OFFICE OF THE AUDITOR GENERAL THE REPUBLIC OF UGANDA ... · THE REPUBLIC OF UGANDA MINISTRY OF...
Transcript of OFFICE OF THE AUDITOR GENERAL THE REPUBLIC OF UGANDA ... · THE REPUBLIC OF UGANDA MINISTRY OF...
OFFICE OF THE AUDITOR GENERAL
THE REPUBLIC OF UGANDA
MINISTRY OF PUBLIC SERVICE
REPORT AND OPINION OF THE AUDITOR GENERAL ON THE FINANCIAL
STATEMENTS OF THE MINISTRY OF PUBLIC SERVICE
FOR THE FINANCIAL YEAR ENDED 30TH JUNE, 2015
OFFICE OF THE AUDITOR GENERAL
UGANDA
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TABLE OF CONTENTS
LIST OF ACRONYMS .................................................................................................. iii
REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF MINISTRY OF
PUBLIC SERVICE FOR THE YEAR ENDED 30TH JUNE, 2015............................................ 1
1.0 INTRODUCTION ............................................................................................. 4
2.0 BACKGROUND INFORMATION .......................................................................... 4
3.0 ENTITY FINANCING ........................................................................................ 4
4.0 OBJECTIVES OF THE MINISTRY OF PUBLIC SERVICE ......................................... 4
5.0 AUDIT OBJECTIVES ........................................................................................ 5
6.0 AUDIT PROCEDURES PERFORMED ................................................................... 6
7.0 AUDIT FINDINGS ............................................................................................ 6
8.0 FINANCIAL STATEMENTS .............................................................................. 19
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LIST OF ACRONYMS
ACRONYM MEANING
A/C Account
Bn Billion
GoU Government of Uganda
IFMS Integrated Financial Management System
IPPS Integrated Personnel & Payroll System
MoFPED Ministry Of Finance Planning And Economic Development
MoPS Ministry of Public Service
NTR Non Tax Revenue
PFAA Public Finance and Accountability Act, 2003
PSRP Public Service Reform Programme
PV Payment Voucher
TAI Treasury Accounting Instructions
UCF Uganda Consolidated Fund
UGX Uganda Shillings
URA Uganda Revenue Authority
USD United States Dollars
VAT Value Added Tax
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REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF
MINISTRY OF PUBLIC SERVICE FOR THE YEAR ENDED 30TH JUNE, 2015
THE RT. HON. SPEAKER OF PARLIAMENT
I have audited the financial statements of Ministry of Public Service for the year ended
30th June 2015. These financial statements comprise of the statement of financial position
as at 30th June 2015, 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 (as amended) and
Section 45 of the Public Finance Management Act (PFMA), 2015, the Accounting Officer is
accountable to Parliament for the funds and resources of the Ministry of Public Service.
The Accounting Officer is also responsible for the preparation of financial statements in
accordance with the requirements of the Public Finance Management Act, 2015 and the
Financial Reporting Guide, 2008, and for such internal control as management
determines is necessary to enable the preparation of financial statements that are free
from material misstatement whether due to fraud or error.
Auditor’s Responsibility
My responsibility as required by Article 163 of the Constitution of the Republic of Uganda,
1195 (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 (ISA). Those standards require that
I comply with the ethical requirements and plan and perform the audit to obtain
reasonable assurance whether the financial statements are free from material
misstatement.
An audit involves performing audit procedures to obtain evidence about the amounts and
disclosures in the financial statements as well as evidence supporting compliance with
relevant laws and regulations. The procedures selected depend on the Auditor’s judgment
including the assessment of risks of material misstatement of financial statements
whether due to fraud or error. In making those risk assessments, the Auditor considers
internal control relevant to the entity’s preparation and fair presentation of financial
statements in order to design audit procedures that are appropriate in the circumstances
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but not for purposes of expressing an opinion on the effectiveness of the entity’s internal
control. An audit also includes evaluating the appropriateness of accounting policies used
and the reasonableness of accounting estimates made by management as well as
evaluating the overall presentation of the financial statements.
I believe that the audit evidence I have obtained is sufficient and appropriate to provide a
basis for my opinion.
Part ‘‘A’’ of this report sets out my opinion on the financial statements. Part “B” which
forms an integral part of this report presents in detail all the significant audit findings
made during the audit which have been brought to the attention of management and
form part of my Annual Report to Parliament.
PART “A”
Basis for Qualified Opinion
Unsupported Adjustments in the Cash Flow statement
Included in the Ministry’s Cash Flow statement are adjustments in respect of:
increase in domestic arrears (UGX.48,213,776), transfer to treasury
(UGX.200,000), EFT’s unapplied (UGX.2,834,276) and others (UGX.107,039,999).
These adjustments were not supported and could therefore not be verified during
the audit. Accordingly, I am unable to establish the authenticity of the
adjustments made by the ministry.
Qualified Opinion
In my opinion, except for the possible effects of the matters described in the Basis for
Qualified Opinion paragraph, the financial statements of the Ministry of Public Service as
at 30th June 2015 are prepared, in all material respects, in accordance with Section 51 of
the Public Finance Management Act, 2015, and the Financial Reporting Guide, 2008.
Emphasis of matter
Without qualifying my Opinion further, I draw your attention to the following matter,
which has been included in the ministry’s financial statements;
Pension Mischarges - UGX.14,657,510,377
An analysis of the pension payment file and GOU chart of accounts revealed that
out of pension payments amounting to UGX.284,338,103,274 paid during the
year, UGX.14,657,510,377 was charged on account codes which do not reflect the
nature of the expenditure described in the GOU chart of accounts.
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Outstanding Commitments – UGX.200,252,608,998
The statement of outstanding commitments on page 17 reflected
UGX.200,252,608,998 as a cumulative ministry debt as at 30/6/2015. The bulk of
this amount (UGX.199,255,907,539) comprises of gratuity and pension arrears
which continue to accumulate uncontrollably. This has been attributed to
inadequate budgetary provisions over the years.
Payment of pensioners beyond the Pensionable Period –
UGX.11,038,936,918
I noted that UGX.11,038,936,918 was paid to pensioners who had exceeded the
pensionable period of 15 years yet no life certificates were availed as proof of
continued existence. Absence of evidence of continued existence in form of life
certificates to support pension payments may imply that payments were made to
non-existent pensioners.
John F.S. Muwanga
AUDITOR GENERAL
KAMPALA
21st December, 2015
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PART "B"
DETAILED REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS
OF MINISTRY OF PUBLIC SERVICE FOR THE FINANCIAL YEAR ENDED 30TH JUNE,
2015
This Section outlines the detailed audit findings, management responses, and my
recommendations in respect thereof.
1.0 INTRODUCTION
Article 163 (3) of the Constitution of the Republic of Uganda, 1995 (as amended)
requires me to audit and report on the public accounts of Uganda and all public
offices including the courts, the central and local government administrations,
universities, and public institutions of the like nature and any public corporation or
other bodies or organizations established by an Act of Parliament. Accordingly, I
carried out the audit of the Ministry of Public Service, to enable me report to
Parliament.
2.0 BACKGROUND INFORMATION
The Ministry of Public Service is located on Plot 12 Nakasero Hill Road, Kampala. The
Ministry was created under the legal instrument of the Public Service Act, 1969. The
Act mandates the Ministry to develop, manage and administer human resource
policies, management systems, procedures and structures for the Public Service. This
mandate is implemented by nine departments which fall under three directorates,
namely; Research and Development, Human Resource Management and Efficiency
and Quality Assurance.
3.0 ENTITY FINANCING
The Ministry was financed by grants from Central Government totalling to
UGX.304,271,140,046. The Ministry also collected UGX.200,000 in miscellaneous
revenue, bringing total revnue to UGX.304,271,340,046. The grants revenue of
UGX.304,271,140,046 constituted 88.4% of its approved budget estimates of
UGX.344,151,011,400.
4.0 OBJECTIVES OF THE MINISTRY OF PUBLIC SERVICE
The Ministry has the following objectives;
a) To manage the administration of Terminal Benefits and the Pension scheme.
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b) To initiate, formulate and plan policies on the management of Human
Resource functions for the entire public service.
c) To develop and review management and operational structures, systems and
productivity practices that are responsive to efficient and effective service
delivery of public services.
d) To promote compliance with policies, standards, rules, regulations and
procedures in order to enhance the efficiency and effectiveness of the
Ministry’s Departments and Agencies (MDA) and Local governments.
e) To ensure that the Ministry has standardized office facilities and services for
effective service delivery
5.0 AUDIT OBJECTIVES
The audit was carried out in accordance with International Standards on Auditing and
accordingly included a review of the accounting records and agreed procedures as
was considered necessary. In conducting my reviews, special attention was paid to
establish whether;
a. Whether the financial statements have been prepared in accordance with the
requirements of the Public Finance Management Act 2015 and the
regulations, and fairly present the income and expenditures for the year and
of the financial position as at the end of the year.
b. Whether all Ministry funds were utilized with due attention to economy and
efficiency and only for the purposes for which the funds were provided.
c. Whether goods and services financed have been procured in accordance with
the PPDA Act.
d. To evaluate and obtain a sufficient understanding of the internal control
structure of the Ministry, assess control risk and identify reportable
conditions, including material internal control weaknesses
e. Whether management of the entity funds was in compliance with the
Government of Uganda financial regulations.
f. Whether all necessary supporting documents, records and accounts have
been kept in respect of all activities, and are in agreement with the financial
statements presented.
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6.0 AUDIT PROCEDURES PERFORMED
The following audit procedures were undertaken;
a. Revenue
Obtained all schedules of all revenues collected and reconciled the amounts to the
Ministry’s cashbooks and bank statements.
b. Expenditure
The Ministry payments vouchers were examined for proper authorization, eligibility
and budgetary provision, accountability and support documentation.
c. Internal Control System
Reviewed the internal control system and its operations to establish whether sound
controls were applied throughout the period.
d. Procurement
Reviewed the procurement of goods and services under the Ministry during the
period under review and reconciled with the approved procurement plan.
e. Fixed Assets Management
Reviewed the use and management of the Ministry assets during the period under
review.
f. Financial Statements
Examined, on a test basis, evidence supporting the amounts and disclosures in the
financial statements; assessed the accounting principles used and significant
estimates made by management; as well as evaluated the overall financial statement
presentation.
7.0 AUDIT FINDINGS
7.1 Categorization of findings
The following system of profiling of the audit findings has been adopted to better
prioritise 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.
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Accordingly, the table below contains a categorized summary of the findings that
follow in the subsequent paragraphs of the report;
Table showing categorized summary of the findings
No Finding
Significance
7.2 Unsupported Adjustments in the Cash Flow statement High
7.3 Pension Mischarges - UGX.14,657,510,377 High
7.4 Outstanding Commitments UGX.200,252,608,998 High
7.5 Payment of Pensioners beyond the Pensionable Period –
UGX.11,038,936,918
High
7.6 Discrepancies between IFMS & IPPS Data Files – UGX.2,607,106,533
High
7.7 Multiple Payments to Beneficiaries – UGX. 1,161,382,909 High
7.8 Understaffing Moderate
7.9 Staff in Acting Positions Moderate
7.10 Non-Implementation of Audit Recommendations Contained In The Audit Report on the Government Payroll
High
7.11 Amount Over released on Arrears of Gratuity –
UGX.1,057,316,417
Moderate
7.12 Migrated Pensioners not identified at respective Votes Moderate
7.13 Doubtful Payment of Pension Benefits – UGX.60,806,690 Low
7.14 Over Payments - UGX.20,157,353 Low
7.15 Lost/Untraceable Pensioners Moderate
7.16
Status of Previous Years’ Audit Observations Low
7.2 Unsupported Adjustments in the Cash Flow statement
Included in the Ministry’s Cash Flow statement are adjustments in respect of:
increase in domestic arrears (UGX.48,213,776), transfer to treasury (UGX.200,000),
EFT’s unapplied (UGX.2,834,276) and others (UGX.107,039,999). These adjustments
were not supported and could therefore not be verified during the audit. It was
further noted that the adjustments led to a negative cash position of
UGX.(417,559,778) which was also reflected in the Statement of Financial Position as
at 30th June 2015. However, given the Treasury Single Account (TSA) arrangement,
this scenario should not be expected, as entities cannot be allowed to spend when
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.
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the TSA has no funds. Accordingly, I am unable to establish the authenticity of the
adjustments made by the ministry.
In their response, Management stated that numerous challenges were encountered
in the reconciliation process due to large numbers of unapplied EFTs, and that efforts
were being made to produce a fully reconciled statement. However, by the time of
writing this report, this had not been provided by management.
I advised the Accounting Officer to ensure that all amounts reflected in the financial
statements are always properly supported. In the meantime, I await the outcome of
the ongoing attempts to have a proper reconciliation by the ministry.
7.3 Pension Mischarges - UGX.14,657,510,377
The GOU Chart of Accounts defines the nature of expenditure for each account code,
with the intention of facilitating better and consistent classification of financial
transactions and tracking budget performance per expenditure item. An analysis of
the pension payment file and GOU chart of accounts revealed that out of pension
payments amounting to UGX.284,338,103,274 paid during the year,
UGX.14,657,510,377 was charged on account codes which do not reflect the nature
of the expenditure described in the GOU chart of accounts.
Audit attributed the above scenario to improper budgeting for the pension obligation
as well as relaxation of the budgeting controls on the IFMS, which would allow
payments on items without sufficient funds. For example, scrutiny of the pension
budget provisions revealed the following;
Certain pension budget items had no funds provided for in the IFMS system,
but payments were made. They included; Pension Arrears for Defense, Local
Governments, Civil service, and Teachers.
Certain pension budget items had a lot of funds provided for on the IFMS
system, than they would actually need. For example; Emoluments paid to
former Presidents and VIPs, and gratuity expenses. This resulted into under
or over budgeting in some pension items with an overall under budgeting of
UGX.5,673,003,274.
The above implies that the pension budget may not have been properly compiled.
In response, management admitted the mischarges, and attributed them to
inadequate budgeting for the various items, and the reduction in the Ministry budget
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to support MDAs/LGs budgets to facilitate the decentralisation process for pension
and gratuity.
I advised the Accounting Officer to strengthen the budgetary processes so as to
ensure that realistic budgets are compiled and funded, and that all expenditures are
charged on the approved budget lines during budget execution.
7.4 Outstanding Commitments – UGX.200,252,608,998
It was noted that the Financial Statements reflected an amount of
UGX.200,252,608,998 as a cumulative ministry debt as at 30th June, 2015. It was
noted that the bulk of this amount (UGX.199,255,907,539) comprised of gratuity and
pension arrears which have continued to accumulate uncontrollably (2014:
UGX.108,681,159,047). I further noted that the ministry does not have a
comprehensive stock of all potential claimants/retired employees as well as an
indication of future retirees, to enable it establish the funds that would be needed to
sustainably manage the pension liability. This implies that the ministry has to rely on
claims submitted by retired employees for it to establish the amount of resources to
budget for, which eventually leads to under budgeting for gratuity and pension.
In her response, the Accounting Officer explained that her Ministry has no control
over the accumulation of gratuity and pension arrears which forms the bulk of the
arrears due to the inadequate budgetary provisions during the year and the
preceding financial years.
I have advised the Accounting Officer to devise a comprehensive strategy for the
management of gratuity and pension for the entire public service, including a
compilation of a complete stock of both retired and current employees which could
then be used in determining the expected liability over time. In addition, government
could also explore a possibility of establishing a pension fund to guarantee
availability of terminal benefits to civil servants, as and when they retire.
7.5 Payment of Pensioners beyond the Pensionable Period –
UGX.11,038,936,918
Section 18 (1) of the Pensions Act, Cap 286, requires that 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 the date of retirement of the deceased pensioner. Pursuant to the above
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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.
I noted that UGX.11,038,936,918 was paid to pensioners who had exceeded their
pensionable period of 15 years, yet no life certificates were availed as proof of their
continued existence. This similar observation was made in my previous audit report
and the recommendations therein were not adhered to. Absence of evidence of
continued existence of pensioners in form of life certificates to support pension
payments may imply payments to non-existent pensioners.
Although the Accounting Officer stated that the respective life certificates were
available to justify the amounts paid out, these were however not availed for
verification.
I advised the Accounting Officer to always adhere to the requirements under the Act
and obtain life certificates, before making such payments. In addition, the life
certificates of pensioners in regard to the questioned payments should be obtained
and provided for review.
7.6 Discrepancies between IFMS & IPPS Pension Data Files
The primary source of data for effecting pension payments through the IFMS is the
pension payroll generated from the IPPS. In order to minimize manual intervention,
an IPPS/IFMS interface was deployed. Effective operation of the IPPS/IFMS interface
is highly premised on the requirement that the data from IPPS will be accurate with
minimal or no need of correction by the Accounting Officer. Ideally the two systems
are expected to be consistent.
I however noted that payments to the tune of UGX.2,607,106,533 were made to
beneficiaries who did not have corresponding records on the IPPS pension payroll.
This implies that there could have been manual intervention in between the two
systems that led to payment of the said funds. There is a risk that the payments
were made to non-existent pensioners.
In response, management admitted that UGX.2,607,106,533 was paid out, off the
IPPS, and that these were payments of pension arrears and gratuity, ex gratia,
payments to past leaders and monthly pension processed on the legacy system
before a shift to IPPS. I was however, not availed the relevant documentary
evidence. I have accordingly advised the Accounting Officer to ensure that the IPPS
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is updated to include all pension information including arrears, to avoid the risky
manual interventions on the interface with the IFMS.
7.7 Multiple Payments to Pension Beneficiaries – UGX. 1,161,382,909
An analysis of the payment file and Bank of Uganda bank statements for the Ministry
revealed multiple payments amounting to UGX.1,161,382,909 to various pensioners.
Audit noted that monthly pension payments were made to accounts of pensioners
who had already received their monthly remittances for the particular months. I also
noted particular cases where pensioners were already on the pension’s payroll of the
previous financial year (2013/2014), but were later paid in the current financial year
(2014/2015) categorised as arrears. However, there was no evidence availed to
show that the Ministry owed the same pensioners arrears as they were not on the
pension arrears list in the previous year.
This was due to the practice of payment of monthly pension prior to payment of the
commuted pension gratuity without proper records tracking, and/or due to poor
controls in the process of data capture where pensions staff leave out critical
information on the pensions database for categories including army veterans and
retirees. The above two scenarios present a risk of falsification of pension data/files
as well as double payment of a particular category of pensioners. I noted that less
attention is given to this particular category of files since it is assumed that clerical
work is done at the vote prior to the files being forwarded to the Ministry for
payment.
In response, management admitted the presence of multiple payments totalling to
UGX.1,161,382,909, but added that some of the payments could be attributed to
unpaid monthly pension for several months for the Ministry of Defence beneficiaries
who submitted letters of Administration late during the financial year yet payment
had earlier been suspended. I was however, not provided with any documentary
evidence to this effect.
I advised the Accounting Officer to institute an investigation into this matter and if
confirmed, recovery measures of the amounts irregularly paid out should be initiated,
as well as disciplinary action to whoever is found involved in the practice.
7.8 Under Staffing
The Ministry of Public Service has an approved structure of 264 Staff across the
existing three directorates. Audit revealed that only 215 posts (82%) were filled,
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leaving a staffing gap of 48 posts (representing 18%). Failure to have all the staffing
positions filled affects the ministry’s capacity to have effective service delivery.
Audit noted that this issue was raised during the previous audit and still continues
not to be addressed. I have advised the Accounting Officer to liaise with the
responsible stakeholders in order to have the staffing gaps filled.
7.9 Staff in Acting Positions
Appointment Procedures (A – c) Sec. 9 of the Public Service Standing Orders, states
that “An appointment on acting basis is expected to last not more than six months,
and is subject to direction by the Appointing Authority.
I noted that contrary to the standing orders, the Ministry continues to maintain 18
staff members in acting positions for more than the recommended periods. The risk
of having one person acting in a position where she/he is not qualified for a long
period may compromise the quality of work performed. Although, during the
previous audit, management had indicated that the staffing challenges would be
solved, this however, appears to still be prevalent, despite the assurance by
management then.
I advised the Accounting Officer to liaise with the Public Service Commission to have
those vacancies filled to enable the ministry improve its capacity to deliver on its
mandate.
7.10 Follow up on the Comprehensive Audit report on Government Payroll
7.10.1 Implementation of the Audit Recommendations Contained in the Audit
Report on the Government Payroll
In March 2015, I issued an audit report on the comprehensive audit of the
Government payroll, which I had undertaken following a request from the Hon.
Minister for Finance, dated 7th August, 2013. In that report, critical recommendations
were made key among which, the Ministry was to make use of the validated data
that was provided, as part of the clean-up process of the government payroll.
However, to date, there is no evidence to show that the Ministry made use of the
validated data that was provided as well as implementing the other
recommendations made thereto. This implies that the government payroll continues
to be exposed to a risk of existence of ghost employees which ultimately continues
to lead to loss of government funds. The inability to make use of the validated
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government employees and to address the weaknesses identified on the IPPS system
also imply that the system cannot be relied upon for maintenance of a clean payroll.
In her response, the Accounting Officer attributed the delays to the involvement of
NITA-U which slowed the procurement process for the server that was to be utilised
to read the validated data that was provided.
I advised the Accounting Officer to expedite this process and to also ensure that the
recommendations contained in my said report are fully addressed in order to
guarantee maintenance of a clean government payroll.
7.10.2 Ineligible Payments – UGX.302,179,793
As part of the comprehensive audit of the government payroll, I also undertook an
audit of the salary arrears which had been compiled by the Ministry in preparation
for their settlement. I noted the following from an analysis of the report as well as
the salary arrears that were eventually paid by the ministry;
Duplicate Payments - UGX.16,260,266
The analysis of the bank statements revealed that duplicate payments to teachers
worth UGX.840,000 and UGX.15,420,266 to Civil servants as identified in the report
were paid. These amounts are recoverable.
Rejected but paid salary arrears claims - UGX.161,383,761
Salary arrears claims for teachers worth UGX.73,881,810 and for civil servants worth
UGX.87,501,951 were rejected during the verification, on grounds of insufficient
documentation among other reasons. However, a review of the bank statement
revealed that these payments had been paid by the Ministry. There is a risk that this
was a financial loss to government.
Payments for claims not approved – UGX.124,535,766
Furthermore, salary arrears claims of UGX.37,033,815 for Teachers, and
UGX.87,501,951 for civil servants were found to have been paid without approval
from the respective Accounting Officers. There is a risk that these payments were
sanctioned by the Ministry of Public Service without prior approval of the respective
votes.
In light of the above, a total of UGX.302,179,793 comprising of duplicate, rejected
and un-approved payments were ineligible and irregular.
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In response, management stated that the funds that were subsequently released by
MoFPED after the verification, were not made to the Ministry but to the respective
votes. However, audit found this explanation not satisfactory, since the respective
bank statements showed that the funds were released onto the Ministry account and
paid out during the financial year 2012/13. I advised the Accounting Officer to
consider initiating steps to ensure that the amount irregularly paid is recovered from
the responsible officers.
7.11 Amount Over released on Arrears of Gratuity – UGX.1,057,316,417
The PS/ST informed the Ag. Permanent Secretary that her Ministry had submitted
payments schedules for pension and gratuity arrears for some votes which exceeded
the amounts verified by the respective Accounting Officers of those votes by
UGX.1,057,316,417. The amount had been released to the Ministry as summarized
below;
Table summarizing releases of pension and gratuity in excess of amounts verified by accounting officers
Vote Verified Amount
(UGX)
Amount Released
(UGX)
Variance (UGX)
Yumbe District 177,510,032 487,783,855 310,273,823
Isingiro District 69,048,347 275,111,340 206,062,993
Namutumba District 53,553,815 149,053,132 95,499,317
Masaka MC 41,227,603 312,782,913 271,555,310
Tororo MC 125,600,114 168,152,594 42,552,480
Kasese MC 78,680,190 169,152,594 90,472,404
Total 37,780,100 78,680,190 40,900,090
TOTAL 583,400,201 1,640,716,618 1,057,316,417
Under the circumstances, there is a possibility that the difference of
UGX.1,057,316,417 worth of arrears released was diverted to other payments
without authority.
Management’s explanation that the amount in the letter by PS/ST was erroneously
stated was not supported with relevant documentary evidence. Although the PS/ST
requested for an explanation regarding the above matter, there is no evidence that a
response was provided by the Ministry.
I advised the Accounting Officer to address the concerns of the PS/ST and properly
account for the monies released to those votes.
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7.12 Migrated Pensioners not Identified at Respective Votes
It was observed that the Ministry of Lands, Housing and Urban Development
disowned a list of 106 pensioners out of 256 names migrated from Ministry of Public
Service, as they could neither be identified in the Ministry records, nor at the Ministry
of Public Service (Refer to copy of the Accounting Officer’s letter dated 9th September
2015, ref. ADM/1/34/02).
This implies that the Ministry of Public Service migrated non-existent pensioners in
that Ministry. Further review revealed that these cases appear not to have the
relevant files at the Ministry of Public Service. There is a possibility of existence of
several cases of a similar nature in other MDAs and Local governments as indicated
by the several calls made by Accounting Officers to non-responsive pensioners in the
media.
In response, management stated that the decentralization process of monthly
pension started in July 2015 and various pensioners were submitted to their votes of
retirement. The reported cases were cases of misrouting which affected almost all
votes, and that a number of votes are also writing to claim their bona fide retirees
which MoPS has since re-routed.
I advised the Accounting Officer to reconcile the pension names and amounts
involved with the respective Votes to ensure a proper migration of the pension’s
payroll. In addition, the Ministry should ensure that all pensioners migrated have
relevant files that contain the details regarding the pensioners’ employment records.
7.13 Doubtful Payment of Pension Benefits – UGX.60,806,690
Sections 10 (2-5), 11 and 12 (1) of the Pensions Act describes the circumstances
under which pension may be granted.
A review of the IPPS pension payroll and IFMS payment file for the year ended 30th
June, 2015 revealed that there existed doubtful beneficiaries with incorrect details on
the IPPS payroll. For instance the dates of birth entered into the IPPS are way
beyond the year 2015 that is currently being reviewed. The dates of retirement then
are 60 years after the dates of birth placing them around 2075. This being an
automated system, a possibility that these payments would continue to be paid until
2080 when they would automatically be knocked off is likely. More to this, were the
salary scales which did not relate to the amounts paid. These instances imply that
the IPPS lacks adequate controls to ensure data validity and reliability.
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Management stated that the wrong dates on the IPPS were as a result of data
migration from the legacy system to the IPPS platform configured with different time
zones. I advised to the Accounting Officer to ensure that the data on the IPPS in
respect of pensioners’ records is always validated following its initial capture and to
ensure that the cases identified are corrected accordingly.
7.14 Over Payments of Pension - UGX.20,157,353
The IPPS captures the total income and deductions and computes the net pay due to
an individual pensioner. This net pay is supposed to tally with the amount remitted
to the pensioner’s bank account. A review of both IPPS and the IFMS payment file
revealed over payment to the tune of UGX.20,157,353 to various pensioners. Under
the circumstances, there is a risk that the amount in question was irregularly
expended and is therefore recoverable.
In their response, management stated that these were not over payments but
refunds to the beneficiaries who had earlier been underpaid erroneously. However,
the supporting pay change forms duly filled and approved by the respective officers
were not availed for verification. I have advised the Accounting Officer that in the
absence of the supporting documentation, recovery measures for the amount in
question ought to be initiated.
7.15 Lost/Untraceable Pensioners
Lost pensioners are people who are due for pension from government but have not
made a claim for it (referred to as lost pensioners in this report). These result from
retirees who neglect to apply for a pension, forget that they are entitled to a
pension, or die before they can make a claim for pension. The existing legislation on
pensions is silent on pensioners who do not show up to claim their pension benefits.
As a result, the government is not obligated to inform a pensioner that they are
entitled to a pension. Accordingly, the Ministry has not taken any effort to plan for
such pensioners.
It was noted that the amount reported as pension arrears ignores the pension due to
these lost pensioners. Audit notes that there is a risk that in future, the pensioners or
their beneficiaries may make claims for these pension funds only to find that the
government may not have made sufficient provision for such amounts. This further
implies that pension arrears will likely keep arising, since the Ministry does not have
a comprehensive database of all such employees who retired from public service.
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Management, in their response stated that with decentralization of the pension
payment it is very possible for votes to account for all their retired pensioners and
have them budgeted for without causing unnecessary backlog, and that the onus of
follow up of entitled retirement benefits rests on the retirees.
I advised the Accounting Officer to liaise with the respective votes to establish a
comprehensive database or registry of all government retirees to be able to fully
manage the pension claims and to avoid any future challenges of financing pension
claims. In addition, government should consider enacting legislation or a policy on
what should be done in case of unclaimed pension funds.
7.16 Status of Previous Years’ Audit Observations - Project Accounts
A review of the status of implementation of the previous audit recommendations on
both the project financial statements as well as the Ministry Accounts revealed that
the following matters were still outstanding;
Table summarizing status of prior year audit recommendations
Audit finding Status during current
audit
PROJECT ACCOUNTS
1 Unexplained translation differences
UGX.784,874,279
Not explained
3 Un deducted WHT on Consultants totaling to
USD.67,089
Not addressed
4 Under deduction of WHT foreign contractor, of
UGX.1,173,298,686
Not addressed
5 Long standing advances of UGX 7,233,802 Not addressed
MINISTRY ACCOUNTS
1 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 (19.7%) posts
vacant.
The approved Ministry staff
structure has still remained
not fully filled in the year
under review with key
positions vacant.
2 Pension Payments to Group Associations
– UGX 956,803,416
The above sum was paid to various pension
groups as gratuity and monthly pension. It was
however noted that these groups did not
furnish the Ministry with accountability
records/evidence of acknowledgements to
The practice of paying group
pensioners without
accountability records/
evidence of
acknowledgements has
continued in the year under
review.
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show that the funds reached the bonafide
beneficiaries.
I have advised the Accounting Officer to ensure that all recommendations are fully
implemented, so as to ensure enhanced accountability and better stewardship of the
resources allocated to the Ministry.
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8.0 FINANCIAL STATEMENTS
APPENDIX 1