Embed Size (px)
Citation preview
OFFICE OF THE AUDITOR GENERAL
THE REPUBLIC OF UGANDA
REPORT OF THE AUDITOR GENERAL
ON THE FINANCIAL STATEMENTS OF BUKEDEA TOWN COUNCIL
BUKEDEA DISTRICT LOCAL GOVERNMENT
FOR THE YEAR ENDED 30TH JUNE 2016
1
TABLE OF CONTENTS
TABLE OF CONTENTS .................................................................................................................. 1
LIST OF ACROYNMS ..................................................................................................................... 2
1.0 Introduction. ....................................................................................................................... 5
3.0 Audit Scope. ....................................................................................................................... 5
4.0 Audit Procedures Performed. ........................................................................................... 6
4.0 Entity Financing. ................................................................................................................ 7
5.0 Findings. .............................................................................................................................. 7
5.1 Categorization of findings. ............................................................................................... 7
5.2 Summary of Audit Findings. ............................................................................................ 7
6.0 Detailed Audit Findings. .................................................................................................. 8
6.1 Late Submission of Financial Statements. ..................................................................... 8
6.2 Unaccounted for Funds. ................................................................................................... 8
6.3 Under Collection of Local Revenue ............................................................................... 9
6.4 Non Compliance with the Statutory Obligations ........................................................... 9
6.4.1 Non Deduction of PAYE .................................................................................................... 9
6.4.2 Non-Remittance of 6% WHT ........................................................................................ 9
Appendix i: Un accounted for funds. ....................................................................................... 11
Appendix ii: Non Remittance of PAYE. .................................................................................... 12
Appendix iii: Non Remittance of 6% WHT. ............................................................................ 12
2
LIST OF ACROYNMS
DLG District Local Government
ICT Information Communication Technology
ISSAI International Standards of Supreme Audit Institution
LGFAM Local Governments Financial and Accounting Manual 2007
LGFAR Local Governments Financial and Accounting Regulations 2007
MoESTS Ministry of Education Science and Technology and Sports
MoFPED Ministry of Finance Planning and Economic Development
NMS National Medical Stores
PFMA Public Finance Management Act 2015
PPDA Public Procurement and Disposal of Assets
UGX Uganda Shillings
URA Uganda Revenue Authority
USMID Uganda Support to Municipal Infrastructure Development
VAT Value Added Tax
WHT Withholding Tax
PAY Pay as You Earn
3
REPORT OF THE AUDITOR GENERAL
ON THE FINANCIAL STATEMENTS OF BUKEDEA TOWN COUNCIL
FOR THE YEAR ENDED 30TH JUNE 2016
THE RT. HON. SPEAKER OF PARLIAMENT
Introduction
I am mandated by Article 163 of the Constitution of the Republic of Uganda, Section 87 of the
Local Governments Act and Sections 13, 16 and 19 of the National Audit Act 2008, to audit the
financial statements of Bukedea Town Council for the year ended 30th June 2016. These
financial Statements comprise of the statement of financial position as at 30th June 2016,
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 45 of the Public Finance and Management Act, 2015, the Accounting Officer is
accountable to Parliament for the funds and resources of Bukedea Town Council. The
Accounting Officer is responsible for the preparation of financial statements, in accordance with
requirements of the Local Governments Financial and Accounting Manual, 2007 and for such
internal controls as management determines necessary to enable the preparation of financial
statements that are free from material misstatements whether due to fraud or error.
Auditor’s Responsibility
My responsibility is to express an opinion on the financial statements based on conducting my
audit in accordance with International Standards on Auditing. Because of the matter described
in the Basis for Disclaimer of Opinion paragraph, I was not able to obtain sufficient appropriate
audit evidence to provide a basis for audit opinion.
Part ‘‘A’’ of this report sets out my disclaimer of opinion. 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.
4
PART "A"
Basis for Disclaimer of Opinion
Late Submission of the Financial Statements
It is a requirement that Council should submit the financial statements to the Auditor General
by 31st August of each year for audit. However, the accounts were submitted late on 22nd
December 2016. Consequently, I was unable to audit the accounts and report by 31st
December 2016.
Disclaimer of Opinion
Because of the significance of the matter described in the Basis for Disclaimer of Opinion
paragraph, I was not able to obtain sufficient appropriate audit evidence to provide a basis for
an audit opinion; and, accordingly, I do not express an opinion on the financial statements.
John F.S. Muwanga AUDITOR GENERAL
15th December, 2016
5
PART "B"
BUKEDEA TOWN COUNCIL DETAILED REPORT OF THE AUDITOR GENERAL FOR THE
FINANCIAL YEAR ENDED 30TH JUNE 2016
1.0 Introduction.
In accordance with Article 163(3), of the Constitution of the Republic of Uganda 1995
(as amended), I am required to audit and report on the Public Accounts of Uganda and
of all public offices, including the Courts, the Central and the Local Government
Administrations, Universities and Public Institutions of the like nature and any public
corporation or other bodies or organizations established by an Act of Parliament.
Accordingly, I carried out the audit of the Bukedea Town Council to enable me report to
Parliament.
3.0 Audit Scope.
The audit was carried out in accordance with International Standards on Auditing and
accordingly included a review of the accounting records and agreed procedures as was
considered necessary. The audit was carried out with regard to the following objectives:-
a. To verify whether the financial statements have been prepared in accordance with
the requirements of the Local Governments Financial and Accounting Manual 2007;
and the Local Governments Financial and Accounting Regulations 2007; and fairly
present the income and expenditures for the year and of the financial position as at
the end of the year.
b. To verify whether all the funds of the entity were utilized with due attention to
economy and efficiency and only for the purposes for which the funds were
provided.
c. To verify whether goods and services financed have been procured in accordance
with the PPDA Act 2003 (as amended)
6
d. To evaluate and obtain sufficient understanding of the internal control structure of
the entity, assess control risk and identify reportable conditions, including material
internal control weaknesses
e. To verify whether the management of the funds of the entity was in compliance
with the Government of Uganda Financial Regulations.
f. To verify whether all the necessary supporting documents, records and accounts
have been kept in respect of all activities, and are in agreement with the financial
statements presented.
4.0 Audit Procedures Performed.
The following audit procedures were undertaken:-
a. Revenue
Obtained all schedules of all revenues collected and reconciled the amounts to the
cashbooks and bank statements of the entity.
b. Expenditure
The payment vouchers of the entity were examined for proper authorization,
eligibility and budgetary provision, accountability and support documentation.
c. Internal Control System
Reviewed the internal control system and its operations to establish whether sound
controls were applied throughout the period
d. Procurement
Reviewed the procurement of goods and services under the various departments
during the period under review and reconciled with the approved procurement plan.
e. Fixed Assets Management
Reviewed the use and management of the assets of the entity during the period
under review.
7
f. Financial Statements
Examined, on a test basis, evidence supporting the amounts and disclosures in the
financial statements; assessed the accounting principles used and significant
estimates made by management; as well as evaluated the overall financial statement
presentation.
4.0 Entity Financing.
Bukedea Town Council is financed by grants (Conditional and Unconditional) from
Central Government and locally generated revenues from taxes, fees, licenses and
charges. During the year, the town council received grants totalling to UGX.
237,350,270 from Central Government, UGX.163,970,600 from locally generated
revenues realising total revenue of UGX.401,320,879 constituting 44.9% of its approved
budget estimates of UGX.893,558,633.
5.0 Findings.
5.1 Categorization of findings.
The following system of profiling of the audit findings has been adopted to better
prioritize the implementation of audit recommendations:
No
Category Description
1. High significance Has a significant/material impact, has a high likelihood of reoccurrence, and in the opinion of the Auditor General, it requires urgent remedial action. It is a matter of high risk or high stakeholder interest.
2. Moderate significance
Has a moderate impact, has a likelihood of reoccurrence, and in the opinion of the Auditor General, it requires remedial action. It is a matter of medium risk or moderate stakeholder interest.
3. Low significance Has a low impact, has a remote likelihood of reoccurrence, and in the opinion of the Auditor General, may not require much attention, though its remediation may add value to the entity. It is a matter of low risk or low stakeholder interest.
5.2 Summary of Audit Findings.
No. Finding Significance
6.1 Late of Submission of Financial Statements. High
8
6.2 Unaccounted for Funds High
6.3 Under Collection of Local Revenue Moderate
6.4 Non Compliance with the Statutory Obligations Low
6.0 Detailed Audit Findings.
This section outlines the detailed audit findings, management responses thereof and my
recommendations.
6.1 Late Submission of Financial Statements.
The Public Finance Management Act 2015 section 51(1) states that an Accounting
Officer shall within two months after the end of each financial year prepare and submit
to the Auditor General the accounts and relevant information.
It is a requirement that Council should submit the financial statements to the Auditor
General by 31st August of each year for audit. However, the accounts were submitted
late on 22nd December 2016. Consequently, I was unable to audit the accounts and
report by 31st December 2016.
I advised the Accounting Officer to comply with the law.
6.2 Unaccounted for Funds.
Regulation 43(2) of the Local Governments Financial and Accounting Regulations, 2007
requires that administrative advances to council employees be authorized by the Chief
Executive and accounted for within one month.
A sum of UGX. 84,991,100 remained unaccounted for at the close of the financial year
as shown in appendix i.
Consequently, it was difficult to confirm that funds were utilized for the intended
purposes.
I advised the Accounting Officer to obtain accountability or else recover funds from the
responsible persons.
9
6.3 Under Collection of Local Revenue
Regulation 32 of the Local Governments Financial and Accounting Regulations, 2007
requires the head of finance to be responsible for collection of all budgeted revenue.
However, only UGX 163,970,600 was collected against the budget of UGX. 235,898,883
resulting into a shortfall of UGX. 71,928,283 (30.5%).
Failure to collect planned taxes may hinder service delivery.
The Accounting officer attributed the shortcoming to quarantine imposed on cattle
markets hence affecting earnings.
I advised the Accounting Officer to constitute a revenue enhancement team to derive
strategies and enhance the local revenue collections.
6.4 Non Compliance with the Statutory Obligations
6.4.1 Non Deduction of PAYE
Section 116 (1) of The Income Tax Act requires that every employer shall withhold tax
from a payment of employment income to an employee as prescribed by regulations.
A total of UGX. 14,682,000 was paid to several employees of the Town Council without
deducting PAYE totalling to UGX. 4,493,300 as shown in appendix ii.
The Accounting Officer admitted the anomally and promised to comply accordingly.
Failure to with hold taxes may attract fines and penalities from the Tax Authority.
6.4.2 Non-Remittance of 6% WHT
Section 124 (1) of The Income Tax Act states that a withholding agent who fails to
withhold tax in accordance with this Act is personally liable to pay to the Commissioner
the amount of tax which has not been withheld and recover this amount from the
payee.
10
There was no evidence to show that 6%WHT totaling to UGX. 1,471,488 recovered from
a sum of UGX. 24,524,800, was remitted to URA. See Appendix iii.
Failure to with hold taxes may attract fines and penalities from the Tax Authority
The Accounting Officer was advised to comply with the tax law.
11
Appendix i: Un accounted for funds.
Date Vr. No Payee Details Amount Remarks
Operations
21/07/2015 09//07 Osomel Stephen Process of desilting the blocked drainage 1,403,000
No accountability for the 30trips claimed
22/07/2015 32//07 Hon Okello Robert Fuel for 1st quarter 480,000 No fuel receipts attached
22/07/2015 33//07 Hon Igune Alfred Fuel for 1st quarter 840,000 No fuel receipts attached
17/02/2016 22//02 Osomel Stephen Payment for garbage disposal 1,422,000
No proof of the 33 trips loaded and paid for
24/12/2015 10//12 Osomel Stephen Payment for garbage disposal 1,452,000
No proof of the 34 trips loaded and paid for
04/12/2015 06//12 Ikere Stella Purchase of tonner and stationery 350,000
No receipts attached for items purchased
21/07/2015 14//07 Abeja Dorothy Field facilitation for illegal revenue receipts 936,000 No report attached
27/07/2015 36//07 Ebwonyu Rockfell Facilitation to Kampala 985,000 No report attached
Roads 0
8-Jan-16 1/1 Ikobit Paul facilitate Routine Road Supervision 345,000 No report and paid for 15 days
4-Dec-15 4/12 Ikobit Paul Routine Road Supervision 460,000 No report and paid for 20 days
19-Aug-15 1/8 Okot Raphael Audit of Works 226,050 No reports
19-Aug-15 3/8 Ikobit Paul Works Supervision 529,000 No reports and payment is for 23 days
19-Aug-15 5/8 Ikobit Paul Works Supervision 483,000 No reports and payments is for 21 days
21/07/2015 02//07 Emune Sam No purpose of payment 780,000 Missing voucher
21/07/2015 04//07 Adeke Rebecca No purpose of payment 2,860,000 Missing voucher
21/07/2015 05//07 Emune Sam No purpose of payment 2,500,000 Missing voucher
21/07/2015 07//07 Adeke Rebecca No purpose of payment 735,000 Missing voucher
21/07/2015 10//07 Ochom Joseph No purpose of payment 700,000 Missing voucher
21/07/2015 23//07 Ochom Joseph No purpose of payment 3,000,000 Missing voucher
21/07/2015 24//07 Okolimo Fidel No purpose of payment 280,000 Missing voucher
21/07/2015 31//07 Okalanyi AliceLoy No purpose of payment 2,000,000 Missing voucher
22/07/2015 34//07 Nandala Robert No purpose of payment 271,000 Missing voucher
07/08/2015 02//08 Ochom Joseph No purpose of payment 1,000,000 Missing voucher
07/08/2015 07//08 Ad eke Rebecca No purpose of payment 800,000 Missing voucher
07/08/2015 16//08 Ochom Joseph No purpose of payment 3,000,000 Missing voucher
06/11/2015 01//11 Aliano Sarah No purpose of payment 1,653,000 Missing voucher
06/11/2015 03//11 Okolimo Fidel No purpose of payment 990,000 Missing voucher
ROADS
28-Aug-15 BAP Engineering Ltd 44,600,000 Missing voucher
TOTAL 84,991,100
12
Appendix ii: Non Remittance of PAYE.
Date Vr. No Payee Details Amount PAYE Remarks
OPERATIONS
07/10/2015 03//10 Aliano Sarah
Payment for council meeting 1,911,000 573,300
No PAYE remittance
06/11/2015 01//11 Aliano Sarah
Payment for council meetings 1,653,000 396,000
No PAYE remittance worth UGX. 396,000
02/03/2016 10//03 Aliano Sarah
Payment for council meetings 1,296,000 396,000
No PAYE remittance worth UGX. 396,000
20/05/2016 16//03 Aliano Sarah
Payment for council meetings 1,303,000 396,000
No PAYE remittance worth UGX. 396,000
18/12/2015 35//12 Aliano Sarah
Payment for council meetings 2,197,000 666,000
No PAYE remittance worth UGX. 666,000
08/04/2016 07//04 Aliano Sarah
Payment for council meetings 2,047,000 666,000
No PAYE remittance worth UGX. 666,000
11/05/2016 01//05 Aliano Sarah
Payment for council meetings 1,986,000 666,000
No PAYE remittance worth UGX. 666,000
15/06/2016 19//06 Aliano Sarah
Payment for council meetings 2,289,000 734,000
No PAYE remittance worth UGX. 734,000
TOTAL 14,682,000 4,493,300
Appendix iii: Non Remittance of 6% WHT.
Date Vr. No Payee Details Amount Tax Remarks
OPERATIONS
21/04/2016 12//04
M/S Global Agencies Ltd
Payment for supply of furniture 9,000,000 540,000 No WHT Remitted
ROADS
30-Jun-16 14/6 Kenworth U Ltd
Supply of Road Equipment 15,524,800 931,488 No WHT Remitted
TOTAL 24,524,800 1,471,488
