shs 58,275,000 for scarification
and re-compacting repeatedly paid in IPC 7 and 8
Overpayment of Shs 82,500,000 respectively for
road bed preparation on the existing carriageway where scarification and re-compacting existing layer has been
done. The items cannot be executed in the same place.
Overpayment of Shs 22,687,500 in IPC 6 and 8 for
repeated section of scarification and re-compacting
existing layers
Overpayment of Shs 165,573,000 paid both
scarification and re-compacting and common
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excavation to spoil on the same location
Uncharged Shs 165,000,000 for the Contractors
inability to update work programme
Contentious commencement date which resulted in
nugatory expenditures of Shs 737,824,000 for time related charges paid in maintaining the consultant on
site while the contractor was not working waiting for
the entire set of designs
Slow progress of works which was 52% at the end
of November 2013 against 80% lapsed time. The delay is equivalent to Shs 690,000,000 as time related
charges and Shs 241,500,000 for under utilisation of
the consultant supervising staff
Delays in decision making by UNRA including
Variation Order No.1 due to increased scope of work, Change of size of stones for second seal, Change of
chip spreader and size of stone chippings, Change from
pre-coated chippings to wet fix, Use of precast concrete slabs for lined drains instead of grouted stone pitching
Approval of uneconomic design which GIBB had
valued at Shs 60,881,988,914 with a design life of 2-3
years as opposed to the alternative design option
valued at Shs67,765,458,914 with a design life of 5-7 years.
Inadequate dust control on the road works causing health
complications to human beings, destruction of crops and
other surrounding vegetation, and also affecting the safety of road users by minimizing visibility
Upgrading of Kazo –
Kamwege road to Bitumen Standard
(75Km) by M/s M/s China Railway Seventh Group
Corporation Ltd (CRGS)
at Ushs.167,458,031,180
Analysis of the works contract indicated that the
form of agreement did not include the contract amount.
There was also a contradiction on the sources of indices in the contractor‘s appendix to bid whose clarification
was not seen. Quantities of some work items increased by huge
amounts for example excavation in swamps or wetlands
by 344%; the designs were prepared by qualified
consultants who did not predict such quantities. The Engineer is empowered to fix rates when quantities
vary significantly but this was not done and no Variation orders in this regard were seen.
Minor transverse cracks were observed on
pedestrian walkway at Ch.92+195.
There was notable siltation in access and cross
culverts. Some sections of lined drains were silted and
vegetation growing in the channel.
All stone pitched side drains terminate at points
susceptible to scouring. In some sections of stone pitched drains e.g. at Ch.
138+595, the bonding joints are oversize as compared
to the stone size. Warning signs for approaching traffic at work sites
were inadequate which can lead to fatal accidents.
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There was inadequate protective gear for workers
especially at the stone quarry and sections where stone
lining of drains was underway at the time of audit. The soffit of the roof slab for the waiting shelter at
Ch.92+195 had inadequate reinforcement cover.
Aggregates used for CRR at CH.100+400 Rhs did
not meet the grading requirements for the fine type.
Aggregates of 10mm for the 2nd seal did not meet
the requirement specifications for grading and flakiness index.
Use of provisional base indices provided at the
bidding stage in the calculation of VoP. The provisional base indices should have been updated and confirmed
at since the commencement of the contract. This has
implications in the computation of VoP. Up to certificate No.30 of October 2013 VoP had
been been certified in excess and/ or overpaid by
Shs4,260,642,802.
Upgrading of Fort Portal – Bundibugyo – Lamia
road (103Km) by M/s Chongqing International
Construction Corporation
at Shs.217,842,539,325
This project was audited as a follow-up case and
most of the issues observed in the previous report have been attended to other than the Variation of Price. The
joint verification exercise has established the VoP certified in excess at Shs28,946,964,331 as of
certificate 41. This amount is recoverable..
The financial progress is not clearly evaluated by
the Consultant; IPC No.40 revealed Shs.220,313,803,470 was due to the contractor yet the
revised contract sum is 217,842,539,325 causing a deficit of Shs.2,471,264,100 and more certificates are
expected.
Surface defects were observed at Ch.0+390 which were reportedly a result of turning vehicles loaded with
steel bars scratching the road surface.
Landslides in the mountainous section continue to
be a threat to the road surface. Concrete culverts were being used to control traffic
at work sites without forward warning signs to
approaching traffic. This poses a danger of accidents to road users
A number of sections on the road have structures
and houses that affect critical visibility along bends.
Some road furniture was being destroyed by communities living along the road. The road signs
were being burnt. Some delineators were found broken and steel bars
exposed.
Some reflectors on guardrails were missing and
reportedly stolen.
Reconstruction of Priority sections on the Kampala-
Mbarara Road: Package
C: Nsangi – Kamengo, Lukaya- Masaka and
Katonga Bridge by M/s
Inadequate justification for direct procurement
method. Delayed payments to contractor which will attract
interest on delayed payments.
Overpayment of Euro 693,481.42 in Variation of
Price. The VoP is yet to be verified through a joint
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Reynolds Construction
Company (Nigeria) Ltd at
Euro 61,187,334.90
recalculation with UNRA.
The Shoulder embankment at Ch.116+200 and a
few other localised areas had developed gullies Cracks were observed in the mortar joints of the
stone pitching.
The drop manholes at several locations were silted.
Laboratory tests revealed that seven (7) out of the
eight (8) samples for AC and DBM had low results for
indirect tensile strength. Overpayments of Euro2474.05 for unexecuted
quantities of works.
The project manager did not revise the rates for
items whose quantities had increased by more than 25% as required by the contract conditions.
Periodic Maintenance of
Lumbugu – Lwamagwa - Lyantonde Road (50Km)
by M/s Abubaker
Technical Services & General Supplies Ltd at
Ushs.1,916,903,400
The special conditions did not specify the Project
Manager as required. It was indicated that it will be
communicated to the contractor in writing. Letter communicating this information was not seen.
The minimum value of interim payment certificates
was not spelled out which affects the contractor‘s
targets and could have led to delayed completion of works.
The Special conditions of contract clause GCC 57.1
provides a requirement for Environmental Compliance Certificate yet the bills of quantities did not provide for
restoration of fill and gravel borrow pits as it is
expected. There was lack of routine maintenance by the
station leading to overgrowth vegetation in drains,
shoulders and the culverts were silted. Rutting was observed on some sections.
Gravel used as wearing course between Ch.
37+000 to Ch. 41+000 was of coarse type comprising
of oversize particles which exceed the nominal size specified. Invert levels along the outlet channel/drain
for a number of culverts could not allow free flow of
water and caused stagnation. It was explained that people do not allow such drains beyond the 30m road
reserve. The side drain at Ch.12+676 under-scoured on
both sides for approximately 100m.
One piece of culvert ring had cracked at Ch.30+750
Lhs.
Traffic warning signs especially for sharp bends
were missing for example for approaches to a bend between Ch.31+000 to Ch.32+000.
A DCP check at Ch.7+900 revealed a poorly
compacted top layer which is susceptible to wearing off fast.
An overpayment of Shs.58,833,000 was made in
respect of gravel as a result of paying for a wider width of the road than was executed.
Maintenance and
Reconstruction of
The performance bond was addressed to MoWT
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Kamwenge – Dura –
Rwimi Road (60km) by
M/s Marvel Contractors and Road Maintenance
Ltd at Shs.3,282,881,790
when the contracting authority was UNRA. It is not
clear how this is being managed by UNRA to guarantee
performance by the contractor. The performance security expired on 21st
December 2013; while the defects or snags raised by
the Station Engineer had not yet been rectified at the time of audit on 20th January 2014.
Another contractor instituted by Hima Cement was
found working on the same road hence overlapping works when M/s Marvel had not been discharged. This
makes it difficult to differentiate between the works of
the two contractors. The Works were tendered out when designs were
incomplete which delayed commencement and also led
to additional costs as the road had further deteriorated. The gravel used contains more coarse aggregates of
nominal diameter greater than that specified. However,
the material test results in the progress report indicate that it met the specification which implies that the
results could have been forged.
Term maintenance of 29 No selected National
roads –Lot 6: Iganga-Mayuge road (20km),
Mayuge- Musita road
(14km), Mayuge- Nankoma Road (23km)
and Mayuge- Bugadde- Bwondha roads (39.8km)
by M/s Tegeka Enterprises Ltd at
Shs.2,878,302,000
Delayed completion of works by the contractor
for a total of 74 days i.e. 20 days in the 1st Cycle and 54 days in the 2nd Cycle respectively
The provisions within cycles did not fully address
the necessary works on the road e.g. removal of boulders and provision of fill materials in
embankments and low spots were not provided for.
Mayuge- Musita road section observations
Stone pitching works worth Shs.8,568,000 were
destroyed by Mayuge Sugar company. Inadequate camber observed at Ch.2+500,
5+100 and 12+700
Shoulder erosion was observed at ch.12+000
LHS Water ponding was observed ialong the side
drain at 13+200 RHS within Mayuge Town.
The locals had blocked the side drain between
ch.9+600- 9+800 to hold water for brick making.
Mayuge – Bwondha Road section observations
Loss of camber on the road surface on some
sections e.g. from Ch. 0+800 – 1+100 and
ch.11+700.
The side drain at Ch.5+200 LHS and 5+200 was blocked to create accesses to the adjacent premises.
The road width at some sections e.g. 9+600 and
26+700 was narrowed due to the presence of rock
outcrops. ; Cracks were observed on the bottom of cross
culvert at Ch.6+000 and Ch.26+000.
Inadequate culvert pipe cover at Ch.23+700 and
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34+100, the pipe cover was 210mm and 250mm
respectively instead of 500mm specified.
Iganga- Mayuge road section observations
Water ponding was observed along the side drain
in some sections e.g.Ch.1+200 LHS for about 200m Overpayment of Shs.1,856,400for stone pitched
drains on Iganga – Mayuge road
7.24 TRANSPORT SECTOR DEVELOPMENT PROJECT
(a) Compliance with the Financing Agreement & GoU Financial
Regulations
It was observed that management had complied in all material aspects with the
financing agreement and GoU financial regulations except for the following
matters;
i) Inter-project borrowings
The project had an outstanding balance of Shs.1,828,815,000 lent out to other
projects at the close of the previous year, which was recognized as a receivable at
the start of the current financial year. During the financial year under review, the
project lent additional Shs.20,509,194,387 to other projects bringing the total
amount let out to Shs.22,338,009,387. The project also borrowed
Shs.22,495,281,514 from other projects resulting into a net payable of
Shs.157,272,127 as at 30th June, 2013.
Such movement of funds could affect the implementation of project activities.
Management explained that Government of Uganda (GoU) funds that had been
allocated to the Transport Corridor, another GoU Project, were utilized to pay for
Land and Property Compensation on the Vurra-Arua-Koboko-Oraba road corridor.
This was done as a temporary intervention to avoid possible undue delays and
disruption of civil works on the road corridor, which was at a critical stage of
implementation. Management further explained that the cause of the borrowing
was occasioned by the delays in release of GoU funds for the road. However, all
inter project borrowings referred to above have been fully settled in the financial
year 2013/14.
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Management was advised to ensure that sufficient resources are obtained for the
project to enable proper implementation of project activities. Prior approval should
be sought before any borrowing or lending is undertaken.
ii) Taxes to the Government
Withholding tax was properly computed on all the payments to the Project service
providers and the payment vouchers indicate payment of the taxes due. However,
it was noted that Project management did not obtain copies of the withholding tax
certificates from Uganda Revenue Authority to confirm remittance and receipt.
Details are indicated in the table below.
Date Payee/particulars US$
30/10/2012 15% WHT from payment 111,162
18/2/2013 15% WHT from payment
70,673.9
Management responded that at the time of audit, WHT had not been
acknowledged by URA. URA delayed in issuing the TCC‘s because the service
provider is a foreign company. Management promised to avail the receipts for
audit once they are secured from the URA.
I advised project Management to obtain the certificates to enable proper
accountability.
iii) Procurement
I noted that the contract awarded to a company worth USD 27,500 did not have a
procurement file containing necessary documentation to indicate which
procurement procedures were followed. I was therefore unable to ascertain that
the procurement complied with the PPDA regulations.
Although Management responded that the company was recommended by World
Bank to assist in the training of some critical staff in Contract Law and
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Management and had issued a No Objection letter to the Ministry for this training,
I was not provided this information.
I advised that procurements should be done in accordance with PPDA regulations.
7.25 ROAD SECTOR SUPPORT PROJECT I (RSSP I) - KABALE-
KISORO/BUNAGANA-KYANIKA ROAD
i) General Standards of Accounting and Internal Control
A review carried out on the General Standards of Accounting and internal control
system and the following shortcoming noted;
Observations from road tour
On 29th September 2012, the contractor finalized the road construction and
handed over the road to UNRA. During the period of 30th September 2012 to 30th
September, 2013, the project was under the defects liability period.
During a tour of the road with the UNRA western region station engineer on 25th
October 2013, I observed that following;
At Km 34 + 900, one lane of the road developed a crack of about 4 inches
deep which was attributed to the nearby swamp.
At Km 37+700 to 900, one side of the road slid causing cracks at the sector.
At Km 66+700 the culvert on the left hand side of the road was cut off by
water running from the hill across the road.
Delayed repairs from the contractor may lead to accidents which in turn would
negatively impact on UNRA‘s public reputation.
Management explained that the cracks at Km 34 and Km 37+900 were located in
a section whose defects liability period ended in 2011, while the culvert at Km
66+700 was damaged due to heavy rains which occurred in September 2013.
They further explained that the contract for the repair works had been approved
and works were scheduled to commence soon. Meanwhile the culvert would be
repaired as soon as the contractor commenced laying asphalt in the last 22 Km
which were originally completed with double surface dressing.
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I advised management to ensure that all defects are rectified by the contractor as
agreed.
7.26 ROAD SECTOR SUPPORT PROJECT II (RSSP II - FORT PORTAL –
BUNDIBUGYO-LAMIA ROAD PROJECT
(a) Compliance with the Financing Agreement and GoU Financial
Regulations
A review was carried out on the project compliance with the credit agreement
provisions and GoU financial regulations and it was noted that the project
complied in all material respects with the provisions in the agreement and applied
GoU regulations except in the following matters:
(b) Non Compliance with Income Tax Act Cap 340
It was noted that Shs.21,890,429,190 in respect of withholding tax was not
deducted and remitted to URA contrary to Section 119 of the Income Tax Act.
The practice could attract penalties in accordance with the Act.
In response, Management explained that according to the laws governing Works
Contracts, Contractors on development projects are paid on a reimbursement
basis. The BOQ includes bill items most of which are fixed by the employer with an
allowance for a pre-determined profit usually not exceeding 10%. Given this
scenario, issues relating to tax payment are directly handled by Uganda Revenue
Authority (URA) and the contractor. Management further added that because
these are large tax payers, most development contractors are exempt from
withholding Tax.
I informed management that in absence of exemption certificates the provisions of
the act should be applied.
(c) Land and Property Compensation
Article V Section 5.01 of the loan agreement stated that prior to the
Commencement of construction works, all project-affected persons in the sections
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of Lot1 and Lot2 should have been fully and adequately compensated in
accordance with the Resettlement Action Plan (RAP).
I noted that this Project is about 98% complete and 100% of the earthworks
done. However, an estimated 17% of the land and property owners were not
compensated prior to commencement of the construction work.
Management responded that this activity was affected by the beneficiaries who
could not be traced at the time of the compensation exercise before the
commencement of construction works. Some had already shifted to new locations
and other beneficiaries up to now have not yet resolved family disputes regarding
ownership, some lacked letters of administration and powers of Attorney,
recognising them as legitimate owners/administrators of the properties/estates.
I advised UNRA Management to follow up the compensation programme to avoid
unnecessary costs associated with litigation.
(d) Inter-Project transfers
At the start of the year under review, the project had borrowings amounting to
Shs.10,557,355,156 and receivables totaling Shs.9,976,813,707 from other
projects. During the year, the project borrowed additional Shs.19,401,143,149
from other Projects and also transferred Shs.4,956,492,685 to other projects
creating an overall payable position of Shs.14,444,650,464 at the end of the
financial year.
Although management responded that they obtained internal authorization for the
transfers, the inter project borrowings affect implementation arrangement of the
project.
I advised management to minimize the inter project transfers as these could
disrupt the implementation of project activities.
8.0 THE UGANDA ROAD FUND
8.1 Failure to Implement the Uganda Road Fund Act
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I noted that the Fund does not operate as envisioned and may not effectively
finance the maintenance of the public roads due to failure to observe the
applicable laws as indicated below:
(a) Implementation of the Road Fund Act – Collection of Road User
Charges
According to Section 21 of the Uganda Road Fund Act, Uganda Road Fund is
required to collect road user charges. However, it is Uganda Revenue Authority
(URA) that collects road user charges. Due to this conflict in the two laws,
Management of Uganda Road Fund has failed to operationalize the provision in the
Road Fund Act which may hamper the activities of the entity.
Management explained that action has been taken by seeking advice of the
Solicitor General (SG). In the meantime, a cabinet memo has been drafted with
regard to the matter and awaits action by the Minister of Finance, Planning and
Economic Development.
I have advised management to liaise with the various stakeholders in a bid to
harmonize the various laws impacting on the operations of the Fund.
(b) Lack of Regulations operationalizing the Fund Act
Following the enactment of the URF Act, 2008 it was incumbent upon
Management and the Board to ensure regulations are developed that would guide
the secretariat in application of the same Act and the operations of the Fund.
However, I noted that for the past 4 years of the Fund‘s existence, it has been
operating without regulations contrary to Section 49 (1) of the Act.
In their response, management explained that regulations have been drafted and
are scheduled to be considered at the 41st Board meeting expected to take place
early 2014 and thereafter forward them for gazetting by the Minister of Finance,
Planning and Economic Development.
The outcome of the above management commitment is awaited.
8.2 Funds Released to Designated Agencies
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Contrary to the URF Accounting Policies and procedures Manual that requires that
within two weeks after the end of each quarter, designated agencies are required
to submit accountability statements in respect of the monies of the Fund released
to them in the quarter; Shs.12,415,977,407 worth of releases to delegated
Agencies had not been accounted for by the Agencies by way of statements of
expenditure at the time of reporting. The Accountability statement is supposed to
show the amount spent for each activity. I explained to management that there is
a risk that the funds could have been diverted for unauthorized activities.
In response, the Accounting Officer explained that he has always faced challenges
of obtaining statements of expenditure in time from the Agencies but was
following up the matter.
I have advised the Accounting Officer to institute measures with a view of
ensuring that the funds are accounted for.
8.3 Lack of a Risk Monitoring Guide (RMG)
It is best practice that Management periodically assesses the risks the entity faces
from both external and internal sources and take appropriate action to manage
the identified risks. This is possible with the existence of the RMG. However, it was
noted that there is no RMG in place. I explained to management that a RMG
facilitates effective risk assessment and aids managers to take prompt and
appropriate action to mitigate them. Besides, it directs resources where they are
needed most.
In response, the accounting officer explained that the RMG is being drafted and is
expected to be ready by February 2014. An expert was hired to carry out the
assignment. The outcome is a waited.
8.4 Lack of an approved Staff Training Policy (STP)
Good Human Resource practices require an organization to put in place a Staff
Training Policy (STP) to guide Management with detailed guidelines in the
development of its human resource personnel for effective service delivery. During
the review, it was noted that management does not have an approved STP in
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place to guide in effective training of its staff. In the absence of a training policy,
there is a risk that irrelevant training courses could be undertaken that may not
add value to the entity leading to wasteful expenditure and or misuse of the
training budget.
In their response, management explained that the training policy is before the
Board for approval.
I advised management to follow up the matter and have the policy approved.
8.5 Failure to Dispose Old equipment
It is good practice that assets that are no longer of economic value to the
organization be disposed off and the profits or losses that accrue from such sales
subsequently disclosed in the financial statements. Inspection of the stores of the
Fund revealed that a number of items including ICT equipment, photocopier, Air
conditioners, office chairs and tyres were in store yet they did not seem to be of
any further use to URF. These items occupy space that would otherwise be
occupied by more valuable stocks. Besides, they are likely to deteriorate further;
leading to loss of any possible value that could be recovered from their sale.
In their response, management indicated that based on the recommendations of
the board of survey, the process to dispose the equipment shall commence soon
and conclude in early 2015.
I advised Management to expedite the process to avoid continued loss of benefits
that would accrue from the disposal.
8.6 Irregular use of Fund vehicle
It was noted that the Chairman of the Board uses a Fund vehicle that was
allocated to him for temporary usage in the Monitoring and Evaluation (M & E) of
the maintenance program in May 2011 until the monitoring unit was set up.
However, the Chairman has continued using the vehicle even after the unit was
set up. The board members‘ entitlements did not provide for this kind of benefit. I
explained to management that making allocations of benefits beyond the
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approved entitlements is irregular. Besides, there is a risk that decisions are not
done with adequate independent objectivity, which is contrary to Corporate
Governance principles.
In their response, management explained that the vehicle was released for
temporary usage for monitoring and evaluation of KCCA and UNRA network
because at that time the M&E department was not fully set up. Management
further explained that they are yet to seek authority for the use of the vehicle
from MoFPED. However, at the time of reporting, the authority had not been
availed.
I advised management that in absence of authority the vehicle should be returned
and associated costs be recovered accordingly.
8.7 Fund Budget Performance – failure to implement planned activities
It was noted that management did not achieve some of its set targets for the year
as indicated below:
Output definition Annual Target
Actual Out Put
Audit Remarks
Develop the 5 year strategic plan and business plan FY 2012/13
1No. 5 year strategic plan
Nil Not realized.
Acquire road condition data across the entire network
Compile an inventory of road condition data by Q3
Nil Not realized.
Physical and Financial Performance reports of DAs
4No. Nil Not realized
URF Internal Monitoring Reports
2No. 1 report produced.
Did not deliver as expected.
I explained to management that failure to implement the planned programs
affects the fulfillment of the objectives of the Fund.
I advised Management to implement activities appropriated by Parliament as
planned.
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JUSTICE LAW AND ORDER SECTOR
9.0 MINISTRY OF JUSTICE AND CONSTITUTIONAL AFFAIRS
9.1 Court Awards and Compensations
One of the responsibilities of the MoJCA is to represent government in any claims
made against it and to settle compensation and court awards arising from such
claims. By the end of the financial year government was indebted to a tune of
Shs.164bn as reflected in the financial statements. An examination of documents
relating to the amount revealed the following;
i) Accumulation of arrears
The arrears figure rose by 200% from Shs.82b in the year 2011/12 to Shs.164bn
in the year under audit. This raises the question of the extent to which
government is making effort to minimize court awards and compensations. During
discussions the Accounting Officer explained that it was important for government
to decentralize the payments of court awards and compensations to the entities
where the causation of the award/compensation is. This would enable linkage of
payment/loss directly with the cause of the loss. The benefit of this would be two
fold; 1) The causer of the loss would (if culpable) be held liable; and 2) The entity
involved would have direct interest in the case and would therefore strive to have
the case expeditiously and effectively concluded. This action in his opinion would
reduce on the rapid accumulation of the arrears.
I concurred with him and informed him that I would bring the matter of
decentralization of payment of court awards to the attention of Parliament.
ii) Payment of arrears
From the commentary on the financial statements by the Ministry Accounting
Officer, as at 30th June, 2013, the Ministry of Finance Planning and Economic
Development (MoFPED) has been releasing minimal sums of money to settle this
item of Statutory Court Awards, as per the approved budget. For the financial year
2012/2013 only Shs.4.3 billion was approved and released by MoFPED for the
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item. The delays in settling claims only worsen the situation and leads to
accumulating unmanageable amounts.
Management explained that they have continued to engage MoFPED and other
stake holders to ensure that reasonable provision for the Court awards and
Compensation is availed to the Ministry. They explained that they continue to do
this through the Parliamentary committees and letters to MOFPED requesting for
supplementary funding and an increase of the MTEF.
iii) Documentation
I was not provided with documentation in respect of the claims, court awards and
ledgers to support the figure. As a consequence, I was unable to verify the
correctness of the figure of court awards and compensations.
I advised Management to provide documentation to support the amount of court
awards and compensations in the financial statements.
9.2 Other Operating expenses (recurrent)
The Statement of Financial Performance for the year ended 30th June 2013
reported miscellaneous expenses (recurrent) of Shs.88, 545,581,549. However,
total transfers received from the Treasury were only Shs.36,868,184,164 and
there was no evidence of the supplementary budget extended to MoJCA.
Furthermore, the details and accountability documents for the miscellaneous other
expenses were not provided. As such I was unable to confirm the amounts
reflected as miscellaneous revenue.
Management responded that Shs.88,545,581,549 billion in question relates to
the liabilities for the financial years 2012/13, which included;
Shs.87,621,581,679 court wards, human rights tribunals awards,
compensations, rent, and contribution to international organizations, as well as
Shs.923,999,870 expended on utility and other operational expenses. However, I
was unable to confirm the amounts as there was no documentation to the effect.
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I advised management to ensure that proper accounting records are posted and
maintained to support accounting transactions.
9.3 Rent Payments (Produced Assets Private Entities)
It was noted that the Budget for Rent (produced assets to private entities) was
Shs.2,403,815,000. However, the actual expenditure as revealed by the
transactions on payment vouchers totalled to Shs.3,477,321,924. This caused over
expenditure on rent Shs.1,073,506,924.
I find it irregular to spend above the budget allocation without authority and/or
previous year disclosure as domestic arrears.
9.4 Absence of Strategic Plan
A strategic plan provides an organization with purpose and direction. It is an
important tool in steering an organization towards its Vision, Mission and the
overall Mandate. Annual activities undertaken by any organization should be
derived from the strategic plan. However, it was noted that the Ministry lacked an
approved Strategic Plan for the period 2012/13-2016/17. A draft plan had been
prepared but had not yet been approved a year into the period into which it was
supposed to be operational. Absence of an approved strategic plan as an overall
guide to planning and priority setting, could lead to sub optimal choices.
Management reaffirmed the existence of a draft. This is awaiting the input of the
Political leadership.
I advised Management to expedite the approval of the strategic investment plan.
9.5 Non-divestiture of Centre for Alternative Dispute Resolution (CADRE)
The Arbitration and Conciliation Act, 2000 (Cap.4) is an amendment of the laws
relating to Domestic Arbitration, International Commercial Arbitration,
Enforcement of Foreign arbitral awards and to define the law relating to
conciliation. The Act establishes the Centre for Arbitration and Dispute Resolution
(CADRE).
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The rationale for establishing CADRE was to promote arbitration and alternative
dispute resolution to decongest the Commercial Court and create a conducive
business environment for promotion of business and attract investments.
CADRE is one of the agencies which was recommended for divestiture into
autonomous status, however, it has not been operationalized since 2000 when
comprehensive restructuring was done. Operationalizing CADRE would imply a
critical part of Government of Uganda‘s strategy for improved case flow into
traditional courts, and reducing greatly commercial cases reaching the court.
However, the provisions of the Arbitration and Conciliation Act relating to
establishment and operations of Centre for Alternative Dispute Resolution are not
being implemented. As a result, the objectives for legal framework provisions for
CADRE to promote arbitration and decongest the Commercial courts are not being
realized.
Management explained that between 2009 and 2011 the Ministry together with
the JLOS sector secretariat and Ministry of Public Service finalized the
institutional arrangement in accordance with the Arbitration and
Reconciliation Act Cap 4. The draft was approved in the same year by the
governing council of CADRE. The Ministry submitted the Organizational
Structure for CADRE to Ministry of Public Service for approval. Since then
several reminders have been made to Ministry of Public Service coupled
with discussions convened by Parliament to resolve the establishment of
CADRE but to date nothing has been done.
I advised MoJCA to divest and restructure CADRE and Government to provide seed
money as capital investment for CADRE to firmly establish itself. Special provisions
for Arbitration and Conciliation Act relating to establishment and operationalizing
CADRE should be implemented in order to achieve the objective of the Act.
9.6 Inadequate Records Management
It was observed that the records management system is inadequate because the
Ministry‘s case management filling system is still a manual one. MoJCA works with
case and advice request files that require tracing, quick movement and action
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which is not possible in the manual system. As the Directorates and Departments
have pending cases for a long time, tracing these documentation from manual
records can be cumbersome and subject to abuse.
Management responded that the Ministry in the past had challenges in the
management of records. However the Ministry has started an Electronic
Document and Records Management Systems (EDRMS) programme which will
help in the streamlining of information management , that is; processing,
storing accessing and retrieving. Management further explained that at the
moment they have procured Laserfiche ® one of the World‘s leading systems in
the electronic records management industry. Additional server hardware and
database software have also been procured to provide a platform for
storage.
I advised Management to computerize records so as to improve information flow
and protection.
9.7 Outdated Organizational Structure
During the review of the Ministry of Justice and Constitutional Affairs
Organizational structure, it was established that the Organization Structure in use
was last approved in the restructuring in the year 2000. Since that time the
Ministry has grown both in number of staff and scope of work. For instance, the
post of the Minister of Justice and Constitutional Affairs was created and Regional
Offices opened in the four regions of Arua, Gulu, Mbarara and Mbale. There are
also plans to create more regional offices at Masaka, Fort portal and Moroto.
Whereas the opening of Regional Offices was a welcome initiative as this enables
most legal issues pertinent to the public to be handled at regional level and
decongest functions at the Ministry headquarters particularly at lower levels, their
absence on the formal organizational structure of the Ministry causes legal and
administrative challenges in their operations.
Management explained that the Ministry‘s structure was reviewed by Adam Smith
Consultants and they submitted the final report of the proposed structure to the
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Ministry of Public Service for consideration. Management is awaiting a response
from Ministry of Public Service.
I advised Management to follow up approval of the revised structure with the
Ministry of Public Service.
9.8 Staffing gaps
Section 15(9) of the standing Orders, 2010 mandates the Ministry of Public Service
to determine the structure, terms and conditions of service in Government entities.
Furthermore, good strategic planning requires an entity to carry out human
resource planning to ensure that an adequate number of qualified staff is in place
to carry out the operational activities of an entity so as to enable her achieve
strategic objectives.
According to the staff establishment, the approved number of positions is 340 and
only 273 positions were filled by the time of audit, while 67 positions remained
vacant, which is 19.7% of the workforce of the Ministry. The unfilled positions
impact negatively on the achievement of the Ministry‘s objectives and planned
activity outputs.
Management explained that vital positions of Solicitor General, Director Legal
Advisory Services, Director Civil Litigation, Commissioner Civil Litigation
(Institutions), Commissioner Legal Advisory Services (Local Government) and
Secretary Law Council in the Ministry have all been filled except for the position of
Administrator General and Commissioner Legislative Drafting (Local Government)
which were externally advertised by PSC and one person applied for the post of
Administrator General while the post of Commissioner Legal Drafting (Local
Government) did not attract any candidate due to the need for specialized training
in Legal Drafting. Management is waiting for the Commission to conclude with the
recruitment process.
I advised Management to expedite the process of filling all the vacant posts.
9.9 Unfilled positions of Administrator General and Deputy Administrator
General
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The Administrator General‘s Act, 1933 (Cap.157) governs the establishment,
powers and functions of the Administrator General. The Administrator General‘s
Act establishes the office of the Administrator General. It also provides for the
appointment of the Administrator General, the Deputy Administrator General and
Assistant Administrator General, subject to the law relating to the appointment of
persons onto the Public Service.
It was noted that, the Ministry under department of Administrator General,
provides only for the Administrator General – one post which is not filled. There is
no provision for the Deputy Administrator General. The current situation in the
office of Administrator General is that, the department is headed by two Principal
State Attorneys. This is contrary to the Administrator General‘s Act, 1933 (Cap.
157) and The Succession Act, 1906 (Cap.162).
Management explained that the Office of the Administrator General is a
department under the Ministry of Justice and Constitutional Affairs whose
organizational structure is approved by the Ministry of Public Service. The
office does not recruit its own staff, the recruitment is done by Public
Service Commission and the deployment is done by the Ministry of Justice and
Constitutional Affairs.
I advised Management to ensure that the Administrator General‘s Office is run in
accordance with the provisions of the Administrator General‘s Act, 1933 (Cap.
157).
9.10 Staffing gaps in the Law Council
Part II of the Advocates Act prescribes the establishment and functions of the Law
Council. To effect independent execution of the above functions, Ministry of
Justice and Constitutional Affairs, at the restructuring exercise of 2000
recommended divesture of the Law Council to a semi-autonomous status, which
recommendation was meant to divest the Law Council to allow independence of
professional conduct with less due influence from any organ of Government with
direct control.
162
However, the Council by the time of audit (January 2014) had not been divested
and continues to operate under full support of Ministry of Justice with huge
staffing gaps. The Law Council was operating with only a Secretary and an office
attendant. This situation has greatly affected the work of the Council as there are
many pending cases that are yet to be handled by the Council.
Management in their response explained that the only approved posts are; of
Secretary, Law Council and Office Attendant which are substantively filled. The
remaining posts are filled by officers drawn from other Directorates/Departments.
This concern will be addressed after the approval of the proposed structure.
I advised Management to address the staffing gaps of the Law Council in
accordance with section 2 of the Advocates Act (Cap. 267) and the Advocates
(Amendment) Act, 2002.
9.11 Lack of Quality Assurance Unit
It is best practice now that entities should have a functional unit for Quality
Assurance that provides function of diligence and adherence to procedures.
However, it was noted that Ministry did not have an established function of Quality
Assurance. As a result of this, Ministry of Justice and Constitutional Affairs has
continued to experience problems of ensuring due process, diligence and
adherence to procedures in dispensation of justice especially in the provision of
legal support and advisory services on contracts and civil litigation that involve
compensations.
Management responded that the post is reflected in the proposed structure of the
Ministry. I advised Management to expedite the approval of the new proposed
structure.
9.12 Lack of Estates Manager
With the support of JLOS SWAP project at the sector, Ministry of Justice and
Constitutional Affairs is undertaking major structural developments throughout the
sector in form of JLOS house and Mini-JLOS houses in every region in the country.
These establishments at the Headquarters and regions need to be maintained.
163
Maintenance of Government infrastructure is often neglected and/or left to non -
technical care takers who are not able to assess technical requirements in case of
any repairs. It has been observed the function and position of estates
management is not yet established in the Ministry.
Management stated that the post of Estates Officer is reflected in the Ministry‘s
proposed structure which is yet to be approved by Ministry of Public Service. I
await the outcome of the proposed structure.
9.13 Mischarge of Expenditure
A review of payments revealed that there were mischarges under various codes of
Shs.1,356,763,496 during the year under review without authority. In the
absence of mechanism to monitor movement of funds from one code to another,
the principal of proper accountability spelt out in the TAI is violated and gives
avenue for the diversion of funds from the rightful activities. The mischarges also
lead to misrepresentation in the financial statements.
Management explained that due to lack of money on relevant activity items,
management was compelled to charge areas where there was money to meet
urgent travel abroad, travel inland and other urgent operational requirements to
mention a few.
I advised Management to streamline the budgeting process to ensure that
sufficient funds are allocated to each account. Authority should be sought before
any reallocations are made.
9.14 Motor Vehicle Repairs
The Ministry spent total sum of Shs.225,873,321 for repairs of motor vehicles.
Examination of records revealed that, there was no technical assessment done to
the motor vehicles before and after repair contrary to Section 816 of TAI.
Management explained that failure to carry out technical assessment before and
after repairs was an oversight which was highly regrettable. Management further
explained that the cost and frequency of repairs of the Ministry Vehicles is
164
precipitated by a fleet of aged vehicles due to lack of capital budget to
replace the old ones, and the many official journeys that the lawyers
make to courts of law upcountry in defence of government.
I advised Management to ensure that motor vehicle for repairs should be assessed
by a Government engineer before and after the repairs to ensure quality and
proper accountability.
9.15 Unacknowledged remittances of Withholding Taxes/PAYE to Uganda
Revenue Authority
Shs. 980,240,917 was withheld from payments to staff as Pay As You Earn (PAYE)
and to Suppliers and Service providers as 6% Withholding Taxes. However,
neither acknowledgement receipts nor tax certificates from URA were availed to
confirm that URA received the remittances and that tax certificates were issued.
Failure to issue tax certificates makes it difficult for the suppliers to determine
their tax obligation when filing their returns to URA. Further, in absence of the
acknowledgement receipts; it becomes difficult to confirm the remittances.
Management explained that at the time of Audit, the URA computer system could
not process the certificates.
I advised Management to comply with tax laws and ensure that all remittances are
supported by acknowledgement receipts from the tax authority.
9.16 Budget Analysis
(a) Lack of Budget Provision for Capital Development
Budgeting is a process of planning for estimates of funds to be used to execute
the activities in an entity for both Recurrent and Capital in nature. It was noted
that there was no provision for Capital Development for the entity in the year‘s
budget. Due to non-provision of Capital Development budget, the Ministry cannot
meet its Capital needs especially to procure assets classified under class 3 assets
whose expenditure Codes were provided with zero funds provision, which include
the following among others:
165
Code No. Asset
312101 Non-Residential Buildings
312102 Residential Buildings
312105 Taxes on Buildings and Structures
312201 Transport Equipment
312202 Machinery and Equipment
312203 Furniture and Fixtures
312204 Taxes on Machinery, Furniture and Vehicles
It was noted that what appeared to be approved under Development is Donor
support which passes through MoJCA as conduit towards implementation of
activities in the JLOS Project at the JLOS Institutions. Due to this MoJCA is forced
to use recurrent budget funds to meet some of its capital development
expenditure, for instance; MoJCA spent Shs.133,801,000 to procure Telesaver
Land lines.
Management in their response agreed with the observation.
I advised that MoJCA, Parliament and MoFPED should plan for a Comprehensive
Budget that provides for both Recurrent and Capital Development funds every
year for the smooth running of the Ministry.
(b) Inadequate provision for Recurrent Budget
Records availed during the audit revealed that the approved revised budget for
MoJCA for the year ended 30th June, 2013 was Shs.21,783,000,000 (Recurrent –
Shs.21,783,000,000 and Development – UGX.0), out of which only
Shs.16,787,000,000 was actual release which is 77%. This left the un-released
budget funds of Shs.4,996,000,000, which was 23% of the approved budget.
Failure to release all funds approved hampers smooth implementation of planned
activities of the Ministry and also undermines the Parliamentary Authority under
Appropriation Act 2010.
166
Management in their response agreed with the observation.
I advised management to liaise with Parliament and MOFPED to harmonize the
budget planning process and approve a realistic budget that reflects the actual
needs of the Ministry.
9.17 Budget Performance
During the year under review, MoJCA planned to undertake a number of activities.
A review of the reported performance by the Ministry revealed that some Key
planned activities were not fully achieved despite funding approved for the
purpose. The details of expected output, actual output and deviations are below;
OUTPUT
NO. /
BUDGET
DESCRIPTION PLANNED ACTIVTIES EXPECTED OUTPUT ACTUAL OUTPUT DEVIATION
120101
0.659bn.
Bills, Acts,
Statutory
Instruments,
Ordinances, and
Bye-laws
-Bills to be drafted and
published.
-Acts to be Published
-Statutory Instruments
(SIs)
-Ordinances
-Bye-laws
-Legal Notices
-19 Bills
-22 Acts
61 SIs
6
3
16
-7 Bills
-14 Acts
-42 (SIs)
-3Ordince
-0Byelaws
-13 Legal Notices
-12 Bills not
achieved by 63%
-8 Acts not achieved
by 36%
-19 SIs
-3 Ordinance
-3Byelaws
3 L/Notices
120103
0.883bn.
Civil suits
defended in
Court
-Effective representation of
Government in Court.
-64 Civil Suits handled - -
-Effective supervision of
State Attorneys to defend
Government in Court.
-114 Constitution
Petitions
-319 UHR Tribunals
-10 EAJC References
-2 Local Arbitrations 7
1 Civil matter
- -
-Effective negotiation of
out of Court settlement
-0 NIL NIL
120301
0.150bn.
Estates
Registration and
Inspection
New Files for clients to be
opened
4,000 Files 3,058 Files 944 files
Estates to be wound- up 200 Estates 200 Estates filed -
120303
0.150bn.
Estates
Administration
Land transfers 400 Land transfers 383 Land transfers 17 land transfers
Certificates of no objection
to be issued
2,200 Certificates 2,198 Certificates 2 certificates
120401
0.144bn.
Conclusion of
disciplinary Cases
Hold Disciplinary
Committee meetings and
conclude cases
150 cases in 60
sittings
72 cases in 36
sittings
78 cases
Carrying out research and Carried out research NIL Not done
167
Consultations and Consultations
120501
1.826bn.
Ministry of Justice
and
Constitutional
Affairs (JLOS)
-Develop Legislative
Quality Assurance
Standards for MoJCA
service
QA Standards
developed
NIL Not done
-Set a Legal Audit and
Inspectorate Department
Legal Audit and
Inspectorate Dept.
set out
NIL Not done
-Gov‘t Liability Mitigation
Policy
Liability Mitigation
Policy formulated
NIL Not done
-Claimant Award and
Compensation Policy
Claimant Award and
Compensation Policy
formulated
NIL Not done
120552
1.680bn.
Ministry of Internal
Affairs (JLOS)
-Improve Border Control Border Control
improved
NIL Not done
-Alternative Sentencing
promoted
Promoted Alternative
Sentencing
NIL Not done
-Enhanced Forensic
Analysis
Forensic Analysis
enhanced
NIL Not done
-Resettlement of returnees Returnees resettled NIL Not done
-Capacity to regulate NGOs Capacity to regulate
NGOs enhanced
NIL Not done
-Publication of Law
Reports
Law Reports Published 3,000 copies
published
Published
120555
2.391bn.
Judiciary (JLOS) -Cases to be disposed off 119126 cases Total of cases
disposed off was
54,800
64,326 cases
-Construction of Aibanda
CM & Lugazi/Mayuge G1.
Aibanda CM and
Lugazi/Mayuge GI
Constructed
NIL Not done
-Transcription and Court
recording equipment in
Courts
In 13 Courts In 4 Courts 9 courts
-Inspections conducted 130 inspections NIL Not done
-Complaints to be handled 900 Complaints NIL Not done
-Increased rationalized
physical presence
Increased physical
presence
NIL Not done
-Quick wins Case Backlog Case backlog reduced NIL Not done
-Community Policing Done NIL Not done
-Improved welfare Improved welfare NIL Not done
-Increased production &
productivity
Increased production
and productivity
NIL Not done
-Effective offender
integration and
rehabilitation programs
Effective offender
integration
NIL Not done
120558
0.680bn.
Judicial Service
Commission
(JLOS)
-Radio talk shows in
regional centres around
the country will be held
36 Radio talk shows 36 Radio talk shows -
-Judicial Officers recruited Judicial Officers
recruited
NIL Not done
-Strong Public Complaints
System
Strong Public
complaints System
established
NIL
Not done
-Staff will be trained in
short term courses
8 staff members NIL Not done
120559 Directorate of -Prosecution programme 142,250 cases Prosecuted 1,283 27,245 cases
168
1.908bn. Public
Prosecution DPP
(JLOS)
plans to have cases
prosecuted
cases in 41 High
courts, 113,722 in
MC
-Nation Wide and adhoc
inspections carried out
4 Nationwide and 100
Adhoc
NIL Not done
-Rationalized physical
presence
Physical Presence NIL Not done
-Train Prosecutors 100 NIL Not done
-Hold one Professional
Retreat
1 NIL Not done
120560
2.237bn.
Other JLOS
Funded Services
-Computerization of
Business registration of
BDR
Business registration
of BDR computerized
NIL Not done
-Tax Appeal Tribunals Tax Appeal Tribunal
supported
NIL Not done
-Local Council Courts Local Council Courts
supported
NIL Not done
-Uganda Law Society Uganda Law Society
supported
NIL Not done
120601
4.347bn.
Court Awards and
Compensations
paid
-Effect payments of Court
Award claimants
Court Award claimants
payments effected
2.19bn paid 2.157bn. not paid
Management explained that the performance varied from the expected output for
the following reasons:-
(a) Expected output is projected against Government‘s Legislation Programme
and Ministry of Justice and Constitutional Affairs bench marks. Further,
planned activities are demand driven; fewer requests from MDAs
automatically result in fewer outputs in terms of drafted legislation.
(b) Delayed payments to Government Printer (UPPC)
Whereas MOJCA drafts legislation for all MDAs, it is the responsibility of each
MDA promoting legislation to meet publication and printing costs. MoJCA has
no control in ensuring timely payment to UPPC by MDAs without which,
legislation cannot be published.
(c) Delayed response by client MDAs to requests for further instructions and
clarification by FPC and the need to consult other departments in the
processing of the legislation also impacts on output achieved.
I advised management to ensure adequate planning by liaising with all
stakeholders involved.
169
9.18 JLOS, LAW AND ORDER SECTOR SECRETARIAT
(a) Budget performance
During the year, the Justice, Law and Order Sector (JLOS) Secretariat received a
total of Shs.39,494,465,988 to facilitate operations of the various JLOS
components. At the beginning of the year, the Secretariate also had unspent
balance totaling Shs.25,167,063,002 bringing the total available funds for
spending to a tune of Shs.64,661,528,990 for the year.
Shs.44,975,848,043 was subsequently spent during the year by the various
components leaving a balance of Shs.19,685,677,947 unspent. An analysis of
utilization of the funds revealed low funds absorption capacity. The table below
shows the opening and closing balances as well as expenditures by various
entities:-
Ministry/
Department
Opening
balance (Shs)
Adjustment of
opening
balance (Shs)
Amount
Received (Shs)
Total funding
Available (Shs)
Amount Spent
(Shs)
Closing Balance (Shs)
Uganda Law
Society
136,695 357,130,450 357,267,145 357,267,145 124,550
Uganda Law
Reform
Commission
93,923 1,583,624,800 1,583,718,723 1,566,228,319 17,490,404
Local
Government
45,929,584 255,054,000 300,983,584 229,986,219 70,997,365
Law
Development
Centre
103,092,050 1,480,034,000 1,583,126,050 1,579,200,578 3,925,472
Tax Appeals
tribunal
80,187,505 413,825,000 494,012,505 405,284,799 88,727,706
DPP 386,282,831 2,601,456,808 2,987,739,639 2,973,620,531 14,119,108
URSB 868,134,437 874,410,000 1,742,544,437 1,094,108,056 648,436,381
Ministry of
Internal
Affairs
356,191,508 2,842,597,000 3,198,788,508 2,836,520,498 362,268,010
Uganda
Police Force
1,238,857,408 258,560,092 3,481,215,500 4,978,633,000 3,236,172,000 1,742,461,000
Uganda
Prisons
Service
926,310,405 4,897,596,000 5,823,906,405 4,096,777,747 1,727,128,658
170
Judicial
Service
Commission
16,772 705,288,000 705,304,772 705,301,618 3,154
Min. of
Gender,
Labor and
Social Dev’t
732,721,279 382,150,000 1,114,871,279 548,124,566 566,746,713
Judiciary 1,121,429,913 344,442 4,464,645,500 5,586,419,855 4,609,405,000 977,014,855
MOJCA 0 1,690,900,000 1,690,900,000 1,681,064,681 9,835,319
Administrator
General –
Public
Trustee
236,304,247 408,630,000 644,934,247 523,712,452 121,221,795
Uganda
Human
Rights
Commission
142,563,757 687,384,000 829,947,757 759,525,000 70,422,757
National
Citizenship
and
Immigration
979,000,000 1,136,000,000 2,115,000,000 484,452,756 1,630,547,244
Secretariat
(IFMS)
0 2,549,879,000 2,549,879,000 2,516,781,493 33,097,507
Secretariat
(Donor)
0 17,352,174,283 1,440,108,444 18,792,282,727 12,387,196,497 6,405,083,230
MoJCA (CBL) 0 338,731,871 1,786,865,000 2,125,596,871 1,920,295,282 205,301,589
JLOS House
Account
0 4,990,725,130 4,990,725,130 0 4,990,725,130
Taxes on
Machinery
464,822,806 464,822,806 464,822,806 0
Total
7,217,252,314
17,949,810,688 39,494,465,988 64,661,528,990 44,975,848,043 19,685,677,947
Failure to utilize the available funds implies that planned activities were partially or
not implemented. This may lead to failure by the management to attain the
programme objectives.
Management responded that Shs.17,475,066,791 out of the Shs.19,685,677,947
was committed to various ongoing construction projects in the sector by the close
of the year. The commitments included preparation of detailed designs and
construction supervision of the JLOS house, ongoing constructions under PRDP,
constructions of Justice centres, Prisons, Police stations, courts and remand
homes.
171
I advised Management to properly supervise the ongoing works with a view of
concluding them in the agreed time.
(b) Shortfall in the Budget Releases
A comparison of the approved JLOS budget and work plan for the 2012/13 with
funds released for the financial year revealed shortfalls in funding. Funds for the
fourth quarter for a number of JLOS implementers were not released at all. The
table below shows funding shortfalls for some institutions:
No Institution Budget (Shs) Releases (Shs) Shortfall (Shs)
1 Directorate of Public
Prosecutions
2,628,000,000 2,264,618,500 363,381,500
2 Judicial Service Commission
820,607,000 705,282,000 115,325,000
3 Ministry of Local
Government
330,040,000 255,054,000 74,986,000
4 Uganda Human Rights Commission
851,000,000 687,384,000 163,616,000
Total 4,629,647,000 3,912,338,500 717,308,500
This impacts negatively on the implementation of planned activities under
Programme.
Management responded that the Sector will continue to liaise with JLOS and
Ministry of Finance, planning and Economic Development to ensure adequate
funding in future for implementation of planned activities.
Management was advised to liaise with the Ministry of Finance, Planning and
Economic Development to ensure adequate funding for implementation of planned
activities.
(c) Lack of Computerized Project Management and Information
System – (PMIS)
According to the Work Plan for the year, one of the priorities in SIP III was to
strengthen records and information management. PMIS was intended to offer
computer support to project management procedures and the Centre. It was
however, noted that the PMIS had not been put in place. Records and information
management is being run manually. Lack of a computerized information system
172
negatively affects management of Programme information in all vital aspects such
as; scope, programme organization, quality, cost, time and activity scheduling.
The Accounting Officer explained that the sector had in place an elaborate but
manual project management system and efforts are underway to computerize the
whole system. While the development and deployment of a Geographical
Information System (GIS) had been completed, computerizing the budgeting and
accounting as well as Monitoring and Evaluation (M & E) functionalities is
underway.
I advised the Accounting Officer to expedite the computerization process to allow
management executes project programmes successfully.
(d) Expiry of grant period
Shs.415,042,600 was transferred to the Embassy of Ireland to supply 400
mountain bikes to be used by the Uganda Police Force (UPF) for community
policing and 14 bikes for training. In the MoU, it was agreed that GoU refund to
Irish Aid within one month of completion of the financial year any part of the grant
which had not been spent unless a joint written agreement regarding its suitable
use had been made between Irish Aid and GOU. It was noted that by the time
JLOS Secretariat effected the above transfer/payment, the terms of the grant had
long expired and there was no proof of renewed joint written agreement availed
for audit review.
Management did not adhere to the agreement terms. The continued application of
the grant is in contravention of agreement terms and may attract penalties.
In their response, Management regretted the delay to request for extension of the
MOU. They further indicated that the sector has been in negotiations with the Irish
Aid and has since requested for a no cost extension to the project.
Management was advised to ensure that funding agreement terms are always
complied with.
(e) Double Payment to a Contractor
173
A local construction firm was contracted to construct Kisoro Police Station at a cost
of Shs.680,827,739. According to interim certificate number one worth
Shs.156,252,389, this certificate had been approved for payment in January 2013
and payment effected on the 19th March 2013 which payment was reversed by the
bank on 21st March 2013, reason being ―invalid account details‖.
On the 27th March 2013 the contractor notified the employer of the change of the
bank and account details to which payment would be effected. The employer
notified the bank accordingly and on the 28th March 2013, the bank effected the
payment of Shs.156,252,389 to the contractor. However, on the 8/4/2013, the
employer raised another payment to replace the dishonoured payment on
payment of interim certificate number one and another payment and subsequently
a sum of Shs.156,252,389 was effected on the 17th April 2013. The interim
certificate number one was therefore paid twice.
Management explained that this was an error that was advertently caused by BoU.
Management further explained that they had agreed with the contractor to recover
the questioned amount from the final and last certificate.
I await the outcome of Management efforts.
9.19 MINISTRY OF JUSTICE AND CONSTITUTIONAL AFFAIRS (MOJCA)
i) Implementation of project activities
During the year, a total of Shs.1,690,900,000 was available for approved JLOS
activities under the MOJCA. Records availed indicate that Shs.1,681,064,681 was
utilized leaving a balance of only Shs.9,835,319 unutilized at the end of the
financial year. Although 99% of the releases was spent, some activities that had
earlier been planned were not implemented during the year. See the table
below;
Specific
Activities
Target
/Inputs
(units)
Proposed
cost
Released Expenditure Remarks on Actual outputs
174
1.1.1.4
Undertake a
study and
develop a
Government
Liability
mitigation policy
and plan
Consultancy
fees
80,000,000 80,000,000 80,000,000 The expected output was not
undertaken by a consultant.
Instead the entity just set up a
task force to coordinate
development of the policy;
developed concept paper and
Terms of reference for
Technical advisor.
1.1.4.1 Review
and harmonize
constitutional
and other Court
rulings with the
existing
legislation
Consultant,
data collection,
analysis and
reporting and
dissemination
30,000,000 30,000,000 30,000,000 No out puts reported therefore
nothing was disseminated.
1.3.5.5
Sensitization
workshops for
legal
practitioners and
other
stakeholders on
legal practice in
central region
Workshop 30,000,000 30,000,000 30,000,000 No output reported. Therefore
no knowledge imparted.
Management responded that the funds for the above activities were used to pay
contractors constructing Mbale regional offices after seeking authority from the
sector following inadequate releases of funds in the last quarter of the financial
year.
Management was advised to carry out adequate planning and ensure that the
activities are implemented in accordance with the work plan.
ii) Non-remittance of donor funds
The Ministry on behalf of the Justice Law and Order Sector signed a Memorandum
of Understanding (MOU) with the Irish Embassy for the assessment of the
implementation of a witness protection policy on 6th December 2011.
175
Section 16.1 of the MOU stipulated that any funds that remained unutilized at the
end of the project were to be refunded within 3 months of completion of the
project failure of which interest at European Central Bank rate would be charged
on the outstanding moneys not refunded from the date of completion. According
to the MOUs, the Irish Aid granted Uganda a total of €65,235 (€40,000 as per the
first MOU and an addendum of €25,235).
It was noted that a sum of Shs.153,535,455 was spent from the grant; translating
into implying that €15,021 remained unutilized. The balance was not remitted
back to the Irish Embassy account. Failure to refund unutilized funds was in
contravention of the terms of the MOU.
Management explained that the sector awaits final audit by Irish Aid before any
further action can be taken on the unutilized balances. I advised Management to
follow up the audit and ensure that balances are remitted to avoid any charges on
unremitted balances.
iii) Incomplete Works at Judicial Studies Institute (JSI)
The work plan for the period 2011/2012 had a provision for construction of
classrooms for the JSI at a cost of Shs.400,000,000 under the GoU budget and
Euro 50,000 was expected from Netherlands Organization for International
Cooperation in higher Education (NUFFIC). The balance of construction costs
were to be met by JLOS sector. A contract for Shs.852,109,288 was signed with a
local company on 21st May 2012. According to the contract, the activity was to
take eight months from the date of signing of the contract.
Field inspections carried out in October 2013, revealed that the period of
completion expired in January 2013 and work had stalled. The status of
construction is shown in the photos below:
176
Stalled construction works at the Judicial Studies Institute in Nakawa, Kampala
Management explained that funding from JLOS was on a phased approach and as
a result interfered with the progress of work. I advised that in future, works
should be carried out in accordance with the work plan.
9.20 DIRECTORATE OF CITIZENSHIP AND IMMIGRATION CONTROL (DCIC)
i) Non implementation of planned activities
During the year, a total of Shs.2,136,930,000 was available for JLOS activities
under the DCIC (Shs.979,000,000 brought forward from the previous year and
Shs.1,157,930,000 released in the year under review). Records availed indicate
that only Shs.484,452,756 was utilized leaving a balance of Shs.1,630,547,244
unutilized implying that only 22.7% of the funds was utilized. The following
planned and funded activities were not implemented at all:
Planned activity Amount
released
(Shs)
Amount
spent
(Shs)
Remarks
Construct immigration border station at
Kizinga
200,000,000 0 No work done
Completion of the chain of Justice 390,000,000 0 No work done
Software installation, carry out staff
training, procure solar system, scanners,
computers
100,000,000 0 No work done
Procure consultant, procure software,
scan, digitize physical files, implement a
computerized workflow
300,000,000 0 No work done
Develop and translate a citizen
verification manual.
40,000,000 0 No work done
177
Develop and print operating procedures
manual
50,000,000 0 No work done
Pilot decentralized passport processing
and issuance (Mbarara, Mbale and Gulu)
300,000,000 0 No work done
Reduction of illegal stay 50,000,000 0 No work done
Enhanced inspections and investigations
of aliens’ immigration and facilities
75,000,000 0 No work done
Ethics code put in place, complaints
system established
40,000,000 0 No work done
The slow implementation of the planned activities has a negative effect on the
achievement of objectives of the project.
Management responded that the delay was caused by long procurement process
in land acquisition and unresolved border disputes. These challenges have since
been addressed and the activities are at various levels of implementation.
Management was advised to ensure that activities are implemented in accordance
with the approved work plans.
ii) Construction of border posts
During field inspections in October 2012, it was noted that construction of border
posts had progressed in only three sites (Bunagana, Atiak and Goli) out of the four
planned. Construction of Cyanika was still pending. Inspection of the sites
revealed that the progress of work was still slow:
(a) Bunagana Border Post
A construction company was contracted to construct the border post of Bunagana
at a contract price of Shs.188,845,241. The following were noted;
The construction was almost complete but no counter had been provided as
specified in the BOQs and no provision was made for construction of an
outside pit larine.
Much as laying of conduits for electrical wiring had been done, power had
not been connected to the building. Sockets, switches and electrical wiring
had not been installed.
178
The billboard stand indicating the client, contractor, supervisor as specified in
the BOQ had not been installed despite the construction having started.
(b) Goli Border Post
A construction company was contracted to construct the border post of Goli at a
contract price of Shs.195,197,400. The following were noted;
Construction was still at wall plate level.
The contactor abandoned the site since June 2012 and it had turned bushy.
The contract period was for 6 calendar months, however, this contract had
expired in February 2012 yet less than 50% of the work had been done.
Although the contract was extended, no extra work had been done by the
new contractor at the time of inspection.
Site clearing was not done at the back of the building leaving excavated
materials on site.
No bill boards or sign post had been fixed yet funds had been paid.
The structural designs provided for internal toilets but there was no piped
water and no provision was made for construction of a pit larine.
(c) Atiak Border Post
A construction company was contracted to construct the border post of Atiak at a
contract price of Shs.93,124,504. The structure did not meet the required
specifications. The rooms and the total constructed area were smaller than
planned. The contractor was required to rectify the defects instead no further
works were undertaken and the site was abandoned. The building is as below:
It was further revealed that the Directorate does not own the land on which this
post was being constructed.
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(d) Cyanika
A construction company was contracted to construct the border post of Cyanika at
a contract price of Shs.390,000,000. No work had started despite the funds
having been released.
Management acknowledged the observations and regretted the state of works in
various sites at the time of audit. Management explained that they had initiated
supervision trips by the technical team and internal audit department, and a
special task force was constituted to address the issues and advise the Accounting
Officer.
I advised Management to urgently compel the contractors to rectify and complete
the works. I also advised that a follow up on the land title for one of the border
posts be done.
iii) Poor state of Immigration offices up country
An inspection of some of the immigration offices upcountry revealed that the
stations were in a poor state. The following were observed at Bibia,
Ngoromoromo and Madi Pei stations:
a) Bibia
The office in Bibia is located within the market area together with the URA offices.
The building was constructed to house shops but has now been turned into
offices. The station has two rooms;
i) The front room for the reception and immigration officers on duty. Here
officers issue visas and stamp passports from behind the counter that
separates them from the customers
ii) The second room serves as the store for all the stationery and items not
required in the front office including used and unused stationery. It is also
used as the kitchen, dining room and office for the in-charge of the station.
b) Ngoromoromo and Madi Pei border posts
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The immigration posts are located on the borders with South Sudan in the district
of Kitgum. The posts have only one staff each who collects money, writes the cash
book and transports the money on a motor cycle to the bank in Kitgum once a
week, which is about two kilometres away from each of these posts. The offices
are mud grass thatched huts with no doors or any security. The photo of the
Ngoromoromo station is shown below:
The grass thatched hut housing Ngoromoromo border post
On a daily basis, staff retire with the office equipments home. They live in uni-
pots provided by the police in their barracks located near the border posts.
Management responded that at the time of establishing the Bibia Immigration
offices, there was limited office space available for rent. However, land has been
identified and a one stop border center is yet to be constructed by Trade Mark
East Africa. Delays were due to border point disputes between the Government of
Uganda and South Sudan.
I await the results of Management efforts.
9.21 DIRECTORATE OF PUBLIC PROSECUTIONS (DPP)
i) Budget performance
During the year under review, a sum of Shs.2,628,000,000 was approved for
implementation of DPP project activities, however, only Shs.2,264,618,500 was
received leading to a budget shortfall of Shs.363,381,500. Project's performance
revealed that some planned activities had not been undertaken, while others
remained incomplete. Details are in the table below:
181
Planned Key
Activity
Approved
Budget
Actual
amount
Released
Expected Output Actual output Remarks
2.1.3.5 Open
and resource 8
new DPP
stations
160,000,000 157,117,623
8 new DPP stations
opened and
resourced
Only 4 offices were
opened in
Lyantonde,
Nakifuma, Mitooma
and Nakapiripirit,
and furnished. 5
computer
workstations, 10
laptops procured.
Under absorption
(43%)
2.1.3.6 Carry
out major
renovation of 3
DPP buildings in
Kasese, Nebbi &
Arua
300,000,000
289,371,233
Major renovation of
3 DPP buildings in
Kasese, Nebbi &
Arua.
Kasese office
renovation is at
completion hence
Lira and Arua offices
not yet renovated.
Delayed
Completion
(absorption
capacity of only
3%)
2.1.3.7 Procure
and install solar
equipment in 5
stations.
150,000,000
144,955,840
Solar equipment in 5
stations supplied and
installed.
Installation of solar
in Amolator, Moyo
and Adjumani offices
is complete.
Installation in Abim
and Kaberamaido
offices was in
progress.
Installation not
done due to
incomplete
construction of offices
though the
contractor had been
fully paid and equipment
procured.
2.1.3.9
Construct Guard
house and
toilets on 6
existing DPP
offices
180,000,000
158,198,514
Guard house and
toilets on 6 existing
DPP offices
constructed
50% construction
done.
Delayed works
Slow activity implementation was exhibited in some construction works.
Construction especially of DPP offices and staff quarters at Kalangala was far
behind schedule. The slow implementation of the planned activities is an
indication of inadequate coordination between those responsible and the
implementers.
Management attributed the slow implementation of planned activities especially
construction works to acquisition and ownership of land, procurement related
182
hitches, contract management related issues and delayed release of funds.
However, the Directorate continues to explore remedial actions such as carrying
out consultations with stakeholders to overcome the emerging challenges that
may affect the implementation of planned activities.
Management was advised to ensure that activities are undertaken as planned.
9.22 JUDICIARY
i) Budget performance
Shs.5,355,000,000 was budgeted to cater for JLOS activities under Judiciary.
During the year, a total of Shs.5,586,419,855 was available for spending
(Shs.1,121,774,355 brought forward from the previous year and
Shs.4,464,645,500 released in the year under review). Records availed indicated
that only Shs.4,609,405,000 was utilized leaving a balance of Shs.977,014,855
unutilized at the end of the financial year. As a result a number of activities were
not implemented as planned despite the release of funds on the planned activities.
Details are below:
Specific Activities
Approved Budget (Shs)
Cumulative Release (Shs)
Cumulative Expenditure (Shs)
Balance released but not spent (Shs)
Remarks
2.1.3.19 Rehabilitation of 2 Chief Magistrate Courts across the country (Kasese and Jinja)
200,000,000 - - Not implemented
2.3.1.1 Acquire Court Recording Equipment for Appellate Courts
80,000,000 80,000,000 - 80,000,000 Not Achieved yet full budget released
2.3.1.2 Acquire Court Recording Equipment for Civil division for 4 Judges
80,000,000 80,000,000 - 80,000,000 Not Achieved yet full budget released
2.3.1.3 Roll out land courts to 10 C.M Courts
180,000 ,000 180,000,000 35,567,000 144,433,000 Not Achieved yet full budget released
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2.3.1.4 Acquire Court Recording Equipment for Family division for 3 Judges
160,000,000 160,000,000 - 160,000,000 Not Achieved yet full budget released
2.3.1.5 Provide office furniture for 10 Magistrate Courts.
100,000,000 100,000,000 41,152,000 58,848,000 No other courts were provided furniture apart from Kalangala but which had its own budget. Not achieved
2.3.5.15High Court- Commercial Justice
160,000,000 130,000,000 130,000,000 0 No report given
2.3.5.20 Case backlog in in the CM Courts (civil, land, family and criminal)
300,000,000 200,000,000 200,000,000 0 No report given
2.3.5.25 Procurement of Station wagon vehicles for Chief Magistrates to be appointed
160,000 ,000 75,000,000 - 75,000,000 Not achieved
2.3.7.1 Provide for facilitation of witnesses in criminal matters and cases involving children (family division) at all Court levels
240,000 ,000 134,000,000 134,000,000 0 Activity not done
Non-implementation of planned activities within the stipulated time does not only
lead to spill over of activities to the next planning periods but may also lead to
non-achievement of the desired outputs due to the rise of prices of the inputs,
subsequently hampering fulfilment of Project objectives.
Management explained that the released funds were committed on procurement
of equipment but the process had not been concluded.
I advised Management to carry out adequate planning to ensure that activities are
implemented in accordance with the work plan.
ii) Inequitable distribution of session funds
184
I noted inequitable distribution of session funds for the backlog cases in the High
courts and other lower courts in the period under review. For example; Gulu,
Masindi and Kabale High courts for unknown reasons did not receive any backlog
funds in the period. Shs.341,670,000 transferred to Chief magistrate courts in the
period under review was allocated to only to 17 Chief magistrate courts out of the
46 spread across the country.
Grade 1 and 11 Courts did not receive any funds although Shs.120,000,000 had
been budgeted and Shs.65,000,000 reported to have been transferred.
Management responded that the available funds were not sufficient to cover all
the courts which called for prioritization where consideration was given to those
courts with large number of cases and availability of Judicial Officers to handle
them.
I advised that management develops a criteria on distribution of session funds and
how they intend to cover non benefiting courts.
iii) Payments for State Briefs
It was noted that there were no proper system and standard rates for the
payment of state briefs to advocates. Detailed information such as the name of
the advocate or the Law firm being represented, and the persons accused of
capital offences was not captured. In many instances, the cases were not
mentioned besides the rates paid differed from one advocate to another. In the
absence of a system and standard rates of pay, state briefs to advocates may not
be appropriately justified.
Management explained that advocates are paid on the basis of number of cases
being handled, number of times one appears in court and the number of witnesses
involved in the case and that some cases are peculiar and hence payment cannot
be standardized for all advocates.
I advised management to develop guidelines for payment of state briefs.
185
9.23 UGANDA PRISONS SERVICE (UPS)
i) Budget performance
Shs.5,823,906,405 was available for approved JLOS activities under the UPS
(Shs.926,310,405 brought forward from the previous year and Shs.4,897,596,000
released in the year under review). Records availed indicate that only
Shs.4,096,777,747 was utilized leaving a balance of Shs.1,727,128,658 unspent at
the end of the financial year. Because of this, planned and funded activities were
partially or not implemented at all. See below;
Planned activity Amount released (Shs)
Amount spent (Shs)
Remarks
Construction of Nebbi Prison 1,359,194,005 435,088,247 Work had just started
Recruitment of 700 Prisons warders/wardresses
500,000,000 93,039,800 Recruitment not done.
Construction of 20 water borne toilets
400,000,000 0 No work done
Construction of Lamwo Prison 250,000,000 0 No work done
The slow implementation of the planned activities negatively affects the
achievement of Project objectives. I advised management to implement activities
in accordance with the work plans.
ii) Construction of New Nebbi Prison
On 27th April 2012, a contract for construction of Nebbi Prison was signed between
Uganda Prisons Service (UPS) and a construction company for a contract sum of
Shs.1,359,194,005. The works involved construction of a prison ward,
administration block, VIP latrines and three staff houses. The construction was to
be completed in 12 months commencing on 5th September 2012. However, field
inspections in September 2013 revealed that the work was far behind schedule
despite the entity paying a sum of Shs.435,088,247 to-date. The photos of the
prison ward and administration block are shown below:
186
Excavation of prison ward was still ongoing
The Administration block at window level
It was observed that the construction of the staff houses could not proceed
because of discrepancies in drawings and bills of quantities. The delayed
execution of the works negatively affected the implementation of Project activities.
Management responded that commencement was greatly delayed by heavy rains
that made the road impassable to the site necessitating extension up to end of
April 2014. I advised Management to follow up the project to completion
within the extended period.
iii) Recruitment of Prison warders
It was observed that the department budgeted for the recruitment and training of
700 staff at the rank of warders/wardresses at Shs.500,000,000. However, only
Shs.390,000,000 was released and only 300 former Local Administration Prisons
Services (LAPS) were trained at a cost of Shs.93,039,800. This meant that
recruitment and training of new staff did not take place as planned.
Management explained that the request for authority to recruit the 700 staff was
declined by Ministry of Finance and Public Service. The authority to re-allocate the
funds to train former LAP staff in basic Prisons was sought and granted.
187
Management was advised to liaise with the responsible Ministries to recruit staff to
improve staffing levels in prisons.
iv) Lamwo prison
UPS budgeted and received a sum of Shs.250 million to build a prison in Lamwo
district. It was however noted that by the time of audit, no work had been done
and no contract had been signed
Management explained that the signing of the contract was delayed because the
District Local Government (DLG) was not able to open the access road to the site.
Management was advised to follow up the project to its completion.
9.24 UGANDA POLICE FORCE (UPF)
i) Budget Performance
During the year, Shs.3,481,215,500 was released to the Police Force while
Shs.1,497,417,500 unspent from the previous year was brought forward, bringing
the total of available funds for spending to Shs.4,978,633,000. Shs.3,236,172,000
was utilized leaving a balance of Shs.1,742,461,000 unutilized at the end of the
financial year. By not utilizing all the funds available some activities were partially
or not implemented at all. Details are in the table below:
Specific Activities
Approved Budget
Cumulative Releases
Cumulative Expenditure
Remarks
Equipment for the Veterinary
Clinic
30,000,000 30,000,000 - Activity not executed
Printing of 2,000 quarterly
reports
32,000,000 32,000,000 - Reports to be made after a trial run of the system
Model Police station Kajjansi
507,000,000 507,000,000 506,000,000 Request for re allocation to Luwero was
submitted to the JLOS and accepted. An LC top
up on the contractor
made.
Procure 2 Patrol Vehicles
83,424,000 83,424,000 - Not done
Procure 16
M/Cycles for
70,000,000 70,000,000 - Contract awarded to
Honda awaiting
188
CFPU clearance from Solicitor
General
The delay or failure to implement planned activities denied beneficiaries of the
intended services and hinders the achievement of programme objectives.
I advised Management to ensure that activities are implemented in accordance
with the approved plans.
ii) JLOS Quick Win Case Backlog Reduction Programme
One of the major Challenges in Administration of effective delivery of Justice in
Uganda has been persistent increase in case back log due to inadequate
resources, poor investigation and delays by criminal justice actors such as Criminal
Investigation Directorate (CID). A number of police stations were inspected to
ascertain the level of investigations. It was noted despite the effort, case backlogs
have accumulated as depicted in three police stations visited in northern Uganda:
No Police Station Total number of cases in year (Old and new)
Successfully investigated by end of year
Cases carried forward at end of 2012/2013
1 Arua 119 29 90
2 Maracha 60 10 50
3 Gulu 80 38 42
Total 259 77 182
I also noted that most suspects spend more time in the police cells than the
required 48 hours and some were released on bond due to inadequate funding
and lack of enough information.
In their explanation, management indicated that much as the complainants, the
investigators, the Government and the Development Partners (JLOS) want speedy
investigations and trials, the funds extended to the up-county stations are not
sufficient to expeditiously and adequately handle the cases as would be required.
189
Management further explained that a request for more funding has been made to
the Ministry of Finance, Planning and Economic Development.
I advised that the Police budget should be enhanced to ensure provision of
adequate funds to the Police stations for investigations so as to clear the
increasing backlog of reported cases yet to be investigated.
iii) Field inspections – Construction of Mukono Police Station
A contract was awarded to a construction company for completion of Mukono
Police station at Shs.295,567,173. A total of Shs.64,183,457 has been paid so far
(on certificate 1). The construction ought to have been completed and the building
handed over within 6 months. However, it was noted that construction was still
underway by the time of the audit inspection in September 2013. It was further
noted that the mahogany veneer doors were of poor quality. The doors do not
measure up to 7ft as prescribed by the bills of quantities. Photos are shown
below:
Doors provided not according to specfications
The windows were supposed to be of casement comprising of 3mm thick steel
plate bottom panel 150mm high and glazed top panels of 600mm high. It was
noted that the panels were weak and some were bent meaning that they do not
measure to the prescribed thickness. A picture of one of the windows is below:
190
Windows not according to standard
The team also observed uncovered septic tanks. The pictures below refer:
Open septic tank Flooring and screeding already in poor shape
According to the report of the supervising engineer, it is evident that the external
and internal plastering was complete and certified yet the work appears below
standard as shown in the pictures. The site inspection also revealed that no
activity was ongoing meaning the works had been abandoned.
The open septic tank can endanger the lives of the people who operate around
the site. The delay in contract performance increase administration costs and also
delays the achievement of the objectives of the project.
Management explained that the site was handed over to the Contractor in March
2013 with a six month completion period and that instructions were issued to the
contractor to remedy the defective doors and windows.
I await the outcome of management action.
191
9.25 LAW DEVELOPMENT CENTRE (LDC)
i) Construction of a Perimeter wall fence
A contract to construct a perimeter wall fence and upper part of LDC premises was
awarded to Home Builders Ltd at a cost of Shs.195,000,000. An inspection of the
work done by the contractor revealed that construction works were incomplete.
According to the BOQ, the contractor was to apply undercoat and three finishing
coats of oil base paint in approved colors to all framings and vertical members of
grill panel. However this had not been done and the contactor seemed to have
abandoned the work as no work was ongoing. It was also noted that some parts
of the copings on the perimeter wall were not properly done and have since
cracked exhibiting substandard works.
Part of unpainted framings cracked coping on the perimeter wall
Delayed completion of the construction works and shoddy work exhibited are a
result of poor supervision and contract management.
Management responded that the contractor is to put right all the defects before
the retention fee is paid. Management had arranged to have a meeting with
contractor on the matter.
Management was advised to ensure that defects on the perimeter wall are
rectified by the contractor.
ii) Construction of Auditorium - Lack of a Contract Manager
192
A contract for construction works for the auditorium was awarded to a
construction company at a contract sum of Shs.3,971,880,902. Regulation 259(1)
of the PPDA Regulations 2003 requires the user department to nominate an
existing member of staff with appropriate skills and experience, or who is
supervised by a member of staff with appropriate skills and experience as a
contract manager.
Contrary to the regulations, no Contract manager was appointed to supervise and
ensure that the provider performs the contract in accordance with terms and
conditions specified in the contract. Absence of a contract manager in a contract
of such a magnitude undermines the procurement regulations and poses a risk of
departure from the terms and conditions of the contract and eventual poor
workmanship.
Management explained that at the beginning of the construction works the project
manager was retrenched. Management indicated that appointment of another
manager is in the process.
I await management action on the matter.
iii) Delayed completion of construction works
It was further observed that construction works for the auditorium started on
30/5/2012 and the completion date was agreed to be 11/6/2013. However,
inspection revealed that construction is still on-going implying that the contract
exceeded its completion date.
By the time of inspection on 30th October, 2013 only two certificates worth
Shs.2,770,753,602 had been paid for the construction of the Project, leaving a
balance of Shs.1,201,127,300. Work was still in progress as indicated in the
photos below:
193
Ongoing works on the auditorium
Delays to complete construction works may result into failure to achieve the
objectives for which the contract was entered, hence affecting the performance of
the entity.
Management explained that the delayed completion of construction works was due
to failure by Ministry of Finance to release all funds allocated for the project in the
1st year of the project.
I advised Management to liaise with the Ministry and ensure all funds are released
as anticipated.
9.26 MINISTRY OF GENDER, LABOUR AND SOCIAL DEVELOPMENT (MOGLSD)
(a) Delayed transfer of Property ownership
In the Financial year 2011/12, the Ministry signed a contract to purchase a
building on Martyrs way in Ntinda at USD.1,100,000 to house various councils that
are under its supervision and indeed staff are already utilizing the premises. It was
however noted that the ownership had not been transferred to the Ministry as
prescribed in the terms of purchase rendering the authenticity of the expenditure
194
uncertain. Additionally, the certificate of occupancy indicating suitability of the
premises for habitation was not availed for audit verification.
I have advised the Accounting officer to ensure that the ownership of the building
is transferred into the names of the Ministry and an occupancy certificate be
obtained from Kampala Capital City Authority.
(b) Lack of records for Ministry land and property
The Ministry indicated that it owns various pieces of land across the country. It
was however noted that a comprehensive data base of all the Ministry land and
property was lacking.
An audit inspection of the property in a sample of districts revealed the following
matters;
Lack of ownership documents
Claim of ownership of the land and properties by Districts and Individuals
Occupation of the land by squatters involved in sand mining and bricklaying
Dilapidated buildings
The Accounting Officer acknowledged that the Ministry did not have land titles for
all the institutional land, with the exception of Kampiringisa National Rehabilitation
Centre, Naguru Remand Home and Lweza Rehabilitation Centre. He further stated
that a taskforce had been constituted to trace and document all the Ministry land
and property for titling. I await the outcome of this exercise.
(c) Inspection of Rehabilitation Centres and Remand Homes
Physical inspection of a sample of rehabilitation centers, remand homes and
sheltered workshops across the country revealed the following matters;
Centre Audit observation
a. Mpumudde
Rehabilitation
Centre
Out of establishment of 19 staff, only 6 were filled resulting into
13 vacancies
One computer for training 50 children
Inspection report by the Ministry Works and Transport (Entebbe),
referenced as; Bld52/141/01 of 23/1/2012 indicated that the
buildings needed urgent repairs to protect the lives of the children
195
b. Ruti Vocational
Rehabilitation
Centre
Had only 4 staff out of an establishment of 7
Building was dilapidated and lacks a land title
c. Kireka
Rehabilitation
Centre
Out of establishment of 19 posts only 7 were filled
The carpentry and metal work shop has been without power for
two years.
Juvenile boys lack toilets
d. Fort portal
Remand Home
Out of establishment of 17 posts, only 7 are filled.
Supplies reportedly are made late because of centralized
purchasing
Children share beds without blankets and mattresses are worn out
Sewerage system is appalling and regularly breaks down.
e. Arua Juvenile
Remand Home
Relatively new structures
But manholes were found open and there were no pit latrines as
stop-gap measure in case of water shortage.
f. Gulu Remand
Home
Lacks a nurse and a cook.
g. Mbale Remand
Home
Out of 19 positions in the establishment only 4 are filled
Due to lack of transport facilities, children are held on remand for
more than 6 months before appearing in court.
The roofs leak
h. Naguru Remand
Home
Out of the 4.4 acres of land occupied by the remand home, only 2
acres is fenced while 2.4 acres had been encroached upon by
Uganda City Terminal Car Depot.
Buildings are dilapidated and some have asbestos roofs
19 approved staff positions, only 6 were filled
i. Jinja Sheltered
Workshop
Workshop has dilapidated buildings
Chain link and poles were reportedly stolen by artisans
Compound was bushy
j. Mbale Sheltered
Workshop
The machinery is non-functional and the structures are
dilapidated
It also lacks a land title
Establishment of 13 positions only 8 are filled
The above weaknesses render the rehabilitation centres, remand homes and
sheltered workshops unsuitable for reforming juveniles.
The Accounting Officer explained that submissions had been made to the Ministry
of Public Service to address staffing gaps. He further stated that renovation of the
196
Institutes for youth and children is ongoing after which rehabilitation centers will
be renovated.
I have advised management to liaise with the relevant ministries and departments
to address the staffing, infrastructural, financial and social needs of the children as
mandated by the regulations.
(d) Budget performance
During the year, a total of Shs.1,114,871,279 was available for approved JLOS
activities under the MoLGSD (Shs.732,721,279 brought forward from the previous
year and Shs.382,150,000 released in the year under review). Records availed
indicate that only Shs.548,124,566 was utilized leaving a balance of
Shs.566,746,713 unutilized at the end of the financial year implying that only
49.2% of the funds was utilized. The unspent balances affected the
implementation of the following project activities.
i. Construction of Kabale Remand Home Phase I and Arua Remand Home
Phase III.
ii. Payment of retention fee for Arua Remand Home Construction Work Phase II
Office block and staff quarters.
iii. Consultancy and supervision services for Arua and Kabale Phase II and I
respectively
Management was advised to carry out adequate planning to requisition for only
those funds that can be put to use during the financial year. Funds should be
released to the entity based on realistic plan and budgets.
9.27 JUDICIAL SERVICE COMMISSION (JSC)
(a) Contract for development and performance of drama skit
A budget of Shs.39,000,000 was included in the Commission JLOS work plan for
the financial year split into development and production of a drama skit on
domestic violence Shs.15,000,000 and staging performance of four drama skits
Shs.24,000,000. The consultancy contract was awarded to M/s Afri-Talent (U)
signed by Abbey Mukiibi, the Company Director and JSC.
197
Inspection and enquiries carried out in the listed districts where
performance/drama shows should have been carried out i.e. Kalangala, Katakwi,
Sheema, Lamwo revealed that no such shows were performed in those districts.
Furthermore, there were no performance reports presented for verification. The
drama skit show was not staged as was required by the statement of
requirements. Despite that fact that no performances were made, allowances were
noted to have been paid to Commissioners during the purported drama
presentations in the mentioned districts. Non-implementation of planned activities
undermines the Programme objectives.
Management explained that the Drama Skit Performance was not carried out in all
the districts except Kalangala because the officer leading the presentation was
assigned extra works on illegal land evictions.
Management was advised to ensure that the activity is implemented to its
conclusion.
(b) Utilization of Information, Education and Communication (IEC)
materials
Over the past years, the Commission has procured various printed Information,
Education and Communication (IEC) materials in form of brochures, charts and
citizens‘ handbooks in various languages including English, Luganda, Runyankole,
Luo, Ateso and Ngakarimojong. The printed materials are properly recorded in the
stores ledger and the responsible officers requisition and receive copies for
dissemination to the public. However, review of the stores by Internal Audit
revealed the following:
The materials issued out of the Commission stores to the public were not
properly accounted for. Other than the quantities reflected in the stores
ledger, details of names of benefiting members from the public at any given
Agency, Sub-County, District or location were not available at the stores for
review as accountability. It was therefore difficult to trace whether these
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materials reached the intended beneficiaries. The intended objectives may not
have been achieved.
Absence of a well laid down programme for distribution of educational
materials throughout the country was also noted. The distribution is currently
done in an adhoc manner depending on where the Commission staff are
proceeding for official activities and they carry any materials for distribution
without following any systematic programme. This is a disadvantage to some
hard to reach places that are not regularly visited by the Commission.
I advised Management to come up with a comprehensive programme for the
distribution of IEC materials covering the entire country. This will ease tracking
and enable a systematic approach to the distribution and monitoring of these
activities.
10.0 MINISTRY OF INTERNAL AFFAIRS
10.1 Mischarge of expenditure
The Parliament of Uganda appropriates funds in accordance with the needs of the
country and this appropriation is implemented through the budget in which funds
are tagged to particular activities and outputs using account and MTEF codes.
Review of the Ministry‘s expenditures revealed that the Ministry charged wrong
expenditure codes to a tune of Shs.834,282,494. This practice undermines the
budgeting process and it is contrary to the intentions of the appropriating
authority. The practice also leads to incorrect financial reporting.
In response, Management explained that the mischarges arose as a result of
having insufficient funds on the relevant item codes whereas the payments were
critical and un-avoidable.
I advised management to streamline the budget process to ensure that sufficient
funds are allocated to each account. Authority should be sought for any
reallocations undertaken.
10.2 Payables
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A review of the Statement of Financial Position revealed payables of Shs.
1,708,629,810 that remained outstanding as at 30th June 2013. Accumulation of
domestic arrears is in contravention of the commitment control system. There is a
risk of loss of reputation and litigation by creditors.
I advised Management to clear the outstanding commitments as a first call on the
budget as guided by Accountant General. I also advised Management to liaise with
the relevant Government authorities for adequate funding.
10.3 Advances to Individual Personal Accounts - Non Compliance with
Treasury Accounting Instructions
Sections 227, 228 and 229 of the Treasury Accounting Instructions (TAIs),
provides for all payments to be made by the Accounting Officer directly to the
beneficiaries. Where this is not convenient, an imprest holder should be appointed
by the Accounting Officer with the approval of the Accountant General.
On the contrary however, Shs.285,191,112 was advanced to Ministry staff through
their personal bank accounts to undertake direct procurements and other activities
of the Ministry. Such a practice of depositing huge funds on personal accounts
exposes Government funds to risk of loss, since the Ministry does not have any
control over such funds deposited on personal accounts.
Management explained that advances to individual personal accounts are treated
as administrative advances and are usually of emergency nature. These are later
on accounted for and retired. I advised Management to ensure strict adherence
with the requirements under the Treasury Accounting Instructions.
10.4 Motor vehicle repairs and servicing
During the year, a total of Shs.66,247,623 was paid to various service providers in
respect of repairs and servicing of vehicles. It was however noted that the entity
has no policy on fleet management to provide guidance to the Transport officer.
For instance, there is no internal mechanism in place for a competent Engineer to
carry out internal assessments of vehicles that are due for repairs. Repair needs
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have mainly been based on the assessment done by the respective drivers.
Further still no post vehicle inspections are done by an engineer to confirm that
repairs are done as specified in the repair orders, instead it is the drivers that
confirm the repairs were done. In absence of an appropriate system and other
records like motor vehicle maintenance charts, I was unable to verify that the
repairs were undertaken accordingly.
Management in their response explained that the Ministry structure does not have
mechanical engineers and in most cases they depend on engineers from the
Ministry of Works and Transport (MoWT). However, MoWT staff are not readily
available and yet the repairs and servicing are usually an emergency.
I advised management to liaise with MoWT to ensure that proper pre and post
inspection is made on all vehicles taken to garages by a competent engineer.
10.5 Lack of storage of space
It was noted that Management lacks an established storage for items of the
Ministry before they are disposed of. Furniture and cars litter the compound with
no immediate plans of disposing them off some of which appear to be in good
condition. The photo below refers:
The Ministry property is likely to depreciate rapidly.
Management explained that the Ministry lacks ample office and other space to
house the items. I advised Management to expeditiously plan for the disposal of
the items to salvage some value.
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10.6 Utilities
(a) Water
The Ministry headquarters has one water meter number 12-042724 located at Old
Port bell Road gate. Outstanding water bills at the end of financial year 2012/2013
amounted to Shs.55,163,695 as per Statement of Account dated 4th July 2013,
from National Water and Sewerage Cooperation. Deposits amounting to
Shs.21,683,266 paid during the financial year were not reflected on the Ministry‘s
Water Statement of Account.
There is a risk of double payments for water bills and creation of unnecessary
domestic arrears since some of the deposits are not indicated on the Ministry‘s
Account.
There is a need for management to send payment advice forms to National Water
as soon as payments are made and also to make a follow up to ensure that the
Ministry Account is credited.
(b) Electricity
The Ministry has one electricity meter number U211392 located on the main block.
Deposits made to UMEME during the financial year amounted to shillings
70,136,184 and they were all reflected on the Ministry Account. However at the
closure of the financial year, the outstanding bill amounted to Shs.29,059,977.
Management in their response stated that this is a result of low budget provisions.
The Ministry made several requests to the Treasury on increased funding for the
utilities, however no positive response was received.
I advised management to come up with appropriate budget provisions for utilities
and continue pursuing MOFPED.
10.7 Stalled Government Laboratory Projects
Construction of Gulu Regional Laboratory which started in February 2008 and
expected to be completed in July 2008 at the original cost of Shs.436,445,468
stalled, while construction of Mbarara regional Laboratory at original contract price
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of Shs.454,015,728 is ongoing but behind schedule. Delays in construction of the
Regional Laboratories may lead to increase in backlog of cases since analysis of
various samples to be used for testifying in court is equally delayed.
Management in their response explained that initially the contractors experienced
a lot of challenges on the ground and consequently work stalled. However,
management has now appointed project managers for each of these projects,
intensified inspections and work is almost complete.
I advised management to expedite the arrangements under way for revival of the
stalled project in Gulu. I also advised that the Project management team of
Mbarara should be more vigilant to ensure that the project is not delayed any
further.
10.8 Monitoring of NGOs
The department of NGO Board has consistently registered new Non-Governmental
Organizations (NGOs) without monitoring whether those registered earlier are still
operational. As a result, the department has un updated database of NGOs.
Management indicated that a monitoring tool was developed and was to be shared
with the District NGO Monitoring Committees, and that it was to publish in the
media all registered NGOs and issue a directive for them to update their
information on an agreed timetable, which were not done.
Management responded that this was due to limited resources (human and
financial), and the Ministry was unable to monitor all NGOs across the country.
They further indicated that they recently secured some funding from USAID and
they developed a database together with a monitoring tool that will help them
improve on NGO monitoring.
I advised the Ministry to regularly update the NGO database.
10.9 Budget performance
Public Finance and Accountability Regulations, 2003, section 2.10 (b) entrusts the
accounting officer with ensuring that all controls such as those contained in the
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approved estimates and warrants are strictly observed. Budget estimates are
based on outputs to be achieved for the financial year and during implementation,
effort is required to be made to achieve the agreed objectives or targets of the
entity within the availed resources.
Review of the budget performance for the year 2012/2013 revealed that some
targets were not achieved despite release of funds for the various programmes.
Details are below:
Activity Cumulative Release
(Shs)
Cumulative expenditure
(Shs)
Unutilized funds
(Shs)
Absorption capacity
Support for EDM system for NGO Board
100,000,000
1,965,000 99,803,500
2%
Partitioning of Office space
of NGO Board
50,000,000 1,965,000 49,803,50
0
4%
Continue piloting DNA
crime data bank to improve
forensic intelligence
50,000,000 - 50,000,00
0
0%
Improve office and
Laboratory health and
safety
50,000,000 - 50,000,00
0
0%
Cybercrime and anti-
corruption investigation
70,000,000 - 70,000,00
0
0%
NCSP Offenders Monitoring – 10 Motor cycles for
community service in Districts.
75,000,000 12,923,000 62,077,000
17%
Procurement of a station
wagon to transport marking team and marking machines
120,000,00
0
- 120,000,0
00
0%
Establishment of inquiry
and information desk and Train staff in customer care.
10,000,000 10,000,00
0
0%
This may have been due to inadequate supervision and as a result service delivery
is hampered and the appropriating authority‘s objectives are not met.
Management explained that by the time the audit was carried out, funds had just
been received and implementation of activities was just commencing.
I advised Management to carry out adequate supervision of the projects being
undertaken to ensure timely completion.
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11.0 UGANDA POLICE FORCE
11.1 Payables
A review of the Statement of Financial Position revealed outstanding payables of
Shs.48,477,669,348. The position as at 30th June 2012 stood at
Shs.38,457,244,017, implying that there was an increase in domestic arrears by
Shs.10,020,425,331 (26.1%) compared to last year. It is evident that
management has continued to incur arrears without establishing sufficient
mechanisms to monitor and control them. Included in the total outstanding
payables is huge rental arrears amounting to Shs.6,754,083,700. Some of the
arrears relate to the period since 2008. There is a risk of eviction of Police
personnel from the rented premises.
Management explained that the increase in the figure of payables was a result of
the unpaid salaries of June 2013 totalling to Shs.12,020,425,331, which were later
paid in August 2013.
I explained to management that the arrears position is still high and could easily
lead to nugatory expenditure arising from costly litigations.
I advised Management to clear the outstanding commitments as a first call on the
budget as guided by Accountant General. I also advised Management to liaise with
the relevant Government authorities for adequate funding.
11.2 Mischarge of Expenditure
A review of the entity expenditures revealed that wrong expenditure codes were
charged to a tune of Shs.563,783,138 without authority contrary to chapter IV
section 156 of the TAIs. This practice does not only distort the intentions of
appropriating authority but also results into misreporting of the financial
statements.
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Management explained that the Police budget is underfunded and as such it
cannot support the level of services that are required to fulfil its mandate. It was
therefore inevitable that certain items were used to fund critical activities resulting
into mischarges.
I advised management to ensure that accounting regulations are strictly adhered
to.
11.3 Absence of Approved Strategic Plan
A strategic plan provides an organization with purpose and direction. It is an
important tool in steering an organization towards its Vision, Mission and the
overall Mandate. Annual activities undertaken by any organization should be
derived from the strategic plan. However, it was noted that the Uganda Police
Force (UPF) did not have an approved corporate plan during the year that spells
out the long and medium term plans. Absence of a strategic plan has a direct
effect on the achievement of the organizational mission and objectives and
therefore performance of planned activities.
Management explained that a draft strategic plan 2012/13 to 2016/17 was
presented, discussed and approved with amendments in the extra Ordinary Police
Council in November, 2013. The final plan is expected to be ready by end of this
FY 2013/14.
I advised Management that this plan has been in draft form for very long and
should be finalized to provide direction to the Force.
11.4 Lack of an IT strategic plan
International Standard on Auditing requires that the Auditor considers whether the
entity has responded adequately to the risk arising from using Information
Technology (IT) by establishing effective general IT controls and applications, the
main objective being to establish the effectiveness and integrity of information and
ICT Policy.
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UPF has heavily invested in the Information and Communication Technology (ICT)
function. It was however noted that the Force has not developed an IT strategic
plan. The increasing reliance on information technology for the delivery of
services makes it necessary to ensure that these systems are developed, operated,
used and maintained in a safe and secure fashion. Without an approved
IT/information security policy and IT strategic plan, there is a risk of making
investments that are not well aligned with other business processes and besides
investments in IT may not be properly guided leading to waste of resources.
Management explained that they have a draft IT policy that is awaiting the
completion of the strategic plan, so as to align the IT plan to the main Strategic
plan.
I advised management to finalize this policy so as to give guidance and direction.
11.5 Failure to dispose off uneconomic fleet
It was noted that the entity has a fleet of 1,057 motor vehicles. Out of this fleet,
318 motor vehicles are either grounded, under repair or uneconomical, leaving
only 735 vehicles in a running condition, implying 30% of the motor vehicles are
grounded. Failure by Management to dispose off the vehicle will lead to further
deterioration and loss in value.
Management explained that the contract for boarding off 174 vehicles has been
signed, 13 vehicles are accident cases beyond repair that will be included on the
list of those for board off, 24 vehicles are grounded but still economical and
pending repairs, and 41 vehicles are under repair.
I advised management to ensure that the uneconomical fleet is boarded off to
avoid any eventual risks.
11.6 Staffing gaps
The approved structure of Uganda Police Force has an establishment of 65,461
staff (uniformed) of which only 41,242 posts have been filled representing a gap
of 24,219. The staffing levels are not adequate to handle the current Police
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challenges emerging daily in the country. The most affected rank was that of
sergeants. Equally affected are the civilian staff, whose approved work force stood
at 927 of which 317 had been filled representing only 34%, of the work force. It
was also noted that the international law puts the police strength in relation to
population to 1:500, however the Uganda Police Force is at 1:767. Lack of ample
staff coupled with the work over load impacts negatively on service delivery and
achievement of Police Force objectives.
Management explained that there has been a ban on staff recruitment. The
staffing gaps were also attributed to lack of resources to effect adequate
recruitment.
I advised UPF to liaise with the relevant GoU bodies to ensure that resources are
provided for recruitment of adequate manpower.
11.7 Un-surveyed Police land
(a) Land Ownership
There is a lot of un-surveyed Police land which needs formalization and securing of
land titles. Out of 563 police stations, 105 had land titles while 456 did not have
titles. It was difficult to establish exactly how much of this land was surveyed.
Although a budget of Shs.120 million had been provided for the financial year
2112/2013, for this activity, very little was done. The Police Force stands to loose
some of its land to encroachers.
Management claimed that UPF has 613 pieces of land scattered in 86 Districts of
which 78 pieces have been surveyed representing 13% of their land.
I advised Management to follow up with relevant stakeholders to ensure that land
is surveyed and secured.
(b) Kawempe Police Station land title
The office has expressed concern on the issue of the untitled Police land at
Kawempe Police Post. It was indicated that the Family of Kakungulu signed
transfer forms for the said land on and a few days later the file disappeared. A
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follow up on the issue revealed that the agreement for this land was signed
between UPF and Kakungulu Family, duly witnessed by the Chairman Uganda
Land Board (ULB) for purchase of land valued at Shs.645, 000,000. The land was
duly paid for by the Uganda Police Force in full and a copy of the agreement and
title was handed over to Uganda Land Board by the Kakungulu family. This title
has since disappeared at the Uganda Land Board Offices. To date, UPF has not
secured the title to its land. In the absence of a title, management of UPF risks
losing this valuable asset.
Management explained that they have taken steps to ensure that the title is
recovered by informing Uganda Land Commission (ULC) to act on the matter.
However the Commission has not responded.
I advised that management should continue seeking audience with management
of ULC to ensure the title is recovered.
11.8 Budget Performance
A review of the budget performance for the year 2012/2013 revealed that some
planned activities and targets were partially or not achieved at all. Unimplemented
activities hamper service delivery, and the appropriating authority‘s objectives may
not be met. Details are indicated in the table below:
Activities Details Budget Achieved Out put Remarks
Output 1256 Police Services
Prompt response to violent crime
Investigate and conclude 59,543 criminal cases
33,659 Cases investigated
25,886 not investigated
Output 125603 Counter Terrorism
Improve public awareness on terrorism. -Increased capacity to identify and
respond to terrorism threats/Incidents
To ensure a proportion of 60% public are aware of signs of terrorism
40% proportion of public are aware of signs of terrorism.
20% are not aware. Also unclear is the methodology used to determine the proportion of the
public that are aware of terror threats.
Output 125605
Minimise incidents of cattle rustling and theft in Karamoja region and neighbouring communities.
To settle and recover 4,368 cases of rustled cattle reported.
353 cattle recovered
4,015 cases not settled.
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Output 125610 Police Administration and Support Services
-Enhanced Information sharing and investigation. -Enhanced participation in UN peace keeping operations. -Enhanced cooperation with partner states on transnational/crime.
210 of international criminals to be repatriated.
169 International criminals repatriated.
41 not repatriated.
Output 1256 Police services
Recruit and train 2000 PPCs and 500 cadets.
2,500 PPCs and Cadets recruited
NIL No recruitment was done.
Output 1256 Police services
Start Implementation of PPP. Construction of 5 barracks using Hydra form.
PPP implementation Complete construction of 5 barracks using Hydra form.
-PPP Program not implemented. Constructed 3 out of 5 Police stations Namely (Tororo, Butaleja and Kibuku).
-PPP Program not implemented apart from forming the Negotiation team. 2 Police stations not yet done
Output 125677
Contractual obligation on Public Order Management bill fulfilled.
Contractual Obligation on Public order Management bill fulfilled.
Partly paid contractual obligation on Public Order Management equipment.
Partly handled.
Output 125609 Police, Command,
Control and Planning.
Strategic Policing finalized.
Strategic Policing finalized.
Process on going. Not finalized.
Management in its response argued that the entity was under funded and as a
result some of the activities budgeted were not implemented.
I advised management to liaise with relevant authorities and ensure that the
planned activities are implemented.
11.9 Inspections
(a) Masindi Police – Backlog cases
One of the Objectives of JLOS is to enhance access to justice for all particularly for
the poor and the marginalized. Continued accumulation of backlog cases therefore
does not reflect the achievement of the objective of the program.
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During Inspection of Masindi Police station, it was noted that only Shs.830,000
was advanced to an officer in charge of criminal investigation to investigate 6,000
cases for the calendar years 2012 and 2013. With the limited resources available,
the officer managed to investigate 779 cases successfully. 1,729 cases were put
on hold due to want of evidence and 437 cases remained un-investigated in 2012.
In 2013, 3,055 case were reported of which 556 were investigated, 921 cases put
away due to want of evidence and 1,578 cases remained un-investigated.
Management explained that in addition to limited funding, office activities were
hampered by delays in receiving reports from Government Analytical Laboratory
and finger Prints expert, lack of cooperation from those who report cases
preferring to settle case out of court, manpower problems and lack of adequate
transportation facilities.
I advised management to liaise with the relevant authorities and address the
critical issues raised above.
(b) Soroti Police station – case backlog
Soroti police was equally facing similar problems as Masindi station. It was noted
that 275 cases were brought forward from the previous year, while 2,990 cases
registered in the 2012/2013, bringing the total number of cases for disposal during
the year to 3,265. Only 288 cases were concluded in court, 1,088 were settled out
of court, 849 cases had been taken to court while 1,040 were still under inquiry.
The concluded court cases, those settled out of court and those taken to court
totalled to 2225 (68%)of available cases, which in my view has been considered
low. Details are in the table below:
Month No. of cases b/f 2011/12
No. cases registered
Total no. of cases
Cases out of court
Cases concluded in court
Cases taken to court
Cases still under inquiry c/f 2013/2014
July 2012
28 156 184 49 38 69 28
Aug 2012 20 184 204 78 18 58 50
Sep 2012 20 184 204 86 16 42 60
Oct 2012 25 263 288 90 23 73 102
Nov 21 264 285 110 24 78 73
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2012
Dec 2012 15 206 221 84 11 76 50
Jan 2013 19 262 281 117 21 66 77
Feb 2013 16 261 277 97 34 83 63
Mar 2013 29 248 277 100 32 74 71
April 2013
21 307 328 114 35 80 99
May 2013
27 309 336 64 17 73 182
June 2013
34 346 380 99 19 77 185
Total 275 2,990 3265 1,088 288 849 1040
The slow disposal of cases denies justice to the complainants and suspects. The
slow progress was attributed to slow investigation processes by Police.
I advised management to ensure that cases registered and under inquiry are
investigated expeditiously to minimize delays in delivery of justice.
(c) Soroti Police - State of the cells
It was noted that the doors to the cells at the station had rusted, making it easy
for the suspect to break and escape jeopardizing investigations. The cells were
untidy. It was also noted that the state of the toilets was pathetic with no flush
water facilities. See photographs below:
Pathetic state of toilets
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Management blamed the bad state of affairs on lack of funding. A provision has
been made for infrastructural development in the subsequent year.
I advised management to make arrangements to have the cells renovated and the
doors fixed to improve the living condition of the suspects.
(d) Gulu Police Station
During inspection, it was established that initially the cells were meant to
accommodate only20 suspects but the officer in charge revealed that sometimes
the number goes up to 70. The cells are now dilapidated because of congestions
and lack of maintenance. There were no toilet facilities in the cells, suspects use
buckets to answer nature‘s call at night, and during the day they help themselves
at a nearby pit latrine near the cells.
The Photo below shows the state of cells:
Male cell at Gulu Police Station
Absence of ample space coupled with the deplorable condition of cells could lead
to suffocation and escape of prisoners.
Management explained that the budget for maintenance is highly inadequate
given the vast stock of Police infrastructure. Consequently routine maintenance is
impossible. However, minor interventions are carried out from time to time.
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I advised management to liaise with the relevant Government agencies to allow
renovations and construction of new structures.
(e) Nebbi Police station – inadequate facilities
It was established that initially the cells were meant to accommodate only 30
suspects but the officer in charge revealed that sometimes the number can go to
over 40. There were no toilet facilities in the cells, at night offenders use buckets
to answer nature‘s call, while during the day they help themselves at a nearby pit
latrine near the cells. The cells also lacked ventilation and lighting systems for the
Juvenile, women and Adult male cells. Absence of ample space coupled with the
deplorable condition of cells could lead to suffocation and escape of prisoners.
Management explained that budget constraints hamper renovation of the existing
facilities and construction of new facilities.
I advised management to liaise with the relevant Government agencies for funding
of the Police to enable renovations and construction of new structures.
(f) Arua Police station - Revenue collection
Section 83, 84 and 85 of the Treasury Accounting Instructions (TAIs) 2003 Part 1
Finance requires that funds collected be immediately banked on the collection
account and a banking slip issued to act as accountability. During inspection it was
noted that apart from the Express Penalty scheme and Traffic Accident and Sketch
Plan, Arua Police Station collected other revenues to the tune of Shs.33,045,400.
This revenue was from Police guard services, Police reports and licensing of fire
arms.
It was noted that the account lacked bank statements to confirm receipt and
banking of revenue, as only bank advice forms were kept. The account was not
reconciled as well, contrary to TAI requirements. In the absence of bank
statements, I was unable to confirm that the funds were all promptly banked.
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I advised management to ensure that bank reconciliations are timely done so that
the collections are properly correlated to banking.
12.0 UGANDA PRISONS SERVICES
12.1 Payables
A review of the Statement of Financial Position revealed outstanding payables of
Shs.18,028,999,698. Payables worth Shs.13,062,521,489 were disclosed in the
statement of financial position as at 30th June 2012, implying that there has been
an increase in domestic arrears by Shs.4,966,478,209 (38%) from the closing
position of the previous year. It is evident that management has continued to
incur arrears without establishing sufficient mechanisms to monitor and control
them. There is a risk of loss of reputation and litigation by creditors.
Management explained that the increase in payables was as a result of electricity
and water consumed during the year and not paid because of insufficient funding
for the utilities.
I advised Management to clear the outstanding commitments as a first call on the
budget as guided by Accountant General. I also advised Management to liaise with
the relevant Government authorities for adequate funding.
12.2 Mischarge of expenditure items
A review of the entity expenditures revealed that Shs.717,151,659 was charged on
wrong expenditure. There was no authority for the reallocation. This practice does
not only distort the intentions of appropriating authority but also results into
incorrect reporting in the financial statements.
Management explained that some of the outputs like construction and renovation
had no related budgets such as allowances spent on the implementation of the
projects and as such funds had to be reallocated from other expenditure codes.
The anomaly is regrettable and this will be addressed in the next budgeting
process.
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I advised management to utilize the budget as appropriated and also ensure that
adequate funds are allocated for each account code and MTEF.
12.3 Under collection of non tax revenue (NTR)
The entity budgeted to collect Shs.7,030,000,000 in non-tax revenue during the
financial year. However, only Shs.5,203,969,214 was collected leading to a
shortfall of Shs.1,826,030,786 (26%).
Management in their explanation indicated that most of their NTR comes from
farm productions, however, the output was affected by erratic weather conditions
over season 2013A as indicated in the table below.
Acreage Target Actual
output
Variance
Season
2013A
2,168 3,722,400 1,525,000 2,194,400
Season
2013B
2,168 3,240,000 2,697,000 543,000
6,962,400 4,222,000 2,740,400
I advised management to liaise with relevant authorities and have the necessary
farm inputs secured.
12.4 Lack of IT Strategic Plan
UPS has heavily invested in the Information and Communication Technology (ICT)
function. It was however noted that the there is no IT Strategic Plan. The
increasing reliance on information technology for the delivery of services makes it
necessary to ensure that these systems are developed, operated, used and
maintained in a safe and secure fashion. Without an approved IT/information
security policy and IT strategic plan, there is a risk of making investments in IT
that are not well aligned with other business processes and objectives of the UPS;
investments in IT may not be properly guided leading to waste of resources.
216
Management in their reply acknowledged lack of an IT strategic plan, however
they have conducted a system study as the 1st step towards computerization of
entity operations and several recommendations have been made in terms of hard
ware, software, user requirements and operating environment. It is upon this
development that a Strategic Plan will be developed.
I advised management to speed up the completion of this study and ensure that
the IT Plan is accordingly developed.
12.5 Lack of Recruitment Policies and Procedures
Section 5 of the Public Service Act, Cap 277 delegates the Authority to appoint,
confirm, engage for further service, retire and promote serving custodial officers
below the rank of Assistant Superintendent of Prison. It was however noted that
management has not put in place recruitment policies and procedures to handle
the regional recruitment of prison cadres. The exercise is carried out only when
need arises. Absences of recruitment procedures at a cadre level could lead to the
exercise being marred by irregularities.
Management responded that they are currently using the Public Service Policies
and Guidelines on recruitment. Arising out of the Prisons Act, it is prudent upon
UPS to develop its own policy on recruitment to address UPS‘ specific concerns.
Management further indicated that they are yet to develop the recruitment policy.
I advised management to develop their own guide lines and seek approvals before
they are adopted.
12.6 Inadequate Staff (Warders)
The Final Report on the review and restructuring of the Uganda Prisons Service
done in August, 2006 identified that Uganda Prisons Service was grossly
understaffed in terms of custodial Officers, rehabilitation and reform staff. Under
the current Prisons Standing Instruction, there is supposed to be one custodial
Officer for every three inmates. In Practice however, the ideal ratio is far from
being attained with an average of one Custodial Officer to every 6 inmates. It
was further noted that there were no replacements of staff after retirement or
217
death of Prison staff. There was also no motivation of staff in hard to reach areas.
This undermines the efficient and effective provision of custodial services to the
prisoners. Inadequate staff (warders) make custodial officers vulnerable to risk of
attack or injury from inmates.
Management attributed this to the ban on recruitment and this has affected their
ability to perform. However, additional wage has been provided to cater for
recruitment of 30 Cadet Assistant Superintendent of Prisons (CASP), 50 Cadet
Principal Officers and 920 warders/wardresses in the financial year 2014/15.
I advised management to dialogue with the relevant Government agencies to
enable recruitment of the necessary staff.
12.7 Staff not taking annual leave
According to the Public Service Standing Orders, every staff is entitled to annual
leave. From a sample of twenty personal files, I observed that 11 out of 20 staff
did not take their annual leave. Many had accumulated leave in lieu without
approval. This is likely to cause fatigue and subsequent poor performance.
In response, Management explained that given the current level of understaffing
of 44% with staff prisoner ratio of 1:7, against ideal ratio of 1:3, weak physical
infrastructure and changing profiles of criminals, it may not be possible for every
staff to take annual leave within a year.
I advised management to lobby for increased funding to allow recruitment of the
necessary staff. This will partially solve the leave gaps.
12.8 Provision of Prison facilities and infrastructure
(a) Infrastructure
Humane custody of offenders covers provision of basic amenities such as
medication, food and accommodation. The infrastructure of the Prison Service has
not expanded even with the increase in number of prisoners‘ population. The
service is still operating from the infrastructures that were set up in the 1960's and
1970's.This has resulted in congestion of the prisons. The review of the Strategic
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Investment Plan as at June 2012 puts the number of prisoners at 33,682 with
occupancy percentage of 231%. The big number cannot only encourage escape
but also poor hygiene, diseases and rampant strikes in prisons as the
prisoners continue scampering for the little resources. In the absence of adequate
structures, the safety, hygiene and general welfare of both the prisoners and
prisons personnel is at stake.
Management explained that they are doing their best within the financial
limitations especially through the JLOS project. With this project in place, through
construction and renovation, occupancy has increased by 65% in 10 Prisons.
There are ongoing constructions/renovations in 8 Prisons and the entity has
planned over a medium term to cater for 20,000 prisoners. Other than the
constructions, UPS has embarked on community service, reactivation of judicial
parole, reviewing of sentences and strengthening rehabilitation services in order to
reduce on the congestion.
(b) Use of the bucket system
Shs.120,000,000 was provided by the entity to construct water borne toilets with a
view of reducing the use of a bucket system. The funds released were inadequate
to address the problem. In almost all prisons visited, the bucket system was still
in use. It was observed that the use of this system is unhygienic and humanly
degrading. Although management indicated that the system is being phased out,
only 28 prisons out of 230 had been provided with water borne toilets.
Management explained that they had planned to construct water borne toilets in
all prisons. However adequate resources were not provided.
I advised management to continue lobbying for additional resources to improve
the well being of the prison community.
12.9 Absence of Regional and District Committee
Section 16 and 17 of Uganda Prisons Act, 2006 empowers the Prisons service to
enact the Regional and District Prisons Committees. The role of these Committees
is to provide advisory role to Prisons Council and Regional Prisons Committees
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respectively. It was noted that management has not instituted these committees
as required. This was attributed to lack of resources to maintain these
Committees. In the absence of the various Committees, Prisons activities may
not be handled in an organized and efficient way to allow proper decision making.
Management explained that they do not have the committees in place due to lack
of funds to support the committees. They further explained that they are currently
using the visiting Justices to inspect prisons and attend to complaints. However, a
presentation was made to the Prisons Council for the formation of the two
Committees. A resolution is being awaited after the approval by the Prisons
Authority.
I advised management to implement this requirement for better service delivery.
12.10 Duty Free Shop
(a) Returned cement
One of the objectives of creating the Duty free Shop was to help staff access
building materials at lower prices. However, a visit to the stores at Luzira
indicated that cement worth Shs.8,908,488 (382 bags) was returned to the stores
from up country due to lack of buyers. Details are in the table below:
Dates
Brought
back
Receipt
Voucher No
No of Bags
Brought back
Value in
(Shs.)
Stations that Brought
Back
7/6/2013 2084 53 1,237,444 Back from Masindi Duty free shop
28/1/201
3
5355 171 3,992,508 Back from Ndorwa Duty
free shop
21/1/2013
4573 150 3,502,200 Back from Jinja Duty free shop
1/6/2013 3607 8 176,336 Back from mid-Eastern
(Soroti)
Total 382 8,908,488
This could have been caused by procuring excess materials beyond the staff
demand for the period or the items.
Management in their response explained that the cement was transferred back
from the said regional stores to the central store in Luzira however the returned
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cement was sold with the exception of 25 bags which got damaged and needed
re-bagging.
I advised management to ensure procured materials are in line with assessed
demand.
(b) Items sold at higher prices than market prices
The objective of creating the duty Free shops was to avail materials at subsidized
prices in various stores both at headquarters and upcountry for beneficiaries
(staff). Currently UPS has fourteen (14) stores including headquarter and up
country stores. It was noted that some stores had prices of items greater than
the market prices. Details of these are given below:
ITEM/SUPPLIER QTY PRICE MARKET PRICE
SAVING MARGIN
STORE LOCATION
ORDER STATUS
IRON SHEETS FROM ROOFINGS GROUP
Super Eco preprinted G30 B/Red
1 38,600 37,000 -1,600 Luzira, S/Eastern, Jinja and Mbale stores
New
Corrugated Preprinted G30 B/Red and Super Eco pre-painted G30 Blue
1 38,600 37,000 -1,600 Luzira ,Gulu New
Corrugated Pre-painted G30 Blue
1 38,600 37,000 -1,600 Luzira New
RIDGES FROM ROOFINGS GROUP
New
12MM X12M 1 27,100 27,000 -100 KER Luzira New 16MMX12M 1 48,300 47,000 -1,300 KER Luzira New
This defeats the objective for which the scheme was established.
Management in their response explained that the Committee of the Duty Free
Shop is reviewing the prices to ensure staff get value for money.
I await the outcome of the technical committee reviews.
12.11 Budget Performance
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A review of the budget performance for the year 2012/2013 revealed that some
targets were not achieved as planned. Details are as per table below:
Planned activities 2012/13 Status of output at end of 2012/13
Enhance safety and security for prisoners, staff and the Public.
Reduce staff to prisoner
ratio from 1:6.
Reduce congestion levels
from 217% to 212% by
constructing and
renovating more prisoners’
wards and case backlog
reduction programmes.
Custodial staff to prisoners‘ ratio has worsened from
1:6 to 1: 6.7.
Congestion level increased from 231% to 251%
because of increase in the number of prisoners. This
was due to 14% increase in prisoners population
from 32,967 in FY 2011/2012 to 37,458 in FY
2012/13 Staff attrition of 215 and no recruitment as
the request to recruit in 2012/13 was turned down
by the Ministry of Public Service.
Contribute to access to Justice
Reduce length of stay on
remand from 14 to 12
months (Sector target)
Reduce the remand
population from 52% to
50% of total prisoners’
population (Sector target)
Length of stay on remand for capital offenders did
not improve but was maintained.
Remand to convicts ratio also increased from 52%
to 55.4%
Rehabilitation and reintegration of offenders
1,000 prisoners integrated
into communities
Conducting rehabilitative
guidance and counseling
for 1,500 inmates and
routine counseling of all
inmates
Instead of industrial and agricultural skills, 1,500
inmates undergoing formal education training; 302
inmates sat for UNEB Exams (PLE -118 (101 Passed)
UCE – 46 (31 passed) UACE -38 (29 Passed with a
minimum of 2 principal passes) others certificates
50. Diploma , 50)
Support on integration into communities and
rehabilitative counselling and guidance not provided.
Prisons Management
A daily average of 532
inmates produced to 211
courts country wide
Survey 10 prisons land
(Ragem, Adjuman, Olia,
Moyo, Lukaya, Mubuku,
Ibuga, Kamuge , Bulaula
and Kamuli prisons land)
Boundaries for 4 prisons
land opened ( Luzira ,
Only 231 inmates produced in courts on average.
Survey not done.
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Amita, Arua and Gulu
Plant 300 acres with
various trees species.
Only 37 acres planted with fruits (Oranges 17,
Mangoes 18, and Pineapples 2).
Constructions and Rehabilitations of prisons
Renovate Gulu prisons ( 7
Prisoners wards and an
administration block)
Shs.565m
Reconstruct a
rehabilitation centre at
Namalu prisons – UGX 360
m
Renovate and expand
Mbarara prison
(administration block, sick
bay, 1 prisoners ward of
accommodation capacity
70 prisoners, perimeter
fence ; construct 20
housing units and renovate
5 staff houses –
Shs.1.751bn.
Completion of the twin-
ward at Ruimi prisons –
UGX 300m
Renovations works ongoing at Gulu prison. Not
completed.
Reconstruction of Namalu Rehabilitation centre
ongoing, not completed.
Construction of low cost staff houses at Mbarara still
on going
A twin-ward at Ruimi farm prison at final finishes.
Unimplemented activities negatively affect service delivery, and the appropriating
authority‘s objectives are not met.
Management explained that capital development activities were hampered due to
insufficient funding.
I advised management to lobby for capital development and have the activities
performed as planned.
12.12 Field Inspections
(a) Soroti Prison – inadequate uniforms
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During audit inspection, it was noted that some prisoners were dressed in torn
uniforms. Records available indicated that Soroti prison received only 375 pairs of
uniforms on 16/05/2012 and yet the lock up number was 621, leaving almost half
of the prisoners without uniforms. The picture below refers:
Prisoner with torn uniform
The inadequate clothing undermines the status of Uganda prisons.
Management in their response indicated that they had a budget for at least 2
uniforms per prisoner at an estimated cost of Shs.1.423 billion, however only
about 0.756 billion was provided and as a result not all prisoners were catered for.
I advised management to bring this to the attention of the relevant authorities to
ensure that prisoners have the required clothing.
(b) Soroti Prison - inadequate beddings
According to records at Soroti prison, it was noted that the prisoners‘ beddings are
in shambles, the prison last received 400 blankets five years ago (21/08/2009).
Most of the prisoners who cannot afford to buy their own blankets sleep on the
ragged blankets or on the cold floor. The pictures below refers:
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Tattered prison blankets
The inadequate prisoners‘ welfare may undermine the image and status of Uganda
Prisons.
Management in its response stated that they planned to provide 2 blankets per
prisoner to a daily average of 35,565 prisoners, this would require
Shs.2,133,900,000. However GoU provided in the budget only Shs.300,000,000,
as a result UPS was un able to provide blankets for the inmates.
I advised management to bring this matter to the attention of the relevant
authorities to ensure that prisoners have sufficient beddings.
(c) Soroti Prison - Drinking water containers and hygiene
It was noted that the prison did not have proper equipment for storing drinking
water. Water was being kept in open containers. Refer to pictures shown below:
Storage of drinking water for prisoners
225
This poses a health risk to the prisoners.
Management should acquire proper and closed hygienic containers for keeping
drinking water for the prisoners.
(d) Isingiro Prison - Living condition of staff and inmates
The following were observed at Isingiro prison:
Health center II that provides health services to the prison is 12 kms away,
posing a risk of escape of prisoners while being escorted for medical services.
The prison has no electricity.
No water source is available at the prison, and the nearest well is 6 kms away
The courts are in Kigagate and Rugaga sub-counties, which are very far from
the prison, (about 50km away).
Most of the time the relatives are the ones who transport the prisoners posing
a risk of escape.
The office has no furniture and office equipment.
Beddings like blankets were last received in 2011 and they were 30 in number,
yet the population now is about 180.
The living condition of the staff and inmates are generally poor. The living
condition affects staff morale, and negatively affects the image and status of
Uganda Prisons.
Management in its response explained that construction and improvement of
Isingiro Prison is planned for this FY2013/14. The procurement process is at the
contract awarding stage.
I advised management to speed up implementation of this contract to improve the
lives of the inmates.
13.0 JUDICIARY DEPARTMENT
13.1 Mischarge of Expenditure
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A review of payments revealed that wrong expenditure codes were charged to a
tune of Shs.4,701,073,327 without authority contrary to S.156 of the TAIs. This
practice undermines the intensions of appointing authority and also leads to
incorrect financial reporting.
The Accounting Officer explained that the mischarge of expenditure was brought
about mainly by gross underfunding of the institutional activities and spending
pressures that emerge after receiving releases when re-allocation cannot be
effected.
I advised the Accounting Officer to streamline the budget process to ensure that
sufficient funds are allocated to each account. Authority should be sought before
any reallocations are made.
13.2 Payables
A review of the Statement of Financial Position revealed outstanding payables of
Shs.6,615,748,840. This amount comprised of trade creditors of
Shs.2,539,771,946 and security deposits of Shs.4,075,976,894. The trade
creditors‘ position as at 30th June 2012 stood at Shs.1,745,647,214 implying that
there was an increase in domestic arrears (trade creditors) by Shs.794,124,732
(45.5%) compared to last year. It is evident that management has continued to
incur arrears without establishing sufficient mechanisms to monitor and control
them.
I advised Management to clear the outstanding commitments as a first call on the
budget as guided by Accountant General. I also advised Management to liaise with
the relevant Government authorities for adequate funding.
13.3 Staffing Gaps
A review of the staff establishment revealed that 297 posts remained vacant
during the year. This included the post of Chief Justice (filled with Acting
Capacity), Deputy Chief Justice and head of Court of appeal, 8 Justices of Court of
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appeal, 4 Justices of the Supreme Court and 8 High court Judges. The post of
Chief registrar has been filled with staff in acting capacity for some time now.
Lack of staff in vital positions of the organization affects the performance and
overall achievement of organization‘s goals and objectives.
Management explained that staffing gaps are being filled with time. The positions
of Chief Justice and the Deputy Chief Justice have been communicated to the
Appointing Authority. Vacancies in the Supreme Court, Court of Appeal and the
High Court, the current position is that Justices of the Supreme Court have
increased from 4 to 8, in the Court of Appeal they have increased from 5 to 11
and the Judges of the High Court are 56 as per the current structure. For the
other cadre of staff, management has continuously liaised with the Ministry of
Finance, Planning and Economic Development and Ministry of Public Service to
approve and provide for the numbers required.
I advised Management to continue liaising with the relevant stakeholders and
expedite the process of filling of the vacant posts.
13.4 Staff in unapproved positions
I identified cases of over staffing for some staff categories. It was observed that
335 staff were recruited above the establishment contrary to the recruitment
policy and procedures. The excess workforce created an unapproved increase in
the wage bill.
The Accounting Officer explained that the Judiciary was last restructured in 1998
and since then, there have been structural adjustments due to continuous and
increased demands for Judicial Services. As a result therefore, there are certain
structures that became a necessity but were not in the structure of the Judiciary.
However, the Judiciary is currently under restructuring and all this will be
addressed.
I advised management to expedite the revision of the structure and have it
approved by the responsible organs of Government.
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13.5 Narrow Structure of the Court of Appeal
The Court of Appeal has jurisdiction to hear appeals from the High Courts. These
appeals come from court rulings of the High Court circuits and the High
Court divisions -including the Civil division, the Criminal division, the Commercial
division, the Anti-corruption division, the Land division and others. A narrow
structure of the court of appeal was noted in as far as the handling of cases from
the High Courts is concerned. The eight divisions of the High Court and the High
Court circuits all feed into the un-divisionalized Court of Appeal. This does not
allow smooth flow of cases.
The Accounting Officer explained that the nature of operation of the Court of
Appeal is through quorum/ panels to execute their duties. Therefore because of
the lack of enough Justices, divisionalising the Court of Appeal may not be easily
affordable.
I indicated to the Accounting Officer that there is need to broaden the structure of
the Court of Appeal to match with the High Court structure. This may go along in
solving the case backlog in the court.
13.6 Uganda Good Governance(UGOGO)
(a) Lack of records for the Project
UGOGO is one of the projects under Judiciary. The Project planned to spend
Shs.4,018,000,000 to undertake several activities in the year under review. Outline
of the activities that were planned for the Project is below:
Planned Activity Budgeted Cost UGX
Capacity building to Judiciary staff 2,000,000,000
Purchase of office and ICT equipment 1,100,000,000
Purchase of office and residential furniture and
fittings
118,000,000
Construction and rehabilitation of Judicial courts 800,000,000
Total 4,018,000,000
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The performance of this Project has not been reported on as no details were
availed for audit review. I could not establish how much was received and
subsequently spent. The cash book, expenditure vouchers, bank statement
together with the bank reconciliation statements were not provided even after
several communications from OAG and intervention by SJ and PS/ST. Some of the
planned activities such as construction and rehabilitation of Judicial Courts are a
responsibility of JLOS project. I could not rule out duplication. Failure to provide
Project records for audit is contravention of the National Audit Act, the Project
Financing Agreement and the Government of Uganda Financial Regulations.
Management explained that the Judiciary Accounting Officer does not have control
over the books of accounts of this project. This state of affairs was brought to the
attention of the Permanent Secretary/Secretary to Treasury who has initiated
negotiations between Ministry of Finance Planning and Economic Development
and the Danish Government to streamline the project operations.
I await the outcome of the negotiation.
(b) Control of Uganda Good Governance (UGOGO)Project
It was further noted that the UGOGO Project profile in the Judiciary Ministerial
Policy Statement indicated that the Secretary to the Judiciary would be the
responsible officer for the project. However, interaction with the Secretary to the
Judiciary, who is also the Accounting Officer revealed that the responsibility for the
project is with the Chief Registrar who is not a designated accounting officer,
which responsibility was embedded in the Memorandum of understanding between
the Danish Government and Government of Uganda. I found this irregular.
Although the PS/ST had provided guidance in regard to the management and
control of the project, his advice was not adhered to.
Management explained that the matter is being handled by the Permanent
Secretary/Secretary to Treasury who has initiated negotiations between Ministry of
Finance Planning and Economic Development and the Danish Government to
streamline the project operations.
230
I advised that the control of the project should be urgently streamlined.
13.7 Payments to Personal Individual Accounts
The Treasury Accounting Instructions, Sections 227, 228 and 229 state that all
payments should be made by the Accounting officer directly to the beneficiaries.
Where this is not convenient, an imprest holder should be appointed by the
Accounting Officer with the approval of the Accountant General.
It was noted that a sum of Shs.588,533,829 was transferred to personal accounts
of staff to undertake Department activities without following the regulations. Such
a practice of depositing huge funds on personal accounts exposes Government
funds to risk of loss, since the Ministry does not have any control over such funds
deposited on personal accounts.
The Accounting Officer explained that advances were made to personal individual
accounts to undertake departmental activities especially routine inspections. In
order to comply with the circulars from the Ministry of Finance, Planning and
Economic Development restricted cash withdrawals were made.
I advised that Management strictly adheres with the requirements under the
Treasury Accounting Instructions.
13.8 Rental Expenditure
The Judiciary budgeted to spend Shs.7,855,956,325 on rent for the various courts
in the year under review of which only Shs.6,188,930,812 was released to the
entity creating a short fall of Shs.1,667,025,513. It was noted that the arrears for
rent at the end of the financial year stood at Shs.1,923,979,955. Some of the
arrears relate to the financial year 2011/12. Rental expenses in Judiciary are too
high. Due to delayed settlement of rental obligations, there is a risk of the
Judiciary facing penalties and litigation resulting into nugatory expenditure.
The Accounting Officer explained that rental expenses are too high because of the
increasing demand for judicial services coupled with lack of own premises. This
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leaves the Judiciary with no alternative but to rent premises throughout the
country. Out of the 122 Courts that operate throughout the country, 79 courts
operate in rented premises. Appeals to Government to build courts have not
yielded much, but with the support of development partners the Judiciary is
currently constructing 13 courts and the JLOS house will house the Appellate
courts.
I advised the Accounting officer to settle the rent obligation to avoid negative
reputation and the potential litigation costs. The Judiciary should also continue
lobbying for funds to construct its own premises country wide.
13.9 Motor Vehicles due for boarding off
It was noted that out of a fleet of 235 vehicles, 57 vehicles were due for boarding
off. However, the entity has not been able to board off the vehicles. Holding on
to old vehicles does not only lead to increased repair costs but also reduces the
salvage value of these vehicles.
The Accounting Officer responded that the listed motor vehicles have become
uneconomical and are supposed to be boarded off. The motor vehicles for board
off have been identified and the disposal process has commenced.
I advised the Accounting Officer to expedite the process.
13.10 Gross tax
The Department budgeted for Shs.1.6bn as gross tax; Shs.668million was released
to cater for gross tax expenditure. However, only Shs.200 million was spent on
this item resulting into un-utilized amount of Shs.468 million. These funds were
subsequently returned to the consolidated fund.
Allocating funds for activities whose likelihood of occurrence is remote provides
avenues for diversions as well as large budgetary slacks which provide for future
unfair budgetary variations. There is a risk that these funds can easily be
converted into resource and later spent by the entity inappropriately.
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The Accounting Officer responded that the Judiciary did not get all the
development funds during the year under review. Out of the total approved
budget of Shs.3.695bn, only Shs.2.45bn was released. This affected the
performance of this area since the entity did not get the proportion of Gross tax
on unreleased development funds.
I advised the Accounting Officer to always ensure that reasonable budgetary
estimates are made.
13.11 Budget Performance
The Judiciary department approved budget for the year under review stood at
Shs.59,150,639,609, comprising of Recurrent Shs.55,455,168,261 and
development Shs.3,695,471,348. A total of Shs.57,667,444,976 was released.
Table below shows the budget:
Despite release of 97.5% of the budget, under performance was noted on a
number of planned activities for the year. Details are shown in the table below:
Output Planned Budget and Output
Actual Expenditure and Performance
Variance- performance
Remarks
Disposal of appeals in the supreme court
No. of cases
Cost 000’s No. of cases Cost 000’s
Criminal appeals 53 5,399,000 3 5,688,000 50 Under performed 94%
Civil appeals 28 9 19 Under performed 68%
Disposal of appeals and Constitutional Matters in the court of appeal
Criminal appeals 277 5,686,000 77 5,556,000 200 Under performed 72%
Civil appeals 150 128 22 Under performed 15%
Disposal of appeals and suits in the High Court
Criminal suits 3,094 1,893 2,568 Under performed
Family suits 3,056 2,345 711 Under performed
Anti-corruption suits
388 360 28 Remarkable performance noted
Civil and Criminal appeals
3,070 502 2,568
Construction and Rehabilitation of Judicial Courts
Construction of Ibanda Chief Magistrate Court;
1 1,696,000 0 242,000 1 No performance noted
Construction of Lugazi/Mayuge G1 Court
1 0 1 No performance noted
Capacity 130 inspections 632 cases No capacity
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building of staff in the Judiciary
resulting to over 900 complaints handled to completion
inspected conclusively out of 682 complaints registered
building activity was reported to have taken place.
Purchase of office and ICT Equipment, including software
Provide Transcription and Court recording equipment to 4 Chief magistrate courts
4 410,924 Court recording equipment to 4 Chief magistrate courts not procured.
The under-performance does not only escalate the case backlogs but also leads to
double funding as funded planned activities are rolled over to subsequent periods.
Management explained that the targets especially on cases under the Supreme
Court, Court of Appeal and High Court were not achieved because of lack of
adequate judges.
I advised Management to follow up recruitment of adequate personnel to enable
the Judiciary achieve its mandate.
14.0 JUDICIAL SERVICE COMMISSION
14.1 Staffing Gaps
A review of the Commission‘s organizational structure revealed that out of the
available 73 posts, only 57 were filled leaving 16 positions vacant. The vacant
posts include key posts of: a Registrar (PRI); a Deputy Registrar (PRI); two
Principal Legal Officers; two legal clerks; and one Senior Policy Analyst.
Lack of staff in vital positions of the organization affects the performance and
overall achievement of organization‘s goals and objectives.
The Accounting Officer explained that despite numerous advertisements being
run, it has failed to attract appropriately experienced legal professionals into the
Commission. The inability to attract the required human resource is attributable to
a number of key factors among which are the un-favourable pay package for legal
professionals at the Commission vis a vis those in other Government agencies, and
the hanging structure which has no vacancies for fresh graduates.
234
I advised the Accounting Officer to liaise with Ministry of Public Service and
Ministry of Finance, Planning and Economic Development to improve the staffing
structure and the rates of pay, with a view of ensuring that the Commission can
attract and retain suitable staff.
14.2 Case backlogs
It was noted that the Commission has been slow in handling cases brought
against judicial officers. During the year under review the Commission had
accumulated case backlogs to a tune of 788. While 697 cases were brought
forward from the previous year, 215 were registered during the year, bringing the
total number of cases to 912, of which only 124 cases were concluded. This
impairs the timely administration of justice.
Management attributed the case backlogs to a number of factors including;
Delay in reconstituting the Commission for fourteen months from December
2010 to February 2012.
The composition of the Commission where the Chairperson is the only full time
member, and the rest are part time which undermines their ability to address
day-to-day demands connected to the Commission‘s mandate;
The quorum of the Commission, which is six out of nine members negatively
impacts on operations, and;
The absence of technical staff to conduct case investigations and prepare
reports for the Disciplinary Committee.
The Accounting Officer was advised to review the mode of operation of the
Commission and address the accumulating backlogs.
14.3 The Autonomous status of Judiciary Service Commission
Section 14(4) of the Judicial Service Act 1997, requires it to be a self-accounting
institution and further to deal directly with the Ministry responsible for Finance on
matters relating to its finances.
Contrary, the Judicial Service Commission reports to Parliament through the
Ministry of Justice and Constitutional Affairs. This impairs its
235
independence/autonomous status and the ability to acquire sufficient resources
to run the Commission.
The Accounting Officer explained that the proposal to amend the Constitution
which was accepted by Government in the Constitution (Amendment) (No. 3) Bill,
2005 is on course.
I recommended that the Commission be given opportunity to operate
autonomously for effective delivery the mandate.
14.4 Mischarged expenditure
The Parliament of Uganda appropriates funds annually in accordance with the
needs of each MDA. This appropriation is implemented through the budget in
which funds are tagged to particular activities and outputs using account and
MTEF codes.
A review of the Commission expenditure revealed that the entity charged wrong
expenditure codes to a tune of Shs.284,300,282. The practice undermines the
budgeting process and the intentions of the appropriating authority as funds are
not utilized for the intended purposes. The practice also leads to financial
misreporting.
I advised Management to streamline the budgeting process and ensure that funds
are allocated to budget lines in accordance with priorities. Any reallocations
should be undertaken in accordance with the regulations.
14.5 Poor Office Accommodation
Public health regulations in Uganda require that there should be a favourable
environment for human beings to live or work in. A conducive working
environment does not only motivate staff towards efficiency but also guarantees
safety of staff and office assets.
During the inspection of the building, it was noted that some offices like: the
registry; accounts section; IT and office superintendent‘s offices are in a
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condemned state and inhabitable. The rooms are leaking and hence affecting
some of the entity‘s important documents. The ventilation is poor with inadequate
lighting system. Photos below refer:
Part of the spoilt roof. Documents spoiled by leaking water. Furniture getting spoilt by the rain water
It was further noted that there is no provision to have the building rehabilitated
and/or maintained.
The Accounting Officer responded that he had contacted Office of the President to
address the issue, who referred him to Ministry of Finance, Planning and Economic
Development for additional resources in FY 2014/15 with a view of sourcing for
office space. However, no response had been received yet.
I advised Management to continue dialoguing with MOFPED on the matter.
14.6 Implementation of planned activities
It was noted that the entity did not implement all activities as planned. The
table below refers.
Planned Key Activity Expected Output
Actual output Variance
Facilitating disciplinary Committee meetings.
24 disciplinary Committee meetings facilitated.
22 disciplinary Committee meetings facilitated
2 meetings (8%) not undertaken.
Court 24 inspection 19 inspection trips 5(20.8%) trips
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inspections/collecting complaints
trips undertaken undertaken not undertaken.
Conducting Investigations
24 Investigations conducted.
17 Investigations conducted.
7(29%) investigations not undertaken.
Management explained that the Committee could not hold all the Disciplinary
Committee as planned because the members who comprise the Disciplinary
Committee are also part of the members of the Commission; which Commission
was heavily involved in the recruitment of Judicial Officers at various levels.
Management also explained that inadequate personnel affected the investigations
and inspection trips of the Commission.
Management was advised to liaise with relevant stakeholders to address the
problem of inadequate personnel.
15.0 UGANDA LAW REFORM COMMISSION
15.1 Mischarge of Expenditure
The Parliament of Uganda appropriates funds in accordance with the needs of the
country and this appropriation is implemented through the budget in which funds
are tagged to particular activities and outputs using account codes and MTEF
codes. A review of the Commission payments revealed that there were
mischarges under various codes worth Shs.373,406,461 (20% of actual
appropriation). This practice undermines the importance of budgeting and could
lead to misleading reporting.
Management explained that this arose because the vote item for allowances was
not adequately funded and therefore allowances had to be paid from other vote
items
I advised Management to stop the practice and always request for reallocations or
virements as provided for under TAI.
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15.2 Unaccounted for fuel deposits
It was observed that the Commission spent Shs.107,180,981 on fuel but the
monthly fuel reconciliations were not maintained contrary to Standing Orders
Section F-1. In absence of the fuel reconciliation statements, I was unable to
ascertain the genuineness of the fuel usage.
Management was advised to put in place a fuel register and carry out monthly
reconciliations.
15.3 Payables
The Commission had outstanding payables amounting to Shs.489,478,968 broken
down into: trade creditors Shs.314,507,781; sundry creditors Shs.172,391,288;
and Withholding tax payable Shs.2,579,899. The outstanding arrears are
attributed to non-compliance with the requirement of Commitment Control
System. Accumulation of creditors may lead to unnecessary cost in form of
litigation.
Management was advised to settle the outstanding obligations to avoid the
associated costs in form of litigation.
15.4 Outdated organogram
It was noted that the Organization Structure used by the Commission was last
reviewed in 1990. Since that time, the Commission has grown both in number of
staff, and mandate. For instance research is a major activity in the process of law
reform but this is not reflected in the existing organizational structure. As a
consequence, in certain instances the Commission has gone ahead to recruit staff
beyond the approved structure. I find this irregular.
Management agreed with the observation and explained that the ongoing
restructuring exercise is expected to address this issue.
I advised Management to ensure that the organization structure of the
Commission is reviewed in line with the current developments.
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15.5 Unimplemented planned activities
It was noted that the entity did not implement all activities that were planned for.
The table below refers:
Planned Key Activity
Expected Output Actual output Variance
Legal Reform
Research under taken to reform the following;
National Citizen and Immigration Control,
Registration of Titles Act, the Employment Act,
Legislation of the
Government analytical Lab(GAL), Law to
regulate the construction Industry
Field consultations on reform of the Civil
Procedure regime were finalized. Writing of the
study report on GAL is ongoing. Working
group meetings held,
consultative meetings held with Ministry of
Lands and report writing on going for
the Registration of
Titles Act; Draft transitional Justice
policy finalised. Report writing for the Market
Act is in advanced stages
Reform of Registration of Titles Act the
Employment Act, Legislation of the
Government analytical Lab(GAL), Law to
regulate the
construction Industry not achieved / finalized,
the research and report writing still on going.
Revision of
Laws
Major revision; revision
of the Principal Laws,
revision of the cumulative supplement
as at 2011, revision of Laws affected by court
decisions and distribution
of Commissions Publications.
Four volumes of the
principal laws 2000
were revised. Revision laws passed between
2001-2012 completed. Draft of cumulative
supplement updated as
at March 2013
Distribution of the
Commission Publications
not effectively done.
Publication
and Translation
of Laws
Translation of the
Constitution into Runyakitara.
Ngakarimojong, and Ateso; Translation of the
simplified Local
government Act into Luganda, Publication of
the Land Act, publication of the study reports
Review of the
Constitution in Luganda concluded.
Procurement process for printing index
ongoing.
Major planned out put
of translation of Constitution into
Kunyakitara and Ateso not achieved.
Publication of Land Act
remained un-attained.
Unimplemented planned activities affect the achievement of entity objectives.
Realistic and achievable targets should be made and priority given to activities not
achieved in the previous year.
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16.0 UGANDA HUMAN RIGHTS COMMISSION
16.1 Motor vehicle repair without certification
Section 816 of the Treasury Accounting Instructions requires an entity to inspect
its vehicles to determine the extent of repair works needed for its vehicles before
placing orders for the repairs. The repaired vehicles should also be inspected to
confirm that the repairs were done as specified in the LPOs.
During the year, a total of Shs.98,395,100 was paid to a service provider in
respect of repairs and servicing of Commission vehicles. However, contrary to the
TAI no pre and post inspections were undertaken to assess the need and
subsequent confirmation of repairs. In absence of such checks, it becomes difficult
to establish the genuineness of the repairs undertaken.
Management explained that the Commission could not recruit an Engineer because
of the inadequate wage provision.
I advised management to liaise with the Ministry of Works and Transport to obtain
the necessary technical expertise whenever required.
16.2 NSSF Remittances- Contribution from Annual Gratuity
Shs.82,771,153 in respect of NSSF contribution was not deducted from staff
gratuity payments contrary to Section 11 (i) of the National Social Security Fund
Act, 1985. Non remittance of statutory deductions could lead to imposition of
fines and penalties on the Commission.
Management explained that the Commission sought legal opinion from the
Solicitor General over this matter. However, at the time of the report no response
had been received.
I advised Management to recover and remit the NSSF contribution as required.
16.3 Budget Performance
241
A review of the Commission‘s performance for the year revealed that some
activities were not undertaken despite the release and utilization of the funds.
Details are below:
Planned key activity Expected output
Construction of regional offices by
procuring land and one building.
Land and building procured
Produce 110,000 IEC materials. 110,000 IEC materials, produced
Produce 24,000 copies of
publications.
24,000 copies of publications
produced
Train 54 District Human Rights
desks
54 District Human Rights desks
trained
4 bills reviewed. 4 bills reviewed.
100 detention facilities inspected. 100 detention facilities inspected.
Management was advised to undertake activities in accordance with the
workplans.
17.0 DEPARTMENT OF PUBLIC PROSECUTIONS
17.1 Mischarge of Expenditure
Parliament of Uganda appropriates funds annually in accordance with the needs of
each MDA. This appropriation is implemented through the budget in which funds
are tagged to particular activities and outputs using account and MTEF codes. A
review of the Directorate payments revealed that there were mischarges under
various codes worth Shs.692,574,586 during the year under review. These
payments were made without requisite authority. The practice undermines the
budgeting process and the intentions of the appropriating authority. The practice
also leads to incorrect financial reporting.
Management explained that there were a number of complex cases that required
co-opting of a wide range of experts which was not anticipated during the
budgeting process. The budget re-allocation process as it is provided for in the
Budget Act is not that flexible yet speed of investigation is critical for a conviction
in the Courts.
242
I advised Management to streamline the budgeting process and ensure that funds
are allocated to budget lines in accordance with priorities. Any reallocations
should be undertaken in accordance with the regulations.
17.2 Unsettled Domestic Arrears-Accrued Rent
It was noted that the Directorate continued to commit Government even when
there were no funds available. A review of the statement of outstanding
commitments revealed a sharp increase in outstanding domestic arrears from
Shs.465,000,000 at close of the previous year to Shs.929,816,160 by the end of
the year under review. The practice is contrary to established commitment control
system.
Management explained that the build-up of unsettled rent during FY 2011/12 and
FY 2012/13 was occasioned by the increase of the rental fees by the Landlord
upon the renewal of the Tenancy Agreement. Attempts by the Directorate to
obtain a supplementary budget during the financial year 2012/13 to settle the
arrears were not successful. However, adequate provisions in the following
financial year to settle the outstanding have been made.
I advised Management to prioritise these commitments in the subsequent year.
17.3 Absence of Approved Strategic Plan
A strategic plan provides an organization with purpose and direction. It is an
important tool in steering an organization towards its Vision, Mission and the
overall Mandate. Annual activities undertaken by any organization should be
derived from the strategic plan. However, it was noted that the Directorate‘s
Second Strategic Investment Plan (2007/08 - 2011/12) expired. The third Strategic
Investment Plan (2012/13 - 2016/17) had been initiated but was still in the draft
form yet to be approved.
Management explained that the delay in the approval process was due to the need
for wide consultations with stakeholders. After the consultations, the process has
243
progressed and the plan will be approved by Top Management early February
2014.
I advised Management to expedite the approval process.
17.4 Staffing gaps
It was noted that the Directorate has 80 vacant posts. These include key positions
of; Senior Principal State Attorney; Principal State Attorneys; Senior State
Attorneys; State Attorneys; and Secretaries.
I informed management that inadequate staffing affects the timely implementation
of the Directorate‘s activities.
Management explained that the Ministry of Public Service cleared the recruitment
of State Attorneys and a submission was made to Public Service Commission. The
process has however stalled due to lack of members of the Commission.
I await the results of management action.
17.5 Repairs and Maintenance of Motor Vehicles
Shs.236,042,886 was paid to various service providers in respect of repairs and
servicing of vehicles. However, it was noted that there were no pre and post
vehicle inspections done on repairs, instead it was the Directorate driver that
confirmed the repairs.
There is a risk that repairs may not be undertaken at all leading to loss of
government funds.
Although management explained that pre-/post repair assesment from the CME-
MoWT, for major repairs were done, I advised Management to ensure that the
repairs should be undertaken in line with the regulations.
17.6 Advances to Individual staff Accounts
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Sections 227, 228 and 229 of the Treasury Accounting Instructions (TAI) require
that all payments should be made by the Accounting Officer directly to the
beneficiaries. Where this is not convenient an imprest holder should be appointed
by the Accounting Officer with approval of the Accountant General.
Contrary to the requirements, a total of Shs.71,832,900 was deposited on the
personal bank accounts of the Directorate staff to execute official activities instead
of effecting payments to the beneficiaries. This practice is irregular and exposes
the Directorate‘s funds to a risk of loss since the Directorate has no control over
such funds deposited on personal accounts.
Management was advised to strengthen the internal controls over advances to
individual personal accounts and ensure compliance with the regulations.
17.7 Budget Performance
A review of the planned activities against the actual performance revealed that
some of the activities were partially undertaken, some of which below 50% mark.
Planned key activity Expected output Actual output Variance
01 Headquarters
Recruitment of staff. 72 Staff recruitment
initiated, inducted and
deployed.
1 position of Senior
Economist filled.
71 (98.6%) under
performance.
Field verification of
Administration matters
107 field offices visited for
verification of
administration matters
72 field offices visited 35 (32.7%) under
performance.
Training of
Administration staff and
drivers
5 administration staff
trained in management
skills
2 Staff trained in
management skills
3 (60%) under
performance
12 drivers trained on basic
mechanics and defensive
driving courses
7 drivers trained on
basic mechanics and
defensive driving
courses.
7 (41.6%) under
performance
Field offices established 8 Field offices established 4 Field offices
established
4 (50%) under
performance.
02 Prosecution
142,250 Investigations
of criminal cases
Investigations of criminal
cases guided in an average
of 120 days
Investigations of
criminal cases guided
in an average of 98
days
22 saved (18%)
time saved.
Prosecutions- led Case
files pending decision to
Prosecutions- led Case files
pending decision to
Prosecutions- led
Case files pending
extra 7 days used
(19%) under
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prosecute or not
perused.
prosecute or not perused in
an average of 3o days (1
month)
decision to prosecute
or not perused in an
average of 37 days(1
month)
performance.
Case files for
sanctioning perused
Case files for sanctioning
perused in an average of 2
days
Case files for
sanctioning perused
in an average of 2
days
100% performance.
Police Case files
pending decision to
prosecute or not
perused.
Police Case files pending
decision to prosecute or
not perused in an average
of 30 days.
Police Case files
pending decision to
prosecute or not were
perused within an
average of 5 days.
25 days saved
(89%) time saved /
over performance
03 Inspections and Quality Assurance.
All public complaints
against staff
performance and
conduct addressed.
100% public complaints
against staff performance
and conduct addressed.
82% public
complaints against
staff performance
and conduct
addressed.
17% under
performance
Public complaints
against criminal justice
processed.
95% Public complaints
against criminal justice
processed.
78% Public
complaints against
criminal justice
processed.
17% under
performance
04 Internal Affairs &Field Operations
Performance planning,
staff mentoring and
performance
assessment done
4 field office performance
planning staff mentoring
and performance
assessment visits carried
out.
2 visits carried out. 2 (50%) under
performance
06 Internal Audit
Field inspections 4 Inspection and
verification reports
produced.
2 Inspection and
verification reports
produced.
2 (50%) under
performance
Verification of payroll. 12 payroll staff verification
Reports on produced
9 payroll staff
verification Reports
on produced
3 (25%) under
performance
staff trained 1 staff trained in risk based
auditing, fraud & security
management matters.
NONE 100% under
performance
Management explained that the inadequacies were attributed to lack of capacity
and inadequate resources to undertake the activities.
I advised human resource management to liaise with the MoPS and MoFPED to
address the bottlenecks.
17.8 Field Inspections
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Field inspections were carried out at various DPP branch offices. The inspections
focussed on the assets of the branch offices, human resource and also followed
the imprest received by the branches. The following were the findings;
Good internal control system for assets requires that all non- current assets be
clearly labelled/engraved with agreed identification marks according to
classification and a serial number given to each of these assets. It was
however observed that some assets at the branch offices were not engraved.
It was noted that the assets register at all the branch offices only indicates the
particulars of the assets and quantity, leaving out other details like; date of
acquisition condition, location among others. Failure to disclose details relating
to the fixed assets poses risk of poor control over the station‘s assets and
eventual failure to track the assets.
In order to ensure efficiently and effectiveness, staff should be provided with
adequate office equipment to enable them carry out their official duties. It was
however noted that inspite the big volume of secretarial work done at Njeru
RSA, Busia RSA, Bugiri RSA offices, the office lacks essential assets such as a
computer, printer and photocopier. It should be noted that DPP‘s office deals
with confidential information that should not be exposed to the public. Typing
and photocopying official documents outside office impair the confidentiality
and security of office information.
Though payments are vouched and submitted to DPP headquarters, the
stations do not maintain an imprest cashbook contrary to Section 28 of the
Accounting Instructions.
It was noted that Njeru RSA, Bugiri RSA, Iganga RSA stations lack secretaries
to do the secretarial work. Inadequate human resource, affects the timely
implementation of the station activities. This may adversely impact on
the Directorate in the achievement of its objectives.
I have informed management to consult the MoPS and MoFPED to address the
anomalies noted in the branch offices.
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18.0 UGANDA REGISTRATION SERVICES BUREAU -
OPERATIONS
18.1 Rental arrears
The Bureau has outstanding rental arrears for FYs 2011/12 and 2012/13
amounting to USD 911,810. It was further noted that no provisions were made in
the budget to settle these arrears in the financial year. There is a risk of eviction
of the Bureau from the rented premises.
Management explained that the total rental arrears could not be accommodated in
the MTEF for FY 2013/14. Management further explained that they have written
to the Ministry of Finance, Planning and Economic Development requesting that
with effect from FY 2014/15, the MTEF for URSB be increased to address existing
funding gaps in the non-wage budget and the non-existent capital development
budget.
I advised Management to continue dialogue with the relevant authorities to ensure
that the rental arrears are settled.
18.2 Lack of a Capital Development Budget
During the financial year, the Bureau was not allocated any development budget.
Consequently, the Bureau has not made any development interventions, a
situation which could stifle its strategic focus.
Management explained that the lack of a capital development budget has for the
last three years constrained the Bureau‘s capacity to roll out its strategic plans.
Management further explained that they have written to the Ministry of Finance,
Planning and Economic Development requesting the MTEF for URSB to be
increased in order to address the lack of a capital development budget and other
funding gaps.
I await the results of management efforts.
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18.3 Disposals of assets
A Board of Survey was commissioned and a report produced. In the report it was
recommended that specific assets to be disposed off. However, no asset has been
disposed off yet. This could lead to further deterioration of asset value. The table
below refers.
Management in their explanation recognized and regretted the delayed disposal of
the assets and indicated that the disposal process has been initiated. They further
explained that a Board of Survey has been constituted to aid the assessment of
the assets to be disposed.
I advised management to expedite the disposal process.
19.0 UGANDA REGISTRATION SERVICES BUREAU –
LIQUIDATION ACCOUNT
19.1 Receivables
Shs.8,183,970,354 was reported as receivables outstanding as at 30th June 2013.
During the previous year, the same amount was reported as outstanding implying
that there has been no movement in the receivables. The delayed collection of the
receivables may result into bad debts.
Management responded that the biggest debtors are Government entities, with
whom they have engaged in meetings and even involved Ministry of Finance,
Item QUANTITY
Car UG 0130J Station wagon white in color 01
Funs 06
Tables 03
Monitors 27
Carpets 06
Chairs 22
249
Planning and Economic Development to amicably find a solution to this long
outstanding matter. However, the efforts have not yet yielded results.
Management was advised to continue engaging the relevant stakeholders on the
collection of the outstanding receivables.
19.2 Irregular Lending out of Funds from the Liquidation Account
In my report for the financial year ended 30th June 2012, I reported that the
Ministry of Justice and Constitutional Affairs had irregularly borrowed money from
this account worth Shs.3,353,802,640. I noted that the funds had not been
refunded by the end of the financial year under review. There is a risk that
liquidation funds may be lost under the circumstances.
In their response, Management explained that the Ministry of Justice and
Constitutional Affairs borrowed the funds from the companies in Liquidation .This
was during the years of 2004, 2005 and 2006 and the funds were to pay for rent
for the office of the Registrar General which at the time was a department in the
Ministry of Justice and Constitutional Affairs. Under the Self Accounting Status
which came into effect in FY 2010/11 URSB does not and will not engage in
irregular lending of funds.
I advised Management to follow up with the Ministry of Justice and Constitutional
Affairs to ensure recovery of the liquidation account funds.
20.0 NATIONAL CITIZENSHIP AND IMMIGRATION CONTROL
20.1 Non-Tax revenue
A review of the Statement of Financial Performance revealed that
Shs.7,119,954,223 was collected as non-tax revenue (NTR). However,
documentation in respect of the NTR collected such as receipts, banking in slips
and revenue registers were not availed to enable a comprehensive review of the
revenue collected.
250
Management responded that these funds are collected directly at border stations
and deposited on the collection accounts. A Standing Order was given to the
Accountant General to transfer the funds to the Consolidated Fund, and the
transfers are done weekly. Management further explained that there is currently a
probe committee which was set up by the Hon. Minister of Internal Affairs to look
at all the areas of the Directorate‘s operations and the documents in relation to
NTR were subsequently forwarded to them.
Management promised to avail the documents when they are returned.
20.2 Security Bond Deposit Account
A review of the financial statements revealed that Shs.13,595,330,081 was
reported as a balance on the security deposit accounts as at 30th June 2013. The
account had a balance of Shs.7,999,358,750 by as at 30th June 2012, implying
that there were deposits of Shs.5,595,971,331 from various immigrants during the
year. However, the documentation in respect of the security deposit account such
as receipts, banking in slips, bank statements, ledgers and the database of the
individual depositors was not readily availed to enable a comprehensive review of
the transactions.
Management explained that this account receives funds deposited as security bond
for foreign workers. Management indicated that documents in relation to
transactions on this account were submitted to the probe committee and await
completion of the committee‘s work to be able to submit them for audit
verification.
I advised management to submit the documents for audit verification at the end of
the probe.
20.3 Payables
A review of the Statement of Financial Position as at 30th June, 2013 revealed
outstanding payables of Shs.79,452,765,142. The position of payables was
Shs.61,006,008,707 in the statement of financial position as at 30th June 2012,
implying that there was an increase in domestic arrears by Shs.18,446,756,435
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(30%) from the closing position of the previous year. It is evident that
management has continued to incur arrears without establishing sufficient
mechanisms to monitor and control them. There is a risk of loss of reputation and
litigation by creditors.
Management in their response agreed to the increase in payables which they
attributed to inadequate releases from the Treasury, and interest on the Mulbuer
contract amounting to Shs.12,997,280,863.
I advised Management to clear the outstanding commitments as a first call on the
budget as guided by Accountant General. I also advised Management to liaise with
the relevant Government authorities for adequate funding.
20.4 Implementation of the National ID Project
In March 2010, the Ministry of Internal Affairs entered into an agreement with Ms
Mulbauer, to develop the National Security Information System at a cost of
€64,231,371.49. The contract provided for supply and installation of equipment,
supply of blank cards, staff training and system maintenance, among others.
Following the establishment of the Directorate, management of this contract was
then transferred from the Ministry (mainstream) to the Directorate. Review of the
progress of implementation of the Project revealed matter below:
(i) Unimplemented activities
A number of activities that were planned to be implemented under the ID Project
during the year under review were not achieved. A total of Shs.25,115,610,000
was budgeted for under the project for the current year, out of which
Shs.19,135,522,406 was released. Shs.2,571,442,721 was utilized during the year
out of the released amount, leaving a balance of Shs.16,564,079,685 unspent.
The actual expenditure was 13.4% of the actual releases and 10.2% of the
budgeted amount. Details are shown below:
Code Planned Activity Budget Amount (UGX)
Releases (UGX) Expenditure (UGX)
Variance (UGX)
121176 Purchase of office and ICT equipment including software
4,000,000,000 2,903,324,176 2,036,958,889 866,365,287
121175 Purchase of motor 900,000,000 725,000,000 5,162,292 719,837,708
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vehicles and other transport equipment
121172 Government buildings and administrative infrastructure
13,660,000,000 10,578,353,024 - 10,578,353,024
121161 Identity cards issued (2 million National ID cards personalized
6,555,610,000 4,928,845,206 529,321,540 4,399,523,666
Total 25,115,610,000 19,135,522,406 2,571,442,721 16,564,079,685
Because of the slow implementation of Project activities, there is a risk that the
intended activities of the Project may not be achieved.
Management responded that ever since the inception of the Project in 2010, there
has been a number of challenges faced. Maulbeur delivered most of the
equipment but Government of Uganda did not adequately meet her part of the
obligation under the agreement. Under the contract GOU was supposed to provide
operational funds and also set up personalization centre where the equipment was
to be installed. Management further explained that Government has now taken
steps in fulfilling her part of the contract, funds have been secured,
personalization centre set up at Kololo airstrip and mass enrolment is soon
commencing.
I await the progress on the implementation of the National ID project.
(ii) Mischarge of expenditure items
The Parliament of Uganda appropriates funds in accordance with the needs of the
country and this appropriation is implemented through the budget in which funds
are tagged to particular activities and outputs using account codes and MTEF
codes. Review of the Directorate‘s expenditures revealed that management
charged wrong expenditure account codes to a tune of Shs.650,785,420. The
expenditure did not meet the definition of what these account codes are required
to be charged with. The bulk of the funds were diverted to pay allowances.
The practice renders the budgeting process redundant, undermines the intentions
of the appropriating authority and leads to misleading reporting.
253
I advised management to always ensure that proper budgeting process is done
and adequate funds are allocated for each account code and MTEF.
20.5 Incompletely Vouched Expenditure
Treasury Accounting Instructions, 2003 part 1, Chapter 1V section 199 requires
procuring entities to issue Local Purchase Orders (LPOs) before a cost is incurred.
Contrary to the legislation, Shs.662,447,643 was paid to Pan Afrique Forwarders
vide EFT 2532373 for clearing services, without an LPO. It was further noted that
the contract Agreement signed between the clearing Agent and the Directorate
was not availed for audit. I was unable to confirm the genuineness of the
payment.
Management in its response explained that at the time of receiving the equipment
for the ID project in March 2010, there was need for clearing services. Pan Afrique
was contracted by vote 009 (MIA) which was then still managing the project.
When the project was transferred to vote 120 (DCIC) in the FY 2010/11, they
were not availed with any formal agreement but the liability was transferred to the
Vote. Pan Afrique through their lawyers had served Government with a notice of
intention to sue for the payments. Management sought guidance from the Solicitor
General and he did advise that the obligation be cleared without going to court.
I requested that Management follows up the documentation to enable audit
verification.
20.6 Nugatory Expenditure
Shs.186,824,001 was paid to URA vide EFT number 2545421 as interest expense
on VAT due to Pan Afrique forwarders due to delayed lodging of returns or
payment of VAT to URA. This payment is considered nugatory since NCIC was not
obliged to file account and pay VAT on behalf of Pan Afrique Forwarders.
Management in their response stated that Pan Afrique forwarders had provided
clearing services to the Directorate but payment was delayed due to insufficient
funds. URA on the other hand continued to charge interest on VAT that had not
254
been paid by the service provider. Subsequently, the clearing agent transferred
this liability to the Directorate.
I advised management to ensure that they do not get into unplanned expenditure
in the future without ensuring that they have enough funds to settle the bills.
20.7 Absence of Approved Strategic Plan
A strategic plan provides an organization with purpose and direction. It is an
important tool in steering an organization towards its Vision, Mission and the
overall Mandate. Annual activities undertaken by any organization should be
derived from the strategic plan. It was noted that the entity does not have a
corporate plan that spells out the long and medium term plans. Absence of an
approved strategic plan affects the overall guide to planning and priority setting.
The achievement of the organizational mission and objectives are likely to be
negatively affected.
Management in their response indicated that they have started the process of
making one and a consultant was in place.
I advised management to ensure that a strategic plan is urgently put in place.
20.8 Lack of an IT strategic plan and Policy
It was noted that the entity has heavily invested in the Information and
Communication Technology (ICT) function, however, there was no IT strategic
plan. The increasing reliance on information technology for the delivery of
services makes it necessary to ensure that these systems are developed, operated,
used and maintained in a safe and secure fashion. Without an approved
IT/information security policy and IT strategic plan, there is a risk of making
investments in IT that are not well aligned with other business processes.
Management in their response explained that their IT plan is being developed
together with the strategic Plan.
255
I advised management to ensure they have an approved IT strategic plan or policy
is in place to guide them in their operations.
20.9 Business continuity and Back up of data
The Directorate has a room referred to as strong room in which all activities of
processing Passports and data capturing are done. The server in which this data is
collected and stored is also in the strong room, the backup is also done in the
strong room. Once in a month data is backed up and allegedly stored off site. The
room has no fire extinguisher and the whole Ministry has no known fire-fighting
equipment. In case anything wrong happened to the strong room all data would
be lost. There is no contingency plan for business continuity.
Management in their responses claimed that the process of formulating the
strategic investment plan which covers IT master plan is ongoing. However, they
have backed up all the processes and the storage is outside the strong room.
I advised management to find an offsite location to be used for backup and should
automatically back up as and when they input the data.
20.10 Inadequate structure
The Directorate has an approved structure however the structure does not have
certain key functions. It relies on the support of the Ministry of Internal affairs for
some very critical and important services. For example, DNCIC does not have
personnel and administration positions in its staffing structure; such as
undersecretary and personnel officers. There is a risk that the Directorate
performance in terms of human resources management and general
administration may be stifled.
Management in their response indicated that the Ministry of Public Service carried
out a study and made recommendations on the new structure, however this has
not been completed. I await the outcome of the MoPs restructuring efforts.
20.11 Vacant posts
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The approved organization structure for the Directorate of Citizenship and
Immigration control has a total staff establishment of 367 personnel. However,
out of the 367 only 337 posts are filled while 30 posts still remain vacant. The
most vital vacant posts include; i) Commissioner/Immigration Control ii) the
Principal procurement officer ,iii) the Internal Auditor and iv) the Principal Stores
Assistant. This state of affairs is likely to affect service delivery at the directorate.
Management explained that Government had put a ban on recruitments and this is
making it difficult to fill the vacant posts.
I advised the Directorate to liaise with Ministry of Public Service to ensure that
these important posts are filled.
20.12 Lack of Disciplinary Committee
A review of the minutes of Top Management revealed that there are a number of
cases of staff misconduct, and an indication of some action taken by management.
However, the Directorate does not have a Disciplinary Committee to handle
disciplinary cases in detail and make appropriate recommendations to conclusion.
Management in their response said that they utilised the services of the Ministry of
Internal Affairs Disciplinary committee chaired by the Undersecretary MIA when
the need arises.
I advised management to consider constituting their own Disciplinary Committee
with properly laid down procedures/terms of references to handle discipline
matters.
20.13 Inadequate controls at immigration offices
Chapter 63 of the Immigration Act, section 21 (1b) states that any person whether
within or in Uganda, who knowingly makes any false declaration, return or
statement for the purpose of obtaining or assisting another person to obtain any
permit, certificate or pass under this act commits an offence. It was noted during
the review of the legal and inspection report that although, the Directorate has a
system – Personal Information Security Comparison Evaluation System (PISCES)
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that facilitates documentation at the boarder points and Headquarters, it is only
used at particular border posts, that is; Entebbe, Busia, Malaba, Katuna and
Mutukula implying other areas remain unchecked and porous. This has enabled
processing of entry documents to illegal immigrants without apprehending the
perpetuators to check the vice.
Management acknowledged these problems but cited lack of funds as the major
bottleneck.
Management was advised to solicit for funding to procure the system and have it
installed in various immigration centers to ensure persons are screened as they
enter into the country. The system should be able to connect all the immigration
points with headquarters to be able to fully monitor immigrants.
20.14 Lack of detention facilities (holding facilities)
Under the Immigration Act section 17 3, ―A person against whom a deportation
order has been made may, if the Minister so directs, while awaiting deportation
and while being conveyed to the place of departure, be kept in custody, and while
so shall be deemed to be in lawful custody. ‖The Ministry of Internal Affairs does
not have a safe place to keep people awaiting deportation especially those who
have been caught off guard and are not prepared. This may cause issues in
respect of the rights of deportees.
Management in their response indicated that they have been having financial
constraints although they needed the facility to perform their duties effectively.
I advised Management to ensure that the place for safe custody is secured to
ensure that such people are kept safe until they are ready to leave.
20.15 Reconciliation of Passport requisitioning and issuing
The storage of passports is handled by different entities and often the process has
gaps, as witnessed between Bank of Uganda and the strong room. There is no
record taken on the number of passports that arrive at the Ministry of Internal
Affairs (MOIA) from Bank of Uganda (BOU) stores. Lack of a register at the
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Ministry means that the passports brought in from BoU may not reach the Ministry
in full numbers. Besides, those picked and taken to Ministry of Finance may also
not be equal to those picked from BoU.
Management in their response claimed to have a designated person to follow the
collection and dispatch of Passports.
I advised that the Directorate should develop a proper recording system of
passports to ensure that there is an audit trail in the collecting and dispatch of
these passports to avoid possible loss.
20.16 Losses of passports in the passport office
The Directorate has a Department of Investigations and Legal Advisory Services.
This department is responsible for investigating, reporting of any possible losses
and providing legal advice to the Accounting Officer. However, this department
did not carry out investigations on the alleged loss of passports and no report was
issued. According to the financial statements page 19, passports worth
Shs.48,400,000 were lost during the year while passports worth Shs.58,480,000
were damaged.
Management promised to provide a report on these figures, however at the time
of writing this report nothing had been provided.
Internal investigations should be done and a report with recommendation made
and acted upon.
20.17 Budget Performance
Public Finance and Accountability Regulations, 2003, section 2.10 (b) entrusts the
accounting officer with ensuring that all controls such as those contained in the
approved estimates and warrants are strictly observed. Budget estimates are
based on outputs to be achieved for the financial year and during implementation,
effort is required to be made to achieve the agreed objectives or targets of the
entity within the availed resources.
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A review of the budget performance of the entity for the year 2012/2013 revealed
that some targets were not achieved despite release of funds for the various
program. Details are as per table below:
PLANNED ACTIVITIES 2012/13 ACHIEVED OUTPUT 2012/13 Audit Comments
Facilitate and regulate
entry, Exit and stay of
Immigrants in the country
through Issuance of at least
80% of all applications
received for Work permits,
Residence Permits,
Dependant passes, Students
passes and Visas.
Issued 412 East African passports,
103 CTDs and 4,674 Certificate of
Identity.
7,975 work permits issued to
foreigners in employment in the
country compared to 8,602 permits
issued last year.
The planned activities are not
measurable. I was unable to
ascertain the targets and
whether they were achieved.
Expand PISCES Software to
4 more borders
Not done Note done
Spearhead implementation
of interconnectivity
between and among borders
with the headquarters.
Not done Note done
Construct three border
posts. i.e. Murumumba in
Kabale district , Madi Opei in
Lamwo district , and
Cyanika Model Border posts
Completed and commissioned
Bunagana and Suam River border
posts. Meanwhile Amudat , Goli and
Lia border posts are 80% complete
(roofed and being plastered)
None of the planned activities
were done during the period
under review, they are
reporting on work carried
forward
Process and issue of at least
90% of all received
applications for passports
conventional travel
documents, Certificate of
identity and temporary
movement permits.
Issued 70,164 passports
compared to last FY ‗s 66,787
reflecting a slight growth of 5%
growth.
The process of issuing
passports and other
documents is still hit by
several bottlenecks ie 1. low
man power in passport office
compared to the tasks
2. Lack of proper statistical
collections to be able to tell
how many applications were
received.
Decentralize immigration
service’s delivery, install
passport issuance system
in Mbale and Mbarara to
decongest the Immigration
Headquarters.
Decentralize immigration service‘s
delivery –install passport issuance
system in Mbale and Mbarara to
decongest the Immigration
Headquarters.
None of this was done during
the period under review. Still
functioning at very low
capacity due to staff levels
Procure Personalization
Centre and install necessary
Procurement for civil works on
UPPC building to establish the main
Not much done in this area by
the end of the financial year.
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equipment for processing
National Identity Cards
Personalization Centre in Entebbe is
at bid evaluation stage. It is
expected that by early July 2013,
the contract will be awarded and
reconstruction start.
Carry out citizenship
verification; personalize
Identity cards for 2 million
citizens already captured in
first phase of the National
Identity Card Project.
Personalized 30,120 National
Identity Cards at the current UPPC
Entebbe interim Personalization
centre.
The planned activity was not
achieved.
Renovate personalization
Centre and install necessary
equipment.
-
Not done during the period
under review
Finalize the development of
the National Migration
Policy; develop regulations
and guidelines for improved
immigration service
delivery.
2nd draft of the National Migration
Policy prepared, pending further
stakeholder consultation.
Procurement of a consultant to
develop the DCIC Information
Communication Technology Master
Plan is at evaluation stage.
Not completed.
Develop and implement the
Directorate’s 5 years
Strategic Plan
-
Not done
This may have been due to management‘s inadequate supervision and as a result
service delivery is hampered and the appropriating authority‘s objectives are not
met.
Management explained that the manpower gaps led to failure to implement some
of the planned activities. They also indicated that some of the activities were still
ongoing as their implementation spanned over two financial years.
I advised management to carry out realistic planning and budgeting, and also
ensure adequate supervision of activities being undertaken.
20.18 Issuing of National passports and East African Passports
Ugandan passports are issued out at the Headquarters of National Citizenship and
Immigration Control, Pretoria, London and Washington. However all these centers
are not interlinked or connected to the main server at the headquarters.
Therefore management cannot regularly access and monitor passports issued at
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the different centres. Reconciliation by the headquarters was difficult in the
circumstance.
Management explained that the output has always remained as one of the
unfunded priorities in the Directorate.
I advised management to continue lobbying for funds to implement the activity.
20.19 Inspections
An audit inspection of border posts was carried out and the following were noted:
Border post Observations
Kamwezi
Border post
The Border post has very little revenue activity. On average, the
station collects UGX.50,000 a month out of selling temporary
movement permits. These funds are banked once or twice a month. The officer has to travel to Mbarara or Kabale to bank
since there is no bank in a close range. There are no student pass documents even when some students
pass, enter and exit from the station. He normally refers them to
Mbarara or Kabale.
DCIC does not have enough facilities at the entry point of Kamwezi.
The station is housed in a UNI PORT of URA. The officer rents a house about a kilometre away from the post making life very
difficult for him. The Border post is entitled to 1,000,000 per quarter; however it
was noted that the officer only received once in the last quarter of
the financial year. Running the station became very difficult.
Paidha border post
During the inspection only one staff was on site and most of the
records had been locked up by the in charge who was away and therefore we could not inspect the records and the books because
the officer had taken with him the keys storing the accounting
documents. There was no structure for a border post
Kikagati
Border Post
The border post was manned by an office attendant since the in-
charge had left the station. Accounting documents could not be
verified to be able to review performance of this station.
Ishasha River
Border Post
At the time of inspection the office attendant was present and he
was the one handling passengers as the rest of the staff had
travelled to Kampala. There were no records/books of accounts as the in charge had lacked them in the drawers although he had left
the unused visa stickers with him.
The above weaknesses hamper delivery of immigration services, negatively
affecting the objectives of the Directorate.
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Management explained that they have had limitations in terms of staff and
financial resources. They further indicated that action is being taken to address the
concerns. I await the results of management action.
PUBLIC SECTOR MANAGEMENT
21.0 MINISTRY OF LOCAL GOVERNMENT
21.1 Mischarge of Expenditure – Shs.4,178,737,274
The Parliament of Uganda appropriates funds in accordance with the needs of the
country and this appropriation is implemented through the budget in which funds
are tagged to particular activities and outputs using account codes and MTEF
codes. A review of the Ministry‘s expenditures revealed that the entity charged
wrong expenditure codes to a tune of Shs.4,178,737,274. Such a practice is
contrary to the intentions of the appropriating authority and leads to misleading
reporting.
Management in response acknowledged the anomaly and explained that they have
since improved the budgeting process to take into account spending priorities with
the output budgeting tool as rolled out by Ministry of Finance Planning and
Economic Development. Management further stated that a request for an increase
in the Ministry‘s MTEF ceiling to cater for the increasing scope of operation of new
Local Governments has been made.
I advised management to streamline the budget process to ensure that sufficient
funds are allocated to each account. Authority should be sought for any
reallocations.
21.2 Advances to Individual Personal Accounts
(a) Non Compliance with Treasury Accounting Instructions
Sections 227, 228 and 229 of the Treasury Accounting Instructions (TAIs), states
that all payments should be made by the Accounting Officer directly to the
beneficiaries. Where this is not convenient, an imprest holder should be appointed
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by the Accounting Officer with the approval of the Accountant General.
Shs.1,840,727,530 was advanced to Ministry staff through their personal bank
accounts to undertake direct procurements and other activities of the Ministry.
Such a practice of depositing huge funds on personal accounts exposes
Government funds to risk of loss, since the Ministry does not have any control
over such funds deposited on personal accounts.
Management explained that advances were mainly related to activities and
workshops undertaken upcountry jointly with staff from other Ministries and Local
Governments and as such, their entitlements were advanced to the team leaders
within the Ministry.
I advised management to ensure adherence with the requirements under the
Treasury Accounting Instructions.
(b) Advances to personal accounts not accounted for
A review of advances to personal accounts was carried out and the following
issues were noted:
i. Personal advances to the tune of Shs.67,700,200 were not accounted for by the
respective officials.
ii. Accountability of Shs.96,313,500 was doubted due to inadequacies in the
accountability.
iii. Photocopies of some accountability were availed without certification, making
the accountability doubtful.
iv. Payment sheets were in some cases blank and not signed by the beneficiaries
as such I was unable to confirm the payments.
The above flaws rendered the accountabilities in question doubtful. In this regard,
I was unable to confirm whether the amount involved was applied to the intended
purposes.
I advised management to ensure that funds are accounted for or recovery
measures should be initiated.
21.3 Unaccounted for Cash Withdrawals
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A sum of Shs.376,248,891 was withdrawn in cash of which Shs.72,000,000 relates
to imprest while Shs.304,248,891 relates to other activity cash withdrawals. It was
noted that Shs.77,896,691 was unaccounted for at the time of audit
(Shs.19,137,500 and Shs.58,759,191 for imprest and other cash withdrawals
respectively) while Shs.15,160,000 was accounted for but the accountabilities
were inconsistent and therefore considered doubtful.
In absence of the relevant accountabilities, I was not able to confirm whether the
funds were put to the intended purposes.
I advised management to ensure that all funds are accounted for within the
statutory period or recovery measures be enforced.
21.4 Payments for Hotel Services
During the year under review, Shs.647,265,371 was spent on workshops and
conference services in four (4) hotels. Scrutiny of the transactions revealed that
expenditure worth Shs.636,362,171 for retreats and workshops lacked attendance
lists. In absence of these lists, I was not able to confirm whether activities did take
place. I could also not confirm the numbers of the billed participants.
Further Shs.57,199,993 paid to Hotel Africana and Hotel paradise lacked
expenditure vouchers and the relevant documentation to support the payments;
consequently I could not certify that the funds were genuinely spent on the
intended purposes.
I advised management to ensure that all funds are accounted for within the
statutory period or recovery measures be enforced.
21.5 Project Refunds
(a) Irregular borrowing from Project Accounts
Contrary to section 42 (c) of the TAIs the Ministry borrowed a sum of
Shs.916,601,532 from eight (8) project Accounts to fund Ministry‘s activities. At
the time of the report, the borrowings had not been refunded. Details are as
below:
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Project Amount (Shs.)
District Development Programme III 52,924,028
District Livelihoods Support Programme 56,751,967
District Transport Revolving Fund 328,688,331
Energy For Rural Transformation(ERT II) 62,074,970
Local Government Management and Service Delivery Programme
198,483,739
Local Government Sector Investment Plan 26,810,000
Strengthening Monitoring Capacities in Uganda Public Sector
61,080,000
Uganda Good Governance Programme 129,788,497
Total 916,601,532
The borrowings affected the planned and timely implementation of Project
activities.
Management explained that the borrowing was due to inadequate funding.
I advised management to ensure strict adherence to the Commitment Control
guidelines and avoid borrowing from the project Accounts.
(b) Unaccounted for borrowings
Examination of payments relating to the borrowing revealed that Shs.70,931,400
advanced in form of fuel and allowances to staff to carry out various activities
remained unaccounted for by the time of audit contrary to section 120 of the TAIs.
There is a weakness in enforcing timely accountability from the staff. In absence
of the relevant accountabilities, I was not able to confirm whether the funds were
put to the intended purposes for which they were borrowed. Unaccounted for
funds are prone to misuse.
I advised management to ensure that all funds are accounted for within the
statutory period or recovery measures considered on the concerned officers.
21.6 Improperly vouched air tickets expenditure
A sum of Shs.33,578,776 was spent on air tickets for staff travelling abroad.
However the funds were not properly accounted for as they lacked supporting
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documents contrary to section 120 and 181 of the Treasury Accounting
Instructions. The highlights of the findings are as below:
Accountabilities in form of ticket folios or e-ticket print-outs were not availed
for authentication of payments.
Boarding passes and passport copies were not availed to confirm exit and
return dates.
No back to office reports were on file to justify the travels undertaken.
In absence of the relevant accountabilities, I was not able to confirm whether the
funds were put to the intended purposes for which they were requisitioned.
I advised management to ensure that all funds are accounted for within the
statutory period or consider recovery measures.
21.7 Irregular Inter-Account Transfer
The Ministry operates Bank Account no.000110088000018 ―Local Government
Sector Investment Plan‖ with Bank of Uganda. It was noted that the Project closed
some years back but the entity did not close the account. Audit review of the bank
account revealed the following:
a) A transfer of Shs.5,211,930,182 was made from the Treasury General Account
in the last week of the financial year 2011/2012 (29th June 2012). No authority
from Treasury for the transfer to the off-budget account was availed for
review. This transfer could have been made to circumvent the controls which
require unspent balances to be returned to Treasury at the close of the
financial year.
b) The amount was spent from the off budget project account in 2012/2013
financial year without appropriation authority of Parliament and approved work
plans.
c) The above transfer was utilised from this account as detailed below:
Expense category Amount (Shs)
Cash 178,180,000
Personal advances to individuals 355,348,860
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Ministry of works and Transport 1,268,658,000
Fuel 143,984,867
Clearing and Forwarding Ltd 994,545,548
URA tax 60,994,939
Shipping Services 2,079,686,300
Tours and Travel Company 82,741,725
Tours and Travel Company 28,304,100
Others 81,059,040
Total 5,273,503,379
A review of the expenditure relating to the above transfer revealed the following:
Shs.188,058,700 out of Shs.355,348,860 deposited on individual personal
accounts was not accounted for. No cash book and advance ledger was
maintained for this account.
According to the MoU signed between the MoLG and Ministry of Works and
Transport (MoWT), MoWT was meant to utilize the remitted funds
(Shs.1,268,658,000) in strict compliance to the terms in the MoU and to
submit accountabilities supported by bank statements and original copies of
related documents within one month of completion of assignment. However
this has not been done ten (10) months after expiry of the MoU.
I was not provided with the policy cover by the contracted cleaning company
implying that charges of Shs.262,920,000 were irregular. Without evidence of
insurance cover certificates and receipts, I could not rule out inflated
payment to the firm.
There was no bank guarantee executed by the cleaning company Ltd for
Shs.108,541,812 though Management stated that it had been returned. I
could therefore not certify its execution. No evidence of confirmation of the
guarantee was availed and consequently no confirmation was on file from
any insurance firm to the Ministry regarding the guarantee.
d) Another transfer of Shs.6,681,216,846 from a cancelled LC account was also
made to this project account. Shs. 6,694,225,263 was transferred to 52 districts
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for the procurement of bicycles. Management records indicated that 29,767
bicycles were procured and distributed to beneficiaries by the 52 districts.
e) Outstanding balance of Shs.852,593,754 at the end of the financial year was not
reflected in the financial statements (balance sheet) of the Ministry as at 30th
June 2013 and yet these are Ministry funds from the TGA. The funds were
instead disclosed in the schedule of project balances hence understating the
cash and cash equivalent.
Management in response stated that the Account will be closed and
accountabilities from Ministry of Works will be obtained and presented for
verification. Management further stated that they had written to the provider to
furnish a copy of the security and the insurance cover.
I will await the outcome of the efforts.
21.8 Payment for Protocol and Presidential Pledges
During the year a total of Shs.84,000,000, was paid to the Ministry of Foreign
Affairs (Shs.59,000,000) and State House ( Shs.25,000,000) to facilitate protocol
activities and hosting of the State banquet. However, the supporting documents to
justify the transfers were lacking and neither were accountability documents for
the expenditure provided for audit review. There is a risk of duplication by the
Ministry for activities that are budgeted and financed by other line Ministries.
Management explained that the funds were for supporting the sub committees for
hosting of the Commonwealth Local Government conference and hosting of the
state banquet.
I advised management to provide accountability or initiate recovery measures.
21.9 Diversion of GOU Counterpart Funding
Shs.597,998,795 (exclusive of gross tax) was released to the Ministry as
Government Counterpart funding for four projects during the year under review.
Scrutiny of expenditure documents revealed that a total of Shs.143,102,809 was
diverted to fund non-project related activities. There is no evidence that the
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Accounting Officer sought for approval by way of a reallocation or virements
warrant, as required under the Public Finance and Accountability Regulations
2003. Summary of diversion of counterpart funding is as below;
Project code Release amount (Shs) Diversion (Shs)
CAIIP I 1068 157,057,145 6,154,298
CAIIP II 1087 149,675,561 19,034,800
DLSP 1066 231,250,577 77,422,200
CAIIP III 1236 60,015,512 40,491,511
TOTAL 597,998,795 143,102,809
Such a practice undermines the intentions of the appropriating Authority, results
into under performance on the part of the project and leads to misstatement of
financial statements. Management in response stated that the omission had been
noted and that refunds will be effected.
I await the outcome of the efforts.
21.10 Transfers to Districts
The Ministry transferred Shs.697,452,087 to various districts to meet several
activities including; medical treatment, IFMS tier 2 recurrent costs, physical
development plan implementation and road openings. Audit review of the
payments revealed the following:
(a) Treatment abroad
Public Service Standing Orders 2010 Medical Attention, section (M-f) 4(b) requires
that night allowance should not be paid to patients except where an officer is
required to convalesce in the country under specialist supervision. The maximum
claim is limited to 21 days exclusive of hospital days which are charged on the
hospital account. It is also provided that in case of any excess requirement, the
officer may claim from the responsible Permanent Secretary and any authority
thereon will be limited to half of the officer‘s night allowance.
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Shs.120,872,000 was remitted to a Municipal Council for treatment of a mayor in
India for a kidney transplant where he was to spend 38 days with the kidney
donor and attendant. The referral was properly authorised by the medical board.
Included in Shs.120,872,000 was US $ 17,900 to cater for hospital costs during
observation, operation and after operation while in India for the 38 days.
However, contrary to the standing orders the ministry of health recommended
payment of per-diem for 38 days to the mayor and subsequently US $ 13,680
(Shs.35,636,400) was paid for all the days he spent in the Indian hospital. The
officer was therefore not entitled to any per-diem. I consider this a loss of
government funds.
Management explained that the Ministry did not have a budget line for treatment
of political leaders however authority was provided by PS/ST to spend from the
Ministry budget.
I advised management to always refer to the standing orders before such
payments are affected.
(b) Support to Town Councils
The Decentralization policy provides an anchor for advancement of Governments
overall political and social –economic agenda. It promotes popular participation
and empowers local people to make decisions on issues that affect their lives and
this is done by Government support through funding the decentralized services.
This funding is through unconditional grants, conditional grants and equalization
grants which are budgeted for and released directly to Local Governments.
Contrary to the above Government funding frame work, it was noted that the
Ministry transferred Shs.60,000,000 to 5 Town Councils to open and grade urban
roads. Several issues were noted as below;
i. Local Government‘s road funding interventions are budgeted and released by
Uganda Road Fund as conditional grants after approval of work plans and
IPFs are provided and passed by the Councils in their budgets for
implementation. The Ministry documentation stated that funding had been
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secured for these transfers however I was not availed with the source. This
pointed to a diversion of Ministry funds.
ii. There were no approved work plans and supplementary budgets by the
Councils provided for review to confirm absorption of funds. This is an
indicator of haphazard planning and absorption of the funds is doubtful given
that even conditional funds are many times returned at year end despite
being planned for.
iii. The criterion used by the Ministry in allocating the secured funds to the
chosen Town Councils was not availed.
iv. No accountability was availed by the districts upon utilization of the funds by
the time of the report.
Ministry allocation of funds to Local Governments without set criteria of allocation,
approved work plans by designated agencies and Councils may affect programme
implementation.
I advised management to provide sufficient supervision to the town councils so as
to ensure adequate absorption of funds transferred to them. I further advised
them to provide accountability for the funds spent.
21.11 Non-deduction of Withholding Tax from Local Suppliers
It was noted that withholding tax to the tune of Shs.26,606,383 was not deducted
from some payments for onward remittance to URA contrary to the regulations.
Summary of payments are in table below;
Item Amount (Shs) WHT tax due
Stationery and computer
supplies
347,761,191
36334,761,191
,761,191,761,19
1258,338,784
18,501,211 Silver springs 26,626,699 1, 353,900
Kembabazi catering centre
Ltd
49,200,000 2, 952,000
Vehicle hire 135,086,201
8,105,172
Total 210,912,900 26,606,383
The Ministry may incur losses due to fines and penalties imposed by URA for non-
deduction and non-remittance of tax.
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I advised the Accounting Officer to adhere to the requirements under the Income
Tax Act. The concerned suppliers should be traced and tax recovered.
21.12 Wasteful Expenditure- Parking fees for Grounded Vehicles
It was noted that Shs.35,607,680 was paid to a company as parking fees for 16
Ministry motor vehicles parked in the basement of Uganda House for more than a
year. However an inspection of the parked vehicles in the basement revealed that
these vehicles were grounded. Management‘s failure to adhere to the TAIs chapter
7, paragraph 705 led to wastage of funds.
Among the vehicles were 4 Mitshubishi Pajeros (2 White and 2 Grey), One Blue
Nissan Hard body, three Nissan Patrols grey in colour and one Toyota Land cruiser
white with the inscription ―UN‖ whose number plates had been removed. Five of
the grounded motor vehicles were not recorded in the Motor Vehicle register
namely UG 2214R Mitshubishi Pajero, UG 1090 R Nissan Hard body, UG 3012 R
Mitshubishi Pajero UG 1221 R and UG 2213 R both Nissans Hard body. Sample
photos are below:
This Vehicle Mistubishi is abandoned in the Uganda House basement parking without registration number plate. This puts the asset at risk of vandalism.
Mitsubishi Pajero vehicle that is not recorded in the Motor vehicle register
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Nissan hard body vehicle that is not recorded in the Motor vehicle register
The Ministry is losing money spent on parking space for motor vehicles that are no
longer of economic benefit to the Ministry and should have been boarded off.
Risks of vandalism are likely to reduce the disposal value at the time of disposal.
Management explained that the vehicles were in the process of being boarded off.
I await the outcome of the boarding off process by management.
21.13 Staff Welfare-Irregular Allowances
It was noted that Shs.624,920,000 was paid to Ministry staff as automatic monthly
allowances. I observed that this allowance paid in form of night subsistence was
paid irregularly because it was not supported with any administrative
circulars/standing order instructions from Ministry of Public Service. Further, no
taxes were deducted in form of PAYE.
Such payments affect the Ministry‘s cash flows hence affecting performance and
implementation of planned activities.
Management explained that the allowances were paid as a way of motivating the
ministry staff to enhance productivity.
I advised management to liaise with the Ministry of Public Service to have the
allowance regularised.
21.14 Budget Performance
A Review of the budget performance for the year revealed that some targets were
not achieved despite release of funds to the various vote functions. Details are in
table below;
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Vote/Programme
Item description Quantity Amount Budgeted in billions
Released amount in billions
Quantity Remarks
Vote 11 Vote function 1323 Project 1089e LGSIP Support to urban development
To provide a single point of reference for mobilizing resources for implementation of decentralization policy within the context of the MTEF
-Urban planning and development regulated, fund transfers to 20 urban councils effected
0.25 0.30 -None No activity undertaken.
Vote function
1324 Programme 11: Urban Inspection Department
To undertake systematic
verification of adherence to established legal and policy frameworks, regulations, guidelines, procedures and rules to ensure efficiency and effectiveness in the operations of urban LGs
-To carry out routine and periodic inspection
in 176 urban councils -Carryout VFM audit on capital investment in 22 Municipal councils -Human resource capacity in 14 urban councils -Provide support to 8 municipalities to improve public financial management systems
0.763 0.532 -Routine and periodic
inspection of 111 districts
-No VFM audits on
capiatal investment. -No human resource capacity in 14 urban councils
Project 1089d LGSIP
Support to policy, planning and support
To provide a single point of reference for mobilization
resources for implementation of the decentralization policy within the context of the MTEF.
-JICA interventions enhanced and FAO phase out strategy
followed up in Northern -Global and Common Wealth Forum -Planning, budgeting and M&E function in 70 districts and 22 MC‘s strengthened -Monitoring and evaluation of 70 districts and 22 MC‘s to link their development plan to the NDP -ICT support to LG‘s in data management and LOGICs in 111 districts and 22 MCs -Provide ordinary coordination meeting, and support supervision on exists strategy for FAO in 7 supported districts.
0.733 1.015 -Global LG common wealth forum
hosted -JICA interventions enhanced and FAO phase out strategy followed. -Planning, budgeting and M&E function in 70 districts and 22 MCs provided.
-No ICT support to LG‘s was
undertaken.
Vote function 1321
Enhance the capacity of MoLG and its partners to
-Decentralized planning supported and monitored in 80 high
0.4 0.287 -None No activity undertaken.
275
Project 1069 Participatory development project
coordinate the promotion and facilitation of participatory development management at all levels
and lower local governments in Northern Uganda -Provision of technical guidance and capacity building to 80LG
Project 1073 LG Management and Service Delivery Programme
To enhance the capacity of local Government so that they are able to plan and manage human and financial resources for effective and sustainable service delivery
-CDD initiatives monitored and supervised in 111 LGs -Implementation of LED projects supported in 21 LGs -LGMSD training, monitoring and support supervision undertaken in 111 LGs. -LG civil works for IFMS installation undertaken in 22 districts
12.24 0.553 -None -No CDD initiatives monitored.—No implementation of LED projects. -No LGMSD training caried out.
Service delivery is hampered and the appropriating authority‘s objectives are not
met.
Management in response stated that due to inadequate funding, they prioritized
the expenditures.
I advised management to liaise with the appropriate authority and ensure that all
activities are undertaken as planned.
21.15 Audit Committee
Regulation 29 and 30 of the Public Finance and Accountability Regulations 2003
and section 8 of the Public Finance and Accountability Act 2003 requires the
Minister in charge of Finance to establish and appoint Audit Committees whose
functions are advisory to the Accounting Officer.
During the year ended 30th June 2013 the Ministry of Local government had an
Audit Committee composed of five members. However, the committee did not
carry out its functions relating to approval of annual audit workplans, discussion of
audit reports, and review of the Ministry‘s financial statements:
I informed management to bring the matter to the attention of the committee.
276
21.16 COMMUNITY AGRICULTURAL INFRASTRUCTURE IMPROVEMENT
PROGRAMME – PROJECT 1 (CAIIP 1)
It was noted that management had complied in all material aspects of the
financing and GoU financial regulations except for the matters below;
(a) Un-remitted Pay-As-You-Earn (PAYE)
It was observed that a total of Shs.147,392,099 was deducted and withheld as
PAYE from salaries of Programme staff as required by the regulations, however,
these funds were not remitted to URA. Non remittance of deductions is a violation
of the tax law which may lead to penalties.
Management explained that PAYE was not remitted due to limited counterpart
funding from Government. I advised management to liaise with MoFPED and
ensure that the statutory deductions are promptly remitted to the rightful
authorities as required by the law to avoid unnecessary fines and penalties.
(b) Failure to deduct 6%Withholding tax (WHT) from Service
providers
It was observed that Management did not withhold tax amounting to
Shs.2,469,004,410 on payments for services provided on non-exempt companies
contrary to the requirements of the tax laws under Section 120(1). Non-deduction
of withholding tax may result in to penalties and fines being imposed on the
Programme by the tax body.
Management explained that the ADB loan agreement prohibits the use of the loan
funds for the payment of taxes relating to the goods and services required for the
execution of the Project.
I explained to management that this is income that should have been subjected to
tax and advised management to liaise with the MoFPED to ensure that tax is
withheld from the service providers and remitted to the tax body as required by
the Income Tax Act.
(c) General Standards of Accounting and Internal Controls
277
Spending project funds at source
A review of the Ministry of Local Government expenditure revealed that GoU
contribution amounting to Shs. 2,657,057,145 was released by Ministry of Finance,
Planning and Economic Development (MOFPED) to the project through the
Ministry of Local Government Treasury General Account where funds were spent
on behalf of the Project which was contrary to the Project‘s operations manual.
Spending Project funds by the Ministry does not only deny Project Management
control over the funds but also poses a risk of diverting the funds to activities
outside the Project.
I advised management to ensure that Project funds are transferred from the line
Ministry to the Project Account for proper monitoring and control.
(d) Field Inspections
Field inspections were undertaken with a view of establishing among others,
Physical progress of civil works on district feeder roads and community access
roads; construction of rural markets and agro processing shelters. The extent of
supervision and monitoring by the respective District Local Governments were
considered. The following matters were observed during inspections:-
Rehabilitation of Community and Access Roads (CARs)
i. Lack of routine maintenance of roads by the Districts
Most of the roads in the Districts under CAIIP 1 (Batch A and B) Project were
completed. However, the districts are not maintaining these roads and as a result
some roads have narrowed due to lack of maintenance. The roads had become
bushy with drainages. Specifically during inspection of Masaka, Mbale, Tororo,
Butaleja and Rakai districts, I noted that the carriage width of some roads had
reduced to 2.5m from the 4.5m standard meter set for the murrum roads. It was
also noted that in some instances, there was poor workmanship exhibited by
contractors. Refer to the pictures and explanations below:
MBALE DISTRICT
Busiu Subcounty
278
Rehabilitation of Watakakhuna-Bukaya-Nanaaloko, Buwalasi-Namwalye Bridge Contractor; Khabusi Building Contractors Contract price ; Shs 892,493,059 Amount Paid; shs.804,320,825 Percentage paid; 90% The bridge was constructed, however maintenance of the road is needed as part of the road was being washed away by rain.
TORORO DISTRICT
Rehabilitation of Siwa Lwala Nimwanga Pobwok 17.7km Road in Nabuyonga Sub County Contractor; WAFW Consult Ltd Contract price; Shs 524,132,806 Amount paid; Shs; 273,125,000 Percentage paid 52% Poor workmanship, stones were left on the road sides and very little murrum appeared to have been used to construct the road. The headwalls are at the same level as the road and there was no offshoot to enable water to flow properly.
BUTALEJA DISTRICT
Mazimasa Sub-county
279
Rehabilitation of Mpologoma- Nabiganda-Bugalo, Kanghalaba- Hisala- Kamenya Contractor;BMK Contractors Contract price ;457,424,900 Amount paid ; Ug shs 425,424,725 Percentage paid: 93% Findings: Narrowing of the road as a result of lack of routine maintenance.
RAKAI DISTRICT
1. Kabingo-Nsimbo-Kyabalemera-Ddwaniro & Lumbugu-Nsozibiri Road 12.3km
Good surface However the head walls at the junction are broken.
Kachanga- Sagala Road 8.2km
Drainage channel blocked by silt and Garbage
Uncompleted drainage channel
280
The respective District Engineers explained that the districts do not get enough
funds to maintain the roads. They further explained that Uganda Road Fund is
planning to fund maintenance of Community Access Roads in sub-counties in the
coming year.
I advised management to liaise with the relevant stakeholders and urgently secure
funds for routine maintenance of rehabilitated roads.
21.17 Agro processing facilities
a) Delayed commissioning of Agro processing Facilities
A number of agro processing facilities in Mbale district were completed but had
not yet been commissioned. For example, a maize mill at Kimwanga market in the
pictures below were not commissioned. Some of the facilities had already
developed cracks before becoming operational most likely due to poor
workmanship. See the photos below:
Maize mill installed but not operating Rice huller fitted but not operational
Poor workmanship; cracks on the floors and on the verandah was evident.
At the moment therefore, the community is not benefiting from the facilities
despite availability.
281
Management explained that follow up with the Sub Counties and District
management will be made to ensure that all the mentioned impediments.
I await the outcome of management‘s efforts.
b) Lack of capacity by a contractor
During the previous year, it was noted that in Tororo District a construction
company was awarded a contract with a contract sum of Shs.227,594,063 to
construct agro processing facilities in all the three sub counties of Nagongera (2
rice hullers); Merikit (2 rice hullers) and Nabuyoga (1 maize mill and 2 rice hullers)
all to be completed at the same time. At the time of audit, only 25% of the
contracted sum had been paid. It was revealed that the contractor lacked
capacity to execute the contracted works in accordance with the contract period
as the projects are still incomplete to date.
Tororo District Local Government wrote to Ministry of Local Government in August
2013 recommending for termination and blacklisting of the contractor for failure to
complete the works. The Ministry responded requesting the district to take over
the abandoned sites from the contractor as the Ministry formalized the termination
process. However at the time of inspection, the District had not yet taken over
the site and the termination process had not been concluded. The construction
sites are shown in pictures below:
a) Rice hullers in Nabuyoga sub county
A bushy site of the abandoned incomplete rice mills; the iron sheets used do not comply
with the specification of ‗‘gauge 28‘‘.
282
b) Incomplete rice hullers in Nagongera Sub county
Abandoned construction sites for rice hullers in Nagongera Sub County
Management of the project promised to follow up the matter and ensure that the
Projects activities fully are implemented.
I advised management to follow up the matter and ensure that the works are
completed.
c) Non-Operational markets
It was noted that some markets that had been completed in Mbale District were
not operational. For instance Busiu Sub County market was complete but not
operational and yet some lockers had already been removed from the stalls. The
District Engineer explained that these markets were handed over to the Sub
County and therefore it was the responsibility of the Sub-county management to
allocate the stalls to the vendors. The community is not benefiting from the
Project infrastructure as was intended.
Completed but un-operational Busiu market
283
Management of the project attributed the non-operational markets to poor
location, lack of enforcement of the Market Act, political interference, reluctance
by vendors to pay market dues and inadequate commodities to sell during off-
season, however, these issues were being addressed.
I await the outcome of management action.
21.18 Status of Project Implementation
i. Project performance under rural infrastructure improvement
component
According to the project five year implementation plan and quarterly progress
reports, the Project had not achieved the following targets despite the fact that its
closure date was set for 30th September 2013:
Activity Targets Progress as at 30th June 2013
Rehabilitation of Community
Access Roads
4,680km 3868.2km completed and handed
over.
343.5km ongoing physical
progress 80%
Rehabilitation/Construction of
Markets
78 Markets 74 Markets completed and handed
over
Four markets not completed.
Supply and installation of
Agro-processing Facilities
123 Assorted
APFs
106 of 123 assorted agro
processing facilities have been
installed. 17 facilities pending.
Unless there is an extension of the closure date, Management will not be able to
achieve targets in the loan agreements.
In their written response, management envisaged that these activities will be
complete by the project closure date and if deemed necessary the closure will be
extended to allow proper management of the completion activities. I advised
management to ensure that uncompleted project activities are completed within
284
the Project time frame to avoid any additional costs associated with project
extension.
21.19 COMMUNITY AGRICULTURAL INFRASTRUCTURE IMPROVEMENT
PROGRAMME – PROJECT I1 (CAIIP I1)
(a) Compliance with financing agreement and Government of Uganda
financial regulations
i) Budget Performance-Low Absorption Capacity
The approved Project expenditure estimates for the financial year amounted to
Shs.80,197,862,398. However, only Shs.30,133,948,428 was spent during the
year, reflecting an absorption capacity of only 37.6%. Low absorption capacity
denies the beneficiary communities services which were meant to improve their
livelihood. There is also a risk that Management may not meet project objectives
within the programme period.
Management attributed the delays to the slow procurement process and as such
implementation of activities was rolled over to the financial year 2013/14.
Management further explained that the loan is 78% committed and the overall
planned activities will be implemented within the project period.
I advised management to ensure closer monitoring of implementations of
contracts to ensure that the activities are concluded within the programme
timelines.
ii) Shortfalls in Counterpart funding
According to the Provisions of the Loan Agreement, GOU is required to fully
commit and contribute funds towards the implementation of Programme activities.
Shs.200,000,000 was accordingly budgeted as GOU counterpart funding, however
only Shs.149,675,561 was released for Project activities resulting into a shortfall of
Shs.50,324,439. Failure to provide counterpart funding as budgeted for is in
violation of the Project Financing Agreement. Besides, underfunding hinders the
smooth implementation of the planned Project activities.
285
Management explained that this matter was addressed to the Ministry of Finance,
Planning and Economic Development by the line Ministry with a view of ensuring
that sufficient releases are made in the financial year 2013/14 and subsequent
years. I await the outcome of management‘s efforts.
iii) Failure to deduct 6%Withholding tax (WHT) from Service
providers
It was observed that Management did not withhold tax amounting to
Shs.1,455,131,824 on payments for services provided contrary to the
requirements of the Income Tax Act under S.120(1). Non-deduction of withholding
tax may result in to penalties and fines being imposed on the Programme by the
tax body.
Management explained that the ADB loan agreement prohibits the use of the loan
funds for the payment of taxes relating to the goods and services required for the
execution of the Project.
I explained to management that this is income that should have been subjected to
tax and advised management to liaise with MoFPED to ensure that tax is withheld
from eligible service providers and remitted to the tax body as required by the
Income Tax Act.
(b) General Standards of Accounting and internal control
i) Spending at source
A review of the Ministry of Local Government development expenditure revealed
that GoU contribution amounting to Shs 149,675,561 was released by Ministry of
Finance, Planning and Economic Development to the Project through the Ministry
of Local Government Treasury General Account where funds were spent on behalf
of the Project. This was contrary to the Project‘s operations manual. Spending
Project funds by the Ministry does not only deny Project Management control over
the funds but also poses a risk of diverting the funds to non-project activities.
Indeed Shs.19,034,800 counterpart funding was diverted to cater for Ministry
activities.
286
Management explained that the GOU funds under CAIIP II are now controlled and
managed on the Government IFMS system. The Project was given the
responsibilities of committing funds on the system by the Accountant General.
I advised management to ensure adequate controls to avoid possible diversions.
In the meantime diverted funds should be refunded to the Programme.
(c) Field Inspections
An inspection was carried out in September 2013 and the following issues relating
to the implementation of the Project were noted;
i) Abandonment of Community access road works under Batch A
It was noted that some road works had not been completed in time while other
sites had been abandoned. During inspections in Lira district, it was observed that
Ageni Lela-Te Cwao road in Aloi Sub County in Aleptong District constructed by a
construction company had been abandoned after undertaking works of 3.2kms out
of the contracted 17.2kms. This road had been contracted at a sum of
Shs.335,692,169 out of which Shs.127,602,100 had been paid to the contractor.
Refer to the picture 1 below:
Incomplete works - 1 Ageni Lela-Te Cwao road in Aloi S/ County in Aleptong
There is a risk that extra administrative costs will be incurred as a consequence of
delayed implementation.
287
Management explained that they had contacted the District Contracts Committee
who explained that the contract had been extended to allow the contractor to
complete the works and promised that no extra costs will be incurred.
I advised management to regularly monitor activities in the districts to ensure
quality and timely completion of the road works. Such monitoring would identify
early enough areas of concern that require attention.
21.20 Delayed completion of projects
a) Delayed completion of Community access roads under Batch B
According to the contract documents for community access roads under batch B,
all road works ought to have been completed and handed over by December
2010. However, inspections carried out in beneficiary districts revealed that some
of these roads had not been completed. The completion was below 50% as
indicated in the table below;
District Sub County Contract sum
(Shs)
Amount paid
(Shs)
Outstanding
(Shs)
%age of
completion
Soroti PINGIRE S/C
489,870,150
126,402,250 356,815,150 26%
KUMI ATUTUR S/C
484,593,900 150,475,250 326,198,900 31%
AMURIA KAPELEBYONG
S/C
638,641,500
246,392,000
379,281,500
39%
The delay in contract performance increases administration costs. It also denies
the community access to good roads which are meant to improve people‘s
livelihoods.
Management explained that the contracts had delayed due to factors beyond the
contractors control such as weather patterns, limited availability of gravel material
and the difficult terrain in some districts. Cognizant of the above challenges, a lot
of effort had been put in place to ensure that contracts are completed albeit late.
288
I advised management to step up the monitoring of these roads with a view of
ensuring quality and timely completion of road works. Management should also
consider invoking the penalty clauses within the contract agreements for delayed
completion of works.
b) Delayed completion of Agro Processing Facilities
It was noted that many Projects were at varying stages of completion in
Kaberamaido, Soroti and Kumi districts despite the fact that contracts completion
was due on 30th September 2013. While some projects were at roofing stage,
others were at slab and foundation levels as evidenced below:
Kaberamaido district
Incomplete structure of the grain mill A grain mill still at foundation level in
in Otuboi sub county Kaberamaido Sub county
Incomplete grain mill at Ochero Sub County
Soroti district
289
Foundation of a maize mill in Arapai Sub county Foundation of Maize Mill in Kateta subcounty
Incomplete maize mill in Atiira Sub County
Kumi District
Incomplete structure for maize mill at Mukongoro Subcounty
Milk cooler and generator house completed in Kobwin, Kumi district but machinery not yet
installed.
290
Milk cooler and generator house completed in Ongino, Kumi district but machinery not yet
installed.
The delay in completion denies the community the intended benefits of the
Project.
Management stated that the delay was mainly due to escalation of prices of major
building materials at the time of contract execution which led to reduced
enthusiasm of the contractors to complete the works as the projects were not
profitable, but measures had been put in place to ensure that works are
completed by February 2014.
I advised management to consider invoking the penalty clauses within the contract
agreements on the delayed completion and also ensure monitoring and
supervision of these projects is properly undertaken.
21.21 Lack of bill boards
Under Item one of Bill of Quantities, bill boards are provided for and costed to
enable identification of the Community Access Road projects. The bill boards
clearly specify the Ministry, the project, the community access road, Sub County,
District and contract number of the contractor for proper identification.
During inspections it was noted that some of the contracted road works
undertaken lacked bill boards yet the cost of Billboards was provided for in the
BOQs. Refer to the table below for roads without billboards:
District Sub County Road Name
DOKOLO Agwata Agwata Atidi-Kachung
Awerowot PS-Alyecjuk PS
Dokolo Alwitmac- Cr. Asalim
Igar-Awialem PS
Kangai Chwagere-Barayom-Amodo
Acungapenyi-Batta Ebwol
LIRA Adwari Adwari TC - Ober
Okwongo TC - Okume PS
Aloi Aloi corner-Orum border
291
Amach Corner Abic-Atanga
Acan pii-Owo-Abongorwot
In absence of the billboards, I could not clearly confirm whether the Community
Access roads inspected were for CAIIP-2 Batch B, as there are several road works
projects in the Districts.
Management responded that it had communicated to all beneficiary districts to
ensure that bill boards are installed. I advised management to ensure that the bill
boards are expeditiously installed for easier identification of road works performed
by the Project.
21.22 Failure to re-grade the road
Before graveling there is need to carry out grading of the road. It was observed
that a contractor of Aromi-Anyangoga road in Amolotar District took long before
spreading the murram resulting into growth of grass which required to be re-
graded before graveling is done. However, the contractor decided to gravel before
re-grading the road. Refer to photograph below:
Aromi-Anyangoga Road in Amolotar District
Management noted the concern and promised to communicate to the relevant
Amolatar District Local Government officials to ensure that the scenario does not
recur in future. I advised management to take stringent administrative measures
on the contractor and the district officials involved.
21.23 Environmental degradation
292
Best practice requires that measures to mitigate environment damage are put in
place before and after construction work is undertaken. It was however observed
that most barrow pits used to excavate gravel for road works were not restored.
Refer to pictures below:
Ocaapa-Orupe P/s-Mukalu Rd, Kateta Sub County in Serere District
The un-restored excavated grounds are a danger to the community as these
provide places for breeding mosquitoes.
Management explained that the borrow pits had been restored, however selected
pits were maintained for mining of construction materials for other roads as well
as correcting defects during the defects liability period.
I advised management to continue restoring areas excavated during construction
of roads in order to control environmental degradation.
21.24 Non-rehabilitation of Onyakedi-Ayac-Banya-Dokolo Boarder Road, Lira
Dsitrict
One of the Project activities inspected in the prior year 2011/2012 was a 21.8 km
Onyakedi-Ayac-Banya-Dokolo boarder road under Lot 74 in Lira district, Amac sub
County; where under-scope of work was noted in Adip swamp and about 100m of
road works had sunk in the swamp thus hindering community‘s access to a nearby
market. It was noted that Management had not made any interventions to repair
the road since 2011/2012. The pictures below refer.
293
As per last year‘s report 2011-12 Recent inspection view of 2012-13
Failure to rehabilitate the road hinders farmers‘ access to markets thus limiting
income generating opportunities.
Management explained that funds had now been secured to extend the road to
connect to a market at Bata Sub-county in Dokolo district and the works have
already been advertised and the procurement process is ongoing.
I await the results of the implementation.
21.25 Non-adherence to Road Specifications
Shs.457,680,300 was paid to Grant Engineering Ltd to construct three roads
totaling to 13.5kms in Amolatar district. According to the specifications in the
contract agreement for the construction of Aromi-Anyangoga Road at Aromi
Swamp, the carriage length was specified as 4.5 Kms with the overall road width
of 6 meters. It was however noted that the road width had varying measures
ranging from 3 meters to 4 meters at certain points. A section of the road is
shown below:
294
Aromi-Anyangoga Road measuring only 3m wide in Amolatar at Aromi Swamp
Non-adherence to road width specifications is a breach of contract and also denies
communities access to good roads.
I advised management to properly execute works according to the specified road
width of 6 metres.
21.26 Closure/blockage of roads
Best practice requires that traffic must be managed and the roads remain
accessible despite the on-going works. This involves the creation of diversions or
working on half of the road while the other half is being used. During the audit
inspection it was noted that several roads were closed and had been inaccessible
for over three months. In one instance the community took initiative to spread the
murram themselves in order to access the nearest market. Refer to pictures below
for blocked roads:
Acan pii-Owo-Abongorwot road in Amach Corner Nyeni road in Lira District
295
Aloi corner-Orum border Road in Aloi -Lira District
Okidi TC Sambwa Road in Soroti District Alwitmac- Cr. Asalim in Dokolo District
Management explained that they are yet to contact and give guidance to the
Project Managers and the community in planning and implementing such works to
ensure that deviations and alternative access are provided.
I advised management to put in place guidelines to avoid significant disruptions in
the affected areas.
21.27 Lack of routine maintenance of roads by the Districts
During audit field inspections in Kaberamaido and Soroti districts, it was noted that
most of the roads were not maintained. In many instances, head walls were
broken, drainages were blocked and grass had narrowed the road width. Refer to
the pictures below:
Okapel-Aperkira road in Kaberamaido Achuna-Angaro-Abeko TC-Aputi Soroti
296
Due to non-maintenance, the roads may not last for the expected life span.
Management explained that they will closely liaise with Uganda Road Fund and
beneficiary districts to ensure rehabilitated roads are maintained. Management
further stated that rehabilitation of community roads will be conditioned on proper
maintenance of the completed roads.
I await the outcome of the efforts being made.
21.28 Inadequate workmanship
Section vii sub section 1.23.1 of the general conditions of the Project civil works
contracts specifies that the contractor shall construct and install the works in
accordance with specifications and drawings.
During inspection of the rehabilitation of 15kms of Lwala Amukurat-Ousia Rd,
contracted to Ficah Enterprises (U) at a contract price of Shs.442,448,843, it was
noted that work was inadequately done as there were no headwalls at the culvert
ends, the drainage was blocked, offshoots were not in good condition, a thin layer
of murrum was spread and poor quality of culverts was used many of which were
found broken. Refer to the pictures below:
Headwalls and passage of water Thin layer of murrum of Achuna-Angaro-
297
Lwala Amukurat-Ousia Rd - the small culverts used were not well placed and no headwalls
Culvert broken on Chwagere-Barayom-Amodo Rd in Dokolo District
Due to poor workmanship, the roads may not last for the expected period thus
denying the community access the intended benefits of the Project.
Management responded that the contractor had partially de-mobilized due to
adverse weather conditions and at the time the road was being used hence
exposing the culverts to direct axel loading resulting into the damages.
I advised management to replace all broken culverts and complete construction of
the road.
21.29 Status of project implementation
21.30 Project performance under Rural Infrastructure Improvement
Component
According to the Project five year implementation plan and progressive reports
accessed from management, the project had not achieved the following targets
despite the fact that the project closure date was set for 30th July 2014:
Activity Targets Progress as at 30th June 2013
Rehabilitation of
Community Access
Roads
4,365kms 1454.1km Batch A CARs completed
and handed over leaving 362km
under construction.
298
1198.2km of Batch B community
access Roads were still on going at
physical progress of 40%.
Recurrent maintenance 8,515kms of community
access roads and 439
kms of district roads;
There was no routine maintenance
carried out in districts due to lack of
funds.
Supply and installation
of Agro-processing
Facilities
97 Assorted APFs Contracts for 77 shelters for
assorted agro processing facilities
(36 maize mills, 14 rice hullers, 37
multipurpose Grain Mills and 5 milk
coolers) were signed; however,
supplies and equipment that were
expected by September 2013 had
not been installed.
Delay in project implementation leads to unnecessary extra administrative costs in
form of monitoring and supervision.
Management explained that rehabilitation of the remaining batch of community
roads will commence soon. Contracts for supply of agro processing equipment
were awarded and the equipments will be delivered soon.
I await management‘s implementation of activities.
21.31 COMMUNITY AGRICULTURAL INFRASTRUCTURE IMPROVEMENT
PROGRAMME – PROJECT I1 (CAIIP III)
(a) Status of Project implementation
Delayed implementation of works
The Project was expected to commence in 2011 and run for 5 years, however,
operations began 9 months late in April 2012. According to the annual work plan
the activities below should have been undertaken and completed by the end of the
year under review, however, by the time of reporting, the works were still
ongoing. See table below for progress.
299
Progress of works so far
Activities for
the year
Targets for the
year
Amount (Shs) Progress
during the year
Rehabilitation of
Batch A Community
Access Roads
40% of the total
road works of
10,645,944,000 Works have
not taken off. Procurements
process still on going
Provision for
Procurement of Consultant to
carry out a baseline study
a study report 150,000,000 Contract was
awarded and the work is in
progress
Provision for
Procurement of consultant to
carry out a post-
harvest losses baseline study
a study report 150,000,000 Contract was
awarded and the work is in
progress
Hire and
remuneration of PFT staff for
Mbarara regional office
1 M&E Officer, 1
CDO,1 Infrastructure
Engineer
379,320,000 Not yet done
TOTAL 11,478,264,000
During inspection of beneficiary districts, it was observed that although some
operational funds had been received to cater for agro based activities, training and
construction of community access roads among others. These activities had not
yet commenced due to delays in the procurement process.
Delay in implementation of works denies beneficiaries the intended benefits of the
Project.
Management attributed the delay to the elaborate evaluation process for the
procurement of contractors. Management indicated that the procurement of
consultancies were complete and the studies were in advanced stages of
completion.
I advised management to expedite the planned Project activities in order to meet
Project objectives within the agreed time frame.
(b) General Standards of Accounting and Internal Controls
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No reportable internal control weaknesses were observed during the period under
review.
21.32 MARKETS AND AGRICULTURAL TRADE IMPROVEMENT PROJECT 1
(MATIP 1)
(a) Non-Performing Loan from Arab Bank for Economic Development
in Africa (BADEA) - US$ 10,000,000
Two funding agreements were signed between the GoU as Borrower and two
banks; African Development Bank (ADB/F - UA 38 Million) and the Arab Bank for
Economic Development in Africa (BADEA - USD 10Million). The following were
noted on the performance of the loans;
Only the ADB/F loan is performing. This was evidenced through the first tranch
disbursement in 2011. The last disbursement is due on 30th September 2015.
BADEA loan agreement was signed on 16th July 2009 to necessitate the
acquisition of land and construction of five markets at Kasubi, Busega,
Kansanga (Kampala City), Kimaka (Jinja District) and Nyendo (Masaka
District). The loan was declared effective on 21st January 2010 and last
disbursement expected on 30th March 2013. The agreement indicated that the
borrower shall pay interest at the rate of one per cent (1%) per annum on the
principal amount of the loan withdrawn and outstanding from time to time. It
was observed that no disbursements have been made since then, despite the
fact that the consultants were procured and were paid to draw up architectural
designs and supervise the construction of the five markets. The commitment
fees and interest that have accrued on this loan account since its effective date
has been estimated at US$400,000. This is a likely loss to Government. In
addition, delays in accessing funds have an effect on service delivery to
communities.
The period for the construction of the above five markets has since elapsed.
The agreed disbursement date of 30th March 2013 has passed yet no
construction works had started.
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Management responded that the designs for the 2 (two) markets of Nyendo and
Busega were submitted to BADEA for approval and the Project is expected to
receive funds upon approval of the designs.
I advised management to follow up on the remaining three (3) markets and also
ensure that funds are requisitioned early to avoid commitment fees from accruing.
(b) Un-remitted statutory deductions
Shs.22, 486,512 was deducted and withheld from staff salaries in respect of Pay
As you Earn (PAYE). However, the funds were not remitted to Uganda Revenue
Authority (URA). Non remittance of statutory deductions is a violation of the law
which may lead to penalties. There is also a risk that the retained deductions could
be diverted.
Management explained that PAYE was not remitted due to insufficient Government
counterpart funding. I advised management to liaise with the Ministry of Finance,
Planning and Economic Development to address the matter.
(c) Failure to deduct 6% Withholding tax (WHT) from civil works
consultants
It was observed that Management did not withhold tax amounting to
Shs.35,892,180 and USD.86,996 on payments made for civil works and
consultancies to eligible service providers. Non-deduction of withholding tax is a
violation of the Income Tax Act which may result into penalties and fines being
imposed on the Project by the tax body.
Management explained that the ADB loan agreement prohibits the use of the loan
funds for the payment of taxes relating to the goods and services required for the
execution of the Project
I explained to management that this is income that should have been subjected to
tax and advised them to liaise with Ministry of Finance, Planning and Economic
302
Development to ensure that tax is withheld from the service providers and
remitted to the tax body as required by the Income Tax Act.
(d) Outstanding VAT on certified works and consultancy
The contract agreements signed between the Ministry and the contractors for
works and consultancy for the construction of markets quoted the prices inclusive
of Value Added Tax (VAT). It was however observed that payments to
consultancy firms were exclusive of VAT. This amounted to Shs.157,014,922 and
USD.264,623. It was also noted that there was an outstanding balance of VAT
amounting to Shs.1,135,189,149 due to contractors.
Management explained that VAT was not paid to a number of service providers
due to insufficient Government counterpart funding.
I advised management to liaise with MoFPED and ensure that GOU abides with the
terms and conditions of the loan agreements to avoid costs that may arise in case
of litigation.
(e) General standards of accounting and internal control
No reportable internal control weaknesses were observed during the period under
review.
(f) Field inspections
Field inspections were undertaken with a view of establishing among others,
physical progress of civil works on markets and the quality of works. By the time
of inspection, Wandegeya, Mbale and Fort Portal markets were substantially
completed, however, the construction of Lira, Gulu, Hoima and Jinja markets were
behind schedule. The following matters were observed during inspections:-
i) Lira Central Market
The contract for the construction of this market was awarded at a contract price of
Shs.26,515,762,350. By the time of inspection, works were ongoing; but behind
schedule. The site engineer indicated that works would be completed in June
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2014, eight months after the agreed completion date of 30th October 2013. Photos
of the inspection are shown below:
LIRA CENTRAL MARKET REMARKS
Construction is ongoing at the third floor which is at roofing level. According to the contractor the works will be completed by June 2014 eight (8) months after the agreed completion date of 30thOctober 2013.
Stalls under construction
Rear view of the Lira Market
Management explained that the contractor had requested for an extension based
on delays in payment of VAT by GOU, design modification during construction,
long haulage distances for local materials and the bad weather conditions.
I advised management to closely follow up the construction with a view of
completing the market as agreed in the extension contract.
ii) Jinja Central Market
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The construction works for this market were awarded at a contract price of
Shs.28,679,485,336. It was established that the works were also behind schedule.
The photos on the audit inspection are shown below:
JINJA CENTRAL MARKET REMARKS
Construction is ongoing. Poles were being erected for slabbing of the second level. The contractor requested for an extension of 6months from October 2013 ending March 2014. But it appears the works will not be completed within the time frame.
Slabbing of the middle level was ongoing.
Construction of the stalls area at the time of inspection.
Management explained that works progress was about 75% against a time
progress of 98% meaning that the works were behind schedule. This was
attributed to delayed payments of VAT, variation of the foundation to reduce on
the backfill, creating extra storage for bulk goods and additional drainage works to
cater for the increased storm water from the built area of the market.
I advised management to closely follow up the progress and ensure that works are
completed as agreed in the extension contract.
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iii) Gulu Main Market
The construction of this market was awarded at a contract sum of
Shs.15,057,709,217. By the time of audit inspection, the works were ongoing, but
behind schedule. Photos of the site during the inspection are shown below:
GULU MAIN MARKET REMARKS
Construction of the lower level of the Gulu Market. The contractor requested for a 6 months extension period but it appears that works may not be completed within the time frame.
Construction is ongoing at second level.
Management explained that the contractor was granted extension due to revised
scope of works, delays in VAT payment by GOU, modification in designs including
relocation of sewage and water supply lines, long haulage distances for local
materials through bad roads, suspension of work due to concerns by the local
community resulting into political interference in the construction of the market
and the inclement whether conditions.
I advised management to follow up the progress of the contract and ensure that
works are completed as agreed in the extension contract.
iv) Hoima Central Market
The construction of this market was awarded to Amugoli General Enterprises Ltd
at a contract sum of Shs.13,717,782,223. By the time of audit inspection, the
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works were ongoing but behind schedule. Photos taken during field inspection are
shown below:
HOIMA CENTRAL MARKET REMARKS
Construction had progressed but the contractor had requested for an extension of completion date for another three months which had not yet been granted. The Supervising company stated that 93% of civil works have been completed.
This is the appearance of the market from the outside.
Management explained that a time extension of 3 months was granted after
analyzing the causes of delay which included delays in the payment of VAT to the
contractor by GOU, initial investigations of the materials and corresponding design
mixes, modifications in designs and introduction of extra works.
Management was advised to step up monitoring and supervision to ensure timely
completion as agreed in the extension contract.
(g) Status of project implementation
i) Project performance as per logical framework
According to the Project five year implementation plan and physical progress
reports accessed from management, the Project had not achieved the following
targets despite the fact that the project closure is done on 30th September 2015:
Component Target Progress to date
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Market
Infrastructure
Development
• Complete design of
Kitgum market
under AfDB Loan
• Complete designs
for Lot 01 (Nyendo and Busega
markets in Masaka
Municipality and Kampala Capital
City Authority) under the BADEA
Loan
• Initiate the
procurement process for lot 01
contractors for Busega and
Nyendo Markets
• Completion of the designs for Kitgum
market under AfDB Loan is still pending
due to the identification of alternative suitable land by the Municipality.
• The detailed structural designs for Busega
and Nyendo markets were completed and submitted to BADEA for approval, but
approval and commencement are still
pending. The markets are to be financed using the BADEA loan.
• The process awaits the approval of detailed designs by the funders (BADEA)
Market
Management and Trade
Enhancement
• Initiate advance
action activities for the relocation of
vendors back to the redeveloped
markets and the eventual
management of the
markets upon completion.
Relocated 14,825 vendors in the seven
markets to temporary relocation sites to
pave way for construction.
Preliminary process of relocating vendors
back to the markets commenced. Draft vendors‘ facility allocation letters
produced and shared with the relevant seven (7) urban councils for their input.
Relocation of vendors was expected to
commence early August 2013. Relocate started only in Wandegeya but met
resistance from vendors due to purportedly high charge out rates for
market spaces.
Programme Management
and
Coordination
• Undertake supervision and
monitoring
Supervision of the seven market
construction sites was undertaken by consultants with technical support from
the Programme Facilitation Team
particularly in matters relating to adherence to key contractual provisions.
Regular site meetings were carried out for
each site on a monthly basis to review progress and address any
issues/challenges that may arise during
implementation.
• Hold progress review workshop
The review workshop was not held. It was rescheduled for the first quarter of the
year 2013/2014.
• Hold an IPC
meeting
One IPC meeting was held in June 2013
and the key output was the approval of
the Annual Work Plan and Budget for the
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FY. 2013/2014.
Delays in Project implementation lead to extra administrative costs in form of
monitoring and supervision.
Management in response stated the Project was set for closure in line with the
project closure date and that two out of seven markets were completed and
commissioned. Management further stated that the remaining five markets were
95% complete and commissioning is expected by February 2014.
I advised management to ensure that incomplete project activities are undertaken
within the Project time frame to avoid additional costs.
21.33 DISTRICT LIVELIHOODS SUPPORT PROGRAMME (DLSP) – MINISTRY OF
LOCAL GOVERNMENT (MOLG)
(a) Low absorption capacity
The approved budget for the financial year 2012/2013 was Shs.29,273,931,317.
While Shs.20,354,291,615 was released, only Shs.17,640,275,579 was spent
representing an absorption capacity of only 60%. It is worth noting that the
Project is in the sixth year of the seven–year implementation period.
Low absorption capacity denies the community services meant to uplift their
livelihoods. Furthermore Project objectives may not be achieved within the
stipulated time frame leading to extra administrative costs.
Management attributed the low absorption capacity to delays in the procurement
process and lack of Engineers to supervise works. They further explained that
internal mechanisms had been put in place to ensure that activities are done on
time.
I await the outcome of management‘s effort.
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(b) Non-incorporation of the GOU counterpart funding into the
Consolidated Annual budget of DLSP
According to the Project Financial Guideline 1.32, all budgets are required to be
associated with codes which identify the funding source, budget categories,
budget components, sub components, and activities as indicated in the budget
plan chart and analysis. However a review of the Annual work plan and budget for
the programme revealed that GOU counterpart funding budget and work plan was
not incorporated in the project consolidated work plan and budget.
Failure to incorporate the GOU funds budget estimates in the Project consolidated
work plan and budget may result into the entity spending funds on unplanned and
duplicate activities.
Management stated that the annual work plan and budget will be updated to
incorporate GOU funds.
I wait management‘s action on this matter.
(c) Project performance as per logical framework
According to the Project seven year implementation plan and progressive reports
accessed from management, the project had not achieved the following targets
despite the fact that the project closure date was set for 15th December, 2014.
Activity Targets Progress as at 30th June 2013
Community infrastructure
Community
Access
roads
(CARs)
Construction of 2,400
Kms of community
access roads.
Training 300 road user
The first batch CARs of 313.5 Kms
were completed and in use.
570 Kms under the second batch of
CARs had been completed while
construction of 77.1 Kms were still in
progress.
Contracts for the third batch of CARs
totaling to 488.1 Kms were submitted
to the Solicitor General for clearance,
not yet implemented
Procurement of contractors for the
fourth batch totaling to 765 Kms is in
progress (37% complete)
171 road user committees had been
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committees
trained (constituting only 57%)
Community Development
Train and facilitate
1,872 community
volunteers (household
mentors and FAL
instructors)
Enroll 46,800 FAL
learners
Train 15,600 farmers
in group organization
and leadership skills.
Achieved: 572 FAL instructors
facilitated.
Achieved: 660 household mentors
trained and facilitated (66%)
13,028 of FAL learners enrolled (28%)
10,240 FAL learners tested (22%)
680 farmer groups identified and
Strengthened
15,640 Individual farmers have been
targeted for capacity building however
no training has commenced (0%)
Agriculture Development and Land Tenure
Support 624 groups
with Enterprise grants
Establish 312 on farm
demonstration.
Support 17,280 poor
households with food
security grants
Sensitize 25,000
people in land tenure
rights
Train 39 area land
committees.
Enterprise development grants valued
at an average of US Dollars 5,000 per
grant were provided to 680 farmer
groups and producer associations
(109%).
236 on farm demonstration were
established. (76%)
Food security grants were given to
18,172 poor household at an average
of US dollars 120 per household.
(105%)
25,000 people sensitized on land
tenure rights. (100%)
39 area land committees trained.
(100%).
District and Sub-County Execution
311
Refurbishment of 13
sub-county
headquarters
Refurbishment of 5
district headquarters.
One sub-county headquarters per
programme district refurbished.
(100%)
2 district headquarters Refurbished
(40%).
Delays in project implementation may lead to unnecessary extra administrative
costs in form of monitoring and supervision.
Management explained that internal mechanisms had been put in place to ensure
that activities are done in time.
I await the outcome of management‘s effort to implement activities within the
project time frame.
(d) General standards of accounting and internal control
i) Spending at source
A review of the Ministry of Local Government development expenditure revealed
that GoU contribution amounting to Shs.331,250,577 was released to the Project
through the Ministry Treasury General Account (TGA) where funds were spent on
behalf of the Project contrary to the Project‘s operations manual.
Spending Project funds by the Ministry does not only deny Project management
control over the funds but also poses a risk of diverting the funds to activities
outside the project components.
I advised management to institute measures to ensure that project funds are
transferred to the project accounts for proper monitoring and control.
ii) Lack of a Vehicles Maintenance Register
It was noted that the Project does not maintain a vehicle movement register to
record all repairs done on vehicles and spares used contrary to the Treasury
Accounting Instructions. In absence of the records, periodic assessment of
vehicles performance compared with their cost of maintenance cannot be done. In
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addition, financial resources may be lost through recycling of repairs on the same
vehicles.
I advised management to put in place operating records for each vehicle as
required by TAI in order to monitor the frequency of repairs, maintenance costs
and spares used.
iii) Unutilized ''TOMPRO' Accounting Software
''TOMPRO'' Accounting Software was procured and installed at the districts and at
the Project Coordination Unit (PCU) in Kampala. The Accounting software was
intended to harmonize the financial, monitoring and reporting for the project
team. The software has modules for system parameters; financial accounting,
reports analysis, budget control, fixed assets management, credit management,
procurement management and disbursement reports. However, it was noted
during the audit that the accounting software had not been put to use at the PCU
and the districts.
I advised management to expedite the process of its implementation to ensure
that the software is utilized for the intended purpose.
(e) Audit Field Inspections
Field inspection to assess progress on implementation of DLSP activities was
undertaken and the findings are noted below. Further, a technical audit was also
undertaken with a view to assessing the quality of works and related progress.
The findings of the technical audit will be issued in a separate report expected to
be out by 31st January, 2014.
i) Lack of routine road maintenance by the Districts
It was noted that most of the roads were not maintained. Drainages were
found blocked and over growing grass had narrowed the road width of
some roads. Refer to the pictures of the sampled roads below:
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Blocked Drainage on Rwenziramire-Kyamugenyi-Kyangamoyo Road in Masindi district
Over grown grass on Businge-Nyancwamba-Nyabitusi-Rukoko Rd in Kamwenge District
Due to lack of routine maintenance, the roads may not last for the expected life
span.
Management explained that there was a delay in putting road gangs in place
however the Ministry had procured and distributed road equipments which will be
used to maintain the roads. I advised management to liaise with the relevant
stakeholders and ensure routine maintenance of rehabilitated roads.
ii) Non adherence to specifications
It was observed that the works on Byerima-Kaiha-Maiha and Rwenzimire-
Kyamugenyi-Kyangamoyo roads in Masindi was not done according to the
specifications in the contract. Inadequate workmanship was exhibited in backfill
around the headwalls posing a risk of rain water washing away murram thereby
exposing culverts and making the roads narrow. Furthermore the culverts used
could not contain the large volume of rain water leading to silting. Refer to photos
below:
Pictures of blocked culverts
314
Byerima-Kaiha-Maiha road in Masindi
district
The area near the headwalls is not
well compacted as evidenced by the
washing away of the murram.
Blocked drainage on Rwenzimire-
Kyamugenyi-Kyangamoyo Road in
Masindi district
Kyangamoyo-Kaikuku-Ntoma road in
Masindi district.
The headwall is almost submerged in
the water as the road was not raised.
Non-adherence to road width specifications is a breach of contract and also denies
communities access to good roads.
Management in response stated that the omissions were brought to the
contractor‘s attention for rectification. I advised management to ensure that the
defects are rectified by the contractor before final payment of retention monies.
iii) Abandoned Works in Bulisa district
Terms and conditions of Project civil works contracts stipulate that the contractors
should complete the work and correct any defect within 6 months from the
contract completion date.
A review of one of the contracts indicated that a total of 45.3kms of five (5)
community access roads was to be rehabilitated in Bulisa district under batch 2 at
a total cost of Shs.1,464,068,499. However at the time of inspection, it was noted
that all the roads had been abandoned by the contractors after having completed
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only 4.2km, less than 10% of the entire road length. Shs.344,252,546 had been
paid for the certified works while performance securities in form of bank
guarantees provided by the contractors had expired before the execution of the
works and therefore could not be enforced except for one bank performance
security/guarantee amounting to Shs.55,937,860.
Management explained that the re-tendering process for the roads at an estimated
cost of Shs.1,626,565,500 (a cost which is higher than the original contract cost of
Shs.1,464,068,499) had begun. The roads status as per project management
contract monitoring ledger was as follows:
ROAD NAME Length Length Completed
Contractor Contract Price Payments To date
% Physical Progress as per contract monitoring ledger
Wanseko-Murchson Falls Park
17.5 0 Patrov International
559,378,600 118,952,493 35%
Kisiabi-Kijangi-Uribo-Nyamitete
12.7 0 Tesla Eng. & Supplies Ltd.
344,707,400 63,477,611 45%
Booma-Walukuba-Kamagongoro-Sonsio
10.9 0 JubEnterp Ltd 319,982,499 161,822,442 15%
Tangala-Kampala-Bubwe
4.2 4.2 JubEnterp Ltd 240,000,000 0 15%
Booma-Walukuba
10.9 0
45.3 4.2 1,464,068,499 344,252,546
Management further stated that the relevant clauses of the contract were invoked
and all recoveries made. However the recoveries made were not availed for
verification.
I advised management to ensue that there is close monitoring of the roads to
address contract execution gaps. Furthermore, due diligence should be done
during the evaluation and award of contracts by carrying out post qualification of
bidders to confirm the ability of the contractors to execute the contracts.
iv) Delayed completion of works
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Best practice requires that traffic must be managed to make roads accessible to
users despite on-going works by creating diversions or working on half of the road
while the other half is being used. During inspection of the rehabilitation of Otwal
Railway Ojwi Road (12km) in Oyam district, it was noted that the dumped murram
had not been spread making the road inaccessible and the work had also stalled.
Photos of the road works are shown below:
OYAM DISTRICT
Rehabilitation of Otwal Railway
Ojwii Road(12km)
Delayed works and blocked road
Due to the delays, communities are denied access to good roads meant to uplift
their livelihood. Project objectives may not be achieved under the circumstances.
I advised management to prioritize contract management in order to ensure
proper and timely implementation of works in accordance with the contract
agreements.
v) Poor procurement record keeping
During inspection in Masindi district, it was noted that the district did not maintain
a procurement file for the procurement of Heifers and Oxen worth Shs.44,
294,000 carried out during the year. In absence of documentation on the
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procurement of the animals, I was unable to ascertain whether the procurement
was done in a transparent manner.
Management should ensure that all procurement documents are properly
maintained as required by the PPDA regulations.
22.0 OFFICE OF THE PRIME MINISTER
22.1 Mischarge of Expenditure
The Parliament of Uganda appropriates funds in accordance with the needs of the
country and this appropriation is implemented through the budget in which funds
are tagged to particular activities and outputs using account codes and MTEF
codes. A review of the Office of the Prime Minister‘s expenditures revealed that
the entity charged wrong expenditure codes to a tune of Shs.27, 629,053,148.
This constituted 37% of total expenditure for the Office of the Prime Minister. This
practice undermines the importance of the budgeting process as well as the
intentions of the appropriating authority and leads to misleading reporting.
Management explained that the diversions were due to insufficient budget
allocations and severe cuts in consumptive areas. In addition, the Ministry of
Finance Planning and Economic Development (MoFPED) had imposed restrictions
as regards to allocations on some of these items despite being commonly used
consumptive items.
I advised management to ensure that they follow set procedures in cases where
reallocations are to be made.
22.2 Advances to Individual Personal Accounts
22.2.1 Non Compliance with Treasury Accounting Instructions
Sections 227, 228 and 229 of the Treasury Accounting Instructions (TAIs), states
that all payments should be made by the Accounting Officer directly to the
beneficiaries. Where this is not convenient, an imprest holder should be appointed
by the Accounting Officer with the approval of the Accountant General. Shs.9.29
318
billion was advanced to Ministry staff through their personal bank accounts to
undertake direct procurements and other activities.
Such a practice of depositing huge funds on personal accounts exposes
Government funds to risk of loss, since the entity does not have any control over
such funds deposited on personal accounts.
Management explained that most of the activities undertaken by office are field
based and involve working with other stake holders in the Districts who are not
usually known at the time the requisitions for funds are made necessitating it to
advance funds to individuals to execute field based activities given the fact that it
is not practical to seek authority to withdraw cash from Permanent
Secretary/Secretary to Treasury (PS/ST) for all these activities.
I advised management to ensure strict adherence with the requirements of the
Treasury Accounting Instructions.
22.2.2 Advances to personal accounts not accounted for
a) Unpresented accountabilities
Accountability documents were filed separately from filled vouchers and were not
cross-referenced to either invoice numbers or EFT numbers. From the sample
selected it was thus difficult to relate particular accountabilities to payment
vouchers. As a result, accountability worth Shs. 417,639,932 could not be traced
and therefore remained outstanding.
b) Doubtful expenditure
A review of accountabilities presented revealed that a sum of Shs.55,869,932 was
doubted because of overpaid per-diems, uncertified photocopies and field reports
filed before activities were undertaken. I was therefore unable to confirm whether
the amount involved was applied for the intended purpose.
Management explained that the inconsistencies in the filling system were a result
of poor record management and that the gap had been addressed.
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I advised management to undertake an extensive review of the expenditure and
where misuse is observed, recovery measures be instituted accordingly.
22.3 Cash Withdrawals
22.3.1 Unaccounted for Cash Withdrawals
Section 226 of the TAI‘s requires cashiers to keep records of payments made by
them in Cash Books and to stamp all the vouchers with a ―PAID‖ stamp and file
such vouchers immediately a payment has been made. In addition, Section 181
requires all vouchers to contain full particulars of each service or goods and be
accompanied by such supporting documents as may be required so as to enable
them to be checked without reference to any other documents.
It was noted that out of the Shs.3,755,374,923 withdrawn in cash by the OPM
during the period, Shs.613,325,500 was unaccounted for. Further, review of the
payments and requisitions revealed several anomalies as outlined below:
Allowances: Funds were spent on allowances without the claimants
acknowledging receipt of funds. In the circumstances I could not confirm the
beneficiaries.
Tonner and Stationery: Funds were spent in cash as micro-procurements yet
the office had pre-qualified suppliers for the items. Management should have
placed orders with the providers and payments processed through direct
payments from the system.
Motor Vehicle Repairs: Funds were spent in cash contrary to regulations which
require service providers to be paid by EFT.
In absence of the relevant accountabilities, I was unable to confirm whether the
funds were put to the intended purpose for which they were requisitioned for.
There is a risk of misappropriation of the funds.
Management explained that cash payments for procurable items were mainly
drawn for items which were required in the field, so it was impractical to procure
them from Kampala. The motor vehicle payments were for emergency repairs
carried out on vehicles of entitled officers especially in absence of relief vehicles.
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I advised management to ensure that all funds are accounted for within the
statutory period.
22.4 Doubtful purchase delivery and issuance of stationery items
It was noted that stationery supplies worth Shs.701,721,893 were contracted out
to various suppliers, however delivery of the stationery items was not recorded in
the stores ledgers to acknowledge receipt. Furthermore there were no authorized
requisitions and issue vouchers to indicate usage as required by stores regulations.
It was also noted that heads of departments were ordering and purportedly
receiving stationery items without first delivering them to stores which was
contrary to stores procedures. I was unable to confirm the genuineness of the
stationery purchases. There is a risk that stationery items were not bought or
delivered.
Management explained that the documents relating to the supplies were taken by
CIID for scrutiny.
I advised management to ensure that procedures regarding receipt and issuance
of stores are followed. In the meantime the funds should be accounted for or
recovery measures be instituted.
22.5 Payments from a Forex Account
OPM spent a total of Shs.2,464,533,982 from the forex account being transfers to
international organizations, payments to international suppliers and travel abroad.
A review of the transactions paid out of this revealed the following:
22.5.1 Unsupported travel abroad
Shs.137,707,383was paid out for purposes of facilitating officers to travel to
various destinations outside Uganda. However the travels were not adequately
supported by accountability documents. Specifically the following were not
provided:
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Copies of the passport pages bearing exit and entry immigration stamps of the
countries where the officers purportedly travelled to were not provided for
verification.
Air tickets showing flight itinerary, boarding passes, visa receipts, and
electronic receipts were not presented.
Back to office reports or briefs to justify the travels were also not presented.
In the absence of the stated documents, the number of per diem days claimed,
number of staff who undertook travels and expenditure incurred could not be
confirmed rendering the expenditure doubtful.
I advised management to ensure that all funds are accounted for within the
statutory period. Otherwise recovery measures should be enforced in event of
non-accountability.
22.5.2 Non-deduction of Withholding Tax
Shs.992,570,770 was paid to two foreign based companies for the supply of Hydra
foam brick making machines and running an advert in the Queen and Common
Wealth 2012 magazine. It was noted that Shs.148,885,615 was not deducted as
15% withholding tax contrary to section 121 of the Income Tax Act.
Failure to deduct withholding tax is a violation of the requirements of the Income
Tax Act and culminates into loss of Government revenue. It also exposes OPM to a
risk of penalties and fines from the Tax Authority.
Management explained that the failure to deduct taxes was an oversight and that
taxes due from M/s Hydra Foam International will be recovered from subsequent
payments since the company still had a running contract with the office. I await
recovery and remittance of taxes to URA.
22.6 Payments for hotel services
Workshops and retreat expenses incurred in hotels are accounted for by provision
of pro-forma invoices, invoices, attendance lists of participants and receipts from
the service providers. During the year, Shs.228,311,993 was spent on workshops
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and conference services in 5 (five) hotels in Kampala and Jinja. Scrutiny of the
transactions revealed that a sum of Shs.162,889,129 lacked attendance lists.
Without the lists, I was unable to confirm whether activities were indeed
undertaken. Included in the above amount is Shs.43,678,130 paid to one of the
hotels where uncertified photocopied accountabilities were presented. I could not
place reliance on them.
The Office could have lost funds due to the anomalies as this could be an indicator
that services were not rendered.
I advised management to ensure that all funds are accounted for within the
statutory period. Recovery measures should be enforced in event of non-
accountability.
22.7 Irregular Inter-Account transfer
The entity operates bank account no.000030088000013 ―National policy on
disaster management‖ with Bank of Uganda which was opened in 2009 for
formulation of a National disaster management policy. This account was reviewed
last financial year and found to have several anomalies which are currently under
investigations.
For the year under review a sum of Shs.3,306,100,000 was transferred from the
Treasury General Account in the last week of the previous financial year
2011/2012 (29th June 2012) to the account. This transfer circumvented the
controls which require unspent balances to be returned to treasury at the close of
the financial year. The expenditures incurred from the account could not be
related to formulation of a disaster policy because the policy had already been
formulated and drafted.
Shs.3,319,953,508 was utilised from the off budget project account in 2012/2013
financial year without appropriation authority by Parliament and approved work
plans as detailed below:
Expense category Amount (Shs.)
Cash 439,262,664
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Personal advances to individuals 366,085,000
Farm engineering 123,192,000
Fuel 50,300,000
Food supplies 1,401,120,000
others 939,993,844
Total 3,319,953,508
A review of the activities on the account revealed the following:
There were no accountabilities for the advances made to individual officers‘
personal accounts.
There were no accountabilities for the cash withdrawals made by the cashier.
I was unable to confirm whether the funds were used on genuine Ministry
activities.
Management explained that the expenditures incurred on the account were in
reference to the disaster that occurred in Bududa and other related disasters soon
thereafter. Management further stated that the account could not be closed
because it was still under investigation by CIID and PAC.
I advised management to cease operations on the account pending finalisation of
the investigation. Recovery measures should be enforced for the unaccounted for
funds.
22.8 Refunds to Donors
The entity paid funds to a tune of Shs.4,314,211,646 to three Donor project
accounts as refunds erroneously charged in the previous financial year. The
following was noted;
(i) Loss: This loss was occasioned from the fraud discovered in the previous
financial year and efforts to recover the funds must be hastened.
(ii) Wrong charge: These funds were not included in the appropriation act
and neither were virements/ reallocation warrants nor supplementary
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funding requisitioned and approved for the expenditure. The accounting
officer charged ―other grants‖, ―transport equipment‖ and ―general supply
of goods and services‖ when refunding to DFID (NIMES), UK/Uganda post
conflict development programme, and GIZ respectively causing financial
mis-reporting and affecting service provision under the item codes. Details
are in the table below:
EFT NO. PAYMENT DATE
SUPPLIER DESCRIPTION AMOUNT (Shs.)
2424529 8/3/2012 DFID Support to National Integrated monitoring and Evaluation Strategy (NIMES)
Refund of funds erroneously charged on NIMES
2,397,716,250
2424530 8/3/2012 UK/Uganda Post Conflict Development Program Grant
Refund of funds erroneously charged on UK/Uganda Post Conflict Dev‘t Prog
1,512,115,748
2722238 30/5/2013 OPM transfers Repayment of Unaccounted funds and VAT for the Germany funded projects.
404,379,648
4,314,211,646
This practice undermines the importance of the budgeting process. It also
suffocates approved programmes which hampers service delivery. Furthermore,
the practice leads to misreporting.
Management explained that efforts to secure supplementary funding to cover the
obligations were not honoured and instead MoFPED advised OPM to re-prioritise
within their budget.
I advised management to adhere to the financial regulations by applying for
supplementary provisions where unforeseen circumstances arise.
22.9 Non-deduction of withholding tax
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It was noted that the entity failed to withhold taxes to a tune of Shs.161,821,594
during the year under review from several companies supplying goods and
services at the prescribed 6% rate contrary to section 121 of the Income Tax Act.
The oversight exposes OPM to a risk of penalties and fines and culminates into
loss of Government revenue.
Management explained that the failure to deduct taxes was due to non-activation
of the IFMS in built system that automatically deducts the taxes. Management
further stated that the recoveries will be enforced as most of the firms have
running contracts with OPM.
I await the recovery of taxes from the affected suppliers.
22.10 Payments for domestic arrears
Shs.2,363,144,295 was paid to several companies for settlement of arrears
incurred in the previous financial years. I could not ascertain whether the
payments were genuine given that no disclosure had been made in the previous
financial year‘s accounts memorandum statement. Besides no evidence was
available to confirm delivery for instance; goods were not taken on charge and
there was no record of issues out of the store. Travel abroad expenditure was not
supported in any way. There was no budget and therefore no release to settle the
obligation.
Under the circumstances, it was noted that the payments for settlement of
domestic arrears were not appropriately charged in accordance with the chart of
accounts provisions. In essence, funds for planned activities appropriated by
Parliament were diverted to settle domestic arrears.
Management explained that in the budget execution circular for the financial year
2012/13 dated 3rd July 2012, the PS/ST directed Accounting Officers to prioritize
outstanding contractual obligations from the previous years and have them make
the first call on the budgeted resources. Expenditures were accordingly made from
the relevant items using resources for the financial year 2012/13.
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I advised management to adhere to the commitment control system and ensure
that domestic arrears are appropriately disclosed in the financial statements,
verified, budgeted for and paid in line with TAIs.
22.11 Farm Engineering Industries Ltd
A contract was signed between OPM and the company in 2012. The company was
to provide ploughing services for Northern Uganda and Karamoja region for a
period of 18 months effective February 2012. In the contract, OPM had the
responsibility of identifying the districts where the ploughing should be done,
allocate the acreage to be ploughed per district, hire the service provider (Farm
Engineering) and settle the bills. The districts had the responsibility of identifying
the beneficiaries of the ploughing, supervising the ploughing through the district
production officers and certifying the works done.
During negotiations with the contractors, it was agreed that a 30% surcharge
would apply to all virgin land and contractual rates would apply to non-virgin land.
Further, it was noted that all land had to be ploughed two times, that is; first and
second ploughing at different rates and also be harrowed twice at different rates
according to the contract provisions. Review of payments and inspections revealed
the following:
(i) Surcharge on ploughing and harrowing non-virgin land
All payments made to the firm during the year totalling to Shs.8,534,645,970 were
surcharged, implying that all land was virgin land. Without identifying virgin land
in advance, the contractor was presented with the opportunity to declare all land
virgin. Further, confirmation of works undertaken by the parish chiefs, sub-county
chiefs, agricultural officers and Chief Administrative Officers (CAOs) did not specify
whether cultivated land was virgin or not. Under the circumstances, surcharge of
Shs.2,537,737,070 could not be independently confirmed.
It was noted during inspection that all the districts land especially individual land
was not virgin. This was confirmed by the CAO‘s, sub-county chiefs, district
production officers and some individual farmers on being interviewed who stated
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that this was land they used to plough before the tractor hire project came into
existence. Therefore payments made to the firm during the year as surcharges for
some virgin land was ineligible.
(ii) Ploughing once
It was further observed that with the exception of Namalu prison, all other land
was ploughed and harrowed only once. Also noted was that some areas such as
Orupa sub-county in Moroto district and Lotome sub-county in Napak district, land
was ploughed only once and no harrowing was done. There were thus
overpayments to the contractor as a result of this anomaly.
(iii) Gap in contract Negotiation
It was noted that the negotiation team did not give OPM value by specifying how
to charge 30% given the inconsistence by the firm in billing. In one of the
payment, the firm charged 30% on only ploughings (I and II) whereas in all the
other subsequent payments it charged 30% on all the ploughings (I and II) and
harrowings (I and II). Audit is of the view that the basis for the surcharge should
have been clearly stated in the contract.
(iv) Lack of central database and land utilisation mechanism
It was noted that OPM does not keep a central database of ploughed land
specifying total acreage ploughed to-date, acreage ploughed per district, acreage
ploughed per sub-county and beneficiaries. Without this database OPM may end
up ploughing more acreage in a sub-county than actual farm land acreage
implying re-ploughing of the same land. Further, there are no mechanisms in place
by the districts/sub-counties to ensure that ploughed land is fully utilised.
During inspection it was noted that most of the land in Napak, Kaabong and
Moroto districts was ploughed late in the months of June-August after the rain
season had passed. This was confirmed through reports from the district
production officers and interviews held with individual farmers, CAO‘s and sub-
county chiefs. As a result there was no planting and this undermined achievement
of project objectives.
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I advised management to review the contract and implementing modalities.
Management should also maintain a central data base capturing the status of land
ploughed.
22.12 Nugatory expenditure on clearing and handling charges
The Ministry imported three containers of fortified (ATIMIT) food as relief aid to
malnourished children which was a donation from Jesus Christ of the later day
saints. The items arrived on 22/12/2012 and OPM had a seven day grace period to
clear the consignment without incurring rental charges for the three containers
and storage charges from the clearing firm.
It was noted that the entity failed to utilize the grace period despite availability of
funds on the Gross payment tax account to expeditiously clear the items and held
onto the containers for 72 extra days which led to wasteful expenditure of
Shs.28,052,860 (US $ 8,640 in rental charges and Shs.5,070,460 in storage
charges).This expenditure could have been avoided had Management taken the
initiative to clear the goods immediately on receipt of the bill of lading.
Management explained that the delay to clear the goods was occasioned by lack
of a MOU between the entity that imported the goods and OPM so as to clear the
taxes from the gross tax account.
I advised management to always ensure that proper planning of transportation
and receipt of donations is done once acceptance of a donation is made. This
would enable clearance of imported items expeditiously to avoid losses.
22.13 Staff allowances
The Office of the Prime Minister paid quarterly allowances to staff during the year
under review to a tune of Shs.1,395,641,502. Review of the allowance payments
revealed the following:
Irregular consolidated allowances
It was noted that Shs.1,172,325,000 was paid to staff as quarterly consolidated
allowance in form of night subsistence days. I observed that this consolidated
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allowance was paid irregularly because it was not supported with any
administrative circulars/standing order instructions approving it from Ministry of
Public Service.
Management in their response explained that this was due to management‘s
desire to motivate Ministry staff. However the practice had hence forth stopped
and only allowances provided for in the standing orders are now paid.
I await management‘s adherence to the regulations.
22.14 Luwero-Rwenzori Development Programme (LRDP)
Luwero- Rwenzori Development Programme is a five year comprehensive
development programme for Luwero Triangle and Rwenzori regions that were
affected by the National Resistance Movement (NRM) Liberation struggle of 1981-
1986 and Allied Democratic Forces (ADF) insurgency of 1996-2003.
The main objective of the programme is to improve household income of the
people and improve social mobilization for development and peace building
through two ways;
(i) Transfers of funds to organized groups through community SACCOs on a
basis of 50% loan and 50% grant.
(ii) Transfer of funds to districts for infrastructure development in selected
sectors.
Chapter Two, 2.2 (Planning and Funds Management) of the third LRDP Operations
Manual, requires MoFPED to directly disburse funds to the Chief Administrative
Officers for the 60% support through the districts. A review of the Programme
transactions revealed the following:
Whereas OPM was to advise MoFPED on the allocation to each Local
Government by availing a disbursement schedule and thereafter disburse
funds to Chief Administrative Officers (60%), this was not done but instead
funds were rather sent to OPM and later sent to the districts.
Shs.4,121,665,102 was remitted to districts by OPM during the year instead of
Shs.4,240,944,550, causing a shortfall of Shs.119,279,448.
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16 (sixteen) micro support projects were supposed to have been appraised
before being given funds worth Shs.273,000,000. It was however noted that
only 4 (four) micro support projects were appraised before receiving
Shs.57,000,000. The twelve (12) projects were funded with Shs.216,000,000
without being appraised.
The Ministry did not have an up to date status report on the performance of
the grants to community SACCOs and thus I was unable to adequately review
the programme to ascertain its efficiency and effectiveness at the grassroots.
There is a risk that the 50% loan funds disbursed to community groups are not
being paid back as per guidelines.
Management explained that effective 2014/2015 Ministry of Finance Planning and
Economic Development will be advised to remit funds directly to the Districts
basing on the lists submitted by OPM. Regarding the issue of project appraisals,
additional staff had been recruited to further strengthen the monitoring and
evaluation of the programme and in addition, an assessment of the programme is
going to be undertaken to assess its viability.
I await management‘s progress in undertaking the above measures.
22.15 Kasiimo Project
The Office of the Prime Minister through the department of Luwero Affairs was
charged with the mandate of paying gratuity to non-combatant War (civil)
veterans. To expedite the process, the Ministry transferred funds to Centenary
Bank equivalent to moneys due to the veterans verified by a committee. The Bank
would then pay individual veterans by crediting bank accounts opened with them.
During the year, Shs.5,139,500,000 was transferred to the bank. I carried out a
review and reconciliation of the verified lists with the amounts transferred to the
bank and noted the following:
i. As stated in my previous years audit report, neither the Committee nor the
Office of the Prime Minister has a full data base of the combatants who have
been paid and those who are pending five (5) years after the onset of the
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scheme. Under the circumstances, cases of duplication and inclusion of non-
entitled beneficiaries could not be ruled out.
ii. While Government had earmarked Shs.30 billion to be released over a period
of three consecutive years for 30,000 civilian veterans, it is now estimated
that the beneficiaries are 60,000 and an extra Shs.60 billion is the estimate
by OPM required to pay off the veterans.
iii. Whereas civilians are paid varying amounts ranging from 1.5 million, 5 million
and 10 million, the verification policy of veteran leaders in a sub-county or
operation zone recommending veterans to be paid should have included area
elected leaders, elders and NRA/UPDF veterans who operated in the areas for
better transparency. Furthermore, whereas management sends a copy of the
approved veterans to be paid back to the district, it was noted that these lists
are not circulated and pinned at the sub-county levels for people to ascertain
genuineness of payees.
I advised management to ensure that the Committee comes up with a detailed
database of the civilian veterans paid and those pending payment. Furthermore,
all data for payments so far made on the various disbursement schedules in soft
copies should be availed for audit verification given that partial payments have
been made in different financial years in order to reconcile payments made to
individuals and rule out double or overpayments.
22.16 Gross Tax
(a) Budgeting
The Ministry budgeted for a total of Shs.20,913,653,190 for gross tax but only
Shs. 2,100,000,000 was released by Treasury. Although Shs.2,100,000,000 was
released, actual expenditure was only Shs.1,724,325,729 reflecting about 10% of
the budget and 82% of the actual release. Allocating funds for activities whose
likelihood of occurrence is remote provides avenues for diversions as well as large
budgetary slacks which provide for future unfair budgetary variations.
Management explained that Memoranda of Understanding (MoU) have been made
with a number of organizations to pay non-resource based taxes on behalf of
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them although at times it may not be possible to accurately determine how much
tax will be required as the tax demands from these organizations are not easily
predictable. Management further explained that an NGO Committee that will
assess all NGOs that are partnering with OPM had been instituted to review the
MoU with all entities with a view of streamlining the planning process.
I await the outcome of the committee.
(b) Tax payments by the Ministry
The Office of the Prime Minister entered into several Memoranda of Understanding
(MOUs) with Non-Governmental Organizations (NGOs) and provided for tax
settlement on their behalf within the MoU‘s for goods acquired by them. As such,
the Ministry had to meet several tax obligations on behalf of the NGOs arising out
of the agreements made. As a result of these obligations the Ministry paid a total
of Shs.665,244,817 on behalf of these organizations. A review of the MOUs
revealed the following:
Article 7 in the MOU‘s signed regarding taxes and duties was open ended as it
did not limit the type of imports, that is; vehicle capacities, luxurious goods
and others.
Upon paying, the Ministry has no control in regard to the final destination of
the goods and there is a risk that such goods may end up in the open market.
Without procurement work plans of the NGOs, OPM risks incurring domestic
arrears on NGO imports since it has no control over their imports.
This practice may undermine the tax planning efforts and ultimately lead to loss of
Government funds.
Management explained that, the instituted NGO committee will review all existing
MOUs with all partnering NGOs with a view of streamlining the planning process
and also develop guidelines and standard MOUs.
I await the outcome of the committee.
(c) Payments for NGOs without MOU
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It was noted that the Office paid taxes to the tune of Shs.95,214,821 on behalf of
five (5) NGOs without any MOUs in place. In one instance Medicines San Frontiers,
the MOU was with Ministry of health. The basis for the payments was not availed
rendering them irregular. Duplication could not be ruled out.
Management explained that the NGO Committee will be advised adequately to
take note of the observation. I await the outcome.
22.17 Vacant posts in the establishment
It was noted that 29 posts had not yet been filled as per the approved
establishment. Service delivery is hampered by the delays in filling the vacancies
especially at senior management level.
Management explained that they had sought clearance from the Ministry of Public
Service and made submissions to the Public Service Commission for filling 18
positions.
I advised management to liaise follow-up the matter with the relevant authorities
and have all staffing gaps filled.
22.18 Audit committee performance
Section 8 of the Public Finance and Accountability Act 2003 and Regulation 29 and
30 of the Public Finance and Accountability Regulations 2003 require the Minister
in charge of Finance to establish and appoint Audit Committees whose functions
are advisory to the Accounting Officer.
During the year ended 30th June 2013 the Office of the Prime Minister had an
Audit Committee composed of five members. However, the committee did not
carry out its functions relating to the following:
The Committee did not review and approve the annual and operational plans
of the Internal Audit.
The Committee did not periodically review and report on the overall quality of
the Internal Audit services at OPM.
334
The Committee did not review the adequacy of the Internal Audit function, its
adherence to professional standards, independence, standing, scope,
resources and reporting arrangements.
It did not consider objectives and scope of any additional work undertaken by
internal auditors to ensure that there was no conflict of interest and
compromise.
The committee did not discuss with the accounting officer the internal audit
findings and recommendations and review or monitor their implementation.
There was concern from the internal audit about under facilitation/funding but
the Committee did not represent this concern to the Accounting Officer, the
Accountant General and the Secretary to the Treasury or the Minister.
The Committee also failed to review the OPM financial statements prepared by
the Accounting Officer to ensure adequate disclosure and fair presentation.
In view of the above observed weaknesses, the Ministry was exposed to several
risks including misstatement of financial statements.
Management explained that during the year under review, the entity was
undergoing various investigations which led to the non-compliance.
I advised management to draw the attention of the Audit Committee to its
statutory responsibility so that OPM can improve its financial management and
accountability.
22.19 Budget performance
Budget performance for the year under review revealed that some targets were
partially or not achieved despite release of funds to the vote functions. Service
delivery is hampered and the authority‘s objectives are not met under the
circumstances. Details are shown below:
Vote function
output
Item description Quantity Amount
(shs)
budgeted
in billions
Amount
released
(shs) in
billions
Quantity Remarks
130302-
programme 06
Payment of
gratuity and
- 4850 war
civilians paid
7.898 7.740 -2619 civilian
veterans paid
-2231 veterans not
paid
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Luwero-
rwenzori
triangle
coordination of
war debt claimants
- 4000 iron
sheets
- 4000 bags of
cement
-2000 bags of
cement
-2000 iron sheets
-2000 iron sheets not
bought
-2000 bags of cement
not bought
130372-
project 022
support to
LRDP
Government
buildings and
administrative
infrastructure
-Construction of
Semuto town
council offices
-Construction of
kabarole youth
skills training
centre
-Regional office
constructed
-Completion of
Nalutuntu health
centre
1.242 1.041
-Nalutuntu health
center finised
- Kabarole youth
skills centre kick
started.
-Semuto TC
constructed
-No regional office
constructed
130279 –
project 0922
Acquisition of
other capital
assets
-Construction of
national store for
relief food
2.022 0.521 No construction -No works were
undertaken.
130275 –
project 1235
Purchase of motor
vehicles and other
transport
equipment
-One trailer
- Two 12 tonne
trucks
- Three pick-ups
1.100 0.866
-Two trucks
bought
-No pick-ups and
trailer bought
130377-
project 0932
Purchase of
specialized
machinery and
equipment
-Hydra foam
machines (35)
- Tractors(10)
5.521
1.328
-8 hydra foam
machines
-2 tractors
Under funded due to
budget cuts of
3,127,000,000
and re-allocation of
1,065,576,168.
.
Management explained that due to emerging needs of the vote which would have
necessitated provision of additional resources by MoFPED, decisions were taken to
vary some targets in the work plans to prioritize new developments.
I advised management to ensure adequate planning and supervision of the
projects being undertaken.
22.20 Field Inspections
(a) Construction of VIP Pit latrines, Kitchen and Storage facilities at Lorengedwat Hydra Form Modern Village
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The Office of the Prime Minister embarked on the construction of Modern Hydra
Form Village houses, VIP Pit latrines, Kitchen and Storage facilities at Naweet
Village, Lorengedwat sub-county in Nakapiripirit District at a cost of
Shs.157,616,651. The Ministry was during the financial year 2012/2013
undertaking the construction of Kitchens(10) and Pit latrines (4) for the Modern
Village as per detailed costs below:
Item Category Amount (Shs) Units Total Amount (Shs)
1 Kitchen and Store
9,945,100 10 99,452,000
2 Pit latrines 8,913,761 4 35,655,046
Sub total 135,106,046
3 Add 10% Monitoring &
Supervision
13,510,605
4 Food 4,000,000
5 Transportation Cost
5,000,000
Grand Total 157,616,651
The payments were advanced to the following persons:
Voucher No. Payee Amounts (Shs)
610/Aug/2012 Mutebi John Henry 79,000,000
/Aug/2012 Segujja Denis 78,616,651
Total 157,616,651
Field inspections of the construction site revealed the following:
(i) Inappropriate Location of the modern village houses
It was noted that the Highway from Moroto to Nakapiripirit passes through the
middle of the modern village and several structures are sited in the road reserve
and too close to the Highway. The structures face a risk of demolition by the Road
Authority. Further, there is a high risk of road accidents to the occupants of the
Modern Village especially children which may lead to abandonment of the village
given the culture of the inhabitants.
(ii) Non-completion of works
It was noted that though all budgeted funds were released to the officers to carry
out the constructions, the works were incomplete as detailed below:
337
Out of the four (4) toilets to be built only three were built and completed. The
fourth one was left at slab level.
Two kitchen houses lacked both internal and external doors despite provision
of the quantities in the estimates.
One kitchen was roofed without fixing ridges and therefore poses a risk of
collapse as a result of leaking during rainy season.
338
The photographs below refer:
An incomplete toilet left at slab level despite full funding in Lorengedwat
Kitchen built without doors in lorengedwat Modern village
Kitchen House roofed without ridges
339
(iii) Non-adherence to Bills of Quantities
Bills of quantities (BOQ) are a document detailing activities to be undertaken with
costed amounts and give the material breakdown in terms of item, unit quantity
rate/cost and the total amount involved. In construction of toilets the following
activities were to be carried out and were costed; excavations of the pit, concrete
slabing of the floor, erecting of the wall, plastering, roofing and finishing. The
following were noted on inspection:
Whereas there was a provision for toilet ring beams, no beams were provided
but rather, wood was laid across the wall.
The structures were not fully plastered as costed in the B.O.Qs and overall
budget.
The toilets were budgeted to be roofed using maroon colored iron sheets
gauge 26 however white iron sheets of gauge 32 were used.
It should also be noted that up to now none of the toilets is in use, eight
months after the completion of the works.
Some of the accountabilities appeared doubtful as the officer purchased 40
tape measures,20 drums, 30 spirit levels, 20 squares, 35 iron bars to construct
4 toilets.
No closing wall was put in some of the toilets built.
The photo below refers:
340
Toilets without a ring beam above, not plastered and roofed with iron sheets gauge 32, in
lorengedwat modern village
The un-plastered toilets with a short wall to cover the front in Lorengedwat modern village
Inadequate works and inappropriate location of structures lead to loss of funds as
buildings may collapse or be moved by the road authority without compensation.
Further, unfinished works hamper achievement of project objectives.
I advised management to ensure that structures are well sited and all scoped
works in BOQ‘s are undertaken. I also advised management to ensure that the
identified defects are rectified.
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22.21 NORTHERN UGANDA SOCIAL ACTION FUND (NUSAF 2)
(a) Compliance with the Memorandum of Understanding and GOU
Regulations
i) Outstanding subproject accountabilities
It was noted that funds amounting to Shs.30,489,256,242 remained unaccounted
for as noted in the table below;
Age of
disbursement
Amount disbursed
(Shs)
Amount accounted
for (Shs)
% Accounted
for
Amount
outstanding
(Shs)
%
Outstanding
Above 12 Months 48,447,669,892 47,965,000,555 99.0% 482,669,337 1.0%
6-12 Months 64,157,173,639 48,867,362,540 76.2% 15,289,811,099 23.8%
Sub-Total (≥
6Mths)
112,604,843,531 96,832,363,095 86.0% 15,772,480,436 14.0%
0-6 Months 15,790,831,371 1,074,055,565 6.8% 14,716,775,806 93.2%
Overall Status 128,395,674,902 97,906,418,660 76.3% 30,489,256,242 23.7%
The delay in accountability is likely to affect Project implementation as
beneficiaries are required to account up to 80% before further disbursements are
made. There is a risk that project objectives may not be achieved within the
stipulated Project timelines.
Management responded that the project had undertaken a Rapid Result Initiative
(RRI) with districts and communities which will likely improve on the submission of
the accountabilities.
I await the outcome of management efforts.
ii) Low absorption capacity
The Annual work plan and budget for the project activities was
Shs.165,129,926,383. During the year, a total of Shs.103,698,075,513 was
available for expenditure by the Project (receipts during the year totalled to
Shs.63,195,040,052 and balance brought forward from previous year of
Shs.40,503,035,461). However, only Shs.53,134,155,258 was utilized during the
year representing an absorption capacity of only 32% of its budget. Considering
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that the project is in its forth year of the five year implementation, project
activities may not be implemented within the stipulated time.
I advised management to expedite the implementation of the activities within the
stipulated time to avoid costs associated with project extensions.
iii) Discrepancy between approved budget estimates by project
funders and the estimates approved by Parliament
According to the financial records the approved estimates by Parliament for the
year under review were Shs.50,946,941,000 while the approved budget by the
World Bank amounted to Shs.165,129,926,383 creating a variance of
Shs.114,182,985,383.
Management in response stated that the discrepancy was a result of the project
implementation designs that allow continuous commitment of subproject funds
where by the funds can be released anytime depending on the implementation
rate by the contractors.
I advised management to harmonise project annual estimates with that approved
estimates by Parliament. This will also facilitate performance measurement.
iv) Failure to align annual work plan and budget to the chart of
accounts
Public Finance and Accountability Regulation 6 (2) (a) and (b) requires
expenditure to be limited to the provision in each item shown in the estimates of
expenditure. The Government Chart of Accounts defines the nature of
expenditures for each item code. The intention is to facilitate better and consistent
classification of financial transactions and also track budget performance per item.
A review of the project annual work plan and budget revealed that expenditure
was not aligned to expenditure codes in the chart of accounts. Failure to align
expenditure with the chart of accounts creates mischarges which will result in to
non-implementation of project activities as per the agreed work plan. The
expenditure reported may not represent the actual charges to the relevant
expenditure codes. Under the circumstances, verification of the correctness of
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expenditure as categorized and reflected in the financial statements becomes
difficult.
I advised management to align the programme budget with the chart of accounts
for easy budget monitoring.
(b) General Standard of Accounting and Internal Controls
A review was carried out of the project system of financial management and the
following matters were observed;
i) Mischarges
It was noted that a sum of Shs.19,059,510 was charged on an item which was not
in line with the nature of the expenditure. Details are below:
VOUCHER No AMOUNT (Shs) PURPOSE ACCOUNT
CHARGED
CORRECT
CHARGE
R113/13/051 19,059,510 NSSF Employer
contribution
Contract staff
salaries
NSSF Expense
A/c
I consider this a diversion. The practice hinders the proper implementation of
approved budgets and work plans and also undermines the objectives of the
project.
Management promised to strengthen the internal checks and ensure that such
actions do not re-occur. I advised management to seek authority for reallocations
in accordance with the regulations.
ii) Unaccounted for funds
Shs.153,673,363 advanced to staff to execute project activities lacked necessary
supporting documents such as Goods Received Notes, activity reports, field
programmes and receipts. In absence of the requisite supporting documentation,
I was unable able to confirm the authenticity of the expenditure.
I advised management to account for funds or take the necessary steps to recover
these funds from the staff involved.
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(c) Training expenditure
i) Ineligible expenditure on a Learning Trip to Malawi
I noted that a total sum of USD 7,186 was spent on purchase of air tickets and
perdiem for two non-project staff to attend a 7-day experimental learning trip in
Malawi. Such practice may result into under performance on the part of the
Project as funds are diverted to cater for unplanned activities. The practice is also
irregular.
Management responded that training sessions undertaken were for capacity
enhancement determined and approved by OPM management.
I explained to management that they should have sought for a no objection from
World Bank before effecting the payment. Management should consider having
the money refunded to the project account.
ii) Lack of training needs assessment
Paragraph 2.2.9 (h)(i) of the NUSAF Administrative Hand book requires
management to be responsible for designing and preparing an integrated Annual
Training Programme based on the training and development needs of the Project
and its employees.
It was however noted that management did not carry out a training needs
assessment during the year under review. Without proper training needs
assessment, performance gaps of Project staff may not be identified and bridged.
I advised management to regularly carry out a training needs assessment of staff
in order to raise the technical and professional level of competence and status of
Project employees.
iii) Irregular Expenditure on a Team building retreat
Paragraph 2.2.8 (c) of the NUSAF Administrative Handbook states that the daily
travel allowances paid to an employee of NUSAF2/OPM shall be the same as that
paid to an employee of an equivalent rank in the Public Service. A review of
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expenditure of Shs38,189,500 incurred on a Technical Support Team (TST)
building retreat held at Ankrah Foundation –Mukono revealed the following:
Cash refunds in lieu of fuel were made to 15 participants at a uniform rate of
Shs.100,000 each instead of using fuel consumed or travel allowances basis.
Management did not provide an explanation as to why the established system
of using smart fuel cards was ignored.
Although the 3 day workshop was paid full board, out of pocket was paid at a
rate of Shs.50,000 per day for each of the 51 participants for 3 days which
totaled to Shs.7,650,000. According to Circular Standing Instructions, out of
pocket is computed as 20% of one‘s night allowance per day. Based on this,
only Shs.2,750,000 should have been paid. This resulted into an over
payment of Shs.4, 900,000 which is recoverable.
The retreat had been planned to take place in the financial year 2011-2012.
This means that it was not in the annual work plan and budget for the year
under review.
I advised management is to ensure that Project funds are spent on only activities
approved in the Project work plan and budget and in accordance with the manual.
(d) General Implementation of Workplan and Activity Component
Audit inspection of subprojects was carried out to assess the progress of
implementation. The following issues were observed:
i) Delayed/under remittance of operational funds
Paragraph 2.2(iii) of the NUSAF2 operations manual states that each District will
be provided with operation funds of at least 5% of the total subproject
disbursements. The District Operation funds are required to be shared between
the District Local Government and her Sub-counties/Municipality Divisions in the
ratio of 35% to 65%. Such funds are to be used to finance fuel costs, motor
vehicle maintenance, stationeries, work related allowances, telephone bills,
approved NUSAF 2 workshops and training.
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During the year, a total of Shs.44,480,214,725 was released to districts
(subproject funds – Shs.42,764,670,255 and operational funds-
Shs.1,715,544,470). However it was noted that operational funds were sometimes
remitted late to beneficiary districts. It was also established that a sum of
Shs.1,715,544,470 was released to the districts as operational funds instead of
Shs.2,138,233,512 resulting into under-remittance of Shs.422,689,042. This was
in contravention of the operation manual.
The delayed remittance and under remittance is likely to negatively affect activities
at the districts.
I advised management to release operational funds in time and in agreed ratios to
enable timely implementation of activities.
ii) Incomplete works
Incomplete works were observed in a number of districts. Details of inspected
projects are in the photographs below:
PROJECT PHOTOGRAPH REMARKS
BULIISA DISTRICT
Incomplete structure of Bulisa Primary school staff houses. The contractor was not found on site yet work was not complete. The engineer explained that he stopped the contractors to proceed because the sub-project had not received funds from OPM. The surrounding bush indicates that there has been no construction for a long time
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KABERAMAIDO DISTRICT
Ekinu Cell Community road (1.3km) in Kaberamaido Town Council handed over but not completed. There was little murrum on the road due to poor workmanship.
AMURIA DISTRICT
Amugu Health Center OPD in Asamuk Sub County is at roofing level. However works had been abandoned because funds for completion had not been released.
Aeket P/S Teachers house in Obalanga Sub County. Works were found incomplete.
KUMI DISTRICT
Incomplete Teachers‘ house at Mukongoro Township P/S
MBALE DISTRICT
Busiu Health Center Staff House. The works are incomplete.
The verandah was low and there were signs of poor workmanship which is likely to be due to limited supervision.
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TORORO DISTRICT
Incomplete construction of Teachers Quarters at Aputir P/S
BUTALEJA DISTRICT
Incomplete Napologoma Heath Center III Staff House. The building was at roofing level, not plastered, no ceiling/ shutters,
Nabagali South Community Road The road construction was still ongoing yet it completion date was 21/06/2013. The road was under construction and gravelling of some parts of the road had not yet done.
Delayed completion of the projects denies the beneficiary community of the
intended services.
Management explained that at the time of inspection, the communities were in the
process of preparing accountabilities for 1st tranche of funds and were yet to
submit requests for 2nd tranche of funds to enable completion of the works.
I advised management to expedite the release of funds and ensure that the
construction works are followed up to completion.
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iii) Non-adherence to bills of quantities - Kobulubulu Health centre
III construction
This contract was awarded to a local contractor. According to the bills of
quantities, the contractor was to use 12mm iron bars for the ring beam. It was
however observed that during erection of the staff house, the contractor used a
combination of 10mm and 12mm iron bars instead of the specified 12mm bars.
Part of the structure was still at window level as shown below:
The use of the wrong specifications can have a negative impact on the overall
strength of the walls and life of the structure as a whole due to under-gauge.
Management explained that a follow up will be made with the district to obtain a
verification report on the deviation of the recommended materials and
consequently follow up the contractor.
I await the outcome of management efforts.
iv) Lack of Routine road maintenance
Inspection of rehabilitated roads revealed that most of the roads were not
maintained. Head walls were broken and grass had narrowed the road width of
some of the inspected roads. Refer to the pictures below:
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Rehabilitated Ayago road
0.5km in Tororo district. Shs.40,538,209
Overgrowing grass narrowing
the road. Broken head walls.
Due to non-maintenance, the roads may not last for the expected life span.
Management responded that the districts had been requested to put in place long
term arrangements for operation and maintenance of roads.
I await the outcome of management‘s efforts.
v) Lack of training of Community Project Management Committees
(CPMC) in Karamoja region
The Operational Manual guideline 2.1.3 Delivery Benchmarks provides for CPMC
training as one of the benchmark to help in assessing the performance of each Local
Government in terms of management of the subproject cycle with a view to
providing technical supervision and capacity enhancement support to improve
performance at the various levels of Project implementation.
It was observed that the sub projects took off prior to training of the CPMCs. Non-
training of CPMCs may lead to poor project implementation.
I advised management to train CPCMs for compliance with the guidelines while
implementing the project activities.
vi) Lack of individual project accounts at district level in Karamoja
region
During the inspections, it was noted that all the districts in Karamoja region had
not opened bank accounts for the identified subprojects contrary to the project
manual guidelines. Advance payments to contractors were made directly from the
District Subprojects Fund in Moroto and Abim districts. Lack of subprojects
accounts may lead to the diversion of funds by the District as CPMCs have no
control over them.
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Management explained that guidance on flow of funds and disbursement
arrangements had been given to the districts and a follow up on this will be done
accordingly.
I await the outcome of management‘s efforts.
vii) Lack of supervision of sub projects
The operational manual guideline 2.1.2(f) provides that supervision, monitoring
and evaluation of subprojects is to be undertaken at the community, district and
national levels. At the district level, overall technical supervision, monitoring and
evaluation is a responsibility of the Chief Administrative Officer. He/she is
supported by the district technical team including the sub-county staff. The Sub-
county Chief on the other hand is responsible for monitoring and supervision of
Project activities in his/her sub-county with the support of the sub-county
technical team.
On the contrary however, it was observed that a number of subprojects were not
adequately supervised in Moroto, Amolatar, Soroti and Amuru/ Nwoya districts
there by leading to poor quality works. Refer to the photos below:
Amolotar District
Lack of back fill on the toilet in Aguludia P/S
Amuru District
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Otwee Health Centre II Staff house roofed with gauge 28 iron sheets instead of gauge 26.
Soroti District
Awasi- Obyarai Community Road 1.6km, Soroti district Shs64,215,412 According to the specifications in the contract agreement, the contractor had to construct 8 head walls. It was however noted that only 5 head walls were installed, insufficient murram had been applied in the swampy area besides the road was not compacted.
Due to inadequate supervision of works, the targeted beneficiaries may not obtain
the intended service delivery.
Management responded that the defects on the works at the time of inspection
had been brought to the attention of the respective contractors and remedial
action was yet to be undertaken. Management further stated that supervision and
monitoring will be intensified through a network of engineering assistants
stationed in each district.
I await the outcome of management‘s efforts.
viii) Lack of sign posts at the project sites
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Bills of Quantities provide for sign posts for identification of sub projects
undertaken by NUSAF2 in the area in which the project is located. The bill boards
should clearly specify the Ministry, the Project, the subproject name, Sub County,
District and contractor. It was however observed that all sub-projects in Karamoja
region and in some areas of Acholi and Lango regions inspected lacked sign posts
for identification except in Dokolo District.
In absence of sign posts, I was unable to confirm whether all projects inspected
were actually genuine NUSAF projects as there were similar projects being
implemented by different Non-Governmental organizations (NGOs).
Management explained that the sign posts had been fabricated and awaiting
transportation to the project sites.
I await the outcome of management‘s efforts.
ix) Delayed execution of works in Karamoja region
According to the contract agreements for NUSAF construction works, the contract
period for all works is a maximum of 6 months. It was however observed during
inspections that most of the contracts had stalled and could not be completed
within the specified period. This was attributed to delayed payments of certificates
by the districts. It was also attributed to lack of training by Community Project
Management Committees (CPMCs) responsible for managing the contracts. For
details of the stalled projects, refer to the photos below:
Lopei Health Centre 2 OPD Napak District at slab level
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Tapac Staff House Heath Centre Moroto District at slab level
Arembwara Staff house in Abim District at slab level
Awach Staff house in Abim District at slab level
Delays in project implementation may result into unnecessary extra costs in form
of administration, monitoring and supervision, as well as escalation of material
costs.
Management responded that there were challenges experienced in engaging
contractors for the Community Infrastructure Rehabilitation (CIR) in Karamoja
which are currently being managed together with the district.
I advised management to ensure that project activities are performed within the
project time frame.
x) Omission of toilet facilities in Out Patients Departments (OPDs) in
designs in Napak district
One of the community health activities implemented by NUSAF2 is the
construction of OPDs at the various health centres. A review of the OPD health
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center designs for Lopei HCII, Murulinga HCII and goleriet HC II OPDs in Napak
district revealed that there was no provision for toilets or VIP latrines contrary to
the Health Sector strategic and Investment Plan (HSSIP) plan that promotes good
health, disease prevention and community health initiative.
Absence of toilets in the OPD centres is a health hazard which may lead to
patients contracting diseases that could have been avoided.
Management explained that a needs assessment will be conducted to update the
infrastructural investment plans for all health centres implemented. For any
subsequent designs, provision for toilets/latrines will be included.
I advised management to urgently reassess and also re-design the OPDs with a
view of providing toilets in line with the HSSIP plan.
xi) Improper location of an incinerator at Lotome Health Centre in
Napak district
The IDA financing agreement Schedule 2 section D ―Environmental and Social
Safeguards‖ requires management to run the Project in accordance with the
environmental, social and resettlement guidelines, rules and procedures defined in
the Environmental and Social Management Framework, Pest Management Plans,
and the Resettlement Policy Framework.
Incineration is a waste treatment process that involves the combustion of organic
substances contained in waste materials. Hundreds of toxic chemicals are
released into the atmosphere when the waste is burned in the incinerator. It was
noted during inspection that a Staff House was being constructed near the
incinerator at Lotome Health Centre in Napak district. Refer to the photos
below:
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Location of Incinerator near the Kitchen and the Main house
This is likely to pose a health risk to the occupants of the staff house.
Management responded that it will engage the district to appropriately either
relocate the household or the incinerator for convenient use by the health facility.
I await the outcome of management efforts.
xii) Delayed implementation of Livelihood Investment Support in
Karamoja region
One of the components of NUSAF2 is Livelihood Investment Support (LIS) whose
major objective is to improve access to income earning among the target
households under the Household Income Support Program and Public Works
Program.
In Karamoja region, the component is supposed to be implemented through the
consultants who are recruited using the World Bank guidelines of ―Selection and
Employment of Consultants‖. It was noted that implementation of the programme
had not commenced due to delays in the recruitment of consultants yet the
Programme is in its final year of implementation (ending August 2014). The
delayed implementation of the project component, denies the community the
benefits which would accrue from the Programme.
Management explained that there were delays in modifying the project
implementation modality for Karamoja however, these are yet to be overcome.
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I advised management to continue in conjunction with other stakeholders to
explore ways of overcoming the challenges.
xiii) Livelihood Support projects in other regions
An inspection of some of the beneficiary communities in northern and eastern
regions was done to assess the progress of projects being undertaken. Findings
are detailed in the pictures below:
PHOTOGRAPHS ON INSPECTION REMARKS
TORORO DISTRICT
Water Village Community Restaurant
The group has insufficient space to carry out their catering services. There is need for subproject supervision through meeting beneficiaries to discuss the challenges and opportunities facing the business.
BUTALEJA DISTRICT
Maize mill at Humutu Sub County
The community is benefiting from this maize mill. However, the structure is made of mud and wattle which cannot sustain the mill for a long period of time. Management should construct a formal structure for the sub project.
MASINDI DISTRICT
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Kiramagi A piggery project
The group received 30 pigs which were distributed to 15 members with each beneficiary getting 2 pigs. One beneficiary lost 13 pigs due to Swine fever. This photo shows an empty Sty.
Mubende Community Piggery project
The group received 33 pigs for 10 members. However, all the pigs died of swine fever.
The sub projects are facing a number of challenges that have remained
unattended to, which would be addressed if there was adequate follow up and
support supervision.
Management explained that the above matters were addressed at a consultative
workshop held for all PRDP districts and that policy related action points were
raised with the responsible Ministries of Agriculture, Animal Industries and
Fisheries and Local Government.
I await the outcome of management‘s efforts.
(e) Status of Sub Project Implementation
i) Project performance per annual work plan and Budget 2012/13
The Project Management planned for implementation of various activities during
the year. A review of the annual work plan vis-à-vis actual implementation and
outputs for the year revealed that a number of activities had been partially
implemented or not implemented at all. The table below refers:
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Activities for the
year
Targets for the
year
Amount (Shs) Progress during
the year
Orientation of
NGOS contracted to support LIS
Implementation in
Karamoja region
27 NGOs (5 staff
per NGO)
30,938,000 Only two NGOs were
trained
Hire of consultancy services
1 consultant to train District
trainers in Business and
Entrepreneurship skills
177,370,000 Not Implemented due to budget constraints.
Subproject review
and funding
Funding of
approved
subprojects; a) New sub
projects 2000 – HISP
600 _ CIR 260 _ PWP
144,361,190,22
4
The project financed
1646 new sub
projects for Shs 43,290,784,432 (30%
of the budget) New sub projects;
723-HISP 911-CIR
12 –PWP
Conducting tracer study for youth
beneficiaries under HISP livelihood
skills development
Trace study report on 80 subprojects
100,000,000 Not Implemented
Administering community
scorecard
Community service scorecard 140m
CIR, HISP and PWP
subprojects
144,962,933 Not implemented
Conducting NUSAF2
institutional assessment
NUSAF2 Institutional
assessment reports
100,000,000 Not implemented
Conducting study
on Environmental safeguards
Environmental
safeguards report on NUSAF2
150,000,000 Not implemented.
However the project recruited an
environmental
specialist in May 2013 to carry out
environmental and social assessments.
Study on social
safeguards
NUSAF2 social
safeguards reports
100,000,000 Not implemented.
However the project recruited an
environmental
specialist in May 2013 to carry out
environmental and social assessments.
Conduct a study on Report produced 100,000,000 Not implemented due
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cost effectiveness
of CIR component
on effectiveness of
CIR
to budget constraints.
Training of EPRA facilitators in
Karamoja region
125 EPRA facilitators trained.
7 supervisors trained
90,000,000 Only 54 facilitators trained in October
2012.
Training of sub
county and divisional focal
persons (CDOs)
546 focal persons
trained on data collection,
reporting, record keeping and
procurement
modalities.
150,000,000 Not Implemented due
to budget constraints
Delay in implementation of planned activities denies beneficiaries the intended
benefits of the Project. Besides, Project objectives may not be achieved due to the
delays.
Management responded that the project experienced delays, particularly in the
lengthy procurement processes that affected and slowed down subproject
implementation. In order to expedite implementation of planned activities, some
actions were undertaken including the recruitment of an environmental specialist
to carry out environmental and social safeguards, training EPRA facilitators and
reviewing of work plan and budget in line with the available funding.
I await the management implementation efforts.
(f) Project performance as per logical framework
According to the Project five year implementation plan and progressive reports
reviewed from management, the Project had not achieved the following targets
despite the fact that its closure date was set for 24th August 2014: In all of the
sub components, the percentage of actual funding against 5 year target was
below 60% as indicated in the table below;
Component / Sub component
5- Year target for number of subprojects
5-Year target funds to sub projects (Shs)
Actual funding (Shs)
Number of sub projects financed
% of sub projects financed against 5-year target
% of actual funding against 5-year target
Community Infrastructure Rehabilitation
1,915 57,450,000 29,528,624 1,826 73% 51%
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(CIR)
Household Income Support Programme (HISP)
7,236 36,180,000 19,823,634 4,807 80% 55%
Public works programme (PWP)
891 17,820,000 1,255,297 96 42% 7%
TOTAL 10,042 111,450,000 50,607,554 6,729 77% 45%
Unless there is an extension of the closure date, Management may not be able to
achieve targets in the loan agreement.
Management responded that the project will not commit any more funds for
implementation of new Community Infrastructure Rehabilitation (CIR) and Public
Works Programmes (PWP).
I advised management to ensure that planned sub project activities are
implemented within the project time frame in order to achieve project objectives.
22.22 STRENGTHENING EVIDENCE BASED DECISION MAKING – OPM
COMPONENT
(a) Compliance with the Key Covenants of DFID Funding Agreement
and GOU Financial Regulation
It was noted that the management had in all material respects complied with the
covenants contained in the credit agreement and government of Uganda financial
regulations except for the following matters;
i) Intermingling of funds
A grant of $30,000 equivalent to UShs.74,016,900 was disbursed to the OPM from
Global Development Network and International Institute for Impact Evaluation for
research, production and use of evidence from rigorous Impact Evaluation for
policy decisions that improves social and economic development programmes in
low and mid income countries. The funds were received on the same bank
account with that of DFID at Bank of Uganda. This contravenes the Memorandum
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of Understanding between the development partners and could lead to use of
project funds for non project activities.
Management explained that there was an urgent need to perform the activity and
they found it practical to transfer the funds to this account. They further
explained that funds were accounted for separately and this was not the practice
but rather a one off occurrence.
I advised management to open independent bank accounts in future for each
project to avoid the risks posed by intermingling of donor funds.
ii) Value Added Tax paid out of DFID funds
VAT of Shs.17,344,800 was paid to a company for printing the Government Annual
Review report for 2011/2012. The Memorandum of Understanding Paragraph 7
prohibits use of DFID funds to meet the cost of any other taxes or duties or taxes,
fees or similar charges imposed directly or indirectly by the Government of Uganda
Management explained that the error was caused due to operational challenges.
However, a refund of the said money was being processed.
I advised management to consider refunding the money applied to activities
outside the recommendations of the Memorandum of Understanding to ensure
total compliance with its provisions. I also advised management to seek a ―no
objection‖ in future from DFID for such activities.
(b) General Standard of Accounting and Internal Control
A review was carried out of the project system of financial management and it was
noted that management had instituted adequate controls to manage project
resources.
(c) Outstanding refunds to be made by OPM to DFID Bank account
A reconciliation of the funds of OPM was undertaken with a view to establishing
any outstanding refunds to DFID. It was noted that Shs.143,813,801 was still due
to DFID as indicated in the table below;
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Details Amount in UShs.
Total unaccounted for funds as at 30th June 2012 report 2,521,732,972
Add: Illegible expenditure (PRDP) as at 30th June 2012 report 48,945,278
VAT as at 30th June 2011 report 77,523,723
VAT as at 30th June 2013 report 17,344,800
Sub total 2,665,546,773
Payments:
Refund on 6/08/2012 (2,397,716,250)
Refund on 12/09/2013 (124,016,722)
Net refund to be made to DFID account – 30th June 2013 143,813,801
I have advised management to consider refunding all the outstanding amounts
due.
22.23 AVIAN AND HUMAN INFLUENZA PREPARADENESS PROJECT
(a) Compliance with Financing Agreement and Government of
Uganda Financial Regulations
It was noted that management complied in all material aspects of the financing
agreement and GoU financial regulations except for the matters below;
i) Ministry of Agriculture, Animal Industry and Fisheries (MAIIF)
Advance from Ministry of Health
Under the project design, MoH receives funds from the World Bank for the
communication component. Part of these funds is sent to MAAIF and OPM for the
implementation of the communication component of the project. The audit noted
that out of the funds received from MoH, MAAIF had not spent a total of US $
96,311 and these funds remained on the account.
Management of MoH explained that they had not yet been availed with the
management comments from MAAIF and promised to follow up the matter.
I advised management to ensure that MAIIF expedites the implementation of the
communication activities as per the project work plan and accordingly account for
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these advances from MoH. In cases where the planned activities could not, the
funds should be refunded to MoH.
Boarding passes
It was noted that there were some instances where boarding passes were not
attached on accountabilities for travel. Journeys for funds amounting to
Shs.26,671,910 were not supported with boarding passes. In the absence of
boarding passes, it would be difficult to confirm actual travel of the officials.
Management explained that they had not yet been availed with the management
comments from MAAIF and promised to follow up. I advised management to
always attached boarding passes on all accountabilities for air travel. In cases
where the officials were not project staff, scanned copies could be obtained
through the e-mail for as far as possible.
23.0 MINISTRY OF PUBLIC SERVICE
23.1 Mischarges of Expenditure – UGX.2,245,336,970
The Government Chart of Accounts defines the nature of expenditure for each
item code. The intention is to facilitate better and consistent classification of
financial transactions and also track budget performance per item in line with
parliamentary appropriation. Audit noted that during the year under review, a sum
of UGX.2,245,336,970 was charged on items which do not reflect the nature of the
expenditure. Such a practice impacts on the credibility of the financial statements,
since the figures reported therein do not reflect true amounts expended on the
respective items. It further undermines the intentions of the appropriating
authority.
In her response, the Accounting Officer regretted the anomaly and promised not
to repeat it in future. I advised Management to avoid such a practice and always
seek for reallocations when such a need arises, in accordance with the
requirements under the Treasury Accounting Instructions (TAI).
23.2 Fuel Expenditure Incompletely Accounted for – UGX.332,879,120
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During the year under review, the Ministry expended a total of UGX.332,879,120
on fuel to staff by issuing them with fuel cards through Standard Chartered Bank.
However, the transaction statements detailing the withdrawals were not availed to
support the expenditure. Under the circumstances, there is a risk that the funds in
question were not put to proper use.
Although the Accounting Officer explained that the statements in question were
available, these were not availed to me by the time of compiling this report. I have
advised management to ensure that all fuel deposits are always properly
supported with detailed fuel withdrawal statements as well as receipts issued by
the fuel stations. In addition, management is requested to follow up this matter
with a view of ensuring full accountability.
23.3 Unaccounted for Imprest Withdrawals – UGX.142,000,000
Treasury Accounting Instructions (TAI) provide for retirement of all imprests by
the close of the financial year, failure of which recovery measures should be
instituted against the concerned officers‘ emoluments. During the year under
review, it was however noted that a total of Shs.142,000,000 withdrawn by the
Ministry‘s cashier as cash imprest remained un accounted for, as there were no
documents availed, detailing how the amount was utilized. Under the
circumstances, I could not establish whether the amount in question was utilized
for legitimate purposes. Further noted was that the amount was not reflected as
an outstanding advance in the financial statements for the year under review. This
implies that the statements are misstated in this regard.
In her response, the Accounting Officer acknowledged the anomaly and indicated
that she had written to the concerned former ministry staff to avail accountability
for the amounts in question.
I advised the Accounting Officer to always ensure that all imprest funds are
promptly accounted for. In the meantime, the accountability for the funds in
question should be followed up and necessary adjustments made to the accounts
to reflect the outstanding amount.
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23.4 Doubtful Refunds to Personal Accounts – UGX.83,668,700
During the year under review, a total of UGX.83,668,700 was deposited onto two
Ministry official‘s personal bank accounts, purportedly being ―refund of borrowed
funds‖. However, there was no documentation availed to show that the two staff
had indeed lent funds to the ministry, rendering the transactions questionable.
The Accounting Officer explained that the funds in question were deposited onto
the two Ministry officials‘ personal bank accounts as refunds for borrowed funds
from available cash meant for other activities which had not been carried out yet.
However, I was not availed any documentary proof to support this explanation.
I advised the Accounting Officer to stop the practice of paying operational funds
into personal bank accounts. In the meantime, the amount in question remains
outstanding and should accordingly be followed up.
23.5 Advances to Staff - UGX.443,467,585
a. Noncompliance with Treasury Accounting Instructions (TAI)
Sections 227 to 229 of the Treasury Accounting Instructions (TAIs) require that
the accounting officer should effect payments directly to the beneficiaries, or
where this is not possible, an imprest holder approved by the Accountant General
to provide cash for disbursements which cannot conveniently be paid directly by
an Accounting Officer.
Contrary to the above, a total of UGX.443,467,585 was advanced to ministry staff
through their personal bank accounts to undertake direct procurements and other
activities of the Ministry. Such a practice is irregular and exposes government
funds to a risk of loss through misuse. Besides the ministry does not have any
control over such funds deposited on personal accounts.
In their response, management explained that the advances in question were
mainly to cater for the Ministry‘s monthly Imprest, office welfare, Newspapers and
other minor office requirements as well as to pay for workshop expenses where
direct payments to participants would prove to be difficult.
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I advised management to stop such a practice and ensure full adherence to the
requirements under the TAI.
b. Advances not Accounted for – Shs.112,924,845
A review of the ministry accounting records revealed that out of shs.443,467,585
deposited on personal bank accounts, advances amounting to shs.112,924,845
remained unaccounted for at the yearend. Under the circumstances, I was unable
to confirm whether the amount involved was applied to the intended purposes.
Further noted was that the unaccounted for advances were also not reported in
the financial statements and that the ministry did not maintain an advances ledger
to record and monitor the retirement of these advances. Under the circumstances,
the ministry‘s financial statements are misstated to this extent. Besides failure to
maintain an advances ledger can lead to failure to track such advances as well as
misuse.
Although the Accounting Officer explained that the accountabilities in question
were available, these were not availed to me by the time of compiling this report.
I advised management to ensure that the advances in question are accounted for
and appropriate adjustments made to the accounts to reflect them accordingly. In
addition, an advances ledger should be opened up accordingly.
23.6 Comprehensive Review and Restructuring of MDAs
In August 2010, the Ministry of Public Service (MoPS) contracted a consultancy
firm to conduct a comprehensive review and restructuring of Government
Ministries, Departments and Agencies (MDAs) as one of the major components of
the Public Service Reform Programme. The major objectives of this exercise were
to address the need to increase accessibility of public services, popularize ICT and
other technological advances, the changing priorities and programmes in
Government among others.
The recommendations of the comprehensive review exercise of MDAs were
presented in a draft Cabinet Memorandum which was forwarded to the Ministry of
Finance, Planning and Economic Development (MOFPED) in July, 2011, requesting
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for a Certificate of Financial Implication. However, MOFPED informed the Ministry
of Public Service in April 2013, that as a result of budget constraints, government
was unable to issue the certificate of financial implications amounting to
UGX.116.598 billion at the time.
As a result of the above shortcoming, the Ministry and other MDAs were unable to
implement the recommendations of the review and restructuring exercise which
aimed at addressing structural redundancies, inconsistencies, weaknesses,
duplications and performance gaps in key service delivery sectors of Government.
Additionally, the resources invested by government in the said consultancy appear
to have been wasted given that some of the recommendations may have been
overtaken by events as a result of the time that has lapsed.
I advised the Accounting Officer to liaise with the responsible authorities and
review this matter so as to address the urgent structural deficiencies across
government MDAs, which continue to impact on their service delivery capacity.
23.7 Payment of Quarterly Night allowances - UGX.569,505,009
According to the Public Service Standing Orders, night allowance is payable to an
officer necessarily absent from their duty station and is claimed only for the actual
nights spent away from the usual station. The Ministry however paid a sum of
shs.569,505,009 to its officers as night allowance with no proper justification, as it
was paid on a quarterly basis and not activity based, rendering it irregular.
The Accounting Officer acknowledged the anomaly and explained that this has
been the practice across the service. In the meantime the Ministry of Public
Service was currently discussing options to motivate public officers given that
government had failed to implement the pay policy of 2006 due to financial
constraints.
I advised the Accounting Officer to ensure that this matter is comprehensively
addressed since it is affecting the whole service. It is important that the Ministry of
Public Service (MOPS) and Ministry of Finance Planning and Economic
Development (MoFPED) explore options and propose to government a viable
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course of action to address the pay issue and stop the payment of consolidated
allowances outside the provisions of the Standing Orders.
23.8 Lack of Motor Vehicle Fleet Management Policy
The Ministry has a fleet of vehicles some of which are attached to entitled staff of
the Ministry, while others are in a pool for use by other un-entitled staff. It was
however noted that the Ministry has no documented motor vehicle fleet
management policy to guide all staff in the usage of motor vehicles. Under the
circumstances, there is a risk of misuse of the Ministry vehicles which in turn can
lead to avoidable maintenance costs.
In her response, the Accounting Officer stated that the Ministry is guided by the
provisions of the Government Standing Orders as well as the provisions of
Establishment Notice No.1 of 2003 on Standardization of Vehicles for Ministries,
other Entitled Officers and Projects.
I advised the Accounting Officer to ensure that given the ministry‘s mandate over
the entire public service, there is an urgent need to compile and put into
operation, a fleet management policy to strengthen the controls, care and
management of government vehicles.
23.9 Vacant Staffing Posts
A review of the staff records of the Ministry revealed that although 293 posts had
been approved following the restructuring of the Ministry, only 233 (79.5%) had
been filled at the time of audit, leaving 58 posts (19.7%) vacant. Some of the
vacant posts such as Assistant Commissioner Monitoring and Evaluation, Assistant
commissioner Information Education and the Principal Internal Auditor are
fundamental in the operations and achievement of the strategic objectives of the
Ministry. Failure to have all the posts filled impacts negatively on the ministry‘s
capacity to deliver its mandate.
In response management stated that the major recommendations from the
comprehensive review and restructuring of MDAs which aimed at addressing the
question of redundancies in the ministry‘s structure were submitted to Cabinet as
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part of the main report and Cabinet approval is contingent upon issuance of
Certificate of Financial Implication from the Ministry of Finance Planning and
Economic Development.
I advised the Accounting officer to liaise with the responsible authorities so as to
have process in question expedited.
23.10 Unspent Balances due to the Consolidated Fund – UGX.552,239,100
The Public Finance and Accountability Act (PFAA), 2003, requires that any unspent
funds from the Consolidated Fund as at the end of the financial year, should be
returned to the Consolidated Fund Account. It was however noted that a total of
UGX.552,239,100 that was meant for the Integrated Payroll and Pension System
(IPPS) but had not been expended by 30th June 2013, was not returned as
required by the above Regulation. The funds were instead transferred to the PSRP
project account number 000050088000013 in Bank of Uganda. There was no
evidence that authority from the Permanent Secretary/Secretary to Treasury
(PS/ST) to retain and transfer the funds was obtained by the Ministry prior to the
transfer. I explained to the Accounting Officer that such action was irregular as it
was meant to circumvent the regulations in force.
In their response, Management acknowledged the anomaly and stated that they
had written to the Accountant General seeking permission to effect the transfer
but no written response was obtained.
I advised the Accounting Officer to always ensure strict adherence with the
regulation and only retain such funds upon obtaining written authority from the
PS/ST, as per the requirements under the Act.
23.11 Payment of Pension Beyond the Pensionable Periods -
UGX.6,153,642,948
According to section 18 of the Pensions Act, every pension or other allowance
granted under the Act, should cease upon the death of the person to whom it is
granted. For the avoidance of doubt, it is declared that a pension granted under
this section be payable for a period not exceeding in aggregate fifteen years from
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the date of retirement of the deceased pensioner. Pursuant to the above
therefore, all pensioners must furnish the Ministry of Public service with annual life
certificates after the expiry of their 15 year pensionable periods as proof that they
are still alive. However the following matters were noted:-
a. Contrary to the above requirements, out of the 1,647 sampled pension
files, a total of 995 pensioners had attained the maximum pensionable
period of 15 years but were still on the ministry‘s payroll and earning
monthly pension, yet they had not submitted life certificates as proof that
they were still alive. Under the circumstances, a total of
UGX.6,153,642,948 paid as monthly pension to this category of pensioners
during the year under review, could not be justified in the absence of life
certificates.
b. Noted also was the apparent laxity in filing of the available certificates as
several life certificates were found unfiled to their relevant pensioners files.
c. There is no mechanism within the ministry aimed at tracking pensioners to
ensure that they do not exceed their lawful pensionable periods as
provided for under the Act. This exposes the ministry to a risk of paying
pension to ineligible pensioners.
In her response, the Accounting Officer attributed the anomaly to laxity on the
part of the responsible officers in filing Life Certificates on the individual
pensioners‘ files.
I advised the Ministry to institute a mechanism to track pensioners so that they do
not get paid beyond the lawful pensionable periods. In addition, the Ministry
should enforce the requirement for pensioners specifically those that have attained
the maximum pensionable period of fifteen years to avail life certificates or else
have them deleted from the pension payroll.
23.12 Pension Payments to Group Associations - UGX.1,472,195,209
A total of UGX.1,472,195,209 was paid to various pension groups as both gratuity
and monthly pension. It was however noted that these groups did not furnish the
Ministry with accountability records/evidence of acknowledgements to show that
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the funds reached the bonafide beneficiaries. Further noted was that there is no
evidence that the ministry has a mechanism to track the pensioners under these
groups to ascertain whether they were still alive and eligible for pension as there
were no life certificates on file for the beneficiaries under these groups. Most of
these files were last updated in 2001. I explained to the Accounting Officer that
absence of any monitoring measures exposes the ministry to a risk of payment of
non-existent/ineligible pensioners and thus occasioning loss to government.
In response, the Accounting Officer acknowledged the anomaly and indicated that
the Ministry had since written to the various groups to furnish the Ministry with
accountability of acknowledgement of funds and life certificates by 15th of April
2014.
I advised the Accounting Officer to update all data in respect of group pensioners
and consider having their payments effected directly to the individual beneficiary
bank accounts and not through group accounts.
24.0 PUBLIC SERVICE COMMISSION
24.1 Lack of fully constituted commission
Chapter 10, 165(2) of the Constitution of the Republic of Uganda 1995 (amended)
requires the Public Service Commission to consist of a Chairperson, Vice
Chairperson and seven members appointed by the President. However, it was
noted that all the nine (9) Commission members‘ contracts had expired and the
Commission activities were at a standstill.
In absence of a constituted Commission, service delivery is hampered due to lack
of authority for recruitment, promotions and handling of disciplinary cases.
Management explained that the matter of the PSC board is before the appointing
authority.
I advised management to follow-up on the matter with the authorities.
24.2 Staffing Gaps
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Good strategic planning and management requires an entity to carry out human
resource planning to ensure that an adequate number of qualified staff is in place
to carryout the operational activities of an entity so as to enable her achieve
strategic objectives.
A review of the Commission‘s organizational structure revealed that out of the
available 82 posts, 76 posts is filled leaving 6 positions vacant.
Lack of filled staff affects the performance and overall achievement of
organization‘s goals and objectives.
Management was advised to liaise with MoPS with a view of ensuring that the
vacant posts are filled.
24.3 Outstanding domestic arrears
It was noted that Shs.75,623,796 (payables) due to various suppliers remained
outstanding for the third year running since 2009/2010 financial year. The
Commission risks litigation from the suppliers which may lead to losses in form of
damages and interest awards by court.
The Accounting Officer explained that the payable relate to UMEME bills that have
not been cleared in a long time however he is pursuing the matter with MoFPED to
have bills cleared.
I await management effort to clear the outstanding obligations.
24.4 Payments for vehicle repairs
Shs.85,239,800 was paid to various pre-qualified garages for repairs and servicing
of vehicles for the Commission for the financial year 2012/13 based on requests by
drivers without vehicle repair assessments done by a competent mechanical
engineer prior to commitment of vehicles to garages for repairs. Further, no
competent mechanical engineer from the Commission was at hand to inspect and
certify repairs undertaken by the garages. The practice is contrary to section 816
of the TAI. There is a risk that the garages may take advantage during
assessment of repair needs and consequently inflate/falsify repair costs.
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The Accounting Officer explained that the Commission does not have a Post of an
Engineer in the staff structure to carry out the pre- and post inspection of
vehicles. However, he had consulted with Ministry of Works and Transport who
had promised to come up with the Government vehicles operational guidelines.
I advised management to contact MoWT to ensure that all vehicle repairs are
assessed and certified as required by TAIs.
24.5 Absence of IT strategic plan
The Commission has an IT resource centre responsible for maintaining data of the
Public Service Commission. However the Commission does not have a strategic IT
plan that ensures adequate security and protection over computers and of data
held on computers or information systems operated by the Commission. In the
absence of the IT strategic plan, there is a risk of loss given the considerable
investments in terms of computers, accessories and data security.
Management explained that the Commission has an E-recruitment System in place
but was awaiting for the harmonization of Integrated Personnel and Payroll
System (IPPS) and IFMS to the National IT Strategic Plan to have a final written IT
plan.
I advised management to come up with an IT policy that will guide in the use of
IT.
25.0 LOCAL GOVERNMENT FINANCE COMMISSION
25.1 Mischarge of expenditure
A review of the Commission‘s expenditures revealed that the entity charged wrong
expenditure codes to a tune of Shs.244,029,386 without authority. This practice
undermines the importance of the budgeting process and leads to misleading
reporting.
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Management in their response acknowledged the mischarges and promised to
abide by the accounting regulations in future. I advised the Accounting Officer to
streamline the budget process to ensure that sufficient funds are allocated to each
account. Authority should be sought for any reallocations.
25.2 Outstanding commitments
It was noted that Shs.17,525,048 (payables) due to URA in taxes remained
outstanding for the second year running and no effort has been undertaken to
have it cleared. The Commission risks fines and penalties from the tax body for
the unremitted taxes.
Management attributed this to non-allocation of funds for domestic arrears in the
appropriation despite several requests for the item inclusion. Management further
explained that they will continue submitting requests to MoFPED to settle the
outstanding dues.
I await the outcome of management efforts.
25.3 Outstanding recoverables
Receivables amounting to Shs.52,575,241 were not received at the close of the
financial year. Shs.49,138,063 relate to the period 2011/12. There is risk that
funds may not be collected.
Management explained that efforts will be made to recover the funds. I advised
management to enforce recovery measures or seek authority from the Ministry of
Finance to have the amounts written off.
25.4 Advances to individual personal accounts
Sections 227, 228 and 229 of the Treasury Accounting Instructions (TAIs), require
that all payments should be made by the Accounting Officer directly to the
beneficiaries. Where this is not convenient, an imprest holder is required to be
appointed by the Accounting Officer with the approval of the Accountant General.
However, it was noted that Shs.429,767,447 was advanced to Commission staff
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through their personal bank accounts to undertake direct procurements and other
activities of the Commission.
Such a practice of depositing huge funds on personal accounts exposes
Government funds to risk of loss, since the commission does not have any control
over such funds deposited on individual personal accounts.
Although management explained that the most of the Commission activities are
field based, I advised management to ensure strict adherence with the
requirements of the Treasury Accounting Instructions.
25.5 Unaccounted for funds
Shs.7,105,600 was paid to third parties and Commission officials for
implementation of Commission activities but these funds remained unaccounted
for at the time of audit. Basic documents like requisitions, acknowledgement of
receipt, receipts for purchases made and pro-forma or invoices from service
providers were lacking. In absence of the relevant accountabilities, I was not able
to confirm whether the funds were put to the intended purposes for which they
were requisitioned.
I advised management to ensure that all funds are accounted for within the
statutory period. In the absence of accountability documents recovery measures
should be enforced.
25.6 Doubtful payments on spares and repairs
Shs.54,735,389 was paid to two pre-qualified garages for repairs of Commission
vehicles for the financial year 2012/13. A review of the transactions revealed the
following:
There were no vehicle repair assessments done by a competent mechanical
engineer prior to commitment of vehicles to garages for repair. The garages
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could thus take advantage in assessing repair needs and consequently inflate
repair costs.
No competent mechanical engineer from the Commission was at hand to
inspect and certify repairs undertaken by the garages. Without this crucial
check I could not ascertain genuineness of the repairs.
The spare items replaced (used spare parts) were not returned to stores for
independent verification by audit.
In absence of checks, the genuineness of the repairs could not be ascertained.
Management explained that due to lack of funds to hire experts, they could not
implement the above section of the TAIs.
I advised management to liaise with Ministry of Works and Transport to obtain the
technical expertise whenever required.
25.7 Budget performance
Public Finance and Accountability regulations, 2003 section 2.10(b) entrusts the
accounting officer with ensuring that controls such as those contained in the
approved estimates and warrants are strictly observed. Budget estimates are
based on outputs to be achieved for the financial year and during implementation
effort should be made to achieve the agreed objectives or targets of the entity
within the availed resources.
Review of the budget performance for the year under review revealed that some
targets were not achieved despite government releasing funds for the various vote
functions. See table below. The authority‘s objectives may not have been met.
Vote function output
Item description
Quantity Budget amount (shs in billions)
Amount released (shs in billions)
Quantity Remarks
135303 Enhancement of LG revenue mobilisation
4 Local revenue enhancement coordination committee
0.573 0.561 3 LRECC meeting held
2 regional workshops
Significant under-performance especially with regional
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and generation
meetings 8 regional
workshops conducted
Technical support for property rates collection in 60 LG‘s
Tax education awareness created in 40 LG‘s
held 42 LG‘s
provided with property rates technical support
34 LG‘s availed with tax education awareness campaigns
workshops despite 98% funding
135304 Equitable distribution of grants to LG‘s
6 meetings of the Local Government budget committee
Grant allocation formulae reviewed to incorporate cross-cutting issues
1.419 1.419 1 meeting of the LG budget committee held
Only Draft
concept note developed
Significant under-performance despite 100% release.
135305 Institutional capacity enhancement and maintenance
8 finance and administration meetings
4 budget committee meetings
Resource center enhancement
Development of communication strategy
Conduct field visits to identify issues affecting financing of education and social development sectors
1.197 1.176 No finance and administration meeting reported
3 budget committee meetings held
No communicatio
n strategy developed
No field visits on education and social development
135375 Support LGFC purchase of one station wagon, spares and tyres
0.149 0.083 No station wagon bought
No station wagon bought
Management explained that after submission of the OBT the Technical Committee
revised the targets to fit the available budget. Besides in some vote functions,
funds received were inadequate.
I advised management to undertake planned activities as approved.
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26.0 KAMPALA CAPITAL CITY AUTHORITY
26.1 Receivables
A review of receivables under notes 4 and R2 and Non-tax revenue in the financial
statement revealed the following:
(i) Irregular provisions for doubtful debts
Reconciliation of receivables revealed a 100% provision of Shs. 3,827,633,557 on
certain revenue sources, especially markets on grounds that the entity does not
anticipate to collect this revenue. Some of the owners of the business and back
ground information on the debts could not be traced. Furthermore a 30%
provision on outstanding receivables as at 30th June 2013 of Shs.25,107,436,851
was made. However these provisions were not supported by narrative disclosures
to confirm that the debt may not be recoverable. Besides, the approval of the
provisions by council was not availed.
(ii) Lack of Ledgers
Out of Shs.21,032,546,909 Accrued revenue, Shs.20,883,562,609 consisting of
property rates, ground rent, Local Hotel tax, Local service tax and Advertisement
could not be confirmed as ledgers for property rates, ground rent and
advertisements were incomplete while no ledgers were maintained for local hotel
tax and local service tax. In the circumstances the accuracy of the figures could
not be confirmed. I was also unable to confirm that properties, hotels and eligible
tax payers were included in the KCCA database.
Management explained that it was not practical to maintain ledgers for local hotel
tax and local service tax as collectable amounts were unpredictable.
I advised management to demonstrate efforts undertaken to collect debtors and
to ensure that debtors‘ ledgers are regularly updated.
26.2 Payables
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Shs. 9,256,053,723 was stated as payables in the statement of financial position
for the year under review. A review of payables in the financial statements
revealed the following:
(i) Trade Payables amounting to Shs. 2,069,433,927 have remained unpaid for
over 2years. Management issued a public notice on KCCA outstanding
creditors through one of the local new papers in September 2013. However
the suppliers‘ claims in response to the public notice could not be verified by
management.
(ii) Pension liabilities amounting to Shs.211,898,151 were not supported by a
schedule of pensioners.
(iii) Shs.875,886,294 was stated as Trade creditors for the financial 2011/12.
However a review of a sample of Shs.369,750,124 owed to creditors under
this category revealed that Shs.313,466,408 was not supported by invoices.
(iv) Shs.4,983,276,692 was stated as additional trade creditors for the year under
review. However a sample of Shs. 2,898,498,561 under this category revealed
Shs.2,515,067,977 could not supported by invoices from suppliers.
Under the circumstances, I was unable to confirm the existence and accuracy of
the payables amount stated in the financial statements.
Management explained that most of these payables relate to the former KCC, the
new management of KCCA has taken steps of certifying the payables by inviting
the creditors to substantiate their claims through the local media however this
process has not yielded results. Many of the claimants in (i) above presented
doubtful claims.
Although management stated that payables‘ ledgers, schedules and supporting
accountabilities were available, by the time of writing this report the mentioned
documents had not been availed.
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I have advised management to take the necessary steps with a view of writing off
the doubtful, unsupported and un presented claims.
Management is further advised to ensure that up to date supplier control ledgers
supported by accountability documents such as invoices, LPOs, certificates of
completion and delivery notes are maintained for future reference.
26.3 Deferred Income
A total of Shs.9,676,075,500 was stated to have been received in the financial
year 2009/10 by KCC as land premium for various KCC properties leased out for
49 years. This amount was apportioned and accrued at a rate of Shs.197,470,918
per annum over the lease period. However Lease agreements for the properties
stated in Note 14 were not availed. I was therefore unable to ascertain the lease
periods and the correct amount of income accruing to the Authority.
I advised management to avail lease agreements to confirm the lease period and
deferred income outstanding.
26.4 Shortfall in Government Grant
The Authority estimated to receive Shs.100,071,685,633 as grants from the
Central Government. However, only Shs. 88,160,309,889 was released creating a
short fall of Shs.11,911,375,744. Management attributed this to a general budget
cut imposed on all Government Ministries and Agencies during the year under
review. Failure by Government to release all budgeted funds to the Authority
stalled implementation of some programs thereby denying services to the
beneficiary communities.
Management explained the Authority suffered budget cuts during the year which
affected the implementation of originally planned programmes in the city like
roads, school facilitation Grant, Community Driven Development (CDD) and
NAADS.
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I advised management to continually engage the Ministry of Finance, Planning and
Economic Development to ensure that budgeted funds are released.
26.5 Non-tax Revenue collection shortfalls
The Authority‘s estimate for Non-tax revenue (NTR) collection was
Shs.75,690,000,000. During the year, actual NTR collected amounted to
Shs.55,679,919,377 creating a shortfall of Shs.20,010,080,623 (26%). Shortfalls in
budgeted NTR collections affect implementation of planned activities of the
Authority.
Management attributed the shortfall to failure to revalue properties, lack of legal
instruments to enable collection of taxes, inaccurate and outdated property rates
and ground rent databases, and failure to renew leases as the KCCA Land Board
was not functioning during the year under review. Management further explained
that the projections had been pegged on the assumption that all the necessary
supporting legislations and rates would have been revised within the year and that
several revenue enhancement strategies would have been adopted and others
proposed.
I advised management to put in place appropriate mechanisms to improve
revenue collections.
26.6 Nugatory expenditure arising out of court cases
A review of quarterly reports from the legal department revealed that the entity
incurred expenditure worth Shs.1,124,880,150 in form of court settlements which
arose from management‘s laxity in the conduct of operations for example breach
of contract agreements and enforcement activities. This expenditure is rendered
nugatory since it would have been avoided. There is a risk that amount incurred in
settling Court claims, could affect service delivery as planned activities may not be
funded.
Management explained these were court awards which arose from breach of
contract and enforcement activities that happened in 2005 and 2007 respectively.
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I advised management to be diligent in executing its mandate to avoid wasteful
expenditure arising from litigation.
26.7 Advances
a) Advances to Personal accounts – Non compliance with Treasury
Accounting Instructions
Sections 227, 228 and 229 of the Treasury Accounting Instructions (TAIs),
provides that all payments should be made by the Accounting Officer directly to
the beneficiaries. Where this is not convenient, an imprest holder should be
appointed by the Accounting Officer with the approval of the Accountant General.
It was noted that Shs.190,824,516 was advanced to Authority staff through their
personal bank accounts to undertake direct procurements and other activities such
as civil works, parties, collection of street children and games of the Authority.
Such a practice of depositing funds on personal accounts exposes Authority funds
to a risk of loss, since the Authority does not have any control over such funds
deposited on personal accounts.
Management in response acknowledged the anomaly and explained that imprest
holders had been nominated and names forwarded to the Accountant General for
approval.
I await the appointment of imprest holders.
b) Unaccounted for advances
Treasury Accounting Instructions Section 217 requires Advances not accounted for
within 60 days from date of payment to be deducted from the monthly salary of
the debtor. Instructions also require that no further advances are made to
anybody with unsettled advance.
A review of advances to officials of the Authority was carried out and it was noted
that accountabilities for funds amounting to Shs.97,124,523 were not available for
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verification. These advances have remained outstanding for over six months after
the close of the financial year. In absence of the relevant accountabilities, I was
not able to confirm whether the funds were utilized on planned activities.
The funds are recoverable in the absence of accountabilities.
26.8 Non co funding of NAADS activities
Section 7.7 of the Revised NAADS Guidelines 2007 requires the Authority to
contribute a matching fund amounting to 5% of its NAADs annual budget for
implementing NAADs activities. A review of the quarterly reports revealed that the
entity received Shs.701,451,221 for NAADs activities. However, the entity did not
provide NAADS (5%) co-funding amounting to Shs.35,072,561 as required by the
guidelines. Failure to comply with the NAADS guidelines might lead to withdraw of
the grant by the funders thereby denying the community the benefits of the
Project meant to uplift their livelihoods.
Management explained that a contribution of Shs.232,213,800 towards NAADS
activities in form of salaries for NAADS coordinators was made.
I advised management to co-fund as required by the programme guidelines.
26.9 Absence of an approved Human Resource Manual
Although the Authority formulated the Human Resource manual, it is not yet
operational. In absence of approved Human Resource policies, procedures and
Manuals, it becomes difficult for the authority staff to be guided.
Management explained that a draft Human resource management manual was in
place and was awaiting Ministerial approval.
I advised management to ensure that the Human Resource Manual is approved
and disseminated to staff as a tool to help them contribute to the achievement of
the corporate goals and objectives.
26.10 Organizational structure - Staffing gaps
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The Authority has an approved organization structure of 1,332 posts of which only
359 have been filled representing only 27% of the required workforce. Lack of
adequate staff coupled with the workload on the existing few staff may impact on
service delivery and achievement of the targeted output/results. The Authority
appears to have few staff to achieve the desired performance.
Management explained that the relevant authorities for recruiting staff provided
the requisite support in terms of conducting interviews but actual appointment has
been hindered by budget constraints.
I advised management to liaise with the relevant Government organs for the
required funding.
26.11 Absence of Public Accounts Committee
Section 58 of the Kampala Capital City Authority (KCCA) Act, 2010 stipulates that
there shall be established for the Capital City, a Public Accounts Committee (PAC)
consisting of a Chairperson and four other members appointed by the Lord Mayor
and with the approval of the Minister. This committee is responsible for examining
the reports of the Auditor General, Chief Internal Auditor and any reports of
Commission of Inquiry and submits its reports to the Authority and to the Minister
and the Minister lays the report before Parliament.
Contrary to the requirement, it was noted that the Capital City Public Accounts
Committee has never been instituted. Absence of Authority Public Accounts
Committee implies that the corporate governance structures are inadequate and
the recommendations of Internal Audit department, Auditor General and other
investigation agencies may not be reviewed and implemented as required.
Management explained that the matter was before the Honourable Minister
responsible for Kampala Capital City.
I advised management to liaise with the minister responsible so as to have a
Public accounts committee in place.
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26.12 Absence of a Metropolitan Physical Planning Authority
Section 21 of the Kampala Capital City Act, 2010 states that there shall be a body
to be known as the Metropolitan Physical Planning Authority. The Metropolitan
Authority shall consist of a Chairperson and four other persons all of whom shall
be appointed by the Minister with the approval of Cabinet, being persons qualified
and experienced in physical planning, civil engineering, architecture, environment,
public health or survey. The functions of the Metropolitan Physical Planning
Authority include developing of the physical plan for the city, planning for
transportation and infrastructural development, approving Capital City, Municipal
and Town structural plans and overall overseeing and monitoring the execution of
the Metropolitan Authority Development Plan.
Contrary to the provision, it was noted that Metropolitan Physical Planning
Authority was not instituted. Absence of the Metropolitan Physical Planning
Authority affects the quality and location of infrastructure in the city as
inconsistencies between individual physical plans with the metropolitan plan may
not be addressed. This is likely to have negative effects in the future plans of the
Authority.
Management explained that the matter was before the honourable minister
responsible for Kampala Capital City.
I advised management to liaise with the Minister responsible so as to have the
Metropolitan Physical Planning Authority in place.
26.13 Absence of a Metropolitan Police
Section 26 of the Kampala Capital City Act, 2011 states that there shall be a
Metropolitan Police Force for the Capital City. The Metropolitan Police Force shall
comprise persons appointed under the police Act and trained by the Uganda Police
Force. It was however noted that there is no such Police in place. Failure to
institute the metropolitan police, hamper‘s the Authority‘s efforts to effectively
maintain law and order in the capital city.
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Management explained that there was a Memorandum of Understanding (MOU)
between KCCA and Uganda Police Force prepared and approved by the Solicitor
General to regulate the interim relationship.
I await the outcome of the MOU arrangements.
26.14 Absence of Standing Committees
Section 6 of the Kampala Capital City Act, 2010 states that the Authority shall
appoint Standing Committees not exceeding the number of Directorates of the
Authority and other committees necessary for the efficient discharge of its
functions which include overseeing the performance of directorates, receiving and
approving directorate work plans, reviewing bills for ordinance and scrutinizing and
recommending to the Authority budget proposals of the Authority‘s directorates.
Contrary to the requirement, it was noted that the Standing Committees of the
Authority were not instituted. In the absence of Standing Committees, the
performance of directorates may not be sufficiently monitored, which might affect
service delivery in the Authority.
Management explained that the appointment of standing committees was a
function of the political organ, which has not been functional. Management further
explained that the Minister responsible for the Authority in exercise of his powers
under section 79 of the KCCA Act directed constitution of working groups to fill this
gap.
I advised management to engage the political arm of the Authority to ensure that
standing committees are constituted so as to have directorates effectively
monitored.
26.15 Unapproved Strategic plan
The strategic plan is an important tool in steering any organization towards its
vision, mission and its overall mandate. Annual activities undertaken by any
organization should be derived from the strategic plan. Management developed a
strategic plan, however this plan has not been approved yet. Delays in
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implementing the strategic plan may adversely impact on the Authority in the
achievement of its objectives.
Management explained that all relevant stakeholders shall be engaged so as to
have the strategic plan approved before the end of the financial year 2013/14.
I await the outcome of management‘s efforts to have the strategic plan in place.
26.16 Unsigned Authority Minutes
The Fourth Schedule 3 (2) of the Kampala Capital City Act, 2010 states that the
minutes recorded shall be submitted to the Authority for confirmation at its next
meeting following that to which the minutes relate and when so confirmed, shall
be signed by the Lord Mayor and at least one councilor in the presence of the
members present at the latter meeting.
Contrary to the requirement, all the minutes submitted for review for the financial
year 2012/2013 were not signed. The resolutions of the governing body may not
be binding as a result they may not be relied upon by management to support
policy decisions.
Management confirmed that minutes of the Authority meetings have not been
approved to date.
I advised management to liaise with the Political organ of the Authority to ensure
that minutes of the Authority are confirmed and signed so that the resolutions of
the governing body are binding.
26.17 Engineering Audits
A sample of seven roads constructed under KCCA was selected for engineering
audit. The projects selected included:
(c) Reconstruction of Paved Roads in Rubaga 1- Consisting of Kabakanjagala,
Kalinda and Ssekabaka Kintu Roads
(d) Periodic maintenance of Hanlon and Nsambya Roads
(e) Reconstruction of New Taxi Park
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(f) Design and build for Rehabilitation and Strengthening of Paved City Roads-
Consisting of Buganda Road, Nakasero Road, Nakasero Hill Road, Lumumba
Avenue, Lourdel Road, Queen‘s Way, Wandegeya Road, Biashara Road ,
Mulondo Road and Wandegeya Parking Yard.
(g) Reconstruction of Mutungo-Bina Road
(h) Upgrading of Gravel Roads to Bitumen Standards Phase 2 (Kimera Road -
1km, Kansanga - Lukuuli Road -1.3km, Salaama-Munyonyo -0.9km)
(i) Construction of Lubigi- Channel
Below is the summary of key findings arising from the Engineering Audit:
(a) Unrecovered advance payment - Shs 234,782,000
Following the termination of the contractor on the Upgrading of gravel roads to
Bitumen standards for Kimera, Soweto and Salaama roads, funds amounting
Shs.234,782,000 are still unrecovered from the contractor despite cashing the
advance payment guarantee and further advance payment recoveries during
execution. The matter is still in court.
The Accounting Officer should ensure that all the advance payment is recovered
from the contractor.
(b) Quality of works
Generally, the overall quality of the works on the projects audited was good.
However, on some roads, defects were identified which need correction. For
example, on Kimera road, alligator cracks were observed at Ch 0+449; and access
culverts on some roads such as Kabakanjagala will need to be replaced.
It is recommended that KCCA follows up the matter with the contractor to ensure
that defects are rectified.
(c) Supervision and Contract Management
The following were noted on supervision and contract management:
Supervision was approached in two ways namely: In-house supervision and
supervision by consultants. Where In-house supervision was used, only one
technical staff was attached to the project thereby providing all the skills
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services required including project management, materials control,
measurement control and reporting. This contrasts with projects supervised by
consultants where each of the roles was played by different personnel. This
was regardless of the scope of the projects. This could have negative impacts
on the quality of project execution especially when the staff is absent or
assigned other duties.
KCCA should boost the capacity of the in-house personnel to provide the full
range of skills required for effective supervision.
Whereas the contract for Lubigi channel was awarded to Spencon Services
(Nairobi, Kenya), the contract was signed and implemented by Spencon
Services (Uganda). This has capacity, legal and cost implications.
KCCA should look into the legal implications of this undertaking.
―As-built‖ drawings for substantially completed projects, for example, Lubigi
Channel, have not yet been submitted as required by the Contract.
KCCA should ensure that the as-built drawings are submitted. The amounts
required as per contract should be retained until the submissions are done.
(d) Summary of Key Findings per Project
The key findings for each of the project audited are presented in the table below:
Road Project / Contractor / Amount
Key findings
Construction of Kalinda, Kabakanjagala, Ssekabaka Kintu Roads in Lubaga Division/ Stirling Civil Engineering Ltd/ Shs 5,066,589,951
Kabakanjagala Road Some of the culverts are cracked, have reinforcement
exposed, joints not filled with mortar at installation and other culverts deforming eg at Chainage 0+326.
Kalinda Road Some of the U-Drains were failing. Some sections of the stone-pitched drains were heavily
silted while mortar joints were failing in other sections. There was little/no mortar in some culvert joints and
there was a cracked culvert line (7m) at Chainage 0+060.
Some access culverts lacked end structures. Man-holes have been left open Ssekabaka Kintu Road Heavy siltation of side and U-drains, cracked, silted eg
0+920LHS Poorly aligned access culverts especially on major
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junctions eg at Ch 0+145, 0+550, 0+100.
Drainage Improvement Works on Lubigi Channel/ M/s Spencon Services (Nairobi, Kenya) Ltd/ Shs 20,588,947,361
The Contract was awarded to Spencon Services of Nairobi, Kenya yet all transactions are with Spencon Services Uganda Ltd without a sub-contract agreement on file. This has legal, cost implications.
As-built drawings not yet submitted despite substantial completion as required by the special conditions of contract. UGX 90,000,000 should be retained for this item as required.
The Contractor raised a claim for compensation against five Addenda which were issued without costs.
Design and build contract for rehabilitation of Paved City Roads –Buganda Road (2.12km), Nakasero road (1.56km), Lumumba Avenue (0.55km), Lourdel road (0.44km), Biashara road (0.29km), Mulondo road (0.32km), Nakasero Hill road (0.35km), Queens lane (0.28km),
Wandegeya parking yard (1,750m2)/ M/s Energo Projekt – Niskogradnja A.D./ Shs 22,385,944,834
Most of the drainage manholes are uncovered and silted
Construction of New Taxi Park / M/S STIRLING CIVIL ENGINEERING / Shs5,940,287,986
Various defects in the new toilet such as - Leaking roof, sagging and cracked ceiling, malfunctioning hand wash basins in toilets, leaking piping systems.
Overpayments of Shs3,818,871.60
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Rehabilitation of Kimera, Soweto and
Salaam Roads/ Stirling Civil Eng Ltd/ Kimera Road – Shs 3,510,322,135 and Soweto Road – Shs 4,089,061,594
An advance of Shs1,212,375,464 was paid to the initial contractor but by the time of termination Shs156,229,799 had been recovered. More funds were recovered by way of cashing the advance payment guarantee of USD 317,066.87 (equivalent to Shs 754,543,054). This makes a total recovery of Shs 910,772,853 leaving a balance of Shs 301,602,611 as unrecovered funds
Kimera Road: There were alligator cracks at Chainage 0+449 on the
asphalt surface The drains are silted and choked with debris. The workers did not have enough PPE especially gloves
and helmets. The site was untidy with a lot of debris and waste material dumped on the road, which affects traffic flow and narrows the road.
There was no evidence of sensitization about HIV/AIDS
Soweto Road Measurement sheets for paid items of Asphalt concrete
and crushed stone base were not included in the certificate reviewed. The basis of quantities certified therefore needs clarification.
Salaama Road No major works were going on at time of audit.
26.18 KAMPALA INSTITUTIONAL AND INFRASTRUCTURE DEVELOPMENT
PROJECT (KIIDP)
(a) Compliance with Financing Agreement and GOU Financial
Regulations
It was noted that project management had complied with the credit agreement
provisions and GoU financial regulations except for the matter noted below;
i) Compliance with Financing Agreement and GOU Financial
Regulations
It was noted that project management had complied with the credit agreement
provisions and GoU financial regulations except for the matters noted below;
RAP Compensations
It was observed that there were still unpaid beneficiaries in the approved RAP
report of the Chief Government Valuer amounting to Shs.4,306,076,966 yet the
funds provided for compensations were fully utilized.
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There is a risk of KCCA being sued by the affected persons whose compensation
has not been paid.
Management explained that Geomaps (U) Ltd, the consultants that facilitated the
compensation exercise had been re-engaged to assist KCCA to open boundaries
particularly along Lubigi Channel and thereafter establish the affected people that
had already been compensated and those that had not. The findings will be used
by management to take further action.
I await for the outcome of management action.
Outstanding Remittances to URA
It was observed that Shs.585,467,717 recovered in the months of November,
2012, January, February, April and May, 2013 as withholding tax and VAT from
contractors‘ bills was not remitted to URA by 30th June, 2013.
There is a risk of being penalized for non compliance with the tax laws.
Management explained that the delayed tax remittances were due to
disbursement challenges the project encountered. I advised management to
ensure that withholding tax and VAT are settled without undue delay to avoid
unnecessary costs in form of penalties.
ii) General Standards of Accounting and Internal Control Systems
A review was carried out of the project system of financial management and it was
noted that management had instituted adequate controls to manage project
resources.
iii) Status of Project Implementation
A review and inspection of project activities was undertaken and the following was
noted;
Construction Works
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It was noted that contracts for construction of the Mpererwe landfill extension and
upgrading of gravel road to Bitumen standards – Phase 2 Roads were terminated.
There is a risk that these works may not be completed at the project closure.
Management explained that a new contractor (M/s Stirling (U) Ltd) was procured
to complete Kimera and Soweto roads. They further explained that the contractor
had mobilized and was already on site starting with the drainage works. They also
explained that another contractor had been procured to complete the extension
works at Kiteezi landfill.
I advised management to expedite the works to ensure that the works are
completed by the project closure date of 31st December 2013.
27.0 ELECTORAL COMMISSION
27.1 Election Petition Costs
The EC incurred election petition costs of UGX.148,678,000stemming from
malpractices perpetrated by presiding officers and failure to properly demarcate
electoral boundaries in some constituencies. These costs could have been avoided
if the EC had demonstrated due diligence. Management explained that the
concerned presiding officers had been blacklisted while re-demarcation of affected
constituencies had also been undertaken.
I have advised the management of EC to always adhere to the electoral laws so as
to avoid or minimize electoral litigations.
27.2 Status of EC Offices in districts
Inspection of selected EC district offices revealed inadequate storage facilities
resulting into damage of some of the election materials. The condition is made
worse by failure by the headquarters to return the metallic ballot boxes from the
district offices to the main ware house in Kampala. Inspection also revealed
instances of inadequate offices in some districts, as showed in table below;
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District Facility Status at Inspection
Kumi Office Building Dilapidated Infested with termites which have destroyed
some records.
Tororo -do- poor structural state.
No place of convenience as the latrine had collapsed.
No fence to secure the premises from intruders.
Manholes had no covers and thus endangering lives.
Kyenjojo -do- Office had leaking roof which posed high risk to the EC records.
Gulu -do- The office is housed in an old and dilapidated structure.
Management in its response acknowledged the anomalies but explained that
retrieval of metallic ballot boxes will be done in 2015 when they are to be returned
to Kampala for refurbishing. The Accounting Officer further stated that the
Commission plans to build regional offices/stores over a period of 5 years, but is
currently being constrained by the meagre capital development funding. For the
time being, the Accounting Officer said that the search is on for better office
buildings.
I advised the Accounting Officer to ensure suitable terms are included in the
contracts with the Landlords and enforced accordingly to ensure conducive
working environment for staff. In the long term, EC should liaise with the
responsible ministries and stakeholders for funding towards building offices.
LEGISLATIVE SECTOR
28.0 PARLIAMENTARY COMMISSION
28.1 Mischarge of Expenditure
The Parliament of Uganda appropriates funds in accordance with the needs of the
country and this appropriation is implemented through the budget in which funds
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are tagged to particular activities and outputs using account codes and MTEF
codes. However, a review of the Commission‘s expenditures revealed that the
entity operates budgets under programs not at item level. An analysis using
government expenditure codes revealed a charge to a tune of Shs.4,132,998,534
on wrong codes. This practice undermines the importance of the budgeting
process and does not conform to proper accounting and financial reporting
practices.
Management explained that the Recurrent Budget of the Parliamentary
Commission is a Statutory Vote and the breakdown of the budget into items is
done for administrative purposes. Management further explained that the actual
expenditure is based on the priority activities where items with funds are charged
accordingly.
I was not satisfied with the explanation and advised the Accounting Officer to
streamline the budgeting process to ensure that funds are budgeted under line
items with sufficient funds and spent within the planned budgets. Proper financial
management practices including budgeting, virement and reallocations need to be
laid down in a financial manual to guide implementation of the budget and
operations.
28.2 Advances to personal accounts not accounted for
A review of advances to personal accounts was carried out and the following
issues were noted:
a) Doubtful expenditure
Shs.420,235,400 was advanced to an individual officer to carry out various
departmental activities however, a review of the accountabilities revealed the
following;
Payments to the tune of Shs.212,836,200 had no supporting accountability
documents and thus audit could not justify the payments.
Accountability of Shs.181,932,533 was questioned due to inconsistencies in the
submitted accountability, and non-compliance with the law as outlined below;
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Signatures and allowances of officials claimed to have participated in the
activities were in some instances forged as some individuals who were
interviewed from the Commission denied ever participating in the activities and
signing for the allowances.
Air time consumption was doubtful as in over ten times the official could
consume air time worth Shs.1,650,000 in a period of 5-10 days for an activity.
Stationery receipts attached appeared forged, for example the officer carrying
out an activity in Sironko attached a receipt worth Shs.4,650,000 from ―Jaira
ICT Centre‖ a stationery shop in Kaberemaido district which is over 100km
from Sironko. Upon calling the number attached the individual denied having
any branch in Sironko.
In many instances the officer paid for the activity report production 10 days
before carrying out the activity. This casts doubt on how the official could have
pre-determined the magnitude of the report. It should be noted that in all
cases no reports were availed despite payment for their production.
In many instances the official hired vehicles for field activities in a range of 10-
16million for 8-12 days yet the officials who were to use these vehicles denied
participating in the activity. This rendered the payments doubtful.
It should be noted that most of the telephone numbers attached to the
receipts were either not existing or incomplete. I could not therefore confirm
the existence of these companies hired to offer the services.
All the payments for stationery and vehicle hire had no withholding tax
deductions retained which poses a risk of fines and penalties to the entity.
The above flaws rendered the accountabilities in question doubtful. In this regard,
I was unable to confirm whether the amount involved was applied to the intended
purpose.
The issue is under investigation and I await the outcome.
b) Unaccounted for funds.
Shs.270,015,000 advanced to other individual‘s personal accounts for
implementation of commission activities remained unaccounted for at the time of
audit.
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In absence of relevant accountabilities, I was not able to confirm whether the
funds were put to the intended purposes for which they were requisitioned. There
is a risk of misappropriation of the funds.
Management should ensure that all funds are accounted for within the statutory
period or recoveries are instituted against the concerned officers.
28.3 Absence of Corporate Strategic Plan
It was noted that the Commission‘s strategic plan expired at the end of the year
(2010/11). The Commission operated without one for the second year running. In
absence of such a plan there is lack of strategic guide in achieving the
Commission‘s objectives.
Management explained that the strategic plan was presented to the Parliamentary
Commission at a joint retreat with the Board of management and discussed but
the approval was deferred until consideration by a joint meeting of Chairpersons of
Committees of Parliament and the Parliamentary Commission.
I advised management to expedite the approval of a new strategic plan.
28.4 Internal Audit
A review of the internal audit function of Parliamentary Commission revealed that
the Internal Audit department did not carry out its statutory role of reviewing and
appraising the soundness and application of accounting, financial and operational
controls as no quarterly reports were produced as required by the regulations.
Further, the Parliamentary Commission had only one Internal auditor who also
acts as head of internal audit and yet the structure provides for three staff. This
has created a big workload which cannot be handled by one officer.
Management explained that the new structure arising out of the restructuring
exercise increased the establishment to four (4) staff which have all been
externally advertised.
I await the outcome of the recruitment exercise.
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28.5 Audit Committee
Regulations 29 and 30 of the Public Finance and Accountability regulations, 2003
and section 8 of the Public Finance and Accountability Act, 2003 require the
Minister in charge of Finance to establish and appoint Audit Committees whose
functions are advisory to the Accounting Officer. However during the year ended
30th June 2013 the Parliamentary Commission had no Audit Committee appointed.
Management explained that a request was made to the Parliamentary Commission
to set up an Audit Committee which was subsequently approved and the
composition duly agreed upon. However ever since this decision was made, the
Committee has not been constituted.
I advised management to draw the attention of the parliamentary commission
regarding the outstanding matter.
28.6 Travel Abroad
The Commission spent a total of Shs.15,438,493,854 in relation to per diem,
transit, tuition, visa fees, and registration payments for travel abroad. Review of
the related payments revealed the following:
Unsupported travel abroad
Shs.142,364,450 was paid to various Commission officials for purposes of
facilitating officers to travel to various destinations outside Uganda. However the
travels were not adequately supported by accountability documents. Specifically
the following were not provided:
Copies of the passport pages bearing exit and entry immigration stamps of the
countries where the officers travelled to.
Air tickets showing flight itinerary, boarding passes, visa receipts, and
electronic receipts were not availed.
There were no back to office reports and/or briefs to support the expenditure.
In the absence of the documentation, the number of per diem days claimed,
number of staff undertaking travels and expenditure incurred could not be
confirmed.
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I advised management to ensure that accountability for travel abroad is sought or
recovery measures are enforced.
28.7 Payment to Uganda Police Operations
Classified expenditure is budgeted for and appropriated by Parliament under the
entitled Government MDA‘s. Regulations governing classified expenditure do not
categorise parliamentary commission as a classified entity. However, it was
observed that Shs. 340,000,000 was transferred to Police Force account and
treated as a classified expenditure. This was done against the regulations.
The accounting officer explained that after an analysis of the security situation of
Parliament, the inspector General of Police advised that security equipment be
purchased for Parliament and funds were accordingly transferred to Uganda police
force for the classified procurement. The equipment was accordingly procured and
delivered to Parliament.
I advised management to adhere to the financial regulations.
28.8 Motor Vehicle repair payments without certification
It was noted that a sum of Shs.521,506,358 was paid to fifteen pre-qualified
garages for repairs and servicing of the Commission vehicles for the financial year
2012/13. However it was noted that there were no vehicle repair assessments
done by a competent mechanical engineer assigned by Ministry of Works and
Transport or from the Commission prior to commitment of vehicles to garages for
repair. Further post repair inspections were also not undertaken.
There is a risk that the garages may take advantage in assessing repair needs and
consequently inflate/falsify repair costs.
Management explained that the repair assessments were not done by a competent
engineer because the officer allocated to the Commission was not available.
I advised management to liaise with the responsible Ministry and have the due
process followed.
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28.9 Payment of VAT on Non-tax Invoices
It was noted that six (6) firms did not present VAT invoices when claiming
payments from the Commission contrary to the VAT statute and as such VAT
amounting to Shs.6,687,867 paid by the Commission may not be accounted for to
the Tax Authority. Failure by the Commission to comply with the VAT Act may lead
to loss of Government revenue.
I advised management to follow up the matter with the suppliers to ensure
compliance and in future not to honour any VAT payment to contractors without
tax invoices.
28.10 Unaccounted for Advances
It was noted that funds advanced to staff during the year amounting to
Shs.120,530,000 were not accounted for by the time of audit. The anomalies
noted included:-
Lack of activity reports for all the official activities undertaken.
Lack of receipts for the consumables such as fuel and stationery or any other
appropriate supporting documents were availed for verification as required by
financial regulations.
Payments for the services rendered to the Commission lacked requisition
minutes, Local purchase orders, invoices and supervisor certification.
Lack of acknowledgement of payments by beneficiaries to confirm receipt of
funds.
In absence of the relevant accountabilities, I was unable to confirm whether the
funds were put to the intended purposes.
I advised management to ensure that all funds are accounted for within the
statutory period. Recovery measures should be considered in absence of
accountabilities.
28.11 Budget performance
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Review of the budget performance for the year 2012/2013 revealed that some
targets were not achieved despite release of funds for the various programmes.
Details are as below:
Programme Item description
Quantity Amount Budgeted (billions)
Released amount (billions)
Quantity Remarks
Programme 02 members of Parliament
To make laws for promoting the rule of law, protection of human rights and socio-economic development.
-Hold 600 standing committee meetings -150 oversight committee field visits
153.5 158.5 -539 sessional and standing committee meetings held -72 oversight field visits
50% underperfomance on oversight commiittee field visits.
Programme 03 Office of the Speaker
To provide administrative support to Rt. Hon. Speaker in the most efficient and timely manner
-180 upcountry trips to government -Speaker to offer donations to 60 charitable causes and fundraising functions -30 trips out of the country
1.433 1.433 -Undertook 208 upcountry trips to officiate at/ attend government -The speaker offered support/donations to 32 local organizations. -22 trips were undertaken by the speaker abroad.
-Few charitable causes undertaken due to increase in amount per donation i.e. from Shs. 500,000 to Shs.1,000,000. -Fewer trips undertaken due to higher number of staff and MP‘s on speakers delegations
Programme 07 Department of clerks 1551 05 Parliament Support Services
Provide technical advice to parliament and committees, ensuring minutes of proceedings are recorded.
-Coordinate 150 oversight field visits with committees -Coordinate 119 plenary sittings -Coordinate 1070 committee meetings
1.241 1.241 -72 committee oversight field visits -106 plenary sittings -539 committee meetings held -55 public hearings -57 reports produced for debate in plenay
inadequate perfomance on commiittee meetings
Programme 09 Department of Library and Research
To provide efficient and effective library and research services to members and staff of parliament.
-1000 text books procured
0.091 0.091 -787 new text books procured
Fewer books purchased despite full release of funds. This was attributed to increase in book prices and utilisation of some funds for subscription to online resources.
Programme 14 Planning and development Coordination Office
Coordinated the updating of the PSIDP and liaises with committees, for a and other departments
-Conduct over 24 oversight field visits -Organize 2 parliamentary outreaches
0.426 0.426 -Thirteen (13) committee oversight visits facilitated -One (1) exposure visit to benchmark best practices
Only half of the outputs were achieved. This was attributed to unforeseen changes in the Parliamentary Calendar i.e. the passing of the
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national budget and other bills took longer than expected and yet they take priority over all other Parliamentary activities. This delay reduced the time left for committee oversight visits, Parliamentary Outreaches and benchmarking trips.
This may have hampered the Commissions objectives.
I advised management to ensure adequate planning and coordination is
appropriately done so that all deliverables are achieved as planned and in a timely
manner.
28.12 PARLIAMENTARY PENSIONS SCHEME
(a) GENERAL STANDARD OF ACCOUNTING AND INTERNAL CONTROL
A review was carried out on the pension scheme‘s system of internal controls and
financial management and the following matters were noted;
i) Lack of Financial, Accounting and Administrative Manuals
I noted that during the year, the scheme did not have Finance, Accounting and
Administrative manuals to guide its employees on how to conduct their operational
activities. Lack of procedural manuals implies that employees work without
standard operating procedures and in the event of misconduct, the scheme has no
written down procedures, guidelines and standards against which to hold them
accountable.
Management explained that during the year, they carried out the process of
developing and documenting the Financial and Administrative Manuals. These are
yet to be approved by the Board. I advised Management to expedite the process
of approval with a view of strengthening internal controls and improving
performance.
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ii) Variances between members on monthly lists submitted for the
sponsor’s (Government) 30% contribution and those submitted
for the 15% deductions from the employees’ monthly salaries.
During the year under review, I noted differences between the number of
members reflected on the 30% schedules and those reflected on the 15%
schedules. Ideally, these numbers should be the same. The details are reflected
in the table below;
Month
Numbers as per the
30% deduction
schedules.
Numbers as per the
15% deduction
schedules.
Difference in
numbers
Staff MPs Staff MPs Staff MPs
Jul-12 288 381 289 381 -1 -
Aug-12 288 378 289 379 -1 -1
Sep-12 303 380 288 380 15 -
Dec-12 288 383 289 383 -1 -
Jan-13 287 382 288 382 -1 -
Feb-13 286 382 287 382 -1 -
Mar-13 289 382 287 382 2 -
Variances in numbers result into under or over-remittances of the contributions to
the scheme by the sponsor. This could result in acts of impropriety which can
lead to financial loss to the Scheme.
Management explained that the variance was attributed to errors from the
Sponsor‘s payroll and promised to reconcile the schedules and take corrective
measures accordingly. I advised management to undertake regular reconciliations
to enable early detection of these variances.
iii) Variance between the expected contributions (both from the
members and the sponsor) and the actual remittances received by
the Scheme.
The scheme management accrued, on a monthly basis, the expected
contributions. However, for the year audited, it was noted that actual contributions
received from the sponsor were less than what was expected by Shs.24,440,218.
The scheme was denied the opportunity to receive full contributions and to
promptly invest the expected income, resulting into loss of income.
405
Management explained that the variations were as a result of errors in source
documents received from the Sponsor, but had established a reconciliation
mechanism to identify the cases and bring them to the attention of the Sponsor
for correction. I await the outcome of management efforts.
iv) Untaxed Staff Allowances
I noted that PPS staff were paid medical allowances for the months of September,
October and November 2012 which were not subjected to tax. The staff members
were also paid mileage and subsistence allowances on a monthly basis and these
were also not subjected to tax. Exclusion of such payments from the tax bracket
is non-compliance to provisions of the law and can lead to heavy tax penalties.
Management responded that the payments for medical, lunch, mileage and
subsistence were considered as reimbursable expenses. Management further
indicated that they will in future ensure that all payments are taxed in accordance
with the provisions of the Income Tax Act.
I advised Management to ensure that all payments made to the PPS staff are
made through the payroll, grossed up and taxed in accordance with the provisions
of the ITA to avoid possible penalties from the tax authority.
406
v) Lack of copies of birth certificates on members’ files
A review of the members‘ benefits and members‘ files revealed that there were no
copies of birth certificates on members‘ files reviewed. A birth certificate is one of
the key documents that should be included on each member‘s file. The date of
birth is vital in the calculation and computation of member benefits. Without birth
certificates, the correctness of benefits computed and paid is doubted.
The Management responded that they have had challenges on obtaining birth
certificates from some members, but had put in place a member specifically to
follow up initiative to ensure that all Members provide the relevant documents.
I advised management to speed up the initiative to avoid eventual errors.
(b) Delays in the implementation of the Management Information
System
In a bid to improve its information management system, the Scheme procured
from M/s Systech Africa (U) Ltd a pension administration computer package in July
15, 2010, at a cost of Shs.184,269,140. Besides administering the pension funds,
the system; according to the procurement contract is supposed to offer
Investment Management, Accounting and Financial Management and Human
Resource Management Systems. According to the General Conditions of the
Contract (GCC) 20.1, this service should have been performed to completion by
end of June, 2011.
At the time of the audit (October 2013), three years from the time of the
commencement of the contract, the system was not fully operational. Additional
modules, such as; Investment Management, Accounting and Financial
Management, and Human Resource Management Systems were not functioning.
To-date the Scheme had paid Shs.138,201,855 with a balance of Shs.46,067,285
yet to be paid. If management does not internally build capacity when the supplier
contract is still running, the scheme might not fully enjoy the intended benefits
and value for money may not be achieved.
407
Management explained that the contractor had installed and customized the
agreed upon additional modules, although they were not yet fully operational.
Management further explained that the delay had been mainly due to capacity
gaps on its side.
I advised Management to ensure that;
The key personnel (Fund Accountant and Data Manager) are trained to
develop their skills in the application of the system.
Standard reports are customized to be directly generated by the system.
SECURITY SECTOR
29.0 MINISTRY OF DEFENCE
29.1 Outstanding Commitments
According to the financial statements, the Ministry incurred outstanding
commitments amounting to Shs.35,969,615,635. This practice is contrary to the
commitment control system which requires the Accounting Officer to commit the
Ministry to the extent of funds available. Further, included in the amount is
Shs.20,393,463,394 in respect of UMEME which was not properly supported and
reconciled. As such I was unable to confirm the figure reflected as outstanding
commitment.
I advised the Accounting Officer to ensure that commitments are minimized and
also reconcile the amounts outstanding.
29.2 Un-reconciled domestic arrears paid to Utility companies
A total of Shs.9,642,859,478 was paid to cater for outstanding utility arrears and
bills consumed during the year. However, by the time of writing this report, a
reconciled position in regard to the arrears was not availed. The amount brought
forward, consumed during the year and payable could not be established. I have
408
raised this issue in my report to Parliament before but no action has been taken.
Details of payments are in table below;
Company Amount paid
UMEME 7,266,863,598
National Water and Sewerage Corporation 2,375,995,880
Total 9,642,859,478
Management explained that the Ministry was undertaking a comprehensive
reconciliation exercise with NWSC and UMEME aimed at determining the arrears
position and the exercise was expected to be completed mid April 2014.
I advised management to finalize the exercise to enable establishment of the
Ministry‘s utility arrears position.
29.3 Diversion of funds from the Defence Forces Fund
UPDF Act required the Ministry to open a Defence Forces Fund. This account
accumulates any savings to cater for the welfare of the armed forces under UPDF.
It was noted that out of Shs.1,470,886,674 expended from this account, a sum of
Shs.1,300,000,000 was spent to settle taxes for items of Defence Forces Shop (U)
Ltd. Payment of taxes from this account was outside the purpose for which the
Fund was established. The items of Defence Forces Shop are tax free and
therefore the basis for using funds meant for welfare to settle taxes was not
explained.
I advised management to consult Ministry of Finance regarding the payment of
taxes for Defence Forces shop.
29.4 Unlawful allocation of Land at Upper Mbuya
Sometime back in 2006, Uganda Land Commission unlawfully allocated 4.8
hectares of Ministry of Defence land at upper Mbuya to private individuals who
were issued with land titles, a position the Ministry contested. The Ministry
stopped the private individuals from undertaking any developments on the land.
409
The matter was referred to police for further investigation however a report is yet
to be produced.
Management explained that the IGP‘s report on the investigation is still awaited.
I urged management to make a follow up on this matter.
29.5 Irregularities in procurements
Various procurements undertaken by the Ministry during the year were reviewed
and the particulars and findings are summarized in the table below:
Issue/Supplier Particulars Findings
Un completed works at 2nd
Division headquarters
Tender for Sewage
rehabilitation and repair works
of the water system at 2nd
division headquarters Mbarara
in the financial year 2009/2010
and was paid Shs.574,777,740.
Works are still pending
The commander‘s office
had not yet been
connected to sewage line.
The sewage lagoons had
not been fenced off with
chain links.
Pipes carrying waste from
respective houses end up
pouring waste to the
bushes as the pipes are
not connected to the
lagoon.
The entire sewage system
was not working as some
pipes had not yet been
replaced.
Leaking ceilings at Kabamba
(UMAK) - M/S Cementers ―U‖
Ltd
To construct Kabamba Military
Academy at a cost of Shs.25bn
to be carried out in 2 Phases.
1st phase was to construct the
main building, 8 classrooms,
dormitories, and external
works. By the close of financial
year 2011/12,
Shs.12,091,391,589 had been
paid to the contractor for the
constructions under phase 1.
Some areas of the roof
were however found
leaking damaging of the
ceiling boards, some of
which appear rotten and
are about to collapse.
The contractor poorly
fixed the roof nails in the
iron sheet valleys instead
of fixing them on
corrugations and although
bondex was applied on
the leaking roof, the
problem has persisted.
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Procurement of UPDF Army
Band instruments
Supply of UPDF band
instruments at a contract price
of USD.589,893.66
(Shs.1,474,734,150).
Bids were accepted on
30/04/2013, four months
after the first delivery of
06/10/212.
The contract agreement
was signed on
10/05/2013, seven
months after delivery.
The procurement and
project management file
was not availed for audit.
Management attributed
non adherence of the
PPDA regulations to
urgency due the Golden
Jubilee celebrations.
Delivery of some items in
January, 2013 (three
months after the
celebrations) was not
justifiable.
Irregular procurement of
furniture
Paid Shs.314,373,800 for supply
of assorted furniture to UMAK-
Kabamba.
7 tables and 100 chairs
delivered, however 2
tables and 8 chairs had
broken down before they
were put to use.
Management of UMAK
had refused to use the
supplied furniture sighting
inferior quality.
M/s Cleave and Company
Limited
Supply of assorted clothing
items for Special Forces Group-
(Shs.907,459,750)
Not availed the
procurement file
Emergency supply of tyres
Procurement of tyres worth
Shs.1,190,630,000
Premised on an
instruction by a senior
officer of the Ministry
quoting an authority of a
previous year
Lacked PP Form 20 which
initiates the procurement
process
Assorted tyres delivered
by 20/08/2012 were
worth Shs.951,280,000
leaving tyres worth
Shs.239,350,004 not
delivered.
Procurement was not
subjected to competition
Purchase of motor Toyota Land Cruiser Prados of Total amount incurred
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vehicles for the
Defence Attaches
3000cc diesel engines at a cost
of USD 60,000 each for the
Defence Attachés‘ of Rwanda,
Burundi, Russia and China.
was Shs.684,196,484
inclusive of USD.13,000
for furniture of the China
Attaché‘.
Similar request was made
for the Defence Attaché of
Sudan for the same type
of vehicle at a cost of
USD.38, 000 and not
USD.60, 000 as it was in
the previous case. This
implies that the previous
vehicles were inflated by
USD.22,000.
Vehicles procured were
specified as ―Toyota Land
cruiser Prado‖. This
contravenes Sec.265 of
the PPDA regulations.
The engine capacity of
the vehicles procured of
3,000 cc was 500 cc
higher than the official
capacity of 2,500 meant
for Military Attaches.
Funds were transferred to
individual personal
accounts and not the
Embassy accounts which
is against financial
regulations
Evidence of purchase and
ownership of the vehicles
could not be confirmed.
Management is urged to ensure that all procurements are undertaken in
accordance with the PPDA law and its regulations. The inefficiencies in supplies
and constructions should be made good by the suppliers or recoveries effected.
29.6 Telecom Masts on Defence land
Telecommunication and Radio Companies erected their Masts on Ministry of
Defence land at Kabamba, Kaweweta and National Leadership Institute (NALI) in
Kyankwanzi, however lease agreements between the Ministry and companies were
not provided for verification. There is likelihood that revenue from the masts could
have been utilized at source since it was not disclosed in the Ministry financial
statements. This is not in line with the TAIs that govern NTR.
412
Management stated that the process of formalizing of Masts on MOD/UPDF land is
still ongoing.
I urged management to expedite the process.
29.7 Nugatory expenditure on clearing of contracted goods
Shs.16,745,842 was spent on clearing of goods supplied under various contracts
Documents supporting the payments indicated that goods were to be delivered by
the supplier to Delivery At Place (DAP). Under such agreements, unless it is clearly
stated otherwise in the bid document and in the specific conditions of the contract,
the seller bears responsibility and risks delivering the goods to the named place
and is required to clear the goods. The Ministry instead paid on behalf of the
supplier.
Supplier Items Clearing
Amount (Shs.)
Point of entry DAP
M/s. Alps Int‘l Ground Sheets 6,189,690 Malaba Magamaga
M/s. Alps Int‘l Military Foot wear 5,342,126 Entebbe airport Magamaga
M/s. Alps Int‘l Military Foot wear 5,560,026 Entebbe airport Magamaga
Total 16,745,842
The Ministry promised to recover the payment. The action is awaited.
30.0 OFFICE OF THE PRESIDENT
30.1 Outstanding commitments
Office of the President had arrears of Shs.20,025,531,752 at the beginning of
financial year 2012/2013 of which Shs.12,735,806,000 was paid leaving a balance
of Shs.7,289,725,752. The balance comprised of Shs.4,289,000,754 as employee
costs and Shs.3,000,414,998 for goods and services.
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The Accounting Officer explained that outstanding commitments were a result of
insufficient funding of the Security Agencies and that the resultant arrears have
been brought to the attention of Parliament and the Ministry of Finance.
I advised management to follow up the requests made to ensure that resources
are availed to settle all the outstanding arrears.
30.2 Direct Procurement of theatrical performances – Shs.708,000,000
A contract was signed on 23/11/2012 between a company and the Office of the
President for the provision of theatrical performances at the Independence Golden
Jubilee Celebrations at a contract price of Shs.807, 000,000. Contrary to Sec.80 of
the PPDA Act the direct method of procurement was used instead of the open
bidding method, and no waiver was obtained from the PPDA as provided for in
Sec.79(3) of the Act and Sec. 330. Besides, the procurement was made before
signing a contract. Whereas the procurement was concluded on 09/10/2012, the
contract was signed 44 days after receiving the services.
Management explained that the use of the direct method of procurement was
occasioned by the late release of funds for the celebrations which translated to
late commencement of the procurement process. Further, delays in approval of
the contract by the Solicitor General led to late conclusion of the contract.
I explained to management that such a practice was irregular and exposes the
Office to a risk of unfair prices, since there is no competition in the procurement
process. I advised that procurement procedures should always be adhered to.
30.3 Contracts performed before signing contract agreements
Contrary to Section 76(3) of the PPDA Act 2003 that provides for an award to be
confirmed in writing by a written contract signed by both the provider and the
procuring and disposing entity, it was noted that the Office undertook various
procurements amounting to Shs.3,306,561,149 before written contracts binding
the Office and service providers were signed. I explained to management that the
414
performances of such contracts were illegal and a risk of loss of funds in case the
service providers failed to perform their obligations.
I advised management to ensure that contracts are always signed before the
procurements are performed.
30.4 Doubtful accountability of PAF fuel refund-Shs.4,549,000
A payment of Shs.7,155,000 was made as a refund of PAF funds from February to
June, 2013. The accountability for fuel worth Shs.4,540,000 presented for audit
from a petroleum company indicated that only one vehicle No. UG 1970C drew
fuel from the station. However, all the receipt serial numbers more or less
chronologically followed one another and the dates on them were not matching
the serial numbers rendering the accountability doubtful.
The Accounting Officer is advised to investigate the transaction with a view to
establishing whether fuel funds were expended for the intended purposes.
30.5 Irregular payment for training abroad
A government officer was paid Shs.12,970,400 to cater for a trip to Korea for
training of foreign leaders from 21st- 30th Nov 2012. According to the invitation
letter, all expenses for travels and the entire stay in Korea would be fully covered.
The amount paid to the officer is recoverable.
The Accounting Officer responded that recovery of the funds was going to be
effected.
The action of the Accounting Officer is awaited.
30.6 Lack of technical pre-motor vehicle repairs assessment reports
Shs.343,590,383 was spent on repairs and maintenance of the entity motor
vehicles without technical pre-inspection reports to determine the extent of the
defects on the vehicle and thus the repairs required. Lack of technical pre-repair
inspection reports exposes the Office to risks of loss of funds through over
invoicing by the garages.
415
In response, the Accounting Officer explained that motor vehicle repairs
requisitions and quotations were analyzed by the transport officer who lacked the
technical capacity however the matter will be pursued with Ministry of Works and
Transport.
Management action is awaited.
30.7 Lack of land titles for RDCs offices
Seven Resident District Commissioner‘s (RDCs) offices located at Lamwo, Otuke,
Kamuli, Amuru, Abim, Buvuma and Buhweju Districts were constructed at a cost of
Shs.4,116,137,221. However, the Office has not secured land titles on which the
offices were constructed. I informed management about the irregularity and the
risk of losing funds on capital projects with no evidence of ownership.
The Accounting Officer explained that the processing of the land title for Buhweju
district is being handled by ULC while the rest are in process of being surveyed.
Management is urged to expedite the process.
30.8 Budget performance
A review of the budget performance for the year 2012/13 revealed that some
targets were not achieved despite release of funds for the various functions and
related activities. Whereas some of the activities were not broken down into
measurable indicators, others were. Details in the table below;
416
Function Planned output Performance
Indicators/Audit Remarks
Achievements
160101;
Monitoring the performance of
government policies,
programmes and
projects
Implementation and
performance of government project/programs monitored
in sampled Districts under
PAF,
SACCOs
NAADS,
Education
Roads
Health
The activities were
not broken down into measurable outputs,
e.g. how many districts under PAF,
how many SACCOs,
etc. This made the audit of budget
performance difficult.
160102;
Economic policy implementation
Inspections conducted to
track progress on implementation of 3
government investment projects
Markets under MATIP
project, Youth Job Stimulus
Project
Development of Mines
The activities were
not broken down into measurable outputs,
e.g. how many markets under MATIP
were inspected, etc.
This made the audit of budget performance
difficult.
160103;
Monitoring implementation of
Manifesto Commitments
Reports from Ministries
analysed and monitoring visits conducted in districts.
Intend to produce 04 quarterly reports and 01
annual report.
Manifesto documentary up
dated
The activities were
not broken down into measurable outputs,
e.g. how many Ministries monitored
and analysed, etc. This made the audit of
budget performance
difficult.
160104;
Economic
research and information
Research conducted on the
effectiveness of 2 existing
policies for 2 key sectors of Infrastructure
Road Maintenance plan &
Road expenditure Program and
Micro/SMES-Operational
framework of SACCOs
01 Research report
on infrastructure
01 Research report
on SACCOS
00
01
160201;
Cabinet meetings
supported
72 number of Agenda and
Minutes of cabinet
meeting issued
12 number of Agenda and
Minutes of PSs meetings issues.
250 Draft Cabinet
Submissions reviewed for adequacy
72 Agendas and
minutes expected
12 Agendas and
minutes expected
250 Draft Cabinet
Submissions expected to be
reviewed
50
11
166
417
4,800 Extracts of Cabinet
Decisions issued to
Ministers and PSs
04 Cabinet Committee
meetings facilitated
01 PSs Annual Retreat
organized
4,800 Extracts of
Cabinet Decisions to
be issued to Ministers and PSs
04 Cabinet
Committee meetings to be facilitated
01 PSs Annual
Retreat to be
organized
4,680
01
00
160203;
Capacity for policy formation
strengthened
Comprehensive Long Term
Policy Capacity Development Plan of Public Service
Developed
01 01
160352; Population
mobilization
Sensitization and awareness campaign programmes
conducted in all districts. Government programmes
monitored.
National Patriotism
Secretariat offices staffed and equipped.
Patriotism clubs
coordinated country wide
The activities were not broken down into
measurable outputs, e.g. how many
patriotism clubs coordinated
countrywide, etc. This
made the audit of budget performance
difficult.
31.0 STATE HOUSE
31.1 Unrealistic Budget for State House
State House approved budget for the year was Shs.63.2bn which was later
adjusted through supplementary funding of Shs.140.2bn bringing the revised
approved budget to Shs.203.5bn. These supplementary funds were 221% of the
original budget implying that the original budget was not realistic in view of State
House operations. Further, it was noted that over the years that State House has
continued to receive supplementary budgets annually exceeding its original
budgets. This impairs the credibility of the budget.
The Accounting Officer explained that they endeavor to present a more realistic
budget but have to work within the ceiling set by the Ministry of Finance, Planning
& Economic Development. I advised management to continue liaising with the
Ministry of Finance to ensure that the ceiling set reflects the operations of the
entity.
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AGRICULTURE SECTOR
32.0 MINISTRY OF AGRICULTURE, ANIMAL INDUSTRY AND
FISHERIES
32.1 Mischarge of expenditure-Shs.293,224,592
Parliament appropriates funds in accordance with the needs of the country and
this appropriation is implemented through the budget in which funds are tagged to
particular activities and outputs using account codes and MTEF codes. During the
year, expenditures totalling to Shs.293,224,592 were wrongly charged on budget
lines to fund activities that were not meant to be paid from the affected budget
lines. This practice renders the budgeting process redundant and is not in line with
the intentions of the appropriating authority. The practice leads to
misrepresentation of expenditure reported in the financial statements.
Management explained that this was linked to restrictive distribution of funds to
the various item lines on the Chart of Accounts during the budgeting process.
I advised management to consult the Accountant General to streamline the budget
process and ensure authority is always thought before any reallocations are made.
32.2 Budget Performance
It was noted that some key planned activities were not fully executed despite
receiving the funding. As at 30th June, 2013 funds worth Shs.20,707,058,483
remained un utilized iincluding the gross tax balance of Shs.118,152,255. The
under absorption capacity of 35% translated into underperformance for the year.
Service delivery was therefore hamphered. The ministry objective may not have
been met as anticipated.Details in the table below:
419
Planned Activities Expected Outputs Actual outputs Deviation Management Response
Output 010103 Crop production technology promotion; Up to 1.76bn was provided under project 1194
Purchase of 20 tractors for distribution as grants to farmer groups engaged in the production of strategic commodities under the DSIP i.e fruit farmers, maize producers, beans producers,
None 20 Tractors not distributed.
The Solicitor General cleared the contract on 30th May 2013 and the contract was signed on 7th June 2013 hence not possible to procure the tractors before the end of the Financial Year.
Output 010106 Increased value addition in the sector. 1.44bn was provided
under project 0104 Budget 0.343bn
Inspection of 20,000 metric tons of cocoa for quality.
A total of 19,430 metric tons of cocoa beans were inspected. Spent:
Shs.0.290bn (84.6%)
570 metric tons not inspected.
It is true that 570 MTs (2.85%) was not inspected. Since 20,000MTs was a projection.
Output 010102 Improved access for water for livestock Budget .110bn Spent .080bn (73%)
Construct 50 valley tanks in the cattle corridor districts with equipment from the Japanese Government.
Sites identified for construction of valley tanks. 1st consignment of Japanese heavy earth moving equipment received. Reported that construction started in Nakasongola, Lwengo and Namalele however progress not reported.
No valley tank yet constructed.
The Tsunam in Japan affected the manufacturing of the equipment and the expected date of delivery delayed. The Government of Japan handed over the equipment to GOU on 27th May 2013 thus preparatory activities delayed and the actual deployment of equipment to the 1st districts (Lwengo, Luwero and Nakasongola was in July 2013.
Output 010204 Promotion of sustainable fisheries. Budget 2.9bn Spent 2.4bn (83%)
Increased fish production from 500,000 MT to 620,000MT from both captures and cultures Establish 4000 aquaculture sites
Production was 507,639MT that is below projection. 800 aquaculture enterprises (20%)
Short fall of 112,361 fish production registered. 3,200 aquaculture sites not established (80%) underperformance.
Fish production was 507,639 MT (407,639 metric tons from capture fisheries and 100,000 from aquaculture) which is 81.8% performance. The short fall of 112,361 is attributed to environmental factors. The underperformance
related to limited PPP arrangements in the aquaculture sector to cover areas of fish seed, feed and management.
Output 010205 Vector and disease control measures
Procure: 250,000 doses of FMD, 100,000 doses of CBPP,
116,000 doses procured.
374,000 doses not procured. Though 90.8%
Explanation of the deviation not given.
420
I advised management to enforce monitoring of its operations to ensure that set
targets are always achieved.
Budget 4.780bn Spent 4.338bn (90.8%)
120,000 doses of rabies vaccine, 20,000 doses of ECF vaccine.
of funds were spent.
Output 010252 Animal breeding and Genetic development. Budget 2.5bn Spent 2.5bn (100%)
83,000 litres of liquid nitrogen produced,72,000 dozens of semen produced. 15,000 breeding produced and sold
14,277 litres of liquid nitrogen produced, 28,650 doses of semen produced and distributed for breeding. 6,694 breeding cattle produced and sold.
68,923 litres of liquid nitrogen not produced, 43,350 doses of semen not produced.8,306 breeding cattle not produced.
Explanation of the deviation not given.
Output 010280 Livestock Infrastructure
Construction. Budgeted .600bn Spent 0.142bn (23.6%)
Rehabilitation of offices and fencing of Animal holding grounds at
boarder posts of Katuna, Malaba, Busia and Mpondwe.
No work was done.
Although 23.6% of the funds was spent, no
activity took place.
A feasibility study was undertaken to know the exact sites, installations
and current functional status of the 4 Ports and their animal holding grounds that are gazetted as per the instrument. The survey was conducted using funding from the supervision spending item Output 010280 and was accounted for. The procurement process was completed. SG gave clearance on 18th June 2013 just at the closure of the Financial Year. Survey results and procurement achievements are to be applied in 2013/14.
Output 10105 Food Nutrition and Security Budget 0.733bn Spent 0.661bn (90%)
Amendments to the Food and Nutrition bill submitted to OPM, stake holder consultations, 200 local government staff trained, 20 Districts assessed
120 Local government staff trained. 18 Districts assessed
130 Local government staff not trained. 2 Districts not assessed.
The budget estimate for the activities was Shs. 0.733bn. However, Shs.0.661bn was released.
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32.3 Procurement Issues
(a) Lack of contract implementation plan-Shs.281,128,146
Sect. 258(3) of the PPDA Act states that upon receipt of the contract, a contract
manager shall prepare a contract implementation plan, using PP Form 60 in the 9th
Schedule, and forward a copy to the procurement and disposal unit for monitoring
purposes. However, it was noted that contracts of value
Shs.281,128,146 lacked contract implementation plans. In the circumstances, I
was therefore unable to establish whether the monitoring of implementation of the
contracts in question was done in accordance with the PPDA regulations.
Management explained that lack of contract implementation plans during the year
was due to inadequate capacity which has so far been addressed. I advised
management to always ensure that a contract implementation plan is prepared for
every contract.
(b) Un executed procurements-Shs.2,525,352,083
Procurements worth Shs.2,525,352,083 were not undertaken at all. PDU did not
have in place a monitoring system to track the procurement implementation
process and as a result, the Ministry returned un utilized funds worth
Shs.6,546,986,464 to the consolidated fund. This is not in line with the intentions
for which the activities were planned and funds released.
Management explained that all the stated procurements were processed up to
some level but not concluded. Details in table below:
Procurement Ref Details Amount (UGX) Management Response
00092/22/10/1 Feasibility Studies on irrigation potential in Kween and Butambala Districts.
250,000,000 The contract was signed in May 2013 and by the end of the FYR the provider had completed the Inception report and the signed agreement is in place as cleared by the SG.
00082/5/10/012 Supply of tractors and implements for demonstration and kick start mechanized
500,000,000 By the end of the FYR, the contract was signed but delivery not yet effected.
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Agriculture labour saving technologies
00102/19/11/12 Feasibility studies on environmental area social impact on Kiige Citrus irrigation scheme
500,000,000 The procurement was delayed due to the lengthy funder‘s procedures and reviews carried out but procurement currently with an evaluation report pending funder‘s review.
00103/19/11/12 Complimentary design for rehabilitation of Olweny irrigation scheme
250,000,000 There was a change in the funding arrangement from AFD to GOU bridging finance (FIEFOC) which led to the transfer of this procurement to Ministry of Water.
00106/13/12/12 Procurement of services to design and install animal quarantine facilities at ports of entry
250,000,000 Procurement was processed and SG clearance was received but contract could not be signed due to closure of Financial Year.
134/18/1/13 Cadastral survey installation of pellars /beacons in Kasese resettled land
320,000,000 Procurement was processed and SG clearance was received. This has been budgeted for this FYR 13/2014 and it is being implemented.
189/3/4/13 Consultancy services for development of MAAIF livestock identification and traceability.
277,452,083 The procurement was cancelled due to failed response.
196/11/4/13 Supply of Motor Cycles , backup laptops for FMD disaster preparedness at TZ boarders
177,900,000 The procurement was processed up to clearance by SG but contract could not be signed due to closure of Financial Year. Currently a tracking system has been put in place to address delaying initiation.
Total 2,525,352,083
I advised management put in place a mechanism to ensure that all the planned
procurements are carried out in the planned period.
(c) Direct Procurement of 44 Cross Alpine Goats for PPR Vaccine Research Project-Arising from PPDA reviews.
It was noted that the entity engaged a local company to supply 44 pure cross
Alpine goats for PPR vaccine research project at a price of Shs.15,312,000 through
a direct procurement method. A review of the PPDA report revealed the following
anomalies:
The procurement was direct but no clear justification was found on file.
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There was no evidence to prove that this supply was budgeted for by the
Ministry and duly included in the procurement plan.
The provider was not on the entity‘s list of pre-qualified suppliers.
The evaluation criteria on technical issues were evaluated without evidence of
proof that the requirements were fulfilled hence a sign of subjectivity.
No evidence of supply was found on file.
Management explained that the experiment was time bound since it had to be
undertaken in a very short time frame to address an epidemic of goat and sheep –
Peste des petites ruminants (PPR). Direct procurement was used in order to
address an emergency due to wide spread of PPR outbreak.
I advised management to ensure that proper procurement methods are applied in
accordance with the regulations.
32.4 Grounded motor vehicles
A review of the list of motor vehicles availed by management revealed that up to
52 motor vehicles were currently grounded and parked in various premises of the
Ministry as well as several garages. I noted that some vehicles were taken to
garages either due to accidents, engine knocks and other mechanical breakdowns
without carrying out pre-repair assessments and on several occasions; the vehicles
were even taken to the garages without LPOs. A visit to 8 garages where some of
the grounded vehicles had been parked on average 2 years revealed that in some
cases where the vehicles were delivered to garages after accidents, there were no
accident reports. It was observed that most of the vehicles appeared to have been
vandalized and continue to deteriorate due to long stay in these garages and there
is a possibility that some could get stolen in those garages.
32.5 Expired chemicals
A review of the entity stores and the system of issuing of chemicals during the
year revealed the following anomalies:
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a) It was observed that 3000ltrs of Cypermetherin 5% Sicorin EC worth
Shs.54,000,000 was received in the stores on 22nd December, 2012 expired in
September 2013. During the entire financial year; 170ltrs
worth Shs.3,060,000 was issued and by the time of audit (Nov.2013) there was a
balance of 2830ltrs worth Shs.50,940,000 that had expired but were still being
issued as indicated in the table below.
Date of
Issue
Issue Vr Receipient(District) Qty Value
11/11/2003 369 Kasese 300 5,400,000
14/11/2013 234 Kween 200 3,600,000
15/11/2013 235 Masindi 200 3,600,000
19/11/2013 236 Soroti 100 1,800,000
19/11/2013 239 Bukedea 200 3,600,000
20/11/2013 223 Bukwo 200 3,600,000
22/11/2013 224 Kapchorwa 250 4,500,000
25/11/2013 225 Serere 200 3,600,000
Total 29,700,000
b) It was further noted that 9700ltrs of Lithoate worth Shs.139,360,000 was
received in the store as per the schedule below:
Date Quantity
28th Jun-2011 1000ltrs
18th Jun -2012 3000ltrs
6thApri-2012 1500ltrs
22nd Jun-2012 2000ltrs
30th Jun -2012 2200ltrs
During the financial year, only 975litres worth Shs.20,280,000 were issued and a
balance of 5725 litres worth Shs.119,080,000 had expired yet they were still being
issued indicated in the table below.
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Expired stock of Lithoate issued.
Date of
Issue
Issue Vr Recipient Quantity(ltrs) Value (Rate
20,800)
11/11/2013 369 Kasese 509 10,587,200
14/11/2013 234 Kween 250 5,200,000
15/11/2013 235 Masindi 400 8,320,000
19/11/2013 239 Bukedea 350 7,280,000
20/11/2013 223 Bukwo 250 5,200,000
22/11/2013 224 Kapchorwa 300 6,240,000
Total 42,827,000
The procurement of the chemicals appears not to have been based on demand,
which could have led to wastage of funds in expired chemicals. It is likely that the
costs will rise duet to destruction costs that involves unquantifiable and hidden
environmental costs on the crops, animals and human health.
Management explained that the chemicals in question were still potent and
effective despite expiry. They further explained that the formulation of an
agricultural chemical does not completely collapse at the end of the period
indicated as the expiry date. The expiry date indicates when the potency of the
chemical just starts to decline and that the decline is slow and gradual such that
the chemical remains potent and effective for a period of time, even up to two (2)
years indicating that all the chemicals were still 100% potent.
I advised management to plan effectively and avoid instances of expired drugs.
32.6 Unutilised science equipment
It was noted that the Ministry procured Scientific Equipment from M/S Labx
Scientific Systems worth Shs.189,549,919 which was delivered to Namalere
Diagnostic Laboratory way back in 2012. From the review, I noted the following
anomalies:
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The equipment was delivered on 7th November, 2012 but received in stores
after one year (12th November, 2013).
The procurement file was not availed for audit.
A verification carried out in December, 2013 at Namalere Diagnostic
Laboratory established that the equipment has not been installed yet.
32.7 Unutilised science equipment
It was noted that the Ministry procured Scientific Equipment from M/S Labx
Scientific Systems worth Shs.189,549,919 which was delivered to Namalere
Diagnostic Laboratory way back in the year 2012. From the review, I noted the
following anomalies:
The equipment was delivered on 7th November, 2012 but received in stores
after one year on 12th November, 2013.
The procurement file was not availed for audit.
A verification carried out in December, 2013 at Namalere Diagnostic
Laboratory established that the equipment has not been installed yet.
It was also reported that the laboratory lacked power and water for a period of
two years. I explained to management that there appears to have been poor
planning and un-coordinated approach in undertaking the procurement of the
science equipment leading to a likely financial loss. There is a risk that the
equipment is likely to go obsolete.
In response, management explained that the equipment is used for pesticide
formulation and residue analysis as part of assurance of safety of food to the
consumer and the potency of pesticides. Installation and test-running of the high
performance chromatography equipment was part of the contract and that the
equipment is very sensitive such that it has to be installed once on the specific
location where it will always be used. Management further indicated that at the
time of Audit, a heavy storm caused damage to the electric system and so the
laboratory lacked power to test run the equipment and hence the installation of
the equipment was stayed.
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I advised management to ensure reconnection of power and water to the
laboratory to enable utilization of the equipment.
32.8 Poor state of stores
As part of the audit, inspection of MAAIF Wandegeya stores was carried out on the
2nd December, 2013 and the following anomalies noted:
Cap 1 Para 112 of the TAI 2003 and part 11 of the Standing orders on Public
Stores management requires every Government store to be fitted with fire
appliances and equipment for protection and that such must be inspected at
least every 6 months. This was not done.
The asbestos roof and metallic wall sheets are worn out and the roof
was leaking due to rusting/peeling.
Due to lack of storage racks and holders; arrangement of items was so
disorganized and as a result; several materials such as publications, old
furniture, computers, old tyres and expired chemicals were mixed up and
littered in the stores.
Combustible/inflammable items such as chemicals were mixed up with items
like stationery, old furniture and old tyres posing a high risk of fire outbreak.
Most of the storage rooms were littered with dead stock some of which were
dumped in the stores most especially the Plan for Modernization of Agriculture
(PMA) Secretariat that dumped stock piles of printed materials such as books,
brochures, banners, old computers, old furniture and others without any
supporting documents.
Management explained that they undertook to install the facilities and to carry out
phased renovation of the stores. The phased renovation shall include installation
of vital facilities while obsolete and unserviceable materials will be boarded off.
Furthermore, inadequacy of stores infrastructure was attributed to inadequate
funding under maintenance-civil.
I advised management to improve on stores management and ensure expired
chemicals are stored separately from the rest of the stocks.
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32.9 Non Tax Revenue performance
(a) Decline in Nontax Revenue performance
It was noted that NTR performance for the year declined by close to 53% (shs
558,622,892) from previous financial year‘s Shs.1,061,579,332 to Shs.502,956,440
for the current year under review.
In response management explained that NTR in fisheries is majorly collected from
fisheries licensing, regulation and enforcement activities. In FY 2011/12 funds
were allocated for fisheries licensing and policing activities however in FY 2012/13
there was no budgetary allocation for these activities hence a decline in NTR
Collection.
I have advised management to enforce collection measures to avoid loss of NTR.
(b) Un disclosed NTR projections
The Ministry collects revenue from various sources however during the review, it
was noted that the information was not disclosed/presented in the statistical data
for NTR projections such as:
a) The schedule of revenue collection centres.
b) List of revenue collectors‘ authorization as per PFA Reg. 45 (1).
c) The Ministry realizes most NTR from issue of various licenses under fisheries
and Rule No 24 (1) of the Fishing rule Statutory Instruments 33 of 2010 states
that the Chief Fisheries Officer or an authorized licensing officer publishes a list
of all licenses and permits issued under these rules in each year, including the
names and addresses of all licensees. This was not done.
d) The Chief Fisheries Officer or an authorized licensing officer shall publish an
updated list of licenses and permits by 31st day of July each year. The Fishing
Rules were reviewed and I noted that out of 679 landing sites enumerated in
the schedule, only 13 (1.9%) indicated the numbers of boats. The total
number of boats recorded in the 13 landing sites was 614 but the number of
boats in all landing sites was not disclosed. The 614 boats currently stated as
revenue licensing base represent only 2% of the potential revenue.
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The Ministry seems to lack capacity to monitor and enforce compliance in the
various lakes where NTR is collected. As a result, the revenue may have been
under estimated by over 98% since licensing is partially based on the number of
boats/fishing vessels.
In their response, management acknowledged that all licenses and permits issued
under Rule No. 21 (1) of the fishing rules Statutory Instrument (SI) 33 of 2010
was not published and indicated it was mainly due to the fact that there is a new
licensing strategy and the database was being organised and updated. It was
indicated that the exact number of boats for the revenue base by landing sites
during the year was not known but improvements have been put in place and the
current data capture system is able to capture the number of boats at landing sites
hence list of boats per landing site will be updated. The ministry further indicated
it has expanded its structure and hence capacity and an Agricultural Police is being
established to enhance capacity to monitor and enforce compliance.
I await the outcome of the above commitment.
32.10 Valley dams
(a) Payments on valley dams construction-Shs.1,537,446,872
The Ministry contracted a construction company to construct valley dams in the
districts of Isingiro, Lyantonde, Rakai, Mubende and Kiboga at a cost of
US$.8,094,704.56 and the work was completed in 2009. During the year under
review; I noted that Shs.1,537,446,872 was paid for the construction/rehabilitation
of valley dams namely; Rwenjuba in Isingiro district, Mukulu in Lyatonde district,
and Kibanda dam in Rakai district. In the previous year‘s report, I pointed out that
the Ministry had paid interest on the delayed payment of Shs. 2,159,517,353. In
the current year, I noted that the amount paid for the year was not broken down
to indicate the payments in relation to the principal and interest respectively. In
the circumstances, I could not establish how the amounts paid were determined
and how much remained outstanding. There is a risk that Government could lose
funds if the Ministry does not reconcile the above position to avoid the endless
claims by the contractor.
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Management explained the issue of endless claims would not arise as the
outstanding amount of this account was now zero. During verification, this position
could not be confirmed as all the supporting documentation was not availed in
time.
I advised management to ensure the above position is reconciled.
32.11 Inspection of the valley dams
As part of audit, inspection of a sample of valley dams was carried out at the
following sites: Rwenjumba Dam-Isingiro district, Mukukulu dam – Lyantonde
district, Kibanda Valley dam - Rakai district and Kasejere Valley dam-Kyankwanzi
district. The following were noted.
It was observed that the papyrus grass had grown in the middle of the dam at
Rwenjumba dam-Isingiro district which contributes to the reduction of water in
the dam. The gate that was originally installed to control movement of both
cattle keepers and animals was no longer in place and as a result two (2) cows
were reported to have drowned in the dam.
The dam at Mukukulu dam – Lyantonde district was being used as a fishing
ground as evidenced by the fishing nets and the traps found in the dam and all
water taps for troughs and those for the dams to the troughs had been stolen.
The location of the dam at Kibanda Valley dam - Rakai district was originally a
swamp and the contractor just removed the grass and fenced it off. The whole
dam is covered by papyrus grass and a big section was not fenced hence
making it easy for people and their animals to enter freely.
The water in the dam at Kasejere Valley dam-Kyankwanzi district had dried up;
it could rightly be observed that the dam‘s source of water was poorly
identified hence persistent low water levels.
All the dams had many inlets and outlets around and as a result, animals were
found grazing within the dams instead of drinking from the troughs that were
constructed outside the dams.
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It was further noted that the pipes leading to the troughs broke down causing
water to divert from the troughs hence reducing the volume of the flow to the
troughs.
It was observed that boreholes constructed on the dams to provide water to
people had broken down and the toilets that were constructed were found to
be out of use due to poor maintenance and grass had over grown all around.
In response, management explained that during project implementation, it was a
requirement for the user committee to form user associations and elect a user
committee to manage the dams which in effect is not a direct responsibility of the
ministry. These committees were trained by the project to ensure that once the
dams are handed over, they are properly maintained.
From the explanations given by management I noted that this is not a primary
responsibility of MAAIF but a sustainability issue as the dams are owned by the
communities. I noted with concern that there was a management challenge on
sustainability of these dams since there is no clear strategy in place on how to
make the valley dams serve their purpose. If these valley dams are not well
maintained, it will have been a serious loss to Government that put in a significant
amount of resources.
I have advised management to liaise with appropriate authorities to allow
sustainability of the valley dams if the intended objectives are to be achieved.
32.12 Bukalasa Agricultural College
(a) Vacant posts
It was noted that the College had 53 vacant posts and these relate to critical areas
in the operations of the college. Vacant posts hinder the smooth running of the
operations of the college.
Management explained that the ministry sought clearance to fill the vacancies and
that the ministry of Public Service has granted clearance for 11 critical posts which
include: the Principal, Senior Lecturer (2), Lecturer (4), Bursar Librarian, Medical
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Assistant/Registered nurse and Assistant Registrar. The other staff will be cleared
on a phased approach pending availability of funds.
(b) Outstanding balances in school fees-Shs.122,591,000
The Universities and Other Tertiary Institutions Act, 2001 gives all public
Universities, Colleges and any other institutions under the Act to devise alternative
sources of generating revenue to supplement the subventions/grants from
Treasury. As at the time of reporting (February 2014), a total of shs.122,591,000
was still outstanding in fees. I explained to management that this affects
implementation of the college activities.
Management explained that measures to ensure recovery of outstanding fees have
been institutes including denying students‘ meal cards and access to examination.
I urged management to collect the pending fees.
(c) Un formalized staff appointments
A review of employee personal records especially those on contract revealed that a
number of staff were recruited on contract arrangement but their appointment had
not been formalized/regularized for a number of years by the Council as required
by the Act.
I explained to management that failure to formalize the appointments result into
remuneration of staff that are not known to the college (ghost workers) or
employment of unqualified staff that would affect the performance of the college.
Management explained that the governing council considered the matter of
formalising staff and recommended interviews subject to complete performance
appraisal reports.
Management‘s action is awaited on this matter.
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(d) Un approved supplementary admission list
The Universities and Other Tertiary Institutions Act, 2001 gives the College powers
to admit private students on private programs through the Admissions Committee
appointed and approved by the council. However, it was noted that despite the
council approving the original admission list, the head admissions board who is
also the Academic Registrar went ahead to include a supplementary list that was
not approved by the Council as required by the Act.
I further noted that even the original Government list was supplemented by
another list not approved by the Ministry of Education. I explained to management
that none approval of supplementary admissions is not only against the law but
could lead to irregular admissions of students.
In response, management explained that the college academic board approved
the admissions in accordance with the universities and other tertiary institutions
ACT sec 82 and as per the Board meeting held on 26th July 2012. I advised
management to always admit students following the law.
32.13 Fisheries Training Institute – Entebbe
(a) Non formalization of staff appointments
A review of employee personal records revealed that a number of staffs were
recruited on contract arrangement but their appointment has not been
formalized/regularized for a number of years by management. I explained to
management that failure to formalize and appoint staff officially may lead to
paying of ghost workers. This may also lead to employment of unqualified staff
once the jobs are not competed for.
In response, management explained that the MoPS has cleared 5 critical posts and
MAAIF will be submitting their names to PSC for regularization of the
appointments.
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I await the outcome of the above action.
(b) Un funded capital development budget-Shs.1,380,000,000
It was noted that the institute had a capital development budget of
Shs.1,380,000,000 for the year which was never funded. As a result, the institute
had many capital development projects which were not implemented during the
year as indicated below:
Unimplemented activities hamper service delivery and the appropriating authority
objectives may not be met.
No. Item Qty. Total
1 Students training/Outboard engines
(15 HP, Yamaha)
02 (10,000,000=)
@)
20,000,000=
2 Swimming pool for training students 01 350,000,000=
4 Double cabin pick-up (official) 01 80,000,000=
5 VIP Latrines for students (5 stances) 01 10,000,000=
7 Equipping wet laboratory Lump sum 300,000,000=
8 Renovating the processing Lab and
Installation of the new machinery
and the cold rooms
01 200,000,000=
9 Fish cages and accessories 04 15,000,000=
10 Incinerator 5,000,000=
11 V.I.P. Latrines 02 25,000,000=
12 Plumbing and Water Pump for (AQ) 50,000,000=
13 Hatchery Construction. 45,000,000=
14 Institute bus 01 280,000,000
Total 1,380,000,000
I advised management to take up the matter with the Ministry and appropriate
authorities for immediate attention.
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Management explained that the budget estimates on an annuals basis, both
recurrent and capital expenditures are made in order to achieve long term and
short-term institute goals though the budget for the year was not approved.
I advised management to take up the matter with the Ministry and appropriate
authorities for immediate attention.
(c) Vacant posts
During the year under review; it was noted that the Institute had 18 vacant posts
including the Deputy Principal, Secretary, Bursar, Assistant Bursar, lecturers and
other support staff. Some of the vacant posts relate to critical areas in the
operations of the institute like the Bursar and the Deputy Principal thus leaving
them vacant affects the operations of the institute.
Management explained that MAAIF took up the matter with MoPS which has
approved filling of 5 critical posts which including: 1 Senior Lecturer, 4 Lecturers
and 1 Bursar.
I advised management to pursue the matter further and have all the positions
filled.
32.14 Institute land issues
(a) Land encroachment-rocky peninsular
It was noted that the Institute has been using a rocky piece of land of
approximately 2 acres located behind the boy‘s hostel. The land has been used by
the school as students‘ observation point for navigation, training in cage farming,
and a breeding ground for fish since 1968. During the review; I noted that the
land is being claimed by M/s Masindi Hotels who recently acquired a title and plans
are under way to have a hotel constructed there. It was noted that this will not
only deny the school authorities to train students but it will also obstruct students
reading environment.
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Management explained that the matter had been taken up with the appropriate
authorities at Wakiso District Land Board, Entebbe Municipal Council, Ministry of
Lands and Uganda Land Commission.
The outcome is awaited
(b) Untitled land – Donation from Entebbe Municipal Council
It was noted that the Institute was allocated a wet land of approximately 5 acres
by Entebbe Municipal Council near the old Airport on Buku Road for aquaculture
fish farming in 2005. However, the land has no title which exposes it to
encroachment by private developers and makes it difficult for the institute to use it
for the purposes originally intended for.
Management explained that the matter is being followed up with Wakiso Land
Board.
I urged management to ensure that the efforts to acquire the land title are
continued.
32.15 Abandoned facility at Namalere
The facility has approximately 90 rooms for office and laboratory usage and well
stocked with new first class furniture. Physical inspection of the
Phytosanitory Laboratory at Namalere revealed the following anomalies:
There was a lot of unauthorized tilling of land at the facility by unknown
people.
The perimeter fence was damaged on the northern side which makes the place
susceptible to vandalism.
It was noted that some of the new items like furniture, freezers and
microscopes were not engraved which makes them vulnerable to theft.
I noted that the facility is given little support as evidenced by lack of basic supplies
like the basic apparatus for cleaning such as basins and brushes. Similarly the
compound caretaker was only using hand slashers for a compound of about 3
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acres hence the over grown lawns. There is a risk that the facility will continue
deteriorating due to neglect and hence no value for money will be realized from
such an investment. The act of neglect could lead to wasteful expenditure on this
investment.
Management explained that the facility is being used and efforts will be taken to
fence the facility and engrave the assets.
The management action is awaited.
32.16 CONSTRUCTION OF FISH LANDING CENTERS UNDER THE FISHERIES
DEVELOPMENT PROJECT-MINSTRY OF AGRICULTURE – SPECIAL AUDIT
A total of Four Fish landing centres namely Lwampanga, Butiaba, Bukungu and
Kiyindi under the Fisheries Development Project were selected for the audit. The
construction works were originally contracted to M/s Dembe – Liberty JV under Lot
1 who were terminated and the works completed by M/s Spencon Services Ltd
through an addendum to their main contract for construction of other landing sites
under Lot 2. The works were funded by the African Development Bank. The key
audit findings arising from documentation review, field inspection, quality tests
and measurement for works executed are summarised below.
I. Lack of Procurement Documents
Procurement documents for the works and consultancy contracts were not availed
for audit. It was therefore not possible to conclude as to whether the
procurement processes were conducted in accordance with the Public
Procurement and Disposal of Public Assets Act.
Management explained that PPDA guidelines were followed in the procurement of
the contract and the solicitation documents were duly approved by the Contracts
Committee, but the procurement documents were subsequently picked from PDU
by CID for investigations following the termination of the contractor for forging a
performance guarantee.
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The Accounting Officer should in future undertake proper due diligence on
contractors before they are engaged to avoid instances of non compliance with
procurement process; it is further recommended that this contractor be forwarded
to PPDA for Action.
II. Financial loss of Shs.2,060,686,142 due to Laxity in the
Procurement and Contract Management
It was observed that the works audited were originally contracted to Dembe -
Liberty Joint Venture on 11th December 2007. However two years after the
guarantees were submitted in the month of September 2009; it was discovered
that Dembe – Liberty Joint Venture had submitted forged advance payment and
performance guarantees; consequently the contract was terminated.
The Bank guarantee submitted by Dembe –Liberty JV was forged at the time its
validity was due to expire, and the contractor was requested to have it extended
but failed.
On 5th July 2010 Spencon services were procured to complete the works through
an addendum to the contract. However, an additional Shs.2,060,686,142 was
incurred because the rates of Spencon were higher than the rates of the original
contractor. In addition some works were eliminated to accommodate the
additional cost implying that some design objectives were not achieved. This cost
could have been avoided if due diligence was ensured at the time the bid
securities were submitted.
I advised that due diligence be carried out on future procurements by the Ministry
to assess the competence, capacity and credibility of the Contractor prior to
contract award.
III. Un-charged liquidated damages (Shs 383, 623,809) and Delayed
completion of works
The addendum made to the contract to bring in M/s Spencon Services Ltd was to
have executed the works within 5 months ending on 4th December 2010; However
even with multiple extensions of time the latest being 15th June 2013, none of the
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project facilities had been handed over to the Ministry because of delays in
completing works; this delay should have attracted liquidated damages of
Shs.383,623,809 under the addendum.
It is recommended that the Ministry should adhere to contract conditions for such
works and the uncharged associated liquidated damages on the contracts be
recovered from the contractors since there was no further extension of the
contract beyond June 2013.
Management explained that Dembe-Liberty and Spencon Services requested for
extensions that were granted, by the Project Manager and this is the reason
liquidated damages were not charged on the contracts. I have however explained
to the Accounting Officer that the extensions granted by the project Manager
(Consultant) were undertaken without the approval of the Ministry. The project
manager granted extensions of time to both contractors in the absence of which
liquidated damages worth Shs.1,641,437,730 would have been charged.
It is recommended that time extensions be properly controlled and minimized as
they have cost implications for the Ministry. Project Managers should not grant
time extensions without the approval of the Ministry.
IV. Irregular Payment of Shs.2,265,064,334 (14%)
The contract amount for the original works under Spencon Services Ltd was
Shs16,190,909,620 exclusive of VAT, however the total amount paid to Spencon
Services Ltd was Shs18,455,973,954. It could not be ascertained why an extra
payment of Shs.2,265,064,334 had to be made as the necessary supporting
documentation and details of the excess payments were not availed for audit.
The excess amount paid of Shs.2,265,064,334 represents an increment of 14% of
the contract amount. The client should be responsible for approvals of costs that
significantly increase the project costs.
Proper justification should be provided for the excess amount paid. It is further
recommended that the client (Ministry) be responsible for approvals of costs that
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significantly increase the project costs. The project manager should seek the
client‘s approval before instructing the contractor to do works that exceed the
contract amount.
V. Amounts Unrecovered on termination of Dembe-Liberty Contract
According to clause 60.1 of the Contract agreement regarding payments upon
termination; the Project Manager is required to value all the completed work and
make recoveries for all advance payments made and apply punitive costs at a rate
of 20% of the value of the remaining works.
On 30th September 2009, the Ministry terminated the works contract with Dembe
– Liberty JV. In this regard the amount payable by the contractor to the employer
was ascertained to be Shs 1,100,659,769 exclusive of VAT which was reduced by
Shs 726,936,006 in respect of VAT due to the contractor on previous certificates.
No proof of recovery of the balance of Shs. 373,723,763 was seen. The Ministry
did not avail evidence of the reconciled tax position of the Contractor. Hence it
was difficult to confirm that the VAT of shs 726,936,006 was the actual amount
due to the contractor. Moreover, if this VAT was paid to the contractor by URA
through the Ministry of Finance, then the Contractor ought to have paid the
Ministry the total Shs.1,100,659,769.
Management explained that the Ministry instituted recovery proceedings upon
termination of Dembe-Liberty JV contract but the contractor made counter claims
and sued the Ministry. The matter is now before the courts of law.
The Accounting officer should pursue the matter with the Solicitor General and
ensure that all recoveries due from the contractor are made.
VI. Cracks in concrete structures , use of timber for kerbs and general
quality of works
Site inspection revealed that there were hairline cracks in some concrete bays on
the landing sites indicating poor control of the curing process; also observed was
the use of timber as kerbs which were cracking and some of the timber poorly
jointed. Use of timber is not appropriate given that it is in contact with water.
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Overall the quality of works was generally good although some concrete panels
were found not meeting the strength requirements as per tests conducted.
Management explained that the Observed hairline cracks in some concrete bays
were noted by the Project Manager and communicated to the contractor for
rectification by way of snag lists during the defect liability period.
It is advised that the cracks be repaired and weak concrete panels redone before
discharging the contractor and the use of timber for kerbing be reviewed.
VII. Payment of Shs.76,332,134 for unexecuted works
Measurements were taken by the audit team in the presence of the contractor,
Ministry and Consultant‘s representatives and an amount totalling Shs.76,332,134
was ascertained to have been paid for unexecuted works.
The Accounting officer should ensure that these amounts are recovered from the
contractor.
VIII. Weaknesses in Supervision and Project Management
It was noted that the project supervisors took almost two years from 11th
December 2007 to September 2009 to discover that the advance payment and
performance guarantees expired. It took the Ministry another ten months to
conclude the addendum on 5th July 2010.
The contract with Spencon expired on 15th January 2009 and had no time
extension granted prior to signing the addendum on 5th July 2010 (1 year and 6
months after the expiry of original contract). This implies that the Ministry had no
contract with M/S Spencon services Ltd to warrant an addendum. To date i.e.
seven years after the contracts commenced, and four years after signing the
addendum, none of the project facilities have been handed over to government
and no action has been taken on either the Consultant or the contractor. At the
time of field inspection on 6th and 8th January 2014, the sites were virtually
abandoned.
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There was no evidence indicating that the Project Coordinator or Manager at the
Ministry was overseeing the project implementation and receiving progress reports
from the Contractor and Supervising consultant as required by the PPDA
regulations on Contract management.
Had the project manager followed progress on the project implementation; delays
and abandoned works would have been detected in time and corrective measures
instituted earlier enough; this is an indication of weaknesses in project supervision
and management.
The Accounting Officer should ensure that there is adequate capacity to supervise
and manage such contracts since the project was being implemented at ten
different landing sites variously located.
Summary of Key Findings per Sub-project
The detailed findings for each of the sub-projects in the audited project are
presented in the table below:
Sn Sub-project Key findings
1 Kiyindi Fish landing site in Mukono district
Multiple hair line cracks were seen on the floor screed for the fish handling bay and the water pump house
Overpayment of Shs 42,604,184.
2 Bukungu fish landing site in Buyende formerly part of Bukungu District
The ice shed structure constructed by Dembe – Liberty JV was abandoned,
Cracking of cement screed on the fish handling bay and the outlet drainage channel
Cracking and poor jointing of the timber kerb
Overpayment of Shs 1,013,599.
3 Lwampanga Fish landing Site in Nakasongola district
Incomplete and abandoned security/tally structure at ring beam level constructed by Dembe – Liberty JV,
Cracked Floor Surfaces Overpayment of Shs 18,115,307
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32.17 VEGETABLE OIL DEVELOPMENT PROJECT
(a) Compliance with financing agreement provisions and GOU
financial regulations
A review was carried out on the project compliance with the loan agreement
provisions and GoU financial regulations and it was noted that the project
complied in all material respects with the provisions in the agreement and applied
GoU regulations except in the following matters:
i) Project Financial Performance
During the year, the project planned expenditure was Shs.24,678,704,410 (GOU:
Shs.2,623,500,000; IFAD: Shs.21,759,405,744 and Farmers‘ funds
Shs.295,798,666) but only Shs.14,756,633,901 in respect of GOU:
Shs.2,621,174,997 IFAD: Shs.11,839,660,238 and Farmers‘ funds:
Shs.295,798,666 was spent translating into only 60% of the annual budget
performance. Procurements and activities for the year under review that were not
undertaken include;
Construction of fertilizer store and farmer‘s hall,
Cadastral survey and road mapping of 90km and the road design for 65km and
other small roads,
Procurements for contractors for construction of 65 kms of connection roads,
Procurement of vehicles (13 double cabin pick-ups),
Conducting consultancies and procurement of seeds for demonstration among
others to facilitate smooth implementation of the project.
Implementation of the planned procurements is critical to the success of the
project, and failure to do so affects the implementation of project activities.
Management explained that the roads constructions and other civil works like
construction of the fertilizer store were deferred, awaiting recruitment of a project
engineer. Procurements related to Buvuma activities (Road design, road
constructions, procurement of a Mini bus and Generators) were also deferred,
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awaiting start of activities by the private sector partner, a condition in the loan
agreement while activities by the private sector await availability of the 6,500
hectares of land required for the nucleus estate. Road mapping of 90 kms was
also postponed until studies for the ferry service between Bugala Island and the
outlying islands of Bunyama and Bubembe are completed.
I advised management to ensure that the required resources are brought on
board to enable implementation of project activities.
ii) Recovery of Loans to KOPGT Farmers
Shs.29.5 bn was disbursed to KOPGT farmers under Phase I and 2. Phase I of the
project commenced in May 1998 and was supposed to close in 2008 but was
extended to June 2012. Phase 2 of the project has just commenced. However,
Shs.1.97bn only has been recovered from the farmers as loan repayment todate.
The balance of Shs.27.53bn is yet to be recovered representing only 93.32%. I
find the recovery rate slow.
I urged the Accounting Officer to put in extra effort and ensure that the
outstanding loan is fully recovered before the end of phase 2 (2018).
iii) Land for Oil Palm Growing
According to the agreement signed between OPUL and GoU, it was agreed that
6,500ha of land be acquired and cleared of any encumbrance and be handed over
for consolidation and expansion of oil palm growing/development. However at the
time of reporting, only 2,404ha had been cleared of all encumbrances but not yet
handed over to OPUL. The balance of 4,096ha had not been secured despite the
fact that funds to the tune of Shs.3,007,197,822 were available and held on the
‗Land funds account‘ managed by the entity. The delay to handover the land could
affect the fulfilment of the project objectives.
Management explained that the delay in acquisition and handing over land to
OPUL was hampered by the following;
some of the land titles that were still held in the names of deceased making
the process of updating the land documents lengthy,
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some of the land that was still occupied by tenants making the process of
negotiations between land lords and tenants is time consuming,
the process of valuation that has been found lengthy and involving vigorous
discussions with the parties involved and cases of land conflicts in terms of
ownership some of which are before courts of law.
Management further explained that caution has been exercised to ensure that the
land paid for has no issues of conflict in terms of ownership to avoid loss to
Government.
I advised management to ensure that the land related issues are handled in a
timely manner so that project activities can be implemented.
iv) Inspection of Kalangala Oil Palm Growers Trust (KOPGT)
operations
KOPGT is one of the implementing agencies of VODP. The Trust is responsible for
representation of the interest of the palm oil farmer, carrying out periodic
reconciliation of growers accounts with Oil Palm Uganda Limited (OPUL),
transportation of fresh fruit bunches from farmers plantations to the mill and
facilitation of credit for the purchase of inputs such as fertilizers and seedlings by
the farmers among other activities.
As part of audit of the project, inspection of the oil palm component of the project
was carried out whose scope included review of the structure and trust operations
and status of implementation of activities for the year. The following was
observed:
v) Lack of a land title
In 2006, the registered farmers agreed to buy a plot of land on which the KOPGT
secretariat was to be constructed. The farmers contributed Shs.50,000 each and
collected a total of Shs.24,000,000 that was used to buy land in Kalangala Town
Council way back in 2007. However, it was noted that although the transfer forms
were dully signed, management has not yet acquired the land title. There is a risk
of encroachment of land in absence of land titles.
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Management explained that KOPGT management has engaged a surveyor to
pursue the land titling process with the Masaka Land Registry to completion. This
is expected to be ready by March, 2014.
The outcome from the above action is awaited.
(b) General standard of accounting and internal control
A review of the following areas was carried out:-
Accounting system and policies.
Book keeping.
Management and control of both bank and cash accounts.
Purchases and payments.
Fixed assets management.
It was noted that management‘s control structure environment, accounting system
and policies and control procedures were generally adequate to ensure prudent
use of, and accountability of the project funds.
33.0 NATIONAL AGRICULTURAL RESEARCH ORGANISATION
(NARO)
33.1 Assets Management
a) Land Issues
It was noted that NARO does not have title deeds as evidence of ownership for
most of its Research Institutions located country wide. The institutes land were
encroached on mainly for settlement, crop growing, and other commercial
activities like brick making. Details taken from a sample of Institutes inspected
follow below:
Institute Observation
National Forestry Resource Research Institute (NAFORRI).
Untitled Land The institute has approximately 425 hectares of land but with no evidence of legal ownership as there was
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no land title.
Coffee Research Center(COREC) -KITUZA
Untitled Land The institute has approximately two acres of land but with no evidence of legal ownership as there was no land title. It was noted that the land title available is in the names of the Uganda Land Board instead of NARO.
Other ZARDI‘s; MBAZARDI, ABIZARDI, KAZARDI, BUZARDI
Lack of land Titles and land encroachment. It was noted that there was no proof of land ownership for Mbazardi, ABIZARDI, KAZARDI, BUZARDI and Kakumiro land. The Institutes‘ land has been encroached on for settlement, crop growing, commercial activities and these encroachers were allegedly illegally selling the land to other individuals. Titles for the mentioned institutes‘ land have not been secured as earlier recommended.
BUZARDI
Land at Kakumiro The land at Kakumiro is held in trust by the land commission and was allocated for exclusive use of Agricultural Research. It was noted that this land has been encroached on affecting productivity of the institute as the encroachers were reported to have destroyed high quality experiments and research structures. Other challenges faced on this land included; Land commission parceling out pieces of land within the research institute and allocating it to private developers regardless of the investments made by NARO. The Host districts issuing subsistent land titles which are recognized by the land commission.
National Fisheries Resources Research Institute
(NaFIRRI)
Land for construction of a pier It was observed that the Institute operates from a pier that belongs to Rift Valley Railways. Further, there was no memorandum of understanding between the two Institutions. There is a risk that the RVR (Rift Valley Railways) could hike charges anytime and or stop offering the services to the Institute which could interrupt operations. I advised management to have a contract with RVR and consider acquiring its own land.
Irregular Allocation of NAFIRRI Institute land to private developers: a) It was noted that land located between Lwasumu road and Mutekanga and Waka road
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measuring 5 acres that had been initially planned for construction of 43 units for staff was allocated to private developers by the Uganda Land Commission. Another piece of land adjacent to the existing staff quarters was reportedly under threat from unknown persons as efforts by NaFIRRI to acquire the title had not yielded any results. b) Land situated at plots 89 Magwa Crescent and 21 Acacia Road where NaFIRRI had already started to develop (foundation and columns up) was allegedly allocated to a company as shown in the picture below:
It was further noted that developments north of this land were also constructed on land belonging to NaFIRRI. c) I noted that Plots No 76 to 82 on Magwa Crescent are not yet developed and there is a risk that these plots may be irregularly taken any time as Plots No.76, 78 and 80 were already leased out to unknown developers by Uganda Land Commission despite the fact that the same plots had been designated for the exclusive use of NARO. d) Plot 8A on Lubogo road is partially developed with a small structure; however NARO does not possess its title. e) Staff quarters located on plots 6-8 Circular Rd that was planned to have 4 houses has 3 houses already constructed. However, the audit noted that plot 8 is empty and vulnerable to land grabbers since management has not secured the titles to these plots ever since 2007 when they were surveyed.
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f) NaFIRRI was allocated 19 acres of land along Jinja –Iganga highway situated between Kakira Community Technical Institute and Kakira Sugar Plantations stretching up to the lake shores. While the institute was in the process of acquiring the title for this land, the same land was being cultivated by unknown persons.
National Livestock Resources Research Institute NaLIRRI
Irregular use ofNaLIRRI’s property (Plot 48 Osukuru Road)
Records available showed that sometime back in 2008 the Honorable MP for West Budama South requested to be allowed a temporary stay in one of the NaLIRRI houses in Senior Quarters in Tororo town plot 48 Osukuru road. It was noted the MP was given permission and entered the house in January 2009 having paid rent of 3,000,000 at the rate of 250,000/= per month. On the 18th of January 2011 the Director NaLIRRI advised the MP that management took a decision that non staff should vacate the Institute‘s houses to give priority to staff and thus the MP was requested to vacate the house. Records further showed that the Legal Counsel for NARO wrote to the same MP on the 12th October, 2011 still addressing the same issue of his refusal to vacate the Institute‘s house despite several reminders. As at 30th June, 2013, the MP was still occupying the Institutes house under unclear terms as there was no tenancy agreement availed for review. Besides, there was no evidence that he ever paid rent since Jan.2010 to Dec.2013 indicating that he owes the Institute Shs.10.5M in rent for the period Jan 2010 – June 2013. The circumstances under which the MP continued to stay in the house were not clear since management advised him to vacate the house. I have advised management to take up the matter with authority to ensure the Institute does not lose this asset and besides, recovery measures should be instituted to ensure the outstanding rent is cleared.
BUGINYANYA (BUGIZARDI)
Encroachment on the Institute’s land.
It was noted that land measuring approximately 270 acres has triplicate title deeds in different individual names and the land was under threat of encroachment. There is a risk of losing this land since there seems to be conflict in ownership that is likely
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to affect the various activities of the Institute.
National Semi-Arid Resources Research Institute(NASARRI) SERERE.
Land Grabbing by Local community Some encroachment was reported on the Institute‘s land situated at Serere by the local community. In Kumi Town Council; un known persons had started putting up permanent structures, in Kuju located in Amuria Trial Verification Centre (TVC). The local community was reported irregularly taking possession of the land and this is similar to what is happening in Nakabango TVC in Jinja.
Nabuin zonal Agricultural Research Development Institute (NABUZARDI)
Un-Surveyed land/Lack of a title deed It was noted that all the land occupied by the Institute estimated to be 1,300 acres has never been surveyed and hence no title deed to the same land. It was further noted that some land estimated at 100 acres were allocated to the Prime Minister‘s office for resettling Karamoja street children, however; there was no evidence to show that appropriate procedures for land allocation was followed and no evidence that Uganda Land Commission was involved in the land allocation. Besides; no memorandum of understanding between the two entities was seen clearly defining the terms of the land allocation. I explained to management that there is a risk that the Institute could lose its prime land since the allocation criteria was not clear/known. I advised management to ensure that proper procedures are always followed in land allocations.
Ngetta Zonal Agricultural Research Development Institute Nge ZARDI.
Land
Ngetta Institute has land measuring approx. 540 acres. It was noted that the eastern side of the land that was formerly used for animal rearing has been encroached on. It was further noted that the District Agricultural Officer Kitgum has been staying in one of the houses for a period of over 5 years without paying any rent. Rent income in default is estimated to be Sh.7M and this has remained outstanding despite frequent demands from the Institute. I have advised management to consider instituting litigation measures to ensure recovery of the outstanding rent and securing the property.
I explained to management that lack of land titles by the institutes might
continuously affect the operations of the Organization and besides, there is a risk
that the organization could lose this land to un-scrupulous persons. Moreover; the
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disruption on the land constrains productivity, and interrupts experimentation,
technology testing and multiplications objectives of the institute. In response,
management explained that NARO was doing its best to address the land issues
though the process was taking long.
I advised management to ensure that all issues on land are resolved urgently and
where applicable land tittles are obtained to avoid unnecessary costs which could
include legal costs.
b) Failure to dispose of old equipment
It is good practice that assets that are no longer of economic value to the
organization be disposed of and the profits or losses that accrue from such sales
subsequently disclosed in the financial statements. This is normally aided by the
Board of survey recommendations. Inspection of various Institutes of the
Organization showed some weaknesses as indicated below:
Institute Observation
1. National Forestry
Resources Research
Institute, NaFIRRI, COFFEE REEARCH
CENTER (COREC)-KITUZA
At these Institutes, old items (scrap) including old computers;
printers and furniture were still kept in stores and others like
old vehicles (3 with no number plates) and motorcycles were scattered in the compounds of these institutes.
3. Other ZARDI‘s;
MBAZARDI, ABIZARDI, KAZARDI, BUZARDI
Inspection carried out during the month of October 2013,
showed that there were assets at the institutes of Mbazardi, KaZardi, Buzardi, and ABIZARDI that were recommended for
boarding off in the previous year‘s board of survey report but
management had not taken action. These included motor vehicles and other scrap.
4. NaFIRRI, NaLIRRI and
NaCRRI
It was noted that most of the grounded motor vehicles were
overdue for boarding off. See a sample of some pictures below:
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5. NgeZARDI Transport Equipment and Tractors
It was noted that most of the motor vehicles and tractors at
NgeZARDI are grounded due to inadequate maintenance. The audit noted that most of the motor vehicles and walking
tractors of the Institute have been grounded for long without repairs. Refer to the pictures below:
I explained to management that these assets continue to lose value as time
passes leading to reduction in the benefits of early disposal. Furthermore; the
items occupy space that would otherwise be occupied by more valuable stocks.
In their response, management explained that NARO was doing its best to address
the asset management issues though the exercise of boarding off the old assets
had taken long.
The outcome is awaited.
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33.2 Domestic arrears
Review of the financial statements showed that during the year, the Organisation
incurred new outstanding commitments totalling to Shs.57,793,017 that related to
international organisations and UMEME in addition to outstanding commitments
from previous years of Shs.885,734,692. This is contrary to the commitment
control system. I explained to management that there is a risk that the continued
discontinued payment of the arrears may result into non provision of services by
the service providers.
In response, management explained that the Organisation did not get quarter four
(4) release as planned which affected fulfillment of its obligations. I advised
management to ensure that these arrears are prioritized in the subsequent
financial year as guided by the Accountant General.
33.3 Budget Performance
a) Shortfalls in Government funding
Analysis of budgeted income of the Organization of Shs.51,455,612,347 (excluding
NTR) for the year showed that only Shs.34,304,918,634 was released leading to a
shortfall of Shs.17,150,693,713 (33% of the budget). I noted that Government‘s
failure to release the expected funding resulted into non-implementation of various
activities. Listed below is a sample of unimplemented activities taken from Abi
ZARDI and Buginyanya ZARDI.
Un implemented activities under Abi ZARDI
Buginyanya ZARDI Un implemented Activities.
Multiplication of the newly introduced
16 improved lines of sorghum for
evaluation and adoption in the region Survey reports on cereal production
constraints in west Nile
Setting up experiments to determine
effects of soil management practices in improvement of tolerance to bean
fly and maintenance of trials
Conduct experiments for cereal and
legume crops on station and adapt them on farm
Generating100 independent rootstock
plantlets Determine soil amendment options for
apples trees at Buginyanya station
2-One goat unit housing 20 bucks
renovated to control breeding 0.7ha of Chlorisgayana pasture
established for seed multiplication at
Bulegeni station
Procurement and establishment of wheat
multiplication gardens
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Collect germ-plasm for trials;
Establish trials both on station and
on farm; Collect data from trials Setting up trial on boundary planting
on station
Testing cassava processing
technologies and Forage multiplication of 2 sites.
Farmer training in pasture agronomic
principles and 80 farmers on fertiliser
use and management Farmer training, animal identification
and initiation of AI breeding services
Setting up trials on different feeding
strategies for goats Training of farmer groups and
individual farmers
Enhancing farmers‘ capacity in
production of live feed for catfish
On site manual sexing of brood stock
and breeding by farmers adapted
Application of 3 fungicide treatments to
selected plots on farms in Bushika,
Bududa District Best soil nutrient amendment options
identified for promotion
Disease surveillance and monitoring on
station and in the zone Generating baseline information on SWC
practices in project sites
Training sessions for famers in
appropriate livestock management
techniques
I explained to management that failure to implement the planned activities may
lead to the organisation‘s failure to achieve the intended objectives. In response
management explained that attempts have been made to follow up the matter
with Ministry of Finance, Planning and Economic Development (MOFPED) but with
no tangible results. I have advised management to continue pursuing the matter
with the MOFPED to ensure the budgeted funds are always secured.
33.4 Inspection of the NARO Institutes
Inspection of the Institutes revealed the following issues:
Institute Observation
Coffee Research Center (COREC) – Kituza
Lack of laboratory space and equipment
It was noted that COREC institute did not have enough space for its laboratory and equipment. The equipment is
currently housed in the main administration block directly opposite the Directors office. This equipment included the
incubator, Water distiller, Autoclave whose operations
within the office block could be unhealthy to human life. Besides, the equipment was too old and needs
replacement. Interview with management showed there was need for the purchase of new ones like Polymerase
Chain reaction machine, 80 C Freezers, and insect rearing unit, for meaningful research to be carried out. I explained
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to management that the above state could affect research
work. In response, management indicated this was a new
Institute that would be included in the civil works of the
project funded by World bank. Management‘s commitment is awaited on the matter.
NaFIRRI
Health Challenges
It was noted that NaFIRRI was generally faced with a
challenge of water pollution coming from water hyacinth, heavy metals such as phosphorus and too much
nitrogenous nutrients. I explained to management that there is a risk that this could affect the research
operations of the Institute in the near future. In response management explained that Pollution was a lake wide
phenomenon and that efforts were being made to engage
NEMA on the matter. The outcome of management efforts is a waited.
Staffing
It was noted that the staffing position of the Institute is
not sufficient for its operations. While the core mandate of the Institute is research; it was noted that the current
number of scientists of 22 staff is inadequate. I explained to management that Research work and all the associated
innovations tend to move at a rather slow pace and cannot meet the ever growing socio economic needs of
the stake holders if the adequate number of scientists is
not in place.
Although management indicated that it has been a long wish and plan to enroll at least 15 scientists every year for
the next 5 years; it was noted that this position has not
changed and that it has always been curtailed by the Government‘s ceiling on recruitment. Management further
explained that the current MTEF cannot allow attainment of desired staff numbers and that engaging MOFPED
would continue. I advised management to take up the
matter with appropriate authorities so as to have the matter resolved.
Operations of the Research Marine Vessels
Status of the Marine Vessels;
NaFIRRI has 3 Research Marine Vessels two of which were reported quite old, with the oldest MV RVIBIS of model
1967, and as a result it consumes excessive fuel. It was
noted that these marine vessels have not been insured contrary to the required Marine vessels operational
standards. In response, management explained that the process of procurement for the insurance of the vessels
had started and ongoing.I advised management to speed up the process of insurance and consider refurbishing the
marine vessels for continued benefits.
Insufficient funding for operations of the vessels.
It was noted that the two Vessels have two fuel tanks each with capacity of 4000 litres that would ordinarily
consume 4000 litres per trip. The vessels are planned to
make at least 2 research trips in a quarter that would
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amount to 12 trips in a year, however due to the reported
financial constraints, the Institute could only afford 4 trips. As a result, management failed to undertake eight (8)
research trips during the year.In response, management
explained that budget restriction is responsible for the reduction in the number of trips but indicated that
additional financing is being sought. I have advised management to adequately provide for the operations of
the vessels in order to be able to carry out all planned research activities.
Road Transport Facilities
It was noted that the Institute is faced with shortage of
worthy transport facilities. Originally; NaFIRRI had 14 project donated motor vehicles however, it was noted that
the majority of these vehicles were grounded except four
(4) of them. I explained to management that there is a risk that the Institute may not deliver as expected.
In response, management explained that NARO secured some resources to improve transport facilities including
two (2) new vehicles and four (4) motor cycles have been procured. Management further indicated that two (2)
pickups are anticipated under ATAAS project funding. I
await the outcome of management‘s commitment.
NaLIRRI
Collapsing Residential
Quarters at NaLIRRI
It was noted that most of the buildings especially staff
quarters of National Livestock Resources Research Institute (NaLIRRI) are in a very bad state with the
exception of the main administration block. A number of the buildings seemed to have been abandoned and were
reported occupied by unknown people as the premises of
the Institute were not fenced. Below are pictures of some of the dilapidated structures:
I explained to management that occupation of abandoned buildings by unknown people pause a security threat to
the Institute. Besides, there is currently shortage of accommodation of staff. Management acknowledged the
challenge and indicated this would be worked on when
funds are available.I have advised management to carry
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out the necessary renovations urgently so as to address
the challenges.
Buginyanya (BUGIZARDI)
Lack of Adequate
Infrastructure (Buildings)
It was noted that the Institute does not have sufficient
infrastructure more especially buildings for office accommodation, stores, laboratories and residential
quarters. The audit noted that the available space within
the administration office block was shared sometimes among 4-5 staff and the same space is being used as
laboratories and storage for samples; a situation that makes the work environment untenable. Furthermore, it
was noted that the administration block just like other staff quarters is still roofed with asbestos whose usage
was long banned by the World Health Organization. The
residential quarters were found to be in a poor state and overdue for renovation. See the picture below:
I explained to management that since the core activity for the Institute is research; lack of laboratory facilities
impacts negatively on its performance. In response, management explained they are in the process of repairs
and that funding is about to start coming in.I advised management to address the above challenges to avoid
further deterioration of the available structures and ensure
the asbestos roof is changed.
Transport facilities at the
Institute
The Institute was reported to have a fleet of seven (7)
Motor Vehicles. However; 3 were grounded due to lack of
routine maintenance yet the Institute is located on the slopes of Mount Elgon with such a difficult terrain that
would require strong road motor vehicles as well as sufficient maintenance funds. I explained to management
that limited mobility constrains research activities.
Management indicated that the above challenges would soon be resolved as they expect project funding where
refurbishment of old structures would be done. I have advised management to review the budget support to the
Institute so as to improve on the current operational challenges including vehicle maintenance.
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Poor internet services
The internet service at the institute was reported to be
very un reliable, a situation that affects research since the Institute is situated in a quite remote area and relies on
internet for both communication and information source. I
advised management to consider having a better service provider and or subscribe for a broader band width for the
Institute if resources can allow.
NASARRI
Dilapidated Housing Structures at
Inspection of National Semi-Arid Resources Research Institute (NASARRI) - SERERE showed that most of the
buildings were old and some dilapidated in need of urgent renovations. Some roof tiles were collapsing while some
houses still had asbestos roofing despite its condemnation by the World Health Organization. Refer to the pictures
below:
It was further noted that the Screen House in which
controlled experiments are carried out is dilapidated and can no longer serve the purpose due to the broken
glasses at the top and the sides which allows in unwanted heat, moisture and light. It was noted that
experiments can no longer be performed in the dilapidated structure since the experiments were meant to be carried
out in a controlled environment. Interview with
management of the institute indicated that research activity is currently carried out at below capacity. I advised
management to plan for the renovation of the structures urgently to avoid further deterioration.
NABUIN Institute
(NABUZARDI
Lack of Office
Infrastructure
It was noted that NaBUZARDI operates from a rented
property in Moroto town since its own premises were
destroyed during the war period as shown below:
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The audit noted that the office accommodation in the
rented property was not sufficient for the existing staff numbers. Besides, the furniture available (10 desks) is not
sufficient for the 32 staff which makes the working
environment not conducive. It was further noted that the rented property does not have a store for samples
collected from the field and reliable internet. Besides, the Institute lacked staff accommodation facilities and
laboratories and as a result operational costs were high
due to commuting costs to the fields which were noted to be 30km away from the current office location. The usual
routine activities such as the lab tests/analysis have to be taken to Kampala and this too is costly and time
consuming. I advised management to make rehabilitation of the Institute a priority if it is to serve the purpose for
which it was set up.
Transport
It was noted that the Institute has a fleet of about 5 Motor Vehicles and by the time of inspection; only one
was found working. It was explained that the frequency of
motor vehicle breakdown was high due to the poor state of the roads. I explained to management that there is a
risk that planned activities may not be carried out as planned due to lack of transport.I advised management to
plan to avail appropriate vehicles for the Institute operations and if possible increase funding on vehicle
maintenance.
Security at the Farm
It was noted that the station is currently guarded by few UPDF Officers; however the permanency of these officers
could not be guaranteed. Because of its remoteness,
security is at risk to both staff and property. I advised management to liaise with appropriate authorities for
assistance so as to have a permanent police post at Nabuin ZARDI station to provide security to both staff and
property.
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Ngetta
Lack of Laboratory and
Screen House
It was noted that the Institute did not have a Laboratory
and Screen House that are quite vital for research activities and this has led to an increase in research costs
as almost all tests and analysis is done in Kampala and
other distant locations.I advised management to plan and construct labs and screen houses in the near future for
enhanced efficiency in research.
33.5 EAST AFRICA AGRICULTURAL PRODUCTIVITY PROGRAM (EAAPP)
a. Compliance with financing agreement provisions and GOU
financial regulations
A review was carried out on the project compliance with the credit agreement
provisions and GoU financial regulations and it was noted that the project
complied in all material respects with the provisions in the agreement and applied
GoU regulations except in the following matter:
i. Over Expenditure US $ 6,013.98
The project management incurred an over expenditure of US $ 6,013.98 on
goods, consultants‘ services and operating costs for parts C.3 and D.1 of the
project without authority.
The Accounting Officer explained that following the mid-term evaluation of the
project, changes were made in regard to the components of the project and this
had an effect on the budget items.
I advised the Accounting Officer to Adhere to the budget provision or seek the
necessary authority to reallocate.
b. General standard of accounting and internal control
A review was carried out on the project system of financial management and the
following matter was observed:
i. Irregular procurement at Ngetta Zonal Institute
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The Institute procured 204 bags of cassava cuttings from MS Otuke Private Sector
Enterprises Ltd at a cost of Shs.9,588,000. However, I noted that the procurement
was undertaken without following PPDA requirements as there was no
procurement file, PP form 20 and no evidence of involvement of Contracts
Committee.
The Accounting Officer explained that the procurement was handled by the
Procurement Officer who has since been transferred from the project and the file
could not be traced but promised to avail the file for audit as soon as the file is
located.
The action of the Accounting Officer is awaited.
c. Status of project implementation
A review of the status of project implementation revealed the following matters;
i. Un-utilized project balances-US $ 5,264,333.93
It was noted that US $ 5,264,333.93 (49%) remained unspent out of the available
funds of US $ 10,772,800.76. Failure to implement the planned activities affects
the achievement of the project objectives.
The Accounting Officer explained that funds could not be fully spent and therefore
some activities could not be undertaken on time due to shortage of staff and
postponement of some uncritical activities. The funds were however carried
forward and incorporated in the project work-plan and budget for 2013-14 and are
currently being implemented.
I advised the Accounting Officer to put in place measures that will ensure that the
project activities are implemented in accordance with the project timelines.
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d. Delayed Works Procurements
i. Delayed Supply and Installation of a Liquid Nitrogen Plant
It was noted that there was a delay in the supply of the liquid nitrogen plant by an
international firm which was contracted at a cost of Euros 940,720. The contract
was entered into in Oct 2011 with completion period of 50 weeks (by March
2012), however, at the time of reporting, supply and installation of the plant had
not been made.
It was further noted that an advance payment was executed almost one and half
years after the signing of the contract and a Letter of Credit opened in favour of
the Contractor effected on 11th July, 2013, almost 20 months from the signing of
the contract.
The Accounting Officer explained that a Contract Management team was
constituted to support the Contract Manager to monitor the Supplier in regard to
the delivery of the Plant and Construction of the Plant House. The Plant was
airlifted and was expected at the end of December, 2013.
I urged the Accounting Officer to ensure that the contract is fully executed plant
installed as agreed.
ii. Delayed supply of Embryo Freezing Machine and Equipment
An international firm was contracted to supply Embryo Freezing Machine and
Equipment on the 5th October, 2012 with the contract expected to be executed at
least not later than 5th January, 2013 (60 days from the contract date as per the
GCC 33). However, I noted that the contractor had neither executed the above
contract within the prescribed period nor notified the Procuring and Disposing
Entity (PDE) requesting for an extension. Further, no liquidated damages for the
delays encountered have been executed.
Further, the agreement provides for termination of the contract in whole or in part
if the provider fails to deliver any or all the supplies within the period specified in
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the contract or within any extension thereof granted by the PDE. This clause was
not invoked despite the failure by the provider to deliver as required.
The failure to observe the conditions of the contract may cause financial loss to
Government.
I advised management to compel the contractor to comply with the contractual
obligations.
e. Lack of approved workplans
It was noted that funds amounting to Shs.402,359,850 released to Ministry of
Agriculture, Animal Industry and Fisheries (MAAIF) were not utilized due to lack of
an approved work-plan and budget for crop (seeds) for the year. The basis upon
which the funds were released to the Ministry could not be established. Non
utilization of project funds is a set back to the fulfillment of the project objectives
and besides the project funds could easily be diverted to other non-project
activities.
The Accounting Officer explained that since the funds were not utilized, and were
still held on the Ministry project account. A refund to NAROSEL will be done once
reconciliations are complete.
I advised the Accounting Officer to liaise with management of MAAIF to ensure
that the funds are utilized or refunded.
33.6 AGRICULTURAL TECHNOLOGY AND AGRIBUSINESS ADVISORY
SERVICES
(a) Compliance with financing agreement provisions and GOU
financial regulations
A review was carried out on the project compliance with the credit agreement
provisions and GoU financial regulations and it was noted that the project
complied in all material respects with the provisions in the agreement and
applicable GoU regulations except in the following matters:
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i) Un-released funds-Shs.26,760,151,091
It was noted that the project management budgeted for Shs.51,455,740,347 as
funding from Government of Uganda but only Shs.34,304,918,634 was released.
In addition, the expected funding from IDA for year was Shs.30,000,000,000 but
only Shs.20,390,670,622 was released. This resulted into an overall shortfall of
Shs.26,760,151,091. Failure to achieve the expected funding implies that the
project may not achieve its objectives in the project planned period.
The Accounting officer explained that the big chunk of unreleased funds worth
Shs.17,308,000,000 relate to non-resource taxes meant to clear the NARO
imports. However, due to the prolonged procurement process, the goods were
not procured on time and funds differed to next year.
I advised management to take up this matter with appropriate authorities to
ensure that all planned funding is released to the project to enable execution of all
planned activities. Further, the Accounting Officer was advised to ensure early
planning to avoid delays in implementation of project activities.
(b) General standard of accounting and internal control
A review was carried out of the project system of financial management and the
following matter was observed;
i) Mischarge of Expenditure-Shs.195,700,610
It was noted that Shs.195,700,610 was spent on various project activities but
charged on wrong expenditure codes contrary to the project requirements. The
affected items were mainly allowances for field activities charged to goods and
services. The practice resulted into misreported expenditure balances in the
financial statements and a diversion of project funds from the intended activities.
I advised management to ensure that activities are implemented in accordance
with the workplans and in case of any reallocations, these should be done in
accordance with the regulations.
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(c) Status of project implementation
A review of the status of project implementation revealed the following;
i) Unspent Project balance-Shs.15,371,475,463
Shs.15,371,475,463 remained unspent at the year end and yet activities for these
funds were budgeted for. There is a risk that the project intended objectives may
not have been fulfilled by the project which could lead to extra administrative cost
in case of project extension.
The Accounting Officer explained that the high project balances were attributed to
unavailability of scientists that are on training for their PHD programmes and this
had an effect on the workforce to implement the planned activities. Management
further explained that World Bank had approved appointment of short term
consultants and a process of recruiting them is ongoing.
I advised the Accounting Officer to expedite the process of recruitment so that
project implementation is not impeded further.
ii) Failure to implement planned project activities at NARO Research
Centres
a) Kazardi, Mbazardi, Rwebizardi, and Abizardi
It was observed that some project activities totaling to Shs.1,093,009,000 at
Kazardi, Mbazardi, Rwebizardi and Abizardi were not implemented as planned
during the year. Summary of the activities not undertaken is below:
1. Programme015101
Generation of Agricultural technologies.
ABIZARDI
Activity Description Target output and remarks. Amount budgeted (Shs.)
Development and
commercialization of cassava
varieties resistant to cassava brown streak virus and cassava
Mosaic disease in west Nile
i. 5 Cassava landraces resistant
/tolerant to CBSD and CMD identified
to be used as parents in the new crossing block not completed.
ii. 4 cassava adaptive trials were not
10,300,000
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region. established in Maracha, moyo, Arua and Nebbi Districts.
2. Improvement and adaption of
selected cereal crop varieties with end-user preferred trials.
4 screening trials for each crop
commodity were not established in Arua, maracha, Koboko and Moyo
Districts.
10,000,000
3. Participatory evaluation of
improved groundnuts and beans technologies.
i. Integrated package for soil fertility
management, weed control and plant spacing for beans and ground nuts
were not developed. ii. 6 bean fly IPM packages (earthing
up, seed dressing, high and low plant
densities fertilizer application and combination) were not evaluated and
recommended for dissemination.
11,000,000
KAZARDI
1. Development and promotion of population B3C1 and B3C2-
based potato varieties for
resistance to bacterial wilt, late blight and with consumer
acceptable qualities.
i. Two B3C2-based potato clones resistance to late blight and accepted
by the farmers were not selected.
ii. On-station evaluation of crosses (progenies) of B3C2 potato genotypes
for resistance to late blight and consumer acceptability was not done.
17,140,000
13,840,000
2. Development and promotion
of population B3C1 and B3C2-
based potato varieties for resistance to bacterial wilt, late
blight and with consumer acceptable qualities
i. Evaluating field and screen house
response of population B3C2 potato
genotypes for bacterial wilt tolerance was not done.
222,570,000
3. Optimization of laboratory and
field protocols for production of
high quality seed potato.
i. A media formulation that supports
in-vitro propagation of new and farmer
preferred potato varieties were not established.
13,110,000
4. Production of foundation seed
potato for experiments and
uptake pathways.
i. 24 tones of prebasic seed were not
generated by June 2013
32,344,000
Conservation and Promotion of selected goat breeds for meat
and dairy production in SWHAEZ
DNA sequences were not generated on existing goat breeds in the zone for
use in molecular characterization of the breeds.
28,950,000
RwebiZARDI
1. Rehabilitation and maintenance of tea research
facilities for scientific evaluations.
High yielding and quality tea planting materials were not developed
18,000,000
2. Evaluation of tea clones for pest and disease resistance
characteristics.
Tea clones tolerant to Xylaria disease selected for the Western highland
agro-ecological zone no data produced.
ii. There was no Selection of high yielding tea clones in Western highland
agro-ecological zone done.
32,100,000
20,855,000
3. Evaluation of chemical composition of Ugandan tea.
80 tea clones were not evaluated for biochemical profiles by end of June
88,000,000
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2013
2. Programme 015102. Research extension interface
promoted and strengthened.
ABIZARDI
Developing Technologies that
improve soil fertility and soil Nutrient management in West
Nile Agro Ecological zone.
The 7 INM trials were not established
for both Maize and groundnuts in Arua, Nebbi, Zombo, Adjumani and maracha
districts.
10,800,000
Development and adaption of
Agro-forestry technologies for
improved livelihood in West Nile.
The 3 protocols for grafting tamarind
and shea were not designed.
6,73,000
Development of technologies
that enhance aquaculture Production and marketing in the
West Nile zone.
4 fish cages were not established in
Nebbi and Adjumani districts.
11,000,000
Improvement of Goat health management in north west Agro-
ecological zone
4 Demonstrations were not set up with fodder in Zombo and Moyo districts
5,000,000
KAZARDI
1. Development and promotion
of population B3C1 and B3C2-based potato varieties for
resistance to bacterial wilt, late blight and with consumer
acceptable qualities
Four potato varieties (Nakpot 1&5,
Kachpot 1&2) popularised in the zone were not presented
20,000,000
Conservation and Promotion of selected goat breeds for meat
and dairy production in SWHAEZ Under
3 genetic breed levels of meat goat breeds popularized in 4 districts of the
zone were not ascertained
12,000,000
3.Programme 015104
Agricultural research
capacity strengthened
ABIZARDI
Development of technologies that enhance acquaculture
production and marketing
3 fish tanks were not established at the station.
Fish Hatchery at the station not done.
7,000,000
100,000,000
KAZARDI
1. Optimization of laboratory and field protocols for production of
high quality seed potato at KAZARDI.
Construction of a new screen house for maintaining potato germplasm for
breeding activities at the institute was not done.
24,000,000
2. Management of Research &
Development activities at KAZARDI
Construction of new stores at
Kachwekano was not done.
60,000,000
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BUZARDI
Construction of new office building with provision of conference facilities
at the institute. This was not done.
195,000,000
Rehabilitation of water works at the institute.
60,000,000
Animal infrastructure facilities to be constructed to create animal study at
the institute. Not done.
40,000,000
Rehabilitation of other existing facilities at the institute. Not done.
30,000,000
Total 1,093,009,000
b) MUZARDI
Project activities estimated at Shs.456,078,000 were in the project work plan for
the year 2012/13, however at the time of reporting, these had not been
implemented. Details are in the table below:
Project/Item Activity not undertaken Amount provided
(Shs.)
04 Agricultural
research capacity strengthened
Carry out administrative operations
such as maintaining information equipments, payments of subscription
fees, rentals and records. -Renovation of laboratory.
20,000,000
Zonal resource centre equipment --purchase of electronic services.
-- purchase of 4 laptops and 2 desktops
13,000,000 14,700,000
Renovation of resource centre 36,797,000
Government Buildings
and administrative
infrastructure
--workshop and Lab. equipment,
Constructing the work workshop and
procuring equipment. --constructing the new laboratory.
130,000,000
78,967,000
Transport equipment. Purchase of vehicle (pickup). 83,240,000
Purchase of ICT
equipments and
software.
7 desktops , 4 laptops computers ,2
printers,15 UPS and 1 fax machine
31,524,000
Procuring of office and residential furniture
and fittings.
3 office tables 1 office table and 1 office chair for the
director. 3 office chairs , 3 bookshelves,
5visitor‘s chairs for HR
3 desk organisers and 3 executive open racket file
11,350,000
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Laboratory furniture and furnishing for the lab.
13,000,000
18 tables and 150 chairs for the
Conference centre.
23,500,000
Total 456,078,000
a) NARL – Kawanda
Funds to the tune of Shs.1,220,000,000 remained unutilized yet the activities had
been included in the project work-plan for the year. Refer to the table below:
Planned Activities Budgeted Amounts (Shs.)
1 Rehabilitation of office buildings at NARL 150,000,000
Rehabilitation of laboratory building 150,000,000
2 Construction of screen houses 270,000,000
3 Rehabilitation of existing residential buildings 200,000,000
4 Rehabilitation of water works 180,000,000
5 Rehabilitation of sewage works 90,000,000
6 Electricity connections and rehabilitation 130,000,000
7 Construction of cold rooms 50,000,000
Total 1,220,000,000
The Accounting Officer explained that the activities that were not implemented
were due to the fact that the procurement process was delayed but they are now
at evaluation and contract awarding stage.
I urged the Accounting Officer to ensure that the procurement process is
expedited so as to enhance improved implementation of the project activities.
ENERGY SECTOR
34.0 MINISTRY OF ENERGY AND MINERAL DEVELOPMENT
34.1 Mischarge of Expenditure – UGX.9,200,543,112
The Government Chart of Accounts defines the nature of expenditure for each
item code. The intention is to facilitate better and consistent classification of
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financial transactions and also track budget performance per item in line with
parliamentary appropriation. Audit noted that during the year under review, a sum
of UGX.9,200,543,112 was charged on items which do not reflect the nature of the
expenditure. For example expenditure item 211103 which according to the chart of
accounts should only be charged with staff allowances was actually charged with
fuel, stationery and tuition among others. The practice impacts on the credibility of
the financial statements, since the figures reported therein do not reflect true
amounts expended on the respective items. It further undermines the intentions of
the appropriating authority.
In his response, the Accounting officer attributed this to the desire to achieve
outputs that leads management to make decisions to utilize resources allocated to
slow moving activities and programmes. I advised Management to avoid such a
practice in future and always seek for reallocations when such a need arises, in
accordance with the requirements under the Treasury Accounting Instructions
(TAI).
34.2 Unsupported Foreign Currency Withdrawals – UGX.375,280,270
A total of UGX.375,280,270 was withdrawn in cash to undertake several activities.
However, I could not confirm whether the funds were expended for the intended
purposes as I was not availed the supporting documentation in form of requisitions
from the officers, withdraw vouchers, evidence of travel and payment receipts to
support the withdraws.
Although the Accounting Officer explained that the documents in question were
available, these were however not availed to me by the time of compiling this
report.
I advised the Accounting Officer to always ensure that all expenditures are
accompanied with the related supporting documentation and that the funds in
question are followed up with a view of ensuring that accountability is provided.
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34.3 Unsupported Expenditure from the Energy Fund Account–
UGX.418,663,378
In my last year‘s report to parliament, I highlighted the irregular use of the
Support to Energy Fund account in Bank of Uganda and advised the Ministry to
have this account closed; the account was eventually closed. However, prior to its
closure, the Ministry had transferred a total of UGX.679,385,200 from the Treasury
General Account (TGA) to this account during the year under review. I reviewed
the transactions that transpired off this account and noted that a total of
UGX.418,663,378 expended from this account was not properly supported. Under
the circumstances, I could not confirm that the expenditures in question were for
genuine purposes.
I advised the Accounting Officer to always ensure that all expenditures are
accompanied with the related supporting documentation. In addition the funds in
question should be followed up with a view of obtaining accountability.
34.4 Hydro Power Development Unit Program Account
The Ministry operates the Hydro Power Development Unit Program account in
Bank of Uganda. A review of the operations on the account revealed the
following:-
a. Transfer of Funds to this Account – UGX.4,444,077,360
During the year under review, a sum of UGX.4,444,077,360 was transferred from
the Treasury General Account to this account. At the time of transfer, these funds
were directly expensed on the respective expenditure line items although by the
close of the year, a significant amount remained as unspent cash. The expenditure
was not reversed to reflect the unspent cash balance. I explained to the
Accounting Officer, that such a practice is irregular and increases the risk of
probable misuse of funds.
472
In his response, the Accounting Officer explained that the account in question is
meant to handle the operational activities of the Ministry in regard to the ongoing
hydro power projects, including Karuma and Isimba. I advised the Accounting
Officer to ensure that proper budgeting is done for the programmes mentioned
and funds are properly allocated within the budget. In expending such funds, the
recommended Government systems (i.e. IFMS) should be utilized. In addition, the
Accounting Officer was advised to close the account and transfer all unspent
balances to the consolidated fund.
b. Unsupported Payments out of the Hydro Power Development
Account – UGX.460,725,234
A review of the expenditures out of this account revealed that a total of
UGX.460,725,234 expended from this account was not properly supported. Under
the circumstances, I could not confirm that the expenditures in question were
genuine.
Although the Accounting Officer explained that the accountabilities in question
were available, these were not availed to me for verification by the time of
compiling this report. I advised the Accounting Officer to always ensure that all
expenditures are accompanied with the related supporting documentation. In
addition the funds in question should be followed up with a view of obtaining
accountability.
34.5 Budget Performance
As provided for in the National Development Plan and the policy statement, the
ministry is focusing on the implementation of four (4) flag bearer projects
namely:-
i) Development of Karuma Hydropower project
ii) Development of the Oil refinery
iii) Promotion of investment in the Sukuru phosphates and
iv) Development of Iron and Steel Industry.
It was noted that the Ministry was appropriated a total of UGX.1,275 billion under
both the development and recurrent budgets. However, only a total of UGX.128
473
billion was actually released, representing an overall budget outturn of 10% as
shown in the table below:-
Budget Revised Budget
(UGX)
Releases (UGX) %
Release
Unreleased funds
(UGX)
%
Unreleased
Recurrent 7,170,699,399 6,338,426,581 88.4 832,272,818 11.6
Dev. 1,268,300,600,001 121,708,039,026 9.6 1,146,592,560,975 90.4
Totals 1,275,471,299,400 128,046,465,607 10.0 1,147,424,833,793 90.0
A review of the ministry projects further indicated that four out of nineteen (19)
Projects received zero funding; notable among them was Karuma hydro power
project which did not receive any release yet it was the biggest project the
ministry intended to implement. Whereas some projects received more than 50
percent funding, audit was not provided with physical performance reports in
order to verify activities on the ground. I explained to the Accounting Officer that
such disparities in funding for the projects usually lead to failure to fully implement
such projects within the planned periods.
In his response, the Accounting officer explained that UGX.1,268 billion was the
development budget provision of which UGX.1,056 billion was for Karuma
Hydropower dam, Bujagali Interconnection, Karuma Interconnection and Mputa
Interconnection projects, which did not take off due to delays in the procurement
processes.
I have advised the Accounting Officer to always ensure that all planned activities
are implemented as intended so as to ensure the attainment of the set targets and
objectives.
34.6 Noncompliance with the Commitment Control System
It was noted that the Ministry‘s outstanding commitments as at 30th June 2013,
stood at UGX.34,260,009,595, up from UGX.2,582,707,955 as at the beginning of
the financial year under review. This implies that the ministry has continued to
over commit government and enter into contracts even without the necessary cash
resources to settle such commitments, contrary to the requirements under the
commitment control system. I explained to the Accounting Officer that failure to
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pay outstanding creditors can lead to unnecessary legal costs as well as loss of
supplier goodwill.
In his response, the Accounting Officer attributed this anomaly mostly to the
thermal power subsidies as well as contributions to International Organizations, for
which there were inadequate releases to meet the required payments.
Management is advised to always adhere to the commitment control system of
government and avoid committing government beyond the availed resources.
34.7 Cash Withdrawals from the TGA not Accounted for – UGX.345,105,433
It is a requirement under section 173 of the TAI that all Payments wherever
possible, must be made by means of direct bank transfer or crossed cheques, only
to the persons named in the vouchers or their accredited agents. It was however
noted that during the year under review, cash withdrawals amounting to
UGX.345,105,433 were made off the TGA and this remained unaccounted for at
the time of audit, six (6) months after the close of the year. I explained to the
Accounting Officer that such a practice not only contradicts the requirements
under the TAI but also exposes such funds to a risk of loss through abuse.
I have advised the Accounting Officer to always ensure that in the event that such
withdrawals are made, these should always be promptly accounted for. In the
meantime, the unaccounted for funds should be followed up with a view of
ensuring accountability.
34.8 Oil Refinery Development Program Account
a. Unaccounted for Cash Withdrawals – UGX.114,386,410
A total of UGX.114,386,410 drawn in cash from this Account remained
unaccounted for by the time of audit, as I was not availed with the necessary
supporting documentation. Under such circumstances, I was unable to establish
the purpose to which the funds were applied.
I advised the Accounting Officer to ensure that all expenditures are always
properly supported with the relevant documentation as required by the
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government financial regulations. In the meantime, accountability for the above
funds should either be provided or recovery measures initiated accordingly.
b. Payments for Transaction Advisory Services
A consultant was engaged to provide transaction advisory services for the
development of a refinery in Uganda at a (time based) total contract price ceiling
of Us$.3,227,777. According to the agreement signed on 31/01/2013, the contract
was to be financed partly using a portion of the grant from the Norwegian Ministry
of foreign Affairs up to the tune of Norwegian Kroner (NOK) 15,300,000
(equivalent to Us$.2,500,000). A review of the payments to the consultant
revealed that a total of UGX.2,181,032,490 (Us$.838,859.20) had been paid by the
Ministry during the year; this exceeded the Government of Uganda‘s planned
contribution by Us$.100,000. There was no evidence that appropriate budgetary
reallocations were made to support this additional expenditure.
In his response, the Accounting Officer attributed this to the Donor freeze the
country was experiencing at the time yet the Consultant had requested to be paid.
However, the Norwegian Government had reopened financing to this project and
agreed to meet its part of the contribution less any moneys paid by GoU during
the freeze.
I advised management to always ensure that such eventualities are treated in
accordance with the provisions in the financial regulations particularly relating to
reallocation of funds.
34.9 Transfer of Funds for Masaka - Kawanda RAP – UGX.7,800,000,000
The Ministry transferred a total of UGX.7,800,000,000 to the Energy Investment
Fund for activities relating to Masaka-Kawanda T-Line Resettlement Action Plan
(RAP) implementation. However, it was noted that this amount was not utilised by
the year end and was also not returned to the Consolidated Funds Account as is
required under the financial regulations. Under the circumstances, the above funds
are exposed to a risk of diversion.
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In response, management explained that the amount remained unutilised because
of delays in the procurement process for the Kawanda – Masaka Transmission
Resettlement Action Plan; however, the RAP implementation consultant is now on
board and that the funds in question will be utilised for this purpose.
I advised the Accounting Officer to always follow lawful procedures embedded in
the financial regulations to handle such occurrences.
34.10 Payment for Acquisition of Office Space for Bujagali Implementation
Unit Offices – UGX.1,200,000,000
Bujagali Hydro power project was started in 2007 and is now complete. The
project is currently being run by a private investor under the power purchasing
agreement with UETCL. The ministry disbursed a total of UGX.1,200,000,000 to
UETCL for purchase of Bujagali Implementation Unit Offices, at Plot 32A, Amberly
Road, Kimaka. However, no documentation was provided to support the transfer.
It was not clear as to how this amount was determined, in the absence of any
form of agreement with UETCL or the land lord. Audit further established that the
said amount has remained redundant on this account nine (9) months after the
transfer. This balance was neither reflected in the Ministry nor UETCL accounts.
There is a risk that over time, the said funds could be misused.
In his response, the Accounting Officer explained that the funds in question were
transfered for procurement of land to accomodate the Bujagali Implementation
Unit Offices. However, this process has delayed due to ownership wangles over
the land in question.
I advised the Accounting Officer to ensure that the amount in question is properly
reflected in the ministry accounts as unspent balances and transferred back to the
consolidated fund to avoid possible misuse.
34.11 Absence of a Central Store to Record all Procurements
In my last year‘s report to Parliament, I noted that the Ministry had no central
store function, with most procurements being delivered directly to user
departments. During the year under review, the Ministry had still not put in place a
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properly functioning central store and accordingly, sundry items procured during
the year worth UGX.1,114,338,237, were not delivered, recorded and issued
through the stores, contrary to the provisions under the Treasury Accounting
Instructions (TAI). Such a practice complicates the audit trail in the absence of any
record to evidence delivery and utilization of such items.
In his response, the Accounting Officer attributed this matter to the challenges the
ministry experiences as a result of location of the two major departments at
Entebbe and other regional offices as well as inadequate stores personnel;
however, the recent deployment of more stores cadres is expected to address this
problem.
I advised the Accounting Officer to institute a sound stores management system
to track all receipts of goods, their storage, requisitions as well as regular stock
taking to confirm stock balances.
34.12 Failure to Deduct Withholding Tax
Contrary to the provisions of the Income Tax Act with regard to withholding tax,
the ministry made payments totaling to UGX.1,488,767,224 to various suppliers
without deducting and remitting the requisite withholding tax worth
UGX.89,326,034 to Uganda Revenue Authority (URA). This omission exposes the
Ministry to a risk of imposition of penalties and fines from the tax body as per the
provisions of the Income Tax Act.
In response, management attributed this matter to a system lapse which affected
the automatic deduction of WHT deductions. Although the Accounting Officer
explained that e-Tax payments had been processed for the amounts in question, I
was not availed evidence of actual payment of the tax in question.
I advised the Accounting to always adhere to the tax law while making payments.
34.13 Expenditure for Fumigation Services - Shs.31,683,000
The Ministry engaged a contractor to undertake fumigation services of Amber
House at a contract sum of Shs.31,683,000. However, audit review revealed there
478
was no evidence that the contract was awarded competitively in line with PPDA
regulations. In addition although the Ministry occupies about 30% of Amber
House, with the rest of the building occupied by other tenants, the ministry paid
the entire bill; there was no evidence that efforts were made to have other tenants
contribute to the total bill. This was therefore wasteful.
The Accounting Officer explained that the ministry offices were invaded by rodents
that damaged its computer network system and IFMS; this necessitated urgent
fumigation of the entire building to prevent further damage to the networks.
HEALTH SECTOR
35.0 MINISTRY OF HEALTH
35.1 Mischarge of Expenditure
Out of the total Ministry, expenditure of UGX.53,730,701,618 a sum of
UGX.13,431,161,682 (25%) was charged on expenditure codes other than those
under which it was appropriated. The practice portrays a breakdown of controls in
the budget implementation process and implies that the financial statements are
misrepresented to the extent of the mischarge.
Management attributed the anomaly to underfunding of some items in the budget.
I advised management to streamline the budgeting process and ensure that
payments are correctly charged on the item codes to enable proper
implementation of the Ministry‘s programmes.
35.2 Funds not accounted for
Funds totalling to UGX.13,052,912,535 were paid out for various activities but
remained un-accounted for by the time of writing this report. In the absence of
the necessary accountabilities, I could not confirm whether the funds had been
put to the intended use. The following table summarizes the funds not accounted
for on activity basis.
479
Particulars Amount (UGX)
Programme funds in the Ministry 331,058,034
Transfers to Emergency Account 837,284,048
Nodding disease syndrome payments not accounted for 799,614,000
Unaccounted for funds for Ebola Epidemic 698,080,620
Unaccounted for funds for Recruitment of Health Workers 2,456,839,000
Funds for Retention of medical officers at Health Centre IVs 1,944,000,000
Unsupported salaries payments to Intern Doctors 5,148,465,980
Expenditure without supporting records 837,570,853
Total 13,052,912,535
Delayed accountabilities may lead to falsification of documents and the practice is
also contrary to paragraphs 217 of the Treasury Accountability Instructions.
I advised the Accounting Officer to ensure that funds are fully accounted for and
to provide for mechanisms of ensuring timely accountability for such payments in
future.
35.3 Unverifiable Salaries for bonded staff
A sum of UGX.559,444,355 was purported to have been paid to the Ministry
bonded workers deployed in various districts hospitals and health facilities.
However there were no personnel records for the respective staff to confirm the
existence of such employees. There is a risk that some of these employees may
not be existing.
I advised management to ensure that the personnel records for the affected staff
are kept and maintained at the Ministry headquarters.
35.4 Accumulation of Payables
According to the Statement of Financial Position, The Ministry had payables of
UGX.8,541,022,766, up from UGX.2,588,020,748 the previous year. Of this
amount, UGX.3,091,460,197 is owed to UMEME and NWSC while
UGX.3,771,617,043 is owed to National Medical Stores. The accumulation payables
is contrary to the government commitment policy on domestic arrears. Under this
policy, Accounting Officers are not allowed to commit government without
confirming availability of funds.
480
The Accounting Officer stated that the PS/ST had guided that domestic arrears
should carry first call on the next budget. This would curtail the implementation of
activities in the next budget year.
I advised the Accounting Officer to always adhere to the commitment control
policy to avoid uncontrolled accumulation of domestic arrears.
35.5 Liabilities recognized as contingent liabilities
The Ministry recognized contingent liabilities of UGX.6,748,728,628 relating to
funds owed to NDA, NMS and JCRC, down from UGX.11,765,341,884 reported in
the previous year. The balances related to suppliers who had delivered services
and therefore the resultant expenditure could not result into contingent liabilities
(i.e. the obligating events of companies providing services occurred).
The current treatment of the liabilities understated the domestic arrears position
of the ministry resulting into misrepresentation of the financial statements.
Management stated that they had taken note of the matter and were to review
the issues and make corrective adjustments. I was not provided with evidence of
any adjustments made.
35.6 Diversion of Funds
During the year, the Ministry made various refunds to Uganda Sanitation Fund,
CDC and UNICEF of UGX.22,980,000, UGX.111,252,5000 and UGX.839,441,954
respectively. The refunds were charged on the National Disease control
Programme and Mulago Kampala Capital City Authority Project (MKCCAP). I was
not provided with evidence that the borrowed funds had been used to fund
activities under this programme and project. There were no ledgers maintained to
keep track of the borrowed and refunded amounts.
Management explained that the borrowing had been necessitated by the pressure
of epidemics and emergencies that occurred in the health sector.
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I advised the Accounting Officer to avoid the practice of mixing up the project and
programme funds through ―borrowing‖ and ―refunding‖ which are not properly
documented.
35.7 Outstanding Letters of Credit
Five Letters of Credit (LCs) with balance of UGX.1,023,907,010 were reported in
the financial statements under Receivables, which had not changed from the
balance reported in the previous financial year. This implies that the LCs did not
perform. However, a list of outstanding LCs availed to me showed that
UGX.918,687,512 was outstanding as at 30th June 2013 as shown in the table
below. The variance of UGX.105,038,498 could not be explained. The financial
statements are likely to be misrepresented with regard to the outstanding letters
of credit (receivables).
Name of Supplier
Date When
opened
LC No Bank
Contract Sum
Balance Amount
(UGX)
Period extension
from 5th Feb 2013
Ace Consult
Ltd
11/3/2009 MH/3414/1
1
BO
U
564,761,358 30,644,238 6 Months
Armpass Technical
13/06/2008 MH/3414/02
BOU
535,251,768 104,961,228 -do-
Coronation Developers
25/07/2008 MH/3414/01
BOU
483,409,110 132,885,543 -do-
Excel
Construction
20/07/2009 MH/3514/0
2
BO
U
2,177,607,183 370,771,266 -do-
Spencon Services
16/03/2010 MH/3514/06
BOU
1,183,558,928 279,425,237 -do-
Total 918,868,512
My recommendation to management was to restate the balance on receivables not
implemented.
35.8 Revenue Performance
The Ministry budgeted to receive UGX.63,996,436,682 for implementation of the
planned activities for 2012/13 financial year. However only UGX.52,493,621,441
(82%) was received resulting into a shortfall of UGX.11,502,815,241 (18%).
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Shortfalls in budgeted funds affect the implementation of planned activities and
consequently the achievement of the Ministry‘s objectives.
Management explained that the Ministry and the sector generally was
underfunded and therefore making initiation of critical activities difficult.
I advised the Accounting officer to continue liaising with the Ministry of Finance,
Planning and Economic Development to ensure that funds in the approved budget
are released for implementation of all planned activities.
35.9 Delayed implementation of the National Health Insurance Scheme
The National Health Insurance Scheme (NHIS) project commenced in 2007, with
intentions to facilitate the provision of accessible, affordable, acceptable and
quality healthcare services to all the beneficiaries of the scheme. UGX.706,000,000
was allocated in financial year under review towards the scheme. The MoH activity
work plan showed NHIS Act as one of the major planned outputs financial year
2012/2013. However it was noted that this output was not achieved.
Management explained that they were in the process of requesting for a certificate
of financial implication from the MoFPED and thereafter have the bill tabled to
Parliament.
I advised management to expedite the process and ensure that the bill is tabled to
Parliament for enactment.
35.10 Redundant Printing Unit
In 2007, the Ministry‘s printing unit was demobilized from Entebbe to Kampala
after the shifting of the Ministry operations earlier. It was noted that
the equipment has not been installed since then. The seven (7) staff who were
supposed to operate and run the unit have also been idle while drawing salaries
for the last six (6) years.
The redundancy of the machines could lead to their obsolescence and yet they
could have reduced the cost of printing of documents such as magazines,
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newsletters, posters, brochures and leaflets on which more than UGX 100million
was incurred during the financial year.
The Accounting Officer explained that the printing unit equipment was secured at
Mulago Hospital stores and that the Ministry had undertaken a procurement to
have it reinstalled.
I await the outcome of this undertaking by management.
35.11 Inadequate Fleet Management System
It was observed that the Ministry had a fleet of 293 Motor Vehicles at
headquarters. A review of the status and condition of the vehicles revealed the
following matters:-
There were motor vehicles which were in poor condition necessitating frequent
repairs and maintenance. For example, forty six (46) motor vehicles had been
grounded and required to be boarded off. Management explained that because
of the Government ban on procurement of new vehicles, the Ministry had
continued to the old fleet of vehicles they had. They stated that a disposal
process of 80 motor vehicles had commenced.
The Ministry lost one (1) motor vehicle but had never reported the matter to
the Permanent Secretary/Secretary to the Treasury, contrary to paragraph 390
of Treasury Accounting Instructions. Management explained that investigations
had been instituted to have the matter resolved.
Motor vehicle registration numberUG1688M was taken by an officer who retired
but the circumstances under which this happened remained unclear.
Management explained that they had contacted the officer several times and
wrote to him officially but did not return the vehicle. They also stated that
processing of his retirement benefits had been halted and the police was asked
to impound the vehicle.
I await the outcomes of management‘s actions.
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36.0 UGANDA BLOOD TRANSFUSION SERVICES
36.1 Proposed Store Construction
Stemming from the inadequate space and the nature of the Blood Bank‘s
operations, the Blood Bank contracted a local firm at a cost of UGX.42,350,000 to
design and come up with drawings for a store that is to be constructed at the
Blood Bank Headquarters. It was however, noted that funds have not yet been
secured to commence the construction works.
The Accounting Officer stated that the Ministry of Finance, Planning & Economic
Development has been approached through the Sector Wide Budgeting Group for
the Health Sector to source for funding for the civil works to commence in
2014/15 financial year. I await the outcome of management‘s action.
36.2 Funds not accounted for
Out of a total of UGX.117,102,521 advanced to staff for official activities
UGX.107,778,521 was accounted for leaving a balance of UGX.9,324,000
outstanding . Delayed accountability may result into falsification of documents.
I advised the Accounting Officer to always ensure that advance payments are
accounted for in a timely manner in accordance with Treasury Accounting
instructions.
37.0 UGANDA AIDS COMMISSION
37.1 Budget Performance
Out of the total appropriated budget of UGX.5,507,195,000 for the year under
review, the Commission realized UGX.5,261,961,073 (95%), thereby registering a
shortfall of UGX.245,233,927. Revenue shortfalls undermine implementation of
planned activities.
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I have advised management to continue liaising with the Ministry of Finance
Planning and Economic Development to ensure that all appropriated funds are
released to enable full implementation of planned activities.
37.2 Non remittance of PAYE and NSSF
Review of employee costs in the statement of financial performance and cash flow
statement revealed a variance of UGX.25,548,455.
Management attributed the variance to deduction of PAYE and NSSF contributions
by Ministry of Public Service (MOPS) amounting to UGX.20,623,341 and failure to
release UGX.4,900,114 of the approved budget by the Ministry of Finance Planning
and Economic Development(MOFPED).
I advised management to follow up with MOPS and MOFPED to ensure that the
statutory deductions are dully remitted to the responsible agencies and
appropriated funds are fully released respectively.
37.3 Non Disposal of Grounded Vehicles and Unused Items
Regulation 295(5) of the PPDA, 2003 requires a Procuring and Disposing Entity
(PDE) to identify assets for disposal on a periodic basis. A review of the
Commission‗s fixed assets‘ register revealed a number of grounded vehicles and
motor cycles which had not been disposed of. There is risk of further loss in value
of the affected assets.
In his response, the Accounting Officer explained that the disposal process had
been initiated.
I advised management to expedite the process of disposal so as to avoid further
loss in the value of the assets.
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38.0 HEALTH SERVICE COMMISSION
38.1 Lack of IT personnel
A review of the Commission‘s operations revealed that the Commission did not
have an IT expert to operate and professionally manage the available computers
(27 desktops) and E-recruitment software in place. There is a risk of
mismanagement of the IT resources.
The Accounting Officer explained that the Commission staff
establishment/structure initially did not provide for an IT person but the Ministry
of Public Service had granted the Commission permission to create the post of
Systems Administrator.
I await the outcome of management action.
38.2 Management of old Motor Vehicles
(a) Wasteful parking charges
The Commission‘s motor vehicle registration number UG 0383B (Suzuki Vitara)
was involved in an accident in early 2010, towed and parked in Workers House
basement. Audit noted that the Commission incurs monthly parking fees of
UGX.120,000 or over UGX.5,760,000 for the more than four years the vehicle has
been parked. It was noted that vehicle risks being vandalized besides the
accumulating of costs.
In his explanation, the Accounting Officer stated that the vehicle had been
recommended for boarding off and a disposal process that was carried out in
2012/2013, failed to attract any buyer. Another disposal process had been initiated
to have the motor vehicle disposed of.
I advised the Accounting Officer to expedite this process for which I await the
outcome.
487
(b) Abandoned Motor Vehicles
Two motor vehicles of the Commission were abandoned and grounded at private
garages for more than 3 years, where they had been taken for repairs; UG 0351B
grounded at Africa Motors since August 2010 and UG 0382B grounded at Cooper
Motors garage since early 2011.
The failure to repair the vehicles and have them returned to the Commission
exposes them to a risk of being vandalized and effects of weather.
Accounting Officer explained that the Commission was not able to raise funds
required for the repairs of the vehicles, which had been estimated at about
UGX.65 million. The Commission was liaising with the Chief Mechanical Engineer
on the process of disposing them off. I await the outcome of this undertaking by
management.
38.3 Budget performance
Review of the approved budget estimates and the financial statements for the
year revealed that out of the total budget of UGX.3,865,673,394, the Commission
received only UGX.3,555,264,221 (91.9%), resulting in a shortfall of
UGX.310,409,173. A shortfall in funding affects implementation of the
Commission‘s planned activities.
I advised management to liaise with Ministry of Finance, Planning and Economic
Development and other relevant stakeholders for improved funding.
38.4 Non-submission of quarterly reports by District Service Commissions
Section 26 (2) of the Health Service Commission Act, 2001, requires District
Service Commissions (DSCs) to submit quarterly performance reports to the
Health Service Commission; these reports help the HSC to keep abreast with the
businesses conducted by the DSCs in executing their mandate in relation to the
mandate of HSC. Most districts submitted one or two quarterly performance
reports for the financial year under review.
488
Failure to submit quarterly reports by DSCs is irregular and implies that the HSC
cannot have consolidated information regarding the number of health staff
recruited, promoted and confirmed in service for proper planning.
I advised the Accounting Officer to always ensure that DSCs submit to the HSC
quarterly reports as required and should consider assigning the role of follow up to
an officer.
39.0 BUTABIKA MENTAL REFERRAL HOSPITAL
39.1 Shortfall in supplies ordered
In the year under review, the hospital received drugs valued at UGX.582,053,641
as compared to the value of orders made of UGX.798,952,318, resulting into a
deficit of drugs valued at UGX.216,898,677.
Management attributed this to the specialized nature of the services offered by the
hospital, whereby NMS initially experienced challenges in supplying the medicines.
I have advised the Accounting Officer to plan properly for the specialized
medicines and have the requirements fully met by NMS, since this is the only
referral hospital for the kind of services offered.
39.2 Poor mechanical condition of the Hospital Ambulances
It was noted that two of the hospital‘s ambulances were in poor mechanical
condition, while the third one had been recommended for disposal. Lack of
properly functioning Ambulances hampers service delivery in the hospital.
Maintaining the old Ambulances is also costly.
Management explained that the hospital had budgeted for procurement of a new
Ambulance during the FY 2013/13 and the process was in advanced stages. I have
advised the Accounting Officer to ensure that the process of procuring a new
Ambulance is expedited and to have the old one disposed off to avoid further
deterioration in value.
489
39.3 Encroachment on Hospital Land
The Hospital was issued with a freehold Land Title on 22nd May 2008 for the pieces
of land covering 76.795 hectares (189.763 acres). An audit inspection of this land
revealed that several encroachers had occupied Plots 89-90 and had erected semi-
permanent structures, without authority of the Hospital Board of Management. It
was noted that management of the hospital had not taken any measures to stop
this encroachment and is likely to face difficulties in evicting these encroachers in
future.
Management explained that all the hospital land had been re-surveyed and the
encroachers had been served with eviction notices. In addition materials for
fencing off the affected land had been procured.
I advised the Accounting Officer to expedite the process of fencing off the affected
land and have the encroachers evicted.
39.4 Status of hospital equipment
Most of the equipment used in the hospital was in good condition but only needed
regular servicing, which is hampered by lack of local technicians. For example, the
hospital X-Ray equipment is always repaired by experts sourced from Nairobi. This
makes the repairs expensive and may require standby equipment.
Management explained that the nature of the x-ray equipment is specialized and
unique and cannot be repaired by local bio-medical engineers hence necessitating
outsourcing within the region. I have advised the Accounting Officer to enter into
a service level agreement with the service provider so that the servicing period
and intervals are properly planned.
490
40.0 UGANDA CANCER INSTITUTE
40.1 Staffing Gaps
Out of the 78 approved positions at the institute, only 52 positions representing
67% of the established structure had been filled leaving 26 posts vacant. Key
positions including Medical Officers of Special Grade, Senior Consultants,
Consultants, Nursing Officers, Senior Hospital Administrator, Senior Principal
Nursing Officers, Senior Procurement Officer, Procurement Officer and medical
officers were among the unfilled.
This matter has not been given the attention it deserves as reported in my
previous audit report for the year ended 30th June, 2012. Such staffing gaps lead
to work overload on the existing staff and limit the ability of the Institute to
effectively deliver its mandate.
I advised management to liaise with the relevant stakeholders and have the
staffing gaps filled.
40.2 Procurement & expenditure
(a) Irregular Procurement of Consultancy
An individual was awarded a consultancy to develop an operational manual for
UCI, at a cost of UGX.9,975,000. Subsequently, UGX.5,000,000 was paid vide
expenditure voucher No. R35/10/12.
However, it was noted that the consultant was handpicked. It was further
observed that, no contract was signed for this procurement. In addition, no
performance reports were presented for audit and neither was there a waiver from
PPDA to allow UCI to procure the services using Direct Procurement Method.
Management explained that an individual with previous experience in the
preparation of the manual was required.
491
I have advised the Accounting Officer that solicitation of proposals from at least
three experts would have provided the necessary competition in the exercise.
Meanwhile, management should obtain and avail all the missing documentation.
(b) Unplanned Procurement
PPDA regulation 96 (1) of 2003, stipulates that a user department shall prepare a
multi-annual, rolling work plan for procurement based on the approved budget,
which shall be submitted to the procurement and disposal unit to facilitate orderly
execution of annual procurement activities.
Contrary to the Regulations, UGX.9,159,322 was spent on procuring furniture yet
it was not included in the entity‘s procurement plan. Further more, the entity used
the Direct Procurement Method without the Contract Committee‘s approval.
The practice undermines the principles of transparency, fairness and competitive
pricing for the items. I have advised management to always ensure that all
procurements and disposals are conducted in accordance with procurement
principles enshrined in the PPDA Act and Regulations.
(c) Violation of the Procurement Regulations
Included in the purchases out of imprest was an amount totalling to
UGX.7,383,000 which was released in respect of two procurements;
i) Purchase of curtains for the clinicians‘ consultation room in the OPD section at
UGX.4,083,000,
ii) Making twenty pieces of wooden pallets for use in the stores and kitchen at
UGX.3,300,000, however, the following observations were noted:
Suppliers were sourced directly for each of the procurements without observing the
procurement thresholds contrary to PPDA Regulation 106 (1) which stipulates that
a procuring and disposing entity shall use the procurement methods specifies in
Part VI of the Act of all procurements.
I have explained to the Accounting Officer that the procurement thresholds would dictate
in such circumstances that the procuring and disposing unit requests for
492
quotations from at least 3 suppliers in order to create a competitive exercise which
eventually brings about fairness and transparency.
I have advised management to always adhere to the PPDA Regulations in all its
procurement undertakings in order to achieve value for money.
(d) Irregular allowances
Section E of the Public Service Standing Orders, 2010 provides for the different
kinds of allowances that public officers are entitled to and a copy of the allowances
Circular No. 4 2008, clearly indicates revised standard rates of allowances
accessible to all public servants.
A review of the institute‘s imprest revealed that an amount of UGX.40,170,000
was paid in respect of irregular allowances to different employees of the entity.
The irregularity constituted two forms:
i. Paying higher allowance rates than what is stipulated in the Public Service
Regulations,
ii. Allowances not traceable to the Public Service Standing Orders, 2010 were
paid to institute employees for activities considered routine in nature.
I further advised management to liaise with Ministry of Public Service on
regularizing the allowances paid.
40.3 Inspections
(a) Congestion in wards
A physical inspection of the institute premises and wards revealed congestion that
is attributed to the high number of patients and attendants, that exceed the
originally planned capacity. There is a risk of increase in cross-infections due to
contamination.
Analysis of the planned capacity and the current number of admissions at the
institute revealed the following gaps;
493
Name of
ward
Category Planned
Capacity
Current
Capacity
L.T.C Children ward 32 53
S.T.C Adult ward 24 38
Private General 9 15
The Accounting Officer explained that the Institute has constructed a six (6) level
ward that will be put to use after installing equipment to ease congestion.
I have advised the Accounting Officer to liaise with relevant stakeholders and have
the building equipped to ease on the congestion.
(b) Expired drugs
An inspection conducted in the institute‘s drug store revealed that an assortment
of drugs worth UGX.898,848,322 had expired. Expired drugs represent a loss to
the public and further loss may be incurred in the process of their destruction.
Management explained that due to the long procurement process, the drugs were
delivered when their usability period was short. I have advised management to
liaise with the key stakeholders and streamline procurement for essential drugs.
(c) Rampant Drug stock outs
It was observed that the institute experiences frequent drug stock outs. The
Accounting Officer explained that supply of some essential drugs takes a period as
long as seven months due to the complexity of the drugs and the nature of
patients medical needs. This affects service delivery in that patients are not able
to get treatment in time
I have advised management to ensure procurement plans are submitted promptly
to NMS and re-order levels for essential drugs are established for ease of placing
orders.
494
40.4 Non-reconciliation of drug supplies with NMS
It was noted that Uganda Cancer Institute did not make regular reconciliations
with NMS regarding drug supplies .For the year under review, while NMS indicated
that drugs worth UGX.651,723,362 had been delivered, UCI disputed this assertion
stating that no invoices were received. Management attributed the anomaly to the
failure by NMS to provide monthly statements in respect of drugs and medical
supplies.
I advised management to obtain monthly statements from NMS for reconciliation
purposes. In addition invoices and delivery notes should be obtained on every
delivery.
41.0 UGANDA HEART INSTITUTE
41.1 Doubtful Expenditure
Funds totalling UGX.85,228,265 advanced to various individuals and organizations
to execute activities of the institute lacked relevant supporting accountability
documents contrary to the requirements of the Treasury Accounting Instructions.
In the absence of these documents, I was unable to confirm whether the funds
were spent on the intended activities.
I advised the Accounting Officer to ensure that advance payments are always
accounted for in accordance with the Treasury Accounting Instructions (2003).
41.2 Utilisation of NTR without authority
The Institute planned to collect UGX,2,033,000,000 in NTR and realised
UGX.2,700,538,488. Details show that part of the excess collections, was spent
without appropriate authority in form of a supplementary budget required under
Sections 16 and 17 of the Public Finance and Accountability Act (PFAA), 2003.
This practice is irregular.
495
I advised the Accounting Officer to ensure that the legal provisions regarding
supplementary funding are always adhered to.
41.3 Shortfall in transfers from MoFPED
A review of the financial statements revealed that out of the revised budget of
UGX.3,759,683,764, the Institute received only UGX.2,641,202,052 from Ministry
of Finance Planning and Economic Development (MoFPED), creating a short fall in
funding of UGX.1,118,481,172 thus curtailing the implementation of planned
activities.
I advised the Accounting Officer to always liaise with MoFPED to ensure that
appropriated funds are released to the Institute to enable implementation of the
planned activities.
41.4 Drug Management Issues
Expiry of Drugs
Audit noted that the Institute had a number of expired drugs which needed to be
destroyed. It was also noted that NMS delivered Dobutamine (used in Intensive
Care Unit and Theatre) with only three months remaining of its shelf life (Aug-Nov
2012). The drugs with short shelf life pose a risk to the lives of patients and the
medical staff, and ought not to have been accepted by the Institute.
I advised management to ensure that drug deliveries are checked and verified to
ensure that those with a short shelf life are rejected. I further advised them to
liaise with the NMS and National Drug Authority and have the expired drugs
properly disposed of.
41.5 Staffing Gaps
Out of the 192 approved staffing positions in the Institute, only 68 (35%)
positions were filled. The key positions critical to service delivery in the Institute
for example Director, Deputy Director, Senior Medical Officers of Special Grade,
Senior Consultants, Consultants, Senior Internal Auditor, and Medical Officers were
496
among those not filled. This matter was reported in my previous audit report for
the year ended 30th June 2012 but no action was taken. Such staffing gaps lead
to work overload on the existing staff and may affect the level and quality of
service delivery.
The Accounting Officer explained that the Institute liaised with relevant authorities
and consequently ten (10) positions had been approved to be filled in the 2013/14
financial year.
I await the feedback on this management action. Meanwhile, management should
fast track turning the Institute into a semi-autonomous entity to be able to recruit,
remunerate and retain its own staff and consultants.
I advised management to implement the audit recommendations so as to ensure
enhanced accountability and better stewardship of the resources availed to the
Institute.
42.0 MULAGO REFERRAL HOSPITAL COMPLEX
42.1 Misclassification of expenditure
UGX.213,000,000 paid to various institutions , departments and individuals for
carrying out research activities , running medical camps and contribution to
professional bodies was wrongly charged on the item of transfers to other
organizations instead of the respective expenditure codes, thereby misstating the
financial statements. It was further noted that the funds lacked accountability.
Though management stated that the accountability was available, the relevant
documents were not submitted for verification.
I advised management to always charge expenditure in accordance with the
appropriation Act. Meanwhile the funds should be accounted for or recovered
accordingly.
497
42.2 Payment of Value Added Tax on Exempt Supplies
A sum of UGX.62,375,000 was paid to a local firm in respect of supply of CT Scan
Films for the Radiology Department. Out of this payment however, UGX.9,514,830
was in relation to the 18% Value Added Tax (VAT) paid in contravention of
Section 79 of the VAT Act 1996, which exempts the supply of dental, medical and
veterinary equipment from VAT.
Further review also revealed that this payment was irregularly effected on a non
Tax Invoice.Management explained that action had been taken by writing to the
firm demanding for refund and response was awaited.
I await the outcome of the management‘s action.
42.3 Outstanding Domestic Arrears
The Payables of UGX.1,704,626,602 reported in the financial statements
comprise electricity bills that have been outstanding since financial year ended
30th June 2010. There is risk of cessation of services and higher costs arising
from possible litigation.
Management attributed the long standing arrears to lack of funding for the item.
I advised management to ensure that the outstanding bills are budgeted for and
settled.
42.4 Revenue Performance
Out of the Hospital budget of UGX.44,315,643,000 , onlyUGX.42,625,168,502 was
realized resulting into a shortfall of UGX.1,690,474,498.Given the nature of
services offered by the hospital, inadequate funding greatly affects the level and
quality of medical services.
I advised management to identify and adequately address the causes of under
collection of Non Tax Revenue and to liaise with Ministry of Finance, Planning and
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Economic Development to ensure that all appropriated funds are released to the
Hospital.
42.5 Advance payments through employees’ bank accounts
During the year under review, the Hospital made advance payments amounting to
UGX.292,656,588 to individuals through their personal bank accounts contrary to
sections 227 and 228 of the Treasury Accounting Instructions, 2003. Though the
funds were eventually accounted for the practice is vulnerable to abuse and could
easily lead to loss of public funds.
I advised the management to ensure that funds are paid directly to the intended
beneficiaries and service providers to eliminate the risk of loss of funds.
42.6 Staffing Gaps
Out of the 2,091 approved positions in the staff structure of the hospital, only
1,860 (89%) positions had been filled leaving 231 vacancies (11%). Audit noted
that the department of Radio therapy, Nuclear Medicine, Planning, Community
Health, Anaesthesia, Paediatrics and Child Health were greatly affected. This also
affects the level and quality of service delivery.
The Accounting Officer explained that the matter had been taken up by the the
Health Service Commision and most of the remaining vacancies had been declared
for filling.
I await for the outcome of this undertaking by management and the Health
Service Commission.
REGIONAL REFERRAL HOSPITALS
43.0 ARUA REGIONAL REFERRAL HOSPITAL
43.1 Unaccounted for funds
Paragraphs 214(a) and 215(a) of the Treasury Accounting Instructions, 2003
require that advances are accounted for without delay.
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During the year under review, it was noted that a total of UGX.132,
061,690 advanced to various staff for various activities remained unaccounted for
by the year end. Furthermore, UGX 102,158,138 paid to various suppliers of
goods and services had no supporting documents. As a result, it was not possible
to confirm that a sum of UGX.234,219,828 spent was properly utilized.
I advised the Accounting Officer to ensure that funds are accounted for.
43.2 Utilization of Non-Tax Revenue (NTR) without authority
Paragraph 94 of Treasury Accounting Instructions (TAI), 2003 does not allow NTR
to be utilised at source unless authorised by the Accountant General. However,
total of UGX 76,960,600 as collection from the private wing and proceeds from
sale of assets was spent at source without authority. Out of the total collections of
UGX.76,960,600, UGX. 51,626,000 was later banked and the balance of
UGX.25,334,600 remained unaccounted for. It was further noted that NTR was
collected by a driver who was not so appointed puts the funds at risk of
misappropriation.
The Accounting Officer claimed that authority to collect and utilize revenue at
source was obtained from the Secretary to the Treasury and attributed use of a
driver to understaffing in the accounts department. However, the authority to use
the funds at source was not availed.
I advised the Accounting Officer to avail the authority to utilize the funds at
source, ensure that the funds are accounted for and a cashier appointed to handle
the collection of NTR.
43.3 Unauthorized reallocations UGX.79,722,845
Contrary to Paragraph 152 of TAI, 2003, Management incurred expenditure over
and above the approved estimates amounting to UGX.79,722,845 on five
expenditure items without seeking the relevant authority.
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The Accounting Officer claimed that these items were spent in accordance with
the approved budget. However, this could not be verified without the approved
reallocation warrants.
I advised the Accounting Officer to desist from incurring over expenditure without
seeking the approval in accordance with the law.
43.4 Unspent balances UGX.867,000,000
Section 19(1) of the Public Finance & Accountability Act (PFAA), 2003 requires that
at the close of the financial year, unspent balances are repaid to the consolidated
fund. At the close of the year, the hospital retained funds totaling to
UGX.867,000,000 without authority. Having such funds by the end of the year
might imply poor absorption capacity.
The Accounting Officer explained that these funds were for the renovation of the
maternity ward and construction of a lagoon which was halted as a result of a
court case.
I advised the Accounting Officer that in the circumstance, authority to retain would
have been sought from the secretary of the treasury to retain the unspent
balances.
43.5 Advance payment to a service provider
Regulation 252(1) of PPDA Regulations, 2003 requires advance payments to be
guaranteed by appropriate security.
The hospital paid an advance of UGX.80,635,638 to the Contractor for the
construction of a 2 bed-roomed flat without appropriate security which was
irregular.
The Accounting Officer claimed that the advance payment had a bank guarantee.
However, there was no evidence that the bank guarantee was provided.
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I advised the Accounting Officer to follow the regulations and ensure that the
advance is fully recovered.
43.6 Absence of salary record cards/establishment registers & mandatory
examination of monthly payrolls:
Paragraph 264 of the Treasury Accounting Instructions, 2003 (TAI) requires that
salary record cards to be maintained. Salary cards show the gross amounts, total
allowances/deductions and net pay for each month. Further, Paragraph 265
requires examination of the monthly pay roll and preparation of pay change
reports for submission to the Ministry of Public Service for action. However,
Management did not maintain salary record cards for each staff and there was no
evidence that monthly payrolls were examined and change reports prepared and
submitted to the Ministry of Public Service. There is therefore a risk that wrong
salaries are paid.
I advised the Accounting Officer to ensure that the salary record
cards/establishment registers are maintained and mandatory examination of the
monthly payrolls is undertaken.
43.7 Contracts awarded without sufficient funds
Regulation 105 (1) of PPDA regulation, 2003 states that an entity shall not initiate
any procurement proceeding or activities for which funds are neither available nor
adequate. However, management entered into a contract to construct one block
of two units of flats at UGX.1,001,744,280 when only UGX.450,000,000 was
provided for in the approved budget. Similarly, another contract for rehabilitation
of the perimeter fence at a contract amount of UGX.529,350,382 was also
awarded when it was not in the approved estimates.
This undermines the process of procurement planning and budgeting.
The Accounting Officer attributed this to the budget cuts in the year and that
funding was to be provided for in the following years since the project span is
three years.
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I advised the Accounting Officer to commit Government on contracts only when
sufficient funds are available in the budget.
43.8 Supply of Medical Equipment – UGX.355, 386,150
A total of UGX.355, 386,150 was spent on procurement of medical equipment
from two service providers. However, the budget allocation for the medical
equipment was UGX.120,000,000. The source of the excess funds of
UGX.235,386,150 was not disclosed. Furthermore, out of the above amount,
procurement records were available for UGX.89,235,000 and the balance of
UGX.266,151,150 was not supported by procurement records.
I advised the Accounting Officer to explain the excess expenditure on the
equipment and avail procurement records for the balance of UGX.266,151,150.
44.0 MBALE REGIONAL REFERRAL HOSPITAL
44.1 Unauthorized Expenditure
According to Treasury Accounting Instruction 152, expenditure not provided for in
the approved estimates of the current financial year may not be incurred without
the authority of a supplementary warrant, virement or contingencies fund advance
warrant.
A sum of UGX.499, 486,625 was paid in excess of the approved budget without a
supplementary warrant as shown in appendix 1.
The accounting officer explained that they had a salary short fall of UGX.
430,000,000 which compelled the hospital to request the Permanent Secretary and
Secretary to Treasury PS/ST for the extra funding.
I advised the accounting officer to seek for the parliamentary approval of the
excess expenditure.
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44.2 Nugatory Expenditure of UGX.143, 564,177
A local construction firm was contracted to construct staff accommodation. It was
however noted that the hospital delayed payments in contravention of the contract
agreement resulting into accumulated interest of UGX 143,564,177.
This expenditure is nugatory and could have been avoided.
The Accounting Officer attributed the interest to inadequate releases.
I advised the Accounting Officer to ensure that commitments are made only when
funds are available in accordance with the regulations.
44.3 Unaccounted for Funds
Para 120 and 181 of Treasury Accounting Instructions (TAIs) 2003 require that all
payment vouchers must be properly supported with appropriate documents or sub
vouchers before they are passed for payment. This is further amplified by section
181 of the same instructions which provide that all vouchers will contain full
particulars of each service or goods and will be accompanied by such supporting
documents as may be required so as to enable them be checked without reference
to any other documents.
During the year under review UGX 88,318,200 in respect of incompletely vouched
expenditure (UGX 64,904,100) and unsupported administrative advances to
council staff (UGX 23,414,100) remained outstanding contrary to these
regulations.
I recommended that the Accounting officer enforces the accountability regulations
as stipulated by the Treasury Accounting Instructions
44.4 Doubtful Tax Remittances
Section 123 of the Income Tax Act, 1997, requires the a withholding agent to pay
URA any tax that has or should have been withheld within fifteen days after the
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end of the month in which the payment subject to withholding tax was made and
regulation 5.6.6 (2) of the LGFAM, 2007 requires PAYE which has been deducted
on salaries and allowances to be remitted to URA.
It was however noted that a sum of UGX.21, 548,079 deducted from contractors
and suppliers in respect of 6% withholding tax lacked the official URA receipts.
There is a risk that the funds were not received by URA and this exposes the
District to the risk of penalties and fines by URA.
I urged the Accounting Officer to follow up the matter and ensure that the funds are
accounted for and also recovery be made for taxes not deducted in accordance with
the Income Tax Act.
44.5 Outstanding Commitments
Section 200 of Treasury Accounting Instructions Part I Finance, provides that all
purchases of goods or services will be subject to the commitment control system
procedures that will be issued by the Accountant General from time to time.
By the end of the financial year, the entity had accumulated outstanding
commitments amounted to UGX.396, 014, 984.
The outstanding commitments can lead to fines litigation costs.
I advised the Accounting officers to adhere to the commitment control system.
44.6 Vacant Positions
A review of the approved structure revealed that the hospital has an establishment
of 429 staff in various positions. The records however indicate that 35 positions
including the senior positions of Senior Consultant Pediatric, Consultant Orthopedic
Surgeon, Consultant Surgeon, Consultant Ophthalmologist, Consultant Physician
and a number of Medical Officers Special Grade are vacant, a situation which has
persisted for the last three years.
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Understaffing and failure to have all necessary positions filled leads to work over
load of staff and undermines delivery of health services.
The Accounting Officer explained that management has constantly used a variety
of approaches including periodic submissions to the ministry of health and public
service. He also indicated that a recruitment plan and the staffing structure and
status has been included in the Output Budgeting Tool to guide the Ministry of
finance provide funds for the extra staff required.
I urged the Accounting Officer to continue engaging the relevant government
agencies with a view of having all vacant posts filled.
44.7 Irregular Payment of Salaries
A review of employee‘s records revealed that there is lapse in updating the payroll
records. From a sample of records on the payrolls for a six months period, it was
established that a total of UGX.19, 144,938 was paid to 4 employees after they
had reached the mandatory retirement age.
The continued existence of ineligible staff on the payroll is attributed to internal
control weaknesses in both human resource and finance departments.
The Accounting Officer attributed the anomaly to absence of a human resource
officer during the period. He also indicated that the response by Ministry of Public
Service in effecting pay changes was rather slow.
I advised the accounting officer to make a follow up of the matter to ensure
money irregularly paid is recovered. Management was also advised to ensure that
human resource records are regularly updated to avoid loss.
44.8 Inspection Report
Audit inspection was carried out at the hospital and a number of salient issues
including; unutilized equipment, poor storage, poor disposal of expired drugs and
some defective projects were noted.
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44.9 Expired Drugs
Some expired drugs were found kept outside at the stores veranda for
approximately one year. It was established that a company in the names of
Green label had earlier been contracted to collect expired drugs on a regular basis
but had not collected since February. Records indicate that the last collection was
on 20/02/2013.
The Accounting Officer revealed that the mandate to dispose expire drugs did not
lie with the hospital but with National Medical Stores.
I advised the Accounting Officer to continuously liaise with the National Medical
Stores to minimize expiry of drugs and to make a follow up with NMS to collect
and dispose of the expired drugs.
45.0 KABALE REGIONAL REFERRAL HOSPITAL
45.1 Audit of Payroll
a) Un effected payroll deletion
A sum of UGX.45,226,480 was irregularly paid due to the failure of the Ministry of
Public Service to delete staff from payroll as per the exception reports that were
raised by the Referral Hospital as well as failure of the Hospital management to
clean up the payroll. This was loss of public funds that would have been used to
deliver service on other programs to the public.
I advised management to recover the funds from the beneficiaries.
b) Vacant Posts
Section 15 (a) of the standing orders 2010 mandates the Ministry of Public Service
to determine the structure, terms and conditions of service of staff in government
service. In line with this requirement, the Ministry approved the staff structure of
the hospital to comprise of 350 positions. Out of this approved Staff
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establishment, only 234 posts were filled leaving staff shortage of 116 positions
(33%) unfilled. Staff shortages adversely affect service delivery.
I advised Management to liaise with the relevant stakeholders in the health and
finance ministry to ensure that vacant positions are filled as soon as practicable.
45.2 Internal Control Weaknesses
(a) Lack of segregation of duties
Treasury Accounting Instructions require Accounting Officers to be responsible for
the financial controls of their entities. Key amongst them is the segregation of
duties. Audit established that the cashier who receives cash, is also responsible for
banking it and maintaining all books of account relating to revenue including the
cash books, revenue register and preparation of bank reconciliations. This practice
compromises the internal control environment in the Finance department.
Management attributed the situation to the challenge of under staffing faced by
the hospital.
I advised Management to address the matter so as to strengthen the internal
controls.
(b) Weaknesses in contract management
Regulation 119 (2) & (3) of PPDA of 2006 requires the User departments to
nominate a member of staff with appropriate skills and experience to be Contract
Supervisor on any contract entered into by the entity and is directly responsible for
supervising the contract.
It was noted that management did not nominate contract supervisors in all the
contracts executed worth UGX185,689,400. Furthermore, the PDU of the hospital
did not carry out contract management and evaluation on projects executed.
I advised management to comply with the PPDA Regulations.
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(c) Commitment control system
A review of financial statements of the hospital revealed that a sum of UGX.
32,460,825 was outstanding in lieu of several services and supplies to the hospital
as at the end of the year contrary to the commitment control system. This
exposes the hospital to the risk of litigation which could lead to eventual loss of
public funds.
I advised management to liaise with the Ministries of Finance and Health to ensure
that these arrears are cleared at the earliest to avoid potential penalties and fines
for late payment.
45.3 Budget Performance
Treasury Accounting Instructions require budget estimates to be based on
objectives to be achieved for the financial year and during implementation, effort
to be made to achieve the agreed objectives or targets as per the programmes of
the hospital. It was noted that hospital had an approved budget of
UGX.4,036,404,000 but only realized UGX.3,900,457,419 creating shortfall of
UGX.135,946,581 ( 3.4%).
Failure to realize budgeted funds impacts negatively on the implementation of
planned activities of the hospital.
I advised the Accounting Officer to always liaise with the responsible authorities to
ensure that all budgeted funds are received and that any budget cuts are properly
planned to avoid disruption of key activities of the Hospital.
45.4 Ineffective hospital board
According to the Referral Hospital Guidelines (2003) issued by the Ministry of
Health, it is a requirement that there should be a hospital Board to provide
strategic guidance to the Referral Hospital through execution of the functions as
stipulated therein. Audit established that there were no committees of the board
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for finance, planning, disciplinary, audit and welfare. The effectiveness of the
Board is therefore affected.
I advised the Accounting Officer to ensure that hospital board executes its
mandate as stipulated in the hospital boards manual.
45.5 Audit Inspections
(a) Construction of Private wing
The Hospital awarded a contractor to construct a private wing at the hospital at a
cost of UGX.2,657,035,984 in May 2009 with the estimated date completion date
being April 2010. The project was delayed for more than 3 years. At the time of
Audit in January, 2014 the contract had expired but work was on going. The
delay to complete the project may lead to extra administrative costs.
Management explained that efforts were being made to expedite completion of
the project and the main contractor had subcontracted some of the works.
I advised the accounting officer to expedite the completion of the project or seek
contract extension.
45.6 Hospital facilities
a) Non-functional and idle medical equipment
Audit inspections revealed that a number of medical equipment for all the Units of
the hospital inspected were found to be obsolete, non-functional and inadequate
for effective service delivery some of the equipment‘s were; ultra sound -scan
machine and the con lab machine.
b) Un safe disposal of medical waste and refuse
It was noted that the waste was dumped in an open pit and burnt. The hospital
also dumped the other waste in the same pit.
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c) Congested patient wards
Inspections of accommodation facilities revealed that a number of wards were too
congested. The surgical and maternity wards were observed as extreme cases
with some patients sleeping on the floor and with bed spacing hardly a metre
apart.
d) Un serviced fire extinguishers
Inspections revealed that some of the fire fighting equipment did have a service
history while others were expired/empty rendering them useless which puts the
hospital at risk of fire.
I advised the Hospital administration to ensure the above anomalies are
addressed.
46.0 LIRA REGIONAL REFERRAL HOSPITAL
46.1 Staffing Gaps
Section 15 (a) of the standing orders 2010 which mandates the Ministry of Public
Service to determine the structure, terms and conditions of service of staff.
In line with requirement the Ministry approved the structure of the Hospital of 347
posts. However, only 260 were filled leaving 87 positions vacant.
The Accounting Officer explained that the Ministry of Public Service has cleared
the filling of up to 23 vacant positions on replacement basis and management was
awaiting action of the Health Service commission.
Under staffing poses a challenge to service delivery and as it may lead to
overworking of the few available staff leading to stress, demotivation and poor
performance.
I advised the Accounting Officer to pursue the matter further with the relevant
authorities and have all the vacant positions filled.
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46.2 Congestion in the wards
Previous audit reports to Parliament, mentioned congestion in the Hospital.
However, An inspection of the hospital wards revealed that congestion still exists.
For instance, it was noted that the children and Male surgical wards were over
crowded to the extent that some patients in the Male surgical ward are attended
to from the corridor. Furthermore, the Children‘s ward which has a capacity of 33
had 46 admissions which exceeded the designed capacity. The hospital also lacks
adequate space in the maternity ward. Below, is a presentation of the situation in
the male surgical ward.
The old sanitary facilities do not match the ever increasing number of patients.
The Accounting Officer attributed it to the non-functioning of lower level health
facilities, and population growth.
I advised the Accounting Officer to liaise with the Ministry of Health and other key
stakeholders to address the matter.
46.3 Dilapited OPD structure and insufficient facilities in the unit
In my previous year report to parliament , I mentioned the appalling state of the
OPD structure and insufficient facilities in this unit. However, a visit to the same
facility revealed that no corrective measures have since been made. It was noted
that there is an ever increasing number of patients in this facility. It was further
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noted that the roof was leaking and the floors are cracked while the sanitation is
deplorable.
The Accounting officer explained that the OPD department is the oldest structure
in the hospital, built in 1922 and has since been condemned, adding that there is
an urgent need for a new out patient department.
Pictorial view of the OPD structure
Outpatients waiting for service in dilapidated OPD1
Dilapidated outlook of OPD building 1
I advised the Accounting officer to bring the matter to the attention of the mother-
ministry for necessary action.
47.0 GULU REGIONAL REFERRAL HOSPITAL
47.1 Domestic arrears paid
The cash flow statement revealed that UGX.420,082,124 was paid to settle
domestic arrears. However, expenditure vouchers together with other supporting
documents were not availed for audit. Accordingly, I could not confirm their
genuineness.
The Accounting Officer explained that the arrears accumulated over the previous
financial years mainly from water bills.
I advised the Accounting Officer to ensure that documentation in support of the
expenditures is provided for audit.
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47.2 Net advances recovered UGX 41,229,994
Advance recoveries presented in the cash flow statement of UGX 41,229,994 could
not be verified in absence of advance ledgers and a schedule and evidence of
recovery.
I advised the Accounting Officer to render the necessary supporting documents in
respect recovery.
47.3 Lack of data on property plant and Equipment
Management reported purchase of property plant and equipment (PPE) at
UGX 1,999,942,521 in the cash flow statement (investing activities). However,
there was no detailed schedule of the items accompanying the financial
statements; neither were procurement and contract management files provided
for audit. This may have been a result of laxity by the procurement and disposal
unit to maintain proper procurement records.
The Accounting Officer stated that the hospital did not have a resident
procurement officer and as such most of the information relating to procurement
could not readily be available.
I advised the Accounting Officer to provide proper documentation of property,
plant and equipment.
47.4 Unaccounted For Funds (UGX 13,156,486)
Paragraph 120 of the Treasury Accounting Instructions (TAI) Part 1 requires that
funds be properly accounted for with appropriate documents. However, a total of
UGX.13,156,486 paid to staff to undertake official activities remained unaccounted
for at the close of the year. As a result, it was not possible to ascertain whether
the funds were put to the purpose for which they were intended.
I advised the Accounting Officer to ensure accountability or recovery.
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47.5 Staff Shortages
Section 15 (a) of the standing orders 2010 mandates the Ministry of Public Service
to determine the structure, terms and conditions of service. Accordingly the
Ministry of Public Service approved a staff establishment of 426, of which 291
posts were filled (68%), leaving 188 posts vacant under staffing impacts
negatively on service delivery.
The Accounting Officer explained that the vacant post had been cleared by the
Ministry of public service for recruitment. By the time of writing the report,
however, recruitment exercise had not yet started.
I await the outcome of management action.
47.6 Nugatory Expenditure for Civil Suits UGX. 168,794,700
A review of records revealed that the Hospital had incurred legal costs of
UGX168,794,700 in respect of court cases and general damages for breach of
contract, and non payment of creditors. These costs could have been avoided had
management adhered to the commitment control system and contract terms.
Accordingly the expenditure is nugatory.
I advised the accounting officer to observe the commitment control system and
compliance to contract terms to avoid such situations in future.
47.7 Unremitted Withholding Tax (UGX. 65,201,024)
Section 124 (1) of the Income Tax Act 1997, provides for deduction of Withholding
tax and remitting to Uganda revenue authority. However, there was no evidence
that the 6% withholding tax totaling UGX. 65,201,024 deducted from payments to
various contractors was remitted to Uganda Revenue Authority (URA). Unremitted
taxes attract fines and penalties.
The Accounting Officer explained that they had obtained all the receipts, but did
not provide the documents for verification.
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The Accounting Officer was advised to obtain acknowledgement receipt as proof
or remittance of the tax.
47.8 Payment Of Hotel Bills (UGX 38,070,000)
During the financial year, UGX 38,070,000 was paid out in favour of hotel bills.
However, the expenditure was not supported by invoices or demand notes.
Management explained that UGX 7,050,000 was incurred in respect of new staff
reporting on duty while the balance related to arrears of hotel bills accumulated
over the years.
I advised the Accounting Officer to present the supporting document otherwise
the expenditure is suspected.
47.9 Accumulation of Expired Drugs (Status of Store)
Audit inspection revealed expired drugs and sundries that had accumulated over a
long time and needed to be disposed off. Besides, the store is in bad condition as
the roof was on the verge of collapsing.
Finally some drugs were on the floor instead of being put on pallets risking
deterioration. The Accounting Officer explained the expiry of the drugs arose
partly from a donation of drugs worth 500 million received in January some of
which was slow moving and nearing expiry.
I advised the Accounting Officer to ensure disposal of the expired drugs, and
proper storage of drugs.
Section of the roof almost giving way
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47.10 Status of Incinerator
The Hospital has only one functional incinerator used for combustion of organic
substances contained in waste materials. However, the following matters were
noted during inspections.
The existing incinerator in use is small, old and obsolete. As a result it
cannot be efficiently used for the high levels of waste at the hospital as
evidently demonstrated by the quantity of waste items to be disposed of.
The position of the incinerator may easily lead to adverse human health
effects. It was observed that the incinerator spews smoke directly into one of
the adjacent administrative buildings. See pictorial below:
Size of incinerator appears to be too small to
handle the high waste levels
Position of incinerator -less than 10meters away
from the administrative building
The Hospital Director stated that the hospital had just repaired an old incinerator
donated in 1998, but decried the high fuel consumption by the machine. I advised
management to reposition the incinerator or consider using cyclonic incinerators
which burn waste/refuse with neither smoke nor smell as well as make
consultations with the relevant authorities on the way forward.
47.11 Construction of Radiology Unit
A firm was awarded a contract to construct a new X-Ray department at a cost of
UGX €242,963.53 (about UGX 923,261,414) funded by Italian government. The
construction work started on 16th March, 2013 and was expected to take 12
months. An audit inspection noted that €20,000(UGX 76,000,000) had been
advanced to the contractor.
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However, the following matters were noted:-
Contract records relating to the project were not availed as management
explained that project was being handled by entirely the Italian corporation.
The contractor abandoned the site in November 2013 (approximately 3
months to the scheduled completion time).
It was also noted that the monitoring of the project was poor.
I advised the Accounting Officer to engage the development partner to avail
copies of the contract records.
48.0 MBARARA REGIONAL REFERRAL HOSPITAL
48.1 Cash and cash equivalent
From the review of financial statements, it was noted that cash and cash
equivalent on the cash flow statement of UGX.437,497,658 differed from what was
stated in the statement of financial position of UGX.695,522,177 rendering the
reported cash and cash equivalent doubtful. I could not confirm the accuracy of
financial statements.
48.2 Non Tax Revenue UGX.207,269,950
During the year, the hospital purportedly collected UGX.207,269,950 as Non Tax
Revenue (NTR). However, no revenue ledgers were maintained for the revenue
collected, no cash book for the NTR collections from July 2012 to February 2013
was presented for audit.
In the absence of revenue registers, I could not confirm the completeness of the
reported NTR revenue reported in the financial statements.
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48.3 Assets Management
a) Lack of Fixed Assets Register
Treasury Accounting Instruction 804 requires that a fixed Assets register be
maintained to show the location of plant, property and equipment of the Hospital.
This register will also show the articles in the custody of each officer. All officers in
charge of plant and tools are required to keep inventories recording each article,
its date of receipt, and the reference to the respective Plant and Tools Ledger. It
was noted that the entity did not maintain a fixed assets register contrary to the
regulation.
The Accounting Officer explained that a register tool provided by Accountant
Generals Office that captures all details is under implementation but the officer
responsible had been transferred.
The Accounting Officer was advised to maintain a fixed assets register to record all
hospital property including plant and equipment.
b) Non Engraving of assets
Best practice requires that entity assets are engraved for ease of identification.
However, during verification, it was noted that most of the assets are not
engraved. This makes it difficult to identify the items in case of loss.
Management explained that engraving is a continuous process that is done
whenever additional assets are procured and the exercise is ongoing.
The Accounting Officer was advised to establish the fixed assets register and to
engrave all the assets.
48.4 Board of Survey report
Board of Survey is mandated to verify the cash balances and security
arrangements at the main cash office, all sub-offices and other entity
establishments holding cash or items of value, as well as inspect and verify all
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goods on charge and belonging to the entity. The board of survey report
highlighted that the Private Patients‘ Account Cash book was not reviewed and
Government release account cash book balance was reported as not reconciling
with the bank balance. As such, I could not confirm cash balances at the end of
the year.
I advised the Hospital Administrator to ensure compliance with the regulations.
48.5 Disposal of assets
Regulation 295 (5) of the PPDA, 2003 requires a procuring and disposing entity
through the board of survey to identify assets to be disposed of on a periodic
basis. The board of survey report recommended a number of grounded vehicles
and un-used items due for boarding off. The failure to timely dispose grounded
vehicles and old items results in further deterioration.
Management explained that the exercise delayed due to inadequate manpower in
the PDU to initiate the disposal process. The old ambulance will be repaired since
it is in running condition.
I advised the Accounting Officer to ensure the obsolete assets are timely disposed
off in accordance with the laid down procedures and the PPDA regulations to avoid
further deterioration in their value.
48.6 Storage space
Inspection of Stores revealed that, the stores where medicine and other related
health supplies were kept did not have adequate space. Some of the drugs were
packed along the corridors. The 8 rooms purportedly used as stores were too
small and lacked the required standards for storage of medicine and other health
supplies.
Poor storage facilities hinder physical check, retrieval and reconciliation of drugs.
It may also lead to losses through theft and pilferage. There was apparent
520
overload of drugs and sundries on shelves which causes damage to drugs and
may break shelves.
I advised the Accounting Officer to provide enough space so that all store items
are accommodated in a well arranged manner.
48.7 Lack of Vote control Registers
Paragraph 412 and paragraph 415 of the Treasury Accounting Instructions
mandates an accounting officer to maintain a Vote Control register, electronically
or manually and to watch not only the progress of expenditure incurred and
committed but also the progress of collection of revenue for which they are
accountable. A review of a sample of vote control registers revealed that progress
of commitments was not watched/ monitored and as a result some votes were
overspent.
The Accounting Officer was advised to closely watch the progress of expenditure
commitments and guard against over expenditure.
48.8 Inspections
(a) Dilapidated building
Hospital Buildings were found to be very dilapidated due to lack of regular repair
and maintenance, rendering the structure weak and dangerous for human
habitation as shown below.
Management acknowledged the shortcomings and explained that the matter is
being addressed under the District master plan; the structures are designated for
521
demolition and replaced with new ones. Management should ensure that the
structures are renovated for better services.
I advised the Accounting Officer to source for funding to improve on the Hospital
buildings.
49.0 FORT PORTAL REGIONAL REFERRAL HOSPITAL
49.1 Entity Financing
Fort Portal Regional Referral Hospital was financed by grants (Conditional and
Unconditional) from Central Government, donations and locally generated
revenues from taxes, fees, licenses and charges. During the year, the entity
received grants totaling to UGX.4,636,498,347 from Central Government, UGX
74,466,164 from other government units and UGX 164,543,299 from locally
generated revenues. The total revenue of UGX4,875,507,810constituting 111% of
its approved budget estimates of UGX 4,401,870,858. Out of the funds received
UGX.4,451,864,904 (91%) was spent on service delivery and administration costs.
49.2 Detailed Audit Findings
This section outlines the detailed audit findings, management responses and my
recommendations in respect thereof.
49.3 Unauthorised Excess Expenditure: UGX 266,042,151
A review of the approved budget against actual expenditure on various item codes
revealed several expenditures in excess of the budget provision with no virement
or authority to reallocate contrary to enabling laws as detailed below.
ITEM BUDGET ACTUAL AMOUNT Excess Expenditure
Allowances 94,864,000 222,275,536 127,411,536
Welfare & Entertainment 69,853,000 94,055,430 24,202,430
Property Expenses 39,801,000 40,084,940 283,940
Electricity 53,774,000 88,457,872 34,683,872
General Supply of Goods 90,059,000 145,960,633 55,901,633
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Travel Inland 89,236,000 99,773,800 10,537,800
Fuel, Lubricants & Oils 90,418,000 99,902,000 9,484,000
Mtce of Mach.& Equip 45,304,000 48,840,940 3,536,940
TOTAL 266,042,151
There was no authority in form of approved reallocation or virement warrants
obtained to incur the over expenditure.
The Accounting Officer explained that the excess expenditure arose because of
more income from the private wing.
I advised the Accounting Officer to spend in accordance with approved budgets
and to seek approval for excess expenditure as required by the PFAA 2003.
49.4 Missing Records: UGX 172,632,541
Regulation 90 and 91 of the PPDA Regulations of 2003, requires an entity to
ensure that all records in respect of procurement are filed on the respective
procurement files. Records for procurements amounting to UGX 172,632,541
were not availed for audit. Absence of procurement is an indication procurements
which are potentially fraudulent.
The Accounting Officer explained that the previous Procurement officer had not
handed over the keys that would enable them access the documents.
I advised the Accounting Officer to ensure that the documents are availed for
review.
49.5 Understaffing
Public Service Standing Orders Chapter (A-a) paragraph 15(a) requires the
Permanent Secretary Ministry of Public Service to determine the terms and
conditions of Service and the structures of the public service in consultation with
the secretary to the treasury.
523
It was noted that out of the establishment of 420 posts, only 312(74%) were
filled leaving 108(26%) posts vacant as shown below.
SECTOR APPROVED FILLED VACANT %GE
VACANT
Doctors 41 17 24 59%
Nurses Division 152 114 38 25%
Paramedics 88 66 22 25%
Administration 32 18 14 44%
Support Staff 107 97 10 9%
Total 420 312 108 26%
Management responded that it was difficult to attract and retain health workers
due to lack of accommodation and poor remuneration.
I advised him to liaise with the Ministry of Public Service and Finance to design
strategies of attracting and retaining staff at the hospital.
49.6 Incomplete Fixed Asset Register
TAI 2003 Part 11 Public Stores Para 804-806 requires a Fixed Asset Register to be
maintained showing the asset code, description, serial number, date of acquisition,
value, condition and location.
It was noted that although the Fixed Asset Register for the Referral Hospital exist
details such location, condition, date of purchase, valuation of some assets were
not shown in the register.
In the absence of full details about the assets in the fixed assets register, the
verification of the items becomes difficult. In addition, it was noted that some
items had not been recorded in the register.
The Accounting Officer stated that management had taken interest in the assets
register and instituted the inventory committee to have the register updated.
524
I urged the Accounting Officer to ensure that the asset register is updated for
proper management and monitoring of assets.
49.7 Service Delivery
(a) Disposal of Expired Drugs
Analysis of the Hospital drug store data revealed that there were expired drugs
which had not been destroyed
The Accounting Officer explained that expired drugs are confined in a secure place
different from the other drug stores and that professional pharmacists were in
place to ensure that there is no linkage to the main system.
I advised the Accounting Officer to liaise with other stakeholders like NMS and
NDA to ensure that expired drugs are promptly disposed off.
50.0 JINJA REGIONAL REFERRAL HOSPITAL
50.1 Lack of land titles
It was noted that the hospital did not have land titles for six pieces of its land. The
hospital land is exposed to risk of encroachment. The Hospital Director in his
response stated that some plots of land are in dispute and are in courts of law
while others, have their titles being pursued by relevant authorities. I advised the
Accounting Officer to ensure that the land titles for the hospital are secured.
50.2 Unaccounted for Funds
Paragraph 217 of the Treasury Accounting instructions 2003, requires that
advances not accounted for within 60 days from date of payment should be
deducted from the monthly salary of the debtor and new advance should not be
given to anybody with unsettled advances.
525
On the contrary, a sum of UGX.10, 374,924 advanced to an officer to undertake
official activities remained unaccounted for contrary to the provisions under the
Public Finance and Accountability Regulations and the Treasury Accounting
Instructions. In the absence of proper accountability, I was unable to confirm that
the funds were utilized for the intended purpose.
I advised the Accounting Officer to ensure that the funds are accounted for or else
recovery from the recipient be effected.
50.3 Establishment and Staffing
(a) Staffing Gap
Out of the approved establishment of 575 posts, 327 posts had been filled,
representing 57% of the establishment, leaving a staffing gap of 248 posts which
are not filled. Staffing gaps negatively affect the service delivery. The Hospital
Director attributed the gaps to inadequate wage bill and a ban on recruitment by
the Ministry of Public.
I advised him to liaise with the Health service commission and Ministry of Public
service so that the staffing gap is minimized.
(b) Over Establishment
There were over establishment of Twenty eight (28) staff; of whom the hospital
had spent UGX.311,441,586 on salary costs. This expenditure is irregular.
I advised the Hospital Director to evaluate the need for those staff and ensure that
the structure is reviewed to accommodate them.
(c) Non Established Posts filled
A review of the approved/established structure revealed that there were some
posts which were not on the establishment but have been filled without authority.
526
As a result a sum of UGX.47, 847,324 was irregularly spent on the staffs who
occupy the non established posts. The details are in the table below;-
Post Approved Filled Salary per Month Amount (UGX.)
annual
Medical Laboratory
Technician
0 3 657,143 23,657,148
Medical Record Assistant
0 1 406,237 4,874,844
Auditor 0 1 952,468 11,429,616
Senior enrolled Nurse 0 1 657,143 7,885,716
6 47,847,324
The expenditure is irregular. The Hospital Director indicated that submissions were
made to MOPS to regularize the appointments or transfer those whose posts do
not exist on the structure.
I advised him to ensure that follow up is made so that the issue is addressed.
50.4 Drugs and other items
(a) Under Delivery of Drugs and Other Items
The hospital receives drugs and other items under the credit line of the Ministry of
Health. It was however noted that the hospital budget under the credit line was
UGX1, 353,693,181 out of which drugs worth UGX.1, 326,222,793 were delivered
leaving a balance of UGX.27, 470,388.
The Hospital Director admitted the shortfall of drugs deliveries and explained that
the funds were carried forward to the FY 2013/2014.
I advised the Accounting Officer to ensure that National Medical Stores (NMS)
makes good the shortfall.
(b) Expired Drugs
It was noted that there were expired drugs to be returned to National Medical
Store/Joint Medical store for further destruction. The failure to dispose of the
drugs poses a danger to the community.
527
I advised the Accounting Officer to follow up the matter and ensure that the drugs
are destroyed.
(c) Non- functioning of Equipment’s
During the year under review the hospital paid UGX.75, 200,000 as part payment
for the equipment worth UGX.579,688,000 supplied in November/December,
2011.
However, audit inspections revealed that they were either non-functional or had
broken down.
An interview with responsible users of this equipment revealed that most of the
equipments delivered had problems which have never been addressed.
The Accounting Officer explained that UGX.23,000,000 had been withheld because
of these defects pending suppliers to train users.
I advised the Accounting Officer to ensure that the equipment is repaired and put
to proper use.
50.5 Inspection of Hospital
(a) Accounting for drugs
Samples of drugs for the month of March were verified and the following
observations were made;-
There were cases of stock variances between quantities of drugs issued to
the pharmacy and those acknowledged. The amount involved was
UGX.3,617,500. Details as follows;-
Items Issued to the
Pharmacy as per
the issue
vouchers
(tablets)
Acknowledged
receipts in the
stock cards
(tablets)
Variance
(tablets)
Cost
per tin
(UGX)
Amount
(UGX)
Erythromycin 22,000 12,000 10,000 70,600 706,000
528
Amoxicillin tab 140,000 70,000 70,000 35,000 2,450,000
Ceftriaxone 27,000 0 27,000 1,000 27,000
Metronidazole 66,000 20,000 46,000 4,500 207,000
Ciprofloxacin 35,000 0 35,000 6,500 227,500
290,000 102,000 188,000 3,617,500
About 64.8% of the drugs issued to the pharmacy from the store were not
acknowledged and their stock cards were missing in the pharmacy store
and some had partially filled stock cards.
Others like amoxicillin and ciprofloxacin had stock cards which were filled
partially. Lack of filled stock cards creates difficulties in monitoring drug
movements within the pharmacy and other wards which increases the risk
of drug thefts.
It was noted that the Dispensing Section had no formal requisitions to the
pharmacy section for the drugs to be issued to the patients.
Ministry of health guidelines require all units to fill in a drug dispensing log,
however; during inspection it was noted that the drug dispensing log for
the month of March 2013 was not available and therefore, there was no
accountability for drugs dispensed to patients.
The Accounting Officer accepted the anomalies and attributed them to staffing
gaps in pharmacy and stores. He promised to address the issue of staffing gaps.
I advised him to follow up the matter and ensure appropriate recruitment.
(b) Stores condition
It was noted that the drug store was congested, and some of the drug shelves
were too dirty to be used for storing medicines. It was observed that drugs are
placed on the floor and not on pallets as recommended. This exposes drugs to
deterioration.
529
Furthermore, the fire extinguishers in the store expired six years ago and have
never been serviced. There is a risk of loss of drugs in case of a fire outbreak. The
accounting officer promised to address the issues raised.
I advised the Accounting Officer to ensure that store conditions are improved.
(c) Inspections of the wards
An inspection was carried out in the wards to assess their functionality and the
following issues noted:
There are no delivery beds at the labour ward
The Theatre bed/ Operating table does not rotate
The Anaethesiatic machine has not been serviced since it was acquired in
2008.
The Auto claves were not working.
The children‘s ward was congested.
Shower rooms were in poor state
Houses for the nurses were in poor state.
I advised the accounting officer to engage stakeholders to address these
anomalies.
(d) ICT Security and Maintenance Policy
Review of the IT general and application controls revealed that the hospital has
not formulated an IT policy and there was no evidence of any effective measures
that had been taken to create awareness regarding IT security amongst staff
despite having 25 desk top computers, 4 laptops, some printers and scanners.
Accordingly, misuse of computer equipment, loss of vital data and information and
theft could not be ruled out.
The Accounting Officer reported that the hospital has engaged a consultant to
formulate the IT security and maintenance policy.
530
Management was advised to follow up and ensure IT security and maintenance
policy is in place.
51.0 SOROTI REGIONAL REFERRAL HOSPITAL
51.1 Grants from Development Partners.
A grant totaling to UGX 148,467,529 from development partners (Expanded
Immunization Programme under World Health Organization) was not reflected in
the hospital financial statements and as result statement of financial performance,
cash flow statement and statements of appropriation accounts and as result were
misstated.
The Accounting Officer promised to adjust the accounts to reflect funding from the
development partners which was not done. The financial statements are
therefore, misstated to that extent.
I advised the Accounting Officer to adjust the accounts accordingly which was
never done.
51.2 Un-Accounted for Funds
Section 215 (a) of TAI Part 1 requires advances to be accounted for without delay.
UGX. 22,993,660 paid to several staff to undertake official activities remained
unaccounted for at the close of the financial year.
There was laxity on the part of the management to enforce controls regarding
accountability and also lack of records to monitor those advances.
In absence of accountability, it was difficult to ascertain whether all the funds
were utilised for intended purposes.
I advised the Accounting Officer to ensure that accountability documents are
obtained from the responsible offices or funds be recovered from them.
531
51.3 Staffing Shortage of the Medical Staff
Section 15 (a) of the standing orders 2010 mandates the Ministry of Public Service
in consultation with the secretary to the treasury to determine the structure,
terms and conditions of service of local government staff.
It was noted that the hospital was under staffed with only 265 positions filled
against the approved structure of 331 posts leaving a gap of 66 posts (19.6%)
vacant which includes Key positions of Specialists (52%) not filled. Lack of
sufficient staffing in key positions affects effective and efficient service delivery to
the public and deprives patients of specialized attention.
Management explained that staff shortage is attributed to retirement, death and
transfers and that the hospital is trying to ensure that the vacant positions are
filled, despite a ban on recruitment.
I advised the Accounting Officer to liaise with the line Ministry to ensure that
critical positions are filled as per the approved structure.
51.4 Payables
Section 198, Part I of the TAI, 2003, requires all purchases of goods or services to
be subject to the commitment control system procedures. A review of the financial
statements revealed that the hospital paid UGX 20,000,000 of the outstanding
payables of UGX 462,368,144 (as per note 26 to accounts) brought forward from
2011/12 financial year leaving a balance of 442,368,144. The delay to settle
domestic arrears may attract interest and fines.
The failure to settle outstanding commitments was attributed to budget cuts by
Ministry of Finance.
I advised the Accounting Officer to ensure that all government commitments are
based on availability of funds as required by the commitment control system.
532
52.0 MASAKA REGIONAL REFERRAL HOSPITAL
52.1 Over payment on construction of retaining wall
The hospital entered into contract with a firm to construct a retaining wall,
landscaping and paving of parking yard for the new staff hostel at a contract sum
of UGX.385,162,280. Analysis of payments to the contractor revealed that
UGX.478,534,870 was paid to the contractor leading to excess payment of
UGX.93,372,590.
There was no evidence in support of the over payment that was made to the firm.
I advised the Accounting Officer to explain the over payment, failure to which
recovery of the over payments should be made.
52.2 Excess Expenditure
The Hospital budgeted for UGX.2,560,090,000 for salary, electricity and water.
However, the actual expenditure for the year was UGX.2,627,104,722 leading to
an excess expenditure of UGX.67,012,727. This expenditure lacks the required
authorization from parliament
Item Ledgers/Budget Financial statement Variance
Staff salary 2,409,092,000 2,437,239,913 28,147,913
Electricity 52,500,000 94,953,101 42,453,101
Water 64,500,000 94,911,713 30,411,713
Total 2,560,092,000 2,627,104,727 67,012,727
The Accounting Officer stated that management requested for a supplementary to
cover a salary shortfall of UGX.28,239,913, however, to their surprise the hospital
received UGX.65,939,927 from the MOFPED and the balance of UGX.37,792,014
remained with the Bank of Uganda.
I advised the Accounting Officer to liaise with MOFPED and Bank of Uganda to
reconcile the balance and have the funds accounted for and ensure Parliamentary
approval for the excess expenditure.
533
52.3 Payables
A review of outstanding commitments schedule reveals that the entity had
payables amounting to UGX.141,846,386 in form of goods and services consumed
by the close of the financial year. It is not clear how management intends to
settle them. In any case accumulation of payables is contrary to government
system of commitment control (CCS).
I advised the Accounting Officer to liaise with the mother ministry and have the
bills cleared and ensure that CCS is observed.
52.4 Procurement irregularity on remodeling Neonatal Unit
Management entered into contract with a firm in May 2013 to remodel the
Neonatal unit at a contract sum of UGX.15,133,000. A review of the procurement
documentation revealed that the record of issue of solicitation document, record of
receipt of bids and record of bid opening were not certified by the procurement
and disposal unit (PDU) due to inadequacies of the PDU.
The Accounting Officer explained that there were generally weaknesses in the PDU
which were being addressed in liaison with the Accountant General.
I urged the Accounting Officer to liaise with the Accountant General to have the
PDU officer replaced in order to address the weaknesses of the procurement unit.
52.5 Expired Drugs
It was observed that drugs worth UGX.31,826,000 had expired. These drugs had
been delivered by National Medical Stores (NMS) to the hospital through the push
system. Expired drugs are a loss of funds. The Accounting Officer explained that
some drugs had expired from the store the bulk of which were under global fund
and Integrated Management of Acute Malnutrition delivered under the push
system.
534
I advised the Accounting Officer to inform NMS of the expired drugs for necessary action.
53.0 MUBENDE REGIONAL REFERRAL HOSPITAL
53.1 Financial Statements
(a) Accounting records
The Hospital did not avail cash books, abstracts, subsidiary ledgers, journals, vote
books payment vouchers, revenue registers, asset registers, contract registers
General Ledgers. Consequently, I could not ascertain whether the financial
statements are a true reflection of the transactions of the hospital during the year
of review.
(b) Outstanding commitments
UGX.92,029,568 owed to contractors remained out standing at the closure of the
year but it was not disclosed in the schedule of outstanding commitments.
(c) Lack of Budget Approval and Performance Reports
The hospital budget lacked board approval as there were no minutes availed for
audit.
I advised the Accounting Officer to avail evidence of board approval and
performance reports for audit review.
(d) Journalizing payroll
The district paid out salaries totaling UGX.1,170,000,000 to staff for the financial
year 12/13 through the straight through process under the hospital vote but did
not journalize the expenditure yet they had budgeted for the expenditure. The
expenditure is therefore misstated in the financial statements.
535
(e) Unsupported figures of fixed assets acquired
A review of the statement of stores and other assets (physical assets) acquired
during the ended 30th June 2013 revealed non-residential assets of
UGX.119,584,000 and UGX.219,167,000 which were not supported with assets
schedules rendering verification difficult.
In all the cases above I advised the Accounting Officer to take corrective action to
address the anomalies.
53.2 Imprest holder not officially appointed by the Accounting Officer
Section 227 of the Treasury Accounting Instruction Part 1 Finance requires the
imprest Holders to be appointed by Accounting Officers with the Approval of the
Accountant General. It was observed that the hospital draws UGX.18,000,000
annually as imprest. However the imprest holder has never been appointed
officially by the Accounting Officer neither was there an approval by the
Accountant General.
The Accounting officer should ensure that imprest holders are formally appointed.
53.3 Non implementation of the investment plan
In the financial year 2010/2011 the hospital entered into contract with a firm to
carry out consultancy services to develop 30 year master plan for the hospital at a
contract sum of UGX.149,840,000.
Although the entity received the investment plan it has never implemented it.
Besides, investment strategic plan does not state the goals, strategies,
objectives and activities to be carried out and has no linkage with National
Development Plan (NDP).
The Accounting Officer was advised to ensure implementation of the plan and
address the above gaps.
536
53.4 Over expenditure on capital development procurements
The hospital had a capital development procurement budget of UGX.500,000,000
of which UGX.338,750,000 was released. This amount was for the construction of
VIP Emptible latrines, supply of assorted furniture, supply of assorted equipment,
construction of a parking yard, supply of patients monitor, supply and installation
of metallic shelves and two computer sets. A review of the expenditure vouchers
revealed that the entity spent UGX.375,351,376 exceeding the actual release by
UGX.36,601,376. There was no evidence of authorization of the excess
expenditure nor the source of funding.
I advised the Accounting Officer to provide authority for the over expenditure and
evidence of source of additional funding.
53.5 Procurement Irregularities
(a) Construction of a Parking Yard
The entity entered into contract with a firm to construct a parking yard at a
contract sum of UGX.102,705,750. The contract started 15 days after signing the
letter of bid acceptance in June 2013 and it was rolled over to financial year 2013-
2014. By the time of Audit the company had received UGX.38,617,362 as advance
payment leaving a balance of UGX.64,088,388 outstanding. A review of the
procurement file revealed the following:
Two companies were issued with the bid document however, evidence of receipt
of the bid documents was not availed for audit.
An inspection carried out in November, 2013 revealed that the Gate and the
security house were not yet completed. The pavers were broken implying poor
quality materials and workmanship. Pictures below refer.
537
Unfinished gate unfinished security guard house at foundation level
I advised the Hospital Administrator to ensure completion of the project.
(b) Supply and installation of metallic shelves
The referral hospital entered into contract with a firm for supply and
installation of metallic shelves at a contract sum of UGX.28,208,626.
Payment of UGX.17,957,760 had been made to the company leaving a
balance of UGX.10,250,866. It was noted that the procurement
requisition Form 20 was not approved by the authorizing officer.
There was a contradiction on the date and time of bid opening, as the
record of bid opening indicates date and time of bid document on
22/01/2013, at 10.30 am while the date and time in the request for
quotation document is 18th/01/13.
I advised the Hospital Administrator to explain the above anomalies.
(c) Construction of emptible VIP 6 stance latrine
The referral hospital entered into contract with a firm for construction of emptible
VIP 6 stance latrine at a contract sum of UGX. 39,331,000. The contract started on
3rd February, 2013 and it was supposed to end on 3rd April using restricted
bidding method. Payments made at the time of audit totaled to UGX.33,688,520
leaving a balance of UGX.5,642,480 outstanding. Inspection carried out in
November 2013 revealed that the emptible toilets were completed and were
already in use.
538
However, a review of the procurement file revealed the following:
Requisition for requirement was not approved by the authorizing officer.
The request for quotation was purportedly issued to the five firms, however
there was no evidence that the companies received /picked the solicitation
document.
Emptible pit latrine
I advised the Hospital Administrator to explain the above anomalies.
(d) Supply and installation of 10,000 ltrs 2 water tanks
The referral hospital entered into contract with a contractor for Supply and
installation of 10,000 ltrs 2 water tanks at a contract sum of UGX. 17,540,000. The
contract started on 3rd February, 2013 and it was supposed to end on 3rd April
2013. By the time of audit the company had been paid UGX.17,961,520 more by
UGX.421,520 implying even the retention money had been paid before the defect
liability period. An inspection carried out revealed that the tanks were supplied and
installed.
A review of the procurement file revealed the following:
Invitation to bid was purportedly issued to three companies that is: H eki
however, there was no evidence of receipt of the invitation documents by all
these companies.
A record of issue indicates only two companies.
A record of receipt and bid opening revealed that only one company received
and returned the bid document which was evaluated as the best bidder.
539
Both tanks were supplied and are already in use
(e) Consultancy service for development of Bill of Quantities &
drawings for latrine, parking yard & walk way construction
The Referral Regional Hospital entered into contract with a company at a
contract sum of UGX. 9,800,000 to carry out Consultancy service for
development of BOQs & drawing s for latrine, parking yard and walk way
construction. By the time of audit the entity had received UGX.9,212,000
leaving a balance of UGX.588,000 un paid.
A review of the procurement file revealed that four companies were approved to
be invited for solicitation documents however, only two companies did
acknowledge receipt and only one company returned the bid document whose
opening was not witnessed by representative of the contracts committee. Time of
bid opening was not indicated.
I advised the Accounting Officer to address the above anomalies.
(f) Supply of assorted medical equipment
The Referral Hospital entered into contract with a firm under contract number
MDH/SPLS/12-13/00058/0009 to supply assorted medical equipment‘s at a
contract sum of UGX. 62,225,000. The contract was supposed to start in March
and end on April 2013. By the time of audit the supplier had been paid
UGX.58,416,300 leaving a balance of UGX.3,808,700.
540
A review of the procurement file revealed the following:
Three companies were issued with invitation to bid document.
The record of receipt of bid document and record of bid opening revealed that
two other companies were included in the receipt of bid document and
yet there was no evidence that those companies were invited to bid.
Date and time of bid opening was not indicated on the record of receipt and
opening of the bid documents.
Record of bid opening was not witnessed by any representative of the
contracts committee.
It was noted that the contract did not have the required technical knowledge
on the equipment. Besides, the contract manager did not prepare progress
reports.
Inspection carried out in November revealed that some of the purchased
equipment‘s were damaged, broken and some had started rusting. Examples of
the damaged equipment were the patient's trolleys at accident & emergency,
maternity and OPD, Theater wheel chairs which lacked wheels as they had fallen
off and the equipment were over loose.
The instrument trolley‘s stainless coating had started peeling off, the trolleys,
wheel chairs had one peddle as the other may be broken or all peddles
broken,
Patients bed screens in wards 1,2,3,4, the medical children's wards, maternity
wards and surgical wards had all the wheels of the trolleys had all fallen off
making it difficult to move patients around the ward.
Other trolley frames are broken at the hinges point which makes it difficult to
maneuver with patients. Pictures below all refer.
Broken patients screens broken hinges
541
The Accounting Officer was advised to explain the above anomalies with a view of
effecting recovery from the supply for the damaged equipment.
(g) Purchase and use of drugs from National Medical Stores
A review of National Medical Stores drug supply revealed that the entity had a
budget of UGX.988,000,000 for drugs to be supplied by National Medical stores
out of which UGX. 615,794,302.59 worth of drug deliveries were made by National
Medical Stores to the Hospital during the period under review leaving a balance of
UGX.273,856,275 unutilized. The following observations were made:-
There was no evidence of reconciliation between drug and medical supplies
orders and receipts.
There was no reconciliation between the invoice received and the actual
amounts debited on the account of the Referral Hospital.
In the absence of reconciliations between the Hospital records and the National
Medical Stores it is difficult to ascertain the actual value of receipts and balances
owing to the Hospital by National Medical Stores.
I advised the Accounting Officer to reconcile the credit line at National Medical
Stores with the value of actual drugs received in order to ascertain the balances
owing by National Medical Stores.
53.6 Internal Controls
(a) Lack of internal audit unit
It is a requirement to institute an internal control department to mitigate on the
risks however it was noted that for the year under review the entity did not have
internal audit department. As a result, management is not able to mitigate risk
and fraud in the organization.
I advised the Accounting Officer to urgently put in place an internal audit section
to enhance the internal control.
542
(b) Lack of segregation of duties in the Accounting System
In order to achieve the objectives of internal controls the function of authorization
of transactions, execution of transactions and custody of assets, this should be
segregated. Officials charged with the duty of examining and checking accounting
transactions should not themselves be engaged in the processing any of these
transactions. However, it was noted that most of the accounting work was being
done by the cashier, that is; initiates, payment prepares payment vouchers, post
the cashbook, writes cheques, draws money from the bank, effects payment and
prepares financial statements.
This could lead to errors, intentional or otherwise occurring and remaining
undetected since the work of one person is not checked by another person.
I advised the Accounting Officer to enforce segregation of accounting duties in
Hospital.
(c) Risk management policy
The responsibility of maintaining a risk management system and an effective
internal controls system lies with the Hospital Administration and the Board.
However, the management has not established and documented a risk
management system for the Hospital. In the absence of a risk management
system the hospital operations are exposed to risk.
The Accounting Officer should develop a documented risk management system
that would assist in mitigating risks.
53.7 Lack of an IT policy
It was observed that investments in terms of computers had been acquired to
improve operations. However, there are no IT policies to regulate their use.
Besides, there was no IT specialist. As a consequence there was no effective
543
general and application controls in existence that would ensure proper logical and
physical access and security over data.
I advised the Accounting Office to liaise with the Ministry of Information
Communication Technology (ICT) to formulate IT policies, to guide in
management of IT resources, and also liaise with the Ministry of Public Service
with a view of recruiting an IT staff.
53.8 Staffing
It was noted that the hospital has operated without a substantive Executive
Director, Senior Accountant and Human Resource Manager for the whole financial
year. These are critical positions that should be filled.
I advised the Accounting Officer to liaise with the relevant authorities to ensure
that the posts are substantively filled.
54.0 MOROTO REGIONAL REFERRAL HOSPITAL
54.1 Un Accounted for Funds
Section 215 (a & b) of Treasury accounting instructions requires advances to be
accounted for without delay. UGX.3,273,000 advanced to various staff members
for various activities remained unaccounted for at the time of audit.
This was due to the laxity of Accounting Officer to enforce the regulation
regarding accountbaility. It was therefore difficult to ascertain whether all the
funds were utilised for intended purposes.
I advised the Accounting Officer to ensure that accountability documents are
obtained from the responsible offices or funds be recovered from them.
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54.2 Human Resource
(a) Staffing Gaps Section 15 (a) of the standing orders 2010 mandates the Ministry of Public Service
in consultation with the secretary to the treasury to determine the structure,
terms and conditions of service of local government staff. A review of the staffing
position of the hospital revealed that out of the recommended establishment of
393 employees, only 173 (44%) posts were filled, leaving a gap of 220 (56%).
In addition, the hospital does not have consultants and a medical officer special
grade. Lack of key medical personnel adversely affect service delivery.
Management explained that retention of staff in the region was difficult due to the
challenge of lack of accommodation, inaccessible roads, non payment of hardship
allowance, a high cost of living and a harsh environment.
I advised the Accounting Officer to to liaise with the line Ministries of Health and
Public Service to ensure that the critical positions are filled and to meet some of
the challenges.
54.3 Asset Management
(a) Un Boarded off Assets
Section 295(1) of the PPDA Regulations states that the accounting officer shall
ensure that the assets of a procuring and disposing entity are reviewed on an
annual basis, to identify those which are obsolete and subject to disposal. It was
however, noted that hospital assets recommended by the board of survey for
boarding off had not been boarded off.
Delayed disposal of these assets causes further deterioration.
I advised the Accounting Officer to ensure that the above assets are disposed off
in accordance with PPDA Regulations.
545
(b) Hospital facilities
Idle Mobile Work Shop
Uganda Health Systems Strengthening project donated a workshop equipment to
work as the regional mobile medical workshop. However, the van is not utilised
due to lack of a technical operator. Failure to use of the facility may result in
deterioration of the equipment.
Management acknowledged the observation and explained that the Ministry of
Health was requested to procure a technician to manage the workshop.
I await management action of the matter.
Lack of a Mortuary
The hospital lacks a mortuary and it keeps human remains dilapidated municipality
house without a cooling system.
Management acknowledged the short coming and explained that a new mortuary
with modern facilities will soon be built using funds under the UHSSP (World Bank)
project.
I advised the Accounting Officer to liaise with other stakeholders to expedite the
process of procuring a contractor to build the mortuary.
54.4 Lack of internal audit department
Section3 (d) of the PFA Act, 2003 requires that the Accountant- General to ensure
that there is an internal audit function in each Government Ministry, department,
fund and agency. It was, however, noted that MRRH does not have a functional
internal audit department. The function is carried out by staff from Soroti Regional
Referral Hospital. The absence of an internal audit unit weakens internal controls
at the hospital.
546
Management explained that there is no internal audit department in the hospital.
However efforts have been made to liaise with Accountant General to post an
Internal Auditor.
I advised the Accounting Officer to laise with Ministry of Finance, Planning and
Economic Development and Accountant General‘s Office to establish the internal
audit unit.
55.0 HOIMA REGIONAL REFERRAL HOSPITAL
55.1 Funds un accounted for: UGX 13,166,000
Paragraph 217 of Part 1 of the Treasury Accounting Instructions (TAI) 2003
requires advances to be accounted for within 60 days and there after deductions
to be made from the monthly salary of the debtor and no new advance to be
given before accounting for the previous advance.
A sum of UGX 13,166,000 remained un-accounted for at the time of audit contrary
to the Accounting Instructions.
This could be attributed to laxity of management to enforce the accountability
procedures.
Delays in submission of accountability may lead to falsification of documents.
I advised the Accounting Officer to ensure that the funds are accounted for or
else, recoveries be made from the concerned staff.
55.2 Staffing Shortages
Out of 349 posts in the approved structure, only 205 (60%) were filled; leaving a
staffing gap of 144 (40%).
This affects service delivery to the community.
547
The Accounting Officer admitted the shortcoming and explained that given the
workload and catchment area for the hospital, there is need for the Central
Government to ensure that key critical staff are recruited to enable the hospital to
deliver on its mandate.
I advised the Accounting Officer to liaise with relevant authorities to have the
challenge addressed.
55.3 Supply of drugs from NMS: UGX 884,030,372
A review of Orders to the National Medical Stores (NMS) revealed under supply of
drugs as shown below:-
Invoice &
order No.
Delivery No. Order Amount
(UGX)
Invoice
Amount (UGX)
Variance
Amount
(UGX)
0158231 120824 -002 418,894,060 206,348,942 212,545,118
0173305 121017 -005 385,856,600 210,558,660 175,297,940
0202830 12O219 -010 317,757,820 120,168,473 197,589,347
0215967 130410 -004 250,176,340 118,760,411 131,415,929
0229681 130606 -007 250,545,260 83,363,222 167,182,038
1,623,230,080 739,199,708 884,030,372
The failure to supply adequate drugs impacts on well being of the community.
I advised the Accounting Officer to liaise with the National Medical Stores to
ensure that the issue of under supply of drugs is addressed.
55.4 Service delivery
(a) Un Disposed Expired Drugs
The physical inspection revealed expired drugs which had not been disposed off.
It was further noted that drugs supplied were not tailored to the Local Purchase
Orders raised leading to supply of unwanted drugs which end up not being used
instead dumped in stores.
548
Un-disposed off expired drugs can end up on market.
The Accounting Officer explained that management will liaise with the NMS to
have these drugs disposed off in Nakasongola.
I await management action on this matter.
(b) Congestion in the wards
Physical inspection revealed congestion in Obstetrics & Gynecology, Pediatric and
Surgical wards with some patients sleeping under beds and others in the corridors
as shown in the photos below:
The Accounting Officer admitted the shortcoming and stated that it is beyond
management control.
I advised the Accounting Officer to lobby for support from relevant authorities to
address the matter.
56.0 CHINA-UGANDA FRIENDSHIP HOSPITAL NAGURU
56.1 Fuel Expenditure not accounted for
During the period under review, management did not maintain vehicle movement
logbooks and yet the hospital spent UGX.82,883,199 on the item out of which
UGX.43,339,667 remained unaccounted for. In the absence of vehicle movement
logbooks and relevant activity reports, fuel consumption statements and fuel
549
receipts, it was not possible to ascertain whether fuel consumed was used for the
hospital official duties.
I have advised the Accounting Officer that as a matter of procedure vehicle
movement logbooks and relevant activity reports, fuel consumption statements
and fuel receipts should always be prepared and filed as part of the accountability.
56.2 Excess Expenditure on the consumption of Capital Development
Note 4 to the financial statements indicated that UGX.254,391,667, was received
as transfer from the Treasury for capital development during the financial year.
However, the statement of appropriation reported UGX.271,250,000 as
consumption of property plant and equipment resulting into an excess
expenditure of UGX.16,858,333 which was not authorized. The source of the
additional funds could not be established in the absence of virements and/or
reallocation warrants.
The Accounting Officer stated that this was a systems anomaly which would be
rectified in liaison with Treasury. I await evidence of action taken.
56.3 Revenue performance
Out of the appropriation of UGX.2,662,268,504 for the year under review only
UGX.2,436,039,559 was received resulting into a shortfall of UGX.226,228,945
(8%). Under funding of a new hospital of this nature may deny services to the
population.
I advised management to always liaise with the MoFPED to ensure that all
appropriated funds are released to the Hospital to enable full implementation of
the planned activities.
550
56.4 Governance issues
(a) Lack of Strategic Plan
During the course of the audit, it was observed that China-Uganda Friendship
Hospital lacks a strategic plan hence implementation of activities aimed at
achieving the Hospital mission and long term objectives may not be properly
guided.
The Accounting officer explained that a consultant had been contracted to develop
the plan in the financial year 2013/14.I have advised the hospital management to
expedite the process of formulating and developing a strategic plan for the
hospital.
(b) Lack of Hospital Management Board
According to the Ministry of Health National Hospital Act 2006, Part 111, Sec.5
Paragraph 3, all hospitals ought to have hospital management boards. The board
is required to provide strategic guidance to the hospital management team.
However it was observed that the Hospital lacks a board.
I advised management to liaise with relevant stakeholders to constitute the
hospital management board in accordance with the law.
56.5 Lack of Board of Survey Report
Regulation 84(1) of the PFA Regulations empowers the Accountant General to
appoint a Board of Survey for each vote to survey cash, bank balances and stores
held by the Accounting Officer at the end of the financial year. The Board of
Survey report supports the balances in the financial statements and indicates the
status of various assets thereby guiding disposal plans. It was however, noted that
the survey was not carried out for the year under review.
The Accounting Officer explained that the Board of Survey team was awaited from
Ministry of Finance, Planning and Economic Development (MoFPED).I have advised
the Accounting officer to follow up the matter with MoFPED.
551
56.6 Lack of waste management plan
By the nature of its operations and location the hospital requires a waste
management plan to be able guide safe disposal of waste in order to mitigate
environmental and health hazards. It was however noted that this was not in
place.
The Accounting Officer explained that preparation of the plan is under way and
procurement of an environmentally friendly medical waste treatment machine is
on-going. I have advised management to expedite the processes.
56.7 Lack of staff houses and space for expansion
Physical inspection indicated that the Hospital lacks staff quarters and land for
expansion. In addition office space and space for the private wing are inadequate.
Lack of accommodation for critical staff may impair medical interventions in
emergency cases.
The Accounting Officer explained that a process of acquisition of land and
construction of staff accommodation was ongoing in Kyanja, Kampala
(approximately 8km from the Hospital).
I advised the Accounting officer to work with relevant stakeholders to expedite the
process of land acquisition and subsequent construction.
56.8 Non Functional Medical equipment
The inspection revealed that some essential equipment such as Auto Chemistry
Analyzer Machine and Safety Light Machine, which were among the initially
installed equipment, were not functioning well. It was noted that some of the
equipment can only be sourced from China.
The Accounting Officer explained that management is already liaising with the
Economic and Commercial Counsellor at the Chinese Embassy to facilitate
552
replacement and repairs of the equipment. I have advised management to put in
place a long term plan for maintenance and replacement of the equipment.
56.9 Staff Shortages
The Hospital has a total of 181 vacant positions in the medical and administrative
ranks, indicating 52.2% vacancy rate. Significantly there is no single consultant in
the hospital out of the 12 approved posts, and only one Senior Consultant out of
the provision of four (4). This adversely affected service delivery.
Management explained that a request had been made to the Ministry of Health
and the Health Service Commissions to fill the vacant positions. I have advised
management to follow up the recruitment so as to fill the vacant positions.
56.10 Fixed Assets Management
(a) Failure to value and engrave assets
The Assets donated to the Hospital such as the buildings and equipment had not
been valued. In addition physical inspections revealed that assets such as tables,
fridge and some laboratory equipment had not been engraved for ease of
identification. There is a risk of loss of equipment without possibility of being
traced.
It was also noted that despite owning a range of assets, the function of managing
assets had not been formally assigned to any officer. Poor asset management may
lead to loss of hospital assets and poor maintenance.
The Accounting Officer explained that engraving of all newly acquired equipment
was on-going.
I advised management to ensure valuation of hospital properties, engraving of
assets and assignment of the asset management function to a dedicated staff.
553
(b) Failure to maintain Fixed Assets Register
It was noted that the Hospital does not maintain a Fixed Assets Register (FAR)
contrary to Regulation 101 of Public Finance and Accountability Act regulations,
2003. All fixed assets donated and those procured during the year were not
recorded in the register.
Lack of a fixed assets register is a critical internal control weakness that exposes
the hospital‗s assets to a risk of loss without notice. Management was advised to
maintain a proper register which should be up-dated regularly.
(c) Inadequate Operating Theatre
The hospital has got only one operating theatre to handle all the operations
including emergencies. The second theatre which would have been used as the
operating theatre under emergency unit was noted to be non-functional during the
hospital inspection on February 6, 2014. Absence of adequate operating theatres
may lead to loss of lives.
I advised management to liaise with the line Ministry and the other relevant
stakeholders to ensure that the facility is adequately equipped.
EDUCATION SECTOR
57.0 MINISTRY OF EDUCATION AND SPORTS
57.1 Inadequately Supported Expenditure
Treasury Accounting Instructions 181 require payment vouchers to contain full
particulars of services or goods, and be accompanied by such supporting
documents as may be required to enable them to be checked without reference to
any other documents. Contrary to this requirement, it was noted that rental and
internet service payments totalling UGX.371,862,292 lacked supporting documents
554
such as tenancy agreements, invoices and acknowledgement receipts rendering
the authenticity of the expenditure doubtful. The table below refers;
DESCRIPTION_PURPOSE AMOUNT REMARKS
Payment for outstanding Rent
Arrears 120,022,891
No tenancy agreement, payment
receipts and invoice
Project office rent & parking for
January to March 2013 64,820,222
No Tenancy agreement, invoice
and payment receipts
Payment for rent for PES & Statistics
Dept. 46,210,778
No Tenancy agreement, invoice
and payment receipts
DIRECT DEBIT FOR RENT 70,808,401 No Tenancy agreement ,invoice
and payment receipts
Sub total 301,862,292
Settling of overdue payments for
internet email data services 70,000,000 No Invoice and receipts
Sub total 70,000,000
Grand total 371,862,292
.
Though management indicated that the documents were available, they were not
submitted for review. I have advised management to trace and submit the
documents for verification.
57.2 Domestic Arrears
The domestic arrears figure of UGX.27,526,613,527 included VAT;
UGX.25,535,059,360 WHT; UGX.8,834,120, Electricity bills; UGX.1,513,523,108,
and water bills; UGX.94,493,893.
Failure to settle the tax and utility obligations may result into penalties and
cessation of services to the institutions respectively.
In response management explained that;
the VAT arrears were incurred before the introduction of VAT exemptions
on provision of education services in respect of donor funded contracts.
the electricity and water bills relate to BTVET institutions, and they
accumulated at the time when the Ministry was not responsible for their
555
settlement, the individual invoices issued had been retained by the respective
institutions and remained outstanding because MOFPED had not provided
funding.
I advised management to liaise with the respective stakeholders and set aside
funds for settlement of the arrears.
57.3 Unspent Balances
The Ministry returned unspent funds amounting to UGX.2,414,095,426 to the
consolidated fund despite having outstanding payables of UGX. 21.5 billion.
In response, management explained that the unspent balances resulted from late
release of funds from MOFPED. I have advised management to always liaise with
MOFPED to ensure timely release of funds.
57.4 Revenue Performance
Out of the budgeted revenue of UGX.412,501,988,999 the Ministry realized only
UGX.352,768,758,178 (85.5%) resulting into a shortfall of UGX.59,733,230,821
(14.5%). It was noted that, the development and donor components suffered the
biggest shortfall . Budget shortfalls affect implementation of planned activities
negatively. The table below refers;
BUDGET ANALYSIS REPORT FOR FY 2012/13
Approved Budget
2012/13
supplementary Revised Budget
A
Actual Releases
B
Variance/ Shortfall
C=(B-A)
%
Rec 149,513,158,039 13,326,000,000 162,839,158,039 162,653,077,872 (187,080,167) 0.11%
Dev 54,350,999,960 - 54,350,999,960 40,862,027,002 (13,488,972,958) 24.82
%
Sub Tot 203,864,157,999 13,326,000,000 217,190,157,999 203,515,104,874 (13,675,053,125) 6.30%
Donor 195,311,831,000 0 195,311,831,000 149,253,653,304 (46,058,177,696) 30.8
399,175,988,999 13,326,000,000 412,501,988,999 352,768,758,178 (59,733,230,821) 14.48
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In response, management explained that the Development Budget was affected
by the 4th Quarter freeze across all Government where only 13% of the budget
was released.
I have advised management to continue liaising with MOFPED and relevant
stakeholders to ensure appropriated revenue is realized to meet the Ministry
objectives.
57.5 Procurement anomalies
(a) Unapproved Procurement Method
Regulation 94, (1) (a) of the Public Procurement and Disposal of Public Assets
(PPDA) Act, 2003 stipulates that a Contracts Committee or a holder of delegated
authority shall approve the choice of procurement method prior to commencement
of the procurement process. However, UGX.57,550,000 was paid to a company
through the Direct Procurement Method for supply of sports uniforms without the
Contract Committee‘s approval. The possibility of inflation of prices could not be
ruled out.
Management stated that funds were released late in the 4th quarter and the
detailed procurement process could not fit into the prescribed dates for the sports
opening ceremony that was held in Bujumbura, Burundi.
Management is advised that since the sports calendar is known in advance,
procurement of sports uniforms should always be planned and undertaken in a
timely manner.
(b) Doubtful Contracts Award
Regulation 90 (g, h & i) of Public Procurement and Disposal of Public Assets
(PPDA) Act, 2003 requires procurement records to be maintained by a
procurement and disposal unit. However, records for UGX.35,656,779 incurred on
procurement of newspaper advertising space were not availed for review
557
rendering the authenticity of the expenditure doubtful. Though management
indicated that the documents were available, they were not submitted on request.
I have advised management to trace and submit the documents for verification. In
the alternative the funds are recoverable from concerned officers.
(c) Lack of Solicitor General’s approval
UGX.73,868,000 incurred on procurement of hotel services for a workshop was not
supported with the Solicitor General‘s approval contrary to procurement guidelines
which require that all procurements above UGX.50,000,000 shall be approved by
Solicitor General. It was also noted that payments were made before expiry of the
display period for the best evaluated bidder.
In response, management explained that there was a delay by the office of the
Solicitor General to provide the clearance and yet invitations had already been
made. I have advised management to always ensure that the PPDA Regulations
are complied with at all times.
57.6 Lack of Land Titles for Government Schools
It was observed that the majority of Government owned schools lack land titles.
This exposes the Government to land conflicts and legal costs. A case in point was
the loss of UGX.960,882,013 to a private firm in respect of compensation of
property belonging to Aboke Girls Secondary School.
Management indicated that out of 183 Government Schools, land titles for 30
schools had been obtained and arrangements were underway to acquire titles for
the remaining 153 schools. I have advised management to expedite acquisition of
the land titles to enable protection of government investments.
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57.7 Staffing matters
(a) Staffing gaps
A review of the approved staff establishment revealed that out of the 456 posts
only 345 (75.6 %) were filled leaving 111 (24.4%) vacancies. Understaffing
affects the level and quality of service delivery at the Ministry.
Management explained that vacancies continuously arise from high levels of
attrition through retirement, death and abscondment. In addition, Government
imposed a temporary ban on recruitment in July 2012 thereby stagnating the
process of filling the vacancies. In spite of this development, the Ministry
submitted a recruitment plan and requested for clearance to fill vacant posts from
Ministry of Public Service though no response was received.
I have advised management to continue liaising with the Ministry of Public Service
to prioritize filling of key positions.
(b) Failure to Appraise Staff Performance
Section A-m paragraph 14 (a) & (c) of the Public Service Standing Orders 2010
require performance appraisal to be conducted on 30th June of every financial year
for confirmed staff and every 3 months with effect from the date of assumption of
duty for staff on probation. A review of staff personal records revealed that 24
confirmed staff had not been appraised for more than one year.
Failure to appraise staff hinders motivation of good performers and identification
of weaknesses for corrective action.
Management stated that a review exercise would be undertaken to identify non-
compliant staff and carry out the appraisal. I have advised management to
comply with the Public Service Standing Orders accordingly.
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57.8 Output performance
Review of the output performance of the Ministry revealed some significant
shortfalls as follows;
(a) Support to war affected children in Northern Uganda
Whereas the Ministry planned to enroll and support 700 pupils in the war affected
region at a cost of UGX.356,262,000, only UGX.291,698,507 was released resulting
in a variance of UGX.64,563,493. Failure to release the necessary funds may
compromise the quality of services offered to the pupils.
In response, management explained that despite the shortage of the funds, all the
pupils were assisted using the available resources. I have advised management
to liaise with all the relevant stakeholders to ensure adequate funding is provided
to support the war affected children.
(b) Classroom construction and rehabilitation in Primary schools
The Ministry planned to Construct 25 new classrooms, renovate 42 old classrooms
provide 644 desks , construct 142 stances of latrines and 2 blocks of teachers‘
houses in 22 schools at a cost of UGX.16.198 billion. However, only UGX.1.038
billion was released for the activities resulting into a funding gap of 15.890 billion
and this negatively impacted on the programme. As an example some emergency
construction of Primary Schools was not undertaken.
In response, management attributed the shortfall majorly to suspension of funding
by the development partners. I have advised management to engage all the
stakeholders and develop appropriate strategies for mobilizing funds to improve
infrastructure in the schools.
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57.9 SUPPORT TO POST-PRIMARY EDUCATION AND TRAINING EXPANSION
AND IMPROVEMENT (ADB EDUCATION IV)PROJECT
(a) Delayed Procurement of consultancy services
Review of the procurement of consultancy services regarding school facilities
maintenance manual revealed that the process has been delayed as outlined in the
table below:
No Activity Progress reported by
management
Remarks
1. Consultancy services to develop
school facilities maintenance
manual
i) Outstanding but Procurement is underway;
ii) Response from all the short listed firms was
received concerning the
renewal of validity of their Expression of Interest (EoI);
iii) Consultations with the Ministry‘s Construction
Management Unit (CMU)
were finalized; and iv) The Request for
Proposals (RFP) is being developed.
There is need to expedite the
procurement process given that
only six months
remain to completion period
of the project.
Delayed initiation and completion of the procurement process may result into
failure to implement the project timely.
Management in response undertook to implement the activities in the remaining
twelve- months period as follows:
Activity Period
(i) Submit the RFP to the Bank for approval. 10-Jan-14
(ii) Issue RFP to shortlisted consultants 24-Jan-14
(iii) Submission of Proposals by consultants 28-Feb-14
(iv) Bid Evaluation and Award of Contracts 31-Mar-14
(v) Preparation of the maintenance manual 30-Jun-14
(vi) Training of school managers August 2014 Holidays
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I have advised management to undertake adequate and timely procurement
planning.
(b) The Aide Memoire
Review of the AIDE MEMOIRE revealed that works in various schools were behind
schedule. In some cases contracts had been terminated and subsequently
litigation was underway. Court cases are likely to further delay completion of the
works. The table below refers;
DISTRICT SCHOOL WORKS DONE STATUS
Kalisizo Kalisizo TC SSS Construction of a new seed
secondary school
60% complete but the contract has
been terminated
Management should consider
re-tendering the works as soon as
possible.
Mpigi Bulamu SSS Expansion of an existing seed
secondary school
60% complete but the contract has
been terminated
Management should consider
re-tendering the
works as soon as possible
Kamwenge Kamwenge SSS Expansion of an existing seed
secondary school
0% complete but contract has been
terminated.
Contractor put an injunction and the
matter is before Solicitor General
for his advise.
Management should follow up
the matter with
the Solicitor General for
advise.
Kyejonjo Bufunjo SSS Construction of a new seed
secondary school
0% complete but contract has been
terminated.
Contractor put an injunction and the
matter is before Solicitor General
for his advise.
Management should follow up
the matter with
the Solicitor General for
advice.
Rubirizi Katungulu SSS Construction of a new seed
secondary school
0% complete but contract has been
terminated. Contractor put an
injunction and the
matter is before Solicitor General
for his advise.
Management should follow up
the matter with the Solicitor
General for
advice.
Busia Lumino High
School
Centres of
excellence (CE)
Expansion and rehabilitation
60 % complete.
Contractor is 6
weeks behind schedule
Management
should enhance
monitoring and supervision
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Tororo Tororo Girls
School
Centres of
excellence (CE) Expansion and
rehabilitation
70 % complete.
Contractor is 4 weeks behind
schedule
Management
should enhance monitoring and
supervision
St. Peters College Tororo
Centres of excellence (CE)
Expansion and rehabilitation
70 % complete. Contractor is 4
weeks behind schedule
Management should enhance
monitoring and supervision
Mbale Mbale SSS Centres of
excellence (CE) Expansion and
rehabilitation
70 % complete.
Contractor is 4 weeks behind
schedule
Management
should enhance monitoring and
supervision and
also note the issues in the
inspection report
Nabumali High
School
Centres of
excellence (CE)
Expansion and rehabilitation
70 % complete.
Contractor is 4
weeks behind schedule
Management
should enhance
monitoring and supervision and
also note the issues in the
inspection report
Zombo St. Aloysius Nyapea
Centres of excellence (CE)
Expansion and rehabilitation
75 % complete. Contractor is 3
weeks behind schedule
Management should enhance
monitoring and supervision and
also note the
issues in the inspection report
Ibanda Kyezimbire
SSS
Centres of
excellence (CE) Expansion and
rehabilitation
60 % complete.
Contractor is six weeks behind
schedule
Management
should enhance monitoring and
supervision and also note the
issues in the
inspection report
Mbarara Mary Hill High
School
Centres of
excellence (CE) Expansion and
rehabilitation
66 % complete.
Contractor is six weeks behind
schedule
Management
should enhance monitoring and
supervision and
also note the issues in the
inspection report
Mbarara High School
Centres of excellence (CE)
Expansion and rehabilitation
60 % complete. Contractor is 3
weeks behind schedule
Management should enhance
monitoring and supervision and
also note the issues in the
inspection report
Bushenyi Bweranyangi Girls School
Centres of excellence (CE)
Expansion and
rehabilitation
75% complete. Contractor is 3
weeks behind
schedule
Management should enhance
monitoring and
supervision and
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also note the
issues in the inspection report
Ntungamo Muntuyera High
School
Centres of
excellence (CE) Expansion and
rehabilitation
75% complete.
Contractor is 3 weeks behind
schedule
Management
should enhance monitoring and
supervision and also note the
issues in the
inspection report
Kabale Kabala SSS Centres of
excellence (CE)
Expansion and rehabilitation
70% complete.
Contractor is four
weeks behind schedule
Management
should enhance
monitoring and supervision
Masaka Masaka SSS Centres of excellence (CE)
Expansion and
rehabilitation
80% complete. Contractor is four
weeks behind
schedule
Management should enhance
monitoring and
supervision
Masindi Kitara SS Centres of
excellence (CE)
Expansion and rehabilitation
Sites were handed
over for
commencement of civil works
between 16th -19th September
2013
Management
should enhance
monitoring and supervision
Kabarole Kyebambe SS Centres of excellence (CE)
Expansion and rehabilitation
Management should enhance
monitoring and supervision
St. Leo‘s
college Kyegobe
Centres of
excellence (CE) Expansion and
rehabilitation
Management
should enhance monitoring and
supervision and
also note the issues in the
inspection report
Kasese Kasese SSS Centres of
excellence (CE)
Expansion and rehabilitation
Management
should enhance
monitoring and supervision and
also note the issues in the
inspection report
Ibanda Ibanda SSS Centres of excellence (CE)
Expansion and rehabilitation
Management should enhance
monitoring and supervision and
also note the
issues in the inspection report
Iganga Iganga SS Centres of
excellence (CE) Expansion and
Management
should enhance monitoring and
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rehabilitation supervision and
also note the issues in the
inspection report
Mityana Mityana SS Centres of excellence (CE)
Expansion and rehabilitation
Management should enhance
monitoring and supervision
Management attributed the delayed implementation to the need to vary the scope
of work at most of the schools. Whereas the needs assessment was carried out in
2008, actual implementation was three years later in 2011-2012. It was also
explained that, liquidated damages and other sanctions have been imposed on
defaulting companies. The performance and advance payment guarantees
crystalized and US$558,600.62 deposited on the project special account have been
activated. Outstanding works have been budgeted for in the 2014-15 financial
year.
I have advised management to ensure regular supervision of the project among
other interventions and also subject delayed works to liquidated damages where
applicable.
(c) GoU Budget performance
The government of Uganda counterpart funding for the project was determined as
UA; 5,780,000(US$ 8,901,200). However, only UA 3,005,600 (US$ 4,628,624) was
availed implying a shortfall of UA. 2,744, 400 (US$4,226,376). The inadequate
disbursement of GOU funding which is expected to meet 10% of the project costs
may result in failure to achieve the planned objectives. In addition it was noted
that quarterly releases of counterpart funding do not match the contractors‘
requests for interim payments, thereby resulting into arrears of payments.
Management in response explained that the Ministry had programmed adequate
resources in Financial Years 2013/14 and 2014/2015 to meet this shortfall to
enable the Project achieve its planned objectives without causing arrears of
payments.
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I advised management to ensure that counterpart funding is obtained in a timely
manner to fund project costs as prescribed in the agreement.
(d) Inspection of Project Activities
As part of the audit process during the year, a field inspection exercise was
undertaken to assess the extent of project implementation. The following findings
were noted;
Non-functional Bore holes
Boreholes installed at Mella and Atutur Seed Secondary Schools for provision of
water were observed as non-functional. This matter was also reported in minute
8.0 of the Site meeting held on 18thSeptember 2013. The anomaly was attributed
to the low depth of 55 Meters contrary to the prescribed depth of 85Metres.
Management explained that the anomalies had been brought to the attention of
the contractor and rectification works were underway.
I await the outcome of management‘s intervention in this regard.
Improper School structures
Inspections at Bugunzu, Busaba and Atutur senior secondary schools revealed
various anomalies as indicated below;
School Particulars Remarks
1 Busaba SS Cracks in the Multipurpose hall Rectification works required
urgently.
2 Bugunzu SS roof leakages in some rooms of
the staff house
Rectification works required
urgently.
3 Atutur SS roof leakages in the Head
teacher‘s house.
Rectification works required
urgently.
Whereas the Head teachers indicated that they had communicated the defects to
the contractors within the defects liability period, no action had been taken at the
time of physical inspection.
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Management is advised to liaise with the Ministry of Education and Sports to
ensure rectification of defects is undertaken timely.
Specific inspection findings in selected schools:
Additional findings regarding specific schools are listed in the matrix below;
School Observation Remarks Response by management
1 Dr. Obote SS Log book for
the tractor UG 2563 E
supplied to Dr. Obote SS was missing.
Ownership of the tractor was not
confirmed.
MoES has custody of original Registration Log Book and copies to be sent to schools.
2 St Joseph‘s
College Layibi, Metu SS in
Moyo, St Joseph‘s
College
Ombachi, Mvara SS in
Arua, Purongo Seed SS
Fencing of the
sites was not done
Management
should ensure that the
construction guidelines
regarding fencing
of the site are adhered to by the
contractors.
Instructions have been issued to contractors to ensure that the sites are hoarded off.
3 Sacred Heart
Girls Schools
The contractor was
using the facilities of the school contrary to
the project guidelines.
Management
should ensure that the
construction agreement is
complied with at
all times.
There is a Memorandum of understanding between the school and the contractor spelling out the terms for the use
of school facilities. The school is to be compensated for use of their facilities.
4 St Joseph‘s
College Layibi,
The condemned bricks
were still on site at the time of the inspection.
Management
should ensure that the
condemned bricks are not put to use
again.
These have been removed
5 Purongo Seed SS,
The consultant advised removal of condemned
Y 16mm iron bars that were used at column
bases as they did not
conform to Bills of quantities.
Consultant advice should be
adhered to.
This has been enforced and adhered to.
6 Bukanga Seed
School
Staff House
roof was leaking
Lights in the
Library Block not
working,
Defects should
rectified before
the end of the defects liability
period.
These schools are still under the defects liability period stipulated in the contracts. These defects have been highlighted to the contractors by the
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the Rail on the
Multipurpose
/Classroom block was not firm
the shutter of
the Toilet was displaced
Project Managers as a List of Snags to be completed before the end of the defects liability period. Retention will not be paid until defects are rectified.
7 Busaba Seed SS
The Verandah
and walls of the Multipurpose
/Classroom block have cracked.
The Staff
Houses were leaking.
Cracks in the
toilet wall.
Management should ensure
that the defects are rectified
before the end of the defects
liability period
These schools are still under the defects liability period stipulated in the contracts. These defects have been highlighted to the contractors by the Project Managers as a List of Snags to be completed before the end of the defects
liability period. Retention will not be paid until defects are rectified.
8 Bubandi and
Kyezimbire SS
Cracks in the
constructed staff
houses noted. Low thickness
of Verandahs in
Bubandi and Kyezimbire SS
Management
should ensure that the defects
are rectified before the end of
the defects
liability period
These schools are still under construction. These defects have been highlighted to the contractors by the Project Managers and are to be rectified before they are issued a Certificate of Practical Completion.
9 Nabumali High
School
The Gauge of
the iron sheets
was doubted by project
management. The iron
sheets were still
on site
Management
should ensure that construction
agreement is complied with at
all times.
The poor quality roofing
iron sheets have been removed from site and the contractor has supplied iron sheets of the recommended gauge.
I have advised management to implement the various recommendations outlined
above.
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57.10 UNIVERSAL POST PRIMARY EDUCATION AND TRAINING PROJECT
(a) Weaknesses in Project Implementation
Review of the World Bank inspection report on UPPET revealed the following
weaknesses in the project implementation:
a) There was lack of participatory budgeting where by work plans were
formulated by MoES without input from Beneficiary Schools and this resulted into
underestimation of construction costs.
Management explained that the project was technical in nature based on designs
to which the School Management Committees (SMCs) were unable to contribute
and attributed the increase in estimates to varying terrain of the various Schools
which was not considered during the design stage. I have advised management to
always consider the different terrains in the country while making designs for such
projects.
b) The Accounting System of MoES is based on IFMS which does not directly
generate project reports required by management and Cooperating Partners
without manual intervention with the Excel Spread sheet. Schools operate manual
accounting systems which are prone to human error.
Management explained that due to limited access to internet facilities, it was not
possible to integrate the schools to the reporting system of the Ministry which also
required installation of the system (IFMS) at school level. I have advised
management to explore the possibility of implementing a simple system that that
has minimal human interventions or where such interventions can be logged and
tracked.
c) Internal Control Weaknesses were noted in the financial management
function leading to;
Lack of segregation of duties.
Absence of dedicated financial management personnel at MoES contrary to
what was specified in the agreement.
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Bursar is the only staff performing all the accounting functions at each
beneficiary school.
Management explained that the weaknesses at the Project Implementation Unit
were addressed by recruitment of additional staff in the Accounts Unit. However at
school level, it was a policy matter and there were compensating controls of using
the various school committees to check on the Bursars‘ actions.
d) The flow of funds from the Ministry was affected by time lags between the
signing of works contracts and transfer of funds leading to delays in
commencement of construction works in some schools. Consequently,
BoQs were affected by increases in prices due to inflation
abandonment of sites by contractors;
Requests for variations that took a long time to approve;
Management explained that the accountability thresholds originally required in
order to disburse more money to the schools bank account have since been
reduced allowing schools to account in smaller amounts leading to replenishment
of the bank accounts in time. This also addressed the delays in submission of
Accountability Returns by the schools which could not attain the 75% threshold
specified in the Guidelines as quickly as expected.
e) There were cases of non-performance of some contractors resulting into
termination thereby leaving many facilities incomplete. A total of
Shs.1,469,350,070 that was paid in respect of terminated contracts was
considered to be ineligible expenditure. Reconciliation sheets availed by
management indicated that Shs.1,224,110,977 had been accounted for by the
schools leaving shs.245,239,093 outstanding. Other recovery measures such as
legal suits had been put in place. I have advised the management to ensure that
the outstanding amount is fully recovered
f) There was failure by the Ministry to take action against terminated
contractors by either not charging liquidated damages or collecting the
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Performance Bonds/Guarantees from the issuers. It was noted that most Bonds
and Guarantees had expired prior to termination of the contracts.
Management explained that a number of factors contributed to the failures of the
contractors which could not be solely attributed to them. For example late release
of funds, delays in processing requests for time extensions and unrecorded time
extensions by SMCs.
g) Accumulated Retention monies withheld in compliance with the contract
agreements were not found in some schools pooled bank accounts and no
explanation was given as to how the funds were utilized. Only Shs.6,761,437 out
of Shs.35,547,210 was on the school bank accounts. Management explained that
measures were put in place to release 90% of the money to the schools‘ accounts
and retain the 10% till fulfilment of the prescribed conditions.
I in general, advised management to put in place appropriate measures that
address the causes of the weaknesses and anomalies outlined.
(b) Review of the quarterly reports
A review of the project quarterly reports for the quarter ending 30th June 2013 in
line with the respective ledgers revealed the following:
Accountability status
Out of the sum of Shs.191,879,800,461 advanced to schools for UPPET activities
under phase 1 and phase 2, Shs.141,656,243,555 was either accounted for or
refunded leaving an outstanding balance of Shs.50,223,556,906 as indicated in the
table below;
Status of Accountability
Advanced (Shs)
Accounted (Shs)
Refunded (Shs)
Outstanding Balance (Shs)
Phase 1 54,493,733,142 40,954,602,871 2,375,903,452 11,163,226,819
Phase 2 137,386,067,319 98,068,104,343 257,632,889 39,060,330,087
Total 191,879,800,461 139,022,707,214
2,633,536,341
50,223,556,906
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Further analysis of the advances ledgers for individual schools for phase 1
revealed that by October 2013, Shs.11,281,487,361 had been outstanding for
more than 18 months contrary to the construction guidelines which require
submission of accountabilities as and when the contractors‘ certificates are settled.
Failure to account for the funds in a timely manner may be an indication that the
contractors are not performing in accordance with the contract completion terms
of 4 months, which could result in sanctions from the funding agency.
Management explained that the status of outstanding accountabilities continued to
change as more accountabilities were being submitted by the schools.
I advised the Accounting Officer to follow up the long outstanding accountabilities
and ensure that the respective schools comply with the accountability
requirements.
Refund of project funds
Shs.119,141,585 purportedly refunded by Abdalla Anyuru memorial school to the
ministry for non-compliance with project guidelines could not be traced to the
project bank statement. In addition Shs.40,511,350 recoverable from Kihihi high
school for unauthorised contract variation was not refunded to the ministry.
Although management indicated that the funds were received on the project
account, there was no evidence to this effect. I have advised management to
ensure that the outstanding refunds are effected in accordance with the project
guidelines and accounted for.
c. General Standards of accounting and internal control
A review of the general standards of accounting was undertaken with regard to
the following areas;
Accounting system and policies.
Book keeping.
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Management and control of both bank and cash accounts.
Purchases and payments.
Fixed assets management.
It was observed that management‘s control structure and environment, accounting
system and policies and control procedures were generally adequate to ensure
prudent use of and accountability for all project funds except for the following
matters:
Taxes not supported with remittance advice forms
A sum of Shs.156,537,007 purportedly remitted to Uganda Revenue Authority as
withholding tax was not supported with remittance advice forms. Non remittance
of the taxes may attract penalties against the project.
Whereas management explained that the tax remittance advice notes were in
place, they were not availed to the audit team for verification.
I advised management to ensure that tax remittances are supported by
remittance advice forms.
i) Withholding Taxes not remitted to URA
Contrary to the Income Tax Act CAP 340, a sum of Shs.23,317,996 which was
withheld from various contractors was not remitted to Uganda Revenue Authority.
Non-compliance with the tax law may attract penalties. Meanwhile at Mackay
College, Nateete, the Interim Payment Certificate No. 4 of Shs.46,074,087 was
paid without deducting the mandatory withholding tax.
No explanation was given by management regarding the omission. I have advised
the Accounting Officer to ensure that taxes due to URA are remitted in accordance
with the Income tax law.
d) Review of the Aide memoire
Review of the Aide memoire regarding activities for the period revealed that a
number of flaws were identified in 22 schools for which actions to be taken were
573
agreed upon between the team and the ministry officials. However, it was noted at
the time of audit that management had implemented the agreed actions in 10
schools, while those in 12 schools were still outstanding as shown in the table
below. I was not provided with proper explanations for the non-implementation of
the agreed actions in the twelve schools and this could lead to;
non-achievement of the intended project objectives
Cancelation of funding by the bank.
Substandard structures being handed over by the contractors.
I advised management to ensure that the actions are implemented as agreed in
the Aide Memoire. I have also advised that the supervising consultants should
engage experienced Clerks to visit the sites more frequently.
Agreed actions in 12 schools that were still outstanding at the time of
audit
School Findings Agreed action
Bukedi SS Site abandoned and no contract staff onsite
Contractor to resume works or effect termination if no further deployment
Kiyeyi High School
No works on the structure due to layout issues
Layout plan discussed on site and proposal for implementation made
Kololo High School
Site abandoned at upper slab level and terminated by school
MOES to follow up TSF computation of final accounts and revised BOQ for retendering and include BOQ and details of staff house in the scope of works.
St. Joseph Kakindo
Manholes for lightening arrestor not built, beam support to verandah wrongly fixed, finish to ramps poorly done and final coat of paint not applied
MOES to ensure corrections done before expiry of DLP
Kakungube Secondary School
Site handed over Quality of finish poor TSF attendance poor Snag list not generated
TSF to generate snag list Re- works to poorly finished surfaces required at
contractors cost MOES ensures all works done before expiry of DLP
Kasenyi Secondary
School
Works behind schedule Contractor has under
deployed VIP latrine construction not started due to location challenges Roofing delayed for no technical reason
TSF to request for revised work plan TSF to ensure contractor deploys manpower to
meet the targets Tracking by schedule of works required for school
supervision TSF ensures roofing should start to avoid delays in
completion.
St. Mugaga Secondary School
Works heavily under certified Lab poorly finished, crooked sink supports, poor quality cabinet shutters, poor
MOES to investigate why works are under certified TSF to generate snag list and ensure quality re -
works MOES ensures contractor is paid for work done
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surface finish TSF attendance very poor
and accountability by school is effected.
Agweng Secondary School
Structures at 100% completion Surface finish to internal walls poorly done Lightening arresters not installed Contract extended due to delayed release of funds by MOES
TSF to approve all surface finish before painting
Town College School
Internal wall surfaces poorly finished No furniture supplied Contract overrun by 2 years Contract expired on 11th July 2012
TSF advised to compute final accounts for termination to be effected
Agwata Secondary School
Works handed over Certification was valued and 50% retention was released before 100% works completion Worktops fixed not to specification provided; tiles used as opposed to terrazzo worktops Lab taps not installed Locks to steel doors not fixed Furniture supply not completed
TSF over certified works before they were
completed and paid including 50% retention release. TSF should bear cost of completion of works should the contractor abandon pending works and furniture supply
MOES to follow up
St. John Bosco Secondary School
Truss assembly not as per roof detail required but is structurally sound Poor brick used on VIP
latrine construction. No bituminous paint applied before fixing of slab to VIP. Internal surface finish poor and not to spec. Hoop iron used of poor quality Facia boards used warping and of poor quality Contractor on and off the site
Present to COW invoices for materials and revised work plan in 3 days
COW to ensure poor bricks removed before casting of slab
Contractor to replace all facia boards with quality boards.
Hoop iron to be replaced by proper quality iron. All poorly finished surfaces to be hacked and
redone at contractors cost and poly filler applied to the rough ones.
Kitgum High School
Contract expired Floors cracked Truss assembly poorly done
TSF advised to monitor repairs as discussed on site TSF to instruct contractor to re-screed floor with
good sand. To avoid procurement delays, school advised to
renew contract upon receipt of revised work plan by the contractor
e) Field Inspections
Field inspections were undertaken to assess the extent of project implementation
and ascertain whether the implementation guidelines were being followed. The
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major findings as well as the responses from management are summarised in the
table below. I have advised management to enhance monitoring and supervision
of the projects and to also take appropriate action where necessary.
School Audit Observations MOES Management Response
L.Mburo SS Two-seater furniture delivered
instead of three- seaters.
Small gauge door shutters.
Head teacher interdicted due
to mismanagement.
In Phase one schools, there was a
discrepancy between the BOQs and
drawings. The furniture at Lake Mburo
S.S was paid for at BOQ rate of two-
seater desks.
Noted and the Technical supervising
firms will be penalized by deducting
from their remuneration.
The Head Teacher was interdicted for
diversion of money and the case was
forwarded to CID for further action
Kibingo Girls
SS
Furniture not engraved and
found lying on the verandah
Accepted the anomaly and pledged to
rectify.
Rwamanyon
yi SS
Shs.153,622,395 not refunded
to the ministry.
Civil works on-going and work had
reached 60% completion.
Kakira high
school
Cracks in the walls of the
Ground floor noticed.
No response by management
Buhkooli
College
Site minutes indicated that
contractor‘s representative
never attended meetings.
No response by management
Nyondo S.S Floor had cracks. No response by management
Ivukula S.S Certificate no.3 overpaid by
Shs.15,627,719.
Withholding tax on certificate
no.3 of Shs.9,463,208 not
paid.
Site minutes for September
2013 not filed.
No response by management
Busembatia
S.S
Ceiling altered from concrete
to boards without approval.
No response by management
Bukonte S.S Funds frozen due to change
in name of account.
Contractor demanding
shs.17m for completed works
No response by management
St. Paul‘s
Rushoka
Poor quality benches were
delivered by contractor.
No response by management
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f) Non- delivery of furniture.
It was also observed that in a number of schools, furniture had not been delivered
by the respective contractors,
School Audit comments
Kapeka SS Furniture was not yet delivered at the time of inspection.
Nampunge SS Project was partially complete but furniture not yet delivered.
Nyakayojo Furniture was not yet delivered at the time of inspection.
Rukoni SS, 150 benches had not yet been delivered.
delivered furniture was not engraved
Nyondo SS Contractor did not supply the Furniture but was paid an
advance of Shs.36,000,000 without authority.
Another Company was contracted to supply the Furniture at
an additional cost of Shs.51,071,500.
Ivukula SS Furniture was not yet delivered at the time of inspection.
Nawansega SS 20 desks for students and the teachers‘ tables were not
delivered.
Laboratory had been completed and 124 stools delivered, but
the tables were missing.
No explanations were provided by management for the non-delivery of furniture at
the various schools and for the other anomalies. I have advised the Accounting
Officer to ensure that the furniture is delivered to schools in accordance with the
contract terms and that the other irregularities are addressed.
g) Contracts executed without performance security
In the following schools, the works contracts were being executed by the
contractors without valid performance guarantees contrary to Reg. 232 of the
PPDA Regulations, 2003.
School Remarks
Nampunge SS, Performance security expired on 18/10/2013
St Kizito Katikamu Kisuule, Performance security was not on file.
Lake Mburo SS, The performance bond expired on 15/02/2013.
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The practice is irregular and leaves the clients without fall-back position in the
event of default or abandonment of works by the contractors. There was no
explanation by management for the continued execution of works without valid
performance guarantees in the above schools. I have accordingly advised
management to strengthen the internal project management and supervision and
to also ensure that contractors renew performance bonds.
58.0 EDUCATION SERVICE COMMISSON
58.1 Fraudulent access to the Government payroll by personnel in Post
Primary Institutions
The Commission undertook a validation exercise for teaching and non-teaching
personnel on the Government payroll in Government aided Post Primary
Institutions in the Eastern, North Eastern and Central Regions, produced a report
in November 2013 which identified 372 personnel with different categories of
anomalies indicating fraudulent actions as detailed in the table below:-
S/N Category No of staff Commission Recommendation
1. Fraudulent access to payroll
201 A complete list of those who
fraudulently accessed the payroll be submitted to the MOES and MOPS for
deletion.
Culprits be blacklisted and records
frozen to deny them re-entry. Formal communication be made to
affected teachers stopping them from
continuing on the payroll.
2. Staff sharing
registration numbers
39 Agreed that lists of officers sharing
registration numbers be submitted to
the MOES to enable correction of the
anomaly. MOES should avail the owner of the
numbers and whether the other people
were genuinely registered or not and their registration numbers
3. Staff in care taking
positions
46 Follow due process for handling cases
of confirming in appointment
4. Staff with disciplinary
cases
9 MOES should be informed so that
actions are taken on the cases.
MOES pledged to handle disciplinary
cases more expeditiously in accordance with the regulations in place.
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5. Staff declared
unknown by head teachers on whose
payroll they
appeared
7 They should be identified and be
submitted to the ministry for deletion.
6. Staff holding more
than one probationary
appointments
5 A list be complied for MOES to initiate
disciplinary procedures against the
culprits. Follow due process while handling
disciplinary cases.
7. Staff earning salary
not commensurate to their substantive
appointments
23 The list be sent to MOES for
investigation and taking of the
necessary action.
8. Staff without the minimum entry
requirements
5 Those without minimum requirements
but had been appointed by the authorized bodies should have their
appointments regularized and thereafter retired.
MOES should identify officers in such
category who may be in other areas
not covered by the validation exercise.
9. Staff appointed on
trial
37 Submit for appointment on permanent
and pensionable basis those who had
acquired the requisite qualifications.
Submit for renewal/extension of the
trial period those whose services are required.
Terminate the services of those
appointed on trial if their services are no longer required.
ESC to submit a list of those appointed
on trial to MOES to enable it take Final position on the matter and finding a
lasting solution to matters pertaining to
Non-Formal Education Instructions (NFE).
TOTAL 372
Although management explained that the recommendations in the report were to
be implemented expeditiously, at the time of writing this report, the Ministry of
Education and Sports had not responded to the issues raised and therefore the
status of implementation could not be established.
I have advised the Commission management to follow up with the Ministry, have
the anomalies investigated and appropriate action taken.
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58.2 Lack of a Strategic Plan
It is best practice for Government Agencies to undertake long term strategic
planning to be able to achieve their objectives through measurable and clear
outputs. It was noted that Education Service Commission was operating without a
strategic plan, despite its huge responsibility of recruiting teachers in the country.
Management explained that the process of formulating the Commission’s Strategic
Plan was in progress and expected it to be in place by end of 2014/15 financial
year.
I advised management to have the formulation process expedited.
59.0 MAKERERE UNIVERSITY
59.1 Un-authorized over Expenditure
Analysis of the budget estimates and the actual expenditure of the University for
the financial year under review revealed that three budget lines were overspent by
UGX.8,552,403,721 without authorization contrary to the requirements of the
Public Finance and Accountability Act, 2003 as well as the Universities and Other
Tertiary Institutions Act, 2001. Unauthorized excess expenditure undermines the
intentions of the appropriating authority. The table below refers;
Expenditure Item Budget
(Shs)
Actual
(Shs)
Excess
Expenditure (Shs)
Employee costs 101,276,703,122 102,939,251,875 1,662,548,753
Goods and services consumed
35,291,581,052 39,450,463,038 4,158,881,986
Other operating expenses
15,439,198,699 18,170,171,681 2,730,972,982
Total 152,007,482,873 160,559,886,594 8,552,403,721
Management explained that, whereas Government approved 30% enhancement of
staff salaries for scientists, the funding and the corresponding NSSF contribution
were not provided thereby necessitating reallocation of funds from other items. In
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addition, introduction of internship for Government sponsored students by the
university also necessitated extra expenditure.
I have advised the Accounting Officer to always seek for the necessary approvals
from the University Council and the Secretary to the Treasury before virement of
funds.
59.2 Revenue Performance
Out of the budgeted revenue of UGX.184,486,065,396, the University realized
UGX. 180,082,040,267 resulting into a shortfall of UGX.4.404,125,129. Further
analysis indicated that the Development Budget under performed by
UGX.8,243,137,562 while the donor component and non-tax revenue exceeded
the budgets by UGX. 2,503,478,887 and UGX.1,335,603,546 respectively.
Failure to fund the capital budget adequately impacted on the planned
infrastructure improvements at the University and as a result the lecture rooms
remain congested.
Management indicated that various stakeholders have been approached to support
the university in funding the capital budget.
I advised the Accounting Officer to continue liaising with Ministry of Finance,
Planning and Economic Development (MoFPED) and other stakeholders to mobilize
resources for improvement of infrastructure and other needs of the University.
59.3 Advances to Employees’ Personal Accounts
Sections 227, 228 and 229 of The Treasury Accounting Instructions (TAIs) 2003
part 1, require that all payments should be made by the Accounting Officer directly
to the beneficiaries. Where this is not convenient, an Imprest holder should be
appointed by the Accounting Officer with the approval of the Accountant General
to handle the Imprest and account at least once a month. However, a total of
UGX.113, 682,246 was paid to the personal bank accounts of College staff for
executing official activities contrary to the above provisions. Though the funds
581
were eventually accounted for, the practice exposes the funds to the risk of
diversion and misappropriation. Besides purchase of consumables by individuals
may result into uncompetitive pricing as the benefits of economies of scale are
lost.
In response, management explained that the payments were made to individuals
in cases where the materials were so specialized that they could not be kept for a
long time because they were perishable in nature.
I advised management to comply with the provisions of the Treasury Accounting
Instructions for the safety of public funds and efficiency in procurement.
59.4 Funds Not Accounted For
(a) Unsupported expenditure
Chapter IV, Paragraph 181 of the Treasury Accounting Instructions Part I -
Finance requires all vouchers to contain full particulars of each service or goods
and to be accompanied with such supporting documents as may be required to
enable checking without reference to any other documents.
On the contrary, UGX.288,304,678 paid for various activities such as field
attachments, student supervision, field practical‘s and teaching allowances lacked
relevant supporting documents including; students lists, time-tables, approved
claim forms and acknowledgement receipts from suppliers. Insufficient
documentation may result into misappropriation of funds.
I advised management to provide the necessary documentation to support these
payments or institute measures to recover the funds.
(b) Outstanding Advances
A sum of UGX.129,488,560 advanced to various staff for official activities remained
outstanding contrary to the Treasury Accounting Instructions 2003, paragraph 217
which require accountabilities to be submitted within 60 days from the date of
payment. Delayed accountability may result into falsification of documents.
582
I advised management to submit the accountability or recover the funds from the
concerned staff.
(c) Irregular Hire of space for Lectures
The Colleges of Education and External Studies (CEES) together with the College
of Business and Management (COBAMS) hired lecture space from secondary
schools and private conference halls at UGX.37,662,020 and UGX.49,080,000
respectively.
However, the payments were not supported with formal agreements and/or
negotiation minutes indicating rates, duration and facilities to be utilized. In the
circumstances the authenticity of the expenditure is doubtful.
Management explained that efforts were being made to ensure that space hire is
formalized.
I advised management to ensure that formal agreements are made and
implemented to safeguard the University from the risk of exorbitant charges and
abrupt alterations. Meanwhile, management should investigate the authenticity
and fairness of the expenditure.
59.5 Review of Financial Statements of Commercial Units
(a) Maize Mill Payables
The maize mill owed suppliers UGX.239, 755,654 as at 30th June 2013. Delayed
settlement of obligations may attract litigation costs and affect business
relationships adversely.
Although management indicated that UGX.164,151,829 had been paid leaving a
balance of UGX. 75,603,825, no evidence was availed to support this position. I
have advised management to put in place necessary measures to ensure creditors
are settled in a timely manner.
583
(b) Makerere University Guest House Creditors
The financial statements of the Guest House reported payables of UGX.248,
541,753 at the end of the financial year under review. During audit examination, it
was noted that UGX.104,015,232 had been settled leaving a balance of
UGX.146,817,181 of which statutory deductions included; N.S.S.F
(UGX.13,263,313), P.A.Y.E (UGX.40,405,188), VAT (UGX.22,478,168).
Management indicated that efforts were being made to settle outstanding debts.
I advised management to prioritize settlement of statutory deductions in
accordance with the relevant laws and regulations to avoid penalties and fines.
(c) Makerere University maize mill Debtors Management
The statement of financial position indicated receivables of UGX.220, 510,730
which represented an increment of UGX.59,816,780 (37.2%) over the previous
year. Receivables indicate idle assets which hinder availability of working capital
for the commercial operations. An increment in the item also implies weaknesses
in debt management.
Although Management indicated that debts totalling UGX.170, 986,100 had been
recovered, no evidence was provided to this effect.
I advised management to follow-up the matter and have the funds fully recovered.
59.6 Operations of Makerere University Printery
(a) Shortage in Revenue Collection
Out of the budgeted revenue of UGX.1,375,000,000 at the University Printery
UGX.1,215,400,391 was realized resulting into shortfall of UGX.159,599,609
(11.6%). As a result various planned procurements such as; computer software,
laminating machine and double cabin pick-up were not made.
I advised management to ensure that revenues are improved for full
implementation of planned activities.
584
(b) Trade Creditors
Review of the financial statements revealed that the printery owes various service
providers a sum of UGX.124,300,363. Long outstanding debts may attract litigation
and loss of goodwill. I have advised management to settle its debts promptly.
(c) Trade Debtors
At the close of the year, the printery was owed UGX.746,278,744 by its customers.
It was further noted that, the entity lacks a credit policy and had not prepared an
aging list of the debtors. Long standing debts represent idle assets which constrain
working capital of an enterprise and may become uncollectable.
Management indicated that a debt collector had been appointed to follow up the
outstanding debts.
I await the outcome of management action.
(d) Misclassification of expenditure at University Guest House
Review of the Guest house accounts revealed that imprest transactions worth
UGX.128,966,354 at the University Guest house were not entered into the imprest
cashbook thereby exposing the expenditure to risk of misclassification .
In response, management explained that following placement of an agency notice
on he Guest House Bank Account by URA due to VAT arrears, only cash
transactions were undertaken during September to December 2012 and these
were inadvertently omitted from the imprest cashbook.
I have advised management that the transactions should be recorded in the
imprest cashbook to enable proper classification of expenditure.
59.7 GOVERNANCE ISSUES
(a) Non-submission of Semi-Annual Reports
Section 8 of the Colleges statute requires every College to submit to the University
council performance reports at least every six months. In addition Section 16 (1),
provides that a Principal of the College shall implement University policies and
585
enforce applicable regulations at the College. However, for the year under review,
all colleges failed to submit performance reports to the University Council. Non
submission of the reports undermines the Council‘s ability to monitor, regulate and
supervise the management and performance of the colleges.
In response, management pledged to ensure submission of reports by the College
Principals with effect from the next accounting year. I have advised management
to ensure that reports are submitted by Colleges to the University Council in
accordance with the statute.
(b) Improper Assets management
An examination of the assets management practices at the College of Natural
Sciences revealed the following anomalies;
Non engravement of assets,
Obsolete items unnecessarily occupying space,
Assets not recorded in the assets register for example Dell laptop
purchased on 25/09/2012 at UGX.1,856,500.
The above weaknesses expose the University property to risk of loss without trace.
In response, management explained that the process of engravement of assets
and disposal of obsolete items had started. I await the outcome of management
action.
59.8 Tax Matters
(a) Non-payment of P.A.Y.E Tax
Section 116 of the Income Tax Act, requires the employer to pay to the
Commissioner any tax that has been withheld or that should have been withheld
under this part within fifteen days after the end of the month in which the
payment subject to P.A.Y.E was made. However, P.A.Y.E of UGX.51,125,340
deducted from employees and purportedly remitted to URA lacked
acknowledgement receipts rendering the authenticity of the expenditure doubtful.
In the circumstances the entity is exposed to the risk of penalties.
586
I advised the Accounting Officer to obtain and submit the acknowledgement
receipts for future use.
(b) Unremitted Withholding Tax
Section 123 (1) of the Income Tax Act, requires that a withholding agent shall pay
to the Commissioner any tax that has been withheld or that should have been
withheld under this part within fifteen days after the end of the month in which
the payment subject to WHT was made by the agent. However, withholding tax of
UGX.6,506,809 deducted from various suppliers was not remitted to the tax body
contrary to the law.
I advised management to submit the acknowledgement receipts for verification.
60.0 MAKERERE UNIVERSITY BUSINESS SCHOOL
60.1 Outstanding Debtors
Included in the receivables of UGX.2,407,291,668 is a sum of UGX.1,725,731,787
in respect of outstanding tuition fees debtors. Delayed collection of tuition fees
and recovery of debts constrains management in implementing planned activities
and could also result into loss of revenue to the school.
I advised management to institute and implement an appropriate tuition fees
collection and debt management policy to reduce on the amount of debtors.
60.2 Inconsistence in the number of staff on the payroll
Review of the staff list and monthly payrolls revealed that every month there was
a variance in the number of staff paid as compared to the staff list as highlighted
in the table below:
COMPARISON OF THE ESTABLISHED STAFF LIST AGAINST PAY ROLL
Jul-12
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
P/Rolls Govt/Payroll and Non/Govt
Total 745 750 754 758 761 763 763 766 778 772 793 819
587
I informed management that inconsistencies between the payroll and the staff list
could result in loss of funds through payment of non-existing employees.
Management attributed the inconsistence in the number of staff on the payroll and
staff list to fluctuations in numbers of part-time academic and administrative staff
who were not remunerated on the payroll. They added that the School usually
prepared a separate payroll for part-time staff based on the number of hours
worked and these payments were not made through the Ministry of Public Service.
I advised management to always reconcile the staff list with the payroll to avoid
the risk of making payments to non-existing employees.
60.3 Inadequate Staffing
The University Establishment was filled to the levels of 57.6%, 83.5%, and 89.3%
for Academic Staff, Administrative Staff, and Support Staff respectively. It was
noted that the academic staff levels were lowest of all categories despite the core
activity of the school being teaching. The tables below gives a summary of
staffing levels in the different categories;
A) Academic Staff Establishment
Position Establishment Filled as at June, 2013 Vacant as at June, 2013
No. % No. %
Sub-total 552 318 57.6 234 42.4
B) Administrative Staff Establishment
Position Establishment Filled as at June, 2013 Vacant as at June, 2013
Sub-total 200 167 83.5 33 16.5
Master file Academic and Non -academic
Total 753 759 762 764 766 760 766 780 780 799 812 827
Variance(P/Roll less Master file) -8 -9 -8 -6 -5 3 -3 -14 -2 -27 -19 -8
588
C) Support Staff Establishment
Position Establishment Filled as at June, 2013 Vacant as at June, 2013
Sub-total 400 357 89.3 43 10.7
Management attributed the understaffing levels to inadequate Government
subvention towards the MUBS wage bill and indicated that despite earlier
promises, the school was yet to receive additional funding for more staff.
I advised the Accounting Officer to follow up the matter with the relevant
authorities to increase funding for more staff especially in the teaching category.
60.4 Incomplete Fixed Assets Register
MUBS Fixed Assets and Management policy states that Assets of the school shall
be accounted for in accordance with the Generally Accepted Accounting Practices,
issue notes and guidance from the Accountant General‘s Office and IFRSs.
Accounting procedures with respect to fixed assets are required to take cognisance of
the following; Existence of a proper record of the asset in terms of description,
physical location, and valuation of the fixed assets.
However, review of the FAR revealed that it was not properly maintained. For
example land and buildings were not reflected in the register and not all the furniture
acquired during the year was recorded. An incomplete FAR may lead to
understatement of the net worth of the school and loss of assets without trace.
Management explained that the revaluation and recording in the FAR of land and
buildings could not be done because the School had not attained ownership of the
land. They stated that the 1st land title was received in December 2013 and a
revaluation request was to be presented in the next Council meeting.
I advised management to expedite the process and update the FAR accordingly.
589
60.5 Irregular medical expenditure
According to the MUBS Human Resource Manual, medical attention for members
of staff and their families is provided by the Council on special terms under the
schemes set out in Appendix D/1 and D/2. The manual defines family as spouse
and children up to 4 in number under the age of 18 years who should be
registered with the Human Resource office using appropriate documents namely;
Marriage and Birth Certificates.
However, management paid a sum of UGX.84,900,000 for the medical treatment
of patients who were neither members of staff nor registered family members.
Review of Council minutes and other documents on the matter revealed that no
authority was sought from Council. The payment vouchers were also not availed
for audit as they were reported to have been taken by Inspector General of
Government.
In response, management explained that the expenditure was part of the school‘s
corporate social responsibility.
I advised management to develop a clear policy on corporate social responsibility
and have it approved by the University Council to be able to streamline such
expenditure. A specific budget should also be provided for the item.
60.6 Exam Malpractices
According to the Minute 4.1 (b) of the 1st Continued Special meeting held on 4th
December 2012, the Principal raised the issue of the School experiencing a
challenge of students cheating in exams and was in the process of acquiring CCTV
cameras to help curb the vice. It was further noted that, UGX.305,976,601 was
incurred on invigilation costs during the year but no evidence of procurement of
the CCTV cameras was submitted, implying that the challenge had not been
addressed. Examination cheating could lead to reputational risk which impacts on
the image of the University and employability of it‘s products.
590
Management explained that the School was in the process of procuring CCTV
cameras, but was constrained by availability of funds.
I advised them to prioritise the activity.
60.7 Physical state of Library building
The inspection of the University library carried out on 9th December, 2013 revealed
the following weaknesses;
Cracks had developed on the Ground Floor and the walls on Second Floor
despite previous correction of defects by the Contractor.
Users of the facility stated that there were three spots that leaked whenever it
rained.
The defective works were attributed to inadequate supervision by the consultants,
during the construction period. Management explained that the defects were
brought to the attention of the architects and the contractor for corrective action.
The retention money due to the contractor had not been paid as a result. I have
advised management to ensure that the defects are fixed to avoid rapid
deterioration of the building.
61.0 UGANDA MANAGEMENT INSTITUTE
61.1 Un-Secured Contract
Ms. Techno Three Uganda Ltd was awarded a contract for rehabilitation of a
hostel at a sum of UGX.2,379,402,546. Whereas the completion date was October
2013, inspections carried out in December, 2013 revealed that the works were
incomplete. Besides the performance security and advance payment guarantee
had expired on 29/9/2012 and 5/1/13 respectively thereby exposing the Institute
to risk of loss of funds.
Management indicated that a letter had been written to the contractor asking for
renewal of the performance security and advance payment guarantee.
591
I advised management to enhance project supervision to ensure completion of the
works, and have the guarantees and securities renewed without further delay.
61.2 Under absorption of funds by the Research function
Whereas the Institute allocated UGX.82,781,414 to research activities, only
UGX.10,436,740 was actually utilized leaving a balance of UGX.72,344,674.
Under absorption of funds implies that some of the activities were not
implemented as planned. Similarly, the goal of strengthening long distance
learning was not properly supported in the absence of a substantive Head of
Department and adequate staffing. Management stated that a process of
addressing the identified gaps was underway.
I advised management that since this is an academic institution, research activities
should be prioritized.
61.3 Domestic Arrears
The Institute liabilities stood at UGX.2,630,191,183 at the end of the financial
year. Included in the liabilities, were sundry creditors and committed creditors
whose details were not clearly explained. Committed creditors had accumulated
from UGX. 1,001,459,828 (F/Y 2011/12) to UGX.1,625,353,691 (F/Y 2012/13).
The table below refers;
ITEM AMOUNT(UGX.)
Overdraft 521,118,246
Trade Creditors 483,539,246
Committed Creditors 1,625,533,691
Total 2,630,191,183
I explained to the Accounting Officer that accumulation of liabilities exposes the
entity to risk of litigation.
592
61.4 Irregular expenditure
A sum of UGX.28,348,000 was paid to two Municipal Councils to facilitate Council
Meetings with regard to acquisition of land by the Institute. This expenditure is
considered irregular as the Councils are required to consider matters of land
application as part of their routine duties. The table below refers:
Irregular expenditure
ENTITY AMOUNT (UGX) CHEQ NO.
Mbarara municipality 12,448,000 CHQ No. 800871
Mbale municipality 15,900,000 CHQ No. 800870
Total 28,348,000
Management stated that the Governing Council of the Institute had approved
facilitation of the special sittings of the respective District Councils to fast track the
allocation of land. However, there was no evidence of acquisition of the said land.
I advised management to follow up the matter and acquire the land. Meanwhile
evidence of approval of the expenditure by the council is awaited.
62.0 MBARARA UNIVERSITY OF SCIENCE AND TECHNOLOGY
62.1 Outstanding Law Suit
In June 2004 the Public University Councils were directed to use part of the
internally generated revenues to enhance the salaries of the Non-Academic Staff
and if possible, to enhance further the salaries of Academic Staff.
It was however noted that the MUST Council did not implement the directive and
in July 2011, the Non-Teaching Staff of the University sued the University Council
for non-payment of their salary arrears amounting to UGX.4,442,293,176. In June
2012, the Solicitor General advised management to settle the case out of Court.
593
The eventual settlement of the subsequent obligation may significantly affect the
operations of the University. Besides, the contingent liability was not disclosed by
way of note to the accounts.
I advised management to take up the matter with the relevant authorities and
have the matter settled. In case this matter is not resolved, the liability should be
disclosed in the 2013/2014 financial statements by way of a note to the accounts.
62.2 Unauthorized Over expenditure
Contrary to Section 17 of the Public Finance and Accountability Act, 2003, a sum
of UGX.722,472,773 was incurred well above the budgeted expenditure on two
items without the relevant authority. The table below refers;
Expenditure item Budget
(UGX)
Actual
(UGX)
Over
(UGX)
Research, Consultancy
and publications 290,000,000 1,007,172,741 717,172,741
Students welfare 735,000,000 740,300,032 5,300,032
Total 1,025,000,000 1,747,472,773 722,472,773
Management attributed the over expenditure on research to off-budget funds that
were channelled through the University Forex Collection Account.
I advised Management to always budget properly and avoid overspending by
obtaining appropriate authority to adjust the budgets where expenditure is
expected to exceed the budget.
62.3 Payables
Payables increased from UGX.1,093,144,611 to UGX.1,458,614,156 indicating an
increment of UGX.365,469,545 during the financial year.
The accumulation of domestic arrears contravenes the Government Policy on
commitment control and may attract litigation from long outstanding creditors.
The NSSF obligations could attract fines and penalties.
594
Management explained that Payables relating to MUST staff would be settled the
following financial. It was further explained that requests had been made to
MoFPED to provide funds to settle NSSF remittances.
I advised management to follow the Government policy on commitments control
and ensure timely settlement of outstanding payables.
62.4 Management of receivables
During the year, receivables increased from UGX.489,658,300 to UGX.521,185,307
indicating an increase of UGX.31,527,007. A review of the supporting schedule
revealed that the debts were owed by sponsors of private students such as Baylor,
BTC and Compassion International. Although Management explained that there
was a policy on fees payments, there appeared to be laxity on its enforcement as
there were students who sat exams without settling the tuition fees.
I advised management to institute mechanisms of enforcing collection of tuition
fees from all privately sponsored students.
62.5 Staffing Gaps
A review of the approved university staff establishment revealed that out of the
2490 posts approved, only 494 (19.8 %) were filled leaving 1996 (80.2%) vacant
as summarized in the table below;
Department Establishment Filled Vacant
CENTRAL ADMINISTRATION 736 170 566
ACADEMIC 1312 178 1134
DEVELOPMENT STUDIES 86 36 50
INSTITUTE OF COMPUTER SCIENCE 104 50 54
FACAULTY OF SCIENCE 205 57 148
ITFC-BWINDI 47 3 44
Grand Total 2490 494 1996
Inadequate staffing undermines achievement of strategic objectives and affects
the level and quality of service delivery at the university. There was no evidence
595
that the University Council and Management were taking any steps to fill the
vacant positions.
Management explained that Government was yet to avail funds to the University
for uplifting the staff structure.
I advised management together with the University Council to liaise with MoFPED
to provide funding for recruitment of more staff in order to be able to achieve the
mandate of the University.
63.0 KYAMBOGO UNIVERSITY
63.1 Funds not accounted for
a) Fuel Expenses
Paragraph 181 of The Treasury Accounting Instructions, 2003 and Regulation
63(4) of the Public Finance and Accountability Regulations, 2003 require all
vouchers to contain full particulars of each service or goods and accompanying
supporting documents. However, a sum of UGX.621,438,192 incurred on fuel was
not supported with motor vehicle movement log books, consumption statements
and deposit receipts rendering the expenditure doubtful.
According to management, the log books, consumption statements and deposit
slips were available. However on verification, the logbooks were incomplete with
columns for total mileage covered, fuel consumed, departure and arrival time and
the signature of the authorizing officer not filled out.
I advised management to update the motor-vehicle records to assist in decision
making.
b) Unvouched expenditure
According to Regulation 60(1) of the Pubic Finance and Accountability
Regulations 2003, all disbursements of public monies shall be properly vouched on
payment vouchers prescribed by the Accountant General. It was however noted
596
that payment vouchers for UGX.483,015,712 were missing rendering the
authenticity of the expenditure doubtful.
Whereas management indicated that the payment vouchers and other supporting
documents were available, there was no documentary proof to this effect.
I advised management to enforce accountability of funds at the University.
c) Nugatory expenditure
The management of Kyambogo University paid UGX.210,263,100 to lecturers as
an allowance for marking coursework assignments. This expenditure was
considered nugatory as the activities are deemed to constitute part of the officers‘
normal schedule of duties as stipulated in the terms and conditions of
employment.
Management in response indicated that the policy was approved by the University
Council in order to create fairness on marking load where some staff had as fewer
scripts as 20 in some programs while others had as many as 800 scripts to mark.
However on verification, there was no documentary proof of policy approval by the
University Council.
I advised management to desist from such practices.
d) Outstanding Advances
UGX.208,002,108 advanced to various staff for official activities lacked relevant
supporting documents contrary to Treasury Accounting instructions, paragraph
181 and Section 63(4) the Public Finance and Accountability Act. Unsupported
expenditure may result into misappropriation of funds. I explained to management
that delayed accountability may result into falsification of documents and
possible loss of funds. Whereas management in response indicated that the
accountability documents were available, there was no proof to this effect.
I advised management to ensure that funds are properly accounted for.
597
e) Doubtful expenditure
A sum of UGX.35,860,604 incurred on various activities lacked relevant supporting
documents rendering the expenditure doubtful.
Whereas management indicated that the expenditure was genuine, there was no
proof to this effect.
I have advised management to recover the funds and ensure proper and timely
accountabilities in future.
f) Payments to retired staff
UGX.5,566,756 was paid to retired staff due to failure to delete their names from
the payroll, contrary to Human Resource regulations, thereby exposing the
university to risk of loss of funds.
In response, management explained that they submitted payroll exception reports
on time to the Ministry of Finance, Planning and Economic Development to
facilitate the deletion of the said staff that left the University. However, MOFPED
delayed to delete the names and instead deleted them in the subsequent month.
Management undertook to deduct the said monies from the former employees‘
gratuity.
I await management‘s commitment in this regard.
g) Doubtful Remittance of PAYE
A sum of UGX.914,901,957purportedly remitted to URA as Pay-as-you-earn (PAYE)
was not supported with acknowledgement receipts rendering the expenditure
doubtful.
Whereas management indicated that some acknowledgement receipts were
available for verification, I could not confirm receipt of the funds by the Tax
Authority.
598
I advised management to always follow-up payments to URA and obtain receipts
thereof.
h) Over Payment of NSSF Contribution
According to section 11(1) of the NSSF Act, every contributing employer shall, for
every month during which he or she pays wages to an eligible employee, pay to
the fund, within fifteen days a standard contribution of 10 percent calculated on
the total wages paid during that month to that employee. On the contrary, it was
noted that 20% of total wages was paid as the standard contribution for the
month of August 2012 to NSSF resulting into an overpayment of UGX.18,860,499.
In their response, management explained that the overpayment of
UGX18,860,499 was in error and that recovery would be effected from the next
NSSF contribution.
I await management‘s action in this regard.
63.2 Procurement Anomalies
(a) Breach of Contract
M/S Global Oracle was awarded a contract for road works on Kulubya road at a
sum of UGX.498,410,000. Review of the contract performance revealed that the
contractor abandoned works after receiving UGX.182,459,398 (37% of the
contract sum). Also noted was that the performance security had expired
rendering recovery of the funds difficult.
In their response, management acknowledged the above state of affairs and
indicated that arrangements were underway to terminate the contract and ensure
that the works are completed.
I have advised Management to seek legal advice to ensure enforcement of the
contract.
599
(b) Uncompetitive Procurements
A sum of UGX.473,179,098 was incurred on micro procurement of repetitive goods
and services during the year. There was a risk of uncompetitive pricing of goods
and services that would be addressed through framework contracts.
In their response, management acknowledged the observation indicating that
most micro procurements were procured from pre-qualified suppliers. However on
verification, the suppliers‘ names were missing from the pre-qualification list.
I advised management to ensure that procurements are conducted in a manner to
maximize competition and achieve value for money.
(c) Doubtful Contract Awards
Regulation 90 (g, h & i) of the Public procurement and Disposal of Public Assets
Act,2003 require a Procurement and Disposal Unit to maintain procurement
records such as; Award Minutes, Contracts Committee decisions, Letter of Bid
Acceptance and Negotiation Minutes. However, payments to various suppliers
amounting to UGX.446,226,772 were effected without the above documents
thereby rendering the validity of the expenditure doubtful.
In response, although management indicated that the payments were procured
with authority of the Contracts Committee with most of the procurements under
Framework Contracts, there was no documentary proof to this effect.
(d) Irregular Procurements
Regulation 94(1)(a) of the public procurement and Disposal of public assets
stipulates that a contracts committee or a holder of delegated authority shall
approve the choice of a procurement method prior to commencement of the
procurement process. However, UGX.51,517,966 was paid to university staff and
other un-prequalified firms for purposes of purchasing various items directly. I
explained to management that the practice undermined the purpose of pre-
qualifying firms.
600
In their response, management acknowledged that some payments were paid to
staff to purchase various goods and services of emergence nature. Those procured
directly by the staff on road construction were unique and uncommon items such
as tar, sand and other materials that were not normally used.
I advised management to ensure that future purchases are made from pre-
qualified suppliers.
(e) Miscellaneous Procurement Anomalies
During the year under audit, some weaknesses were noted in the procurement
and disposal unit. They include among others:
Poor filing of records
Late submission of procurement requisitions
Failure to sign off issues of bids and bid receipts by responsible persons.
Some contract agreements have no effective dates.
I explained to management that these weaknesses hinder tracking of documents
and may result into inefficiencies in procurement and thus the need for proper
record keeping by the management.
In response, management attributed the weaknesses in records management to
understaffing and inadequate records space.
I advised management to take up the matter with the University Council.
63.3 Staff Accommodation
Contrary to the University Policy, 30% of staff occupied University houses without
signing tenancy agreements. Enforcement of recovery procedures may not be
possible in the circumstances.
Whereas management indicated that the University had about 90 staff paying for
the University houses and that rent was deducted from the staff salaries on a
monthly basis, the issue of unsigned tenancy agreements remained unresolved.
601
I advised management to streamline the system and have all occupants sign
agreements for easy monitoring of rentals.
63.4 Rentals from other assets
Out of 36 businesses operating in the University, 28 (representing 77%) did not
have any tenancy agreements contrary to the University Policy. In the
circumstances, the revenue amounting to UGX 240,259,518 reported as ‗other
property income‘ (Note 7_Non-Tax Revenue) could have been understated.
In their response, management explained that an adhoc technical committee
which was appointed, produced a report which identifies all weaknesses in the
collection of revenue in the small business entities in the University and the
committee had already been directed to implement the report by contracting all
premises where business entities are expected to operate through a procurement
process.
I await the outcome of management‘s intervention in this regard.
56.1 Teaching Process
a. Irregular Issuance of certificates to students
The university policy on examinations stipulates that students shall be issued with
certificates of performance before sitting for examinations, as a method of
confirming that students fulfill all academic and non-academic requirements.
However, it was noted that all the nine (9) departments did not issue certificates
of performance.
In their response, management attributed the anomaly to inadequate Human
Resources and high student numbers in the University. According to management,
the process of establishing the Quality Assurance Department to manage all
quality assurance issues was on-going.
I await the outcome of management action in this regard.
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b. Maintenance of students attendance register
The university policy requires that each department/Faculty maintains a student
attendance register to confirm attendance as a fulfillment of the minimum
requirement of the university before examinations are sat at the end of each
semester. However out of nine (9) departments, only four (4) departments (44%)
maintained student‘s registers. I explained to management that students may not
be fulfilling requirements for sitting for examinations.
In their response, management acknowledged that some Faculties and Academic
departments had not maintained the registers.
I advised management to always maintain students registers as a control
measure.
c. Accreditation of courses
According to the University and Other Tertiary Institutions Act 2001, all the
programmes taught at the university should be accredited by the National Council
for Higher Education. However out of 91 programmes offered only 21 (23%) are
accredited while the rest are still in the process of accreditation. I explained to
management that there is a risk of students offering programmes that are not
recognized in the job market.
In their response, management indicated that efforts had been made to submit all
the University academic programs to the National Council for Higher Education
(NCHE) and a temporary accreditation had been granted.
I advised management to enforce its stated policies to enhance the quality of its
academic programmes and accreditation of the programmes be followed up
urgently.
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64.0 BUSITEMA UNIVERSITY
64.1 Misrepresentation of Gratuity Arrears
A Council resolution referenced as minute 9/UC/20/2012 changed the University
staff engagement terms from contractual to permanent basis resulting into total
payable gratuity of UGX.3,718,173,901 out of which only UGX.496,876,521 was
settled during the year leaving a balance of UGX.3,221,297,380.
This liability was however not reported in the Statement of Financial Position but
was rather disclosed by way of a memorandum statement. The financial position
is understated in this regard.
Although management indicated that they had a payment plan for the outstanding
arrears, the liability position in the financial statements remains understated.
I advised management to have the liability recognized properly in the financial
statements.
64.2 Non-alignment of the Budget with the Strategic Plan
The University strategic plan for the period 2008/09-2013/14 indicated a funding
requirement of UGX.43,199,883,000 for the financial year 2012/2013 while the
approved budget provided for only UGX.15,756,779,000 resulting into a funding
gap of UGX.27,443,104,000. It was also noted that the budgeted activities were
not properly aligned to the plan. The non alignment combined with the gross
underfunding implies that the strategic objectives may not be achieved. It was
also noted that the strategic plan did not identify the potential sources of funding
to enable funds mobilization.
Management stated that the budget was aligned to the strategic plan but the
variances in amounts of funds were due to limitation of funding.
I have advised management to ensure annual plans are properly aligned to the
strategic plan and to enhance mobilization of the necessary funds.
604
64.3 Non implementation of planned activities
A comparison of the University‘s budget and Ministerial Policy Statement for the
year with outputs achieved revealed that the following planned activities and
acquisitions were not attained yet these activities impact directly on the quality of
Education achieved;
Farm structure construction;
Modern Library construction;
Machinery for the workshop; and
Assorted furniture (Chairs and tables).
Management attributed the shortfalls in the performance to inadequate funding.
I advised the Accounting Officer to enhance liaison with the MoFPED to attain
necessary funding and to prioritize key activities.
64.4 Advances not accounted for
TAI 215 (a and b) of the Treasury Accounting Instructions require all advances to
be accounted for without delay and immediately after the expense has been
incurred. On the contrary, UGX.9,744,000 that was advanced to one University
staff to facilitate a committee meeting was not accounted for. Delayed
accountability may result into falsification of accountability documents.
I advised management to ensure that advances are always fully accounted for in a
timely manner.
64.5 Management of ICT and Information Systems
A review of the University Strategic plan revealed that the University had planned
to develop an ICT policy by June 2010 in order to provide a framework for ICT
operations. However, the following matters were noted:
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Lack of ICT Policy and IT Steering Committee
There was no ICT Policy in place at the time of audit and the University lacked an
ICT Steering Committee to guide the related investments. This could result into
inefficient and uncoordinated ICT operations.
The Accounting Officer explained that efforts were being made to form the
Steering Committee and that there was a draft ICT Policy pending approval by the
Planning Investment Committee.
ICT Infrastructure and their security
Various planned infrastructural activities had not been implemented. For
instance LANs, WAN and intranet as well as connection to the National
Infrastructure Backbone had not been done. Management in response
attributed the inadequacy to limited funds.
Contrary to Regulation 74 of the PFAR regarding control of access to data
and computer systems, a number of security lapses were noted for example;
unrestricted access to the computer server room and existence of some un
engraved ICT equipment. As a consequence, there were some losses of ICT
equipment (Computers). Also noted was absence of fire control equipment
in the computer/server room thereby exposing the entity to risk loss.
Management explained that access to the server room was restricted to only two
staff with the keys. Biometric Access control was being planned for in the year
2014/15.
Staffing and Administration
Whereas the ICT staffing establishment provides for twenty two (22) staff, the
Unit had only 4 staff and was not represented at key University decision making
organs thereby limiting its effectiveness. Management explained that the wage
ceiling could not allow for more recruitment and as such any increment received
would cater for the teaching staff.
606
Lack of integration of software
The University installed 2 Information Systems namely; Pastel Systems for
financial management and Academic Information System for academics. However
the two systems lack integration. They are also not linked to other units such as
Library service management, student management and inventory management. In
the circumstances the University is unable to take advantage of related databases
which would aid efficient and prompt decision making.
Management explained that CEMAS would soon be implemented in public
Universities and this would address the issue of system integration.
I have advised management to ensure that;
The ICT Policy is approved and ICT Steering Committee established,
All the University units are connected to the ICT platform through LANS, WANS
and intranet to enhance communication at the University,
ICT staffing levels are improved especially at senior level,
Proper physical controls are initiated to the ICT infrastructure,
IT software is properly integrated to reduce on the cost of maintaining
different systems,
Proper communication channels are established through LANS and WANS.
64.6 Contracts Committee decision making
Regulations 51(2) to (4) of the PPDA Regulation, 2003 require the Contracts
Committee to either approve or reject (with reasons in writing) the
recommendations of an evaluation committee and to refer back the matter to the
Procurement Unit. However, it was noted that the Contracts Committee made
decisions without referring the matters back to the Procurement Unit in two cases
namely; contract for construction of the lecture blocks at Nagongera campus by
Peak Planets and supply of computers by CAL Ltd.
Management in their response acknowledged the anomaly and indicated that the
relevant provisions of the procurement law will be followed henceforth.
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I advised management to always comply with the regulatory framework governing
procurements in public institutions.
64.7 Procedural flaws in hand-over of projects
Review of activities relating to the completion and takeover of University
construction projects revealed that the procedures followed were contrary to
provisions of the PPDA Act and General Conditions for Contracts as shown below;
Sites taken over without key witnesses such as management representative
and users;
Non issuance of key documents such as; statement of Final Account issued by
contractors and defects liability completion certificate issued by supervisors,
certificate of occupancy issued by district/town health departments; and
Absence of minutes for inspection meetings.
Failure to undertake appropriate procedures in project completion and takeover
may result into taking over of works that are defective.
Management acknowledged the anomaly and indicated that procedures had since
been put in place to ensure that sites are handed over in the presence of a
member of management as a witness and certificates of final completion are
handed over to contractors.
I advised the Accounting Officer to ensure that proper procedures are always
followed when contracted works are being handed over to management.
64.8 Formulation of University Procurement Plan
Section 58 of the PPDA Act 2003, and Regulation 60 of the PPDA Regulations
2003, require that all user departments shall prepare and submit to PDU their
procurement work plans, to form basis for formulation of the master procurement
plan of the entity based on the approved budget.
It was noted that there was limited integration into the master procurement plan
and alignment to the budget with regard to the procurement of stationery, ICT,
medical supplies, insurance, maintenance civil, telecommunications, machinery
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and books/periodicals. There is a risk of unbudgeted procurements and missing
out on the benefits of bulk procurements.
I advised management to always ensure that the Master Procurement Plan is
comprehensive and aligned with the University budget.
64.9 Non-competitive Procurements
Section 94 (a) of the PPDA Act 2003, requires approval of the choice of a
procurement or disposal method by the Contracts Committee. On the contrary
goods, building and clearing materials worth UGX.19,398,006 were procured
through Direct Procurement method without approval of the method by the
Contracts Committee. Use of non competitive procurement methods without
requisite approvals is vulnerable to influence peddling, substandard goods or
services being provided at exorbitant prices.
Although management asserted that the suppler for building materials was
solicited through Request for Quotation (RFQ) and that a framework contract for
cleaning materials was in place, there was no documentary evidence to support
this assertion.
I advised management to ensure that procurement methods are approved before
procurement processes are commenced.
64.10 Significant variances between Estimated and Contract prices
PPDA Regulation 104 (2) requires that in estimating the value of procurements
and confirming the availability of funds, the estimate should be realistic and based
on current information and technical assessment. Comparison of the estimates
with actual contract prices however revealed significant variances which were not
properly explained. The variances are shown in the table below;
Provider/subject Estimate (UGX
million)
Contract value (UGX
million)
Variance in
(UGX Millions)
Percentage variance
Construction of bathroom 26.9 39 12.1 45%
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at Namasagali
Supervision of Master plan by TECO
8.5 27.5 19 224%
Renovation of Arapai library by Mukakamu
14 26 12 86%
Supply of training materials by Goodwill
29.6 32.3 2.7 9.1%
Significant variances may be a result of unrealistic technical estimates and/or
overpricing on the part of contractors and could have adverse effect on the budget
performance.
The Accounting Officer acknowledged that the reserve price for the works was
under quoted and attributed the variation to unfavourable changes in prices of
goods and services at the time of project implementation.
I advised management to ensure realistic estimation of costs and proper
procurement of service providers to ensure resources are economically utilized.
64.11 Inspection Report
Inspection of the infrastructure at the Arapai Campus revealed the following state
of affairs:
Dilapidated infrastructure including roads, lecture rooms and residential
houses;
Inadequate lecture rooms, dormitories, furniture and fittings;
Some houses are still roofed with asbestos sheets which is a health hazard to
occupants;
Lack of a proper green house; and
Insufficient number of animals kept for student practical lessons, non-
operational dairy farm.
The current poor state of infrastructure if not improved is likely to impact
negatively on the image and general performance of the University.
Management explained that an assessment of renovations needs had been done
and the results partially included in the BFP for the FY 2014/15. Management
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further explained that they were in advanced stages of preparing a business plan
to improve the facilities at the campus.
I advised management to follow up the matter and address the infrastructure
needs of the University.
65.0 GULU UNIVERSITY
65.1 Doubtful Payment for Extra Load Allowance - UGX.728,758,584
During the year under review, the University spent a total of UGX.728,758,584
purportedly for the extra lecture time/work done. This majorly applied to weekend
assignments and evening lessons. However, the basis of computation of these
payments, including information relating to the total number of hours lectured
above the standard hours by each lecturer, rates and evidence of occurrence were
not availed to support the payments. Further noted was that there is no evidence
of close monitoring/supervision of teaching staff, who may opt to appear outside
working hours for purposes of earning this type of allowance irregularly. Under the
circumstances, the authenticity of the payments made cannot be established.
In response, management agreed that the policy guiding teaching extra load lacks
control and shall strengthen the monitoring and control measures to address this
shortfall.
I advised management to expedite this action so as to curtail any possible misuse
of this facility. Besides, given that the cost involved in paying for the extra load is
sufficient to have other staff recruited locally and be paid, the University could also
consider revisiting the staffing numbers to ensure that adequate staff are
engaged.
65.2 Understaffing at the University
The University‘s current staff strength is only 414 personnel out of the approved
900 staffing positions. Among the units that are seriously affected is the Human
Resource (HR) department; according to the approved structure, the HR
department is supposed to be headed by a director, assisted by a deputy director
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and senior human resource officer plus the Human resource officers and
assistants. However, the department that is charged with managing over 400
employees is being headed by a personnel officer and assisted by an assistant
personnel officer. This grossly affects their effectiveness.
Other key vacant positions include; Quality Assurance Officer, Deputy University
Secretary, Senior Assistant Secretary, Estates Manager, Senior Medical Officer,
Chief Internal Auditor, Principal Internal Auditor, Senior Procurement Officer,
Principal Personal Secretaries (2) and Senior Security Officer among others.
I explained to the Accounting Officer that such insufficient staffing levels ultimately
imply that the existing staff are overworked, which in turn reduces their motivation
and hence their productivity. This ultimately reduces the level of service delivery
by the University.
In their response, the Accounting Officer explained that the University has made
several submissions for recruitment to the Ministries of Finance and that of Public
Service over the last three years but all have not been honoured. I have advised
management to follow up the requests made to ensure that all key positions are
filled to avoid operational inefficiencies.
65.3 Absence of Titles to University Land
During the audit, it was noted that the University owns various parcels of land
with no land titles as shown in the table below:-
Table 1: List of land parcels owned by the University
Land name Location Size (acre
)
Status Remarks
National Forestry
Authority land
Gulu
Municipality
69.2 Faculty of medicine
buildings
To be swapped with
Latoro land
Gulu University Main Campus
Gulu Municipality
22.2 Office, lecture blocks, laboratories & library
Offered by Gulu District
Latoro land Nwoya
District
606 Vacant, portion
earmarked for swapping with NFA
To be swapped with
National forestry Authority land
Gulu Constituent
College, Lira
Lira district 621 Offices, lecture
blocks & library
Offered by Lira
District
612
I explained to management that under such circumstances, the University land is
exposed to a risk of encroachment.
In response, management explained that the process of acquiring titles for all
University land had been initiated.
I advised the Accounting Officer to expedite such action so as to fully secure the
University‘s ownership status of the land in question.
65.4 Revenue from Income Generating Units
The University has a number of Income Generating Units (IGUs) comprising of the
Public Café, the Guest House and the University Printery. An inquiry into the
management of the IGUs in question revealed that, there are no operational
guidelines put in place by management for monitoring their activities. Further
noted was that there was no provision in the budget for the income and
expenditures from these units during the year. Under the circumstances, there is a
risk of misuse of such revenue.
In his response, the Accounting Officer explained that the university has started
the process of developing policy guidelines relating to the operations of all the
income generating units and that a team of senior staff had been setup to monitor
the operations of the IGUs, as an interim measure.
I advised management to expedite the process of setting up the operational
guidelines so as to strengthen revenue monitoring and accountability by all IGUs.
65.5 Revenue Shortfall - UGX.1,089.166,998
It was noted that during the year under review, out of a total budget of
UGX.25,915,853,186 the University managed to collect a total of
UGX.24,826,686,188 (about 96% of the budget) thereby making a revenue
shortfall of UGX.1,089,166,998. Failure to collect all the budgeted revenues
negatively affects the university‘s capacity to implement all the planned activities.
In his response, the Accounting Officer committed to strengthen the University‘s
revenue collection efforts so as to fully collect all the budgeted revenue in future.
613
I await the outcome of this management commitment.
65.6 IT Policy, Usage and Development
A review of the Information Technology (IT) operations revealed limited usage of
Information Technology in the business processes of the University. The IT
operations are largely under resourced; the systems analyst and other IT staff are
operating without a defined budget for the unit. The only server belongs to the
Library department and the IT officer in charge of the Server is answerable to the
Librarian and not the head of the IT Unit. The server room is at the same time
used as a workshop to repair broken down computers. There is no service plan for
the server except repairs when it has broken down. In addition, there is no fire
extinguisher in the server room, no restricted access to the room and no record
taken of personnel who access this room. These are weaknesses that expose the
University to a risk of unauthorized access and loss of stored data. In addition, the
University risks losing the benefits of ICT application in its operations like revenue
recording and monitoring, as well as admissions and examinations management.
In response management stated that a new directorate for ICT has been approved
by Council and that the University was in the process of recruiting the required
personnel to start off its operations.
I advised management to ensure that the new directorate is fully supported so as
to quickly embrace its potential in effectively handling the University‘s business
processes and therefore the achievement of its strategic objectives.
65.7 Grounded Vehicles and other spares
Regulation 295(1) of PPDA requires an Accounting Officer to carry out review of
assets on annual basis for the purpose of identifying those which are obsolete and
those which should be subjected to disposal. A physical inspection of the
University vehicles and spares revealed a number of grounded vehicles and plants
that have not been boarded off for a long time. Many old motor vehicle tyres and
spare parts are also available for disposal.
614
I explained to the Accounting Officer that under the circumstances, the is a risk of
further deterioration in value as a result of the continued failure to have the items
disposed.
In his response, the Accounting Officer explained that the processes of boarding
off these assets had been kick started.
I advised management to speed up the disposal processes to avoid further loss in
value and also free the available storage space.
65.8 Internal Audit Effectiveness
A review of the Internal Audit operations revealed that the unit is understaffed. By
the time of audit, it was being headed by a Senior Internal Auditor, in absence of a
substantive Chief Internal Auditor and Principal Internal Auditor. This significantly
affects its capacity to deliver its mandate, given the size and nature of operations
of the University. As a result of the above, it was noted that the quarterly Internal
Audit reports to Council for the entire financial year were not produced on time
and hence limiting its usefulness.
Absence of an effective internal audit unit exposes the University to a risk of
financial losses and various operational irregularities across the various
departments within the University, since there is no internal mechanism for timely
evaluation of the effectiveness of the other internal controls.
In response, the Accounting Officer explained that the University was to take all
the necessary efforts aimed at strengthening the Internal Audit department in the
near future.
I advised that the department‘s key positions be urgently filled and that adequate
staff numbers are engaged in order to enhance its capacity to fully deliver its
mandate.
615
65.9 Anomalies in the Procurement Processes
a. Lack of an Approved Procurement Plan
Contrary to section 96(1) of the PPDA regulations, 2003 that provides for the user
department to prepare a multi-annual rolling work plan for procurement based on
the approved budget, a review of the procurement records revealed that the
University again failed to prepare a consolidated work plan for Council approval,
despite my previous audit recommendation. The continued failure by the
University to adhere to the procurement law is not only irregular but also denies
the University of an opportunity to properly plan for all its procurements and also
benefit from consolidated bulk procurements as opposed to disintegrated
purchases by individual departments.
In his response, the Accounting Officer attributed this matter to delays by user
departments in submission of their departmental plans and indicated that efforts
have been made to compile the consolidated procurement plan for the 2013/2014
financial year.
I advised the Accounting Officer to ensure that the University always compiles a
consolidated Procurement Plan in accordance with the procurement law.
b. Poor Estimation of Procurements on PP Form 20
Contrary to regulation 227 of the PPDA that requires the Accounting Officer to
commit the total cost of the contract prior to its placement, there was poor
estimation of the total costs on PP Form 20 for the following procurements:-
Contract Purpose Amount on PP Form 20 (UGX)
Amount on award (UGX)
(Gu/works/1112/00031/10/01
Construction of School of Midwifery block in Lira
695,000,000 1,114,136,353
Gu/works/1213/00031/07/01)
Tiling and Painting the Main Library
52,000,000 89,616,870
It was noted that the values recommended for award were above the estimated
values on PP Form 20, yet there is no other commitment that was approved by the
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Accounting Officer before the eventual award. This has contributed to increase in
payables as there is always an inadequate budget to pay off the suppliers.
In response management regretted the anomaly and indicated that this was to be
addressed in any future procurement.
I advised management to always ensure that no contract awards are made before
confirmation of additional funding in circumstances where the quotations are
higher than the budgeted amounts.
c. Split Procurements - UGX.64,989,000
Contrary to section 108 of the PPDA regulations that provides for micro-
procurements to be undertaken where the estimated value of the procurements is
below UGX.2,000,000, it was noted that management of Gulu University
Constituent College - Lira, broke down procurements amounting to
UGX.64,989,000 to disguise them as micro-procurements apparently to avoid
going through the laid down procurement procedures. This was done through
drawing cash and sourcing the items from wherever management deemed fit. This
was attributed to lack of a procurement plan as well as failure to undertake proper
supervision of the line departments by the Main campus.
I explained to management that such a practice exposes the University to a risk of
unfair prices, since there is no transparency in the procurement processes
undertaken.
In response the Accounting Officer regretted the above anomaly and committed to
have the constituent college adhere to the procurement law while undertaking any
future procurements.
I advised that management needs to ensure that a consolidated procurement plan
is always compiled and that the constituent college is instructed to adhere to the
procurement law while undertaking all procurements, which should regularly be
subjected to supervision and monitoring, by the main campus.
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d. Procurement from Non Prequalified Service Provider
The University paid a total of UGX.31,406,800 to M/S National Insurance
Corporation (NIC) for comprehensive Insurance of the University Vehicles.
However, this company was not on the list of the prequalified service providers.
There was no evidence that the service providers who were prequalified during the
year under review had been requested to also submit quotations for the services
in question.
I explained to management that such a practice is not only irregular but also
unfair to the firms that showed interest in doing business with the University but
are not given an opportunity to compete.
In his response, the Accounting Officer explained that from the inception of the
University, NIC was used as a service provider and this continued up to the year
under review; however, going forward the error made was to be rectified whereby
management will make use of the prequalified firms to provide the services in
question.
I advised that management should always adhere to the provisions under the
procurement law and only engage firms that are on its prequalified list.
WATER AND ENVIRONMENT SECTOR
66.0 MINISTRY OF WATER AND ENVIROMENT
66.1 Mischarge of Expenditure
A total of UGX.9,438,526,861 was charged wrongly on expenditure codes other
than those under which it was appropriated. The practice portrays a breakdown of
controls in the budget implementation process and implies that the financial
statements are misrepresented to the extent of the mischarge.
618
The Accounting Officer attributed the anomaly to budget cuts in certain areas
termed as ‗consumptive items‘ which results into charging expenditure on items
which have funds.
I advised management to streamline the budgeting process and to subsequently
ensure that payments are correctly charged on the item codes to enable proper
implementation of the Ministry‘s programmes.
66.2 Funds not accounted for
a) Expenditure on workshops and field work
Out of a sum of UGX.650,853,714 incurred on workshops and field travels
UGX.398,694,714 was accounted for leaving UGX.252,159,000 outstanding.
Among the missing accountability documents were attendance lists, field reports
and vehicle movement log books. Delayed accountability may result into
falsification of documents.
I advised management to submit the relevant documents for verification.
Otherwise the funds are recoverable from the concerned officers.
b) Unsupported Utility bills
Section 120 of the Treasury Accounting Instructions (TAI), 2003 requires payment
vouchers to be properly supported with appropriate documents before being
passed for payment. On the contrary UGX.194,469,517 paid to various companies
for utility services lacked acknowledgement receipts and reconciliation statements
rendering their authenticity doubtful. Whereas management indicated that the
documents were available they were not submitted for verification. The table
below refers;
Table indicating unsupported Utility bills
S/No Entity Amount (UGX.)
1. Uganda Telecom Ltd 94,747,981
2. Umeme Ltd 74,567,507
3. National Water and Sewerage Corp. 25,154,029
Total 194,469,517
619
I advised management to obtain acknowledgement receipts and prepare
reconciliation statements for future use.
c) Irregularities in payment of Consultancy Fees
UGX.59,393,823 paid to various consultants for carrying out feasibility studies,
policy formulation, project design and supervision were not supported with
invoices and completion certificates. In some cases withholding taxes were not
charged on the payments contrary to the Income Tax Act. In the circumstances,
the authenticity of the payments is doubtful.
Management indicated that the specific cases would be investigated and corrective
action taken. I await evidence of action taken.
66.3 Nugatory expenditure
a) Delayed payments to contractors
The Ministry paid interest charges of UGX.203,158,615 to three local contractors
as a result of delayed settlement of approved work certificates. Management
attributed delayed payments to cash flow constraints and extensive verification
processes for the claims. Management further indicated that the Ministry had since
addressed internal bottlenecks to expedite the payment process of certificates
without compromising the internal controls.
I advised the Accounting Officer to ensure that in future, realistic payment terms
are included in the contract agreements and verification processes are
streamlined.
b) Under performance of Letters of Credit
The Ministry disclosed in the statement of financial position receivables of
UGX.7,464,502,592 relating to three Letters of Credit that had not performed at
the end of the financial year. The underperformance of Letters of Credit resulted
into payment of UGX.52,240,811 as bank charges and commissions by the
ministry.
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Management attributed the costs to various extensions and amendments of the
Letters of Credit. The interest charges and commissions are considered nugatory
expenditure as they could have been avoided had the provisions of the contracts
been complied with.
I advised management to ensure that procurements using Letters of Credit are
properly planned and executed in future.
66.4 Procurement of Goods and Services
a) Procurements not reflected in the Procurement Plan
PPDA Regulations, 2003 particularly Regulation 96 require a user department to
prepare a procurement plan for ease of organizing, forecasting and scheduling of
procurement activities for the financial year. It was however, noted that goods and
services worth UGX.579,975,000 were procured without being provided for in the
approved procurement plan. Whereas, management indicated that all
procurements had been planned for, examination of the approved plan revealed
that procurements in the schedule below were missing.
Schedule indicating unplanned procurements
S.no Subject of procurement Reference no. Amount
(UGX.)
1. Supply of one Rigid
Inflatable
MWE/SPLS/11-
12/01419/1
245,600,000
2. Construction supervision of
Ntwetwe Town water
supply
MWE/SRVCS/13/01434 334,375,000
Total 579,975,000
b) Micro procurements
During the year under review, UGX.161,601,702 was advanced to various staff of
the Ministry through their individual bank accounts to carry out micro
procurements, however, some procurements were split to ensure that the
purchases did not exceed the threshold of UGX.2,000,000. Most of the
621
procurements were for stationery which was neither delivered to stores nor
verified by internal Audit.
The practice however denied the Ministry the economies of scale associated with
bulk purchases. Management indicated that it would stop the practice effective
2013/2014 financial year.
I advised the Accounting Officer to always comply with regulations.
c) Dormant Accounts
The MWE maintained fourteen dormant accounts comprising eight (8) local
currency accounts and six (6) foreign currency accounts, with a total bank balance
of UGX.214,648,582 and USD.144,266.86 respectively as at 30th June 2013.
Dormant accounts are prone to abuse and ought to be closed.
Management indicated that it had written to the Accountant General to have the
dormant accounts closed.
I advised management to follow up the matter with the Accountant General and
ensure that all the dormant accounts are closed.
d) Failure to transfer FIEFOC project counterpart funds
Audit noted that the MWE received GoU counterpart funding of
UGX.17,161,052,576 for FIEFOC project but transferred only UGX.15,738,742,900,
and thus retaining UGX.1,422,309,696. This undermines the intentions of the
appropriating authority and may delay the implementation of planned activities
and ultimately the attainment of the project objectives.
Management stated that the funds were used to meet the Ministry‘s cross-cutting
expenses while some of the funds were utilized on the project activities.
I advised management that since the project has separate accounts, it is
important that all the counterpart funds are transferred to the project and spent as
appropriated.
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e) Domestic Arrears
The MWE reported domestic arrears of UGX. 8,104,031,863 at year end. These
had accumulated over the years and may attract additional costs in form of
litigation and associated interest charges. Management attributed the
accumulation to failure by the Ministry of Finance, Planning and economic
Development (MoFPED) to release necessary funds for their settlement.
I advised management to continue liaising with MoFPED to ensure that resources
are set aside to settle these outstanding commitments.
f) Gross Tax budgeting and payment
Out of the Gross Tax allocation of UGX.12,200,623,324, the MWE utilized only
UGX.2,093,000,000 (17%) indicating low level of procurement of goods and
services. The practice may also imply unrealistic budgeting for Gross Tax.
Management indicated that the low absorption of the Gross tax provision was due
to lengthy procurement procedures.
I advised management to ensure realistic budgeting for Gross Tax and proper
procurement planning that would ensure efficient attainment of project objectives.
g) Irregular payment of VAT
Review of Value Added Tax (VAT) payments revealed that the Ministry paid VAT of
UGX.26,492,919 to various contractors who were VAT exempt. Management
indicated that it was in the process of recovering the money from the contractors.
I await evidence of recovery.
I advised management to always prepare and adhere to the approved
procurement plan and in the event of need for amendment, prescribed procedures
should be followed.
h) Under Staffing
Out of the 418 approved staffing positions in the Ministry, only 203 had been filled
leaving 215 vacancies. The unfilled posts included senior positions such Assistant
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Commissioners, Principal Water officers, Principal Hydrologists, Principal Water
Analysts amongst others. It was further noted that some posts were filled over
and above the approved numbers, such as Senior Wetland Officer, Senior
Sociologist, Senior Engineer and senior assistant engineering officer. In addition it
was observed that the MWE maintained 189 staff on contract basis in various
projects using support from development partners, and this may not be a
sustainable approach.
I advised the Accounting Officer to liaise with the relevant stakeholders for the
review of the organization structure and fill the vacant posts appropriately.
66.5 FARM INCOME ENHANCEMENT & FOREST CONSERVATION PROJECT
a) Outstanding Project Liabilities
A review of the contract ledgers, certificates and financial statements revealed
that the project had a liability of UGX.1,270,000,000 owed to a local construction
firm. It was however noted that the project officially closed on 31st December
2012, on the side of the Development Partners, leaving the liability to be settled
using the GoU counterpart funding through the Ministry of Water and Environment
(MWE). The settlement of this liability is bound to affect the funding of MWE‘s
activities and may also result into extra costs in form of interest due to delayed
payments.
Project management explained that outstanding obligations were to be settled
with GoU funding.
I advised them to provide a roadmap on how the outstanding obligations will
eventually be settled to avoid incurring of huge amounts of interest and possible
litigation.
b) Under absorption of funds
Out of the funds received by the project amounting to UGX.59,513,636,421 only
UGX.58,514,778,849 was spent leaving a balance of UGX.998,857,512 which was
still lying idle on the various bank accounts at year end. This implies that planned
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activities were not implemented according to the work plans. The funds on the
account had also not been returned to the financiers.
Under-utilization of the funds was attributed to splitting of districts during the
project implementation period, which resulted into inadequate staff in the newly
created districts to implement the project activities. Management further explained
that unutilized balances were to be returned to the development partners after
undertaking final reconciliation.
I advised the Accounting Officer to always plan properly and utilize all the
disbursed funds on the project activities and to have the unspent funds returned
to the Development Partners.
c) Funds not accounted for
It was noted that a total of UGX. 62,048,000 spent on fuel on the various project
activities remained unaccounted for at the time of audit. The payment vouchers
availed for review lacked evidence of official fuel usage in form of vehicle
movement log books, fuel receipts and associated work plans to which their usage
could be linked.
Furthermore, contrary to Chapter 1V Section 217 of the Treasury Accounting
Instructions 2003, which requires public officers to account for funds advanced to
them within a period of 60 days, audit noted that UGX.4,000,000 advanced to staff
had not been accounted for. Accordingly, I could not ascertain whether the funds
were used for the intended purpose.
I advised management to ensure that advances to staff are always accounted for
in a timely manner.
d) Project Accounts at Districts
The project opened special accounts with 71 Districts for purposes of remitting
money to fund the project activities at the respective Districts. In January 2013,
the Permanent Secretary (PS) requested the Accounting Officer of the Districts to
close the bank accounts, submit bank statements, documents regarding closure,
any outstanding accountabilities for advances, project asset registers and District
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physical project outputs. It was however, noted that only 6 districts had complied
implying that the MWE is constrained in the preparation of the final project
reports.
Management explained that they had written reminders to submit asset registers
and to close special bank accounts.
I advised management to follow up with the Accounting Officers of the districts to
ensure that the closure procedures are expedited and report thereof finalised.
66.6 JOINT PARTNERSHIP FUND
a) Low absorption of project funds
The JPF had total of Euros 19,191,793 to spend on donor account during the year
under review but only Euros 10,573,129 was transferred to operations accounts
leaving a balance of Euros 8,618,664 (45%) on the account. As a result, some of
the key project component activities were either partly or not implemented. The
failure to absorb all the available funds does not only affect service delivery but
may also impact negatively on future donor funding. Table below refers.
Title Target Actual (%) Variance
Code Output and activities
Performance indicators (a) (b) (b/a*100)
8122 Mobilization, design and documentation of the RGCs/STs water supplies (including supervision)
No. of STs/RGCs whose Designs have been approved
19 5 26.3
813 Applications for construction received
No. of STs/RGCs that have submitted applications for construction
10 1 10
8142 Procurement of contractors
No. of STs/RGCs whose contractors have been procured
11 5 45.5
8143 Construction of water facilities by the contractors
No. of STs/RGCs under construction to completion
9 8 88.9
8144 Construction of Public Ecosan facilities by the contractors
No. of Public Ecosan facilities under construction
3 2 66.7
08151 Developing the Operational & Maintenance
No. of STs/RGCs whose Operational Manual has been developed
2 1 50.
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manual
510 Fully functional water supply schemes in 75 RGCs/STs
No. of RGCs/STs with functional water supply schemes
3 0 0
512 Designs completed No. of RGCs/STs with completed designs
5 0 0
513 Applications for construction received
No. of RGCs that have submitted in their applications for construction
6 1 16.67
514 Construction Completed
No. of completed schemes 5 1 20.00
515 Fully functional schemes
No. of schemes in operation 3 1 33.33
520 Sanitation coverage in 75 RGCs/STs
No. of Eco-san units constructed
32 0 0
05213 Construction of household Ecosan toilets
No. of Eco-san units constructed at household level
32 0 0
05215 Training communities on sanitation
No. of community trainings 32 4 12.50
Management explained that most of the funds were received late and could not be
absorbed within the financial year because of the lengthy procurement procedures
involved.
I advised management to improve on the funds absorption in the subsequent
periods so as to be able to attain the intended objectives.
b) Supply of Laboratory Equipment
PPDA Reg.237 Para 1(b), requires a procuring entity to use frame work contracts
to reduce procurement costs and lead times for items that are used repeatedly.
Audit however noted that a call off order for Benefit Worldwide Ltd to supply
laboratory equipment worth Euros 66,880.92 (UGX.226,290,138) was made on
16th April 2011 but deliveries were made on 27th August and 19thOctober 2012.
The delay of 16 to 18 months contradicts the purpose for which a frame work
contract was signed with the supplier. Delayed deliveries greatly affect service
delivery.
Management indicated that the delivery period of 16-18 months is a record
improvement from the previous 36-48 months because the supplier had to obtain
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equipment from companies and manufacturers in Europe and United States of
America. Management further indicated that some of the chemicals and equipment
had restricted transport regulations which further lengthened the delivery period.
I advised management to always specify the delivery periods and the penalties for
late deliveries in the call off orders sent out to the suppliers.
66.7 Inadequately supported payments for consultancy fees
a) Provision of strategic environmental and social assessment
COWI Uganda Ltd was contracted to carry out consultancy on strategic
environment and social assessment at a contract sum of Euros 869,888 for a
period of 2 years and later the contract was extended for another 4 months at a
cost of Euros 127,359.
During the year under review the contractor was paid UGX.414,897,459
(equivalent to Euros 122,045.06) but audit noted the following irregularities in the
payments made;
Clause 24.1 of the General Conditions of the contract required the consultant
to provide details of working and travelling hours used in the computation of
the number of days worked and for the reimbursable funds to be supported by
invoices from the third party. It was however, noted that the consultant was
paid without availing management with any of the above required information.
Contract ledgers and invoice registers were not maintained by the fund
accountant and this made it difficult to maintain audit trail of the payments.
For example certificate No. 12, which was paid on 25/02/2013, was used to
clear invoices No. 5273671 and No. 5284035 that were submitted on 24th May
2011 and 11th Oct 2011 respectively. Without a contract ledger and an invoice
register, there is a risk of recycling invoices.
COWI submitted a demand notice from Prof. B.E. Marshall for editing a report
and was paid USD.13,750 (Vat Inclusive) for 20 days at a rate of USD.575 but
the time sheets were not attached to show time worked and the activities done
contrary to clause 24.1 of the general conditions of the contract. In the
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absence of the above, I could not ascertain if the consultant was paid what
was rightfully due.
b) Assessment of water use and demand in the Lake Albert Basin
M/s WSS Services was paid UGX.199,146,240 for consultancy services on water
use and demand in the Lake Albert basin however; audit noted that contrary to
clause 24.1 of the general contract agreement, reimbursables of UGX.65,968,000
was paid to the contractor without the supporting evidence of working and
travelling hours. Furthermore audit noted that the contract period was for 8
months but the firm delayed by more than 2 months.
Although management in its response indicated that the details of working and
travelling hours used to compute the number of days worked and invoices for
reimbursable funds were available however, during the audit verification
management failed to provide.
I advised management to investigate these payments with an aim of recovering
inadequately supported amounts.
c) Travel Abroad
Management paid USD.7,320 to a member of staff to cater for air ticket, per diem
and seminar fees on 9th May 2013 vide voucher number 12-0892 for attending
executive secretary seminar in Nairobi conducted from 13th to 24th May 2013. Audit
however noted that although all the facilitation and necessary approval for travel
were obtained in time, the officer travelled 3 days late (16th May 2013), implying
that the per diem of USD.1,080 paid for those days should have been refunded.
Management indicated that the officer regretted the anomaly and was willing to
refund the money.
I advised management to expedite the recovery process of the funds from the
concerned officer.
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d) Supply of Motor Vehicles Lot 1- Toyota Uganda
Toyota (U) Ltd was contracted to supply four double cabin pickups to the Urban
Water Department at a cost of USD.159,476 however, audit noted that contrary to
PPDA regulation 249 (2), which requires an advance payment to be secured with
an appropriate security, M/s. TOYOTA U Ltd was paid USD.31,895.2 as a deposit
payment without any security. There was a risk of losing the advance payment to
the contractor in case of failure to perform.
In response management indicated that in future the Ministry will adhere to the
procurement regulations.
I advised management to refrain from advancing funds to suppliers of goods and
service without obtaining appropriate security.
e) Supply and Installations of Water Pumps in Small Towns
Sumadhura Technologies Ltd was contracted to supply and install water pumps in
small towns at contract sum of USD.224,000. Audit however noted that the call-off
order No.1 of USD.82,500 was made on 15th July 2011 and No.3 of USD. 67,907
on 11th Nov 2011, however the deliveries for both were made in April 2012,
implying a delay to supply. Further review revealed that:
The contract price was for supply and installation of pumps however, on 5th
Mar 2012, the Ministry wrote to the supplier amending the contract to include
an additional cost of USD.35,000 for the installation of the pumps under call-
off order No.3. Audit noted that the additional cost was not approved by the
contracts committee.
Delivery notes, job installation reports and engineer‘s certificate of completion
were not attached to the examined payment vouchers.
It is possible that the contract was executed without following the agreed upon
terms leading to the loss of government funds.
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I advised management to investigate the circumstances through which the
contract was amended, to include installation cost; an item which was provided for
in the initial contract.
66.8 Water and sanitation development facility-north
Inspection of Construction Works
a. Water supply Systems at Omugo Sub-County
Construction works for Omugo Water Supply Systems were contracted out to M/s
Sumadhura Technologies Ltd at a cost of UGX.2.2 billion. Construction works
started on 15th Jan 2013 and were expected to be completed by 15th Jan 2014.
However by the time of inspection (6th Dec 2013), which was one month to the
expiry of the contract period, there were still a lot of unfinished works as indicated
below;
A second tank at Drimveni had not been completed.
The construction works for water Office Block were at the finishing level, while
the 2 stance flush toilet and 2 bathrooms were still under construction.
At the water source of Aliodra Village - Angazi parish, clearing of debris,
replacement of the fence, construction of Guard House and Ecosan Toilet had
not been completed.
b. Inspection of Paidha Water Supply System in Zombo district
Construction works for Paidha Water Supply System started on 15th Jan 2013 and
was supposed to be completed by 15th Jan 2014. Audit inspection of this project
noted the following;
Painting, wiring, and fitting of doors for the office block had not been done.
The water tank had not been installed.
Construction works for the water source near Ayoda River had stalled.
Construction works for the Ecosan Toilet at Paidha Primary School had not
been completed.
The delayed completion of construction works, which was caused by late
disbursement of funds, does not only affect service delivery but may also result in
litigations.
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I advised management to hasten the implementation of the water supply system
for the good of the populace.
66.9 JOINT WATER SANITATION SECTOR PROGRAMME SUPPORT (JWSSPS)-
AfDB FUNDED COMPONENT
a) Unreconciled Bank Balance
The bank balance on the Joint partnership fund component Account at Bank of
Uganda was reported in the financial statements as Shs.347,785,267 while the
reconciliation statement indicated a negative balance of Shs.187,499,762 implying
a variance of Shs.535,285,029 which was not explained. Unreconciled balances
imply improper bookkeeping and may result into misappropriation of funds.
I advised management to explain the variance and to ensure the reconciliation of
the balances.
b) Low absorption of Funds
Shs.26,652,627,247was disbursed by ADB to the JPF account to fund activities of
the Rural Water Supply and Sanitation (RWSS), Sector Programme Support (SPS),
and Water and the Sanitation Development Facility-Central (WSDF-Central). A
review of the operations of the three projects however revealed that
Shs.1,268,892,945 was transferred to the operations account and
Shs.7,994,780,000 to the WSDF-Central donor account, leaving a balance of
Shs.17,388,954,302. The delays in implementation may constrain the attainment
of programme objectives.
Management in its response attributed the above to the delay by GoU to meet the
conditions for effectiveness of the Program which led to delays in procurements
and in implementing of planned activities.
I advised management to ensure timely and comprehensive planning and
implementation of activities.
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66.10 JOINT WATER AND SANITATION SECTOR PROGRAMME SUPPORT
(JWSSPS)- WATER AND SANITATION WATER DEVELOPMENT FACILIY
EAST
a) Delayed remittance of funds
The project received 99% of the budgeted funds for the financial year 2012/13
whose remittance and receipt were inconsistent in the 1st and the 4th quarters
resulting in slow progress of works. At the year end, the outstanding obligations
for certified works amounted Shs.2,608,054,723. These obligations may attract
ligations with related costs and interest.
Similarly, there were outstanding tax obligations due to Uganda Revenue Authority
of shs.282,526,820 in form of PAYE and WHT which are likely to attract fines and
penalties.
Management attributed the delays in settling the obligations to untimely release of
funds by the development partners. For Withholding Tax, management explained
that the amounts were withheld in error because the contractors were exempted
from withholding tax.
I advised management to regularly engage the funding Partners so as to remove
funding bottlenecks that cause delays in remittance of funds.
b) Laxity in the monitoring and evaluation of activities
Monitoring and Evaluation Performance plan for the year requires production of
quarterly Monitoring & Evaluation reports, but only two incomplete monitoring
reports, were prepared in the 1st and 3rd quarters. Without regular Monitoring &
Evaluation reports, independent assessment of activity progress, implementation
weaknesses and limitations may not be promptly identified for action.
I advised management to ensure that M&E activities are undertaken as planned
and complete reports prepared thereafter.
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c) Staffing Gaps
The facility‘s key positions of Administrator and Senior Environment and Sanitation
Officer were vacant and no evidence that action was being taken to fill the
vacancies. The delay to recruit key project personnel affects performance of
specific project activities and achievement of project objectives. For example,
activities such as community sensitization on hygiene and sanitation in usage of
public and Ecosan toilets were not implemented as planned.
Management explained that the process of filling the positions was on-going. I
have advised the project to expedite the process of filling the vacant positions so
as to solve the existing operational challenges.
d) Revised employment contracts
A review of the harmonized project salary structure and comparison with the
documentation in the staff files revealed that the individual staff files lacked
revised employment contracts. Absence of revised contracts could be an indication
that staff files were not updated to reflect changes in employment terms.
Management explained that the process of revising the affected employees‘
contracts in accordance with the general communication had been initiated and
thereafter all staff files were to be updated to reflect the new employment status.
I advised management to expedite the process and to ensure that staff files are
regularly updated with changes in employment terms.
e) Inadequate reviews of processed accounting Information
At the time of the audit, the branch expenditure cashbook differed from the
Kampala HQ branch ledger by shs.29,762,798. This was as a result of double
posting of expenditure in the Accounting software system and the omission of
some transactions. It was noted that although corrections were later made, branch
financial data processed at Kampala Head office is not adequately reviewed to
identify such errors and this could lead to incorrect information being used for
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decision making. There is also a risk that such errors could be used to perpetuate
some malpractices.
Management explained that due to persistent poor network link between the
Facility and the Ministry server, data capture into the Navision system was done at
the Ministry headquarters, which resulted in differences between the manual
cashbook and the Navision records. However, efforts to improve the connectivity
were ongoing and a solution to the problem had been agreed with the service
provider and its implementation was being awaited.
I advised management to ensure that the branch accounting data processed by
the accountant is timely and adequately reviewed for accuracy to avoid producing
misleading financial information.
66.11 WATER SUPPLY AND SANITATION DEVELOPMENT FACILITY-CENTRAL
a) Invalid Bank Guarantee
The contractor for the Bweyale Town Water Supply and Sanitation System was
paid Shs.845,451,558 as an advance payment against a bank guarantee
No.328020033898. Further scrutiny revealed that the bank guarantee related to
contract number MWE/WRKS/11-12/01453/3 of 30th October 2012 while the actual
contract number was MWE/WRKS/11-12/0145/3 of 7th March 2013. Payment
against an invalid bank guarantee exposes the facility to risk of losing funds in
case of failure by the contractor to honor its obligation. Management in its
response regretted the typographic errors but affirmed that the contractor
performed the obligation.
I advised management to always validate documents from third parties before
committing funds.
b) Unaccounted for Funds
Out of shs.233,404,520 advanced to contractors for materials, Shs.145,000,000
was accounted for leaving a balance of Shs.88,404,520 contrary to ADB
guidelines. Delayed accountability may result into falsification of documents.
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I advised management to ensure that all funds are timely accounted for.
c) Failure to Maintain Accounting Records
The WSDF-C facility did not maintain a manual vote control register, general
ledger and subsidiary ledgers as required by Para E.1.7 of the WSDF operations
manual, 2009. The interrogation of the NAVISION accounting system also revealed
that the records were not maintained electronically. In the circumstances it was
difficult to confirm some of the account balances like advances, NSSF, PAYE and
withholding tax deductions and remittances.
I advised management to maintain the primary books of accounts as required by
the operations manual.
66.12 LAKE VICTORIA ENVIRONMENT MANAGEMENT PROJECT II
a) Memoranda of Understanding with Implementing Agencies
A review of the contents of the Memoranda of Understanding (MoUs) signed with
the ministries revealed that the deliverables expected were lacking, contrary to
the LVEMP II Financing agreement, schedule 2. This makes it difficult to assess
the performance of ministries and whether the money is being used for activities
geared towards attaining the agreed upon deliverables.
Management in its response stated that it will review all the MoUs to incorporate
deliverables by implementing agencies.
Management effort in the matter is awaited.
b) Beneficiary Contributions
It was noted that the project beneficiaries were not contributing the required 20%
of the total project cost in cash or in-kind, as stated in Section 1(d) sub-section
3(a) (i) of the LVEMP II Financing Agreement. This may result in scaling down the
implementation of the project activities. Management stated that it will seek to
ensure that the beneficiaries contribute towards the implementation of the
subproject as stipulated in the agreement.
I await results of management‘s efforts.
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67.0 MINISTRY OF TRADE, INDUSTRY AND COOPERATIVES
a) COMESA Summit advances not accounted for
Paragraph 215 (a) of Part I of the TAI, 2003 requires advances to be accounted
for without delay and in any case not later than sixty days. However
UGX.84,795,999 advanced to several sub-committee members to execute the
COMESA summit activities in November 2012 and June 2013 lacked accountability
rendering the authenticity of the expenditure doubtful.
I advised management to avail the necessary documentation for future use or
effect recoveries from the concerned persons.
a) Funds not accounted for by Uganda Commodities Exchange
The ministry disbursed a sum of UGX. 76,456,000 to Uganda Commodities
Exchange (UCE)for purposes of meeting expenses with regard to regulating the
Warehouse Receipt System (WRS) in accordance with the WRS Act. However,
contrary to financial regulations, the funds lacked relevant accountability. In
addition performance reports were not submitted to the ministry to enable
verification as required by WRS regulations.
Management stated that the accountability documents could not be availed as
they were locked up by the Landlord over rent arrears.
I advised management that the agency should be adequately funded to carry out
the prescribed functions. Meanwhile, arrangements should be made to avail the
documents for verification.
b) Incompletely Vouched Expenditure
Paragraph 120 of Part I of the TAI, 2003 requires all payment vouchers to be
properly supported with appropriate documents or sub-vouchers before they are
passed for payment. However, it was noted that expenditure amounting to
UGX.54,112,956 incurred on workshops, meetings, field work and stationery
lacked the necessary supporting documents such as; attendance lists, activity
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reports and acknowledgement receipts rendering the authenticity of the
expenditure doubtful.
I advised management to submit the relevant accountability for verification or
recover the funds from the concerned staff.
c) Un-acknowledged Tax Remittances
A sum of UGX.25, 030,360 reportedly remitted to URA as withholding tax lacked
acknowledgement receipts rendering the expenditure doubtful. Non remittance of
the tax may attract penalties as prescribed in the Income tax Act,1997(as
amended).
In response, management stated that a process of obtaining a password from URA
to enable printing acknowledgement receipts off the URA‘s website has been
initiated.
I await the outcome of management‘s action.
d) Budget performance
Out of the budgeted revenue of UGX.33,595,668,604 only UGX.32,706,145,330
was realized resulting into a shortfall of UGX.889,523,274. Failure to release all the
budgeted funds constrains management in the implementation of planned
activities.
In response, management explained that despite writing to the MOFPED for
additional funding the request was not addressed.
Management was advised to liaise with the relevant stakeholders to obtain more
funding.
e) Untitled Ministry Land
The Ministry indicated that it owns four plots of land with in Kampala, valued at
UGX. 300,000,000. However, in the absence of proof of ownership in form of land
titles, there is risk of encroachment and/or fraudulent transfer of the land.
638
Management explained that Uganda Land Commission had been requested to
expedite the transfer of the land into the ministry‘s name. Meanwhile, a caveat
was also placed on the land.
I advised the Accounting officer to follow up the matter and have the land title
processed without further delay.
f) Staffing Gaps
Out of the 183 approved staffing positions only 130 positions (71%) were filled
leaving 53 vacancies.
The Accounting Officer attributed the staffing gap to the inadequate wage bill
allocated to the Ministry. He further stated that MoFPED had agreed to an
increment of the Ministry‘s wage bill for the financial year 2014/15 and that is
when recruitment will be effected.
I await the outcome of management‘s action.
g) Lack of Asset Disposal Plan
Section 295(1) of PPDA regulations, 2003 requires an Accounting Officer to review
the assets of the procuring and the Disposing Entity on an annual basis to identify
obsolete assets due for disposal. It was noted that the Ministry lacked a disposal
plan and yet it had assets like vehicles and motorcycles identified for disposal.
The table below refers;
Reg No Make/type Office attached to
UG 0312T MIT PAJERO Grounded at Uganda museum
UG 0308T TOYOTA COROLLA Grounded at Uganda museum
UG 0068T MIT D/CABIN UCE – Grounded
UG 0313T MOTORCYCLE Registry (old needs boarding off).
In response, management indicated that obsolete items would be disposed of in
April 2014.
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I advised management to periodically review the Ministry‘s assets and put in place
a disposal plan for assets that are no longer required for use.
68.0 MINISTRY OF TOURISM WILDLIFE AND ANTIQUITIES
(a) Mischarge of Expenditure
Paragraph 405 (a) of the Treasury Accounting Instructions 2003 specifies that all
government transactions shall be recorded in the books of account in accordance
with the Government of Uganda chart of Accounts as prescribed by the Accountant
General. In addition, Accounting Officers shall ensure that all financial transactions
are properly coded.
It was however noted that out of the total Ministry expenditure of
UGX.10,521,481,141 a sum of UGX.981,208,806 (16.1%) was charged on codes
other than those under which it was appropriated leading to mischarge of
expenditure on these accounts as summarized in the table below:-
Item Code Total Spent Correct Charge Mischarge
Amount
211102 24,000,000 0 24,000,000
213001 6,816,000 2,220,000 4,596,000
213002 19,461,640 11,500,000 7,961,640
213003 4,999,800 0 4,999,800
221001 38,239,613 0 38,239,613
221002 149,011,691 145,280,691 3,731,000
221003 311,879,708 191,594,582 120,285,126
221006 105,989,421 0 105,989,421
221007 110,732,152 76,325,966 34,406,186
221008 43,347,717 26,019,346 17,328,371
221011 186,422,444 133,604,073 52,818,371
221012 15,066,999 0 15,066,999
222001 80,428,388 69,809,329 10,619,059
222003 20,000,000 0 20,000,000
223004 61,986,796 4,986,610 57,000,186
223901 1,532,111,610 1,419,621,946 112,489,664
225001 250,175,444 156,700,000 93,475,444
227001 202,473,767 200,473,676 2,000,091
227002 229,405,491 194,148,183 35,257,308
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227003 46,741,096 0 46,741,096
228001 69,999,559 54,855,559 15,144,000
228002 139,758,184 100,265,811 39,492,373
228003 26,884,568 0 26,884,568
231002 222,333,133 221,333,333 999,000
231004 444,761,447 436,000,000 8,761,447
231005 29,999,444 16,596,000 13,403,000
263322 8,717,799 0 8,717,799
321422 60,800,000 0 60,800,000
5,654,092,442 4,672,883,636 981,208,806
The practice portrays a breakdown in budgetary controls and leads to
misrepresentation of the financial statements.
Management attributed the anomaly to underfunding of some items in the budget.
I advised the Accounting Officer to always liaise with MOFPED and ensure
adequate funds are allocated to the budget items.
(b) Advances paid into personal Bank Accounts of Ministry officers
Sections 227, 228 and 229 of the Treasury Accounting Instructions (TAIs) 2003,
state that all payments should be made by the Accounting Officer directly to the
beneficiaries. Where this is not convenient an Imprest holder shall be appointed by
the Accounting Officer with the approval of the Accountant General. It also
requires that the Imprest funds must be accounted for promptly.
It was noted that UGX.1,275,725,185 was advanced to various Ministry staff
through their personal bank accounts to implement a number of activities.
Although the funds were eventually accounted for, the practice is prone to abuse
and could easily lead to loss of public funds.
Management explained that these were funds deposited on personal accounts for
field work activities to take care of local expenses such as transport refund,
refreshments and allowances for local participants given that cash withdrawals
were limited to UGX.20,000,000 per month.
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I advised the Accounting Officer to adhere to the financial guidelines regarding
management of advances given the high risks involved.
(c) Vacant Posts
A review of the staff list of the Ministry revealed that out of 301 approved posts,
171 posts had been filled leaving 130 vacant. A number of vacant posts relate to
implementation of the mission critical activities in the fulfilment of the Ministry‘s
Constitutional mandate. The posts include the following;
Director Tourism, Wildlife & Antiquities
Assistant Commissioner Quality Assurance
Assistant Commissioner Planning and Partnership
Assistant Commissioner Licensing & Monitoring
Assistant Commissioner Sites and Monuments
Principal Conservator
Principals of the two Training Institutes.
In response management indicated that clearance had been sought from the
Ministry of Public Service to fill the first three positions on the list and that the rest
of the positions could not been filled due to the recruitment freeze.
I advised the Accounting Officer to continue engaging the Ministry of Public
service and other relevant stakeholders to have vacant posts filled.
LAND SECTOR
69.0 MINISTRY OF LANDS, HOUSING AND URBAN
DEVELOPMENT
a) Mischarge of Expenditure
Expenditure of UGX.2,013,594,374 in respect of various activities was charged
wrongly to item codes meant for different activities resulting in misstatement of
amounts expended on the affected codes. This implies that the financial
statements are misrepresented with regard to the mischarged amounts. The
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practice renders the budgeting process redundant, and it is also contrary to the
intentions of the appropriating authority.
Management attributed the mischarges to mix up of narrations on the payment
vouchers which were not carefully scrutinized due to shortage of staff in accounts
section. He further stated that he is liaising with the Accountant General to obtain
the necessary staff to address the issues.
I await outcome of the action.
b) Payments without supporting documents
Paragraph 120 of Part I of TAI, 2003 requires all payments to be properly
supported with appropriate documents before they are passed for payment.
However, the Ministry expended UGX.43,895,000 through the Intergrated
Financial Management System ( IFMS) without filing supporting documents. Such
expenditure is potentially fraudulent. I was not able to ascertain whether the funds
were used for the intended purpose.
I advised management to ensure that all payments are properly vouched and
supported with appropriate documents.
c) Outstanding Commitments
The Ministry had outstanding payables of UGX.8,286,694,065 at year end of which
UGX.8,158,337,542 was for the years dating to financial year 1999/2000. The
delayed payment of domestic arrears could result into higher costs by way of
interest and litigation.
Management explained that the accumulated domestic arrears had been
reconciled and the position frozen by the MoFPED but funds had not yet been
released for the purpose.
I advised management to liaise with Ministry of Finance, Planning and Economic
development to ensure that resources are set aside to settle these long
outstanding commitments before it becomes a national problem.
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d) Budget Performance
Review of the approved budget and the financial statements for the year revealed
that out of the total budget of UGX.14,507,839,600, the Ministry received
UGX.13,260,322,137 (91.4%), resulting in a shortfall of UGX.1,247,517,463. The
failure to realize all the budgeted funds hindered full implementation of the
Ministry planned activities, for example the dissemination of Land Act,
operationalization of the urban development forum and the stakeholders‘ meetings
on tenants‘ bills were only partly implemented.
Management explained that the Ministry‘s budget was affected by the budget cuts
which they did not have control over.
I advised management to liaise with Ministry of Finance, Planning and Economic
Development and other relevant stakeholders for improved funding to have all
planned activities implemented.
e) Staffing Gaps
It was noted that out of the 839 approved staffing positions for the Ministry, only
329 (39.2%) positions had been filled. In particular, the department of Surveys
was greatly affected yet it plays a very important role in the management of land
affairs. It was also noted that a number of staff have been in acting capacities for
periods longer than the six (6) months contrary to provisions of the Public Service
Standing Orders. This practice is irregular and demoralizes staff.
Management explained that most of the staffing gaps were a result of inadequate
wage budget provisions and delays in the recruitment process by the responsible
entity. The Public Service Commission is not in place.
I advised management to continue engaging with the concerned agencies to
ensure that the vacant posts are filled and staff in acting positions are regularized.
f) Status of buildings at the Department of Surveys and Mapping in
Entebbe
An audit inspection was carried out at the Department of Surveys and Mapping in
Entebbe and it was noted that;
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The buildings are dilapidated and have old wooden doors without burglar
proofing, yet the department houses highly valuable survey and mapping data,
records and equipment.
The department did not have access to intranet making it difficult to
communicate to the mother Ministry in Kampala.
There is a great risk of losing the data and the equipment kept at the department.
Management stated that the buildings at Survey and Mapping Department
Entebbe were in a dilapidated state because of lack of adequate funding for
maintenance.
I advised management to plan for renovation of the structures at the department
in order to secure the survey data and equipment at the department.
70.0 UGANDA LAND COMMISSION
a) Mischarge of Expenditure
Expenditure of UGX.274,007,650 in respect of various activities was charged
wrongly to item codes meant for different activities resulting in misstatement of
amounts expended on the affected item codes. This implies that the financial
statements are misrepresented with regard to the mischarged amounts. The
practice renders the budgeting process redundant, and it is also contrary to the
intentions of the appropriating authority.
Management attributed the mischarge to non-availability of funds on some items
and yet activities had to be implemented.
I have advised the Accounting Officer to ensure that payments are correctly
charged on the item codes to enable proper implementation of the Commission‘s
programs.
b) Outstanding Property Rates
The Commission had accumulated property rates commitments at year end of
UGX.5,316,175,868. This was an increase of UGX.2,473,315,251 from the figure of
UGX.2,842,860,617, reported in the previous year. There was no provision to pay
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off these arrears in the budget of 2013/2014,hence there is a likelihood of the
obligation increasing further.
Management explained that the property rate arrears were verified by internal
audit and awaited availability of funds by the Ministry of Finance, Planning and
Economic Development (MoFPED) to pay the debts.
I advised management to make provisions in the Commission‘s subsequent
budgets and have the creditors settled.
c) Failure to maintain an inventory of Land
ULC is mandated to acquire and manage government land and keep custody of all
documents relating to land. It was however noted that the Commission lacked a
comprehensive inventory of Government land and this may result into
encroachment and/or loss.
Management attributed this to lack of sufficient funds, personnel, and information
management systems to keep such an inventory but stated that they were
planning to make a budget provision in the FY 2014/15.
I advised management to liaise with key stakeholders in the sector to ensure that
this activity is undertaken.
d) Delayed approval of the Organizational Structure
The Ministry of Public Service approved a temporary establishment for ULC in
2006 to enable it start operations pending consultations and approval of its main
organizational Structure. Since then the main Organizational Structure has never
been approved by Public Service.
Consequently, out of necessity the Commission recruited officers on contract but
the positions were not in the temporary establishment. These officers included
Economist, Transport Officer and Systems Administrator.
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Management explained that under staffing was a challenge in the Commission and
this had been communicated to the Ministry of Public Service (MoPS) but no
response had been obtained.
I advised management to follow up with the MoPS so that a proper Organizational
Structure is put in place to enable the Commission operate optimally.
e) Revenue Performance
Review of the approved budget estimates and the financial statements for the
year revealed that out of the total budget of UGX.11,664,589,000 a sum of
UGX.11,451,370,266 (98%) was released resulting into a deficit of UGX.
213,218,734. Non realization of all appropriated revenues leads to non-
implementation of planned activities.
Further analysis revealed that despite receiving 98% of the budgeted funds, the
commission processed only 28 land titles out the planned 50 titles and did not
register the 1,750 planned bonafide occupants. This implies that management
diverted funds meant for these outputs to fund other activities without obtaining
necessary approvals.
I advised management to always liaise with the MoFPED for improved funding and
seek necessary approval for any re-allocations.
f) Procurement Anomalies
Uganda Land Commission paid UGX.59,704,050 to a local firm for supply of
surveying equipment, however audit noted that the equipment was not entered in
the Assets Register on delivery and has remained idle in the stores. There is a risk
of this equipment being misappropriated or becoming obsolete before utilization.
I advised the management to ensure that the equipment is registered in the stores
ledger and to put it to the intended use.
g) Fixed Asset Marking /Engraving
Regulation 101 of the PFAR, 2003 requires all fixed assets to be appropriately
marked or engraved to ensure that they are easily identifiable as Government
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assets. It was noted that some assets had not been engraved as required. The
failure to have the assets engraved exposes them to risk of loss through theft or
misappropriation.
Management explained that the only items that were not engraved were those
procured in FY 2012/2013 but indicated that they were in the process of procuring
a firm to undertake the exercise.
I advised management to expedite the process to safeguard the assets of the
Commission.
INFORMATION AND COMMUNICATION SECTOR
71.0 MINISTRY OF INFORMATION AND COMMUNICATIONS
TECHNOLOGY
a) Budget performance
Out of the revenue budget of UGX.20,225,476,812 the Ministry realized only UGX.
13,985,958,421 resulting into a shortfall of UGX. 6,239,518,391. As a result key
planned activities such as the National ICT Backbone were not implemented. I
informed management that delayed implementation of ICT Infrastructure impairs
improvement of government business process and hinders country
competitiveness.
In response management stated that not all funds budgeted were released by the
Ministry of Finance Planning and Economic Development (MoFPED). Further,
management indicated that they had since engaged the MoFPED to ensure
funding of ICT infrastructure programs are adequately catered for in the budget.
I advised management that there is need for closer liaison between the Ministries
of ICT and MoFPED to prioritize funding of key infrastructure that support business
processes.
648
b) Mischarge of Expenditure
Review of the Ministry‘s expenditures revealed that a total of UGX 232,267,708
was charged on budget lines other than those under which funds were
appropriated.
The practice undermines the intentions of the appropriating authority and implies
that the financial statements were misrepresented to the extent of the mischarge.
Management explained that the mischarge was necessitated by limited cash
ceilings on some critical items of the Ministry
I advised management to always ensure adequate liaison with MoFPED so as to
allocate sufficient funds to critical items.
c) Domestic arrears
Comparison of the payables balances for 2011/12 and 2012/13 revealed that the
Ministry has continued to report domestic arrears at UGX.900,856,821 without
any movement thereof. Long outstanding payables may expose the Ministry to
the risk of litigation.
The Accounting officer explained that funds were not released for the item during
the year despite requests to the Ministry of Finance, Planning and Economic
Development (MoFPED).
I advised management to continue liaising with MoFPED to prioritize settlement
of domestic arrears.
d) Nugatory expenditure
The ministry incurred costs of UGX.16,538,890 following cancellation of an
irrevocable letter of credit on purchase of a vehicle. This expenditure is
considered nugatory since it would have been avoided had proper procurement
planning been undertaken.
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Management explained that the cancellation was necessitated by the objection of
the supplier, who indicated that the vehicle was already in the country and there
was no need of importation.
I advised management to always ensure proper procurement planning to avoid
unnecessary costs.
e) Funds not accounted for
Contrary to TAI 217 which requires accountability for official advances within sixty
days, it was noted that a sum of UGX. 43,979,000 paid to various staff to carry out
official activities remained outstanding. In the circumstances, it was not possible to
confirm that the money was used for the intended purposes.
I urged the Accounting Officer to submit the relevant documents for verification.
In the alternative the funds are recoverable.
PUBLIC ADMINISTRATION SECTOR
72.0 MINISTRY OF FOREIGN AFFAIRS
a) Unplanned procurement
During the year under review the Ministry incurred UGX.1,200,000,000 on
procurement of conference and accommodation facilities for the International
Conference for Great Lakes Region (ICGLR) summit without including the activity
in the procurement plan for the year contrary to the procurement regulations. It
was further noted that the Ministry contravened PPDA Regulation 105 (1-3) which
requires a procuring and disposing entity to confirm availability of funds before
initiation of any procurement proceedings. Management attributed the anomaly to
the short notice of the summit arising from issues of emergency nature.
I explained to management that since they were aware that the country was
chairing the ICGLR summit, the procurement plan and budget should have
included this activity.
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I advised management to follow prescribed procedures whenever such
procurements are anticipated.
b) Procurements not Approved by the Solicitor General
All procurements of UGX.50 million and above are required to be approved by the
Solicitor General in accordance with procurement Regulations. It was however,
noted that the procurements worth UGX.945,742,695 were not approved by the
Solicitor General thereby exposing the Ministry to unfavorable contract clauses that
could lead to loss of public funds. Table 2 below refers;
Table 2:
In response, the Accounting Officer explained that the time frame for the summit
was too short to enable following all the required procedures under PPDA.
I advised Management to always ensure that prescribed approvals are obtained as
required by the PPDA Act to protect the entity from possible losses.
c) Un-realized Receivable
The Ministry reported in its Statement of Financial Position, receivables of
UGX.3,343,140,729 that arose from an advance made to the proprietor of Imperial
Royal Hotel for the completion of the hotel for use during CHOGM event in 2007.
The hotel was not able to host/accommodate CHOGM officials and as such, the
proprietor was tasked to pay back the money to the Ministry.
Procurement Ref
Number Contractor Contract Details
Contract
Sum (UGX)
MOFA/SRVS/12-
13/000189 Munyonyo Resort
Venue, conference facilities
and accommodation for ICGLR
summit
109,929,732
MOFA/SRVS/12-
13/00048 Munyonyo Resort
Venue, conference facilities
and accommodations for
ICGLR summit
670,326,500
MOFA/SRVCS/11-
12/00153 Munyonyo Resort
Conference facilities for 7-8th
October summit 165,486,463
TOTAL 945,742,695
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Management explained that the matter was in court.
I await the outcome of management action.
d) Failure to Withhold Tax
Section 119 (1) & (2) of the Income Tax Act requires all Government institutions
to withhold tax at the rate of 6% on payments for supplies of goods and services
exceeding one million shillings and to remit it to Uganda Revenue Authority.
Contrary to this requirement, MoFA did not withhold UGX.9,388,821 from the
payments to a supplier of stationery. Failure to withhold and remit the tax may
attract penalties from the tax body.
Management explained that deduction of the tax is a system automated function
which was not activated at the time of setting up the supplier on the IFMS and
that the supplier had been requested to declare the tax to Uganda Revenue
Authority (URA).
I advised management to follow up the matter with URA since the Income Tax Act
considers the Ministry the withholding agent responsible for remitting the tax.
73.0 EAST AFRICAN COMMUNITY AFFAIRS
a) Mischarged Expenditure
Treasury Accounting Instructions require that transactions should be recorded in
the books of account using the Government of Uganda Chart of Accounts as
prescribed by the Accountant General. The detailed explanations for each account
prescribe what expenditures should be charged on the account.
However, expenditure of UGX.631,272,089 was charged on expenditure codes
other than those under which it was appropriated as summarised in the table
below:-
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Account Account Description Amount mischarged
213001 Medical expenses (To employees) 6,888,000
221001 Advertising and Public Relations 244,106,159
221003 Staff Training 26,518,175
221008 Computer supplies and IT services 19,027,060
221009 Welfare and Entertainment 153,869,378
221011 Printing, Stationery, Photocopying and Binding 38,546,351
221012 Small Office Equipment 41,022,668
222002 Postage and Courier 21,515,890
227002 Travel abroad 8,657,500
227004 Fuel, Lubricants and Oils 26,126,800
228001 Maintenance – Civil 7,855,940
228002 Maintenance - Vehicles 25,008,168
228003 Maintenance – Machinery, Equipment & Furniture 12,130,000
631,272,089
The practice is a sign of a breakdown in controls over the budget implementation
process and implies that the financial statements are misrepresented to the extent
of the mischarge.
Management explained that these were preliminary expenses related to the main
item codes.
I advised the Accounting Officer to streamline the budgeting process so that
available funds are properly allocated to the planned activities.
b) Expenditure on Foreign exchange Account
The Ministry spent UGX 15,212,588,098 out of its foreign exchange account of
which UGX 12,500,392,970 was transferred to the EAC Secretariat and the balance
of UGX.2,712,195,128 was spent on other activities. The details on the bank
statement show that UGX.758,031,287was drawn in cash during the financial year.
I was not availed with accountability documents relating to this cash withdrawal
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for examination. It was therefore not possible to satisfy myself that this cash was
properly utilized.
I advised management to ensure that records relating to this expenditure are
properly kept and maintained for proper accountability.
c) Expenditure on Travel Abroad
Review of the records relating to travel abroad for various activities revealed the
following matters;
Inappropriate representation to conferences
There were officers being nominated to travel and attend conferences but by their
designations were not appropriate to attend these conferences. There is a risk that
as a country, Uganda may not be benefitting from such representation at high
level conferences because they are attended by staff who are not coming back to
implement what they learn. Besides, supporting accountability documents for
these trips such as back to office reports were not made.
Retrospective requests for Clearance
There were cases of staff who travelled without clearance from the Prime Minister
but later requested for retrospective ones. This was contrary to a letter referenced
ADM/125/128/01 of 19th December 2012 stopping the retrospective clearances,
with exception of those who were forced to stay abroad after being cleared. The
ministry risks incurring travel expenditure on staff whose clearances could be
rejected.
Travel abroad without the clearance of the Prime Minister
It was noted that the travels abroad whose expenditure amounted to UGX
318,396,600 were not supported with clearance by the Prime Minister for trips
abroad.
The Accounting Officer explained that this was caused by the short notices at
which some of the travel requests were made.
I advised the management to always plan properly for the travels so that the
appropriate clearances are sought in time.
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MISSIONS
74.0 UGANDA EMBASSY, ABU DHABI
74.1 Lack of Mission Charter
It was observed that the Embassy is operating without an approved Charter.
Whereas H.E the Ambassador submitted proposals on the Charter including its
objectives, activities and the cost implications of the proposals, these have not
been acted upon by the Ministry of Foreign Affairs. Ideally, the Ministry would
formulate a foreign policy through which missions would contribute to its
achievement by way of implementation of well defined and coordinated charters.
In the absence of approved Mission Charters, there is a risk implementing
uncoordinated activities at missions that may not achieve the objectives of the
foreign policy.
Management explained that the Embassy operates and files performance reports
based on the draft charter submitted to Ministry of Foreign Affairs in March 2011.
They further indicated that in the Ambassadors‘ Conference of January 2014, a
summarized version of the Mission Charter was agreed upon.
I advised management to follow up with Ministry and finalise the Charter to enable
achievement of Government objectives in the foreign policy.
74.2 Unimplemented activity – Uganda Consulate in Dubai
The Embassy is responsible for representing Uganda‘s interests in the seven
United Arab Emirates including Abu Dhabi, Dubai, Sharjah, Ras Al Khaimah,
Fujairah, Ajman and Umm Al Quwain. To enhance representation in Dubai, which
is the business centre of UAE, the Embassy planned to open up a consulate in the
Emirates in the 2012/2013 financial year, set up offices and procure a vehicle for
the consulate. It was however, noted that the Mission did not implement this
activity reportedly due to lack of funding.
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I advised management to continue pursuing the establishment of the consulate
with the Ministries of Foreign Affairs and Finance, Planning and Economic
Development for enhanced representation in the Emirates.
74.3 Accommodation of Foreign Service Officer (FSO) V
As reported in my previous year report, the Foreign Service Officer, Grade V was
still accommodated within the Chancery due to inadequate funds. The officer has
been living in these circumstances for three years now. There is a need to ensure
that staff of the Mission are provided with appropriate accommodation depicting
their status.
Management explained that the Embassy budgets for the optimal officers‘
accommodation but the funds are usually not provided in the approved
appropriated budget. They further explained that an appeal had been made to the
responsible Ministries of Foreign Affairs and Finance, Planning and Economic
Development to avail an optimal budget for the chancery and the officers‘
accommodation.
I await the results of Management action in this regard.
74.4 Security at the Chancery
It was noted that the Chancery did not have a Security Guard and Security
Surveillance systems like CCTV cameras though the facilities had been provided for
in the 2012/2013 work plan. The Chancery premises are pictured below:
Abu Dhabi Mission chancery premises
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There is a risk of burglary and vandalism of the Chancery premises, and
subsequent loss of Government property due lack of security.
Management responded that they had obtained authority from Abu Dhabi
Municipality to erect a shelter for the Guard, however, there was no funding for
the activity.
I advised management to ensure that the premises are secured as planned.
74.5 Staffing at the Embassy
The Embassy is graded as 1+3+9 Head of Mission, three home based staff and
nine local staff in accordance with the approved staffing structure. However, it was
observed that the Embassy had not yet recruited an Administrative Attaché and a
Translator, absence of whom the Embassy may not implement all its planned
activities.
Management attributed the shortfall in staffing levels to inadequate funds to cater
for wages.
I have advised Management to liaise with the Ministries of Foreign Affairs and
Finance, Planning and Economic Development to provide for the sufficient funds
for wages.
75.0 UGANDA HIGH COMMISSION, ABUJA
75.1 Review of draft financial statements
a) Statement of Financial Performance
Included in the Statement of Financial Performance were transfers to treasury
totaling to UGX.203,605,255 at the year end. However, this did not include
UGX.235,847,496 cash and cash equivalents which were due to Treasury. I was
therefore unable to confirm that transfers to treasury were fairly stated.
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In addition, it was also noted that receivables of UGX.31,057,291 disclosed in note
21 lacked a supporting schedule. In the absence of the schedule, I was not in
position to determine whether the balance reported is fairly stated.
I advised the accounting officer in future to always make necessary adjustments
to the financial statements and always provide a schedule for receivables as an
attachment to the financial statements.
b) Statement of Stores and Other assets
The following issues were observed during the audit of the statement of stores
and other assets;
Included among other assets acquired during the year, are non-residential
buildings erroneously posted with UGX.204,366,703 when actually there was
no expenditure incurred in acquiring non-residential buildings during the year.
On the other hand, residential buildings item was posted with UGX.90,114,974
although this item was not budgeted for in the first place.
Transport equipment acquired during the year was US$.35,759.50, an
equivalent of UGX.90,277,718. This was however omitted from the Statement
of Stores and Other Assets acquired during the year.
I advised management to always make necessary adjustments to the Financial
Statements and as well as strengthening the budgetary processes.
c) Non-Tax Revenue
The Mission collects Non-Tax Revenue from passport and visa entry fees.
However, the inventory for passport and Visa entry books was not availed for
verification. The records such as Revenue Counterfoil Register, used counter foils,
record of receipt and issue of passports which are vital for accounting for revenue
collected, banked and transferred to treasury were not availed. In the
circumstances I could not verify the accuracy of shs.154,172,262 reflected as
actual revenue collected under NTR during the year.
I advised management to avail all necessary supporting documents for
verification.
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d) Transfers to Treasury
Revenue reflected as remitted to the consolidated fund of Ugx.124,650,624 was
not supported with remittance schedules and acknowledgement receipts. In the
circumstances I was unable to verify whether the transfers were fairly stated in
the Financial Statements.
I advised the Accounting Officer to always follow up acknowledgement.
75.2 Non-Submission of Accounting Documents
The High Commission in Abuja, Nigeria opened and operated bank accounts Nos.
05280040000027, 02680131002197, 3000003033, 3001200145, 3000003026,
02680131002197 and 1015388990 as follows:
A/C Title
A/C Number Balance at
June 30th
2013(USD)
Balance at
June 30th
2013(NGN)
Revenue (US $) 3000003033 11,074.11
Uganda House Project. (US
$).
3001200145 21,178.67
3000003026 51,565.91
Social Security (NGN). 1015388990 760,318.71
05280040000027
02680131002197
Uganda House Project.(NGN) 1014577249
However the returns for Accounts 3000003033, 3001200145, 1015388990,
1014577249 and 3000003026 such as receipts, payment vouchers, cash
sheets/cash books and revenue returns for all the months under review were not
availed for verification. Bank reconciliations statements for all the accounts were
also not presented for audit.
I advised management to always submit the relevant returns for each of the
accounts for review.
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75.3 Improper procurements
a) Fuel
It was noted that during the year a sum of Nigerian Naira (NN) 162,600 was used
for the purchase of fuel. However a test check revealed that fuel worth NN
101,000 was purchased from ungazetted markets. I brought to management‘s
attention that they risk consumption of contaminated fuel. The table below refers;
S/N VOUCHER NO. AMOUNT PAID (NN)
1. PV-389/08/12 5,000
2. PV-391/08/12 6,000
3. PV-392/08/12 11,000
4. PV-402/08/12 4,000
5. PV-446/09/12 8,000
6. PV-444/09/12 11,000
7. PV-429/09/12 11,000
8. PV-428/09/12 8,000
9. PV-416/09/12 6,000
10. PV-672/10/12 6,000
11. PV-394/10/12 6,000
12. PV-393/10/12 3,000
13. PV-487/10/12 8,000
14. PV-484/10/12 8,000
TOTAL 101,000
I advised management to desist from such practice in future.
b) Purchase of a Mini-Bus
A minibus was purchased by the High Commission at a cost of NN.5,650,0000
approximately US$.35,759.50 from one Kojo Motors. However the following
anomalies were observed;
i. The customs papers for import of new vehicles were not attached for
verification. Other documents showing specifications, mileage at purchase,
seating capacity, engine and chassis numbers were also not provided for audit.
ii. The assets register page indicating recording of the asset was not submitted
for review.
I advised management to avail all the relevant documents indicated above for
review.
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75.4 Payment of Allowances to Policemen
During the year under review, Nigerian naira 560,000 approximately US$.3,544.30
was paid to some policemen in cash as allowances for security services. However
there were discrepancies in the signatures of the recipients making it difficult to
rely on them.
Besides, it is not clear whether diplomatic facilities require separate security
arrangements. I have advised management to explain the anomalies.
75.5 50th Independence Anniversary Celebrations
A total of NN.1,536,100, approximately US$.10,000 was purportedly used for the
Independence celebrations as follows;
VOUCHER NO. PAYEE AMOUNT (NN)
PV-452/09/12 Chelsea Hotel 800,000
PV-502/10/12 Chelsea Hotel 612,500
PV-503/10/12 Mugisha 104,000
PV-469/03/12 Mugisha 19,600
TOTAL 1,536,100
However the following matters were noted;
i) The above expenditure was not budgeted for and therefore it was not funded
for the year under review.
ii) The expenditure also did not follow the public procurement and disposal of
assets procedures and regulations.
iii) There was no proper accountability of the above in terms of attendance list
and the invitation of the 250 guests who should have attended.
I advised management to avail the necessary accountability for verification and
also to ensure that in future, important celebrations should be budgeted for.
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75.6 Capital Development Funds
One of the key planned activities for Abuja Mission was to acquire, develop and
manage properties abroad. A budget was therefore set for Non-residential
buildings of NN.300,000,000, (US$.120,813.31) and for transport equipment of
NN.150,000,000 (US$.60,406.65).
However the following expenditure incurred from the capital development fund
was not budgeted for and this resulted into diversion of funds without authority.
Item Amount (US$)
Renovation of Residence 20,800
Construction of a Bore hole 5,949.37
Purchase of Generators, furniture & music system 8,515.69
35,265.06
In addition, I was also unable to verify the balance of US$.14,063.44 an
equivalent of UGX.36,554,958.96 because of lack documentary evidence.
I have asked management to always seek relevant authority for reallocation or
virement of funds.
76.0 UGANDA, EMBASSY ADDIS ABABA
76.1 Inadequacy of payment processing controls
Good public management practices require enhancement of checks and balances
inform of segregating of duties to minimize the possibility of making errors. Audit
however noted that most of the Embassy payments were initiated, approved, and
paid without involving the heads of units and sections. Furthermore scrutiny
revealed that payment vouchers were not signed by the beneficiaries. There is a
risk that public funds may be misused in the absence of adequate internal
controls.
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In response the Accounting Officer indicated that in future, steps will be made to
ensure that transactions are processed by more than one officer.
I advised the Accounting Officer to enhance the internal controls in the transaction
processing system by involving section and unit heads at the Embassy.
76.2 Embassy planned out puts and actual expenditures
The output based budgeting system requires funds to be linked to the
output/deliverables in the work plans and presented in ―Performance Form: A‖, to
facilitate measuring of performance against planned outputs.
Audit noted that the Embassy expenditures such as employee costs, rent, water,
electricity and insurance amounted to UGX.347,000,000, however this was not
itemized in relation to the planned outputs and performance indicators.
It was further noted that the performance report of the mission did not link actual
expenditures incurred to the objectives, except in general terms. In the absence of
this, I was unable to assess the mission‘s performance.
Management in its response indicated that future work plans shall contain details
of planned resource allocation per planned output.
I advised the Embassy management to prepare work plans that link activities to
the cost of execution to ease performance evaluation.
76.3 Lack of Embassy Website
Modern information technology is critical for proper functioning of the Embassy in
order to maintain a well-populated and periodically updated Website. It was
however noted that the Embassy did not have a website and can be attributed to
the fact that Embassy management has not accorded setting up of the website the
attention it deserves. In the absence of a website the Embassy operations are
effected given the fact that it‘s accredited to serve two countries.
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In its response the Embassy management regretted the omission and indicated
that an officer had already started assembling materials for the website.
I advised the Accounting Officer to expedite the process.
76.4 Embassy rental costs
Good practice require Foreign Missions to acquire own property in the country of
accreditation to reduce on rental costs. Audit noted that the Ethiopian Government
in 2004 offered land to the Embassy for the construction of its permanent home
but no efforts have been put in place to formalize the offer and utilization of land.
The physical inspection of the allocated land revealed that it had been encroached
on.
Management indicated that they are planning to make a budget allocation in F/Y
2014/15 for acquiring the allocated piece of land offered by the Ethiopian
Government and after plans for developing it will be undertaken.
I advised the Accounting Officer to liaise with stakeholders and ensure that
appropriate measures are undertaken in acquiring and developing embassy land.
76.5 Furniture status of Chancery and Official residence
Government, in accordance with section H-e (10) provides furniture to Foreign
Service officers however, inspection of the chancery and the official residence
revealed that 85% of the furniture had outlived their usefulness. Furthermore
audit noted that furniture was not engraved and not comprehensively captured in
the assets register. Absence of such in asset register and distinctive identification
makes it difficult to manage the assets during their useful life.
Management explained that the Ministry of Foreign Affairs has not developed a
replacement policy for furniture and other assets in Missions.
I advised the Accounting Officer to liaise with the Ministry of Foreign Affairs on
formulation of a policy or guidelines for replacement of furniture and other assets.
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77.0 ANKARA EMBASSY
77.1 Performance Report
The Accounting Officer under Regulation 14 of the Public Finance Accountability
Regulations (PFAR 2003) is required to carry out a regular review of the Embassy
operations and establish whether the operations are being carried out as planned.
The 3rd and 4th quarter or performance reports were not presented for verification.
The Accounting Officer acknowledged the shortcoming and undertook to prepare
and present both the financial and performance reports in accordance with the
regulations.
It was therefore difficult to establish whether the Embassy activities had been
implemented as planned.
I advised management to ensure that performance reviews and reports are
regularly concluded and presented for verification.
77.2 Assets Management
Regulation 14 (c) of the PFAR 2003 requires the Accounting Officer to ensure that
property and resources are properly managed and safeguarded. It was observed
that the Mission had not established a detailed Fixed Assets Register for purposes
of recording the items owed by the Embassy. In absence of a detailed fixed assets
register, the verification of the assets owned by the Embassy could not be done.
The Accounting officer acknowledged the shortcoming and explained that the
Embassy inventory list of assets was computer based but will in future establish a
book register to show full details about the assets.
I advised management to ensure that a detailed Fixed Assets Register is kept and
properly maintained.
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77.3 Engraving of the Assets
It was also noted that the assets owned by the Embassy had not been engraved
with the Embassy identification marks. It therefore becomes difficult to identify
the items in case of loss.
Management attributed this to lack of the necessary funding but indicated that
plans were underway to have all the assets engraved by the end of the financial
year 2013/14.
I advised the Accounting Officer to ensure that the process is followed through
and concluded.
77.4 Procurements
77.4.1 Procurement Plans
Regulation 96 of the PPDA Regulations, 2003 requires that entities shall prepare
annual procurement plans based on the approved budgets and work plans in
accordance with PPDA Regulations and submit them to the Authority before the
end of the first quarter of the financial year. It was noted that there was no
procurement plan submitted to PPDA, contrary to the Regulations.
The Accounting Officer acknowledged the shortcoming and attributed it to staffing
challenges, but promised to endeavour to ensure compliance in this regard with
effect from the financial year 2014/15.
I advised management to ensure that procurement plans are prepared and
submitted to the Authority in accordance with the regulations and guidelines.
77.4.2 Quarterly Reports on Procurement and Disposal
Section 3.1 of the PPDA guidelines 2007 requires that the entity submits quarterly
reports on procurement and disposal to the Authority by the 15th day of each
month using PP Forms 200 and 202 on micro procurements and, DPA Form 201 on
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disposals, copied to the Permanent Secretary, Ministry of Foreign Affairs. However,
no such a report was presented for audit verification.
The Accounting Officer undertook to ensure that quarterly reports on procurement
and disposal are prepared and submitted to PPDA and the Ministry of Foreign
Affairs in accordance with the PPDA Regulations.
I advised management to ensure that in future quarterly reports on Procurement
and Disposal are prepared and submitted to the Authority and the Ministry of
Foreign Affairs.
78.0 UGANDA, EMBASSY BEIJING
78.1 Payables balance
Included in the payables balance of UGX.433,160,894 is a sum of
UGX.426,244,607 comprising of overdue rent and heating costs for the diplomatic
compound and staff apartments. The embassy is exposed to a fine of 2% on daily
basis for delayed settlement of rent and a risk of cessation of services.
Management attributed the accumulation of payables to underfunding of the items
and stated that the embassy would seek supplementary funding for the payables.
I advised the Accounting officer to liaise with the Ministry responsible for finance
to ensure prioritization of funding for the items.
78.2 Lack of procurement plan and un approved contracts committee
Contrary to the PPDA Act, 2003 section 58 the entity did not prepare a
procurement and disposal plan. In addition the members of the contracts
committee were not approved by the Secretary to Treasury thereby contravening
section 27 of the Act. In the circumstances there is risk of uncoordinated and
irregular procurement activities. Management stated that a draft plan had been
prepared and regretted that final review and approval was not followed up. In
addition the request to the Secretary for Treasury for approval of contracts
committee members was not responded to.
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Management was advised to always ensure timely preparation of the procurement
and disposal plan, and approval of members of contracts committee before
commencement of the activities.
78.3 Non-responsiveness to offer of purchase of property
Review of official correspondences revealed that the Embassy was given an offer
to purchase the diplomatic compound measuring; Built floor of 1,496.4 square
meters and land area of 5,026.5 square meters in November 2006 at a cost of
approximately US $7.8 million. It was however noted that despite previous
expression of interest, no further efforts have been made to acquire the property
despite high rental charges that are projected to increase. There is also possibility
of withdrawal of the offer by the host government.
I advised management to follow up the matter with the Ministry of Foreign affairs
and other relevant stakeholders to acquire property so as to minimize future rental
charges.
78.4 Failure to appraise local staff
Appraisal of staff is a requirement under government standing orders and good
human resource management practices. This enables motivation of staff over good
performance and identification of performance gaps for corrective action.
It was however noted that eight local staff comprising; the accountant, visa clerk,
two drivers, translator, cook, gardener and maid were not appraised.
Management stated that this was an oversight and appropriate appraisal forms for
staff had been secured for the purpose.
I await evidence of appraisal.
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79.0 UGANDA EMBASSY, BERLIN
79.1 Unauthorized Over expenditure
A review of financial statements revealed that the Embassy incurred
UGX.370,619,951 in excess of the approved budget of UGX. 798,328,000.
However, there was no documentary proof to the effect that the necessary
approval in the form of virements/reallocation warrants was granted contrary to
section 17 of the Public Finance and Accountability Act, 2003. Under the
circumstances, the expenditure is not a proper charge to government funds.
Management in response acknowledged the anomaly but indicated that the
necessary approvals for the Financial Year 13/14 had been received.
I advised management to always ensure that approval is obtained prior to
spending.
79.2 Absence of an Approved Mission Charter
A Mission Charter outlines the strategic objectives of an Embassy/Mission
established and how a given Mission should be run in the prevailing economic and
political environment.
However, it was noted that the Mission did not have an approved Charter in place.
In absence of the charter, I was unable to assess the performance of the mission
against its planned activities.
Management in response indicated that the Ambassador made a follow-up of this
matter during their Conference in December 2013. According to management, the
authorities undertook to send a signed copy to the Mission. I have advised
management to ensure that the proposed Charter is approved by the relevant
authority.
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79.3 Staff Appraisals
It is a requirement under Chapter (A-m), para 14(a) of the Uganda Public
Standing Orders 2010 for a staff performance appraisal report form to be
completed for each confirmed officer and those on contract terms in Ministries and
a copy submitted to the Responsible Permanent Secretary by 30th of June of every
financial year. However, no such record was in place at the time of inspection of
the Mission.
In the absence of an objective assessment of an Officer‘s appraisal, it is difficult to
recognize their performance and reward them accordingly. In addition,
performance gaps may not be easily identifiable for appropriate action.
Management in response undertook to comply henceforth. I await the outcome of
management‘s commitment in this regard.
79.4 Inventory of Official Residence
Chapter (H-e)(4) of the Uganda Public Standing Orders 2010 requires the Head of
Mission to assign, in writing, an officer who should be responsible for the official
residence. The assigned officer should compile an inventory of the contents of the
official residence and undertake maintenance of the residence. However, no such
inventory was in place at the time of inspection. In the circumstances, it is difficult
to assess the furnishing and maintenance needs of the Residence.
Management in response indicated that the Third Secretary was appointed to take
charge of the Official Residence and that the Officer was in the process of drawing
up the inventory accordingly.
I await the outcome of management‘s action in this regard.
80.0 UGANDA EMBASSY BRUSSELS
80.1 Budgeting and inadequate funding
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The Ugandan Embassy in Brussels is a multilateral station which covers Belgium,
the Netherlands, Luxemburg as well as the European Union and international court
of Justice (ICJ). For the financial year 2012/13, UGX.2.751Bn (compared to
UGX.2.964Bn for 2011/12) was released to implement planned activities of the
Embassy in the above areas of representation.
It was noted that due to fixed MTEF budget ceilings, there were always
expenditure pressures on the available funds. The situation was further worsened
by continued loss in value of the UGX against the Euro. Some activities such as
travel abroad had to be suspended due to budgetary constraints. There is a risk
that the embassy will fail to meet its obligations in the implementation of its
mission charter.
Management explained that they were liaising with the relevant stakeholders to
have the budget of the embassy increased.
I await the outcome of this engagement.
80.2 NTR reconciliation
Following my previous recommendations to management to strengthen controls
over Non Tax Revenue collection and management, audit noted that action was
taken in this regard. However, there were still challenges regarding daily
reconciliations.
It was noted that transfers to the bank through the agent using ATOS system
were in lump sum amounts (batches), which made it difficult to reconcile the
individual entries to the lump sum (batch) transfers to the bank.
Management explained that the ATOS system had been linked to the consular
Documents related to NTR collection and the accounting system so that the entries
could be traced to the relevant bank transfer.
I advised management to ensure that the reconciliations are done at the close of
business daily to allow immediate follow-ups to avoid backlogs.
80.3 Use of PPDA guidelines
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The PPDA issued guidelines for missions, PPDA Guideline 1/2007 to simplify the
procurement procedures and guide Missions and Embassies in conducting
procurements and disposals. The guidelines were occasioned by the different
staffing levels of these entities and unique circumstances under which they
operate.
It was noted that the Embassy in Brussels had not accessed these simplified
guidelines which was impacting on how the procurement activities were being
undertaken at the Embassy.
Management stated that, they had obtained the simplified guidelines but indicated
that they continued to face hurdles in their implementation because of the unique
nature of the procurement environment and conditions in Belgium.
I advised management to bring this to the attention of PPDA Authority so that
proper guidance is given.
80.4 Staff matters
a) Understaffing
It was noted that the Embassy was understaffed especially in the category of
support staff, posts which are required to be filled with Local staff. The area
greatly affected was the front desk office which must be attended to at all times
when the Embassy is open to business but was being manned by officers (home
based) who had other duties to perform. Combining the responsibility with others
implies that the officers could be underperforming in their other responsibilities.
Management explained that they had undertaken to recruit staff to fill the vacant
posts at the embassy beginning with the receptionist. I await the outcome of this
undertaking.
b) Lack of performance plans at the start of the appraisal period
Management of staff performance requires the appraisees to agree with the
supervisors on the outputs for the appraisal period. The agreed outputs together
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with the activities constitute staff performance plans on the basis of which staff
should be appraised at the end of the appraisal period. However, the staff of the
Embassy did not have performance plans agreed with their supervisors at the
beginning of the period. As a result, there were cases of appraisees not agreeing
with the performance appraisal results at the end of the financial year. Lack of
performance plans with clear outputs limits the objectives of performance
appraisals at the end of the period.
Management explained that they had initiated discussions on the staff
performance plans for both home and locally based staff.
I await the outcome of these discussions initiated by management.
80.5 Status of the Government properties
a) State of Disrepair of the Chancery
An audit inspection of the chancery revealed that the building has not had major
renovations of recent and as a result, it was in a state of disrepair requiring
substantial provision of money to have it renovated. There was complete lack of
routine and periodic maintenance activities required because of the weather
conditions. The structure continued to deteriorate with water leakages from the
roof destroying the walls and ceiling, the basement floors were in a sorry state and
inhabitable, some walls in the building had developed mold which is considered to
be toxic, while most of the walls and ceiling had developed major cracks putting
the lives of the users at great risk.
b) Official residence
An audit inspection of the Official Residence revealed that some limited
renovations had been undertaken mainly on the heating system. There were
notable defects on the building with motor peeling off the walls on the outside,
unpainted walls, water leakages through the roof and ceiling affecting the walls.
The heating system, though improved, still had old heaters, non-functioning water
and plumbing systems in the bath rooms, broken wooden window frames among
others.
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There is a risk that the two facilities may deteriorate further if no major
renovations are undertaken.
c) Redevelopment of plot of land formerly occupied by official
residence
Following the demolition of the former official residence at 35 Clos DesLauriers
Woluwe St Pierre because of non-maintenance and then its eventual collapse, the
asset (plot) was stripped of its immunity and granted the same to the current
building occupied by the Ambassador. As a result of this, the City Authorities have
asked the Embassy to redevelop the plot within a given time frame. There is a
great risk that if the construction is not done within the time frame given, the plot
which is located in a very prime area will be given to other developers.
Management explained that an assessment of the status of the buildings had been
undertaken and recommendations made by the property management team from
Ministry of Foreign Affairs. A provision was made in the 2013/14 budget of
UGX.1.18bn to start the renovation works. The team had also taken up the matter
of the plot with a view of soliciting for funding to develop it.
I await the outcome of management undertaking regarding the renovations and
redevelopment of the plot.
I have also advised them to liaise with MOFA & MOFPED and set up a minimum
fund to cater for routine and periodic maintenance requirements of the buildings.
81.0 UGANDA HIGH COMMISSION, BUJUMBURA
a) Un-Budgeted NTR
It was observed that the High Commission collected NTR of UGX.12,372,151 from
Administrative Fees and Licenses and VAT refunds without prior budgeting for the
funds. Besides, no revision of the budget was evidenced.
Management in response indicated that they will liaise with relevant authorizes in
the budgeting process to include the Missions NTR projections in the upcoming
budget.
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I advised management to ensure that in future, all incomes are budgeted for and
reported accordingly.
82.0 UGANDA EMBASSY, CAIRO
82.1 Review of Financial Statements
a) Statement of Outstanding Commitments
A total of UGX.158,679,788 was reflected in the accounts as commitments
outstanding. Out of this UGX.106,669,233 and UGX.51,562,039 were for Social
Benefits and Goods and Services respectively. However, the balances were not
supported with schedules and/or notes to the accounts.
Management said that these payables had been outstanding for the past several
financial years and efforts by the Mission to have them paid off had failed due to
lack of funds from the treasury.
I advised management to plan for the settlement of the debt to avoid possible
litigation costs in future which would be nugatory.
b) Statement of Disposal of Physical Assets
Proceeds from sale of boarded off furniture and fittings to staff amounting to EGP
1820 were not reflected in the cash flow statement as is required.
Management said that these proceeds were recorded under item 145003
(Miscellaneous receipts) and hence reflected in the cash flow statement.
I advised management to always make sure that necessary adjustments and
disclosures in the financial statements made.
83.0 UGANDA HIGH COMMISSION, CANBERRA
a) Unnecessary interest charges
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The High Commission entered into an agreement with Mercedes-Benz Canberra in
February 2013 to purchase a new official vehicle for the High Commissioner at a
sum of AUS$28,559.20. UGX.100,000,000 was provided in the Mission budget and
UGX.99,999,469 released for the purpose, the Mission opted to acquire the vehicle
on hire purchase, attracting interest charges of AUS$5,076.32 bringing the total
contract price to AUS$33,635.52 which was to be paid by monthly instalments of
UAS$934.32 for 36 months up to February 2016. The additional cost could have
been avoided if outright purchase method was used.
Management explained that because of insufficient funding, the funds that were
provided for the vehicle were used for other pressing and urgent needs of the
Mission. They further explained that they had sought authority from Ministry of
Foreign Affairs to be allowed to reallocate funds from other items to pay off this
debt.
I note that management‘s explanations are indicative of improper budget
execution.
b) Expired Tenancy Agreement
The Mission signed a contract with a local Landlord in January 2005 for rent of the
building housing the Chancery at 7 Dunoon Street, Block 1, Section 6, O‘Malley
Division for two years beginning from 2nd January 2005, at rental amount of
AUS$3,476 per month.
It was noted that the Tenancy Agreement expired on 2nd January 2007 but was
not renewed. The Mission is not protected in case any legal challenges arise with
the Landlord.
Management explained that the Tenancy Agreement was last reviewed in
December 2009 and increased the monthly rent to AUD$3,823.81. However, due
to inadequate funding, the Mission was reluctant to discuss renewal of the
agreement out of fear that the landlord would definitely increase the monthly rent.
I advised management to ensure that they are legally protected amidst the
financial challenges.
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c) Underfunding of the Mission
The Mission is responsible for representing Uganda‘s interests in Australia, New
Zealand as well as Papua New Guinea with regard to promoting bilateral and
multilateral relations, trade and investment, tourism and, diplomatic, protocol and
consular services.
It was however noted that the Mission is not adequately funded to carry out its
mandate. For example for the 2012/2013 financial year was UGX. 1,703,180,000,
was budgeted for but only UGX.1,470,117,897 was released by Ministry of
Finance, Planning and Economic Development. The underfunding affects
implementation of Mission activities.
Management was advised to continue in dialogue with the responsible Ministries of
Foreign Affairs and Finance, Planning and Economic Development for increased
funding.
d) Obsolete Equipment
It was noted that desk top computers in use by the Accounts Clerk, the
Accounting Officer and the High Commissioner were old and not functioning
properly. This hampers the work flow and activities of the affected staff.
The Accounting Officer explained that procurement of new equipment had been
budgeted for under the development budget but were not funded. The
underfunding had also affected other areas like medical care and up keep for
Mission staff which had to be pushed to the 2014/2015 financial year budget.
I advised management to liaise with Ministries of Foreign Affairs and Finance,
Planning and Economic Development to review and increase the funding to the
Mission.
e) Inadequate Security at the Chancery
The building housing the chancery is located on 7 Dunoon Street, O‘Malley ACT
2606, Canberra, an uptown suburb, with a low population density. It was noted
that the building was neither fitted with security surveillance systems like CCTV
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cameras nor monitored by a security guard. The chancery premises are pictured
below:
View of chancery premises from Road
Chancery premises at close range
There is a risk of burglary and vandalism of the chancery premises, and
subsequent loss of Government property due lack of security guards.
Management explained that a provision to cater for guard services had been
included in the 2014/2015 financial year budget and they were liaising closely with
Ministry of Foreign Affairs regarding the matter. I await the outcome of this
engagement.
84.0 UGANDA EMBASSY, COPENHAGEN
a) Non Tax Revenue not Accounted
Examination of the Non Tax Revenue (NTR) returns revealed that during the
period 1st July 2012 to June 2013, a total of UGX.187,905,114 was collected as
NTR. However, review of transfers to the Uganda Consolidated Fund(UCF)
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indicated that only UGX.151,051,637 was remitted leaving a balance of
UGX.30,853,477 unremitted.
There is risk that the NTR may have been utilized at source.
I advised the Accounting Officer to remit the outstanding funds to UCF in
accordance with financial regulations.
b) Imprest Management
The Treasury Accounting Instructions 28 & 233 require imprest holders to keep
separate cashbooks for purposes of recording petty cash transactions. In addition,
sections 29 & 230 require preparation of payment vouchers for all petty cash
transactions.
It was observed that petty cash withdrawals amounting to DKr. 126,000.00 were
made without corresponding petty cashbook entries to capture the income. It was
also not clear as to how the drawings were expensed because there were no
accountability documents attached to support the payments.
It was further observed that the Accounting Officer is also an imprest holder. This
undermines the internal controls regarding segregation of this function.
I advised the Accounting Officer to institute a proper imprest management system,
including the use of imprest cashbook and payment vouchers for accountability
purposes.
c) Irregular Payment of Travel Allowance
According to Section (E-b) 2 of the Public Service Standing Orders, 2010, night
allowance is payable when the Foreign Service Officer abroad officer is travelling
on official duties away from the duty station in the country to which his or her
Mission is accredited and having to spend nights away from his or her residence. A
review of expenditure however revealed that some Embassy Officials were paid
Dkr.64.661,11 subsistence allowance for carrying out special duties instead of
being paid honoraria. This payment is irregular.
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I advised the Accounting Officer to recover the irregularly paid allowances.
d) Initiation of Procurement
PPDA Regulation 104 (1) 2003 requires that procurement requisitions should be
documented using PP Form 20. Contrary to this requirement, it was noted that all
the procurements during the year under review totaling Dkr.454.084,75 were not
requisitioned on PP Form 20. The failure to comply with the stipulated procedures
of initiating procurement may lead to abuse of the procurement process.
I advised the Accounting Officer to always comply with the PPDA procedures in
initiating procurements.
e) Wasteful Expenditure
Review of expenditure for the year under audit revealed that the Mission paid DKK
2,496.43 to a company in India for printing business cards. It is not clear why the
Mission preferred to import printed cards other than sourcing them from a
domestic supplier which would have been cheaper.
I did not get any response from the Accounting Officer for this decision.
Management is advised to manage public funds more prudently.
f) Lease of Photocopier
It was noted that management of the Embassy undertook lease payments worth
Dkr 95.890,54 for photocopying services. However, there were no details attached
to the payments to show how the service was procured. Besides there was no
signed agreement for the services offered. In the circumstance, I could not
establish the basis for the determination of the quarterly payments made and
whether value for money was obtained from the procurement process.
I advised Management to always document any transaction that involves public
funds for accountability purposes.
85.0 UGANDA HIGH COMMISSION, WASHINGTON
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85.1 Staffing at the Mission
According to the approved structure of the mission, the mission is graded as
1+3+9 implying Head of mission(1), home based staff(3) and local staff(9).
However it was observed that the mission has six (6) home based staff as opposed
to the approved three (3).
The current staffing position implied that the mission was overstaffed and could
not access adequate resources to manage the existing staff.
Management explained that whereas management at the Mission had jurisdiction
over the numbers of locally recruited staff, it had no say as to how many home
based staff were posted by Authorities in Kampala.
They further explained that they had written a couple of letters to both Ministry of
Finance, Planning and Economic Development and Foreign Affairs, hoping they
would review the structure. Up till now, the structure has not been reviewed.
I advised management to liaise with the Ministry of Foreign Affairs and that of
Finance, Planning and Economic Development to review the structure so that
corresponding resources are provided.
85.2 Board of Survey Report
It is required under the Public Finance and Accountability Regulation Number 85
that the Accountant General appoints a Board of Survey to undertake stock of the
missions assets and also identify those that may require disposal. However, it was
noted that the activity was not undertaken.
There was non compliance which could lead to inappropriate use of assets.
Management explained that a Board of Survey was actually instituted at the end of
financial year 2012/13. The only problem was that at the time of audit inspection,
the report could not be located due to the laying off of the Accounts Assistant,
who did not make a proper handover. However, they have since located the
Survey Report from the lockers and it is available for verification.
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I advised management to ensure that a copy is availed for verification.
85.3 Un remitted Non Tax Revenue
It was observed that during the financial year ended 30th June 2012, the mission
had un remitted non tax revenue of Shs.211,796,984 constituting 16% of the NTR
collected. For the financial under review the mission collected Shs.1,355,723,400
and only Shs.1,143,926,416 was remitted. The practice is irregular and contrary to
the regulations which require that all NTR should be remitted to the consolidated
fund.
Management explained that the unremitted NTR was borrowed by the Mission to
meet some of the obligatory expenditures like rent, utilities, medical insurance and
staff salaries, which had not been paid due to insufficient releases from Treasury.
However, the funds were later refunded.
I advised the Accounting Officer to comply with the regulations and ensure that
the NTR is remitted regularly as provided in the regulations.
85.4 Production of Passports at the Mission
The mission procured a passport production machine over 15 years ago. However,
over the years the machine had been experiencing frequent breakdowns.
Management explained that the passport printing machine was procured 15 years
ago and had finally broken down. They further explained that they had written
several letters to the Ministries of Foreign Affairs and Finance, Planning and
Economic Development informing them about the problem and requesting for
funds to procure a replacement. No action had been taken by the relevant
authority at the Headquarters.
I advised management to continue liaising with the Ministry of Internal Affairs,
Directorate of Immigration and the Ministry of Finance, Planning and Economic
Development to secure resources in order to enable replacement of the existing
old machine.
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85.5 Appraisal of staff
Under the Terms and Conditions of Service, staff can be reappointed or contracts
renewed based on satisfactory performance in the previous contracts. However, it
was noted that appraisals were not undertaken to assess the performance of these
staff to enable decisions on renewal of contracts or otherwise. There is a risk of
non performing staff being reappointed.
Management explained that they had developed a staff appraisal instrument,
which is being used to appraise locally recruited staff and intend to revise the
contract period to one year beginning with next financial year (2014/15).
I await the outcome of management efforts.
85.6 Procurements at the Mission
Procurement Plan and reporting
According to the PPDA guidelines on procurements in missions, all missions are
expected to prepare procurement plans based on PPDA regulation 96 and submit
them to the Authority before end of the 1st quarter of the financial year. However,
it was noted that no procurement plans were prepared despite the entity
undertaking procurements during the year under review. The practice is irregular
and could lead to penalties.
Management explained that due to some internal weaknesses coupled with
wrangles at the Mission, it was very difficult to come up with an appropriate
procurement plan. However, with a change in leadership at the Mission, a
mechanism was being put in place to ensure that PPDA guidelines are strictly
adhered to. PPDA Committees have been formed and procurement plans which
are in consonance with work plans are being prepared so as to comply with PPDA
regulations.
I await the outcome of the management efforts.
85.7 Management of Fixed Assets
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The mission owned a number of assets including the Chancery, official residence
and office and home items. However a proper fixed assets register with all the
necessary details such as cost, location and current condition of assets were not
included for all items. Instead a list of items was only provided. In addition a
number of items were not engraved to provide easy identification incase of loss.
Management explained that they already have a proper fixed assets register.
However, they were looking for an engraving company to the do the engravings.
I advised management to institute a fixed assets register in accordance with the
TAI.
86.0 THE PERMANENT MISSION OF THE REPUBLIC OF
UGANDA TO THE UNITED NATIONS AND OTHER
INTERNATIONAL ORGANIZATIONS IN GENEVA
a) MISSION CHARTER
Uganda Embassies now use the Mission Charter as a tool that defines and
provides the strategic direction of the Embassies. At the time of inspection in
November 2013, the previous charter that had been put in place in 2006 had
expired and a new charter had been formulated and approved by the management
of the Mission. However the charter had not been approved by Ministry of Foreign
Affairs.
Without an approved charter, the mission may produce work plans that are not in
line with the long term strategies of the Ministry resulting into failure by the
ministry to achieve its strategic objectives.
Management explained that the Ministry of Foreign Affairs had requested the
mission to revise the charter before its approval and were planning to meet to
consider the revisions.
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Management should expedite the process of operationalisation of the charter by
having it formerly approved by the Ministry of Foreign Affairs, aligning it with the
annual operational plan of the Mission clearly defining the annual outputs, planned
activities and the performance indicators to be used to monitor performance.
There will also be need for an effective performance management system to
monitor the performance of the charter.
b) Mission Structure
Absence of approved structure
A review of the approved structure for the mission revealed that one staff position
of third secretary had not yet been filled. In the interaction with the management
of the mission, it was indicated that the structure and staffing positions of the
mission were not adequate to effectively handle the huge work load of the
Mission. Uganda Embassy, Geneva handles both bilateral and multilateral relations.
In addition to bilateral relations between Uganda and Switzerland, the Embassy is
also responsible for representation of Uganda to the United Nations and various
other key international organizations in Geneva which include; World Trade
Organization (WTO), World Intellectual Property Organization (WIPO), World
Metrological Organization (WMO), United Nations High Commission for Refugees
(UNCHR), Office of the High Commission for Refugees (OHCHR), World Health
Organization (WHO) Global Alliance for Vaccines and Immunization (GAVI), United
Nations Environment Programme (UNEP), Global Fund, United Nations Conference
on Disarmament and International organization for Migrations among others.
These organizations operate on permanent basis (full time) and hence require the
country‘s full time representation.
However due to inadequate staffing, the Embassy was not able to participate in
the work of a number of these international organizations. Where there was
participation, it would not be effective given that staff had to attend to the
demands of other organizations assigned to them.
This also impacted on the effectiveness of the Embassy to handle the bilateral
relations between Uganda and Switzerland.
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There is need for the Ministry to fill the existing vacancy and further undertake a
review of the mission structure and staffing requirements to address this
challenge. In addition, the Ministry should pursue the request made by the mission
to the Ministries of Health, Gender, Labor and Social Development to post Health
and Labor attaché‘s to the Embassy to support the Embassy staff in the work
undertaken by the related international organizations.
86.1 Human Resource Management
At the time of the inspection, the mission was employing seven locally recruited
staff who included the Accounts Assistant, Office attendant, Representative Driver,
Utility car Driver, Office attendant, Cleaner, House keeper (Ambassador‘s
residence) and House keeper – Deputy permanent representative residence. It
was observed that the mission did not have an approved structure for local staff
and there were no documented recruitment procedures for local staff. Without
documented procedures, recruitment may be undertaken arbitrarily based on
individual preference or convenience rather than by necessity.
Management should come up with an approved structure and recruitment
procedures for local staff to provide guidance on staff recruitment.
The Accounting Officer explained that they had come up with a draft structure
which was to be presented to management for approval.
86.2 Budgeting
It was observed that the budgeting was undertaken through a participatory and
consultative process involving all staff and the finance committee. The key
challenge facing the Embassy was the unfunded priorities that heavily impact on
the mission operations. Some of the key unfunded priorities included:
a. Relocation of the Chancery to a new location
The Embassy is currently located in a residential area that is not suitable for office
accommodation. Its location makes accessibility difficult for not only staff but also
other people seeking for services. The mission has been advised by the Authorities
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to relocate to a more suitable location where all other Diplomatic offices are
located.
b. Procurement of office furniture
The existing office furniture was acquired in 2006 and now requires replacement.
c. Replacement of Heavy Duty Printer /Photocopies
The heavy duty in printer was due for replacement. The manufacturer had
indicated to the mission that from December 2013, there would be no further
technical support for that range of equipment.
d. Replacement of vehicles
All the three mission vehicles bought in 2006 -2007 require immediate
replacement. Due to old age, the cost of maintenance is high.
86.3 Non Tax Revenue
(a) NTR Utilized at Source
Examination of the Non Tax Revenue (NTR) returns revealed that during the
period 1st July 2012 to June 2013 a total of UGX.122,473,893 was collected in
revenue out of which shs.35,080,585 was banked and remitted to the UCF leaving
a balance of shs.87,393,308 due to the consolidated fund at the end of the
financial year.
A total of CHF 50,411 (shs.87.3 million) had been borrowed without authority to
fund mission operations and repaid back.
Borrowing of NTR without authority should be discouraged as it delays remittance
of NTR to the Treasury and may also result into extra budgetary expenditure.
(b) Visa Booklets not Accounted for
A total of 20 visa booklets bearing serial numbers SU 709001-710,000 issued to an
officer who had since been recalled to Headquarters were found missing hence
exposing the mission to the risk of fraud.
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In a recent inspection undertaken by the Ministry of Foreign Affairs, the Mission
was advised to bring the matter to the attention of the officer responsible. At the
time of the audit inspection, there was no record on file regarding the explanation
of the officer.
Management should seek for an official explanation of the officer and take
appropriate action.
86.4 Expenditure
86.4.3 Delayed return of Accounting Officer
An officer was posted to the Mission in February 2008 and subsequently appointed
Accounting officer in June 2011. The instrument of appointment as Accounting
Officer related to financial year 1st July 2011 to 30th June 2012.
On 30th April 2012, his tour of duty ended following his recall to Headquarters. For
unexplained reasons, the officer overstayed at the Mission up to September 2012.
Consequently, the officer continued to handle Mission finances without a valid
appointment letter as Accounting Officer after the expiry of his instrument of
appointment on 30th June 2012.
It was also observed that the officer paid himself allowances (CHF 3897) for
September 2012 inspite of instructions from the Permanent secretary, Ministry of
Foreign Affairs stopping payment of his allowances and expenses by 31st August
2012.
Management should seek for the recovery of the irregular payment from the
officer.
a) Excess Expenditure
The financial statements (Statement of Appropriation) for year ended 30th June
2013 showed that the mission incurred excess expenditure totaling
shs.90,434,033.
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b) Loss on Poundage
During the financial under review, the mission incurred loss on poundage
amounting to Shs.56million. However, it was observed that only shs.2million had
been provided in the budget to make good the loss on poundage.
This loss is significant given the resource envelope available to the mission and
impacts heavily on the mission operations if not reimbursed.
To avoid budget distortions, Treasury should provide realistic projections of
amounts reimbursable for loss on poundage. Provisions based on losses incurred
the previous year may provide more realistic projections.
c) Utilized cash Balances
The mission had utilized cash balances of shs.595,810,911 by the end of the year
which were not returned to the consolidated fund as required by regulations. The
Accounting Officer attributed the balances to the delayed release of funds for the
fourth quarter by Treasury. He explained that following the release of the cash
limits for the last quarter of the financial year, they committed the funds on the
system with the hope that the cash release would be received immediately.
However the amounts were credited on the embassy account in July and
payments made thereafter.
The late release of funds to missions delays implementation of planned activities
and may lead to challenges of funds absorption inspite of the funding needs for
the Embassy. Treasury should put in place mechanisms to ensure that funding for
missions is released early to allow proper planning and implementation of
activities.
d) Navision computerized accounting system
During the audit inspection, a high level review was undertaken of the Navision
computerized accounting system used by the Embassy for budgeting, payment
processing, accounting and reporting. The major objective of the review was to
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assess the adequacy of general and application controls of the system and assess
the extent to which the system can be relied upon to produce accurate and
reliable financial statements for the mission. The following matters were observed.
e) Functionality of the software
The software has various modules that have the capability to handle financial
management, fixed assets, inventory management and human resource
management. The module in use was the financial management module being
utilized for budgeting, payment processing, accounting and financial reporting.
On the basis of the procedures undertaken, it was observed that management was
to a very large extent utilizing the software for the purposes intended in
accordance with the guidelines prescribed by Treasury.
However, Treasury should work towards deploying other modules (HRM and
inventory Manual) to benefit from the full functionality of the software.
f) Lack of system Integration with the banking application
Currently the financial management module is not fully integrated with the
banking application. It was observed that with the system set up, it is possible to
use the e-banking application to effect payments without using the Navision
computerized accounting system. The set up can allow actual payment in the bank
to be undertaken before payment vouchers are raised and approved by the
Accounting Office, a practice that is inconsistent with financial Regulations and
Treasury Accounting Instructions.
g) Password management
There were no formal procedures for charge of passwords. The Accounting Officer
in an interview explained that if there is a need for change of user responsibility
on the system, all he does is to call the Navision centre at Treasury (Kampala) to
effect the changes. The lack of documented procedures for change of
responsibility or passwords poses a risk of unauthorized access to the system.
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Treasury should come up with procedures and standard templates to be used for
requests for change of responsibility and passwords.
It was also observed that the system set up did not prompt users to regularly
change passwords. In addition the password structure was numeric instead of
alpha numeric. This poses a risk of unauthorized access to the system.
h) Stores
No Board of survey for stores was undertaken during the year contrary to
Treasury Accounting Instructions which provide that Boards of Surveys
should be undertaken annually at the end year. By not undertaking a Board of
survey, the mission was exposed to the risk of loss of assets without easy
detection. It also deprived management, of the relevant information needed to
properly plan for replacement of assets.
Management should ensure that Boards of surveys are regularly undertaken in
accordance with the requirements of the Treasury Accounting Instructions.
i) Court cases
An officer (Miss Irene Kalibbala) who formerly worked at the mission as a support
staff had sued the mission for unfair dismissal and harassment and was
demanding a total of CHF 240,000 .The case was before the Courts of Law in
Switzerland was due for hearing in a few months. The Head of mission indicated
that the case had been taken over by the Ministry of Justice for further
management. It was however observed that in spite of the impending hearing and
possible determination of the case, there was minimal consultation going on
between the Mission, Ministry of Foreign Affairs and the Attorney General. This
minimal level of consultation between the key players exposed the mission to the
risk of loss of the case and the attendant court costs.
Management was advised to follow up the matter with the Attorney General.
87.0 UGANDA CONSULATE, GUANGZHOU, CHINA
691
a) Non-responsiveness to Land offer
The Chinese government offered interested governments including Uganda, land
to construct consular premises at an estimated cost of US$ 1,500,000 for an
acreage of 2500 square meters. Out of 17 plots demarcated for the purpose only 1
remains available. It was also noted that the consulate incurred US$ 267,228 on
rent for the year 2012 and this is projected to increase at a rate of 6-8% annually.
The consulate had been given notice of eviction in the previous year for delayed
rent payment. In the circumstances acquisition of the land and subsequent
construction of premises would eliminate rental charges and save foreign
exchange. However at the time of audit inspection, there was no evidence of
expression of interest by the government thereby exposing the land offer to risk of
forfeiture.
I advised the Accounting officer to follow up the offer with the Ministry of Foreign
affairs and other relevant stakeholders.
b) Lack of mission Charter
The consulate lacks a mission charter that would spell out its key objectives,
outputs, performance and annual targets. In the circumstances it is difficult to
assess the performance of the consulate or individual officers. The Accounting
officer indicated that despite requests to the ministry for the mission charter no
response had been obtained.
I advised management to make further follow up with the ministry on the matter.
c) Failure to appraise local staff
Appraisal of staff is a requirement under government standing orders and good
human resource management practices. This enables motivation of staff over good
performance and identification of performance gaps for corrective action. It was
however noted that six local staff comprising; the accountant, two drivers,
translator, visa clerk/receptionist and cleaner were not appraised.
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Management stated that this was an oversight and appropriate appraisal forms for
staff had been secured for the purpose.
I await evidence of appraisal.
88.0 UGANDA EMBASSY JUBA
a) Un-supported cash in transit UGX.198, 556,110
Review of financial statements revealed that the embassy disclosed UGX.198,
556,110 as cash in transit under note 20 however; there were no supporting
documents to confirm its accuracy and remittance. As a result I was unable to
confirm the concurrency of the transaction.
I advised the accounting officer to always document and file returns for all the
remittances made at the embassy.
b) Failure to transfer of non-tax revenue of UGX 695,328,767
Section 9 of Public Finance and Accountability Act requires that all revenues or
other moneys raised or received for the purpose of the Government, be paid into
and form part of the Consolidated Fund. However, review of the statement of
financial performance on page 6 and cash flow statements on page 8 and 9
revealed that the embassy collected NTR of UGX 695,328,767 but according to
note 18 this money was not reflected in the financial statements as having been
transferred to the consolidated fund.
It is therefore possible that this money was spent at source and was not been
accounted for contrary to the established regulations.
I advised management to always remit all the NTR to the consolidated fund or
seek permission from an appropriate authority when there is need to spend NTR
collections at source.
c) Unspent balance of cash UGX2,065,939,399
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Section 19 of public finance and accountability Act 2003 requires the accounting
officer to return the balance of any moneys withdrawn from the Consolidated Fund
at the end of the financial year. The embassy disclosed under note 20 page 36
that a total of UGX 2,065,939,399 remained on its bank account but there was no
evidence that this money was transferred to the consolidate fund. Further analysis
revealed that cash balance were 100.7% of the total operating expenses during
the year under review, implying that this was relatively substantial sum to be held
by the embassy at the financial year end.
I advised the accounting officer to remit the bank balances to the consolidated
fund.
d) Transport Expenses
The embassy has a fleet of two cars, but analysis of expenditure on their
maintenance fuel, lubricants and oil revealed that a substantial sum of UGX
149,379,383 was spent on then during the financial year under review.
Management explained that the vehicles were procured in 2006 and have of
recent been breaking down.
I advised the accounting officer to make budget allocation for the procurement of
new vehicles in the next budget.
e) Rent Expenditure
In the financial year under audit, the mission spent a total of UGX.761,248,948 on
payment of rent, constituting 58% of goods and services consumed in the year.
The accounting officer attributed the substantial funds paid in rent to the high
demand for house in Juba due to many international organizations in the country.
I advised Accounting Officer to liaise with other stakeholders for a long term
solution of constructing a permanent residence for the consulate.
f) Purchase of Land
Regulation 100 of Public Finance and Accountability Regulations requires a register
to be kept for all assets of Governmentt and make them identifiable. Audit noted
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that under note 10, the mission purchased land worth UGX.46,462,660 during the
year under audit but neither the assets register nor purchase documents were
availed for audit verification. In the absence of these vital documents I was unable
to confirm ownership, existence and authority of purchase.
I advised management to always prepare and avail all necessary documents
during the audit that important to confirm ownership and existence of assets.
g) Lack of Missions Charter
The ministry of foreign affairs requires every embassy to have an approved
charter spelling out the goals, objectives, activities and the cost implication of the
proposals however, it was noted that Juba embassy operated without one.
In the absence of approved mission charter, there is a risk that the embassy is
implementing uncoordinated activities that may not achieve the objectives of the
foreign policy.
I advised the accounting officer to liaise with the ministry and ensure that the
charter is prepared to enable achievement of government objectives in the foreign
policy.
89.0 UGANDA EMBASSY, KHARTOUM
89.1 Review of draft financial statements
a) Non-Tax Revenue
The Non Tax Revenue (NTR) of UGX.131,614,597 collected was not supported
with revenue receipts rendering the collection uncertain. Out of NTR of UGX
131,614,597 only UGX 119,554,197 was purportedly remitted to treasury, leaving
UGX 12,060,400 not accounted for. The remittance was not supported with the
Treasury receipts.
I advised management to always avail the acknowledgement receipts for
verification.
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b) Foreign Exchange Losses
UGX.54,498,671 was reported in the accounts as foreign exchange losses incurred
during the period. However, this assertion was not adequately supported with
relevant journal vouchers and conversion rates.
I advised the Accounting Officer to always provide supporting documentation for
the occurrence and measurement of the exchange losses.
c) Refund of Medical Expenses
Section M- Medical Attention part (M-a) subsection 14 of the Public Service
Standing Orders 2010 requires Foreign Service Officers, his/her spouse and up to
4 children while serving on a mission abroad to be covered by full Medical
Insurance. Contrary to this a sum of SDG.6,235 was paid to staff as refund for
medical bills. There was no evidence that embassy staff were registered with a
medical insurance scheme as required by the Foreign Service standing orders.
I advised management to ensure that in future, the Embassy staffs get registered
with medical insurance scheme in accordance with Foreign Service Standing
Orders.
90.0 UGANDA HIGH COMMISSION, KIGALI
a) Unauthorized Over Expenditure
A review of financial statements revealed that the Embassy incurred a sum of UGX
516,640,239 in excess of the approved budget of UGX 2,643,120,000. However,
there was no documentary proof to the effect that the necessary approval in the
form of virements/reallocation warrants was granted contrary to section 17 of the
Public Finance and Accountability Act, 2003. Under the circumstances, the
expenditure is not a proper charge on government funds.
Management in response attributed the over expenditure on non-residential
buildings and transport equipment to funds retained as at 30th June 2012 for the
696
construction of Chancery and procurement of Representation Car. However, the
team undertook to ensure approval is secured prior to spending.
b) Open-ended Mission Charter
A Mission Charter outlines the strategic objectives of an Embassy/Mission
established and how a given Mission should be run in the prevailing economic and
political environment.
However, it was noted that the existing Charter which was approved by the Hon.
Minister of Foreign Affairs on 23rd January 2006 had no implementation time-
frame. In view of the dynamic political and economic environment within which
the Embassy operates, the objectives may no longer be appropriate and realistic.
Management in response stated that following the Ambassadors‘ Conference for all
Heads of Missions, the Ministry of Foreign Affairs undertook to conclude the
formulation of comprehensive Charters by end of April 2014.
I await the outcome of the Ministry‘s commitment in this regard.
c) Staffing Matters
Staff Appraisals
It is a requirement under Chapter (A-m), para 14(a) of the Uganda Public
Standing Orders 2010 for a staff performance appraisal report form to be
completed for each confirmed officer and those on contract terms in Ministries and
a copy submitted to the Responsible PermanentSecretary by 30th of June of every
financial year. However, no such record was in place at the time of inspection of
the Embassy.
In the absence of an objective assessment of an Officer‘s appraisal, it is difficult to
recognize their performance and reward them accordingly. In addition,
performance gaps may not be easily identifiable for appropriate action.
Management in reponse acknowledged the anomaly and indicated that the
appraisals were now being conducted accordingly.
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I await the outcome of management‘s commitment in this regard.
d) Special Provision of Overtime for Drivers
According to Section E-c, Para 37 of the Uganda Government Standing Orders,
overtime, means any period of work on weekends, public holidays or in excess of7
¾ hours on any day, from Monday to Friday. Para 39 states that overtime which
invariably no driver can avoid has been consolidated for drivers so that such
drivers shall get a consolidated overtime payment calculated as 30%of their
monthly basic salary.
In addition, Section 6 of the Embassy Drivers‘ appointment letters indicates that a
driver may be called upon for official duty on Saturdays, Sundays and Public
Holidays.
However, it was noted that the 30% was not paid to the drivers during the year
under review. In the circumstances, the welfare of the officers is compromised
which may affect their productivity.
Management in response undertook to comply with the standing orders. I have
advised management to always make a provision in the Embassy Annual budget
to cater for the drivers‘ overtime.
e) Treasury Management
The Embassy opened a USD Project Development Account No.5005347-04-50
(Bank 4) for purposes of managing transactions related to the construction of the
Chancellery. However, it was noted that development releases were first deposited
on the USD operational A/c No.5005347-02-56 (Bank 2) before being transferred
to the Development A/c. In the circumstances, there is a risk of diversion of the
development funds.
Management in response indicated that a fresh permission was being sought
through the Ministry of Finance to add another account for receipt of the funds in
question.
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I advised management to ensure that all development releases are credited
directly on the designated A/c.
f) Irregular Power Refunds
According to the Uganda Government Standing Orders, Sec H-e Para 9,
responsibility of the cost of lighting and water lies with every public officer(other
than Head of Mission) at the Embassy. On the contrary, a sum of Rwandese
Francs 2,240,000 was paid to Embassy Staff to cater for power costs at their
residences. In the circumstances, implementation of priority activities is
compromised.
Management in response indicated that the 80% refund to staff was supported by
section (H-e) 10 of the Standing Orders 2010.
I advised management to seek guidance from the Ministry of Foreign Affairs in this
regard.
g) Inventory of Official Residence
Chapter (H-e)(4) of the Uganda Public Standing Orders 2010 requires the Head of
Mission to assign, in writing, an officer who should be responsiblefor the official
residence. The assigned officer should compile an inventory of the contents of the
official residence and undertake maintenance of the residence.
However, no officer had been formally assigned this responsibity at the time of
inspection. In the circumstances, it is difficult to assess the furnishing and
maintenance needs of the Residence.
Management in response acknowledged the anomaly and indicated that the Head
of Chancery had been duly assigned to undertake the assignment.
91.0 UGANDA EMBASSY, KINSHASA
a) Review of draft financial statements
699
The following matters were observed during a review of the draft financial
statements;
b) Non Tax Revenue
The financial statement for the period ended 30th March, 2013 indicated Non-Tax
Revenue of UGX.26,695,914. It was however not possible to validate totals to
ledger balances because revenue ledgers were not availed. The Accounting officer
explained that all NTRs were transferred to the Consolidated Fund (CF) and
receipts were given. However, evidence to this effect was not availed. In
circumstance I could not confirm transfer of funds to the CF.
I have advised management to always provide supporting documentation in
relation to NTRs for verification.
c) Payables
Included in the Financial Statements is an amount of UGX. 130,999,921= that was
committed to pay the sundry creditors. However particulars of the payables were
not disclosed in a schedule rendering their authenticity doubtful.
Management in their explanation attributed the amount in question to outstanding
terminal payments due to former locally recruited staff.
I advised management to always provide schedules in relation to payables for
verification.
d) Cash at Hand
Included in the financial statements is an amount of UGX.80,931,523 representing
cash and bank balances. These balances were however not supported by
certificates of bank balances rendering their accuracy doubtful. While as
management in their response indicated that all certificates of bank balances had
been submitted for verification. The said certificates were still outstanding. In their
absence I could not confirm cash at hand.
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I advised management to always provide certificates of bank balances in order to
confirm funds at bank and at hand.
e) Employee Costs
The financial statements indicated UGX.130,999,921 as unpaid employee costs for
the last ten months.
The Accounting Officer explained that the money relates to the outstanding
terminal benefits due to the former locally recruited staffs of the mission from
1975 to 1997 when the Mission was forceful closed down after severance of
diplomatic relations.
I advised the Accounting Officer to ensure that the matter is followed with the
ministry of Finance and appropriate bodies so as to settle the arrears.
f) Revision of Foreign Service Allowances
The PAC made recommendations for the upward revision of the Foreign Service
allowances after ascertaining the circumstances in which the staffs therein live in
their respect missions abroad. However, there was no evidence that this
recommendation of PAC was implemented.
I have advised management to follow the issue with the relevant authorities so
that the leaving conditions of the staffs are improved.
92.0 UGANDA HIGH COMMISSION, LONDON
92.1 Budgeting and inadequate funding
It was noted that due to fixed MTEF budget ceilings, there were huge pressures
on the available funds. Activities such as Independence cerebrations, movement of
incoming and outgoing officers, renovations and an extra officer, other state
agencies‘ programmes etc., did not have adequate provisions in the Mission‘s
budget. It was also noted that the budget continues to be affected by loss of
poundage due to weakening value of the UGX.
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For example, although the absolute amounts in UGX increased slightly over the
past five financial years, the corresponding amounts in Pounds had reduced as
shown in the graphs below
UGX amounts since 2008/09 Equivalent amount in pounds.
The Mission was failing to implement planned activities using the released funds
and management frequently requested for authority from the Secretary to
Treasury to utilise Non Tax Revenue at source as a stopgap measure.
Management explained that the MTEF Budget ceilings had stayed fixed for the last
five years yet costs of utility bills and Rent for Officers had substantially increased.
The Mission had been hugely affected by Loss in Poundage.
I advised the Mission management to continue liaising with other stakeholders and
have the budget increased to meet the requirements of the Mission.
92.2 Opening of new bank accounts in a local Bank
The Mission operated four bank accounts in the HSBC bank in London until June,
2013 when the bank forced the Mission management to close these bank
accounts. This was after the bank had indicated that they would no longer provide
the Mission with any banking services. Consequently, management opened
corresponding bank accounts in a small bank, Habib Allied International Bank Plc,
(HBL). The following matters were observed with regard to the operations of the
bank accounts
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There was no risk assessment of the banks operations and reputation which
could lead to loss of the Mission‗s funds in case of unforeseen events
happening.
The bank‘s location is a distance away from the Mission. This was because the
other banks in the vicinity of the Mission could not accept to provide the
nature of services required by the Mission. The distance increases the risk of
carrying many to and from the bank.
Management explained that the Mission was still banking with Habib Allied
International Bank plc, as the process of liaising with Bank of Uganda to engage
Barclays Bank for reconsideration was going on.
I advised the Accounting Officer to continue engaging the Ministry of Foreign
Affairs to explore opening accounts in other nearby banks whose operational risks
may be lower.
92.3 Use of a permanent evaluation committee
It was noted that the Mission‘s management appointed a permanent Evaluation
Committee that evaluated bids for all procurements undertaken. The permanent
nature of the Committee does not allow appointment of members in accordance
with the specific requirement of each procurement.
Management explained that the use of permanent evaluation committee in the
evaluation of Mission‘s procurements was mainly due to the small number of
Home Based Officers available at the Mission.
I advised management of the Mission to appoint members of the evaluation
committee for every procurement and not to be permanently chaired by one
member.
92.4 Staff matters
a) Staff performance plans
Management of staff performance requires setting of performance plans by the
staff and agreeing with the supervisors on the outputs for the period. These
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agreed outputs together with the activities to achieve them constitute staff
performance plans on the basis of which staff should be appraised at the end of
the appraisal period. It was however, observed that the locally recruited staff did
not have performance plans agreed with their supervisors at the beginning of the
period.
Furthermore, the same staff had their contracts renewed without appraisals being
undertaken in respect of the previous period of their contracts.
This practice does not allow objective appraisals that should be informed by the
staff performance and achievements of the agreed outputs.
Although management explained that the Staff had been issued with the
Performance Plans, these were not availed for verification.
b) Staff Gratuity
The local staff on contracts are entitled to gratuity in accordance with the labour
laws of the UK. Due to budget constraints, the Mission management decided to
integrate the gratuity entitlements in the monthly salaries. However, it was noted
that apart from the amendment in the employment terms to state that the
monthly salaries were inclusive of entitled gratuity, there were no increments on
the salaries to reflect this change.
In a related development, a former employee (Accountant) at the Mission from
2003 to 2009 had submitted a claim for payment of gratuity amounting to
GBP.22,576. There was no formal response to the claimant and no efforts were
being made to have the amount settled.
There is a risk that the Mission may be faced with regarding the gratuity payments
for both current and former employees.
Management explained that they were still investigating the non-payment of
gratuity to the former Accountant and also finding ways of how to reduce the risk
of such developments by putting all requirements/terms and Conditions on paper.
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I advised the Accounting Officer to review the current arrangement on gratuity for
the current staff and consider the claim of the former employee to avoid future
ligations.
92.5 Asset Register
It was noted that the Assets register maintained by the Mission was incomplete
and not updated with the assets acquired during the year. The assets used at the
Ambassador‘s residence were all not recorded in the register. As a result, the
assets that were used by the former Ambassador could not be tracked and
accounted for before the current one occupied the house.
There is a risk that the Mission could have lost its assets because they were not
recorded to ease their tracking.
The Accounting Officer explained that the Mission had adopted the audit
recommendations and started the process of recording into the Assets Register all
Assets being held both at the Official Residence and Chancery.
I advised management to maintain and have the register updated with assets
acquired and disposed of. Asset counts should be undertaken whenever an Officer
using them is leaving the Mission to avoid loss of more assets.
92.6 Renovation works
a) The Chancery
A contract for renovation of the Chancery Building at a total of GBP 39,982 was
signed between the Mission and a firm, Virtual Group, to which GBP.20,642.50
was paid during the financial year. Although quality works were undertaken on
some parts of the building, other areas of the building remained in a poor state
and substantial amounts of money are still required to work on them.
There is a risk that if additional funds are not availed to undertake these
renovations, the renovated areas will again be affected.
b) Official Residence
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GBP 69,500 was paid to NY Contractors for renovation works at the official
residence of the Ambassador. An audit inspection of the residence showed that
although some substantive works were executed, the building still required
substantial amounts to put it in a maintainable state. The flat roof had stagnant
water on it leading to uncontrolled leakages; plumbing system was old and
required overhaul while the furniture and fittings required to be replaced.
The poor conditions of the buildings was attributed to lack of mandatory routine
and periodic maintenance works necessitated by effects of weather on buildings in
the Temperate zones. The amount spent could not have a big impact because
there had been no maintenance works for a long time.
Management explained that the Official Residence was to undergo major
renovations and repairs that are mandatory requirements by the council on Listed
Buildings.
I advised the Accounting Officer to ensure that adequate funds are included in the
subsequent budget to undertake the planned renovations and routine maintenance
works.
93.0 UGANDA EMBASSY, MOSCOW
a) Late submission of quarterly financial returns
Audit found out that contrary to the requirements of Section 417 of Treasury
Accounting Instructions (TAI) 2003; the mission submitted financial returns for
January to June 2013 four months after the required date. Late submission of
financial returns affect timely evaluation and reporting on the embassy by other
government agencies. Management attributed this failure to the high costs
involved in sending documents by courier from Moscow to Uganda.
I advised the Accounting Officer to electronically submit a summary report
quarterly and supporting documents can be delivered physically half yearly.
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b) Periodic Procurement reports
Paragraph 3 of the mission‘s procurement guidelines requires the procuring entity
to submit quarterly procurement reports to the Public Procurement and Disposal
Authority (PPDA). However, audit noted that the mission made procurements
worth UGX 19,460,417 but the quarterly reports were not submitted to PPDA as
required.
Failure to submit procurement quarterly report may not only lead to the
Accounting Officer being penalized but also undermines PPDA‘s ability to promptly
and accurately provide procurement information to the users.
I advised the mission management to comply with procurement guidelines by
promptly submitting quarterly reports to PPDA.
c) Embassy planned out puts and actual expenditures
The output based budgeting system requires funds to be linked to the
output/deliverables in the work plans and presented in ―Performance Form: A‖, to
facilitate measuring of performance against planned outputs.
Audit, however, audit noted that the mission did not analyze actual expenditures
to reflect the cost incurred towards achieving specific mission objectives.
Furthermore the performance report of the mission, does not link actual
expenditures incurred to the objective except in general terms. Evaluation of the
mission‘s performance became difficult in the absence of this vital information.
In response management indicated commitment of ensuring future work plans
contain details of planned resource allocated per planned output.
I advised Embassy management to prepare work plans that link activities to the
cost of execution to ease performance evaluation.
d) Embassy website
It is a best practice that the embassy maintains a well-populated and periodically
updated Website. Audit however, established that the official mission website was
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not functioning effectively and appeared hatched into. Additionally audit found out
that there was another website in the names of Ugandan Embassy hosted by
entity unknown to the mission providing unauthenticated information. Inefficient
and un-updated website effects the operations of the embassy.
Management in its response indicated that the service provider for updating the
embassy website had been secured and that it undertakes to update the website
on a regular basis.
I advised the Accounting Officer expedite the process of updating the website.
e) Language challenges of the Mission
Good practice requires that Foreign Service officers are prepared prior to posting
to the intended foreign stations. This entails providing them with basics regarding
the foreign country of posting in order to effectively operate in executing public
duty for the benefit of government. It was however, established that none of the
four home based staff serving in Moscow mission can adequately transact business
in Russian. This scenario is a result of inadequate prior staff posting planning by
the Ministry of Foreign Affairs. This has exposed the mission to lack of control on
confidential matters on mission operations. It has further increased the magnitude
of translation of information into Russian by a single non-Ugandan
secretary/receptionist who is apparently also over worked without additional pay.
Management indicated that the mission had been constrained by the budget
ceilings to train embassy staff in local language. I have advised the accounting
officer to administratively handle staff training needs and to consider an
appropriate remuneration for the secretary/receptionist.
f) Non-compliance with host Labour Laws.
The Foreign Service standing orders chapter 3(6) requires that the terms and
condition of service of locally recruited staff at a mission should generally follow
the national labour laws and practices for comparable personnel in the country of
accreditation as spelt out by the national laws.
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However, review of employee‘s costs indicated that the mission is not remitting
taxes and social security contributions in respect of the locally recruited staff. This
situation contravenes the Russian Federal law No. 115-FZ of July 25, 2002. The
Russian Ministry of Foreign Affairs has already written twice bringing this matter to
the attention of the Embassy for compliance.
The Embassy risks being dragged into diplomatic exchanges over non-compliance
with Russian Federation law. In its response management indicated that it has
already held meetings with the Russian Ministry of Foreign and guidance was
obtained and the Embassy undertakes to regularize local staff employment.
I advised management to ensure that the employment contracts for locally
recruited staff comply with the requirement of the National laws relating to
taxation and social contributions.
g) Furniture status of Chancery and official residence
Government, in accordance with section H-e (10) provides furniture to Foreign
Service officers however, Inspection of the chancery and the official residence
revealed that 75% of the furniture had outlived their usefulness. Furthermore
audit noted that furniture was not engraved and not comprehensively captured in
the assets register. Absence of such in asset register and distinctive identification
makes it difficult to manage the assets during their useful life.
Management explained that the Ministry of Foreign Affairs has not developed a
replacement policy for furniture and other assets in Missions.
I advised the accounting officer to liaise with the Ministry of Foreign Affairs on
formulation of a policy or guidelines for replacement of furniture and other assets.
94.0 UGANDA HIGH COMMISSION, NAIROBI
a) Excess Expenditure
The High Commission incurred expenditure of UGX.106,055,285 over and above
the approved estimates on various expenditure items without obtaining authority
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from the Permanent Secretary/Secretary to Treasury contrary to the financial
regulations. Expenditure in this respect was rendered irregular. Table below
refers.
Management in response attributed this anomaly to MoFPED releasing less than
the budgeted funds to the High Commission.
Based on the management response, it implies that excess expenditure was
incurred out of the NTR which should have been transferred to the consolidated
fund account.
I advised management to always follow prescribed procedures before incurring
excess expenditure.
b) Outstanding Commitments
A review of the financial statements revealed that the High Commission had
payables of UGX.23,627,965. Of this figure, UGX.689,182 accrued in the year
under review. The accumulation of domestic arrears poses a huge burden to
Government and may also lead to litigation.
The Accounting Officer in response stated that the High Commission had liaised
with the Ministry of Finance to pay the domestic arrears.
I await the outcome from the management‘s actions.
c) Refund of Medical Expenses
Expenditure Item Final Budget Actual
Expenditure
Variance
Employee Costs 1,139,999,255 1,170,219,028 30,219,773
Goods and services
consumed
810,637,833 883,803,048 73,165,215
Consumption of Property,
Plant & Equipment
153,999,750 156,670,047 2,670,297
Total 106,055,285
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Section M-Medical Attention part (M-a) subsection 14 of the Public Service
Standing Orders 2010 requires Foreign Service Officers, their spouses and up to 4
children while serving in a Mission abroad to be covered by full medical insurance.
Contrary to this, KShs.712,868 was spent on medical bills from various health
facilities and refund to staff for costs on medical treatment. The High Commission
had not instituted a medical insurance scheme, as envisaged by the Standing
Orders and no assurance was given as to the authenticity of the medical bills.
In response the Accounting Officer indicated that the High Commission was in the
process of selecting a medical insurance company to provide the service.
I await the outcome of the action taken by the Accounting Officer.
d) Clearance of Local Mission Staff by MoFA
Section A-C (8) of the Public Service Standing Orders, require all Missions to seek
clearance and approval from the Permanent Secretary, Ministry of Foreign Affairs
(MoFA) before appointing non Ugandans as employees of Missions. It was noted
that the Mission has 13 local staff that were paid monthly gross salary totalling to
KShs.408,930, however there was no evidence of MoFA having cleared these staff.
In the absence of such clearance, the staffs are considered illegally recruited.
In response, the Accounting Officer indicated that the High Commission had
written to the Permanent Secretary of MoFA requesting for authority to regularise
the employment of the local Staff.
I advised management to hasten the regularization of the appointment of local
staff, in accordance with the Standing Orders.
95.0 UGANDA HIGH COMMISSION, NEW DELHI
a) Review of financial statements
A review of the financial statements reviewed several audit observations namely:
The statement of losses of public monies and stores (page 19) reported
UGX.1,211,606 that was incurred on lost immigration permits. The amount
related to the F/Y 2011/12 (UGX.728,323), and F/Y 2012/13 (UGX.473,283).
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However, there was no explanation to the causes nor was the matter
investigated.
The statement of financial performance revealed transfer from the treasury
UGX.1,678,001,914 and NTR UGX.149,891,269. However, I was not able to
verify the amounts for lack of general receipts.
The statement of financial performance also revealed foreign exchange losses
UGX.11,405,848. Again, I was not able to verify the amount because no
supporting document was availed to indicate the computation of the losses.
The statement of financial position reported cash and cash equivalents of
UGX.416,692,443. The cash books, certificates of bank balance, bank debit
advice notes and Board of Survey report were not presented for audit.
Accordingly, the amount and the supporting Note 20 to the financial statement
could not be verified. Similarly payables reported at UGX.119,550,361 lacked
supporting documents.
The cash flow statement reported domestic arrears paid of
UGX.86,306,031,and deposits received of UGX.26,216,871. However, the
respective ledgers and supporting payment vouchers and acknowledgement
receipts were not presented for verification.
The statement of appropriation revealed that the budget on transfers received
from the treasury were revised from UGX.1,678,000,000 to
UGX.2,069,386,260. There was therefore, a budget revision of
UGX.391,384,346. However, the PS/ST authority was not availed.
Statement of arrears of revenue reported an accumulated amount of
UGX.149,891,269 at the year. However, supporting ledger was not availed
rendering it difficult for the amount to be verified.
The notes to the financial statements on pages 31, 35, 39 indicated supporting
schedules which were not attached.
I advised the Accounting officer to provide the necessary explanations and
documentation for verification.
b) Incomplete preparation of Monthly Returns
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The monthly returns examined at the Mission on a test check basis were
incomplete. The following were lacking:
Cash books
Bank reconciliation statements
Abstracts
Counterfoil returns
Expenditure summaries
Balanced NTR revenue returns
Trial balance etc
I have advised the Accounting Officer to submit the complete set of monthly
returns for audit.
c) Segregation of duties
A review of the expenditure revealed minimal segregation of duties. The
requisitioning for procurements, selection of the supplier, authorization of
purchase orders, approving of payments were all done by the Accounting Officer.
On the other hand, invoice processing, ledger posting, preparation of purchase
invoices and payment vouchers were all done by the Accountant. Therefore,
processing of payments was a responsibility of only two people. This poses a risk
in the expenditure process for lack of adequate segregation of duties.
For example most of the expenditure relating to the operations of the Chancery
namely; the payroll for local staff, repair and maintenance of building and motor
vehicles, procurement of goods, etc, were not endorsed by the Head of the
Chancery who would render the necessary counter check to confirm genuineness
of expenditure.
It was explained that, only two people were given responsibility rights on the
Navision system, the software installed for financial management.
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I advised the Accounting Officer to liaise with the Accountant General to review
the system with a view of enhancing responsibility rights to include the Head of
Chancery.
d) Non submission of returns to Ministry of Foreign Affairs
It was observed that the Mission did not submit monthly returns to the Ministry of
Foreign Affairs as required by Regulations. This is a matter that has been raised
repeatedly in the previous audit reports.
It was explained by the Accounting officer that the system of submission was not
very clear.
I advised the Accounting Officer to liaise with the Ministry for guidance on the
existing submission arrangements and ensure compliance.
e) Foreign Service Allowance
Apparent Overpayment
In three cases the Foreign Service allowance being paid was inconsistent with the
officers‘ entitlements according to their grading and Mission classification. This
resulted into an overpayment of US$1,698.57 per month.
I advised the Accounting Officer to explain the apparent overpayment.
f) Review of Foreign Service Allowance
It was noted that the Foreign Service Allowance (FSA) paid to the home based
staff to cater for their cost of living has never been reviewed by the Ministry of
Foreign Affairs and Public Service for a long time. The FSA has now been eroded
by the expensive market prices in the economy. As a result, management
explained that it is becoming increasingly difficult for the staff to live an affordable
life. This impacts on their morale and hence productivity.
In view of the high price index in India, I advised management to engage the
relevant authorities for the possibility of reviewing the FSA .
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g) Payment for Repair of Chancery
A sum of Rs.151,470 was paid to a firm in respect of repair and maintenance of air
conditioners at the Chancery. However, as reported in Paragraph 3.2.1 the bills
were not endorsed by the Head of Chancery.
During discussions, the Accounting Officer further explained that according to the
Tenancy Agreement such repair and maintenance were considered major and
were a responsibility of the landlord. Accordingly, a claim had been for recovery.
However documentary evidence of the claim was not presented for verification.
I advised the Accounting officer to follow up the claim and ensure recovery. In
future, such bills should be independently checked by the responsible officer
before they are approved by the Accounting Officer for payment.
h) Renting of Property
It was observed that the Mission does not own any property. Accordingly, the
Chancery, the official residence and other residences for staff are rented at an
annual cost of Rs.15,033,600 equivalent to US$820,008 (2,141,040,888). This cost
would be saved in the long run if an attempt to acquire own property through the
budget process is made.
During discussions with Head of Mission, she stated that indeed the matter has
been raised in their annual retreats of Heads of Missions.
I urged the Head of Mission to follow up the matter and engage the Ministry of
Foreign Affairs and Ministry of Finance, Planning and Economic Development and
other stakeholders for the necessary consideration.
95.1 Review of Procurements
a) Lack of a Contract Committee and a Procurement and Disposal
Unit
An interview with the Accounting officer revealed that there is a Contracts
Committee chaired by the Head of Chancery. However, it had not been formally
715
appointed by the PS/ST Contrary to the Public Procurement and Disposal of Public
Assets (PPDA) Regulations. Besides the Contracts Committee lacks the requisite
training and sensitization.
It was also discovered during the inspection that there was no PDU. In fact, it
was the Chairperson who was again carrying out the roles of the PDU.
I informed the Accounting Officer that according to the number of available staff
(6) she was able to constitute a fully-fledged contracts committee as well as the
PDU in accordance with the existing PPDA guidelines issued for mission.
It was recommended that the Accounting Officer ensures that the contracts
committee is formally appointed and PDU established.
b) Procurements and disposals undertaken during the year
The statement of revenue collected and the statement of stores acquired during
year reported disposals of assets of UGX.23,347,294 and a motor vehicle
acquired at UGX.138,804,641. However the procurement file lacked any record
relating to the disposal and procurement process respectively. Accordingly I could
not confirm whether the required procedures were complied with and value for
money obtained.
c) Goods and services consumed
The statement of appropriation of account reported a sum of UGX.1,023,353,893
incurred on goods and services. However evidence to confirm that proper
procurement procedures were complied with were lacking as the procurement file
availed did not contain evidence of initiation, bidding, evaluation, contract
management etc. of the procurements in question. Besides value for money could
not be confirmed
I advised the Accounting Officer that Procurements procedures should be complied
with and documented.
d) Outstanding medical bills
716
It was noted that, there are outstanding medical bills of Rs.1,471,386
(US$27,850.93) in respect of Indra prasha Medical Corporation Limited (Apollo
Hospital) incurred on two patients referred by the Mission. In both cases,
clearance from the mother organizations and medical board authority as required
under the Standing Orders were not availed for audit. Although the Accounting
Officer has reminded the mother organizations of the pending bills, no response
has been obtained. Failure to settle the debt may depict negatively on the image
of the Mission and may attract litigation.
I advised the Accounting Officer to continue following up the matter with her
counterparts and ensure settlement. Meanwhile referring cases for medical
treatment should be upon relevant clearances within the existing standing orders.
e) Training
It was noted during discussions with the Head of Mission that there was need of
training of staff to enable them meet their mandate with necessary efficiency.
Such training would include exposure to procurement, financial and accounting
regulations, human resource management, the Navision software installed for
financial management, and negotiation skills among others.
However, it was noted that the Accountant General had scheduled the training for
the computerized financial management system for Accounting Officers of Missions
due to take place in January 2014.
I advised management to engage the Ministry of Foreign Affairs and that of
Finance Planning and Economic Development and other stakeholders to secure the
necessary budget provisions for training.
f) Mission Charter and performance reports
Although the Mission prepared performance reports according to the required
budget performance format, they did not show actual out puts realized during the
year. It was therefore, not possible to assess performance against the targets for
which UGX.2,069,386,260 was allocated in the revised budget estimates.
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Besides, the Mission charter was not availed for audit. During discussions with the
Accounting Officer, she explained that there was other guidance from the Ministry
of Foreign Affairs that was used to prepare the targeted outputs for the year.
However, these guidelines were also not provided for verification.
In the circumstances, it was not possible to establish value for money spent.
I advised the Accounting Officer to avail the Mission Charter, the guidance
mentioned above and the performance report that includes actual output realized.
g) Review of the inventory
A review of the inventory of the Chancery and the residences revealed old
furniture and other stores that require replacement. During discussions the Head
of Mission and the Accounting Officer explained that Capital Development funds to
enable replacement of the items were minimal.
I urged management to lobby for the necessary funding through the budget
process to ensure that the old stores, furniture, and equipment are replaced.
96.0 UGANDA HIGH COMMISSION, OTTAWA
a) Fixed Assets Register
In my previous report, I stated that the mission did not have a comprehensive
assets register to record its fixed assets. During inspection of the mission for the
year under review, it was noted that the mission had not yet established a fixed
assets register despite the management‘s commitment to put one in place.
Absence of a comprehensive fixed assets register exposes the mission‘s assets to a
risk of loss without detection.
The Accounting officer indicated that the Mission had established the Register and
also secured a provider of the engraving services to engrave all the Mission assets
that will be incorporated in a comprehensive fixed Assets Register.
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I advised the Accounting officer to ensure that the register is kept and properly
maintained.
b) Official Residence
In my previous year report, I also indicated that the official residence required
renovation and improved security measures. However, no renovation works had
been undertaken at the official residence by the time of audit inspection.
According to the Accounting officer, the Mission had prioritized the issue of
security and was to continue liaising with the Ministry of Finance, Planning and
Economic Development to secure the required funds for the renovation works.
I advised management to continue liaising with the authorities to have the
residence renovated.
97.0 UGANDA EMBASSY, PARIS
a) Charter
The mission had a charter issued in 2007 which expired in 2012. At the time of
audit inspection in November 2013, a new charter dated March 2011 had been
developed and the draft had been submitted to the Ministry of Foreign Affairs for
approval.
It was observed that a year had elapsed without the Ministry of Foreign Affairs
giving final approval of the Mission charter.
Without an approved charter, the mission may undertake activities which may not
be properly aligned with strategic objectives of the Ministry. It may also be difficult
for the Ministry to monitor and evaluate the performance of the mission.
Management should immediately follow up the matter with the Ministry of Foreign
Affairs.
97.1 Human Resource management
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a) Organization Structure
The approved structure for the mission was not presented during the audit.
However management in an interview indicated that the mission is categorized as
a 1+2 structure. At the time of inspection, the structure had been filled with Head
of Mission, Counselor, 1st Secretary and 3rd Secretary in addition to various other
local staff.
Management also indicated that the 1+2 structure was not adequate for the
existing workload for the mission which also involves coordinating the work
relating to an international organization, UNESCO to which Uganda is a member.
Management should undertake comprehensive review of its staffing structure and
liaise with the Ministry of Foreign Affairs and Public Service for appropriate action.
The current approved structure should be traced and properly filed at the mission.
b) Locally Recruited Staff
At the time of audit inspection, the mission had eight locally recruited staff
comprising of Drivers, Cooks and Office Assistants.
Their contracts had been renewed and were running from 1st August 2013 to 30th
August 2014. Conditions of Service spelling out their terms of employment were in
place and these constituted an integral part of their employment contracts.
However the following matters were observed;
The mission did not have documented recruitment procedures for local staff.
In absence of such procedures, recruitments may be undertaken arbitrarily
and not in the best interest of the mission.
There was no approved organization structure for local staff posing a risk of
inefficient utilization of staff resources.
There was no evidence on file that appointments of local staff had been
approved by the Ministry of Foreign Affairs.
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There was no evidence on file that the performance of local staff was being
appraised. In absence of an appraisal system for local staff, staff may not be
properly directed to the achievement of their outputs and gaps in their
performance may not be identified and addressed.
Management was advised to put in place recruitment procedures for local staff in
order to make the process more transparent and effective. A staff evaluation
should also be undertaken and a proper structure put in place in order to guide
the mission in the recruitment of staff. There is also need to put in place an
appraisal system for local staff.
97.2 Financial management
a) Budgeted Expenditure (Excess expenditure)
A review of the financial records (Statement of Appropriation) revealed that during
the financial year (2011/12), out of an approved budget of shs.2,907,599,812,the
mission registered total actual expenditure of shs.3,319,058,854 resulting into
excess expenditure of shs.411,459,042. The excess expenditure was incurred
without parliamentary approval contrary to the Public Finance and Accountability
Act, 2003.
Management should ensure that expenditure is incurred in accordance with the
approved budget and where additional expenditure is necessitated, budget
variations should be sought in accordance with the regulations.
The excess expenditure should also be regularized in accordance with the Public
Finance and Accountability Act 2003.
b) Unfunded Priorities
Management expressed the need for additional funding of the mission to cater for
various unfunded priorities. The review of the budget indicated that some key
activities budgeted in the past had not been funded despite their critical
importance to the operations of the mission, key among these priorities were;
721
Activity
Renovation of the Chancery Building (civil works, painting, electrical, drainage,
heating and lighting )
Procurement of Representation car
Replacement of utility vehicles
Furnishing of official residence and the Chancery
Security installation at the Chancery
Failure to finance these activities impacts on the smooth implementation of the
mission activities.
The Mission should be facilitated to finance the unfunded priorities in order to
make the mission more effective in its operations.
Revenue
Review of the revenue revealed that during the financial year 2010/2013, the
mission registered collections of shs.303,400,824 out of which only
shs.233,604,667 was remitted to the consolidated fund (UCF) leaving
shs69,996,157 due to the UCF.
The unremitted amount was utilized at source to fund mission operations without
relevant authority contrary to financial regulations. It was also observed that the
revenues collected and remitted to the UCF were not disclosed in the
memorandum statement of arrears of revenue as required by the treasury
reporting guidelines.
Utilization of revenue without authority should be discouraged as it leads to extra
budgetary expenditure.
All non tax revenue should always be banked intact and remitted to the UCF.
Rented Properties
722
A review of the rental contract records for staff revealed that, the mission had not
yet recovered the security deposit amounting to (euro) 5,500 in respect of the
residence that had been vacated by the former head of mission It was also
observed that security deposits on rented properties had not been disclosed in the
financial statements for the year ended 30th June 2013 hence under stating the
assets (receivables).
Management should pursue the recovery of the security deposit henceforth. All
rental security deposits should also be determined and recorded in the financial
records.
Expenditure (Internal Control System)
The following matters were observed as a result of the review of controls over the
payment system.
The embassy uses the Navision accounting software for budgeting, payment
processing and accounting. It was observed that the system is not fully
integrated with the E Banking application used for payments by the bank. With
the current set up, it is possible for payments to be effected through the bank
without going through the Navision accounting software.
Payment vouchers generated by the system during the payment process were
not being approved (signed) by the Accounting Officer. This can result into
unauthorized payments leading to loss of funds.
Payment vouchers were not filed sequentially rendering audit verification
difficult.
The design of the payment vouchers did not provide for a space for payee. It
was difficult to get the payee details from the payment voucher and the
system cash book.
Supporting documentation for the payments made were being filed separately
from the payment vouches.
Treasury should work towards full integration of the Navision software with the e
banking application.
723
All payment vouchers generated by the system should be approved by the
Accountant and Accounting Officer.
A proper voucher filing system should be put in place for ease of identification of
vouchers and their supporting documentation.
Chancery Building
The Uganda Government owns the Chancery building situated at 13th Avenue
Raymond Poinarre‘ in the 16th Arrondissement of Paris. It is a storied building
comprising of four flours and a basement. The property was acquired in 1993.
The following matters were observed;
(a) Refurbishment of the Building
Although the building is in a very prime location and is considered to be
structurally sound, it looks dilapidated due to lack of regular maintenance. The
upper most floor of the building is an un-partitioned hall which has not been in use
for a very long time because of the poor state it is in. The electrical, drainage,
heating and cooling systems for the whole building require replacement. There is
also need to furnish the building.
Through previous interventions, the mission was able install a new lift. However a
lot still needs to be done to make the building more appealing.
(b) Rental of space to the Tanzania Embassy
The Embassy of the Republic of Uganda, Paris entered into a lease agreement
with the Embassy of the Republic of Tanzania for the rental of office space at the
2nd and 3rd floors of the Chancery building each measuring 127 sqm2.
The lease was to run from 21st October 2004 to 20th October 2007 at a monthly
rental of €6,152 and €600 to cater for water. A review of the lease performance
revealed the following matters;
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It was observed that the lease agreement expired in 2007 and had not been
renewed by the time of audit inspection (November 2013).
The rental payable was in arrears to the tune of €50,082. Efforts by the
mission to have the arrears settled have proved futile. As a result of failure by
the Tanzania Embassy to clear the arrears, the Uganda Embassy was meeting
the costs of maintenance, ground rent and management fees, costs which
should have been met from the rental proceeds from the Tanzania Embassy. A
total of €6,499 was spent by the Embassy in this during the year.
To manage the property, the Embassy contracted Loick Founder as the
property manager for a period of 3 years running from 25th September 2000 to
25th September 2003. The contract provided for tacit annual renewal of the
contract for a maximum of ten times implying that the contract was to expire
on 25th September 2013. It was however observed that at the time audit
inspection, the mission had not yet initiated arrangements for the renewal of
the management contract.
Management should continue to pursue the recovery of the outstanding arrears of
rent from the Tanzania Embassy. There is also need for Management to
undertake arrangements for the renewal of the rental agreement and the property
management contract.
(c) Vehicles
The mission has two vehicles, the representation vehicle, Mercedes Benz 350
bought in 2005 and the Utility vehicle, Peugeot Model 807 bought in 2003 when
the Embassy was reopened. The two vehicles are due for replacement as their
maintenance costs are too to three times their current value. They often
breakdown while carrying delegates and causing embarrassments to the Mission.
At the time of inspection, the embassy had obtained quotations of €103,000 and
€23,000 (without taxes) for the new representation car and utility vehicle
respectively.
The mission should be facilitated to replace the two vehicles.
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(d) Procurement
There was no contract, committee in place at the time of the inspection. In
absence a contracts committee, procurements were being handled in a manner
not prescribed by the PPDA Act and Regulations.
In absence of a contracts committee, the mission may fail to achieve value for
money from the procurement it undertakes from time to time.
Management should put in place Procurement and Disposal Unit and a Contracts
Committee in accordance with the Procurement guidelines for missions.
98.0 UGANDA HIGH COMMISSION, PRETORIA
a) Absence of Mission Charter
The high commission lacks a mission charter that would spell out its key
objectives, outputs, performance and annual targets. In the circumstances it is
difficult to assess the performance of the mission or individual officers.
Management explained that the issue had been raised during the bi-annual
conference for the Ambassadors that took place in January 2014.
I advised management to follow up the issue with the Ministry Foreign affairs.
b) Unexpended balance 2012/13
A review of the financial statements revealed that there was un-spent balance on
the dollar account equivalent to UGX.578,496,143 which was not returned to the
consolidated fund, in contravention of Section 19(1) of the Public Finance and
Accountability Act, 2003.
Management acknowledged the anomaly and stated that the funds were for
capital development works and consultancy for the renovation of the official
residence of which the procurement process was still ongoing by the end of the
financial year. A letter to the Permanent Secretary and Secretary to Treasury
requesting for permission to retain the funds had not been responded to.
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I advised the Accounting Officer to always return un-spent balances or seek
authority before retaining funds.
c) Over Expenditure
A review of the financial statements revealed that the Mission spent
UGX.128,373,275 over and above the budgeted amount, which contravened
Paragraphs 152 of the Treasury Accounting Instructions (TAIs), 2004. There was
no evidence that the Mission obtained a Supplementary Budget Warrant to allow
the expenditure stand in the Financial Statements.
Management attributed the anomaly to the unforeseen activities such as the recall
of the High Commissioner to Kampala, whose travel (including the family), haulage
and freight costs had to be met by the Mission. Additionally, the Mission had to
remunerate a financial attaché who had not been budgeted for.
I advised management to ensure that the Mission‘s expenditure does not exceed
the amounts approved in the budget without seeking supplementary funding.
d) Management of Fixed Asset
Lack of Fixed Assets Register
The Mission did not maintain a comprehensive fixed assets register but rather a
list of assets was kept without details like dates of acquisition, repairs, additions
and the valuations thereof. This is contrary to Paragraph 400 of the TAIs, 2014.
Lack of these details makes it difficult to track the existence of assets.
Assets not Engraved
The Mission‘s assets had not been engraved contrary to Regulation 101 of the
PFAR, 2003, thus exposing them to risk of loss through theft or misappropriation.
Management acknowledged the omission but attributed it to budgetary
constraints.
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I advised the Accounting Officer to ensure that the activity is planned and
budgeted for in the subsequent financial years. A comprehensive assets register
should also be maintained.
e) Follow up of prior year audit recommendations
A review of the status of implementation of prior year‘s audit recommendations
revealed that some had not been implemented, as detailed in the following table.
This is indicative of management‘s attitude towards the relevance of the audit
function.
Finding Status of Implementation
Excess Expenditure - UGX
234,391,868 Not Addressed
Foreign Exchange Losses
Addressed
Revenue Collections Utilized at Source
without Authority.
Addressed
Un-spent Balance not Returned to the
Uganda Consolidated Fund (UCF) –
UGX 249,115,161
Not addressed.
Misstatement of the Statement of
Arrears of Revenue
Addressed
I advised management to implement the audit recommendations so as to ensure
enhanced accountability and better stewardship of resources appropriated to the
Mission.
99.0 UGANDA EMBASSY, ROME
a) Lack of accountability for the Agriculture Subvention Funds
The Embassy has additional responsibility of being a Permanent Mission to the UN
Agricultural Agencies of FAO, WFP and IFAD for which it operates an account No.
090050 with BNL Bank in Rome, under the supervision of the Agricultural attaché.
During the year,UGX.387,000,000 was disbursed to the account.
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However review of the operations of the account revealed the following
anomalies;
The Accounting Officer and the Accountant are not signatories to the
subvention account thereby complicating the accounting responsibilities.
The expenditure records for the funds were not availed for examination. It was
not possible to ascertain whether the funds were utilized for the intended
purposes.
The expenditure resulting from the operations of the Account were not
reported in the financial statements of the Embassy, implying that the
performance regarding the Embassy is understated.
The Accounting officer indicated that he is not privy to the activities of the
subvention.
I advised management to seek guidance from the Accountant General, Ministry of
Foreign Affairs and other relevant stakeholders to have the issues resolved.
b) Mission Accreditation
It was noted that the Embassy had presented letters of accreditation to Italy, FAO,
WFP and IFAD, but was yet to present to the countries of Malta, Greece, Cyprus
and Serbia & Montenegro, which had already accepted Uganda. The countries of
Macedonia, Croatia, Slovenia, Albania and Bosnia & Herzegovina were yet to
accept Uganda‘s accreditation. In the circumstances the Embassy‘s ability to
execute its mandate of representing Uganda is affected adversely. The delay to
present letters of accreditation was attributed to inadequate resources on the
travel vote.
I advised management to enhance engagement with MoFPED and MOFA so as to
obtain funds for the purpose.
c) Employment Contracts for Non-Diplomatic Staff
A review of top management minutes revealed that the non-diplomatic staff did
not have employment contracts with the Embassy as a result of disagreement on
exclusion of past period of employment with the Embassy. The staff feared that
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the exclusion was likely to affect their terminal benefits. Lack of contracts may
lead to litigation and loss of funds in future.
I advised the Embassy management to amicably resolve the matter raised by the
affected staff and have contracts finalized.
d) Lack of Insurance of Embassy vehicle
Interviews with staff revealed that an Embassy vehicle number CD060EC which
was involved in an accident on 11th December 2012, with another car, registration
number EM594HD lacked insurance cover. There is risk of loss of funds arising
from the legal suit instituted by the affected party. The Accounting officer
indicated that the vehicle belonged to the office of the Agricultural attaché whose
operations are not under his supervision.
I advised management to ensure all vehicles of the Embassy are insured
accordingly. Meanwhile the concerned officer should be held responsible.
e) Rent expenditure
Review of the commentary to financial statements indicated that the embassy
incurs more than UGX. 496,800,000 on rent of premises for the chancery annually.
Physical inspection revealed that the space was still inadequate and Embassy
records were packed in boxes and piled in corridors.
Management explained that proposals have been made to the responsible
ministries for acquisition of property estimated at UGX. 10 Billion. In the meantime
the embassy was in the process of renting new office premises.
I advised management to continue engaging with the responsible ministries to
acquire property so as to minimize rental expenditure.
f) Management of Fixed Asset
Lack of Fixed Asset Register:
The Embassy did not maintain a comprehensive fixed asset register showing
details of the assets and their valuations but only a list of the assets was
maintained contrary to paragraph 400(h) of the Treasury Accounting Instructions
(TAI). Lack of these details makes it difficult to track the existence of the assets.
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Management acknowledged the anomaly and undertook to put in place a proper
Asset Register in 2014.
Assets not engraved:
The Mission assets had not been marked/engraved as required by section 101 of
the PFAR, 2003 and this exposes them to risk of loss through theft or
misappropriation. Management stated that they were going to procure equipment
for engraving in 2014.
I advised the Accounting Officer to ensure that a comprehensive fixed asset
register is maintained and have the assets engraved to avoid possible loss without
trace.
g) Follow up of Prior Year’s Audit Observations
A review of the status of implementation of prior year‘s audit recommendations
revealed that some had not been implemented, as detailed in the following table.
This may be indicative of management‘s attitude towards the relevance of the
audit function.
Finding Status of Implementation
Collection & Accounting for Non Tax
Revenue
Not Addressed
Board of Survey Addressed
Recruitment of Non Ugandans as Local
Staff
Addressed
Review of Personnel Files & Staff
Contracts
1) The appointment letters are varied and
open ended.
2) Poor filing of documents in some
personal files
3) Incomplete files
Audit could not ascertain due to absence of
the Deputy Ambassador/Head of Chancery
from the duty station, and yet the files had
been locked in her office.
Staff Performance Appraisals Not addressed
Court Cases from Local Staff Not Addressed
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Recruitment of Accounts Staff Addressed
Staff Entitlements Not Addressed
Engraving of Fixed Assets Not Addressed
Letters of Accreditation Not addressed
Non-compliance with The PPDA,
Regulations
Not Addressed.
Capital Budget Addressed
Subvention Funding from MAIIF Not Addressed
I have advised management to implement the audit recommendations so as to
ensure enhanced accountability and better stewardship of the funds disbursed to
the Embassy.
100.0 UGANDA EMBASSY TOKYO
a) Over expenditure on the vote
A review of financial statements revealed an over expenditure in the statement
of appropriation of UGX 33,869,667.It appears no authority was sought from the
treasury occasioning the over expenditure.
I advised the Accounting Officer to consult the treasury and obtain the necessary
authority.
b) Staffing
The staff at the mission is small and as such categorized as 1+2. This means the
Head of mission and two other home based staff. It was observed that the mission
area of jurisdiction is big as it is accredited to Japan, South Korea, the Philippines
and Brunei Darussalam.
However, for this number of staff the mission is charged in its charter to:
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To convince Japan, South Korea, Brunei Darussalam and Philippines to
increase ODA and grant funding for vital projects in Uganda.
To solicit for technical assistance in fields such as Education, Health,
Agriculture
To solicit for markets for Uganda products in order to increase trade between
Uganda and Japan, South Korea, Brunei Darussalam and the Philippines.
To attract and promote investment from Japan, South Korea, Brunei
Darussalam and Philippines
To promote Uganda as number one tourist destination in the missions areas of
accreditation
To initiate development ventures from mission‘s area of accreditation
To protect and assist where possible Ugandans living in the area of
accreditation
A review of the annual plan and performance for the year under review revealed
that it could only cover Japan leaving out the other areas of accreditation.
During discussion, the Head of Mission attributed the under coverage of scope to
the inadequate structure and staffing. She further explained that the Mission has a
lot of economic and development potential that Uganda could take advantage of if
staffing could be stepped up and the requisite funding enhanced. She argued that
the mission structure should be reviewed and at least reinstated to its former
status of 1+3 status.
I urged the Head of Mission and the Accounting Officer to follow up the matter
with the Ministry of Foreign Affairs, Ministry of Finance planning and economic
development and Ministry of Public service for redress. An appropriate structure
and staffing together with the requisite funds will strengthen the performance of
the mission and reasonably cover its of scope.
c) Renting of property
It was observed that the mission does not own any property. Accordingly the
chancery, the official residence and other residences for staff are rented at an
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annual cost of ¥27,450,000 equivalent to US $ 274,500(shs.741,150,000). This
cost would be saved in the long run if an attempt to acquire own property through
the budget process is made.
In fact the Head of Mission affirmed that acquiring of own property was cost
effective. She revealed that the matter could be initiated by engaging the two
governments so that land for construction could be obtained through negotiations
on a reciprocity basis.
I urged the Head of Mission and the Accounting officer to follow up the matter
and ensure that the mission acquires its own premises to save on rent.
d) Review of the board of survey report on stores
The above review revealed several store items that were very old and the board
recommended replacement. This includes a 1997 vehicle, Toyota Crown
registration number GAI-12616. Such old stocks consume space and are
uneconomical to keep. Regarding the vehicle management revealed that it cannot
be allowed on the road as it is considered unworthy by the authorities.
During discussion the Head of Mission and the Accounting Officer explained that
the mission cannot replace the old stores due to inadequate capital development
funds. Besides their disposal would not attract any saleable value in the local
market, instead a cost would be incurred on them.
I advised management to lobby for the necessary funding through the budget
process to ensure that the disposal of assets and eventual.
e) Representation Car
In 2005 the Mission acquired a representation car, Toyota model 2005 registration
number GAI -12601. The vehicle is eight years now. Although it appeared to be in
good condition, management revealed that the vehicle was too old and considered
road unworthy under the traffic regulation of Japan. The mission may therefore
suffer embarrassment as a result if not replaced.
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Management should similarly lobby for the requisite funds through the budget
process and have the representation car replaced to save the mission any possible
embarrassment.
f) Foreign Service Allowance
It was noted that the Foreign Service allowance (FSA) paid to the home based
staff to cater for their cost of living has never been reviewed by the ministry of
foreign affairs and public service for a long time. The FSA has now been eroded by
the expensive market prices in the economy. As a result management explained
that it is becoming increasingly difficult for the staff to live an affordable life. This
impacts on their morale and hence productivity.
In view of the high price index in Japan I advised management to engage the
relevant authorities for the possibility of reviewing the FSA .
g) Training
It was noted that staff generally needed training and sensitization on the financial
and accounting regulations to enable them appreciate the role of the Accounting
Officer and their responsibility under the regulations. Similarly it was also noted
the Accountant specifically needed formal training on the Navision accounting
software. The training will enable her use some of the functions, for example,
bank reconciliation, that are currently dormant.
In a written response, the Accounting Officer stated that the training on Navision
soft ware was scheduled for May 2014. However this left the other training un
planned for the moment.
I advised the Accounting officer to follow up the matter with the Accountant
General and other authorities to ensure that all training as identified is undertaken.
The necessary budgetary funding need to be sought.
101.0 UGANDA EMBASSY, TRIPOLI
a) Unsupported rent payments
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A total of Euros 57,600 was paid in respect of rent for the Chancery official
residence and officer‘s accommodation. There were, however, no tenancy
agreements provided for the premises being rented to enable me confirm their
authenticity. I could also not ascertain whether the rates used were arrived at
competitively through proper market surveys, comparative bids and proper
evaluation.
I advised management to avail the tenancy agreements and a documented
procedure for identifying and valuation of properties.
b) Review of Financial Statements
Unsupported Non-Tax Revenue(NTR)
The NTR collection of UGX.12,934,981 was not supported with revenue returns
documents such as visa receipts rendering the completeness of the revenue
uncertain.
Non acknowledgement of NTR
The purported remittance of NTR in the sum of UGX.4,892,582 to the consolidated
fund lacked acknowledgement.
Non-remittance of NTR
A Sum of UGX.8,042,399 collected as NTR was not remitted to the consolidated
fund contrary to financial regulations. There is a risk that the funds were spent at
source.
Cash and cash equivalents
Included in the cash and cash equivalents balance of UGX.312,867,261 is a sum of
UGX.57,920,901, being cash at hand. However the cash balance was not
supported with the board of survey report rendering its accuracy and
completeness doubtful.
Foreign Exchange Losses
UGX.32,198,407, was reported under operating expenses in the Statement of
Financial Performance as Foreign Exchange Losses. However the basis of
measurement of the loss was not provided for audit verification.
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Trade Creditors
Included in the Financial Statement under Statement of Financial Position is an
amount of UGX.238,000,000 as trade creditors. However, a schedule indicating the
details of the creditors was lacking.
Statement of Cash Flows
Review of the Statement of Financial Performance (Based on classification of
expenditure), indicated the transfers from treasury as UGX.1,283,000,000. The
corresponding figure as per the Statement of Cash Flows is UGX.1,521,000,000
resulting into a difference of UGX.238,000,000 which was not explained. It was
also noted that the difference is equivalent to the amount of trade creditors and
may have been inserted into the cash flow statement as a balancing figure.
I advised management to ensure all the necessary explanations, adjustments and
disclosures are made and submitted for future use.
c) Un authorized excess expenditure
The provisions of Public Finance and Accountability Act and Regulations
(Regulation 39 & 40) together with the Treasury Accounting Instructions require
that Accounting Officers to adhere to the budgetary allocation per vote or obtain
prior permission before an over expenditure is incurred. On the contrary,
expenditure of UGX.238,929,314 was incurred on various budget items in excess
of budget provisions without necessary authorization. The practice undermines
budgetary controls.
I advised management to always follow prescribed procedures before incurring
excess expenditure. In the meantime, an explanation is awaited.
d) Medical Treatment of Mission Staff
Chapter 3 Section F-a of the Uganda Public Service Standing Orders, 2010 requires
Foreign Service Officers together with their spouses and children to be registered
with a doctor and dentist to provide them with medical treatment and the Mission
deals directly with those service providers. However, the Mission paid out
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individual bills and also made refunds to officers amounting to Euros 2,454 for
their treatment without any prescription from qualified personnel.
Such adhoc medical payments not only prove costly in the long run but may also
be dangerous to officers‘ health. Medical costs would have been probably lower if
the Mission had subscribed to the national health insurance scheme as required by
the Standing Orders.
I have advised management of the Mission to ensure that the requirements of the
Standing Orders are complied with. Meanwhile an explanation for the anomaly is
awaited.
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