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OFFICE OF THE AUDITOR GENERAL ANNUAL REPORT OF THE AUDITOR GENERAL FOR THE YEAR ENDED 30 JUNE 2007 VOLUME 2 CENTRAL GOVERNMENT
Transcript of OFFICE OF THE PRESIDENT - Office of the Auditor General · office of the president ... lands,...
OFFICE OF THE AUDITOR GENERAL
ANNUAL REPORT OF THE AUDITOR GENERAL
FOR THE YEAR ENDED 30 JUNE 2007
VOLUME 2
CENTRAL GOVERNMENT
ii
TABLE OF CONTENTS
INTRODUCTION .............................................................................. 1
GENERAL OBSERVATIONS .................................................................. 5
REPORT OF THE AUDITOR GENERAL ON GOVERNMENT OF UGANDA CONSOLIDATED FINANCIAL STATEMENTS ............................................. 29
OFFICE OF THE PRESIDENT ............................................................... 42
STATE HOUSE ............................................................................... 44
OFFICE OF THE PRIME MINISTER ........................................................ 47
PUBLIC SERVICE ............................................................................ 57
FOREIGN AFFAIRS .......................................................................... 59
JUSTICE AND CONSTITUTIONAL AFFAIRS .............................................. 66
FINANCE, PLANNING AND ECONOMIC DEVELOPMENT ............................... 71
AGRICULTURE, ANIMAL INDUSTRY AND FISHERIES .................................. 77
LANDS, HOUSING AND URBAN DEVELOPMENT ........................................ 93
WATER AND ENVIRONMENT ............................................................ 101
EDUCATION AND SPORTS ............................................................... 119
HEALTH 140
WORKS AND TRANSPORT ............................................................... 152
DEFENCE …………………............................................................................ 168
INTERNAL AFFAIRS ....................................................................... 175
INFORMATION AND COMMUNICATION TECHNOLOGY .............................. 181
LOCAL GOVERNMENT .................................................................... 184
TOURISM, TRADE AND INDUSTRY ..................................................... 185
ENERGY AND MINERAL DEVELOPMENT ............................................... 188
GENDER, LABOUR AND SOCIAL DEVELOPMENT ..................................... 197
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UGANDA POLICE .......................................................................... 203
UGANDA PRISONS ........................................................................ 211
NATIONAL AGRICULTURAL RESEARCH ORGANISATION (NARO) .................. 219
NATIONAL AGRICULTURAL ADVISORY SERVICES (NAADS) ....................... 224
JUDICIARY …………………………………………………………………………… 247
DIRECTORATE OF PUBLIC PROSECUTION (DPP) .................................... 251
PARLIAMENTARY COMMISSION ........................................................ 253
HEALTH SERVICE COMMISSION ........................................................ 254
JUDICIAL SERVICE COMMISSION ...................................................... 254
ELECTORAL COMMISSION ............................................................... 256
UGANDA HUMAN RIGHTS COMMISSION .............................................. 259
PUBLIC SERVICE COMMISSION ......................................................... 261
LAW REFORM COMMISSION ............................................................. 261
EDUCATION SERVICE COMMISSION ................................................... 262
LOCAL GOVERNMENT FINANCE COMMISSION ....................................... 262
UGANDA BLOOD TRANSFUSION SERVICES ........................................... 263
UGANDA LAND COMMISSION ........................................................... 264
UGANDA INDUSTRIAL RESEARCH INSTITUTE ........................................ 270
UGANDA AIDS COMMISSION ............................................................ 274
MAKERERE UNIVERSITY ................................................................. 277
MBARARA UNIVERSITY ................................................................... 301
KYAMBOGO UNIVERSITY ................................................................ 305
GULU UNIVERSITY ........................................................................ 311
MAKERERE UNIVERSITY BUSINESS SCHOOL ......................................... 316
MULAGO HOSPITAL ....................................................................... 318
BUTABIKA HOSPITAL ..................................................................... 328
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ARUA HOSPITAL ........................................................................... 331
GULU HOSPITAL ........................................................................... 342
JINJA HOSPITAL ........................................................................... 343
LIRA HOSPITAL ............................................................................ 350
MASAKA HOSPITAL ....................................................................... 351
FORT PORTAL HOSPITAL ................................................................ 355
KABALE HOSPITAL ........................................................................ 359
HOIMA HOSPITAL ......................................................................... 362
SOROTI HOSPITAL ........................................................................ 366
MBARARA HOSPITAL ..................................................................... 367
LONDON MISSION ........................................................................ 370
NEW YORK MISSION ..................................................................... 378
WASHINGTON MISSION ................................................................. 387
NEW DELHI MISSION ..................................................................... 392
CAIRO MISSION ........................................................................... 395
ADDIS ABABA MISSION .................................................................. 399
BEIJING MISSION ......................................................................... 409
OTTAWA MISSION ........................................................................ 411
TOKYO MISSION .......................................................................... 413
TRIPOLI MISSION ......................................................................... 416
RIYADH MISSION ......................................................................... 420
COPENHAGEN MISSION .................................................................. 420
NAIROBI MISSION ........................................................................ 424
DAR ES SALAAM MISSION ............................................................... 428
ABUJA MISSION ........................................................................... 431
BRUSSELS MISSION ...................................................................... 434
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ROME MISSION ............................................................................ 442
JUBA MISSION ............................................................................. 447
KINSHASA MISSION ...................................................................... 449
GENEVA MISSION ......................................................................... 452
PRETORIA MISSION ...................................................................... 459
KHARTOUM MISSION ..................................................................... 463
KIGALI MISSION .......................................................................... 464
MOSCOW MISSION ....................................................................... 470
BERLIN MISSION .......................................................................... 477
PARIS MISSION ............................................................................ 479
TEHRAN MISSION ......................................................................... 483
CANBERRA MISSION ...................................................................... 485
APPENDIX
CONSOLIDATED FINANCIAL STATEMENTS OF THE REPUBLIC OF UGANDA
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1.0 INTRODUCTION I am required by Article 163 (3) of the Constitution of the Republic of
Uganda to audit and report on the Public Accounts of Uganda and of all
public offices including the courts, central and local government
administrations, Universities and public institutions of like nature and any
public corporations or other bodies established by Act of Parliament.
Under Article 163 (4) of the Constitution I am also required to submit to
Parliament 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, Agencies,
Universities, Uganda Missions abroad and Referral Hospitals. Separate
volumes have been issued on the Annual Performance of the Office of the
Auditor General, audit of Local Governments, and audit of Statutory
Corporations.
In this introduction I give an overview of the financial audit work carried
out, status of completion of the audits and a summary of the audit opinions
issued on the financial statements of the entities audited.
Part II of this report presents the major general observations and cross
cutting issues arising from the results of the audits carried out.
In Part III, I present my findings and audit opinion on Government of
Uganda Consolidated Financial statements and all the significant findings
made on the other audited entities i.e Ministries, Agencies, Universities,
Referral Hospitals, and Uganda Missions abroad.
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1.1 STATUS OF COMPLETION OF AUDITS The Directorate of Central Government is responsible for the audit of 20
Ministries, 19 Agencies, Commissions, Departments, 12 Referral Hospitals,
28 Uganda Missions abroad, 6 Public Universities, Uganda Revenue
Authority and the Consolidated Government of Uganda Financial
Statements. All the entities financial statements for year ending 30th June
2007 were audited and audit reports issued separately on each of them.
The status of completion of the audits is indicated in the table below;
The status of audit is as indicated below:-
Total Number Of Accounts
Accounts Audited
Audits Outstanding
Ministries 20 20 -
Agencies, Commissions, Departments
19
19
-
Referral Hospitals 12 12 - Missions (Embassies)
28
28
-
Public Universities 6 6 - Uganda Revenue Authority
1
1
-
GOU Consolidated Financial Statements
1
1
-
Total 88 88 -
Of the total number of entities audited, 26 entities had unqualified opinions,
60 qualified opinions and 2 had disclaimer of opinion.
The table below provides a breakdown of the types of opinions issued. The
basis used to arrive at the audit opinion is described in the separate reports
issued on individual Ministries, Agencies, Referral Hospitals and Public
Universities.
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Unqualified Opinion 1 Local government 15 Internal Affairs 2 UMI 16 Masaka Hospital 3 Local Government Finance
Commission 17 IGG
4 Soroti Reform Hospital 18 Lira Hospital 5 Arua Hospital 19 Police 6 Kabale Hospital 20 Law Reform Commission 7 Hoima Hospital 21 DPP 8 Gulu Hospital 22 Uganda Blood Transmission
Service 9 Presidents’ office 23 Mbarara Hospital 10 Education Service
Commission 24 Tourism, Trade & Industry
11 Health Service Commission
25 Judicial Service Commission
12 Public Service Commission 26 Uganda Industrial Research Institute
13 MUBS 14 Mbarara University
Qualified Opinion 1 Uganda Aids Commission 31 Rome Mission 2 Jinja Hospital 32 Beijing Mission 3 Parliament 33 Copenhagen Mission 4 NARO 34 Kigali Mission 5 Works & Transport 35 Brussels Mission 6 Justice 36 London Mission 7 Uganda Human Rights
Comm. 37 Dar-Es-salaam Mission
8 Mulago Hospital 38 Paris Mission 9 Foreign Affairs 39 Addis – Ababa Mission 10 Agriculture, Animal
Industries & Fisheries 40 Washington Mission
11 Butabika Hospital 41 Tripoli Mission 12 Education & Sports 42 New York Mission 13 Tokyo Mission 43 Ottawa Mission 14 Kyambogo University 44 New Delhi Mission 15 Gender, Labour & Social
Development 45 Riyadh Mission
16 Lands & Housing 46 Berlin Mission 17 Prisons Department 47 Geneva Mission 18 Office of the Prime Minister 48 Pretoria Mission 19 Water & Environment 49 Abuja Mission 20 Mbale Hospital 50 Cairo Mission 21 Defence 51 Fort Portal Hospital
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22 Finance, Planning & Economic Development
52 Moscow Mission
23 Electoral Commission 53 Nairobi Mission 24 Energy & Mineral
Development 54 State House
25 Uganda Land Commission 55 Makerere University 26 Public Service 56 Uganda Revenue Authority 27 Judiciary 57 Information & Communication
Technology 28 Health 58 Juba Mission 29 Tehran Mission 59 Canberra Mission 30 Khartoum Mission 60 GOU Consolidated Financial
Statements
Disclaimer 1 Gulu University 2 Kinshasa Mission
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PART II
2.0 GENERAL OBSERVATIONS
2.1 TAX APPEAL TRIBUNAL
The Tax Appeals Tribunal is mandated to hear and rule on cases pertaining
to tax complaints brought forward by tax payers and/or URA before further
adjudication by a higher court in case of appeal by either litigant. The
expeditious rulings would ultimately result into efficient and better
collection of taxes. However, by the date of issue of this report a dispute
had arisen between the two bodies that is likely to adversely affect the
functioning of the two bodies.
Uganda Revenue Authority has lodged a complaint with the Ministry of
Finance expressing dissatisfaction with the performance of the Tax Appeals
Tribunal particularly in regard to the manner they have handled the various
cases brought against Uganda Revenue Authority. Other matters relate to
the mandate, composition and competence of the Tax Appeals Tribunal
members and the inconsistencies in rulings made by the Tribunal. On the
other hand the Tax Appeals Tribunal disputes the Uganda Revenue
Authority complaints. These differences have the effect of constraining the
performance of URA in their role of tax collection and administration.
There is need for an urgent intervention by the Ministry to resolve the
differences so that the two bodies can continue to carry out their functions
effectively.
2.2 BUDGETS FOR STATUTORY BODIES Treasury came up with major reforms which saw the introduction of a very
comprehensive chart of accounts that would enhance budgeting and
reporting processes. However it has been observed that when making
budgets, it is only Ministries, Agencies and Universities where the chart of
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accounts is comprehensively used. When it comes to Statutory Bodies’
recurrent expenditure, all expenditure is itemized under one item 263106
(other current grants). I was not able to ascertain why these budgets are
not further broken down to the anticipated actual expenditure items to
enhance better budgeting.
The law also requires that all budgets for statutory bodies be presented to
H.E. The President for his comments and submission to Parliament for
consideration and approval. In Parliament these budgets are discussed by
budget committees. The report of the budget committees forms a basis for
Parliamentary appropriation.
However, a review of the Parliamentary resolution for approval of budgets
for statutory bodies revealed differences in the budgets amounts approved
by Parliament and those captured in the overall Government approved
budgets. A case in point is the Parliamentary Commission which always
has lower amounts captured in the approved Government of Uganda
budget than what Parliament actually approves. This has the effect of
giving rise to the need for supplementary appropriation to make up for the
short falls in approved funding. However, any additional funding by way of
supplementary appropriation would imply having the additional funding
appropriated twice. This is considered irregular.
The Accountant General promised to follow up this matter with his
counterparts in the budget directorate. I am yet to be informed of the
outcome of this follow up.
2.3 DELAYS IN SUBMISSION OF FINANCIAL STATEMENTS Section 31(a) of the Public Finance and Accountability Act 2003, requires
Accounting officers to prepare and submit financial statements for their
Ministries/Agencies to the Office of the Auditor General for audit within
three months after the year end (by 30th September).
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Generally there has been an improvement in timely submission by the
Missions and referral hospitals. However more Ministries/Departments and
Universities have failed to meet the deadline compared to the previous
year. This is attributed to laxity by Accounting Officers to have the accounts
prepared on time.
The following Ministries/Agencies did not submit their financial statements
on time as required and this directly impacted on my operations.
Ministry/Department Date Received
1. State House 4/12/2007
2. Office of the Prime Minister 18/11/2007
3. Water and Environment 26/11/2007
4. Ministry of Health 4/12/2007
5. Parliament 4/12/2007
6. Works and Transport 13/11/2007
7. Mulago Hospital 26/11/2007
8. Tourism, Trade and Industry 7/01/2008
9. Gender, Labour and Social Dev. 4/12/2007
10. Uganda Police 5/11/2007
11. Health Service Commission 13/11/2007
12. Inspectorate of Government 4/12/2007
13. Education Service Commission 4/12/2007
14. Judicial Service Commission 4/12/2007
15. Director of Public Prosecution 1/11/2007
16. Local Govt. Finance Commission 4/12/2007
17. Uganda Aids Commission 4/12/2007
18. Uganda Blood Transfusion 12/11/2007
19. Treasury
1/11/2007
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Referral Hospitals
1. Gulu Hospital 3/12/2007
2. Masaka Hospital 26/11/2007
3. Fort Portal Hospital 3/12/2007
Missions
1. Juba 1/12/2007
2. Canberra 11/12/2007
3. Nairobi 4/12/07
4. Tehran 3/1/08
5. Cairo 3/1/08
6. Khartoum 3/1/08
7. Pretoria 21/12/07
8. Kigali 3/1/08
9. Paris 3/1/08
10. Dar-es-Salaam 18/01/2008
UNIVERSITIES
1. Mbarara University 12/11/2007
2. Kyambogo University 16/11/2007
3. Makerere University Business School 4/12/2007
2.4 TERTIARY INSTITUTIONS All tertiary institutions are governed by the Universities and Other Tertiary
Institutions Act, 2001. The Act establishes them as financially and
administratively autonomous institutions and requires them to maintain and
produce annual financial statements which should be audited by the Auditor
General.
The list from the ministry of Education and Sports puts the number of
Tertiary Institutions to over two hundred (200). However, very few of
these prepare the required annual financial statements. The few that try to
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prepare financial statements do not follow a standardised financial
reporting framework.
I have advised the Ministry of Education to put in place measures for the
enforcement of preparation of financial statements and also liaise with the
Accountant General for the development of a suitable standardised financial
reporting framework for all the tertiary institutions.
2.5 AUDIT OF EXPENDITURE ON COMMONWEALTH HEADS OF GOVERNMENT MEETING (CHOGM)
The Commonwealth Heads of Government Meeting (CHOGM) is a Summit
meeting held every two years by the Heads of Government from all the
Commonwealth nations. Most meetings over the years have included the
appearance of Her Majesty the Queen of Great Britain who is the titular
Head of the Commonwealth.
The Summit provides a unique forum for consultations and discussions on
global and Commonwealth issues and an opportunity to agree on collective
policies and initiatives. In November 2007, Uganda had the honour of
hosting this summit whose theme for the meeting was “Transforming
Commonwealth Societies to Achieve Political, Economic and Human
Development”.
As the Host Government, Uganda was obligated to put in place facilities
that would meet the requirements of the Commonwealth Secretariat. The
Ministry of Foreign Affairs was the overall co-ordinator of all the CHOGM
activities. Due to the wide span of the activities involved, it was decided
that some of those activities be delegated and managed by Permanent
Secretaries of the various committees that were established.
A total of Shs.255 billion was released for the preparation of the CHOGM
activities during the financial years 2005/06 to 2007/08, of which the bulk
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of this expenditure was released during 2007/08 to the Accounting Officers
who were responsible for its propriety.
In December 2007 the Government through Cabinet requested my Office to
undertake a financial and value for money audit to confirm whether this
responsibility entrusted to the Accounting Officers was indeed executed and
performed with due regard to the authorities that govern that public
expenditure.
The special audit was undertaken and it focused on the financial aspects of
that expenditure, to obtain reasonable assurance on whether those funds
were properly budgeted, requisitioned and utilized for the intended
purposes. In addition, a further special audit was also commissioned to
establish whether funds released on civil works and infrastructure were
spent taking into consideration the principles of economy, efficiency and
effectiveness (value for money). The financial audit has been completed
and the detailed audit findings have been issued to the Executive and to
the Speaker.
The additional VFM audit of the civil works expenditure is in its final stages
of completion.
Generally there were many challenges to hosting an event of such
magnitude in terms of operations, management and accountability but
generally the CHOGM event presented Uganda with many opportunities and
experiences to benefit from, which accrued to both the private and Public
sector ranging from improved and faster communications facilities to
expanded hospitality/ tourism amenities. Instances of non compliance with
laws and regulations resulting in unaccounted for funds, loss and abuse of
public resources were noted in the audit report, and it is of essence that
the authorities bring pressure to bear on the responsible officials to provide
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the requisite accountability or be surcharged as provided for in the Public
Finance and Accountability Act.
2.6 DOMESTIC ARREARS: (a) Domestic Arrears:-
Consolidated domestic arrears as at 30th June, 2007 for Ministries, Referral
Hospitals, Departments and Foreign Missions stood at Shs.210,623,171,766
compared to Shs.279,181,303,353 as at 30th June, 2006. Arrears for
Public Universities and Uganda Management Institute amounted to
Shs.32,614,404,949 as at 30th June 2007.
Although the arrears management strategy being implemented by the
Treasury has led to improvements in the management of arrears,
Accounting Officers still need to further comply with the commitment
control system and desist from continually incurring domestic arrears.
Government should also endeavour to settle the existing stock of domestic
arrears in order to portray a positive image in its management of the
budget and to avoid litigation and unplanned impacts on the economy.
Details by Vote are as follows:-
NAME OF MINISTRY/DEPARTMENT/HOSPITAL/MISSION AMOUNT
Ministry of Finance, Planning and Economic Development
23,945,104,070
Ministry of Defence 43,978,799,833
Ministry of Foreign Affairs 24,859,666,378
Ministry of Justice and Constitutional Affairs 3,512,717,895
State House 4,488,339,468
Ministry of Works, Housing and Communications 7,138,979,930
Ministry of lands 9,071,183,529
Electoral Commission 5,729,311,229
Ministry of Water and Environment 11,396,099,000
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Ministry of Communication and ICT 197,795,376
Ministry of Agriculture, Animal and Industry 9,466,469,142
Uganda Police 4,942,826,959
Ministry of Tourism, Trade and Industry 7,902,942,430
Ministry of Gender, Labour and Social Development 4,968,807,747
Ministry of Energy and Minerals 4,867,560,174
Office of the Auditor general 36,567,512
Uganda Prisons 5,413,996,398
National Agricultural and Research Organisation (NARO) 2,284,567,687
Ministry of Health 2,959,836,104
Ministry of Education and Sports 4,349,495,936
Office of the President 5,795,796,452
Ministry of local government 2,140,104
Judiciary Department 5,686,766,752
Directorate of Public Prosecutions 231,232,095
Office of the Prime Minister 901,533,958
Ministry of Public Service 346,666,533
Uganda Human Rights Commission 1,934,592,630
Public Service Commission 79,889,269
Inspectorate of Government 1,544,004,360
National Environment Management Authority(NEMA) 209,246,217
Uganda lands Commission 648,865,014
External security Organisation 1,198,000,000
Local government Finance Commission 936,816
Judicial Service Commission 25,598,319
Health Service Commission 19,317,377
Ministry of Internal Affairs 1,929,658,675
Uganda Aids Commission 115,113,962
Sub-Total 202,180,425,330
Mulago Hospital 2,969,363,421
Butabika Hospital 3,000
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Jinja Hospital 249,997,135
Mbale Hospital 230,000,433
Soroti Hospital 616,155,410
Gulu Hospital 32,572,760
Masaka Hospital 36,185,455
Fort Portal Hospital 79,902,087
Lira Hospital 75,398,594
Hoima Hospital 17,626,208
Kabale Hospital 31,924,727
Mbarara Hospital 119,580,780
Arua Hospital 21,743,597
Sub-Total 4,480,453,607
Uganda Embassy in Italy 1,249,515,265
Uganda Mission in New York 1,267,084,856
Uganda Embassy in Ethiopia 13,644,161
Uganda High Commission in Tanzania 210,318,967
Uganda Embassy in China 136,281,089
Uganda High Commission in Kenya 210,935,207
Uganda Embassy in Rwanda 42,075,618
Uganda High Commission in Canada 126,460,542
Uganda High Commission in India 10,438,019
Uganda Embassy in Saudi Arabia (Riyadh) 55,123,070
Uganda Embassy in Belgium 399,904,917
Uganda Embassy in Berlin 61,722,019
Uganda Embassy in The US 122,597,214
Uganda High Commission in Nigeria 56,191,885
Sub-Total 3,962,292,829
TOTAL Ministries, Hospitals, Missions/Departments
210,623,171,766
Makerere University 26,530,920,895
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Kyambogo University 2,666,271,188
Makerere University Business School 910,622,283
Uganda Management Institute 874,347,940
Gulu University 889,745,671
Mbarara University 742,496,972
Sub-Total 32,614,404,949
GRAND-TOTAL 243,237,576,715
b) Pension Liabilities: As at 30th June 2007 pension liabilities amounted to Shs.210,840,827,822
compared to Shs.222,825,029,112 as at 30th June 2006. This does not
take into account the pending liability of over Shs.One trillion arising from a
court judgement in favour of the former soldiers of the Uganda Defence
Forces (military).
The table below gives a breakdown of the pension arrears as at 30th June,
2006.
Pension Liabilities CONSOLIDATED 30 June 2007 30 June 2006
Office of the President (Gratuities)
15,014,111,038 15,238,186
Ministry of Public Service including
Military Widows and Survivors Benefits
190,841,680,614 222,340,243,548
Uganda High Commission UK
(Gratuities)
555,158,170 469,547,378
ESO
4,429,878,000
0
Total 210,840,827,822 222,825,029,112
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c) Contingent Liabilities
A total of Shs.384,724,059,917 was reported as contingent liabilities as at
30th June, 2006. The bulk of it relates to unverified pension liabilities for
the Ministry of Defence (Shs.107 billion) which have stood in the accounts
of Ministry of Public Service unresolved for over three years. It also
includes Shs.198,533,965,000 relating to guarantees and indemnities under
Ministry of Finance. I have advised the Accounting Officers to have the
contingent liabilities investigated and verified. Efforts should also be made
to have those relating to legal proceedings concluded. The table below
gives a breakdown of the contingent liabilities position:-
Ministry/Department Total Contingent Liabilities (30th June 2007) Shs.
Total Contingent Liabilities (30th June 2006) Shs.
State House 5,326,850,455 6,150,760,859
Office of the Prime
Minister
566,364,157 566,364,157
Ministry of Defence 18,000,000
Ministry of Public
Service
107,000,000,000 107,000,000,000
Ministry of Foreign
Affairs
89,401,439
Ministry of Justice 73,207,478,866 73,207,478,866
Ministry of Finance 198,5333,965,000
Ministry of Internal
Affairs
20,001,230,409
Total 384,724,059,917 207,951,572,245
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2.7 OUTSTANDING ADVANCES During the year under review advances totalling to Shs.10,721,944,304
remained unaccounted for contrary to financial regulations which require all
advances to be retired at the year end.
Delays in accounting for advances are caused by laxity by Accounting
Officers to enforce timely accountability and strengthen controls over
advances. Such delays may lead to falsification of accountability.
In the absence of the requisite accountability, I was not able to confirm
that funds were utilized for the intended activities.
These advances are detailed in the individual reports and accounts of the
entities and are summarized here under:-
SCHEDULE OF UN-ACCOUNTED FOR ADVANCES 2006/2007
S/No. Ministry/Department Amounts (Shs)
1. State House 8,886,400
2. Office of the Prime Minister 235,384,775
3. Finance, Planning And Economic Dev. 2,175,583,993
4. Agriculture, Animal, Industry and
Fisheries
366,308,000
5. Water and Environment 13,734,000
6. Education and Sports 372,512,324
7. Health 774,027,753
8. Parliament 3,190,000,000
9. Defence 1,287,140,000
10. Mulago Hospital 456,668,007
11. Local Government 43,158,940
12. Tourism, Trade And Industry 10,887,750
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13. Gender, Labour and Social Development 23,698,000
14. National Agriculture Research
Organization
31,540,200
15. Judiciary 10,608,412
16. Electoral Commission 329,815,000
17. Uganda Human Rights Commission 8,000,000
19. Makerere University 786,741,083
20. Mbarara University 39,654,440
21. Kyambogo University 429,563,516
22. London Mission 3,469,000
23. Addis Abbaba Mission 15,307,011
24. Tokyo Mission 106,535,700
25. Uganda Industrial Research Institute 2,720,000
10,721,944,304
2.8 EXCESS EXPENDITURE A number of votes incurred expenditure which exceeded their approved
budgetary provisions as indicated in the table below. Excess expenditure is
a result of improper budgeting and weaknesses in controls over budgetary
expenditure. For the Uganda Embassies, the major cause is unauthorised
utilisation of non-tax revenue at source. Accounting Officers have been
advised to have this expenditure properly regularised in accordance with
the regulations.
Name of Ministry Approved/Revised Actual Expenditure
overexpenditue
UGANDA AIDS
COMMISSION
7,064,064,000 7,639,431,865 (575,367,865)
NATIONAL PLANNING
AUTHORITY
11,511,960,000 11,753,328,177 (241,368,177)
NATIONAL AGRICULTURAL
& RESEARCH ORG.
25,665,951,000 31,346,217,220 (5,680,266,220)
UGANDA BURREAU OF
STATISTICS
7,626,672,000 11,791,457,739 (6,579,715,739)
PRISONS 38,487,681,695 (4,264,785,739)
18
32,874,305,000
UGANDA MISSION AT THE
UN, NEW YORK
2,022,498,149 3,941,343,319 (1,918,845,170)
UGANDAHIGH
COMMISSION IN CANADA
1,452,742,000 1,480,106,153 (27,364,153)
UGANDA HIGH
COMMISSION IN KENYA
910,954,000 1,302,821,639 (391,867,639)
UGANDA EMBASSY IN THE
US
1,493,579,000 1,614,441,401 (120,862,401)
UGANDA EMBASSY IN
CHINA
1,152,498,000 1,300,832,145 (148,334,145)
UGANDA EMBASSY IN
JAPAN
1,392,280,000 1,401,099,752 (8,819,752)
UGANDA EMBASSY IN
SAUDI ARABIA
757,109,000 771,323,965 (14,214,965)
UGANDA EMBASSY IN
DENMARK
1,358,100,496 1,409,454,337 (51,353,841)
UGANDA EMBASSY IN
BELGIUM
1,406,598,000 1,566,010,151 (159,412,151)
UGANDA EMBASSY IN
ITALY
1,935,788,000 2,094,811,524 (159,023,524)
UGANDA EMBASSY IN
SUDAN-Khartoum
785,000,000 790,145,040 (5,145,040)
UGANDA EMBASSY IN
PARIS
1,584,523,000 1,706,825,553 (122,302,553)
UGANDA EMBASSY IN
MOSCOW
509,121,000 616,827,879 (107,706,879)
UGANDA EMBASSY IN
CANBERRA
698,510,000 775,382,813 (76,872,813)
MINISTRY OF
COMMUNICATION & ICT 1,212,056,000
1,492,589,124
(280,533,124)
2.9 BOARD OF SURVEY (BOS) The Public Finance and Accountability Regulations require that the
Secretary to the Treasury and the Accountant General to appoint a Board of
Survey for each Ministry, department and agency of government to survey
cash, bank balances and stores held by Accounting Officers at the end of
each financial year. All the votes submitted Board of Survey reports apart
from the Uganda embassies of Goma and Kinshasa.
19
In the consolidated reports prepared by the Accountant General on the
findings from the Board of Survey on stores undertaken for the period
ended 30.06.2007, several government stores and assets were found
obsolete, unserviceable or too old for their purpose and were hence
recommended for boarding-off. Included are 201 motor vehicles of which
57 are for NARO, 31 for Ministry of Health, 16 for Mulago, 16 Foreign
Affairs.
However, it was noted during the audit that in many instances government
stores and assets recommended for board off were being held or grounded
for too long hence eroding any salvage value realizable at the time of
disposal. There is loss of income to government notwithstanding, keeping
large volumes of scrap stores/assets creates competition for space,
pilferage, environmental hazards (e.g. expired laboratory chemicals
identified at Kyambogo University). It is recommended that unusable
stores/assets be timely identified and disposed off expeditiously in a
manner that is beneficial to government.
It was also noted that in a number of instances the boards appointed do
not carry out a comprehensive job. The information reported by these
boards is some times inconsistent with that reported in the financial
statements and other records of the Ministries. A number of Ministries and
departments had stores for board off which were never captured in the
Board of Survey reports. This was particularly evident in the Ministries of
Defence, Police, State House, Agriculture, Lands, Education and Prisons.
Accounting Officers have been advised to expedite the implementation of
the Board of Survey recommendations particularly those regarding items for
boarding off or disposal. There is also need for more guidance, training
and supervision of all surveys that are undertaken out so that they produce
accurate and useful information.
20
2.10 LOSSES During the year losses of cash and stores valued at shs.327,435,008 were
reported by various ministries, departments and institutions as indicated
below:-
These losses should be investigated and properly dealt with in accordance
with the Public Finance and Accountability Act 2003 and the attendant
regulations.
Schedule of Losses 2006/2007
Value (Shs) Nature of Loss
S/No. Ministry/Department
1. Justice 9,581,500 Sundries office equipments
2. Internal Affairs 37,210,000 Passports
3. Education and Sports 12,115,500 Gestener cycle styling machine
4. Works, Housing and
Communications
40,400,000 TV,VCR, to curtains and Equipments
5. Butabika Hospital 8,035,416 Document safe
6. Uganda Police 175,500,000 Cash
7. National Agriculture Research
Organization
36,153,800 M/cycle and computers(2)
8. Electoral Commission 2,424,000 Office Equipments
9. Inspector General of
Government
5,636,592
10. Tokyo Mission 378,200 DVD/VCR Player
327,435,008
21
2.11 MISSIONS (i) Management of Mission Properties
During the year the Ministry of Foreign Affairs initiated the process of
formulating a policy and strategy on the management of Uganda properties
abroad. Consultations were held with various stakeholders including
Parliament. The intention was to put in place a policy framework that
would guide the acquisition, financing, maintenance, disposal and proper
management of Uganda properties abroad.
This drive was in response to a policy communication from the Ministry of
Finance to transfer the management of the Mission properties from Uganda
Property Holdings (Ltd) to Ministry of Foreign Affairs.
Indications are that not much progress has been made. Consultations with
various stakeholders to obtain their views and concurrence have not been
concluded.
As a consequence Uganda Missions are still facing enormous challenges in
the management of their properties. They still lack funds to renovate and
maintain many of their dilapidated structures. The official residence for the
Head of Mission, Brussels has remained inhabitable for almost 10 years
despite its prime location in the city. Some Missions like have prime plots
of land allocated to them for constructing Embassy buildings but these
authorities are about to be withdrawn due to lack of funding for their
development.
In a related development, some Missions have made proposals to dispose
off some mission properties. The Uganda Mission in Washington made a
proposal to the Ministry of Foreign Affairs for the sale/disposal of two of its
properties despite the good state they are in. It is claimed that the
intention is to acquire properties for the chancery and staff residences
considered to be a better option.
22
I have advised the Head of Mission that in the absence of a clear policy,
any sale or disposal of Mission properties would require wide consultations
with all stakeholders including the Cabinet, relevant authorities and
compliance with the law and a proper justification showing cost/benefit
analysis to allow all stakeholders make informed decisions.
I recommend that government expedites the process of coming up with a
clear policy on the management, sale, disposal and acquisition of Mission
properties.
(ii) Land Titles
Audit Inspections revealed that many of the Missions with buildings cannot
trace their land titles. The titles for the properties owned by the Ugandan
Missions in Washington, New York and Paris were not available at the
station. The Ministry of Foreign Affairs are also not aware of the
whereabouts of the land titles.
I have advised the Accounting Officers of the Missions to liaise with the
relevant Ministries to trace the titles and keep copies at the Missions.
Moreover it is negligent to not have proper custody of government
property.
2.12 REGIONAL REFERRAL HOSPITALS All the referral hospitals were established more than 70 years ago as
district hospitals and upgraded to serve as regional referral hospitals in mid
1990s. Currently they each serve a minimum of five districts with some like
the case of Arua Hospital serving regions extending beyond the Ugandan
border. In most cases, these hospitals have also continued to serve as
district hospitals in the regions where they are located. Despite the large
catchment areas and large population, the hospital infrastructure that were
planned at the time these hospitals were constructed more than seventy
23
years ago, has not been expanded nor upgraded. This has greatly affected
their operations. The following matters were generally noted during my
audit and inspections of referral hospitals.
2.12.1Staff Establishment In many of the referral hospitals, the existing staffing structures are not
adequate to address the current needs of the hospital. The staff
establishments were set up more than ten years ago but have not been
revised to match the ever increasing demand for medical services by the
population. Hospitals now serve larger areas and their catchment
population is above the planned numbers as a result of cross border
movements. The increasing number of patients is also associated with poor
referral system and poorly functioning health centres.
It was noted that in many regions Health Centre IVs are not functioning
properly. Although they have adequate infrastructure they lack medical
personnel. This has led to increased numbers of patients at referral
hospitals. However the current establishment lists for many referral
hospitals show that not all the approved posts are filled hence creating
staffing gaps in key posts. Many of the referral hospitals had vacant posts
for Doctors, radiographers, Pharmacists and specialists for gynaecology,
surgery, pathology and anaesthesia. As a consequence the few available
staff are over-worked and the patients end up not getting adequate
attention/assessment time as the medical standards require. Understaffing
in such key areas that are fundamental for effective and efficient delivery of
the required services renders the referral system ineffective.
In my discussions with the Accounting Officer, they explained that although
they have declared the vacant posts and submitted them to the Ministry of
Health and the Health Service Commission and Public Service Commissions,
the responses to recruit staff for the referral hospitals have been slow.
24
2.12.2Staff Accommodation The hospitals were greatly affected by the government policy to dispose off
government pool houses. Some houses which used to serve as institutional
houses accommodating hospital staff were also sold to the sitting tenants.
This left the hospitals with few or no houses to accommodate staff.
Where the hospitals have some houses, they are either not sufficient or not
habitable due to the sorry state they are in, like in the case of Mbale
hospital. It is also difficult to get decent accommodation near the hospitals
for staff who are on night calls. Without decent accommodation it is very
difficult to attract key medical personnel to work in upcountry referral
hospitals.
The Accounting Officers explained that it has become difficult to retain staff
because of lack of accommodation and yet the budget does not provide for
housing allowances.
There is need to provide suitable accommodation for medical officers
working upcountry. Construction of institutional houses for the hospitals
would be a step in the right direction.
2.12.3State of the Hospital Infrastructure (a) Buildings
Most of these buildings are dilapidated having walls and ceiling crumbling
and have not been renovated in the recent past. The Out Patients
Department (OPDs) are housed in small, old buildings without adequate
space for the big numbers of patients visiting the hospital daily. Most of
the road/path network is also in poor state and this hinders mobility and
movement within the hospitals difficult.
The hospitals have not had any expansion since they were turned into
regional referral hospitals. The available infrastructure capacity has been
out-paced by the increase in responsibility/number of patients and this has
led to an accommodation crisis. This was evidenced from the over crowded
25
maternity wards, surgical and general wards which are accommodating
more patients than they were designed for, in many instances resulting into
floor cases and utilisation of corridors to accommodate more patients. This
overcrowding leads to poor hygiene and may facilitate disease
transmission.
(b) Inadequate Theatre Facilities
The hospitals operate without adequate theatre facilities. In many
hospitals, theatres are in dilapidated buildings, and lack proper functioning
theatre equipment like operating tables, doctors’ chairs, adjustable lights,
autoclaves, air conditioning facilities etc. Where equipment is available, it is
too old to serve its purpose. The minor theatres in the Out Patients
Departments where minor operations are carried out are also poorly
equipped or out of service due to the sorry state they are in.
(c) Medical Waste Management
Disposal of medical waste in various referral hospitals is by placenta pits
which are considered to be a crude method of waste disposal. Disposal of
other medical waste (used sundries) is by burning in open pits which is also
considered not to be environmentally safe. Most of the hospitals do not
have properly functioning incinerators. The incinerators constructed by the
Ministry of Health at Masaka and Mbarara hospital cracked shortly after
hand over and are not functional.
There are also inadequate mortuary facilities. Masaka hospital has none at
all. Where mortuaries are, they appear very dilapidated and are housed in
tiny structures and lack modern facilities.
An environmental audit carried out at the National Referral Hospital also
revealed inadequate waste management and disposal practices. The issues
noted included:
26
• Lack of medical waste policies and strategies.
• Limited awareness and access to legislation and guidelines relating to
waste management and disposal.
• Lack of documented internal medical waste control systems.
• Inadequate supervision and monitoring by the regulatory body.
• Inadequate use and lack of protective gear.
• Lack of adequate supply of disinfectants and disposal tools like waste
bins.
• Poorly arranged drugs stores.
A separate report was issued to management and the issues have also
been summarised in the audit report of Mulago Hospital.
(e) Sewerage System and Sanitary Facilities
The sewerage systems and sanitary facilities in the hospitals are as old as
the hospital themselves. With time, the pipes became old and they now
often break down. Generally the sewerage system cannot support the
increasing hospital population any longer.
The Accounting Officers explained that there is need to overhaul the entire
system and even construct lagoons for proper waste management and
disposal.
2.12.4Transport The Hospitals are operating with only a few old vehicles that have outlived
their useful lives. Most of these vehicles are over ten years old and can
hardly operate as they frequently break down. It is becoming uneconomical
to maintain them. A number of the hospitals also lack ambulances.
The Accounting Officers explained that as referral hospitals, they need to
operate with a minimum of two ambulances but most of them are
operating with only one or none at all and that those that have they have
27
become very old to maintain. There is need to have the old vehicles and
ambulances replaced to enable the hospital operate effectively.
2.12.5Shortage and Use of Faulty Equipment There is generally lack of modern equipment and this makes the working
environment for medical personnel very difficult. Medical equipment is very
old and some obsolete as most of it was acquired at the time the hospitals
were constructed in the 1930’s. The storage facilities in the various offices
are also too old and require immediate replacement. In some hospitals,
autoclaves are non functional/faulty and instead charcoal stoves are used
for sterilisation of equipment. The continuous shortage and use of faulty
equipment leads to poor service delivery and puts the lives of both the
medical staff and patients at a great risk.
2.12.6Lack of Capital Development Funds Although the hospitals are operating as individual votes, no capital
development funds were allocated in their budgets. In the circumstances,
no major developments could be initiated by the hospitals nor could they
carry out any major repairs of their dilapidated structures, procure vehicles
or any other equipment.
The recommendation by the Public Accounts Committee to have the
hospital capital development vote decentralised at the hospital vote level
has not yet been implemented by the Ministry of Health.
2.12.7Expired Drugs Many hospitals face a serious problem of expired drugs arising from drug
procurements and donations that are not properly planned for. Ministry of
Health through the National Medical Stores has a “push system” whereby
drugs and sundries are simply pushed to user hospitals through donations
without regard to their consumption needs and patterns. In the process
hospitals are supplied with drugs which are either not needed at all or are
in excess of their needs hence leading to their expiry.
28
The other cause of expired drugs is procurement of short shelf life drugs.
Some Accounting Officers indicated that National Medical Stores (NMS)
sometimes deliberately dumps drugs which are about to expire. For
example, Arua hospital had a sizeable quantity of ARV drugs delivered
which had expired two months earlier. At Mbale referral hospital National
Medical Stores delivered Zinc Oxide which turned out to be non-adhesive.
In Kabale hospital huge quantity of Aspirin and Panadol donated under the
Global Fund were delivered when they had expired.
Expired drugs do not only pose a danger to personnel but are also costly to
keep and also occupy space that would otherwise be utilised for other
purposes. There is need for the Ministry of Health to come up with a
stringent policy on drug donations. Donations should be properly screened
before they are accepted. Procurement planning should also be
strengthened such that only drugs with acceptable shelf life are purchased.
2.12.8Private Patients Scheme Many hospitals now operate private patients scheme which generate non-
tax revenue. In accordance with NTR guidelines, all the revenue is
remittable to the Consolidated Fund. In order for the scheme to operate
efficiently and generate enough revenue, it has to be adequately equipped
with the required medical drugs, equipment and well motivated staff.
However, this is hampered by lack of adequate resources to finance their
routine operations. A number of Medical Superintendents have expressed
the wish for the hospitals to be allowed to use the NTR proceeds from the
private patients scheme to finance their needs and further improve the
scheme’s health service delivery standards.
I recommend that the Ministry considers this view for all referral hospitals
since it has proved to be successful at Uganda’s major national referral
hospital.
29
PART III
3.0 REPORT OF THE AUDITOR GENERAL ON GOVERNMENT OF UGANDA CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30TH JUNE 2007 TOGETHER WITH THE OPINION
I have audited the financial statements set out on pages 10 to 38 of the
GOU Consolidated financial Statement. Under Article 164 of the
Constitution and Section 8 of the Public Finance and Accountability Act
2003, the Accounting Officer is accountable to Parliament for the funds and
resources of the Ministry. These financial statements are also under Section
31 of the same Act the responsibility of the Accountant General.
My responsibility as required by Article 163 of the Constitution, Section 33
of the Public Finance and Accountability Act, is to audit and express an
opinion on these statements based on my audit.
PART A of my 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.
PART ‘A’
3.1 BASIS OF OPINION
I conducted my audit in accordance with International Standards on
Auditing and Government of Uganda Legislation. Those standards require
that I plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An
audit includes examining on a test basis, evidence supporting the amounts
and disclosures in the financial statements as well as evidence supporting
compliance with relevant laws and regulations. An audit also includes
30
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. I believe that my audit provides a reasonable basis for my
opinion.
3.1.1 Cash and Cash Equivalents For the period ended 30th June 2007, government reported a consolidated
Cash and Cash Equivalents balance of Shs.1,177,176,897,305 represented
by cash and bank balances Shs.2,411,748,703,028 and bank overdrafts
Shs.1,234,571,805,723. In the absence of comprehensive information on
the overall stock of government bank accounts held both in the BOU and
commercial banks, I was not able to confirm that the balance is properly
stated.
3.1.2 Foreign Debt Included in government’s consolidated foreign debt portfolio are eleven
(11) loans totalling Shs.35,193,062,617 without any supporting
documentation such as loan agreements.
3.1.3 Finance Costs Finance costs in respect of interest on treasury Repo stocks/transactions
amounting to Shs.15,774,825,032 accumulated over the years, including
Shs.5,703,149,467 for the period under review were not recognized in the
financial statements. This has the effect of understating the equity.
3.1.4 Government Bonds The variance of Shs.27,287,232,115 between Shs.184,370,732,115
representing matured treasury bonds that were redeemed and
Shs.157,083,500,000/= charged in respect of the redemption on the
Treasury Bond investment account was not explained to my satisfaction.
31
3.2 OPINION
In my opinion;
Except for the effects of any adjustments, if any, as might have been
determined to be necessary had I been able to satisfy myself on the
matters noted above.
• The financial statements fairly present in all material respects the
financial position as at 30th June, 2007 and the results of its operations
and cash flows for the year then ended, and comply in all material
respects with Generally Accepted Accounting Practice and the Public
Finance and Accountability Act, 2003.
• The expenditure and receipts have been applied in all material respects
for the purposes intended by Parliament.
3.3 EMPHASIS OF MATTER
Without qualifying my opinion further, attention is drawn to the following
additional matters which are also included in Part B of this report and my
annual report to Parliament.
3.3.1 Receivables (Outstanding Government Loans) Out of Shs.1,205,608,734,946 reported as outstanding government loans
as at 30th June 2007, loans totalling to Shs.620,884,726,162 have not
been performing for a very long time. The basis used for the provision
made in this respect was not explained.
3.3.2 Unexplained Transactions on Holding Accounts Various entries relating to transaction reversals and revaluations on the
budget support holding accounts were not explained. I was therefore not
able to confirm the balances of the affected accounts.
32
3.3.3 Other matters are included in Part B of the report.
John F. S. Muwanga
AUDITOR GENERAL
KAMPALA
30 APRIL 2008
PART “B”
33
DETAILED REPORT OF THE AUDITOR GENERAL
This Section outlines the detailed audit findings, management response, and my
recommendations in respect thereof.
3.4 Cash and Cash Equivalents
3.4.1 Cash Balances For the period ended 30.06.07, government reported a consolidated cash
and bank balance of Shs.2,411,748,703,028 and bank overdrafts
Shs.1,234,571,805,723 on all bank accounts operated by the Treasury and
Central Government ministries. It includes balances with the Bank of
Uganda for both the Consolidated Fund and for various votes and for all
Project Accounts. There is no comprehensive information on the overall
stock of government bank accounts held both in the BOU and commercial
banks to enable me undertake audit procedures to confirm the
completeness and accuracy of the balances reported.
Besides cash balances on donor funded project bank accounts particularly
those still in commercial banks are not captured in accordance with the
accounting policy followed on consolidation of Project expenditure.
The absence of a comprehensive data on bank accounts further makes it
difficult to periodically circularize and reconcile government bank accounts
and balances for authenticity, purpose, obsolescence/redundancy and
excessive liquidity, and illegal overdraws.
3.4.2 Redundant and Overdrawn Accounts Bank records indicate that 153 bank accounts did not record any
transactions for the whole financial year under review. One hundred and
thirty three (133) of the accounts had redundant credit balances worth
Shs.32,199,268,269 while twenty (20) were overdrawn to the tune of
Shs.11,160,722,951. Government bank accounts in BOU have continued to
34
be overdrawn despite the instruction by Treasury to the Central Bank not to
have overdrawn accounts
In his response, the Accountant General explained that ‘Treasury is in the
process of revalidating all bank accounts held by all votes whether in
commercial banks or BOU’. On twenty (20) accounts overdrawn to a tune
of Shs.11,160,722,951 he stated that an explanation has been sought from
the BOU for the anomaly. I still await the outcome of the revalidation
exercise and the BOU comments on the overdrawn accounts.
3.5 Foreign Debt A review of the foreign debt portifolio has shown that government is in
arrears on twenty one (21) loans that have been due for repayment.
According to the DMFAS data base, total principal in respect of the 21 loans
as at 30 June 2007 was Shs.202,300,014,509. For over 10 years, there has
not been any movements in principal values either in terms of repayments,
rescheduling or otherwise. It was explained that the decision not to pay
the loans was based on the Paris Club agreement that requires all creditors
to deliver HIPC initiative debt relief to countries under HIPC 1 &11.
Included in the 21 non-performing loans are 11 loans worth
Shs.35,193,062,617 without any supporting documentation (e.g., loan
agreements). The Accountant General explained that the loan agreements
were lost when a consultancy contracted to validate the debts in 1991/92
failed to hand back the loan agreements and that efforts to trace the firm
and the loan agreements have proved futile.
These loans need to be thoroughly investigated for their legitimacy in order
to mitigate the risk of paying unscrupulous claims.
3.6 Receivables (Outstanding Government Loans) In my report to Parliament on the Public Accounts of the Republic of
Uganda for the year ended 30th June, 2006, I reported that Government
35
loans totalling Shs.1,242,928,209,265 to state and private enterprises were
still outstanding. As at 30.06.07 Shs.1,205,608,734,946 was outstanding as
a number of enterprises had partially paid up while some debts were wholly
or partially cancelled. It was noted that Loans worth shs.620,884,726,162
have not been performing for a very long time. Their recoverability is
highly doubtful.
The basis for the provision made in the accounts in this respect was not
properly explained.
3.7 Finance Costs Finance costs in respect of interest on treasury Repo stocks/transactions
amounting to Shs.15,774,825,032 accumulated over the years, including
Shs.5,703,149,467 for the period under review were never recognized or
expensed in the accounts, accordingly overstating government equity. The
Accountant General explained that he was hesitant to recognize the
expenditure because he cannot measure it reliably since no database or
records are maintained at the Treasury. He added that the liability was
picked from the statement of Government position from Bank of Uganda
and that consultations between his Office and BOU are going on to explore
the possibility of having monthly returns upon which reconciliations will be
carried out.
3.8 Treasury Bonds During the period under review Treasury Bonds worth Shs.184,370,732,115
matured and were accordingly redeemed. However, the debits on the
Treasury Bond Investment Account in respect of these redemptions
amounted to Shs.157,083,500,000 only. The variance of
Shs.27,287,232,115 was not satisfactorily explained.
The Accountant General explained that the bonds figure presented in the
accounts (Shs.184,370,732,115) fully reconciles with Bank of Uganda
Central Depository Treasury Bond redemption profile for the period under
36
review. I have however advised that the profile also be reconciled with the
Treasury Bond Investment Account.
3.9 Government Non-Resource Taxes (NRT) During the period under review, Parliament appropriated
Shs.181,959,964,445 for various Votes to afford import taxes ( Non-
Resource Taxes) on machinery, furniture and Motor Vehicles. In
accordance with tax reforms introduced during the period, a total of
Shs.180,990,628,113 in respect of these taxes was released to various
Votes with instructions to ‘Issue block cheques (i.e., for the entire tax
release)’ to the Treasury. This money was deposited on two BOU
accounts; TREASURY OFFICE ACCOUNTS.GROSS RECEIPTS ACCOUNT and
TREASURY OFFICE ACCOUNTS GROSS PAYMENT ACCOUNT. As at 30th
June 2007 Shs.137,600,572,275 was lying idle on the Gross receipts
account. In many instances it was noted that votes were appropriated tax
funds far in excess of requirements, consequently eroding away funds
available for allocation to other priorities within the vote’s MTEF provisions.
It was also noted that in a number of cases tax obligations were paid for in
excess of the individual tax appropriations for the Vote. For example,
Ministry of Education had its tax obligations for the Vote settled on its
behalf by Treasury yet it did not have an appropriation for it. The
Accountant General explained that this was the first year of operating the
Gross Tax system and certain modalities may have not been finalized. He
indicated that once reconciliations with URA are finalized, the amounts
standing on the account will be transferred to the UCF.
3.10 Treasury Transactions with the Central Bank (i) Transaction Delays, Errors and Mispostings
The transfer of all Government bank accounts from commercial banks to
the Central Bank has created increased volume of Government transactions
with the Central bank. The Accountant General has time and time again
37
reported mis-postings, errors on bank Statements, delays to respond to
queries and certificate of Bank balances being wrongly advised to
accounting officers who do not own such accounts. Government accounts
in the Central Bank are occasionally overdrawn due to errors, duplicated
payments despite Treasury explicit instructions not to allow overdrawn
accounts. There are also sometimes delays in crediting Treasury bank
accounts. For instance a total of Euros, 3,599,000 (Equivalent to
Shs.8,193,624,393) was released to B.O.U Account 208,209070.1 for
Poverty Action Fund on 27th June 2007 by KFW in support of the Poverty
Reduction Support Credit V-VI. The Central Bank communicated to the
Accountant General on 10th July 2007 having received the funds. However,
the Bank Statement indicates that the grant equivalent of
Shs.8,193,624,393 was credited to the Account on 31st August 2007, more
than two months after receipt of the money.
In another instance, Shs.37,296,972,081 transferred from the Customs &
Excise A/C of Uganda Revenue Authority on 6/10/2006 was credited to the
UCF A/C on 24/11/2006, 50 days later although the transfers should be
done twice a week.
During discussions, the Accountant General explained that the Permanent
Secretary/Secretary to the Treasury had written to the Central Bank
expressing concern over these matters. I await the outcome of this effort.
(ii) Commission Charges
For all transactions denominated in foreign currency, the Central Bank
charges government a commission at the rate of 1% on the gross amount.
Only the net amounts are posted to the respective bank accounts and the
commission charged is posted to a special account meant for Project Bank
charges. During the year, total bank charges under Treasury amounted to
Shs.9,238,011,970 of which Shs.8,096,403,082 was posted to this account
in respect of commissions and charges arising from foreign currency related
38
transactions. The rate and amounts charged appear to be on the high side.
There is need for Treasury and Bank of Uganda to agree on more realistic
rates.
The Accountant General explained that negotiations were on-going
between the Ministry of Finance and the Central Bank to waive the charges
and that this would be concluded by signing a new MOU. The outcome of
this process is awaited.
(iii) Unexplained Transactions on holding Accounts
Budget Support Grants from the donors are kept on holding accounts in the
Central Bank before their transfer to the Consolidated Fund. When the
grants are received the Foreign Currency is translated to local currency
using the rate at the time (day) and the proceeds credited to the holding
account in local currency after the bank has charged a commission of 1%
of the gross amount.
However, many unexplained transactions referred to as “revalues” and
“reversals” are reflected on the Bank Statements and in most cases wiping
away the would-be credit balances on these accounts.
Details on Bank account No 208209038.1 show that 15,199,144,438 was
received by the bank and credited on this account on 6th June 2007. This
amount was wiped away by various unexplained transactions and by 30th
June 07, the account showed a debt balance of Shs.4,446,462,344. The
account was subsequently reconstructed following communication and
meetings between the European commission, BOU and the Accountant
General which resolved that all transactions wrongly made on this account
be reversed resulting into a new credit balance of 8,173,566,995. However,
the final position of this account was not accordingly adjusted in the
accounts. The following accounts have also not been reconstructed to
reflect the true position of their closing balances.
39
A/C title A/C no. Total Unexplained Debits
Total Unexplained Credits
PAF A/C 208.209070.1 2,480,064,437 579,005,562
Educ Budget Support
208.209079.1 2,725,255,806 1,682,986,996
ADB Budget Support
208.209196.1 4,355,594,574 2,108,406,078
I have advised the Accountant General to liaise with the Central bank and
have the accounts properly reconciled.
3.11 Debt Swap Over the years, government has been involved in a series of debt-swaps
involving mainly state enterprises listed for divestiture. Although the funds
involved are quite colossal, in many instances the debts debt swaps are
never reported in governments’ financial statements and thus are not
subject to my routine financial audits.
The Accountant General explained that the initiation of the debt-swap
process is done by the affected state enterprise through the Ministry of
Finance which then starts the process of debt-swap by constituting a debt
settlement committee whose role is to verify the extent of government’s
indebtedness with the assistance of the internal audit department. The
committee then makes recommendations based on the findings.
On the basis of the recommendations, the Ministry approves and
implements the debt-swap by preparing the necessary agreements in
consultation with the Solicitor General and presents it to Cabinet and
subsequently to parliament for approval. It is after approval by parliament,
that the indebtedness of the enterprise is reduced in GOU records.
40
I have advised that the procedures be reviewed, documented and officially
approved.
3.13 Domestic Arrears Existing procedures require that the arrears are verified by Treasury
Services Department in conjunction with the internal audit and inspectorate
and registered in an IT based domestic arrears database maintained at the
Treasury.
However, a reconciliation of verified domestic arrears database maintained
at the Treasury and the actual arrears reported in the financial statements
of various Ministries, Agencies, Departments, Universities and Missions
revealed variances. In some instances the arrears reported in the financial
statements were more or less than those captured in the Treasury
database. These variances need to be investigated and reconciled
properly.
Vote
Arrears Per Treasury Database
Arrears as per Financial Statements Variance
Office of the Prime Minister
552,375,752
901,533,958 (349,158,206)
Justice & Const Affairs
74,421,121,878
3,489,642,270 70,931,479,608
Internal Affairs
46,862,476
1,929,658,675 (1,882,796,199)
Lands
9,431,660,539
9,046,042,591 385,617,948
Health
2,890,539,248
2,959,836,104 (69,296,856)
Gender, Labour & Soc. Dev.
4,950,412,430
4,968,807,747 (18,395,317)
Water & Environment
10,607,828,000
11,396,099,000 (788,271,000)
Judiciary
1,722,991,408
5,686,766,752 (3,963,775,344)
Electoral Comm.
4,010,864,191
5,729,311,229 (1,718,447,038)
Uganda Human Rights Comm
1,567,960,324
1,934,592,630 (366,632,306) UCDA
3,092,236,882 0 3,092,236,882
DPP
267,000,050
231,232,095 35,767,955
41
Health Service Commission
-
19,317,377 (19,317,377)
ESO
-
1,198,000,000 (1,198,000,000)
NEMA
-
209,246,217 (209,246,217)
Addis Ababa
4,384,902 13644161 (9,259,259)
London
555,198,170 0 555,198,170
UGANDA EMBASSY IN BERLIN
556,967 61722019 (61,165,052)
42
4.0 OFFICE OF THE PRESIDENT
4.1 Non-Tax Revenue (NTR) Although Shs.66,575,778 was collected as NTR, only Shs.1,559,488 was
remitted to the Consolidated Fund by end of the financial year, leaving a
balance of Shs.65,016,290 not transferred contrary to regulations. In his
written submission the Accounting Officer, explained that Shs.40,421,462
was transferred to Bank of Uganda by DFCU Bank on 13th August 2007 and
the balance of Shs.24,594,828 was wrongly remitted to UBC account by
DFCU Bank. The Managing Director, UBC had been requested to return the
money to the NTR Account for onward transfer to the Consolidated Fund
Account. However, by the time of writing my report, no action had been
taken.
4.1.1 Liabilities The accounts show that the Ministry has total liabilities of
Shs.20,809,907,490 comprising of payables of Shs.5,795,796,452 and
pension liabilities of Shs.15,014,111,038.
• Included in the payables are withholding tax deductions amounting to
Shs.21,875,272 which have remained outstanding for two years. No
proper justification was given for not remitting the withholding tax
deduction to Uganda Revenue Authority yet deductions are made at
source at the time of processing payments to suppliers.
The Accounting Officer attributed the problem to the change over of the
Ministry accounting systems to the Government of Uganda Integrated
Financial Management System. She promised to clear it when a
supplementary is approved by Parliament.
• The bulk of the pension liabilities represents (gratuity) owed to ISO
staff. It was noted that little progress has been made to have this
cleared and it is accumulating annually by very large amounts.
43
The Accounting Officer explained that due to resource constraints, the
Ministry cannot afford to clear off all the arrears.
There is need for government to address the matter. A review of the
current terms and conditions of service may assist in identifying the
causes of the accumulation of arrears.
4.1.2 Non-Recovery of Vehicle Inspection of the vehicle fleet revealed that a Ministry vehicle is still with
the family of a deceased Senior Presidential Advisor who passed away in
December 2006. The vehicle is now in private use contrary to Standing
Orders.
The continued use of this vehicle for private purposes deprives government
of its assets and could affect the activities of the organization. Besides, it
exposes the vehicle to quick wear and tear.
The Accounting Officer explained that following the death of the former
Senior Presidential Advisor, the family was allowed to continue using the
official vehicle up to the end of March 2007 when the vehicle would be
returned to the office.
When the authorized period expired, the family did not return the vehicle
and continued being defiant even when police officers were contacted.
Several attempts were made to retrieve the vehicle to no avail. The matter
has been referred to the Inspector General of Police and his response is
awaited. I also await further action from the Accounting Officer.
44
5.0 STATE HOUSE
5.1 Recurrent Expenditures Charged to Capital Development
During the drill down in the account enquiry, it was established that a
number of payments to the tune of Shs.664,312,400 for recurrent
expenditure were wrongly charged to asset items (Development budget).
This not only inflated the assets balances but also resulted into budget
distortions that were contrary to the appropriations by Parliament.
The payments related to recurrent expenditure comprising of matters as set
out below:-
100,000,000 Borrowing 300,000,000 refund of borrowed funds 500,000,000 Classified and general running 5,700,000 Donation 13,978,400 Transport for furniture to TZ schools 177,975,000 Training PGB Staff 21,749,000 Fuel 14,910,000 Advertising for SH Jobs 30,000,000 Fuel
664,312,400
I advised the Accounting Officer to adjust the accounts and remove the
recurrent expenses from capital expenditure and the schedule of assets.
Otherwise the assets stated in the accounts remain overstated by 664
million.
5.2 Non Boarding off of Vehicles
State House has 80 old motor vehicles that have been grounded in
Nakasero and Entebbe while others are abandoned in various garage
workshops. These vehicles were earmarked for boarding off some time
back in 2004. However, the process seems to be taking long and the
salvage value continues to reduce. Further still, these vehicles are packed
at various places including private workshops which may lead to their
vandalisation.
45
It was also noted that a number of house hold property was removed from
Entebbe State House to pave way for its reconstruction and this property
has been kept in containers for a long time now. Although it was
anticipated that this property could be used again after the reconstruction,
most of it has become obsolete or outdated and new house hold property
has been bought (2007/08).
Continued keeping of property earmarked for boarding off causes loss in
value and eventual loss of revenue to government.
The Accounting Officer explained that the boarding off exercise is in
progress. I have advised him to expedite this process as the vehicles
continue to lose realizable value.
5.3 Service Contracts for Staff on Contract
Uganda Government Standing Orders, under chapter 1 paragraphs A-j,
Appointment on Agreement Terms, Sub paragraphs 2-6, require that if an
officer serving under agreement terms wishes to serve another period of
service, at some time not later than three months before the expiration of
his or her period of service, an officer serving on agreement terms shall
indicate to his or her responsible officer his or her willingness or otherwise
to serve for another period of service if offered and that two months before
the expiration of the current period of service, the responsible officer shall
seek for the decision from the appointing authority with his or her opinion.
However during my review of a sample of 79 personnel files for staff on
contract, it was noted that;
• Contracts not renewed
18 employees had their agreements expired but no efforts were made
to renew them although they were still accessing the payroll. A total of
46
Shs.99,958,017 was paid to them as salaries although the agreements
had not been renewed. This expenditure is irregular.
• Late Renewal of Service Agreements
It was also noted that a number of employees engaged on Contract
terms do not renew their Agreements in time as required but continue
to earn their salaries and only sign their contract agreement one year
later and others at the time of claiming their gratuity at the expiry of
their contract period.
Continued access of the pay roll by the employees whose terms of
employment are irregular, contravenes Standing Orders.
The Accounting Officer explained that he had cautioned all staff serving
on contract terms to strictly adhere to the provisions of their Local
Agreements with Government, which require them to indicate their
willingness to continue in Government service at least 3 months before
expiry of their current contract
5.4 Purchased Property Not Yet Transferred
During the financial year, State House paid a total of Shs.382,000,000 as
the last installment on Cheque No 54212 for purchase of property on plot 2
State House Close from an individual at a consideration of
Shs.1,100,000,000.
Although the sale agreement indicates that transfer forms would be signed
after payment of the last installment, the land title was handed over
without signed transfer forms to effect transfer of the property to
government. Management explained that the seller lives in South Africa and
the forms have been sent to her for signing. I await the outcome of this
process.
47
5.5 Un-accounted for funds
A sum of Shs.8,887,400 advanced to an various persons for carrying out
various activities under the Poverty Alleviation Project, remained
unaccounted.
TAI 2003, par 215 requires that advances be accounted for promptly.
6.0 OFFICE OF THE PRIME MINISTER
6.1 Outstanding commitments (Payables) Supporting documents for outstanding commitments of Shs.901,533,958
reported in the statement of financial position were not availed for
verification. Besides payables ledger accounts were not maintained to
enable me confirm accuracy and completeness of account balances.
Management explained that all supporting documents for payables would
be availed together with payables ledger accounts. I await necessary
action.
6.2 Statement of stores and other Assets Equipment and furniture bought at Shs.233,640,000 were not reported in
the statement of stores and other assets acquired . This implied that the
value of assets was understated by an equivalent sum. Besides failure to
report may expose government assets to loss without trace. An explanation
is required for this irregular practice.
6.3 Improperly vouched expenditure A sum of shs.99,576,870 was paid to various suppliers without proper
supporting documents. The payments were based on photocopy invoices
and/or estimate statements. In one case Shs.60,462,752 was paid to
National water and sewerage corporation without supporting invoices or
statement of consumption. This practice contravenes financial regulations
and is potentially fraudulent. In response management stated that original
48
supporting documents had been traced and would be availed for audit. I
await for the original documents.
6.4 Statement of Contingent liabilities A sum of shs.95,950,297 was reported in the statement of contingent
liabilities as payable to two clearing firms. However supporting documents
and rationale for the liabilities were not provided. A Contingent liability
ought to be evidenced by constructive obligation such as advice of the
solicitor General.
I advised management to seek the opinion of solicitor General on the
matter.
6.5 Non deduction of withholding tax Withholding tax of shs.94,463,582 was not retained for onward remission
to Uganda Revenue Authority in violation of the income tax Act 1997(as
amended). Failure to recover and remit withholding tax exposes the
Ministry to the risk of tax penalties. The Income tax Act requires the
accounting officer to recover the tax, failure of which personal responsibility
is attributed.
6.6 Northern Uganda Social Action Fund (IDA CREDIT NO.3697)
6.6.1 Non adherence to Funding mechanism According to the Development Credit Agreement (DCA), the Project
expenditures were to be financed in the following ratios:-
Expenditure category
IDA GOU
1 Sub projects 90 % 10 %
2 Goods and vehicles 100% of foreign expenditures and 90 % of local expenditures
10 % of local expenditures
3 Consultants services training and audit
90 % 10 %
4 Operating costs 90% 10%
49
However it was noted that the project management did not strictly observe
the above requirement. As at 30th June 2007 an amount equivalent to
USD.1,424,950.06 from the IDA account had been used to finance activities
that should have been financed under GOU counterpart funding. This
practice is irregular.
Management explained that in one of the review meetings in October,
2005, it was agreed that the Project’ management should use the IDA
funds to implement the Project activities and later claim the funds from the
Government of Uganda. Due to shortfalls in Government counterpart
funding the Government of Uganda requested for 100% funding for the
Project and this was granted by the Bank in September 2007. An amount of
USD 1,424,950.06 has been claimed from the Bank under Withdraw
application No. 21.
6.6.2 Taxes It was noted that there were delays in remitting taxes deducted at source
by project management (including with holding tax and Pay As You Earn).
For example the following deducted taxes had not yet been remitted by the
time of audit in October 2007:-
Date/ Ref:
Purpose Amount (shs)
Purpose
7/6/07 chq 2546
50% for contract to design radio and TV programmes for NUSAF
23,352,000 and w/tax 1,251,000
W/tax not remitted by the time of audit
14/6/07 chq 2565
Gratuity for period Feb04 to Feb07
14,946,033 net of PAYE 6,405,443
PAYE not remitted by the time of audit
14/6/07 chq 2564
Prnting NUSAF quarterly report Jan – March 07
6,987,960 and w/tax 446,040
W/tax not remitted by the time of audit
50
The above practice can lead to penalties from the Uganda Revenue
Authority.
Management explained that the delays have arisen out of poor coordination
and that the loopholes were to be addressed.
Management is advised to ensure that provisions of the tax law are
complied with to avoid punitive action from Uganda Revenue Authority.
6.6.3 Bank charges (shs.227,146,595) It was noted that the following charges were debited onto the project
special account by the Bank of Uganda as being the costs of effecting
transfers of Project funds to other banks:-
Date Charges ($)
Charges (UShs)
Aug-06 3,000 4,810,050
6-Sep-06 47,520 76,191,192
7-Mar-07 35,000 56,117,250
7-Feb-07 1,650 2,645,528
6-Dec-07 9,500 15,231,825
27/6/07 45,000 72,150,750
Total 141,670 227,146,595
The above charges appear to be high and had not been budgeted for.
Management explained that they are now taking up the issue through the
Accountant General, to see how best Bank of Uganda can reduce on these
charges.
6.6.4 General Standards of Accounting and Internal Control
(i) Implementation of the SUN accounting soft ware
According to the aide memoir of 6-17/June 2005, the project was
supposed to have installed accounting software by 30th October,
51
2005. However, it was noted at the time of audit in October 2007,
the software had not yet been installed and none of the project
reports for the year under review (including Financial Monitoring
Reports) were generated using the software. This shows laxity on
the part of management to implement agreed recommendations.
(ii) Internal Audit
The Internal Audit Department did not have an Internal Audit
manual. The manual is expected to guide personnel on the
procedures to be followed while undertaking all internal audit
routines. Lack of it implies that work undertaken may not have been
done in accordance with standard guidelines.
Management explained that the Project didn’t have an authenticated
audit manual, since the consultant had not yet completed all the
required terms in the contract.
(iii) Advances to staff
Some project staff delayed to submit accountabilities for funds
advanced to them to carry out project activities. Accountabilities
totalling Shs.206,708,450 had not been accounted for by the time of
audit in October 2007:-
Some of the accountabilities have been outstanding for a period of
more than one year.
Delays in accounting for funds may lead to falsification of
documents.
Management is advised to ensure that agreed procedures with
regard to advances are complied with.
52
(iv) Advances to suppliers
The Project advanced funds totalling Shs.28,676,325 to two
suppliers with no advance guarantees being secured from the
suppliers in question. This implies that in case of failure to deliver
the project would run a risk of losing the advanced funds.
Management explained that the special condition of both contracts
did not provide for an advance payment guarantee. However, they
are taking up the issue with the Procurement Specialist, to see how
best they can introduce such a condition in future contracts.
6.7 Motor vehicle repairs There was no certification of repairs done on project motor vehicles to
confirm the quality of repairs done before payment of the garage invoices.
This implies that it is not possible to ascertain whether value for money was
attained from the repairs in question.
It was also noted that some repairs were authorised by a secretary as
opposed to a more senior project staff. The following cases were noted:-
Date/Ref: Particulars Amount (UGS)
Remarks
16/5/07 chq 2477
Service & repair of UG 0154 z and UG 0156 Z
8,156,835
Repairs authorised by Esther Othieno, a secretary in Liaison office
No inspection of repairs done on completion of repairs
16/5/07 chq 2475
Services for Service and repair of UG 0190 Z and UG0192 Z
2,115,037
No inspection of repairs done on completion of repairs
53
16/5/07 chq 2478
Service and repair of UG 155 Z
765,820
No inspection of repairs done on completion of repairs
Management is advised to Institute proper guidelines on vehicle repairs to
avoid wastage.
6.8 Store Keeping Although store issues are recorded on issue vouchers, there are no store
ledgers maintained to show running balances of any store item. This makes
it difficult to carry out reconciliations as well as stock taking. In addition,
there was no stock taking/board of survey carried out at any time during
the year as is required under section 7.4.1.5 of the Financial Management
Handbook. This implies that any errors and omissions (whether intentional
or otherwise) may go undetected.
It was also noted that purchases of project items worth shs.65,139,000
were not taken on charge (recorded in the project stores) and no
distribution records were available.
In the absence of the above records, it’s not possible to ascertain whether
the deliveries were made and received by the intended beneficiaries.
Management explained that measures have now been put in place to
ensure that all issues and receipts are properly documented, stores ledgers
have been redesigned, and monthly stock counts by a Project Officer from
the Directorate of Finance are being done. A stores register has been
introduced at the liaison office, to avoid cases of non recording of items
that are distributed from that office.
6.9 Petty Cash There was no evidence of reviews of all petty cash payments by a senior
official. In addition, the project does not carry out surprise cash counts to
54
ensure that there is no misuse of petty cash. The controls regarding cash
management appear to be weak.
Management explained that Petty cash control has now been strengthened.
Snap checks are now carried out by our internal auditors, and all petty cash
payments are being reviewed by a senior officer before cash is paid out, as
well as a review by an Accountant before they are posted in the Sun
Accounting System.
This will be verified during the next audit.
6.10 Procurement of Laptops A total of shs.7,950,000 was paid to a local company for three Laptop
supplied to the project. However, it was noted that, the specification of the
Laptops required by the office was DELL Latitude D510 but the contractor
supplied DELL Inspirion 1300 contrary to the BID document. It was further
noted that DELL Inspirion 1300 supplied could not be used because MS
office 2003 professional software had not been installed and the CD for the
same was not delivered.
Management explained that the supplier informed the Project that
production of the Dell Latitude D510 was being discontinued, and therefore
opted to supply the Dell Inspiron 1300 Laptops and that technically, the
Laptops supplied were compliant, and this was confirmed by the MIS
Department.
6.11 Fixed Assets Register It was noted that the project did not have a fixed assets register at the
time of audit in October 2007. The project should maintain a record of all
the fixed assets it owns which should include the following assets details:-
• Asset Name,
• Supplier,
• Location,
55
• Unique Identification Number,
• Cost, and
• Condition
In absence of a fixed assets register, it becomes difficult to monitor the
assets.
Management explained that the Project maintains a fixed assets register in
an excel file. However, at the time of audit, the register had not been
modified to include all the details as noted above.
Management is advised to ensure that a proper register is established to
keep track of all the project assets.
6.12 Project Staffing Position The following key staff positions were vacant at the time of audit in
October 2007:-
• Director Finance & Administration
• NUSAF District Technical officers (7)
• District accounts assistants (7)
Lack of adequate staff can lead to failure to implement all the planned
project activities.
Management explained the posts would soon be filled.
6.13 Sub-Projects
6.13.1Sub-project Tracker The Project designed an excel spread sheet to record all payments and
accountabilities from subprojects (subproject tracker). This is meant to
ensure that a record of funds paid to each subproject is tracked and to
avoid any double payments to subprojects. However, the tracker has the
following shortcomings:-
56
• It is not reviewed by any other person other than the preparer. This
implies that errors and omissions can easily go undetected.
• The tracker has many errors. Several subprojects have been double paid
and others have not had their accountabilities posted. As such the
tracker can not show an accurate status of advances to subprojects.
Management explained that they will inform the Districts that it is
mandatory to always keep a copy of whatever they send to NUMU and also
improve the accuracy of the tracker through the use of the Accounting
software, and support from the Audit Departments at the District Levels
who were trained by the NUMU Audit Department in 2007.
Project Management is advised to ensure that the integrity of the data
produced by the tracker can be relied upon and also train the concerned
officers.
6.13.2Physical Inspection of subprojects The audit also included an inspection of activities being implemented by the
districts and the subprojects. However the most common findings included
the following:-
• Sub standard physical works
• Use of poor quality materials e.g. weaker gauge for iron sheets
• Delays in accountability for funds by subprojects
• Delays in disbursement of funds from NUMU especially the GOU
contribution
• Incomplete structures/buildings due to delays in disbursement of funds
• Defects on structures already completed
• Use of subproject funds for operations by the district officials
• Misuse of funds by community subprojects
• Most Projects that were over funded by NUMU failed to refund the
amounts over funded.
57
• Some structures funded are owned by individuals as opposed to
communities.
• Most subprojects having problems with ensuring sustainability of
investments done. For example purchase of drugs for treatment of
cows, purchase of feeds for poultry, etc.
Management explained that the irregularities cited in the sub-project
implementation in the different districts ranging from sub standard physical
works, use of poor quality materials, incomplete structures, and delays in
accountability for funds by subprojects, were being addressed through
regular consultative meetings with District Engineers and other technical
staff. It was also explained that NUMU has, at such for a pointed out the
different roles and responsibilities of the different stakeholders especially in
the districts (where the local government officials are responsible for
supervision and technical advice to the communities) on implementation of
the NUSAF sub-projects. Where this capacity is lacking, the Operational
Manual, provides for outsourcing support for these functions. The Local
Governments have been encouraged to take advantage of this route. NUMU
is also improving its monitoring, supervisory and technical support to the
communities and the districts through regular visits.
Management has been advised to urgently address the matters pointed out
so that the Project can fully achieve all its objectives.
7.0 PUBLIC SERVICE
7.1 Contingent Liabilities: A sum of Shs.107,000,000,000 is reported in the Statement of Contingent
Liability as contingent liability relating to Military Pension. This liability has
been reported on since 2003/2004 financial year. The liability was allowed
in the accounts on the premise that the claims (Military Pensions) have
never been verified by the Pension Authority.
58
In response to my report for the period ended 30th June 2006, the
Accounting Officer explained that he had received confirmation from the
Ministry of Defence that documents had been compiled. To date no
documents exists, to permit a realistic assessment and settlement and/or
approximation of the overall pension arrears owed in respect of retired
military personnel, many of whom are now dead or living a destitute life. A
court judgement recently made in favour of the pensioners awarded them
Shs.1.4 trillion. I am not aware of the next course of action government is
going to take to avoid incurring interest on delayed payments.
7.2 IT Strategy In the 2005/2006 management letter and subsequent discussions it was
recommended and agreed that the Ministry develops an IT Strategy to
guide the Ministry in implementation of IT based initiatives. To date no
such a policy exists. Thus IT decisions such as procurement, maintenance,
disposal, etc are taken haphazardly. The Accounting Officer explained that
a draft IT policy was in place. I advised that the draft policy be
expeditiously approved.
7.3 Under Establishment According to the Ministry’s revised establishment structure, a specific
number of staff is required for effective implementation of its mandate.
However, by end of the financial year, an understaffing of 39 staff was
noted. This adversely impacts on the ability of the Ministry to offer the
required services.
In his written response, the Accounting Officer explained that these
vacancies will be filled in accordance with the wage provisions in the
budget.
59
8.0 FOREIGN AFFAIRS
8.1 Payables (i) Adjustments
A sum of Shs.14,626,323,766 is included in Schedule 14 for Payables
as adjustments. Details as to how the above adjustments were
arrived at were not availed for verification.
(ii) Kagera Basin Organisation
A total of Shs.6,879,434,865 is included in payables as liability to
Kagera Basin Organisation. It was however noted that this
organisation was wound up last year. It is not clear how such
indebtedness is going to be treated.
(iii) Other Creditors (Borrowings)
As mentioned in my earlier reports, an amount of Shs.3,670,458,784
is still being reflected in the accounts as an overdraft. Photocopies of
supporting documents which were availed indicate that this was an
overdraft from Bank of Uganda incurred for expenditures on travel
abroad and remittances to International Organisations in the year
2001. The documents presented were incomplete and I could not
therefore verify the genuineness of the expenditures.
8.2 Travel Abroad
Government regulations require that officers travelling abroad should seek
and obtain clearance from the Prime Minister’s Office as authority for their
facilitation. Examination revealed that Shs.1,330,154,604 was paid out in
respect of both air tickets and allowances. However, accountability
tendered was found incomplete. In particular there were no coupons of
travel to confirm whether the trips actually took place.
60
In addition there were no foreign exchange slips to ascertain the rates at
which the funds were translated to effect payment of allowances nor was
evidence of clearance by the office of the prime Minister provided.
The Accounting Officer is advised to streamline the system of accounting
for funds earmarked for travel abroad.
8.3 Lack of Strategic/Corporate Plan
The Ministry only prepares annual plans (One year plans) which are
presented in its Policy statements. There are no long-term plans (5 to 10
year plans) to give long-term strategic direction. There is also no clear flow
of how the Ministry intends to achieve its vision in the long term. This
promotes short-termism and adhoc planning leading to unfocussed service
delivery and inability to achieve the organisational mandate.
The Accounting Officer stated that the Ministry resources were not enough
to facilitate consultations with all key stakeholders including Missions
abroad, hiring consultants and printing of final documents of the plan. He
has however initiated the process which is expected to be completed in
September 2008. I advised him to take advantage of the annual
ambassador’s conference for consultations.
8.4 Lack of Job Descriptions
The key role of the Personnel Division within the Finance and
Administration Department is to assist Line Managers to draw up job
descriptions and work plans for all employees. These should specify the key
objectives, key functions, key activities and key outputs required of each
post holder. The work plans should indicate specific measurable, achievable
and realistic tasks to be carried out during a specific period. (Post
Constitutional Restructuring of the Ministry of Foreign Affairs Final Report
5.1.12).
61
It was, however, noted that there are no job description for staff other than
for the Accounting officer and the Directors. The implication is that there is
no basis against which staffs are monitored and evaluated.
The Accounting Officer explained that the Ministry in conjunction with
Ministry of Public Service is in the process of designing job descriptions for
each post.
8.5 Lack of Performance Evaluation and Appraisal
Although performance targets and goals are set for Missions, their
performance is not evaluated. There was no evidence of any performance
appraisal at both the individual staff level and the Mission level as a whole.
Lack of a performance appraisal system for the Missions renders targets set
irrelevant.
It was also further noted that the Performance goals set for the missions
are not measurable and appear too ambitious for the Missions taking into
consideration the meagre resources remitted to them. Goals such as
“increase tourism by 30%”, “increase trade by 20%” appear too ambitious.
Such ambitious and unrealistic targets indicate lack of proper risk and
financial analysis of such Missions and government sector as a whole.
8.6 Payment for Electricity Bills i) Doubtful Billing-UMEME
A scrutiny of the monthly bills for the Ministry revealed that although
the Ministry has only one Meter No. E245203 which would normally
attract one rate, the readings on the bills are of three rates. It is not
clear how such rates are derived. Furthermore, as at 26th June
2006 the meter reading was only 525 Units using the domestic rate
and monthly consumption was averaging Shs.50,000 per month
(May and June 2006). However under unclear circumstances, by 1st
July 2006 a month later, the meter reading rose to190,600 units
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using a different rate of “PPM_OFFPEAK MEDIUM” and the
consumption rose to averagely Shs.2.5m per month. By June 2007
the consumption had reached Shs.4,314,068 in one month. The
sudden rise in billings were not properly explained.
The Accounting Officer noted the concerns and promised to
investigate the matter with the electricity company.
ii) Prepayments
It was further observed that the Ministry prepays for its electricity.
As at 30th June 2007 the Ministry had a credit balance of
Shs.23,343,076. Surprisingly additional payments are being made to
the firm before utilising the earlier balances. For a period of eleven
months (July 2006 to May 2007) the Ministry did not pay any
electricity bills because it still had credit balances with the service
provider. This is an indication of over budgeting.
Besides, the prepayments were not reflected in the final accounts
contrary to regulations.
The Accounting Officer explained that the releases for utilities are
made 100% irrespective of the actual consumption at the time but
promised to pay against actual bills in future.
8.7 Procurements (a) Procurements without Work Plans
The procurement Reg. 96 requires that user departments make
annual procurement work-plans the basis on which all procurements
are made. However, contrary to regulations, the ministry spent a
total of Shs.1,344,726,893 for procurement of various items without
any work-plans from user departments.
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Procurements made on adhoc basis deprive the Ministry of the
benefits of bulk purchasing.
The Accounting Officer stated that a format is being developed
under the guidance of the Policy and Planning Unit.
(b) Payments without Contracts Committee Approval
The procurement law requires that all procurement proposals are
approved by the contracts committee. The law further encourages
that all procurement transactions to be competitively bidded for.
However, it was noted that suppliers who were paid an amount of
Shs.382,816,635 during the year did not have the Contracts
Committee approvals.
(c) Flouting of Bidding Regulations
It was noted that most of the procurements made during the year
were through the restricted bidding method. Regulations require that
approval of the method be sought from the Contracts Committee
and that a short list of at least three firms from the pre qualified list
be presented to the Contracts Committee for approval after which
solicitation documents are sent to the approved firms for bidding.
The bids submitted are then evaluated and contract award made.
There was however no evidence that this was done. Procurements
were mostly made through presentation of invoices.
It is not certain that government got competitive prices and quality
goods and services.
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8.8 Operation of the Ministry Canteen
The Ministry has a Canteen at the First floor being operated by private
individuals but there was no information or how it was contracted. No
contract agreement was availed despite numerous reminders. I could there
fore not ascertain the terms and conditions of the tenancy. In the absence
of any agreement, government could be losing funds in uncollected rent.
This arrangement has been that way since 2004 (three years).
The Accounting Officer regretted the error and informed me that although
the Ministry advertised the Service, the submissions received were
inadequate and that the Ministry was in the process of re-advertising to
attract more competition. A formal Contract would be signed as soon as
the process was concluded.
8.9 Payments for United Nations Arrears
A total of Shs.450,000,000 was paid to the Central Bank for onward
transmission to the United Nations in respect of payments for subscription
arrears. I was however not availed the evidence of remittance by the bank,
acknowledgement by the payee and details of the period paid for. The
payment therefore remains unaccounted for.
The Accounting Officer explained that he has written to the United Nations
Secretariat to acknowledge receipt.
8.10 Fixed Asset Registers
Treasury Accounting Instructions state that "All purchases of plant and
tools will be charged to a plant and tools item in the Ledger. A fixed Assets
register will be maintained to show the location of plant and tools in daily
use. This register will show the articles in the custody of each officer. All
officers in charge of plant and tools will keep inventories recording each
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article, its date of receipt, and the reference to the respective Plant and
Tools Ledger.
It was however noted that a Fixed Asset register is not being maintained by
the Ministry contrary to regulations. As such I could not verify asset
acquisitions, additions and disposals, maintenance/service records,
estimated life and retirement of assets.
The Accounting Officer explained that the Ministry was in the process of
designing an integrated fixed asset register.
8.11 Returned Gross Receipts Tax Account Balances
During the financial year an amount of Shs.150,000,000 was released to
the Ministry to cater for payment of import duties for goods procured. It
was noted that during the year the Ministry purchased two vehicles at
Shs.173,753,460 which attracted taxes totalling Shs.41,146,276.
However instead of the Ministry paying the taxes from the tax release
through the Gross receipt tax account, the amount was paid from the
capital development budget. In effect this tantamounts to an unauthorised
reallocation of funds. The Ministry later returned all the tax funds to
Treasury at the end of the year without utilising them.
The Accounting Officer explained that this was an oversight and that he has
written to Permanent Secretary/Secretary to the Treasury seeking
retrospective approval for reallocation.
8.12 State of Vehicles due for Board off
The Ministry has earmarked 9 vehicles and 12 Motorcycles for Boarding off
(disposal) during the year. A Survey of vehicles proposed for disposal
however revealed that they are located in private garages and being
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exposed to pilferage, deterioration and damage. The effect is increase in
wear and tear of these vehicles leading to decrease in the salvage value
(sale value).
The Accounting Officer explained that Ministries do not have adequate
storage for scrap vehicles and a coordinated effort with Ministry of Works
and Transport is underway to solve the problem. He has meanwhile
initiated the process of Boarding off of all the grounded vehicles.
9.0 JUSTICE AND CONSTITUTIONAL AFFAIRS
9.1 Improper Basis for Determining Ex-Gratia Compensation
According to the compensation claims database, a total of Shs.5, 733,
794,311 was approved as compensation to victims of the year 2001 rebel
attacks on the convoys on Karuma–Pakwach road, out of which a sum of
shs.2,148,485,948 was paid in the period under review leaving
Shs.3,585,308,363 outstanding. However, the following matters were
noted.
The Claims submitted were not subjected to an independent verification for
occurrence and valuation. Appropriate government institutions such as the
Police, Government Valuer and Chief Mechanical Engineer were not
involved to corroborate occurrence or confirm valuations.
It was also noted that the compensation was made without due regard to
the amount of Shs.1,385,956,297 which had earlier been recommended by
Cabinet. This was to represent 25% of the certified claims. The
Accounting Officer attributed this to poor coordination between Ministry of
Finance and Justice. He explained that when the matter was brought to
Ministry of Justice, information pertaining to who was paid and how much
was not made known to her yet Ministry of Finance had already effected
some part payments to some individual claimants.
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I advised the accounting officer on the need for a documented
compensation policy with proper verification and valuation procedures to
mitigate the risk of exposure of public funds to loss through unauthentic
claimants and inflated claims.
9.2 Weaknesses in Handling of Cases at the Attorney General’s Chambers
9.2.1 Court Award to Okema Okot Wilfred An audit review of case file No. HCCS 569/01 revealed that Shs.62,000,000
was paid to an individual as court award. However it was established that
the Ministry Officers in charge of defending this case absented themselves
from court with the hearing eventually proceeding experte.
Judgment was made in favour of the plaintiff resulting in a loss of public
funds.
In his response, The Accounting Officer stated that at the time, the officer
in charge of this case was abroad on study and Senior Civil Litigation
officers had been sent on forced leave, leaving an administrative vacuum.
He added that the Ministry has since acquired case management software
that will assist in monitoring the progress of all court cases to ensure that
all court sessions are attended.
9.2.2 Payment of Court Award to Male Salongo, T/A MB Transporters (U) Ltd. (HCC285/2004)
Following issue of a consent judgement of Shs.177,180,000 against a claim
of Shs.246,500,000, a part payment of Shs.47,169,200 was made to MB
Transporters Ltd in respect of transport services rendered to State House.
However, there was no evidence that supporting documentation such as
Invoices and LPOs were availed and verified before Attorney General could
enter consent Judgement.
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Further scrutiny revealed that the claimant had already requisitioned for
these funds from State House. The Ministry of justice effected payment
without reconciling with State House. I cannot rule out a double payment of
this transaction.
The Accounting Officer explained that although instructions were sought
from State House no response was received from them. Subsequent
reminders were sent requesting for relevant documents to enable the
Ministry prepare defence but no response was received. He added that
given that State House had already acknowledged the debt the Commercial
Court advised on settlement of the uncontested amount.
9.2.3 Court Award to Musoke Peter, Shs.107,000,000
Audit examination revealed that M/s Peter Musoke acquired a leased plot of
land (Plot 3, Water Lane, Naguru) from Uganda Land Commission several
years back but, the Ministry of Lands later refused to approve his plans on
grounds that the lease had been fraudulently granted since the plot had
been zoned as space for the protection of a water tank and radio
transmitter on Nagulu Hill.
The claimant sued government and was compensated. However, there is
no evidence that the Attorney General verified the validity of the claimant’s
lease agreement at the time together with the payments for annual rent.
The Accounting Officer explained that the Attorney General’s chambers
requested the Government Valuer for a valuation of the property in
question prior to discussing a settlement but the valuation took over 8
years to obtain, otherwise her officers had given the matter due diligence.
She added that the Ministry cannot police the performance of other
government departments.
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9.3 Indebtedness to Official Receivers Account
A total of Shs.3,472,504,560 was diverted by the Ministry from the Official
Receivers account to pay for office accommodation for the Administrator
General and the Registrar General Offices at Amamu House. Only
Shs.300,000,000 of this has been refunded to date.
It was further noted that at US$1.2 million per annum, the charge rate per
square metre for this rent was higher than market rate and exceeded the
annual budget allocation, thus leading to accumulation of debts.
I recommended that the Ministry seeks for cheaper office space through
competitive bidding. There is also need to have the diverted funds
refunded to avert risks of litigation from beneficiaries.
The Accounting Officer attributed the necessity for diversion to insufficient
funds on rent which she had already been brought to the attention of
Ministry of Finance. She added that plans are under way to construct a
Justice, Law and Order sector house in the longer term.
9.4 Over Expenditure on Travel Abroad Examination revealed that a total of Shs.60,532,014 relating to travel
abroad was wrongly charged to other budget lines without authority. This
mis-charge of expenditure indicates weakness in controls over budgetary
expenditure.
The mis-charge should be regularised in accordance with the Regulations.
9.5 Failure to Operationalise Uganda Registration Services Bureau (URSB)
URSB formerly a department under The Registrar General was created by
an Act of Parliament “The Uganda Registration Services Bureau Act” in the
year 1997. It has been observed that ten (10) years since the enactment
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of the law making it autonomous, the department remains under the
administration of Ministry of Justice. This defeats the intentions of
Parliament in enacting this law.
The Accounting Officer stated that all measures have been put in place to
fully operationalise the URSB in the 2008/2009 financial year.
9.6 Staffing The most senior positions in the Ministry have not yet been substantively
filled for a long time. This applies to the post of the Solicitor General,
Administrator General, Registrar General, Director Legal Services and
Secretary Law Council. There are also a number of other vacant posts at
various levels of management. This impacts negatively on the ability of the
Ministry to deliver the necessary services.
There is need for government to have these posts substantially filled to
enable the Ministry discharge its duties effectively.
9.7 Breach of Contract by a Service Provider
Examination revealed that the Ministry contracted a consultancy firm for
US$89,740 to conduct a financial and legal audit of court awards and
compensation against the government of Uganda. The contract was to last
for 4 months starting 25th June 2006.
The key outputs of the consultancy included:-
• A computerized Database, in the Civil Registry, of all civil suits against
government of Uganda as at 31st March 2005.
• A computerized database of all pending war debt claims as at 31st
December 2003.
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• A legal opinion as to the liability of any of the parties, in pending legal
suits exceeding the amount of US$50,000 as at 31st December 2004
collated in tabular format and arranged by day, month and year.
• A tabulated report of potential government liability based on the legal
opinion above.
• A tabulated report of current government liability, including accrued
interest for suits where final judgment has been entered, and with no
pending appeals.
However, the following matters were noted:-
a) Whereas there was an already existing computerized database
system in place, there is no evidence of an evaluation carried out
including consultation with stakeholders, to justify a new system.
b) Proper justification was not provided for not using a competitive
tendering process in the selection of the consultant.
c) There was an unnecessarily long delay in completing this report.
The Accounting Officer acknowledged the delays, and further explained
that a draft final report was being discussed with the consultant. In spite of
this, I could not confirm that Value for money was realized from this
expenditure.
10.0 FINANCE, PLANNING AND ECONOMIC DEVELOPMENT
10.1 Energy Fund
During the period under review, Shs.99,400,000,000 was appropriated
under the Energy investment fund project in respect of ‘supply of goods
and services item 224002’. The appropriated funds were wholly released to
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the Ministry and were subsequently transferred to the Energy Fund Account
in Bank of Uganda.
In May 2007 the Ministry signed on behalf of Government Of Uganda
(GOU) an agreement with Uganda Electricity Transmission Company limited
(UETCL) in which it was agreed among others that: -
(a) GOU shall transfer US$75,000,000 from the Energy Fund Account
(EFA) to UETCL. The later shall enter into a loan agreement with
Bujagali Energy Limited (BEL) solely for the purpose of making
advance works payment under the Limited Notice to Proceed
Agreement.
The Loan agreement shall inter alia, contain the following conditions: - • UETCL shall disburse the US$75,000,000 directly to Salin
Construttori S.P.A the contractor of Bujagali Hydro Electricity Power
Plant under the EPC Contract.
• The loan amount shall be repaid to the UETCL upon Bujagali
Energy Ltd. reaching the financial closing.
(b) UETCL shall upon receipt of the repayment of the loan amount of
US$75,000,000 from BEL remit the same to the EFA.
In accordance with the agreement, Shs. 99,332,050,000 was
subsequently transferred from the EFA to Bujagali Hydro Power
Project Transmission Line Resettlement Action Plan Account (RAPA).
A review of the documents filed in support of the Energy Investment
Fund transactions was made and the following matters were noted:-
(i) Unexplained Sources of Funding
While only Shs. 99,400,000,000 was appropriated, up to Shs.
127,346,707,140 was remitted to the contractors. In her
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response, the Accounting Officer explained that the additional
Shs 27,946,707,140 was drawn from the Divestiture Accounts
based on the DRIC 347th meeting decision. The regularity of
Privatization Unit intervention in the transaction is was not
explained.
(ii) Refund of the Funds
A total of Shs.127,346,707,14 was remitted to the contractors.
Although the Accounting Officer explained that the amount of
US$ 75,000,000 has since been recovered in its entirety, I was
unable to verify this and ascertain whether the recoveries were
remitted back to the Energy Fund Account as required by the
agreement.
(iii) Improper Classification
Since it was agreed that all US$75,000,000 paid to the contractor
is a loan recoverable upon Bujagali Energy Ltd. reaching the
financial closing, it was erroneous to recognise the payments to
EFA as expenditure. Instead the transaction should have been
recognised as an on-lent.
(iv) Uncredited Transfer from EFA to RAPA
On 31/05/2007 a debit of Shs. 43,951,700,000 was made on
Energy Fund Account being transfer of funds to Resettlement
Action Plan Account (RAPA). However, according to the “credit
advice” only Shs 43,744,700,000 was credited to RAPA. The
variance of Shs. 206,960,000 was not explained to satisfaction.
The Accounting Officer explained that the difference represents
foreign exchange loss on the translation. I have however
explained to the Accounting Officer that the charges by Bank of
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Uganda are unrealistically high. There is need for Government to
negotiate with Bank of Uganda and agree by way of a
Memorandum of Understanding on the appropriate and realistic
charges applicable to Governments transactions.
(v) Legality of the Energy Fund
The creation of the Energy Investment Fund was not done in
accordance with Public Finance and Accountability Act, 2003.
The Act requires that a special fund be established by way of
Statutory Instrument issued by the Minister. However, this has
not been done. There is also lack of clarity on which Ministry is
responsible for managing this fund. The Ministry of Energy also
has budget appropriations made for the support to the Energy
fund. There is need to have the Energy Fund legalised and its
operations properly streamlined.
10.2 Excess Expenditure
A total of Shs.20,671,363,812 was spent by the ministry on import taxes on
equipment and motor vehicles against an appropriation of
Shs.17,879,000,000 leading to an excess expenditure of
Shs.2,792,363,812. The Accounting Officer explained that a request for
supplementary expenditure to clear the over expenditure had been made
(on February 25, 2008) to the Permanent Secretary/Secretary to the
Treasury for laying before Parliament. I was not however provided with
evidence of approval of the supplementary by Parliament.
10.3 Funds allocated but not disclosed in the Financial Statements The Ministry was allocated Shs.433,740,000 under statutory budget to cater
for: External Interest (Shs.51,300,000,000), External Amortization
(Shs.174,800,000,000), External Arrears and Domestic Interest
(Shs.207,640,000,000). While transactions relating to domestic interest
(TB/Bonds) are rightly recorded/recognized in the Ministry accounts
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Shs.226,100,000,000 in respect of the three other categories are not
recognized in the accounts at all. The Entity's accounts i.e., Statement of
Finance Performance, Statement of Finance Position and cash flow
statement are therefore grossly understated.
10.4 Salary Arrears During the financial year ended 30th June 2007, Shs.4,786,200,500 was
advanced to various Accounting Officers in Ministries and Districts to cater
for salary arrears. At the time of writing this report only Shs.2,880,616,507
had been accounted for leaving a balance of Shs.1,905,583,993
unaccounted for. In the absence of accountability, I was not able to
ascertain that the funds were utilised for the intended purpose.
The Accounting Officer explained that she had written to the concerned
Accounting Officers who have not yet forwarded their accountabilities to do
so. The out come of her action is awaited.
10.5 Contingent Liabilities
On 30th June 2006 total quantifiable contingent liability was
Shs.4,200,000,000, representing Custodian Board debts to be inherited by
government. During the period under review, additional contingent
liabilities of Shs.2,000,000,000 and Shs.906,000,000 in favour of an
advocate and Kampala City Council were recognised. The basis of these
contingent claims was not satisfactorily explained.
I advised the Accounting Officer to have these claims urgently investigated
for their authenticity in order to mitigate against any risks of future
fictitious payments.
10.6 Payments to Foreign Consultancy Firm
During the financial year under review, Shs.270,000,000 was paid to a
commercial bank, for remittance to a foreign consultancy firm in respect
of a consultancy for Promoting Uganda's Export and Investment
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Opportunities. The payment is yet to be acknowledged by the consultant.
Performance reports in respect of the consultant for the period under
review were also not submitted for my review. I was therefore not able to
confirm that the amount was received by the beneficiary.
10.7 Flouting of the Public Procurement Regulations
A sum of Shs.224,564,040 (US$131,324) was spent by the Ministry on
procurement of 2 motor vehicles (Wagon). The procurement was neither
advertised nor approved by the Contracts Committee. This practice
exposes the Ministry to the risk of high pricing and procurement of
substandard goods. The Accounting Officer explained that the action taken
was inevitable because two Ministers had been newly posted to the Ministry
and there was an urgent need to provide transport for them.
10.8 Under Establishment
According to the Ministry revised establishment structure, for effective
implementation of its mandate 769 staffs are required. However by the end
of financial year, only 684 posts were filled while 85 posts were vacant.
The accounting officer explained that the posts have been advertised but
Public Service Commission has been slow in effecting interviews and
subsequent appointments.
10.9 Improper Maintenance of Fixed Asset Register
As part of the on going financial reforms, in May 2007, the Accountant
General instructed all Ministries to migrate to an IT-based Fixed Asset
Register (FAR): Fixed Asset Management (FAM), to track physical existence,
conditions and locations of government’s fixed assets. By the time of filing
this report, MOFPED was still using the defective manual registers despite
being the lead Ministry in the reform initiative.
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The Accounting Officer pledged to migrate to the new system before the
end of 2007/08 financial year.
10.10 Population Secretariat Project: Lack of Corporate Status
Examination revealed that the secretariat has no corporate status to enable
it carry out its mandate effectively. I have advised management to speed
up the process of acquiring the corporate status.
The Accounting Officer explained that a Cabinet Memorandum has been
developed and submitted to Cabinet. Once passed it shall operationalise
the revised population policy 2007 and recommend the enactment of a law
that will transform the Secretariat into an autonomous institution.
11.0 AGRICULTURE, ANIMAL INDUSTRY AND FISHERIES
11.1 Unauthorised Expenditure According to the statement of appropriation account (based on services
voted by Parliament) the Ministry incurred excess expenditure on
consumption of property, plant & equipment (fixed assets). Whereas actual
expenditure was Shs.2,114,818,353 the approved budget was only
Shs.1,986,200,000 resulting into unauthorised excess expenditure of
Shs.128,618,353.
The Accounting officer explained that the excess expenditure arose from
taxes paid on its behalf by the Ministry of Finance. I advised him to seek
authority from Ministry of Finance to regularise the expenditure.
110.2Advances Not Accounted For During the year a total of Shs.366,308,000 was advanced to various chief
administration officers for the execution of various official activities in the
areas under their jurisdiction. However, contrary to regulations the funds
had not been accounted for by the time of writing this report.
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In the absence of accountabilities, I was unable to confirm that the funds
were properly utilised. I advised the Accounting officer to strengthen the
internal controls over the management of advances.
11.3 Government Assets (a) Government Land
Available records indicate that an inventory of land under the
Ministry was compiled basing on the information submitted by the
Chief Administrative Officers (CAO) in the year 2002.The following
observations were made: -
• No effort since the year 2002 has been made to confirm the
accuracy of the list and make any additions, which could have
been omitted.
• The land identified has never been surveyed and there were
no land titles processed to confirm ownership.
• Available correspondences indicate that Government land has
been subjected to severe encroachment by the surrounding
communities or outright grabbing by unscrupulous people. For
instance one of the correspondence from State house,
indicates that land at Kazinga- Ngoma sub county Ntungamo
Districts, measuring approximately 100 acres, which has been
known to belong to the Ministry, was not secured and some
neighbours decided to take advantage and grab the land.
They have since disagreed and have been in court and
recently the High court ruled in favour of one of the parties.
In a related development, the Minister of Agriculture, Animal
Industry and Fisheries complained to the Office of the Prime
Minister about the unfair ruling on MAAIF land at Entebbe
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Livestock Experimental Station which CAA wants to use and
had obtained a land title for the said land belonging to MAAIF.
When the matter was brought before cabinet, a sub-
committee chaired by the Hon. Prime Minister was assigned to
resolve the dispute, but ruled against MAAIF.
Alleged Sale of Veterinary Estates in Kigungu
A Fisheries officer reported that arrangements were in
advanced stages for some crafty land dealers with connivance
of some local council members to sell off some veterinary
estates in Kigungu and had already surveyed the land.
In his response the Accounting officer explained that the
ministry set up a land task force to identify and verify the
Ministry land countrywide and so far land in western Uganda
has been verified and the process of identifying and titling
land in other regions will commence soon. On the alleged
sale of Veterinary estates, he was investigating the matter.
I advised him to expedite the process and also to liase with
other Government agencies like Police, Chief administrative
officers, and the Judiciary to put caveats and evict
unauthorised encroachers. Meanwhile the outcome of the task
force and investigations is awaited.
(b) Unengraved Government Property
An inspection of government property at the Ministry headquarters
revealed that some furniture, equipment and machinery are not
engraved, which subjects them to the risk of misappropriation and
embezzlement.
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During discussion the Accounting officer stated that he was going to
mobilise funds to undertake the engraving exercise. I urged him to
expedite the exercise.
11.4 Cash and Cash Equivalents (a) Unexplained Variance
The cash and cash equivalents of Shs.1,276,918,424 shown in the
accounts does not reconcile properly with the general ledger
reconciliation and the relevant explanatory note 20. Whereas in
explanatory note 20 the reconciled balance on the expenditure
accounts was recorded as Shs.1,267,339,148, in the reconciliation
statement it was shown as Shs.1,233,001,369 resulting into
unexplained variance of Shs.34,337,779. Similarly, in the same
explanatory note there are unexplained balances of Shs.400,000 and
(464,776) on collection accounts and others respectively which were
not explained.
The Accounting officer explained that a reconciliation of the treasury
General Account would address all the issues above. I urged the
Accounting officer to expedite the process of reconciliation of the
Treasury General Account.
(b) Un-presented Cheques
The General ledger reconciliation shows un-presented cheques
totalling Shs.3,895,231,161 out of which cheques amounting to
Shs.210,013,987 have remained outstanding for more than one
year.
The Accounting officer explained that the unreconciled difference
was a systems generated error and was still carrying out
consultations with the Accountant General to address the issue while
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for the un-presented (stale) cheques he had written to BOU and
awaits its response.
I advised him to expedite the consultations to ensure reconciliation
of the account and reversal of the stale cheque transactions.
11.5 Audit inspections (A) DOHO Rice Scheme
The scheme is found in Bunyole County in the new district of Butaleja
in Eastern Uganda. Rice growing in the area started in the 1940s
when farmers were asked to grow rice by the colonial government,
for soldiers during World War II. The farmers faced several
problems ranging from inability to control rice blast disease, damage
of the crop by birds and rats to low yielding varieties. The
Government came to their rescue in December 1975 by bringing in
the Chinese experts and posting some personnel to develop the
swamp under the name of Doho Rice Scheme.
Construction of the irrigation and drainage structures was completed
in 1989 resulting into the reclamation of 2500 acres. The actual area
under cultivation is 2380 acres and about 4340 farmers are currently
cultivating rice in the scheme.
The following observations were made:
(a) Rehabilitation of the Scheme
The Ministry entered into an agreement with a company for
the refurbishment and rehabilitation of the scheme at a
contract sum of Shs.442,368,296. To-date a total of
Shs.198,873,869 has been paid. However, it was noted that
implementation has been very slow due to lack of funding of
the contract by the Ministry. The project outputs may not be
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achieved if funding is not provided for the completion of the
rehabilitation.
(b) Encroachment on Government Premises.
A number of Government facilities at the scheme were
encroached on without authority. For instance almost all
stores are occupied with private property, some housing units,
which were meant for the project staff, are occupied by
unknown people, and accessibility to the station, is not
restricted particularly at the eastern gate.
The Accounting officer explained that it’s only the staff
serving on the scheme that occupy the station’s residential
units. All other occupants are supposed to be paying rent
which is yet to be determined. He further noted that
accessibility to the station is restricted but this has been
hampered by lack of a perimeter fence.
I advised him to evict all illegal occupants of Government
premises and also to put up a perimeter fence.
(c) Abandoned machinery and equipment
All machinery at the station in the carpentry, welding and
fabricating, machine mills workshops and water pump were
either found abandoned or redundant and not used for any
gainful activities to Government.
In a related development, wind blew off the entire structure
of the carpentry workshop close to a year now, which has
exposed the machinery and equipment to direct sun rays,
rainfall and all other vagaries of nature.
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During discussion the Accounting officer explained that plans
to renovate the facilities were underway. I urged him
expedite the process.
(d) General Appearance of the Station.
Generally the station is not well maintained. It was in a bushy
environment. This was probably explained by lack of funding
for the station from headquarters. Apart from the salaries for
staff, there was no imprest for the station manager to enable
him run the station properly.
I have advised the Accounting officer to ensure that the
station is properly managed by providing the required
resources.
(B) Olweny Swamp Rice Irrigation Project
The scheme is located in Agwata Sub-county, Dokolo County, Lira
District in Northern Uganda. Available records show that a feasibility
study for the project was carried out in 1982, with the hope of
implementing it between 1987 and 199, but got delayed because of
the insecurity which was in the region, incomplete feasibility at the
time of project approval and high costs that were required to
implement the project.
The financiers of the Olweny Swamp Rice Irrigation project (OSRIP)
were the African Development Bank (ADB) and Government of
Uganda (GOU).
Objectives of the project
• To demonstrate research, extension and farmer linkages.
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• To be a model design for sustainable wetland development to be
replicated in other parts of the country for developing gravity–fed
irrigation.
• To popularise production of high value crops for poverty
alleviation.
• To increase rural employment and food production.
The project was developed into two different sites, each with its own
irrigation system:
The Nucleus Farm (NF)
The NF is the headquarters of OSRIP and is located in Agwata,
Dokolo, Lira District. It is a 50 hectare farm and is used for seed
multiplication, research and training of farmers.
Otek-Okile Small Holder Project
It is also a smallholder rice scheme of 600 hectares. It is located
upstream in Sub-counties of Barr and Amach in Erute south, Lira
and irrigation and drainage in the scheme is by gravity.
The following observations were made:
(a) Termination of Project Activities
The project activities were terminated at all the project
sites above and all technical staff withdrawn or laid off. At
Otek-Okile, farmers under their umbrella organisation called
Growers cooperative society run the station and offices. I
was not provided with the terms under which the premises
and other project assets were allocated to them. Similarly
at the Nucleus firm, the station is completely abandoned
and bushy with no sign of activity, there is only the stores
assistant managing the stores and the station.
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I advised the Accounting officer to come up with a clear
position about these valuable projects and if Government
was to pull out, how the projects will be run.
(b) Projects Assets
The projects have a number of assets and assorted stores
whose status is unknown considering the uncertainties
surrounding the future of the projects.
I advised the Accounting officer on the need to clarify on the
whereabouts of the assets and how they are going to be
disposed off in case Government decides to withdraw it’s
interest in the project.
The Accounting officer explained that the Ministry through the
procurement process has put in place a team, which will
survey the items with a view to isolating those due for
disposal.
(c) Staff Quarters (Estate) at the Nucleus Farm.
The staff estate at the Nucleus Farm has fourteen (14)
housing units, some of which at the time of inspection were
occupied by unknown people. The terms of occupancy of the
premises and how they were solicited were not explained.
The Accounting officer explained that the staff quarters were
formerly occupied by support staff who were eventually laid
off under the restructuring process and due to insecurity by
then in the Northern region they could not return to their
homes but with peace returning to the region, they will be
soon moving out of the quarters.
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I have advised the Accounting officer to secure Government
property from illegal occupants.
11.6 Stores Inspection An audit inspection of the Ministry’s main stores at Wandegeya revealed
that various assorted stores that have not been issued out or claimed from
the stores since 1996 and are now obsolete. The rationale for the
acquisition of such stores is questionable if they could not be put to use for
all that time, and also casts doubt as to whether there is proper planning
for the use of the scarce resources.
I advised the Accounting officer to ensure that that stores once purchased
are utilised for the purpose for which they were acquired.
The Accounting Officer explained that the obsolete items are supposed to
be destroyed but the destruction costs are too high.
11.7 Vegetable Oil Development Project: IFAD LOAN NO.442 – UG
11.7.1GoU Counterpart Funding According to the budget, Government of Uganda was supposed to
contribute shs.794,197,000 as counterpart funding and shs.1,200,000,000
for land acquisition for the year under review. However, only
Shs.214,157,000 was released as counterpart funds and no release was
made for land acquisition, leading to a shortfall of Shs.580,040,000 for
counterpart funding and Shs.1,200,000,000 for land acquisition.
This affects the timely implementation of programme activities.
Management explained that U.Shs.2 billion has been provided for in the
2007/08 budget for land acquisition of which Shs.1 billion had so far been
released. It is expected that this financial year, counterpart will be availed
as budgeted.
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11.7.2Fixed Assets Management a. Fixed Asset Register
It was noted that Kalangala District does not maintain a fixed asset
register.
Lack of a fixed asset register weakens controls over the management of
assets.
Management explained that the concern had been raised with Kalangala
District and they have clarified that the district maintains a general assets
register used for all district assets, which was not accessible at time of
audit. The District Agricultural Officer had also been advised to open an
assets register at his level for project assets.
b. Engraving of Assets
It was noted during the audit that some Project assets were not engraved
with the project name and unique identification numbers. For example the
following assets were not engraved:-
Asset Location
2 Filing cabinets Kalangala Oil Palm Growers Trust (KOPGT)
9 Office desks ,,
3 UPS ,,
10 Office chairs ,,
1 Dell CPU ,,
2 Laser et printers ,,
In the absence of unique identifying marks, it becomes difficult to trace the
asset incase of loss.
Management explained that the assets had just been bought by Kalangala
Growers Trust and the Coordination Office had written to them urging them
to urgently have the assets engraved as per government rules and
procedures.
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c. Quarterly reports
According to appendix X of the Kalangala Oil Palm Growers Trust (KOPGT)
operational manual, KOPGT is supposed to submit quarterly reports to the
Ministry of Agriculture Animal Industries and Fisheries (MAAIF) through the
Project Coordinator. In addition, the Project Coordination Office (PCO) is
supposed to respond to each report with regard to timeliness, level of
detail and accuracy. The PCO is also supposed to address specific queries
on the reports to KOPGT and make recommendations for future reports.
Whereas KOPGT has been submitting the reports as required, the PCO has
not been responding to the reports.
Management has noted the concern and will in future acknowledge receipt
and give response in writing to KOPGT.
d. Bye-laws
According to appendix X of the KOPGT operational manual, a draft of bye
laws to govern the trusts detailed operations would be prepared
immediately upon the registration of KOPGT, possibly with the assistance
of a local consultant to be hired by the PCO.
The bye-laws would include:-
Financing terms and conditions
Repayment modalities
Sanctions for defaulters
Rules regarding the staff and board members participation in the oil
palm growers scheme.
Details of hire/purchase scheme for staff motorbikes.
Allowance rates for board members and remuneration and allowance
rates for staff.
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KOPGT has been in operation for one and a half years now and yet no bye
laws have been drafted to guide the operations of KOPGT.
Management explained that they will facilitate KOPGT to prepare the by
laws, that will serve as a reference for managing the farmer-KOPGT
relationship, to be used when the project closes.
e. Oil Palm Pricing Committee
According to Article 8 of the Tripartite Agreement between the Government
of the Republic of Uganda, Oil Palm Uganda Limited (OPUL) and the
registered trustees of KOPGT, an oil palm pricing committee was supposed
to be in place based on the Government of Uganda –BIDCO cooperating
agreement. The committee was supposed to be appointed by Government
to carry out the following tasks:-
To oversee the pricing of inputs and services under the oil palm growers
scheme; and
To determine the price at which small scale farmers sell their output to
OPUL.
However at the time of audit in December 2007, the committee was not yet
in place, suggesting that if the out growers are subjected to unacceptable
prices they would have nowhere to appeal.
Management explained that arrangements are under way to have the
pricing committee constituted to provide a forum for determination of
prices using a formula that has already been agreed on by government,
KOPGT and Oil Palm Uganda Ltd.
f. Status of Project implementation
According to article 3(2)(f) of the cooperating agreement between the
GOU and OPUL government was to provide 30,000 hectares of land, 10,000
on the island and 20,000 on the main land to enable them produce to full
capacity.
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However at the time of audit in November 2007, the project had only
secured approximately 9000 hectares at the island.
This has made some of OPUL’s equipment redundant and therefore makes
the Government vulnerable to litigation as a result of non-compliance with
the agreement provisions.
Management explained that implementation of the Oil Palm component is in
phases. The focus has been on the first phase which is on Bugala Island.
The land required on the Island is almost met. Efforts to purchase the
remaining 1000 hectares are underway. Shs.2 billion has been provided for
land acquisition. The Outgrower/Smallholder scheme is also progressing
with close to 2000 hectares surveyed and planting on going.
g. Delay in Processing Farmers Loans
It was noted that processing a farmers loans on average takes about four
months. Some of the loans are for slashing or planting oil palm. The delay
may imply that by the time some of farmers obtain the money seasons may
have changed making these loans susceptible to being misused because
the funds are secured when the time for the intended purpose has passed.
Management explained that they have recognized the lengthy period in
accessing farmer loans and have decided to provide for an advance to
KOPGT Secretariat for farmer loans, depending on the quarterly loan
requirements. The advance will then be accounted for and replenished. In
addition, farmer training in filling the application form has been undertaken
to ensure that no applications are returned to farmers for correction.
Applications will be handled as and when they are submitted, without
waiting for all the farmers to submit. These efforts will reduce the turn
around time for the farmer loans to less than one month.
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h. Security of Farmers Loans
According to Para 8 of the KOPGT operational manual, the criteria for a
farmer to participate in the loan scheme stipulates that a farmer would need
to pledge his/her land tenure rights for the useful life of the plantation in
form of a land title or certificate of occupancy with KOPGT. The useful life of
the plantation was assumed to be 25 years or in case the documents were
not available a letter by the Local Council (LC) 1 chairman and two other LC1
committee members confirming 12 years occupancy. However it was noted
that farmers were participating in the scheme and obtaining loans without
fulfilling the above requirements.
Management explained that the oil palm plantation itself is loan security,
which, according to the farmer agreement, can be taken over by KOPGT in
case of mismanagement, until the loan is repaid using proceeds from the
plantation. The farmers will sell their oil palm bunches to one factory at the
nucleus estate. Recovery of the loans will be effected at point of sale, hence
minimizing the risk of non repayment.
i. Road Equipment
It was noted that the project procured a motor grader at a cost of
US$.272,589 and a wheel loader at a cost of US$.201,052 from M/s. Panafric
trucks. The equipment was handed over to Kalangala District Local
government Administration to be used by the District and KOPGT. However,
no guidelines were put in place to guide the sharing of the equipment. In the
absence of proper guidelines it becomes difficult to know the rights of the
stakeholders and how they are supposed to share maintenance costs. This
could result in disagreements in future.
Management explained that the road equipment is under the control of the
Chief Administrative Officer (CAO) as the accounting officer Kalangala Local
Government. The KOPGT as and when they require to use the equipment
will make a request to the CAO, requesting for the equipment. The CAO will
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determine the use of the equipment including how operational and
maintenance costs are to be met. The CAO is also in charge of the project
activities and oversees the KOPGT activities in the district.
I have, however, advised him to have these guidelines properly
documented.
j. Assessment of rate of delivery of output
During the year under review, it was noted that expenditure for the Project
was generally below budget as indicated below :-
Component Budget(shs) Actual(shs) Variance(shs)
Oil Palm 5,567,017,521 2,739,092,258 2,827,925,263
VODF 2,061,112,000 481,297,575 1,579,814,425
Institutional
Support 3,497,580,099 2,996,697,962 500,882,137
TOTAL 125,709,620 6,227,087,795 ,898,621,825
This may imply the following:-
• The project has a low absorption capacity
• Lack of proper planning or budgeting
• Slow rate of project implementation.
• The above may lead to extra administrative costs as a result of extending the
Project life.
Management attributed the delays to:-
• Delays in the procurement of roads equipment that was not concluded in
time to enable payment for the equipment.
• Delays taken in identifying a private investor to co-implement the Project.
• Delays in identifying land.
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12.0 LANDS, HOUSING AND URBAN DEVELOPMENT
12.1 The Pool Housing Fund In September, 1994, Government of Uganda represented by the Ministry of
Finance and Economic Planning signed an Agency contract with the
Housing Finance Company of Uganda Limited (HFCU Ltd) which allowed to
have the proceeds of the sale of pool houses deposited with HFCU Ltd the
agent, extension of mortgage facilities to public servants to acquire such
houses and to use the fund to provide mortgage finance to the general
public. The fund was opened to receive deposits from public servants who
had been allocated government pool houses.
The offer letters seen indicated that the beneficiary was required to deposit
Shs.3,000,000 into the fund within 12 months upon receiving the offer
while waiting valuation of the property by the Chief Government Valuer.
It was also a requirement for the beneficiary upon receiving the value to
deposit a valuation fee of 0.125% of the purchase price into the pool
houses sales committee Account in Stanbic Bank, IPS Building on
Parliamentary Avenue.
After valuation of the property, the beneficiary was required to deposit 8%
of the value as down payment upon which the title was to be transferred
into the buyers name and forwarded to HFCU Ltd for execution of
mortgage for the outstanding balance.
However the following are my observations:
(a) To date there is still no Parliamentary resolution to authorise
establishment of the above revolving fund despite the Minister of
Finance request to Parliament made in November 2004 and January
2007. It appears that the fund is still being operated illegally.
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The accounting officer explained that the ministry had requested the
Minister of Finance to consider issuing a statutory instrument
establishing this fund as a special fund for housing development in
the country to which he has received no response.
(b) Available information regarding the account in Stanbic Bank IPS
Building indicates that the account was opened for collection of
operational funds for the operation of the pool houses sales
committee. However, I have not been able to establish the balance
on this account as at 30th June 2007 because the signatories have
not changed from the Accounting Officer Ministry of Works and
Public Service .It is not known how much money lies on this account
and what it is used for.
(c) The status of the rent payments as at 30th June 2007 has not been
established.
The status report on the fund released by the HFCU Ltd as at 30th June
2007, revealed the following matters:
(i) A total of 261 beneficiaries were offered properties and paid up the
initial deposit of 8%, but have not yet executed mortgage with the
Housing Finance Company of Uganda Ltd as specified in close A6 of
the terms of offer. The value of offers outstanding in this category
is Shs.5, 062,500,000.
The Accounting Officer explained that this category has a mandatory
period of one year within which they are required to execute
mortgages and that it had not expired.
(ii) A total of 95 beneficiaries in various districts have had their titles
processed but have not executed mortgages with HFCU Ltd. I could
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not tell whether their offers were still valid as the offer dates were
not disclosed in the files.
In his response the Accounting Officer explained that the
beneficiaries had since been notified to execute their mortgages by
December 2007.
(iii) Shs.456, 552,780 has been collected from 343 properties which were
offered to public servants without valuation. These are properties
around Kampala, Ntinda, Entebbe and a few in Jinja. I do not know
why such valuations of nearby areas have taken that long.
The Accounting Officer explained that these were condominium
properties whose plans were not yet ready and that the majority of
the beneficiaries were making their payments as scheduled. He also
stated that for the property in Kampala, Entebbe and Ntinda they
had been inspected by the Chief Government Valuer.
(iv) 150 beneficiaries were allocated properties but have never deposited
any money with HFCU Ltd towards the purchase of their houses.
These are mainly in areas in Kampala, Kololo, Entebbe, Jinja and
some upcountry districts of Moroto and Masindi. This violated the
terms of offer that required them to deposit Shs.3,000,000 within
one year of offer. Majority of these offers were made in 2006 and
some in January 2007 and are worth Shs.3, 639,300,000.
The Accounting officer explained that the mandatory period 12
months had not lapsed and that an advert had been made urging
the affected beneficiaries to fulfil their obligation or else their offers
would be revoked.
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I advised him that all those offers for which no money has been
received yet should be sent a reminder if they are still within the 12
months period.
(v) 131 beneficiaries have not fully paid the 8% down payments and
their grace period has expired. Offers in this category are worth
Shs.2, 229,800,000.
In his response, the Accounting Officer explained that the
beneficiaries have been given a grace period of 30days in which to
fulfil their obligations after which their offers may be revoked for non
payment.
I advised him to consider cancelling those offers whose grace period
has expired before making the down payment and have them
referred back to the pool houses sales committee.
vi) VAT Payments to URA
During the year under review it was observed that on a monthly
basis a constant figure of Shs.170,219,432 was being paid to URA in
respect of assessed VAT on sales of pool houses. The authority and
basis used to arrive at the assessed amount was not explained.
The Accounting Officer explained that these were arrears whose
repayment schedule had been negotiated between HCFU Ltd and
URA. It was also explained that an appeal had been made in the
Commercial Court and HFCU had been asked to stop the remittances
to URA until the matter is resolved.
12.2 Land Acquisition a) Further to my observation in the Annual Report for 2005/06, (Para
11.3) during the year under review, an additional payment of
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Shs.186,600,000 was made to a Land owner towards purchase of
his land in Mutungo comprising of 5 titles which was acquired for
security reasons. This is in addition to an earlier payment made to
the same person of Shs.884, 530,000 during the previous financial
years.
The valuation report dated 17th September 2004 indicates that this
land was valued at Shs.1,110,000,000 and the Landlord has so far
been paid Shs.1,071,130,000. However Plot 67 has a caveat fixed
by the administrator of the estate of the late William Serwadda
dated April 2005.
The Accounting Officer explained that the issue is still before court
and has not been concluded.
b) In a related development, a total of Shs.311, 000,000 was paid
during the last two years to various persons in respect of
compensation for compulsory land/ranches acquisition by
government.
A copy of the valuation report seen for the ranches, (Ranch No.33
covering 638 hectares in Ankole ranching scheme and ranch No.19
covering 885 hectares in Singo ranching scheme) indicates that the
government has not fully paid for these ranches and as such cannot
have the titles. So far government has paid Shs.120,000,000 leaving
a balance of Shs.222,260,000 for both ranches unpaid.
The land at Isingiro (2076.24 hectares/5130.39 acres) comprising 9
titles was valued at Shs.373,000,000 of which Shs.191, 000,000 has
so far been paid. The valuation report for this land indicates that 5
titles are free from encumbrances while the remaining 4 titles valued
at Shs.195,000,000 are encumbered. I have advised the Accounting
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officer to handle the issue to its final conclusion because any further
delays may lead to complications.
I was also not availed with any of the above titles to confirm their
transfers to Uganda land commission.
12.3 Cash Payments Examination of expenditure for the year under review has revealed that
Shs.1, 864,727,946 (See details below) was drawn in form of cash under
various heads of departments as official advances to carry out various
activities. This represents 38% of the Ministry’s annual budget. The
expenditure exceeded the authorised imprest warrant of Shs.756,000,000
by Shs.1,108,727,946 contrary to regulations.
I have advised the Accounting Officer to discourage cash payments and
where necessary operate within the imprest limits authorised by the
Accountant General.
12.4 Un-completed Projects The following projects being implemented by the Ministry are registering
very slow progress and may not achieve their intended objectives. They
include:-
Project Amount Anticipated (Shs)
Budgeted Amount
Amount Released
% of Budget
Re-development of Kyabazinga Palace
3,123,000,000 123,057,000 123,057.000 3.9%
Residences of a former Head of State
500,000,000 121,000,000 121,000,000 24%
Markets and Workplaces around Kampala
4,600,000,000 70,000,000 70,000,000 1.5%
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• Redevelopment of the Kyabazinga Palace (0965)
The above palace was vandalised by the Military police who occupied
it between 1966 and 1979 after the abolition of Kingdoms in 1966.
The government then undertook to renovate the palace.
Funding of Shs.3,123,000,000 was anticipated in the financial year
2006/07 to enable completion of phase one of the project as per the
Ministerial Policy Statement. However, only Shs.123, 057,000 was
budgeted and approved by Parliament representing 3.9% of the
required amount for the year. With this amount very little could be
implemented.
• Completion of the former Head of State Residence
In 1993 H.E the President during his visit to Kitgum district pledged
to rehabilitate the residences of a former Head of State; one located
on Palabek Road, Kitgum town and another located at the Kitgum
Hilltop.
During the year under review Shs.500, 000, 000 was planned to be
spent on the project as per the policy statement. However only
Shs.121, 000,000 was budgeted and approved by Parliament for the
above project, representing 24% of the approved budget.
• Project 0967 – Markets and Work Places in and Around
Kampala
The above project was conceived during H.E. The President’s tour of
the city suburbs. During inspections of markets His Excellency
noticed the appalling situations in the market areas and directed that
some markets be cemented and other workplaces be sheltered. The
first markets to be worked on included Kalerwe, Kizito and
Nakulabye.
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The objective was to improve hygienic standards in the markets that
handle foodstuffs intended for human consumption, and to create a
healthy working environment for market vendors and artisans.
The planned expenditure for the year as per the policy statement
was Shs.4,600,000,000. However, only Shs.70,000,000 was
budgeted for and approved by Parliament for the year under review
representing 1.5% of the planned expenditure.
There is need for government to provide the necessary resources to
complete these planned activities. It is not good practice to go into
ventures that end up not being funded to completion.
12.5 Non Reconciliation of NTR Collections by URA The non-tax revenue collected by Uganda Revenue Authority on behalf of
the Ministry was not properly reconciled with the Ministry records. A
comparison between Monthly returns from URA and receipts issued by the
Ministry for the same period shows that a total of Shs.75,467,700 was not
receipted thus understating the NTR revenue by the same amount. The
records should be properly reconciled and any differences properly
investigated.
12.6 Lack of Approved Staff Structure The Ministry was granted its ministerial status in July 2006 with the vision
of ‘Planned Productivity and Sustainable Use of Land Resources in
the areas of Lands, Housing and Urban Development’. The Ministry
carries its activities through the departments of Lands and Survey, Land
Registration and Valuation, Physical Planning, Urban Development, Human
Settlement and Building. However the following matters were noted:
• The Ministry has continued to operate without an approved staff
structure by the Ministry of Public Service.
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• Although the Department of Building was indicated in the Ministerial
Policy Statement of 2006/07 by Parliament, it has not been incorporated
in the interim structure. This could have affected delivery during the
year.
The Accounting Officer explained that though a structure was approved by
Cabinet in June 2007, this was not agreed to and a new compromise
structure was developed. He further stated that consultations are going on
with the Ministry of Public Service to have the compromise structure
approved and implemented by the Ministry. It was also explained that the
department of building had been removed and a new department of
housing created.
I await for the finalisation of the process of having an approved structure
for the Ministry that will enable it fulfil its mandate.
12.7 Board of Survey Fifteen (15) grounded vehicles were not declared to the Board of Survey on
stores. The Board of Survey report on stores is silent on them.
The Accounting Officer was requested for an update on the progress made
to have them boarded off.
13.0 WATER AND ENVIRONMENT
13.1 Excess Expenditure A total of Shs.2,583,020,491 was over spent on consumption of property,
plant and equipments (fixed assets) as reflected in the appropriation
account based on the nature of expenditure for services voted. No
explanation was provided for the excess expenditure.
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13.2 Gross Taxes Payments (i) Acknowledgement of Non resource taxes
A total of Shs.2, 714,989,503 was paid to Uganda Revenue Authority as
gross tax payments incurred by the Ministry during the year. However, no
receipts to acknowledge the same by URA were availed for review. The
Accounting Officer explained that there was no clear procedure on who was
to retrieve receipts from URA after receiving payment from Accountant
General.
(ii) Un authorised payment of domestic taxes
Examination of a sample of payments on the gross tax account at bank of
Uganda revealed that a sum of Shs.467,617,255 was paid on behalf of
various private companies and non government organisations, in respect of
domestic VAT on procurement of goods and services. An additional amount
of Shs.125,522,954 was paid by the Ministry as taxes on goods imported by
a construction company. However I was not provided with the authority
under which the payments were made. Payment of taxes for unauthorised
private companies has the effect of introducing unfair pricing advantage
over the tax complaint companies.
13.3 Payroll (i) Un-authorized salary payments
Salary payments of Shs.217, 903, 360 were made to students who had
applied to join the Ministry for industrial training in various professional
disciplines to further their skills. During audit examination, it was however
noted that these payments are irregular as they lacked authority of Ministry
of Public Service.
The Accounting officer explained that the staff trainees are taken on to
enable them acquire some relevant experience after which they are sent to
the districts to support the water and sanitation programs.
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I have advised the Accounting Officer to have this policy regularised with
the Ministry of Public Service.
(ii) Violation of public service regulations on personnel recruitment
A review of a sample of Ministry payments to contract staff employees has
revealed that the ministry recruited and paid Shs.93,088,870 to contract
staff employees for jobs which were not advertised. There was no evidence
of either internal or external job advertisement having been made. This is
irregular as it contravenes Public Service regulations which emphasize
competition for public service jobs.
In his reply the Accounting officer stated that during the time under review,
proper procedures were not followed but have now been streamlined to
comply with Public Service regulations.
I advised him to always follow the right procedures recommended by public
service when recruiting staff.
(iii) Recruitments without job requirements
Some contract staff employees who did not meet necessary job
requirements were recruited without following proper procedures. The
admissions were made based on admission letters from Education
Institutions. One of the jobs is at the level of a consultant with Joint
Partnership Fund (JPF).
The Accounting officer explained that the JPF under which these people
were recruited has its own recruitment procedures and refers to their staff
as consultants.
I advised the Accounting Officer to regularize these appointments or have
these employees’ services terminated.
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(iv) Improper budgeting for NSSF (employer contribution)
It was noted that the Ministry did not budget for the employers 10%
contributions (212101) under the various projects where contract staff are
employed. Instead the NSSF contribution is charged on the item for
contract staff salaries. I find this irregular.
The Accounting officer promised to have this rectified in the new financial
year.
13.4 Expenditure Outside the Budget During the audit for the year 2006/07 it was noted that some projects with
bank accounts in Bank of Uganda were being operated by the Ministry.
Funding to these projects comes directly from the donors to the project
bank accounts in Bank of Uganda. However, they were not budgeted for
and appropriated by parliament in the financial year under review as
required by the law.
They include,
Project name Donor
Support for carbon finance IDA
New partnership for Africa’s
development fund
Global environment facility (GEF)
through its implementation agency
UNDP
Enabling Uganda phases I and
II
Development Biodiversity
information data bases
climate change UNDP
El-Nino action plan UNDP
Support to Ramsar Cop EU
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In his response the Accounting officer explained that there are some
donors who choose to fund projects directly through their accounts in Bank
of Uganda without going through the national budget.
I explained to him that management should streamline the budgetary
system so that all funds are budgeted for and appropriated by parliament.
13.5 Lack Of Approved Staff Structure The Ministry of Water and Environment was granted its ministerial status in
July 2006 to promote and ensure rational and sustainable utilization,
development, and effective management and safeguard of water and
environment resources. To date the audit shows that although the Ministry
had its structure approved by the Cabinet most of the posts have not been
filled led to forcing the Ministry to engage contract staff in some positions.
The Accounting Officer explained that the process of filling the vacant posts
had been initiated and interviews were to be held soon.
13.6 VAT Exemption on Water Works In January 2007, the ministry sought for clarification from Uganda Revenue
Authority about VAT on water works, to which URA clarified that the
Finance Act 2006 amended schedule II of the VAT Act, cap 349 by
substituting for paragraph 1(aa) with the following; “the supply of
feasibility studies, engineering designs and consultancy services
and civil works related to roads and bridges construction and
water works”.
This meant that for the case of water works the supply of feasibility studies,
engineering design, consultancy services, and civil works related to water
works is an exempt supply and therefore not vatable.
It also implied that VAT paid on all certificates issued before 1stJuly 2006
had to be accounted for. However by the time the clarification was issued
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by Uganda Revenue Authority it was seven months into the financial year
and many water works contracts had been signed earlier and as such the
Ministry had been paying the contractors certificates VAT inclusive. It is
not known how the VAT paid was subsequently recovered.
It was noted that most contractors especially those dealing in water works
who incurred Input VAT on the materials used on the water works such as
pipes, cement etc have responded by requesting the ministry to invoke
clause 45.1 of the water works contracts which requires the project
manager to adjust unit rates for the affected items of the contract.
However, the Ministry has not come out to address the issue of price
adjustments. The effect is that the out put VAT has been eliminated and
the contractors have been made to suffer input VAT as final consumers.
They complain that this has made them to incur losses and may impact on
their ability to execute the agreed contracts.
The Accounting Officer explained that the Ministry has remained vigilant in
ensuring that contractors deliver as per their contract terms until the issue
is addressed.
13.7 Management of the Ministry Canteen The ministry owns a canteen within its headquarters in Luzira which is
being operated privately. I have not been provided with the formal
contract/agreement between the Ministry and the operator of the canteen
and it’s not known whether the ministry receives any revenue from this
canteen.
The Accounting Officer promised to finalise the contractual arrangement
with the operator.
13.8 Payments to Suppliers not on the Pre-qualified lists In the financial year 2006/07 when the new Ministry of Water and
Environment was created, the Ministry continued to use the approved
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suppliers previously pre-qualified by the former Ministry of Water, Lands
and Environment for the period 2005/06 to 2007/08.
However, it was noted that a total of Shs.41,373,105 was paid to various
suppliers which were not on that approved list of the pre-qualified
suppliers. The implication is that the pre-qualified suppliers are denied the
opportunity of providing services even after going through the rigorous
process of pre-qualification. The practice creates a risk of over-invoicing
and procuring substandard goods.
The Accounting officer attributed this to the transitional problems the
ministry faced at inception.
I have emphasised to him the need to have all procurements made from
pre-qualified suppliers. Any departures from this requirement should be
handled in accordance with the regulations.
13.9Procurement Plan and Budget It has been observed that the procurement unit had no procurement plan
for the whole of the last financial year contrary to Sec.31 (f) of the PPDA
Act 2003. This means that procurements were handled in an haphazard
manner.
The Accounting Officer attributed this to inadequate staffing of the
procurement unit. He explained that the procurement unit has since been
reinforced by the appointment of a Principle Procurement Officer.
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13.10Small Town Water Supply and Sanitation Project Funded by GOU and ADF; PROJECT ID NO.P-UG-E00-002 LOAN NO.2100150008849 AND GRANT NO.2100155003571
13.10.1Counterpart Contributions It was noted that although Government of Uganda budgeted to provide
counterpart funds amounting to shs.1,536,000,000 during the financial
year, only shs.1,280,000,000 was released leaving a shortfall of
shs.256,000,000. This affects timely implementation of project activities.
Management explained that this was due to budgetary constraints caused
by the preparations to host the Common Wealth Heads of Government
Meeting (CHOGM) in Kampala in November, 2007.
13.10.2With holding Taxes It was noted that Shs.2,880,000 of whithholding tax was not deducted from
a supplier.
In addition, remittances of Shs.1,231,162 effected to URA were not
supported by receipts to enable confirmation of receipt of funds by URA.
According to section 136 of the Income Tax Act, non-deduction of
withholding tax can attract interest and penalties.
Management explained that the payment for printing of IEC Materials was
made without deducting the statutory 6% with holding tax in error and will
be rectified by deducting funds from the VAT which has not yet been paid.
A letter to the service provider informing them of this process and seeking
their no objection is due to be written.
The remittances to URA that were made but the receipts not collected were
due to an omission and the receipts were to be collected at once.
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Management is advised to adhere to the requirements of the Tax law to
avoid punitive action.
13.10.3General Standards of Accounting and Internal Control (i) Settlement of invoices
It was noted that there were delays in settling the contractor’s
invoices/interim certificates especially the Government of Uganda
portion of the invoices. Accordingly, a total of Shs.2,568,331,735
remained outstanding/unsettled by the end of the financial year
under review.
According to the conditions in the contract, delayed settlement of
contractors’ invoices (beyond 28 days) makes it liable for payment of
Interest to the contractor. This may result into unnecessary costs to
the project.
Management explained that the delay to settle the Government of
Uganda portion of the contractors’ invoices arose out of the lack of
funds to the project from the Government of Uganda within the
budget and that the Ministry was preparing a special request to
Ministry of Finance to provide a supplementary budget to meet the
contractual requirements of the project.
I have advised Management to expedite the process of settling the
invoices to avoid litigation.
(ii) Advances
Advances to project staff totalling to Shs.13,734,000 had not been
accounted for by the time of audit in December 2007.
Delays in accounting for advances can lead to extension of the
Project life leading to extra administrative costs.
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Management explained that the accountabilities had not been filed
by the time of audit but they undergoing authentication to the
satisfaction of the Internal Auditor.
Management has been advised to ensure that accountabilities are
always submitted promptly.
(iii) Procurement
A review of the procurements undertaken by the project revealed
that these were carried out in accordance with the bank
procurement guidelines except for the following:-
(iv) Delayed Completion of contracts:
It was noted that the following contracts had not yet been
completed by the time of audit in November 2007, despite the fact
that their contractual periods had expired:-
Lot 2: Mityana expired on 3/7/07
Lot 2: Mpigi expired on 10/5/07
Lot 2: Kigumba expired on 6/5/07
Delays in completion of contracts can lead to failure by the project to
accomplish all the planned activities within the project duration.
Management explained that the initial contract completion date was
03rd July 2007 but due to substantial delays caused by accessibility
issues on some of the construction sites, an extension was
authorised for the entire contract up to 17th October, 2007.
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(v) Supervision Mission Recommendations
The following AFDB Supervision Mission recommendations of 26th
March-6th April, 2007 had not been implemented by the time of
audit in November 2007:-
• GoU to settle all outstanding balances to the contractors and submit a report on status of GoU contribution including the balance owed by 30/6/07.
• GoU to provide evidence of reimbursement of the
ineligible payments made from the special accounts by 30th June 2007.
• GoU to submit to the bank a follow up report on the
status of implementation of recommendations of the auditor by 15/5/07.
• GoU to complete the works according to respective
contracts by 31st October 2007. • GoU to replace the projects excel based accounting
system with a specialised accounting software package.
There is laxity on the part of Management to implement agreed
recommendations. This practice can lead to punitive action such as
suspension of disbursements by the Bank.
Management is advised to ensure that all recommendations of the
supervising Mission are implemented.
13.11Farm Income Enhancement and Forest Conservation Project; Project ID NO.P-UG-AAC-001; ADF LOAN NO. 2100150008296; ADF Grant NO.2100155003172; and NDF Credit No.441
13.11.1Project Financing According to the financing agreement, the project was supposed to be
funded as follows:-
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Source Amount (UA) Percentage
AfDB loan 31,600,000 62
AfDB grant 9,900,000 19
Nordic Development Fund (NDF) 4,200,000 8
GoU 5,600,000 11
TOTAL 51,200,000 100
However, for the period under review, there was no contribution from the
NDF. In addition, Government of Uganda only provided Ushs.130 million to
the Agricultural Enterprises Development component and none to the other
two components. This can affect timely implementation of project activities
which may lead to Project extension and unnecessary administrative costs.
Management explained that due to limited funds allocated to the Ministry
by Ministry of Finance Planning and Economic Development. The funds
were allocated to the Agricultural Enterprise Development Component in
the Ministry of Agriculture Animal Industry and Fisheries.
For Nordic Development Fund, the conditions necessary before initial
disbursement had been fulfilled.
13.11.2Lack of National Project Coordinator According to the conditions precedent to the first disbursement contained in
Article five of the Financing Agreement it was a requirement that the
National Project Coordinator (NPC) be recruited not later than 6 months
after the first disbursement. However, the position of the NPC has not been
filled. This implies that the vital roles of coordinating the activities of the
two main components of the project, supervising the implementation of
these activities and general administration of the whole project may not be
effectively performed.
Management explained that the post of NPC could not be filled at the time
because some of the candidates interviewed contested the results. The
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concerned candidates referred their cases to both the PPDA and IGG.
Investigations were carried out by the IGG. After review of the PPDA and
IGG reports, the Bank recommended that the post be re-advertised and
the position has now been re-advertised and interviews shall be held soon
after the last date of submission of applications of 7/1/2008.
Management is advised to expedite the process of recruiting a Coordinator
and ensure that the correct procedures are followed.
13.11.3Project Steering Committee: According to Article V of the financing Agreement, the project is supposed
to have a steering committee which involves the Permanent Secretaries of
the following Ministries: Ministry of Water and Environment, Ministry of
Agriculture Animal Industries and Fisheries, Ministry of Finance, Planning
and Economic Development, Ministry of Tourism, Trade and Industry,
Ministry of Local Government, Ministry of Gender, Labour and Social
Development and Office of the Prime Minister, with a member from Uganda
National Farmers Federation. The Project steering Committee met only
once as opposed to the required two meetings per annum. In addition, the
Secretary to the steering committee who is supposed to be the National
Project Coordinator (NPC) has not yet been recruited.
This implies that the project steering committee is not effectively giving
policy guidelines to the project.
Management explained that the Steering Committee was expected to meet
at least twice a year for among other things to approve recruitment and
appointment of key staff, annual work plan and budgets and annual
trainings to ensure that they are consistent with project objectives.
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During the period under audit, the project activities were basically start up
activities and that the Steering Committee shall be more active as project
activities pick up in the next financial year.
Project Management should ensure that all the required meetings are held
regularly.
13.11.4General Standards of Accounting and Internal Control (i) Book Keeping
The following books of account were not being maintained contrary
to the ADB/F book keeping guidelines:-
• Currency register
• Summary register
• Contractors ledger
Management explained that financial management guidelines had
been developed and shall guide the project on proper ADB financial
management system including the establishment of the registers.
It is recommended that the guidelines be implemented without
further delays.
(ii) Budget Management and Control
It was observed that each component of the project prepares work
plans/budgets and spends the funds as a separate entity. However,
there are no vote books maintained to monitor how the budget
allocations have been utilized. This implies that funds may be spent
uncontrollably.
In addition there was no budget variance analysis carried out by the
project to ascertain the extent of deviations from the budget as well
as providing explanations for each major deviation.
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Management explained that this was due to absence of proper
financial guidelines at the time and that since then each of the
components had established a vote book following the project
financial management guidelines.
This will be verified in the subsequent audit.
(iii) Accounting and Operations Manual
The Project does not have an accounting and operations manual.
This implies that the various components have no uniform guidelines
to refer to in their day to day operations and book keeping.
Management explained that this was a result of delayed recruitment
process of the technical staff of the NPCU mandated to produce the
guidelines, a process which was finalized only after 30/6/06. The
accounting manual will be finalized in January 2008.
(iv) Supervision Mission Recommendations
The following recommendations made during the supervision mission
held between 16th–24th September 2007 have not yet been
implemented by management:-
• National Project Coordinator be appointed expeditiously to reduce
the impact of lack of the NPC on implementation achievements.
• Production of District Accounting guidelines be finalized and put
into use by December 2007.
• A process of acquisition, installation and training for accounting
software be concluded as soon as possible to enable the
operationalisation before 1st December, 2007.
• Insurance to all project vehicles that had been procured be
expedited.
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• Recruitment of a Watershed Management Advisor be made and
completed by 15th November, 2007.
Management explained that they have made some progress in
implementation of some of the recommendations.
Management is advised to ensure that all recommendations of the
supervising Mission are implemented promptly.
13.11.5Forestry Component (i) Fuel Deposits
It was noted that shs.12,000,000 was deposited in Standard
Chartered Bank for Forestry coordinating Unit to facilitate execution
of component activities. The fuel was allocated in the ratio 4:3:3:2
for Project Coordinator, Project Manager-Water-shade, Training and
participating officer and Project Manager-Tree planting.
However, during that time there were no project motor vehicles for
which the fuel would be used. Further more, no motor vehicle log
sheets were availed for audit, thus the activity/ purpose of
movement was rendered difficult to establish.
I was not able to establish whether funds were used for the intended
purpose.
(ii) Repair of Motor Vehicles
A sum of Shs.6,285,383 was spent on the repair of the following
Motor vehicles: UG 1293 S, UG 1443 S, UG 1248 S and UG1442 S.
However, these vehicles are not the property of FIEFOC Project.
Management explained that in the initial stages of the project start
up phase, there were no project vehicles whereas preparatory work
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had to be done .The officers designated to the project were using
vehicles from the Forestry Inspection Division for project supervisory
and preparation work pending the procurement of the project
vehicles. Such vehicles had to be fuelled and maintained.
(iii) Fixed assets management
• Although the forest Component opened a fixed asset register, it
was noted that the register was not kept up to date. For instance
vehicles UG 1480 S and UG 1481S Pajero were not recorded in
the assets register. It was further noted that the same furniture
procured by the component had not been engraved at the time
of audit.
It was also noted that in the agriculture component all assets
procured (9 vehicles and assorted office furniture and equipment)
had neither been recorded in the register nor engraved. The fixed
asset registers for Agricultural enterprise development and NPCU
were not availed for audit.
In the absence of a complete fixed asset register, it becomes difficult
to verify the existence and monitoring of project assets.
Management explained that the furniture was not yet engraved at
the time of the audit because the procurement process for securing
a firm to engrave the assets was still underway. The vehicles have
now been entered in the asset register and furniture will be
engraved.
13.12Joint Partnership Fund
13.12.1Government of Uganda Counterpart Contribution It was noted that Government of Uganda has not fulfilled its obligation to
contribute towards the project by way of Tax refunding. As at the year end,
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there was a high cumulative outstanding VAT amount of Ug.Shs.2.3 billion.
This implies that the programme may not obtain value for money on the
VAT tied up on the various expenditures incurred.
The accounting officer has indicated that the matter has been raised with
the Ministry of Finance, Planning and Economic Development.
13.13Water and Sanitation Development Sanitation Development Facility – South Western Branch (ADA:1709-00/2005, EU:236A & GOU:0160)
(i) Operations Manual
It was noted that the program does not have an operations manual. In the
absence of an operations manual, program staff and other implementing
agencies (e.g. the districts) have no guidance to follow while executing
their duties.
This was caused by the delay in procurement of the consultancy that is
supposed to prepare the manual. He promised that the Operational Manual
for the Project will be available within the next three months.
(ii) Status of Program Implementation
There were delays in release of funds from the Joint Partnership Fund (JPF)
account. Funds for the first quarter (July-September 2006) were received at
the end of September 2006 whereas funds for the second quarter
(October-December 2006) were received in January 2007.
This implies that the activities are not implemented on schedule and
according to work-plan. This can lead to extending the Project life and
extra administrative costs.
Management attributed the delay to the Project Management Committee
(PMC) which has to first approve the Work plans and reports before funds
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can be transferred to the project account. It was explained that for the
particular quarter, the PMC did not sit on schedule and that the problem
had been acknowledged by the Ministry and modalities were being planned
to minimize the delays.
14.0 EDUCATION AND SPORTS
14.1 Extra Budgetary Financing
Under the provisions of the constitution, all expenditure must be approved
in the Appropriation Act. However, examination of project records revealed
that some programmes were being run outside the approved budget for the
ministry. These include the following:
Project 30thJune account
balance (Shs) SESEMAT project 968,520,880 Development of Human resources project 848,530,733 Uganda and Norwegian schools cooperation 671,565 IDA energy for rural transformation A/C 213.213032.1 213.213029.1
94,907,526 3,362,219
Common wealth association of learning. 3,754,149 Sports development fund
There is a risk that duplicate activities may be undertaken. The Accounting Officer has explained that no duplicate activities are
undertaken and that all activities undertaken through this mode of
financing are not reflected under the work plans for the main stream
estimates of the Ministry.
The Accounting Officer should further streamline the operations of the
Projects to ensure that all projects under the Ministry are budgeted for,
appropriated by Parliament and disclosed in the Financial Statements.
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14.2 Tax Expenditure Not Budgeted for The Ministry incurred taxes amounting to shs.2,223,959,178 during the
year. The amount was paid to URA by Treasury on behalf of the Ministry
through gross tax settlement system. The Ministry has recognised this as
expenditure in the Statement of financial performance. However, this Tax
expenditure had not been budgeted for by the Ministry and is therefore
extra budgetary. It is not clear why Treasury deviated from the existing
procedures relating to settlement of taxes under the Gross Tax Payment
System.
14.3 Undisclosed Cash Balances The Ministry has projects which operate outside the Integrated Financial
management System (IFMS). At the end of the financial year, the project
balances totalling Shs.9,911,668,898 were not consolidated in the Ministry
accounts nor was there any disclosure to that effect.
In his written reply the Accounting Officer stated that he is waiting for
further guidelines from the Accountant General on the issue. I await final
proper consolidation of Project activities in Ministry statements.
14.4 Interest on Unpaid Tax
During the year under review, Shs.33,967,506 was paid to a clearing firm in
two instalments in respect of interest on un paid tax on goods donated to
schools under the humanitarian Assistance Programme. The interest was
arrived at after a legal mediation by the Solicitor general and subsequently,
a consent judgment was drafted.
However, the company is not a withholding agent and therefore it was
irregular for the Ministry to pay interest on unpaid tax directly to the
company. Instead the amount should have been remitted to URA. At the
time of audit, there was no evidence that the interest was later remitted to
URA as required.
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The inability by the Ministry to meet its obligation of paying the tax well
aware of the repercussions led to the nugatory expenditure.
In his reply the accounting officer explained that this was a court ruling to
which he had to comply.
14.5 Easy learning cards project
A total of 35,000 easy learning cards under the easy learning Project were
purchased in July 2005 at a cost of USD 175,000 and handed to a
consultant. Over the period, 7024 cards were sold and Shs.63,216,000 was
raised from the sales at a unit cost of Shs.9,000. I was not provided with
accountability for the monies collected.
(i) Unutilized card balances:
27,976 cards costing USD 139,880 and expected to realise Shs.335,712,000
were still in stock at the time of audit. In the event that no call center is
opened and therefore operational, there is a possibility of loss on the side
of government.
(ii) Project Management
It appears that there is lack of interest in the entire project because out of
an expected budget out turn of USD 3,200,000 only USD 175,000 has been
released. This represents a percentage of only 5.5% of money released for
the Project.
I recommended that a review of the entire project should be made with a
view of addressing all the issues identified. The monies so far collected
from the sales by the consultant should be accounted for.
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14.6 Non-Remittance of WHT
Section 120 (1) of the Income Tax Act requires the Ministry to withhold tax
on any payment exceeding Shs.1,000,000. Accordingly, the Ministry with
held Shs.70,687,942 from payments made to its suppliers and contractors.
The payments were made through opening letters of credit with various
commercial banks.
However, the withheld amount was not remitted to URA within 15 days
after end of month as required under Section 124 (1) of the Income Tax
Act.
The inability to remit the funds denies Government access to these funds to
finance other important activities.
During discussions, the accounting officer produced documentation
instructing Bank of Uganda to remit the monies to URA. However, at the
time of the report there was no evidence that the remittance was actually
done.
14.7 Inspections on Educational Institutions
During the period under review inspections of a sample of education
institutions was carried out and the findings are indicated below:-
(i) Staffing
It was noted that a number of the institutions inspected had inadequate
number of staff and some of the staff did not have their appointment
regularised. This was noted especially in the transferred institutions.
In his reply, the accounting officer explained that the ministry had made
submissions for recruitment of staff of Health training institutions to the
Education Service Commission totalling 267.
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I await for the response from the Education Service Commission.
(ii) Non deduction of WHT
Contrary to the tax regulations, a number of institutions were not deducting
with holding tax. Non compliance with tax requirements denies Government
revenue to implement important activities.
Details are as below.
Institution Gross total amount
WHT lost
1 Mulago school of Nursing and Midwifery
729,282,050 43,756,923
2 Butabika School of Psychiatric Nursing
21,013,700 1,260,822
3 Bishop Willis Core PTC Iganga 43,544,160 2,612,6504 Paidha PTC 33,590,600 2,015,4365 Arua Core PTC 76,928,800 4,615,7286 St.John Bosco lodonga 62,723,650 3,763,4197 Jinja School of Nursing and
Midwifery 202,790,530 12,167,432
I recommend that the provisions of the tax law be complied with. (a) Mulago School of Comprehensive Nursing and Midwifery (i) Staffing
It was noted that 27 teaching staff who had been appointed by MOH , did
not have their appointment regularized by MOES by time of audit .Six non
teaching staff including the school bursar had no appointment letters from
MOES. This is potentially dangerous and risky especially for the bursar who
is entrusted with a lot of government funds.
In his reply the accounting officer agreed with the observation and stated
that the issue was being handled by the relevant department.
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(ii) Procurements: Shs.729,282,050
During the period under review, the school procured supplies worth
Shs.729,282,050 from various suppliers. However, it was noted that the
supplies were not procured through competitive bidding as no award letters
or contracts were provided for audit review. As such, I could not confirm
whether, there was value for money achieved in these transactions.
(b) Butabika School of Psychiatric Nursing
The school was founded 40 years ago with the mandate to train competent
mental health professionals for Uganda and the great lakes region.
(i) Accommodation
Where as the school is housed in new buildings, accommodation is still
inadequate which has resulted into sharing of class rooms with another
independent institution on the same compound. The school also lacks
adequate accommodation for its staff.
(ii) Lack of a sick bay
Despite the fact that the school is for boarding only, there is no sick bay to
offer first aid to students. This puts student lives at risk in case of
emergencies.
(iii) Book keeping
The books of account were not up-to-date. The cash analysis book was
opened in December 2006. All transactions for the period July 2006 to
November 2006 were not recorded any where.
(iv) Stores records
The stores records were not up to date therefore I could not perform, a
stock check.
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(v) Chaining of payments
As a requirement, all payments exceeding one million should be subjected
to with holding tax. However, it was noted that the school breaks down
payments to amounts below the threshhold for WHT purposely to avoid the
requirement. For instance, shs.6,213,000 was paid to M/s Masha General
merchandise ltd for supply of food stuffs using seven cheques all issued on
28th February 2007.Also, Shs.3,962,500 was paid to the same firm on 18th
December 2006 using four cheques. This practice denies government funds
to implement important activities and also leads to wastage of cash
stationery.
In his reply, the accounting officer explained that he had instructed the
Principal to ask the firm to process and have WHT deducted. At the time of
the report, there was no evidence that this had been done.
(c) Jinja PTC
The school has a total student enrolment of 319 who are all government
sponsored with a staff strength of 27 ( 13 tutors ,3 non teaching and 7
support staff).
The school lacks transport as the school lorry (UCD 876) has been
grounded for over 2 years.
(i) Accommodation
The College is housed in dilapidated buildings shared with a primary
school. There is no dinning room for the students and food is taken
while standing. The bursar’s office is extremely dirty, dusty and
besides water percolates through the ceiling hence soiling
accounting documents. Given the government regulations which
require that documents be kept for a specific period, it is unlikely
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that the manner in which the records are kept will permit future
reference if need arises.
(ii) Book keeping
Stores records availed for review were not up to date .The stores
book for receipts and issues of beans was found to have been last
up dated on 2/05/05.
(iii) Compliance with PPDA requirements
The college had no pre-qualified suppliers and all purchases were
being made by a one M/s Takoba Rose the college caterer on a cash
basis. Given that this person is also responsible for maintaining the
stores records with almost no supervision, the stores records cannot
be relied upon and cases of abuse and mismanagement of resources
cannot be ruled out.
I recommended that duties regarding maintenance and purchases of
records be segregated. Cash purchases should be restricted to
emergencies. The college administration should also ensure total
compliance with the procurement regulations.
(d) Bishop Willis Core PTC- Iganga
The school started as a theological college in the early 1920s by COU.
Through a series of up grading, the school is one of the original core 23
PTCs in the country located 800 meters off the Jinja –Tororo high way. The
following was observed from the audit inspection carried out at the school.
(i) Farm
The college runs a farm which was opened with assistance from ADB.
However, there is no farm manager to manage the activities of the farm.
Given the already staffing problems at the school, it is important that a
manager is recruited as soon as possible.
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In his written response the accounting officer explained that he had
instructed the Principal to identify and hire a person with relevant
qualifications to temporarily manage the farm as he awaits for ESC to
recruit.
(ii) Sick bay
The school has no substantive nurse at the school which has led
management to locally recruit against normal procedures. Where as, the
school has 14 blind students, there is lack of a tutor in Braille.
The Accounting Officer explained that the regularization/validation and
recruitment of non teaching and support staff exercise done in 2003 did not
give the department all the required staff while some personnel presented
failed the interviews. He further indicated that this would be taken seriously
to ensure proper recruitment.
(iii) Laboratory block
There is no laboratory technician at the school but a laboratory tutor
currently carries out the responsibility for the lab. Also, there was no record
of items issued to the College by the Ministry.
(e) National meteorological training school
The school was started in 1990 under the department of meteorology in
the then Ministry of natural resources to train medium meteorologist. It was
transferred to MOES in 1998 with current entrants of 43 students.
The inspection revealed the following:
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(i) Staffing
The school has an acute staffing problem with no substantively appointed
lecturers. Reliance is attached to part time lecturers who come in and go at
will.
(ii) Accommodation
There is inadequate accommodation for both students and the staff.
Students are housed in a dilapidated and bat infested structures which
require urgent renovations.
There is no laboratory for the science equipment, no kitchen nor a student
hostel.
(iii) Transport
The school has no means of transport with only a now grounded Daewoo
car registration number UG 0061S inherited from the then Ministry of
natural resources.
(iv) Book keeping
The cash book presented for audit was very untidy with a lot of white
wash. The cash book was not maintained professionally.
(v) Funds not accounted for; Shs.118,485,702.
The school received shs.118,485,702 from Ministry of Education and Sports
in respect of capitation grants and other activities. However, accountability
documents were not provided for audit review. The details of the
expenditure are shown below:-
Cheque Date Purpose
Amount
984088 9.8.06 Capitation grant July to Sept.
6,176,250
533333 15.11.06 Capitation grant Oct _ Dec
6,176,250
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60207 5.12.06 Training equipments, instruments, furniture and fencing
48,755,000
68100 8.2.07 Capitation grant Jan to March
6,176,250
143955 30.5.07 Capitation grant April to June
6,176,250
150913 21.6.07 Payment for exams and monitoring
5,025,702
990915 25.8.07 Assorted renovations
40,000,000
TOTAL 118,485,702
I recommend that the Ministry reviews the staffing, accommodation and
transport issues identified above. The PTC should also provide
accountability for the unaccounted for funds.
(f) Nakawa VTI
The school started in 1971 with assistance from government of Japan with
the objective of retraining workers from various industries. The school gets
assistance from JICA. It has a current student enrollment of 560 of which
only 60 are GOU sponsored. The audit inspection exercise revealed the
following:
(i) Staffing
The school is inadequately staffed with only 25 out of the approved staff
structure of 46 positions filled.
(ii) Staff advances: Shs.7,000,000
Shs.7,000,000 advanced to staff remained un accounted for at the time of
audit. Further more, contrary to financial regulations, no advance ledger
was being maintained at the institute. In absence of an advance ledger, it
becomes difficult to monitor the movement of advances.
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(iii) Missing vouchers
Payment vouchers totalling to Shs.61,251,100 were missing and therefore
not availed for audit examination. I was not provided with the explanation
for the missing documents.
(iv) Un accounted for funds
A total of Shs.93,289,000 paid from two cheques (990946 Shs.43,089,000
dated 25.8.06 for assorted renovations and 060714 of Shs.50,200,000
dated 12.12.06 for training) remained un accounted for at the time of
audit. Delays in accounting for funds may lead to falsification of documents.
The Ministry is advised to review the staffing problem in the Ministry. In
addition the Institute should provide supporting documentation related to
unaccounted for funds.
(g) Paidha PTC
Paidha PTC was established in 1982 as a Government founded grade 11
Teacher training college. In 1985 it was upgraded to a grade 11 TTC. It is
located at Alisi Village in Paidha Town Council on 80.9 hectares piece of
land.
It has a current student enrollment of 360 government sponsored students.
(i) Physical Structures of the School
• Boys dormitories consist of mud and wattle structures • Teacher’s houses are grass thatched mud and wattle structure
• A grass thatched mad wattle structure serves as the kitchen, there is no
dining hall, and students are served food in the open.
• There is only one 4 – classroom block accommodating all the 360
students.
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• A multipurpose hall that collapsed in 2006 has not been replaced to
date. Instead a temporary structure with reeds and tarpaulin roof has
been erected as a replacement.
• The staffroom consists of a make-shift wooden structure.
• Administration block is in a very dilapidated state.
• A library block constructed by GQ Investments at a total cost of Shs.
152,716,684= and handed over on 29.6.2007 has its floors cracking by
the time of the inspection.
• The girl’s dormitory though in a better state, lacked beds and as such
girls sleep on the floor.
• The college lacks electricity for lighting.
• It was also noted that people who were compensated in October, 2001
have re-encroached on the college land.
In addition, I was not availed a copy of the land title, as such I could not
establish the ownership status of the land.
(b) Book-Keeping (i) Stores
It was noted that record keeping in stores was very poor. There were no
stock-cards and stores ledgers availed for audit. Receipts into and issues
from stores were not recorded anywhere. Science equipment and chemicals
received from the Ministry on 10.2.2007 had not been recorded in stores
ledgers by the time of inspection. As such I could not confirm whether the
quantities issued to the college were actually received and put to good use.
The store appeared disorganized with items scattered all over. The person
working as store-keeper was a grade 5 teacher without any store-keeping
background or training.
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(ii) Books of Account
Similarly, it was also noted that the book keeping in accounts was poor.
Monthly bank reconciliations were not being done. For example from the
month of September 2006 up to the end of the financial year i.e. 30.6.2007
no bank reconciliation had been done contrary to S.345 of the Treasury
Accounting Instructions 2003.Receipts and payments for the months of May
and June 2007 had not been posted in the cashbook at the time of audit.
Paid vouchers were not cancelled with ‘PAID’ stamp.
(iv) Procurement – Shs.33,590,60
It was also noted that during the period under review, the college paid out
a total of Shs.33,590,600 in cash to different suppliers for different items
procured by the college contrary to financial regulations. There is a risk
that Value for Money may not have been achieved.
I recommend that the Ministry should review the state of facilities in the
College and come up with an Action Plan to address the issues. The
College is advised to ensure that record keeping at the stores and books of
account is done in accordance with the TAI. The College is further advised
to adhere to the provisions of the Income Tax Act and PPDA.
(h) Arua Core PTC
Arua Core PT started as a school for training clergymen by the Inland
Mission for Africa under the Anglican Church missionaries in 1946.
Between 1946 and 1960 it changed to training vernacular teachers. In
1962 it was elevated to a grade 11 teaching training college and again to a
grade 111 TTC in 1986 and in 1997, it became a Core PTC. It has a current
enrollment of 450 students. An audit inspection carried out on 3.7.2007
revealed the following:-
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(a) Facilities in the College
• The college suffers from persistent power failure due to old
underground cables that cause short circuits once it rains.
• The science laboratory block lacks basic facilities for a science
laboratory.
• The kitchen is in such a dilapidated state that it may collapse anytime.
(b) Book-keeping (i) Stores
It was noted that the record keeping in stores was inadequate.
Items were not entered in the stores ledgers. For example, the
following items valued at Shs.7,097,600 procured on various dates
were not entered in the stores ledgers.
Date of delivery
Item Quantity Unit price Amount
4.12.06 Posho 1062 kgs 800 849,600=-do- Cassava
flour 1061 kgs 500 531,000=
-do- Rice 672 kgs 1500 1,008,000=-do- Sugar 320 kgs 1800 576,000=-do- Cooking oil 40 ltrs 2250 90,000=16.1.07 Tyres 4 pcs 270,000 1,080,000=16.4.07 Cassava
flour 300 kgs 450 135,000=
-do- Salt 2 bags 9000 18,000=-do- Cooking oil 20 ltres 2,250 45,000=-do- Onions 1 basin 15,000 15,000=20.3.07 Rice 500 kgs 1600 800,000=-do- Fish enkejje 1 sack 120,000 120,000=20.2.07 Rice 500 kgs 1500 750,000=28.9.06 Tyres 4 pcs 270,000 1,080,000= 7,097,600=
In absence of proper store ledgers, it becomes difficult to monitor
movement of items procured and also exposes the stores to misuse.
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(iii) Wasteful Expenditure – Shs.14,535,000
A sum of Shs.14,535,000= was paid to an individual for emptying of
College pit latrine between August 2006 and March 2007.
I consider this expenditure wasteful due to the amounts involved in
this activity and also reflects poor planning on the part of
management as this amount could instead have been used for
construction of a new pit latrine(s). Whereas the emptying could
have been allowed on an emergency basis, the continued exercise
cannot be justified because it weakens the physical structure of the
latrine and ultimately putting student lives at risk.
(iv) Uniform/ICT Account
The College operates a uniform/ICT Account No. 0140091548001
with Stanbic Bank Arua Branch into which proceeds from sale of
uniforms to students and ICT charges paid by students are
deposited. A copy of the bank statement availed for audit revealed
that the account had a credit balance of Shs.44,980,273 as at
31.5.2007.
I could not ascertain the operations of this account as no cashbook
and payment vouchers were available for audit.
I recommend that the Ministry reviews the state of facilities in the
College and come up with an Action Plan to address the issues. The
PTC Management should improve on its store-keeping and also avail
this Office with supporting documents for the uniform/ICT account.
(i) St. John Bosco Lodonga
St. John Bosco Core PTC started in 1945 as a grade 1 Teacher Training
College for boys by the Roman Catholic Fathers. Admission of girls started
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in 1990. It was up graded to a Core PTC in 2001. It has a current
enrolment of 451 students. An audit inspection carried out at the college
on 5.7.2007 revealed the following observations:-
(a) College Facilities
• Staff houses are in dilapidated state and need serious
renovations.
• There is no electricity as such a lot of money is spent on the old
generator that is used for lighting the college.
• 12 solar panels with 9 batteries installed by Roko to help alleviate
this problem cannot serve the entire college. It only services the
computer laboratory for 1 – 2 hours. Besides one of the inverters
that blew on 6.2.2006 had not been replaced by the time of
audit despite the fact that Roko was notified about this.
• The college truck is in a dangerous mechanical condition and
breaks down quite often.
• A firewood kitchen that is under construction by Zebra Associates
is too small for the purpose and appears badly designed.
(b) Book-keeping (i) Stores
It was noted that record keeping at the College store was poor.
There was no store ledger presented for audit inspection in the
science laboratory. As such science equipment and chemicals
dispatched on 8.2.2006 from Ministry stores could not be traced in
the college records. I could therefore not confirm receipt of these
items and how they were being used.
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Similarly, in the general stores, record keeping was not in any way
better. Ledgers were not well maintained. A sample of items worth
Shs.8,902,483 procured on different dates could not be traced to the
stores ledgers therefore casting doubt as to whether they were
actually procured and received into the store for the benefit of the
college community as a whole.
(ii) Cash purchases
A total of Shs.62,723,650 was paid out in cash to various suppliers
and service providers during the year contrary to Treasury
Accounting Instructions.
It was further noted that these suppliers and service providers were
not selected through competitive bidding contrary to PPDA
Regulations.
(iii) College Truck – Shs. 31,000,000
The college procured an old truck a Mitsubishi canter 1991 model,
registration number UAH 226R at a cost of Shs.31,000,000 on 2
October 2006 from an individual. This procurement was conducted
contrary to the PPDA guidelines. I could not therefore ascertain
whether value-for-money had been obtained. This purchase is also a
violation of government policy of not procuring old motor vehicles.
In the absence of express authority for this transaction, the
expenditure be disallowed as a charge on the consolidated fund.
Besides, I could not identify the source of funding for this capital
expenditure as the college only receives grant for recurrent
expenditure from the Ministry.
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(iv) Funds Not Accounted For Shs.22,101,500
A sum of Shs.22,101,500 paid out for various activities had not been
accounted for by the time of writing this report. This is irregular and
the funds should be accounted for else recovery measures be taken.
(v) Missing vouchers: Shs.21,432,000
Payment voucher involving expenditure totalling Shs.21,432,000
were found missing. This could be a result of poor record keeping or
an attempt to hide audit evidence. The records should be availed for
audit review. Details as under:
I recommend that the Ministry reviews the state of facilities in the
College with a view of coming up with an action plan to address
them. The College should desist from making a lot of cash
purchases and ensure that funds not accounted for are accounted
for and documentation provided to this office.
(j) Arua Technical Institute- Ragem
Arua Technical Institute started as Uganda Technical Institute – Ombaci in
1985. In 1987 was closed by the Government. After an appeal by the
Community, it was reopened in 1990 with assistance from British American
Tobacco BAT (U) Ltd.
It has a current enrolment of 220 students. An inspection carried out at
the Institute on 6.7.2007 revealed that:-
There is lack of a girl’s dormitory which has adversely affected enrolment
as there are only 20 girls enrolled at the Institute. There is also acute
staffing problem. Out of the 15 teaching staff at the Institute only 8 are
formally appointed and are on payroll while the rest have never been
appointed.
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However, it was noted that the Bursar had kept proper books, keeping
accounting records up to date and well organized.
(k) Canon Lawrence PTC
The PTC hired an audit firm Ms ABOMAL to conduct an audit. An
examination revealed that Shs.1,400,000 had so far been paid to the firm in
respect of audit fees and audit expenses. This is contrary to section 91 of
the Universities and other tertiary institutions Act which mandates the OAG
to conduct the audit or to appoint the auditor. It was also noted that the
format of accounts is not in accordance with the TAIs.
It is recommended that the monies paid out to the audit firm be disallowed
as a charge on the consolidated account. The accounting staff need to be
sensitized on the format of the GOU accounts.
14.8 Support to the Education Strategic Investment Plan (ADB Education II Project), ADF Loan No.F/UGA/PL/1AZ/2001/4 and Grant No. F/UGA/GA/1AZ/2001/4
14.8.1Unaccounted for Funds The following districts had outstanding balances unaccounted for at the
time of audit in December as shown below:-
District Amount (Shs.) Apac 17,692,061Kanungu 6,614,442Kiboga 36,798,663Kitgum 22,405,748Masaka 5,737,578Moroto 1,787,273Nakapiripirit 2,116,523Palliisa 2,913,186Tororo 24,959,229Wakiso 10,611,419Total 131,636,122
Delays in accounting for funds may lead to falsification of documents.
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Management explained that according to School Facilities Guidelines for
construction of Primary School Building Program component of the Project,
contracts awarded under this component should provide for a defects
liability period of six (6No.) months before final retention is paid for. The
above funds were retention funds not paid to the contractors due to this
clause stated in the contracts. Therefore by the time of carrying of this
audit the defects liability period had not expired resulting into these funds
being not accounted for by the stated Districts.
Management should make a follow-up of the accountability.
14.8.2Supervision Mission Recommendations According to the ADB supervision mission of 11-25 June 07, the following
recommendations were to be implemented by Management:-
Recommendation To be implemented by
1 Defective equipment supplied to STEPU and the undelivered equipment (i.e. 2 circular saws and 1 power hacksaw) to be replaced by the supplier
31st July 2007
2 Proposal for using the grant balance of uncommitted funds
31st July 07
3 Adequate accounting for funds advanced to districts and include detailed usage of the ADF resources advanced to the SFG component in 2006/7 audit report
September 2007
4 Liquidated damages to be deducted from supplier of Lab Equipment and chemicals supply out of the retention of USD.117,442.10.
September 2007
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It was noted that the above recommendations were not addressed. This
can imply that management does not take seriously supervision mission
recommendations.
15.0 HEALTH
15.1 Nugatory expenditure
A construction company was paid a total of Shs.3, 822,558,930 during the
year in settlement of outstanding bills of Shs.5,823,231,755. Included in
the payment was a total of Shs.2,160,390,970 and US $798,232 in respect
of interest charged on delayed settlement of outstanding certificates that
were not paid for a long time. This interest component is considered as
nugatory expenditure as it could have been avoided if the outstanding
certificates had been paid in time.
It was also noted that these particular arrears were not disclosed in the
previous years’ financial statements. Work certificates authenticating the
amount were also not presented for audit.
The Accounting Officer promised to avail the supporting documentation.
15.2 Cash and Cash Equivalent
Under note 20 to the financial statements, the cash and cash equivalents
balance is reported as Shs.2,992,929,702. This is composed of balances on
revenue accounts of Shs.12,554,403; expenditure account
Shs.2,892,939,433; and other accounts Shs.87,435,866. The bank
reconciliation prepared in support of the balance on expenditure accounts
still shows stale cheques to the tune of Shs.338,335,991 for financial years
2003/04, 2004/05 and 2005/06. It is not known why they have remained
unpresented for such a long time. The Reconciliation also has unexplained
debits of Shs.198,492,370in the cash book for 2004/05 which have not yet
been investigated.
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I have advised management to investigate all outstanding items in the
reconciliation.
15.3 Un-appropriated Funding
The Ministry implements a number of projects which are not reflected in its
budget.
A sample of such projects is here below;
Project Name USD($) UGX(SHS) Account No Status
1. National TB & Leprosy Program
936.00 214.214026.1 Outside Budget
2.” 2,181,525 214.214027.1 “
3. Medicinal Plants & Biodiversity
33,883 214.214033.1 “
4. Network in medicinal plants & Traditional medicines
36,789.97 214.214059.1 “
5. “ 204,060 214.214060.1
5. Uganda Virus research projects
2,572.11 214.214063.1 “
6. “ 9,576,237 214.214064.1 “
7. Medical Plants & Bio diversity
113.38 214.214032.1 “
8. MPAMBA-NKUSI 1,879,841 214.214029.1 “
9. TB Resaerch program fund 20,592,500 214.214051.1 “
10. MOH/ CDC-HIV-AIDS 106,878.00 214.214044.1 “
11. “ 9,843,274 214.214048.1 “
12. Highland Malaria project 37,124.00 214.214045.1 “
Policies and Procedures for sourcing for donor funded projects in the
ministry are not documented.
Projects that operate outside the Ministry budget lead to extra budgetary
expenditure which is considered irregular. They create a risk of duplication
in funding of similar activities and projects running for several years without
being subjected to proper monitoring.
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The Accounting Officer explained that the Ministry was in the process of
streamlining the operations of projects in the Ministry and in the process all
the projects will be captured in the budget and reported in the financial
statements.
15.4 Outstanding Advances Regulations require that all advances be accounted for by the end of the
financial year to which they relate. Contrary to these regulations, the
Ministry did not account for administrative advances to staff totaling to
Shs.774,027,753.
The Accounting Officer explained that advances are accounted for at
different times and the figure is adjusted accordingly and that all measures
have been put in place to retire all accountabilities for advances in time.
I await results of the mentioned measures
15.5 Borrowings Management borrowed a total of Shs.1.8bn from DISP Project, in order to
open the Letter of Credit in favour of a company that was contracted to
equip health centres under the ORET project. At the year end, the amount
had not yet been refunded by the Ministry.
Project borrowings should be discouraged as they impede timely
implementation of project activities.
The Accounting Officer attributed it to inadequate funding.
15.6 Diversions of funds Examination of accounts for the ministry for the period under review
revealed diversion of funds totalling Shs.410,605,015 to cater for travel
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abroad. Most of the funds were diverted without authority from other
items especially item 224001-Medical Supplies (Drugs). Whereas the
Ministry’s budgeted amount for travel abroad was Shs.175,883,000,
sampled payments in respect of travel abroad amounted to
Shs.410,605,015.
Furthermore, some payments lacked Prime Minister’s Office clearance and
were not supported with used air ticket coupons as evidence of travel.
The Accounting Officer is advised to strengthen control over expenditure on
travel abroad. Where additional funding is required reallocations or
Virements should be sought in accordance with the financial regulations.
15.7 Outstanding Invoices for 3rd Party Procurements and Distribution
National Medical Stores invoiced the Ministry a total of 159,767,195 as
distribution charges for donated drugs for Reproductive Health. In the
absence of all the supporting documentation, I was not able to confirm that
the bill was a proper charge to the Ministry.
It was also noted that the Ministry of Health is not aware of the funders of
these drugs or the stocks in stores at the National Medical Stores. The
donors deliver the drugs directly to National Medical Stores without liaising
with the Ministry. There appears to be no proper coordination of the drug
programme between the Ministry and National Medical Stores.
Besides, there are no policy guidelines that govern drug donations. Such
guidelines would specify the type, quantity and shelf life of drugs
acceptable to the Health Sector. Unplanned donations sometimes lead to
large donations which may not be easily absorbed. This can lead to expiry
of drugs.
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I have advised the Ministry to put in place proper control systems that allow
proper tracking and monitoring of all 3rd party procurements and
distribution. There is also need for policy guidelines for drug donations to
regulate and restrict entry of certain drugs that may be considered harmful.
The Accounting Officer explained that the Ministry has developed a three
year rolling procurement plan for essential medicines and health supplies
under which 3rd party procurements will be streamlined.
15.8 Rehabilitation of Entebbe Laboratory
Payment of Shs.50,102,000 was made to Bank of Uganda on 30th June,
2007 for rehabilitation of the measles laboratory at the Uganda Virus
Research Institute (UVRI) institute in Entebbe. However the request made
by the Director, UVRI revealed there were no works being carried out at
the institute at the time. There were no bills of quantities and even the
bidding process had also not yet been carried out.
The Accounting Officer explained that due to the dire need to rehabilitate
the Measles Laboratory at UVRI, the money was transferred to a project
account in Bank of Uganda before the year end pending the completion of
the ongoing procurement of works. I have explained to her that the funds
should have been remitted back to the Uganda Consolidated Fund and the
activity budgeted for again in the new financial year. The Accounting
Officer has also been requested for an update on the progress of work.
15.9 Security For Inventories Regulations on public stores require secure facilities to be provided for the
safe custody of inventories and valuables in all Government premises in
which such inventories are received and retained either temporarily or
permanently.
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However, the Ministry has several storage facilities which are not
functional. Inventories received are not retained either temporarily or
permanently in these facilities. They are distributed immediately or
delivered directly to the recipients who do not reside in the Ministry of
Health Headquarters. The available space referred to as a store has only
banners for health promotion. The stores ledger presented for audit was
found to be incomplete. It does not provide sufficient details on receipts
and issues to allow proper verification. Furthermore it does not comply with
the stores ledger folio as described in the TAI. Inadequate accounting
procedures for inventories expose the Ministry to the risk of theft and loss
of inventory.
The Accounting Officer attributed the lapse in stores management to lack of
a qualified Store Keeper. She explained that although the two approved
posts of Senior Stores Assistant and Stores Assistant have been declared to
the Health Service Commission, they are yet to be filled.
15.10 Irregular Employment of Staff
Article 172 of the constitution of the Republic of Uganda requires that
Persons holding or acting in any Office in the Public Office of Uganda
should have been appointed by the appropriate authority.
It was noted that there were an estimated two hundred people employed
at the Ministry Headquarters whose status of employment in the Ministry
was not clear. A list of these people shows their status as either ‘personnel
on contract, temporary appointment, no status of appointment at all or
volunteers. During the year a total of shs 448,753,866 was paid to several
of them as allowances. Although the number of such people is reported to
have been reduced to ninety, their existence in the first place shows
weaknesses in the Ministry’s human resource recruitment procedures.
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The Accounting Officer attributed the recruitment/engagement of such
personnel to staffing gaps in the Ministry. She explained that the Ministry
was in the process of having a new structure to address the existing
staffing gaps. In the time being the Ministry is to seek authority from
Ministry of Public Service to allow them retain the volunteers. This was yet
to be done by the time of writing this report.
15.11 Non Bonding of staff under Human Resource Development
The Ministry has a three year strategic plan to develop the health work
force with the support of the development partners and financing from
Government. This is to be achieved through various capacity development
programmes. Through these programmes various staff are being trained in
various Training Institutions. It was however noted that the Ministry does
not enter into bonding agreements with staff who are sponsored.
For a sample of sixty three people that have been sponsored for training
only two bonding agreements were availed for review. The Ministry is at
risk of losing staff who have been trained.
Although the Accounting Officer indicated that all staff who had proceeded
on training without signing bonding agreements were being called upon to
do so, no progress had been achieved by the time of writing this report.
15.12 Essential Drugs Procurement and Distribution
The Government through the Ministry of Health has a Memorandum of
Understanding (MOU) with National Medical Stores (NMS) to stock assorted
pharmaceutical drugs and medical supplies. Under the MOU, NMS is
required to distribute products belonging to Government (3rd party
distributions donated to the Government of Uganda) and also stock
products or drugs for sale. During the year, I carried out an audit of the
distribution programme and the following were my observations:-
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(i) Under Deliveries In the year under review medical supplies worth Shs.19,618,996,007.27
were ordered for by the users. However NMS was able to deliver medical
supplies worth Shs.13,458,077,504.03, equivalent to 68% of the quantities
ordered. It is through this method that the Ministry through the credit line
provides essential drugs to the Hospitals.
According to the memorandum of understanding NMS is obliged to ensure
100% fulfilment of scheduled orders from end users for the standard kit
items. Details of deliveries however show that at no single time was any
order fully delivered. In that regard NMS has not demonstrated full
commitment to the provision of essential drugs to end users.
(ii) Drugs not Delivered
Verification of deliveries from NMS to DDHS, Health Centres and Users in
selected districts showed that sometimes drugs issued were not delivered
at all.
For quantifiable drugs, distributions worth Shs.2 billion were examined. Out
of this, documentation relating to drugs valued at Shs.290 million could not
be traced. The end users did not also have knowledge of these deliveries
either. The drugs included ARVs, Coartem, Condoms and oral rehydration
salts.
The Accounting Officer explained that the Ministry has been monitoring the
performance of NMS with regard to compliance with the Memorandum of
Understanding and added that these concerns had been drawn to the
attention of NMS during their joint technical meetings. She further stated
that the MOU would continue to be reviewed to ensure improved
performance. I am yet to review the outcome of this process.
(iii) Non existence of drug dispensing Records
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The issue of drugs from stores, and dispensing at the health centers and
Hospital wards, is not recorded. Several interviews with Patients in Hospital
wards revealed that they were ignorant about their right to free medicine.
The Accounting Officer explained that under decentralization, the Districts
are responsible for management of these Health Centres. Under the PHC
districts are expected to use up to 50% of their non-wage grants on
stationery including record books. She also explained that the Ministry is
also sensitising the population on their right to free medicine.
15.13Support to the Health Sector Strategic Plan Project ADF Loan No.F/UGA/PL/IBA/2001/1 and Grant No.F/UGA/GA/IBA/2001/1
15.13.1Counterpart Funding It has been noted that the government budgeted for Shs.6,120,000,000 to
finance part of the project costs in the financial year. However, only
shs.5,057,203,000 was released leading to a shortfall of Shs.1,062,897,000.
This affects timely implementation of the project activities.
Management attributed it to the financial constraints that government may
have faced during the financial year. Management also noted that such
deficit in releases results in the outstanding balances to the contractors and
service providers at the end of the financial year (especially for VAT),
leading to domestic arrears.
Management was advised to follow up the shortfall in funding in order to
finance outstanding payments to contractors and suppliers.
15.13.2Supply of Specialized medical Equipment and Furniture It was noted that a company supplied medical equipment worth
Euro.795,455. However part of the medical equipment was found to have
major deviations from the recommended specifications and the supplier
was requested to rectify the anomaly. The equipment includes:
• Examination couch with lithotomy poles (100) Euro 24,000
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• Surgeons stool (21 pieces) Euro 2,100
• Linen Trolley (6) Euro 1,200
Euro 27,300
At the time of audit in September 2007, there was no evidence to show
that the supplier replaced the above mentioned equipment.
Management explained that since the supplier has not replaced the
equipment nor rectified the anomalies, it was decided not to pay him for
the 3 items, an amount equal to Euro 27,300 and that if the supplier
continuously fails to replace the equipment, government will look for other
alternative ways of procuring the 3 items for the health centres concerned.
15.13.3Outstanding Payments to Contractors/Suppliers At the time of audit in October 2007 the project had outstanding bills to the
various contractors/suppliers of goods and services totalling
Shs.819,800,098.
The bills have been outstanding for over a period of one year. This may
lead to litigation being taken against the project. Given that the project has
now closed, it is not clear how the project management intends to settle
these bills.
Management explained that because of inadequate releases of funds by
government during the financial year, the project was not able to meet all
its financial obligations in time. Since then some bills had been cleared
while for others the contractors had not completed their work.
Management was advised to pursue and settle the outstanding payments
so as to avoid future litigation costs.
15.13.4Fixed Assets Management The project maintains a fixed assets register. However, specialized medical
equipment and furniture supplied under the three lots and distributed to
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the health centres had not been included in the assets register. This
weakens controls over management of project assets. In addition, it is now
a requirement by African Development Bank (ADB) that a comprehensive
fixed assets register forms an integral part of the financial statements.
Management explained that during the financial year under review, the
project procured a lot of items under the 3 lots for Butabika Hospital, 32
health centres in 11 districts and 6 mental health units at referral hospitals
and that the updating of the assets register especially for items sent
upcountry had taken longer than anticipated. It was indicated that the
exercise was ongoing and was to be completed soon.
Management was advised to have a complete fixed assets register for all
assets procured using project funds inclusive of the specialized medical
equipment and furniture.
15.13.5Status of Previous Years Recommendation It was noted that audit findings identified in the previous year audit were
still unresolved:-
(i) Construction of VIP Latrines
It was noted that the construction of pit latrines had not been fully
completed. At the time of audit in November 2006, 186 out of 780
blocks had been completed and handed over representing
approximately 24% of the works.
Management explained that during the financial year under review,
there was considerable improvement in progress of work and by 31
December 2007, all the works were complete except for one
company whose all 100 blocks are still at different stages of
completion and the matter has been referred to the Solicitor General
for legal redress.
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Management is advised to closely follow up with the Company to
ensure that all the 100 VIP latrines are completed as envisaged in
the contract agreement.
(ii) Defective Specialized Medical Equipment and Furniture
The National Advisory Committee on Medical Equipment (NACME) of
the Ministry of Health verified the equipment and furniture delivered
by the suppliers. As per the interim report, several items were found
to be non compliant with regard to the generic specifications.
Management explained that all the 3 suppliers were provided with
the NACME reports of all non compliant items and they made good
for most of them (replaced or rectified) and that the equipment were
re-verified by NACME and accepted except for the following:-
• Lot 1: The X-ray machine is still not meeting the specifications
and NACME has asked the supplier to replace it. The supplier is
still to make good. The supplier promised he is coming in
January 2008 to address the problem.
• Lot 2: Ms. Gatero Instruments Ltd is yet to replace the
examination couches, surgical stools, linen trolley as indicated in
B1 above.
• Lot 3: MJ Medical replaced all furniture that had not met
specifications.
In the case of lot 1 and lot 2, management and NACME is advised to
liaise with suppliers of the defective items so that they are replaced
according to the agreed specifications.
(iii) Delayed Payment of the Contractors Bills
The project still experienced delays in settling outstanding payments
to the contractors/suppliers.
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(iv) Gravity Water Installation at Kaproron Health Centre in Kapchorwa District
At Kaproron Health Centre, there was no water and yet the sub-
contractor was paid US$ 71,249.66 to rehabilitate and protect four
spring wells at Bukwa, Chesoweri, Kapronon and Sipi Health Centres.
The absence of water in the health centre affects the provision of
medical services to the local communities.
Management explained that PMU wrote to the CAO and District
Water Engineer (DWE) who supervised the works to rectify the
remedy. Reports from the DWE indicate that the contractor was
made to redo the pipe network for the scheme which he had omitted
(as per contract). However, the flow of water to the scheme was
not adequate because the water source, given in his scope of work,
was inadequate. As a result, the district has identified some funds to
connect this network to another water source that is more reliable.
Management should liaise with CAO, Kapchorwa District to ensure
that this matter is concluded accordingly.
16.0 WORKS AND TRANSPORT
16.1 Non-Deduction of withholding Tax on the Contract of Redevelopment of State House - Entebbe
A contract was signed with a foreign-based Chinese contractor; to develop
State House- Entebbe at a contract sum of US $ 20,845,618.30 (UGX
38,564,393,854). However, examination revealed that the Ministry paid the
contractor gross without deducting withholding tax estimated at US
$5,537,962. In the absence of evidence of exemption, non deduction of
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the tax constitutes a tax offence for which penalty is payable. In a written
reply the Accounting Officer stated that a letter of exemption was available.
However, this was not availed by the time of issue of the report.
It is recommended that evidence of tax exemption be availed for
verification. In the alternative the tax amount is recoverable.
16.2 Budget Performance 2006/07
A review of the budget performance revealed that 17 activities planned and
budgeted for the year remained incomplete by the year-end. It would
appear some causes of delays such as procurement of contractors and
consultants could have been addressed expeditiously by management since
prequalified lists are in place. Where weaknesses are attributed to the
Contractor as in the case of Northern by Pass, penalties ought to be
imposed. Other causes such as delay in release of funds ought to be
addressed by MOFPED. A separate column indicating specific management
responses is included herewith. It is noted that failure to meet target
outputs prolongs public access to proper infrastructure and undermines
achievement of value for money.
1. Key output Target
output Achievement Budgeted
amount released-UGX
Deficiency Management response.
2. National roads maintained to all weather standards
Routine maintenance-Manual maintenance of 10,569 km
10,358 km of roads maintained
7.64 billion 211 km of roads not maintained
Money and time not matched during release of funds by MOFPED.
Periodic maintenance- 145 km of the road network resealed.
28.6 km of roads resealed
3.0 billion 116.4 km of roads not resealed.
As above.
3. Kafu-Masindi road 44 km upgraded to class II bitumen
47% upgrading works completed
22% completed by FY end
1 billion budgeted but 6.3 billion spent
34.32 km of road not upgraded
7.88Billion required but only 1billion approved in budget
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standard by the financial year end
(530%)
4. Construction supervision of 21 bridges in NW Uganda
10% of works completed
0% of works completed
0.1 billion 10% of works not completed
Delays occasioned by prolonged evaluation, procurement and negotiation processes.
5. RDPPI-Upgrading Kiboga-Hoima road-76km
30% of works completed
20% of works completed
0.5 billion 7.6 km incomplete
Delays occasioned by breakdown of contractor’s equipment and fuel shortages.
6. RDPP2- Rehabilitation of F/Portal-Hima road-55km
50% of works completed
35% completed 2 billion budgeted but 2.65 released (132%)
4.125 km incomplete
7. RDPP2-Matugga-Semuto-Kapeeka road
20% of works completed
0% completed 3.5 billion Approval for detailed engineering designs delayed at NDF/World Bank.
8. RDPP3-Kampala-Gayaza-Zirobwe-Wobulenzi roads
30% of works competed
0% completed 1.01 billion Delays occurred in procurement of contractor and supervision consultant.
9. RDPP3-Accident black spots improvements
100% of works completed
20% completed 0.5 billion Black spots at Namukomago, Namagunga, Namataba, Kawolo and Sagazi, along Jinja road still incomplete
Delays occurred in procurement of contractor.
10. RSSP1-Kabale-Kisoro-Bunagana-Kyanika road
15% of works completed
5% completed 2 billion GOU and 26.26 billion donor funds against 11.65 billion budgeted
10% incomplete
Late procurement of supplementary loan.
11. EDF- Kampala-Northern Bypass road
60% of works completed
35% completed 1.15 billion 25% incomplete
Various weaknesses on the part of Contractor in project management, asphalt surfacing works and failure to provide natural materials.
12. District, urban 200km of 191 km done 1 billion 9 km undone
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and community access roads rehabilitated
district roads rehabilitated under AAMP (TR 75 A)
13. 350 km of district roads to be rehabilitated by districts
325km under rehabilitation
4.2 billion 25 km not rehabilitated
Late release of funds to districts.
14. 500 km of district roads+ rehabilitated under DANIDA program in Eastern and Northern Uganda
403 km rehabilitated
0.3 billion 97 km not done
DANIDA funds released as per calendar year and not financial year.
15. 540 km of D/roads rehabilitated under STABEX –EU funding
410 km done 0.3 billion 130 km not done
Funds released at end of f/y 2006/07.
16. Urban roads resealed
15km resealed in Njeru, Kabale, Masindi and Kampala
8.5 km done 1.2 billion 6.5 km not done
Only 40% of budgeted funds released.
17. Construction of markets and workplaces in and around Kampala supervised
Building works supervised, 60% completed
38% completed 20 million 22% incomplete
Inadequacy of funds.
Procurement processes for contractors and consultants should be
adequately and timely planned to avoid delays. Non–compliant contractors
ought to be penalised.
16.3 Road Development Programme – Phase 1 Project Development Credit Agreement Number 3267 – UG
The objectives of the Project are:-
• To upgrade two of the highest priority roads of Busunju-Kiboga-Hoima and
Nebbi-Arua, including related construction supervision;
• To carry out sector policy and management studies, including those related
to feeder roads. These studies were financed under the Project Preparation
Facility (PPF); and
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• To carry out audits under the Programme through the provision of technical
advisory services.
The following observations were made and drawn to the attention of
management during the audit of the Project.
16.3.1Progress on contracts C005 and C006 (Busunju – Kiboga, Kiboga – Hoima) Following the receipt of the performance and advance guarantees on 10th
December 2003 and the World Bank’s ‘No Objection’ declaring the Deeds of
Novation effective, the contractor (SCEL) was permitted to proceed with the
upgrading of the roads. However, the progress of civil works has continued
to be slow due to the cash flow problems of the Contractor.
Busunju-Kiboga (C005): Between 30th June 2006 and 30th June 2007, the
Contractor had completed an incremental 17.4% of the weighted works
compared to the 28.3% annual expected performance. Cumulative
completion was at 82.4%. It had been planned that the Contractor would
complete the works by July 2007; however, the Contractor’s standing
programme indicated the works will be completed in November, 2007.
Kiboga-Hoima (C006): Similar to Busunju-Kiboga, the contractor had
completed an incremental 22.5% of the weighted civil works progress only
in comparison with the expected progress of 31.9% between June 2006
and June 2007. By 30 September 2007, the contractor had completed
about 87% of the weighted works on the section.
Furthermore, despite minimal activity on both contracts, normal supervision
costs have continued to be incurred.
The implications are that:-
• The contractor may not be in a position to proceed with the contract
and later on execute it efficiently and effectively.
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• Delayed execution may lead to costs exceeding the budget,
especially the supervision costs.
Management and other stakeholders should devise possible ways to
address the impending possibility of not completing works on time and
failing to obtain funding for the works after expiry of the credit.
Management explained that the contractor did not execute the works as
per program due mainly to:-
• Shortage of fuel in the country during the months of March, April
and May 2007 and
• Excessive rains experienced in the region.
Management estimated that substantial completion of C005 will be on the
15th December 2007 and C006 at the end of February 2008 and that
payments for works during the defects Liability period will be secured by a
bank guarantee from the contractor given that it will cover a period after
Credit expiry. The current expiry date is 30th June 2008.
16.3.2Progress of Physical works on Kawempe – Luwero Road From the review of the cash out flows on the Kawempe-Luwero-Kafu
project, it was noted that actual cash flows were only 43% of the projected
figure. This was indicative of a potential delay in works performed by the
contractor.
It was also confirmed from the Consultant’s progress report of July 2007
that the contractor on the road was behind schedule by 4 weeks. As per
the contract for civil works on this road, work commenced on 8th February
2007. Therefore work on this road had proceeded by approximately 5
months as at the date of the progress report implying that 4 out of the five
months had been lost.
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Inefficiency of the contractor will delay accomplishment of the road. There
is also a risk that delays by the contractor are likely to increase
proportionately with time.
It was recommended that the contractor be monitored to ensure that
delays are checked.
Management attributed the set backs to the need to:
• Review the original design for this road.
• The national fuel crisis of April to May 2007 brought construction
operations to a near halt;
• The unusually heavy rains since May 2007 have slowed the
contractor’s progress;
It was also explained that this Project had lost approximately 4 months due
to the above-mentioned factors that are outside the contractor’s control.
The contractor has improved his equipment stock holding in order to
accelerate the work. RAFU is also closely monitoring this project to ensure
that any potential problems to the project are sorted out quickly enough to
avoid further delays. It is envisaged that this project will be concluded by
June, 2008.
16.3.3Payments for Land and Property compensation During the review of expenditure, it was noted that land and property is
paid in instalments to beneficiaries which was found to be improper. The
process of compensating the land owners has been slow with some of the
individuals still receiving partial payments.
It was also noted that there were still some villages that were yet to receive
any compensation namely; Bukomero, Mataagi, Temankali and Lukuga.
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The delayed payment of compensation to the beneficiaries has also
witnessed increased value of land, most of the land being currently paid
lower than their current value. This has resulted in a few of the land
owners refusing to surrender their land titles as they collect their
compensation particularly in the Kiboga Town Council. However, these
have only been a few cases.
Some of the individuals who have handed over their land titles have also
expressed discomfort about the delay in processing these land titles leading
to the failure of the beneficiaries to utilize their asset for other purposes like
security.
It was recommended that installment payments be stopped as Monitoring
of land and property compensation payments may turn out to be difficult.
Management explained that RAFU has taken over payment of compensation
from the contractor. The contractor has given accountability of the
outstanding payments including partial payments which have been verified
by an independent auditor, to enable RAFU continue with payments, with
the assistance of the district officials and that all payments will be
completed by 31 December, 2007.
16.4 Road Development Programme – Phase II Project Development Credit Agreement Number 3544 – UG
The objectives of the Project are:-
• Upgrading to paved (bitumen) standard the Karuma-Olwiyo-Packwach
gravel roads and strengthening of the Katunguru-Kasese-Fort Potal,
Kasese-Mpondwe (Equator) and Kasese-Kilembe roads, including related
construction supervision.
• Implementation of the first phase of a National Road Safety Action Plan;
• Consultancy services for mitigating of “black spots” along two transport
corridors (preparation of designs, bidding, documents and supervision);
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• Preparation of a national Transport Master Plan and provision of
Technical advisory services for innovative technologies for construction
of low volume traffic roads; and
• Design and construction supervision of the National Road Agency
building.
16.4.1Government of Uganda (GoU) Contributions Despite the persistent shortfall of counterpart funds from GoU to this
Project, It was noted that GoU contribution reduced from Shillings 12.3
billion in the financial year 2005/6 to shs.10.5 billion during the financial
year 2006/7. As a result, the project has continued to face difficulties
effecting prompt payment of contractors’ and consultants invoices and any
related taxes as they fell due. As at 30 June 2007, management indicated
the Project debt position as:-
Amounts due in respect of: Amount UGX Amount USD
Civil works 2.3bn $3.4m
Consultancy supervision 17.3m 40,951
Withholding tax 613m -
All contracts have a provision to charge interest on overdue payments.
Section 3.01 9a) of the DCA requires GoU to provide promptly as needed,
the funds, facilities, services and other resources required for the Project
and section 3.04 (c) requires GoU to make quarterly deposits into the
project Account as shall be required to replenish the account to the amount
in Uganda Shilling equivalent to US$ 3 million as GoU’s contribution to the
Project.
However, this was not fully complied with the implication is that the Project
may be subjected to an extra cost of accrued interest claims in form of
penalties on delayed payment of invoices.
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The GoU should adhere to its commitment to provide its financial
contribution to the Project on a timely basis as agreed in the DCA.
Management explained there was an improvement in the GoU cash releases
but the budget fell far short of the required counterpart funding to
implement the project. This is because of the inadequate GoU revenue and
the related cash limit budget system.
16.5 Contract Variation and Supervision
16.5.1Contract Variations Two road construction contracts were varied by more than the maximum
limit recommended by the PPDA Act and regulations. One contract for the
resealing of Kibuye-Zana-Entebbe Airport Road was varied by 47% while
another for construction of Lugazi bridge was varied by 59%. Although
necessary approvals were obtained such huge variations indicate a
possibility of weaknesses in planning particularly at the design stage and
resource allocation level.
During discussions, the Accounting Officer attributed the variations to
limited resources. He explained that delayed fund disbursements to the
Ministry cause extended contrast durations which in turn lead to cost
variations.
16.5.2Supervision Periodic maintenance of five murram roads measuring 288 km cost the
Ministry Shs.511,912,500 in consultancy (supervision) fees. Although
approval were obtained for the procurement, measures should be devised
to reduce on these costs. The Ministry should develop internal capacity to
carry out the supervision as it may be cheaper in the long run. The
regional Executive Engineers can be a useful resource for the purpose.
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16.6 Special Audit of Payroll On the request of the Accounting Officer and Criminal Investigation
Department (CID), we carried out a special audit of the payroll of the
Ministry. The objective was to ascertain whether the names on the salary
payment schedules to banks reflect genuine staff of the Ministry and
determine whether loss was occasioned by government. In the report
made to the CID I made the following observations;
• It was noted that some staff appearing on the Ministry’s payroll
particularly in the salary scale U7 and U8 were not appointed properly in
accordance with Government Standing Orders and other regulations.
This was further evidenced by some correspondences on record where a
Clerical Officer was accused of irregularly issuing appointment letters on
behalf of the Permanent Secretary without authority of the Public
Service Commission between 1999 and 2002.
In her (Clerical Officer) unreferenced response against the accusations
levied, dated 21st November 2003, the officer consented to have issued
out appointment letters through irregular means and facilitated illegal
entrants into the service. Eighteen (18) officers were noted as having
been appointed irregularly by the Clerk according to her letter.
The Accounting Officer has explained that disciplinary action was
initiated as far back as 2003 but the procedure delayed due to various
consultations among the Ministry of Works, the Public Service
Commission and Ministry of Public Service. However, the officer was
subsequently interdicted and dismissed from government with effect
from 3rd December, 2007.
• A detailed scrutiny of the salary payment schedules and the IFMS
records for the period under review was undertaken. It was noted from
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our reconciliation of the salary payment schedules from Uganda
Computer Services with the actual salary payments on the IFMS that a
total of Shs.137,016,497 was paid out as salaries to various Commercial
Banks without supporting schedules.
In absence of supporting salary schedules the payments appear
doubtful and irregular and could have caused financial loss to
government. It is also not clear how the salaries were processed.
My scope of audit was limited by the failure to access information from
the banks relating to the beneficiaries of the unsupported payments.
Management explained that salaries are normally remitted to
Commercial Banks with supporting salary schedules. However, in the
case mentioned above the schedules cannot be traced. The Ministry
explained that it requested an outsourced computer expert and CID to
follow up the matter. In the meantime the suspects have been
interdicted.
It is recommended that the Criminal Investigation Department (CID)
carries out further investigations with the concerned Banks in order to
ascertain the beneficiaries of the unsupported payments and also
establish the eligibility of the recipients.
It is further recommended that the Ministry liaises with the Public
Service Commission to verify all appointments, retentions, confirmations
and Public Service Minutes for all staff in the salary scales U7 and U8.
16.7 Audit Inspection-Weighbridges
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An audit inspection was carried out in August 2007 at the two weigh
bridges situated at Lukaya on the Kampal-Masaka highway and Mbarara
and the following were my observations:
16.7.1Kampala-Masaka-Mutukula Mobile Weighbridge
It was explained by the officer in charge of the mobile bridge that on
exceeding the maximum axle load, a charge sheet is filled detailing the
particulars of the vehicle and driver, time, particulars of each offence and
issued to the driver, who, in the company of a police officer proceeds to
court, where a fine is determined through a court ruling by the magistrate.
The driver may either pay cash in the magistrate’s office (to cashier), to the
bank, or to the Uganda Revenue Authority office. A general receipt is
finally issued to him. The computer print out of the details of
measurements together with a copy of the general receipt is then filed in
the weighbridge records.
It was revealed that the weighing of the vehicles, charging and fining are
governed by the Traffic and Road Safety (Weighbridges) Regulations of
2004.
It was discovered that whereas it is the Ministry’s responsibility to enforce
the traffic and road safety regulations so as to protect the national roads
through deterrent fines, the discretion of the extent of the fine was left to
the court, who may not be particularly aware of the costly process of
resealing and maintenance of the damaged roads as the Ministry itself. This
may lead to leniency to the culprits by the courts and complacency by
drivers, hence continued overloading and eventual damage to the roads.
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It is recommended that the Ministry devises means of ensuring that the
culprits are fined amounts which are realistic. This can be done by entering
on the charge sheet the amount of fine for each offence committed.
16.7.2Mbarara Weighbridge It was observed that for the entire financial year 2006/07, the overloaded
vehicles were being fined between Shs.100,000 and Shs.200,000 with
Separate isolated cases of Shs.300,000, Shs.400,000, Shs. 1 million and
Shs.2 million, or even a mere caution.
The explanation was that it was the magistrate’s discretion to determine
the fine. At the same time between 3rd and 7th of March 2007 when the
magistrates were on strike, the police stepped in to avert the crisis where
overloaded vehicles impounded were congesting the weighbridge yard and
drivers were complaining. As a result the police were fining all culprits only
Shs.80,000 irrespective of the offences. It was discovered that the Police
had treated all the cases as traffic offences and ignored the Traffic and
Road safety Act.
Although the latter one was an isolated incident, the two cases above are
doing little to help the Ministry meet its objective of protecting roads
against damage through overloaded vehicles. This is because the culprits
will prefer to overload and pay the small fines preferred on them while
damage to the roads goes on unchecked.
The Ministry needs to come out clearly on the fines carried by each axle
overload offence committed, by prescribing the relevant fines payable on
the change sheet, instead of leaving it to the magistrate’s discretion. The
courts should instead help to enforce the Act through preferring the fine
(payment or imprisonment).
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The two Ministries of Works and Justice therefore need to harmonize this
position so as to achieve the intended objective of protecting the national
roads.
The Accounting Officer explained that the Ministry noted the anomalies on
the fines from the magistrates courts and wrote to the Solicitor General but
no tangible results were forthcoming. The Ministry then initiated the
amendment of the Traffic and Road Safety Act to decriminalise the offence
and instead prescribe fees which will be directly paid to the weighing bridge
and then banked on the special account for the Road fund.
16.7.3Absence of Weighbridges on Major Highways
There is absence of weighbridges, fixed or mobile along Mbarara
Ntungamo-Katuna boarder, Mbarara-Kasese-Bwera and DRC Congo
boarder. It is therefore possible that overweight trailers carrying cement,
coffee, scrap metal and other goods have travelled from Hima, Kasese,
Mbarara,Ntungamo or Kabale to Rwanda or the DRC with out hindrance,
damaging the roads along the way for some time.
The Ministry therefore needs to urgently procure and station at least three
mobile weighbridges along these routes if the original objective of
minimising damage to paved roads is to be meaningful.
The Accounting Officer explained that the matter is to be addressed under
the Transport Rehabilitation Project.
16.8 East African Civil Aviation Academy (EACAA).
16.8.1Legal status, operational and financial status
I commented about the legal status in my report for the year ended 30th
June 2006 (ref 15.5) but I am not aware of any action that has been
initiated to resolve the matter. The EACAA was established in Soroti by a
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treaty of the East African Co-operation in 1971 to train pilots and aircraft
maintenance engineers mainly for the then East African Airways. It was
supported by the UNDP and the International Civil Aviation Organization
(ICAO). The support included appraisal training programmes, providing
instructors and equipment and linking the academy to other Civil Aviation
Institutions outside East Africa.
In 2006, the Ministry of Public Service carried out a restructuring survey
and produced a report to that effect for cabinet approval. However to date
the report has not been tabled.
The academy offers pilot, flight operations, electrical and engineering
courses to students admitted from the East African states and surrounding
states, on both sponsored and self-sponsored bases.
It charges and collects fees for these courses, which, together with grants
from the Ministry of Works and Transport, constitute the funding base for
its operations. The Academy is supposed to be headed by a Director, but is
currently being headed by an officer who has been reportedly acting for
nine years, pending substantive appointment. This is quite unusual and
contrary to Public Service standing orders, which limit the “acting” capacity
to one year.
As reported last year, the academy does not have the legal mandate to
operate independently. According to the Acting Director, it still operates
under and is funded by the ministry and its financial operations are
governed by the same regulations as the ministry and the latter is
supposed to monitor and supervise these operations.
There was also no evidence that the Ag Director of the school was formally
appointed as receiver of revenue and as imprest holder as required by the
regulations. This implies that it is irregular for him to collect revenue and
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administer public funds as well as accounting for them, because he lacks
the authority to do so.
The legal status, institutional framework, funding and financial reporting of
the Academy should be resolved promptly. In the meantime the Director
could be formally appointed as an Imprest Holder and Receiver of
Revenue.
17.0 DEFENCE
17.1 Excess Expenditure According to the Statement of Financial Performance, the Ministry spent a
total of Shs.14,471,106,588 in excess of the approved budgetary
appropriations without relevant authority. Against a budget of
Shs.389,295,441,999 the Ministry incurred actual expenditure of
Shs.403,766,548,587 leading to excess expenditure of Shs.14,471,106,588.
This indicates breakdown of controls over budgetary expenditure. The
Accounting Officer attributed this to domestic arrears which arise due to
inadequate budget resources, maintenance of auxiliary forces and
unpredictability of activities of the Ministry.
17.2 Salary Arrears for Auxiliary Forces
A total of Shs.16,300,000,000 was paid to Bank of Uganda in June 2007 to
cater for salary arrears of Auxiliary Forces for various months in UPDF.
However, by the time of writing this report only Shs.15,012,860,000 had
been accounted for leaving a balance of Shs.1,287,140,000 still un
accounted for.
In the absence of accountability I was not able to satisfy myself that the
amount was utilised for the intended purpose.
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The Accounting Officer should ensure that the accountability is followed up
and tendered.
17.3 Supply of Army Uniform A sum of U.Shs.177,411,857 was paid to a firm as part payment for the
supply of uniforms to UPDF. Supporting documents indicate that the firm
was to supply 2,200 shirts each at 20,475 equivalent to Shs.45,045,000 and
also 4,437 sets of ceremonial uniforms each at 220,000 equivalent to
Shs.976,140,000 all totalling to U.Shs.1,021,185,000. However, records
show that the firm initially supplied only 2,200 shirts out of the total
consignment but under unclear circumstances sued the Ministry for non
payment of the whole contract sum in a civil suit No. 226 of 2004. A
consent order was subsequently signed between both parties in April 2005.
The following matters were further noted.
• The consent order signed in April 2005 required the Ministry to pay
Shs.1,860,850,180 as full payment for uniforms supplied by the firm
payable in ten (10) equal instalments. The firm was also to be paid
16% interest on the outstanding amount (1,860,850,180) for the period
from May 2003 to October 2005, the period the amount had stayed
outstanding.
The basis upon which U.Shs.1,860,850,180 was arrived at by both
parties despite the fact that not all items were delivered was not
explained. The awarding of interest at a rate of 16% on
U.Shs.1.860,850,180 totalling to U.Shs.744,340,072 for a period of 30
months (May 2003 – October 2005) was also not properly explained.
• On 18/08/2006 the Ministry of Defence signed a new agreement with
the firm acknowledging the debt of U.Shs.1,860,850,180. In this
agreement the firm also agreed to supply the balance of the undelivered
items. The Ministry also agreed to pay interest for 38 months (May –
July 2006) totalling to U.Shs.942,830,768. This agreement pushed the
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Ministry’s indebtedness to a total of U.Shs.2,803,680,948. (i.e.
1,860,850,180 + 942,830,768).
Basing on this new agreement, the Ministry stands to lose or incur
nugatory expenditure of U.Shs.1,782,495,948. This represents the
amount by which the payment will exceed the amount payable under
the original contract (2,803,680,948 – 1,021,850,000). It was also noted
that the firm has continued to charge interest at the rate of 16% on
principal amount (1,860,850,180) despite the fact that the consent
order which was signed by both parties had agreed to charge interest
for only 30 months.
The Accounting Officer should investigate this matter further to avert a
possible loss to government.
17.4 Irregular Contract For Repair of Helicopter MI-24
A sum of U.Shs.758,955,527 ($ 404,000.60) was paid out against a
contract for the overhaul of Helicopter M1-24. The contract sum for
overhauling the helicopter was US $790,000. However the contract does
not give a detailed break down and pricing of work to be done. I was
therefore not able to ascertain and verify the work done against the
amounts paid.
On scrutinising the contract, it was noted that one of the clauses provides
for separate billing over and above the contract sum in case during the
overhaul some parts are found to be irreparable. However in the absence
of a detailed list of what was to be done in the overhaul, such a clause
leaves room for manipulation to the disadvantage of the Ministry.
It was also established that adjustments to the contract price worth US $
32,000 were not properly supported and were authorised by one officer
who also happened to sign the acceptance certificate after the overhaul.
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The Accounting Officer is advised to provide full accountability for payment.
Contracts should also always be properly drawn up to reflect details of work
to be carried out and its costing.
17.5 Undelivered Procurements – Spare Parts For Low Loaders
A total of Shs.293,967,305 was paid to Bank of Uganda to open a Letter of
Credit in favour of a local company in respect of supply of two new engines
(Shs.237,398,650), Axle Hanger bushes (Shs.14,608,400), Engine Parts
and others (Shs.39,061,900).
However, verifications revealed that only items worth Shs.263,059,241
were delivered and the firm accordingly paid. The Letter of Credit expired
without the balance of Shs.14,608,400 being utilised. The purpose to
which the amount was spent was not explained during the audit.
17.6 Borrowings not Refunded
A total of Shs.657,920,350 was borrowed from the computerisation account
to finance various activities within the Ministry and was to be refunded
before the closure of the financial year. However, by the time of filing this
report only Shs.562,035,000 had been refunded leaving a balance of
Shs.95,033,000 outstanding. I advised the Accounting Officer to recover
the borrowed funds to avoid constraining the project in achieving its
objectives.
17.7 Overpayment to a Hotel
Shs.20,404,350 was paid to a Hotel to settle Hotel bills for Ministry of
Defence guests. Two un-referenced tax invoices were submitted for
payment, one invoice had Shs.1,437,120 and US$3,496 and the second
invoice had Shs.2,414,430 and US$5,700. Both Invoices were faxed from
the Hotel before being endorsed by the Ministry guests.
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It was established that although the 2nd invoice was part of the 1st invoice,
the Hotel in their handwritten demand to the Ministry treated each tax
invoices separately.
This led to an overpayment of Shs.1,437,120 and US$3,496 totalling to
Shs.7,729,920 . I have advised the Accounting Officer to investigate and
accordingly recover the over payment.
17.8 Domestic Arrears of National Water and Sewerage Corporation
A service provider (NWSC) submitted outstanding bills to the Ministry of
Defence totalling to Shs.6,564,966,267 as at 30/06/2007. A review of
documents in the Ministry indicated that a total of Shs.8,147,525,881 had
been paid to the provider. However, statements from NWSC showed a
total of only Shs.6,330,421,254 as funds received from the Ministry leaving
a balance of Shs.1,817,104,627 paid not reflected on NWSC statements.
In the absence of an up to date reconciliation by the Ministry, I was not
able to ascertain the actual bills outstanding.
17.9 Audit Inspection
An audit inspection of Entebbe airbase and Katabi Barracks revealed the
following matters -
17.9.1Accommodation
Some officers are accommodated in the Ministry of Defence Houses.
However, the houses are dilapidated and require renovation. The
Administrative Officer attributed this to inadequate funds for maintenance.
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The Accounting Officer explained that the construction unit has been tasked
to earmark funds for renovation of the barracks.
17.9.2Katabi Barracks (i) Katabi Secondary School
It was noted that Katabi secondary school is located in the Barracks without
any fence separating the School from the Barracks. Girls’ dormitories have
no fences and are located next to houses accommodating male soldiers.
The dormitories are also very congested with no flash toilets. The pit
latrines used are located outside the dormitories which expose these young
girls to more insecurity.
The Accounting Officer explained that due to dilapidation and the need for
better security for the school, there are plans to relocate the school to
Kitala.
(ii) Water Tank
There is wastage of water from a leaking water tank. This partly explains
the high water bills.
The Accounting Officer explained that the whole water system in the
barracks is too old and requires complete overhaul. She added that she
was in touch with National Water and Sewerage Corporation to undertake
the capital repairs.
(iii) Land not Surveyed
It was also noted that land occupied by Katabi Barracks is not surveyed and
has no land title. Therefore we could not clearly see the boundaries of the
barracks. The problem of encroachers cannot be ruled out as nice looking
buildings were seen next to the barracks.
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The Accounting Officer explained that much of the Ministry land is not
surveyed and as a result they had acquired survey equipment and Survey
Unit to have all Ministry land surveyed including Katabi land.
(iv) Air Base Stores
A visit to the technical store revealed that the technical store requires
general repairs. Some stores are leaking thus exposing spare parts to rain
water and rust. Since their construction, no funds have ever been provided
for repairs despite the fact that very expensive spare parts, including those
of MI 17 and MG.24 air craft are kept there.
The Accounting Officer attributed this to limited funding and further
indicated that funds had been earmarked in the new financial year to
address the problem.
17.9.3Kakiri Barracks (1st Division)
It was noted that the stores are in a very poor condition due to their
dilapidated state. They also have poor ventilation, lighting and shutters
and are infested with rodents and bats. It was observed that the last
fumigation was done in 2004. We have therefore recommended to the
Accounting Officer to spare some funds and re-fumigate the stores.
The Accounting Officer explained that these are temporary stores and that
the Ministry is planning to put up new stores in the division.
17.9.4General Military Hospital Mbuya (i) Funding
The G.M.H referral hospital receives only Shs.1,920,00 per month for
maintenance of buildings and general running of the hospital. This is very
little money given its size and the fact that it is a referral hospital.
Insufficient funding has led to non functioning hospital equipment.
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The only X-ray equipment in the Hospital broke down due to power surge,
after less than a year of repairing it at a cost U.Shs.24,514,760. This
machine is reparable but has been left to deteriorate.
The other X- Ray machine which was picked from former Kiseka Hospital
has a faulty control device which needs replacement according to the
Radiographer.
The Dental equipment and eye equipment got a functional problem when
the fire broke out in the surgical ward and are also not functioning.
Without such equipment, it is difficult for the hospital to offer good
services.
17.9.5Kaweweta Training School
The school is heavily indebted to various supplies who were engaged to
supply ration. This may affect its operations. It was established that
authority was given to contract local contractors to supply ration worth
338,486,500 during the year. However, by the time of writing this report
only Shs.215,996,500 had been paid leaving a balance of Shs.122,490,500
outstanding. Non payment of local suppliers indicates weaknesses in the
Ministry’s commitment control system.
The Ministry is therefore at risk of being sued for non payment which may
result into unnecessary legal costs.
18.0 INTERNAL AFFAIRS
18.1 Unaccounted for Visa Stickers to Foreign Missions
Visa stickers issued to the various foreign missions in different
denominations worth US$352,500, €218,900, AUD187,500, CDN$80,000,
CHF30,000 and ₤138,250 were not accounted for. Further, there is a
tendency for Missions to vary the face value of stickers issued to them. It
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was also noted that some stations and missions had not yet accounted for.
Stickers issued to them which were affected by the price change.
The Accounting Officer explained that all Missions had been instructed to
return all the visas that were affected by the price change and that the
Ministry was in the process of establishing those Missions which had not
complied.
I have also advised the Accounting officer to redesign the accountability
forms so that they indicate the running balances of visa stickers available at
all Immigration points and missions abroad.
18.2 Non-Tax Revenue (Work Permits)
The Ministry collects revenue from sale of various immigration documents
to the public and these include among others work permits, dependants’
pass, Pupil’s/student’s pass, visitor’s pass, prohibited immigrant’s pass,
special pass, renewal of special pass, duplicate of any permit certificate or
pass and certificate of residence.
Audit inspections revealed that there are still large volumes of these
documents acquired way back in 1960s that are still in use. The following
observations were also made:-
• Status of the Store
The store is a small room with shelves having documents which are
tied with ropes. All documents are covered by dust and some have
been destroyed by termites leading to their cancellation but no
records are kept of cancelled documents. The citizenship certificates
in particular were loosely held and kept in sacks and most of them
were dirty.
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• Stores Management Procedures
There were no adequate stores management procedures in place.
For instance no requisitions are made for the issue of documents
from stores. The Attendant collects the documents from the store
on merely verbal instructions and there were no stores documents.
The Ministry did not identify and assign a responsible officer to take
charge of the stores.
• Stocktaking
For unknown reasons stocktaking has not been carried out on stores
for many years.
I explained to the Accounting Officer the risks of mis-handling of
such very sensitive documents.
18.3 Spoilt Passports
Inspections carried out at the Ministry’s strong room revealed that
passports valued at Shs.37,210,000 were damaged thereby causing a loss
to government.
This problem has continuously occurred over the years. The Accounting
Officer attributed this to human error on the part of applicants while filling
in their applications and occasionally on the personnel in the strong room.
He indicated that the loss is within the acceptance limit of 5%.
I have advised him to devise means of reducing the loss.
18.4 The National Population Data Bank and Identification The above project was conceived by government sometime back to ease
verification of citizenship identification by modernising the national
registration systems in the country. Under the programme each citizen was
to be issued with a national identity card that uniquely identifies him or her.
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Records indicate that the entire project is estimated to cost US $54 million
and was to be completed in 2010.
However, it was noted that during the year under review no funds were
budgeted and released for the project although the Ministry had planned
for its implementation. It is also not known how far the Ministry went in
resolving the matters regarding the botched procurement that had been
initiated two years ago.
The Accounting Officer has been requested for an update on the status of
project implementation.
18.5 Audit Inspections
An audit inspection carried out at Goli, Phaida, Vurra, Oruba, Afoji
Immigration and Airport Immigration Offices and the following are my
observations:-
(a) Staffing
All stations visited are not adequately staffed. On average each
station is manned by two to five people. Generally the directorate of
immigration has low staffing levels. The level of staffing is still not
adequate to meet the ever increasing workload at the various
stations.
(b) Office and Staff Accommodation
Office and staff accommodation is also a problem to most of the
stations visited. Many offices are housed in unipots while others are
in dilapidated houses. Staff are also accommodated in similar
houses. There are no indications that the situation will improve in
the near future. Entebbe Immigration Office is currently
accommodated by Civil Aviation Authority, with only two rooms that
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are quite small for the number of staff. The general office is a server
room as well as the store.
The station also currently has no changing rooms and the officers
use the washrooms which are also used by transit passengers.
(c) Office Furniture
Most offices visited do not have office furniture and equipment like
computers, which would be necessary for data entry and
management. Despite being revenue collecting units the offices do
not have safes and cash is just kept in drawers. There are also no
telephones in most of the offices. Our inspection at Entebbe Airport
Immigration Office indicated that the American Embassy donated
computers under the PIECES (Personal Identification and Evaluation
System), a stop list system for controlling movement of persons.
However these computers lack printers. The system is continuously
on and off and therefore not operating efficiently. There is no
internet connectivity between this entry point and other entry points.
Therefore, a person denied entry from this point can still enter the
country through another entry point. The PIECES System is not even
connected to the Ministry Headquarters.
The single money detector machine is also defective. There is
neither a fax machine nor a photocopier and officers are forced to
request for services of neighbouring offices. There is also no money
counting machine despite the fact that a lot of revenue is collected
from this centre.
Departure and arrival cards are not readily available as the office has
to collect them from the Ministry Headquarters weekly and
sometimes arrival cards are used yet the information on them varies.
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There are currently only five counters in operation and there may be
a need for more in future. The Passport scanners in place are of a
quality that does not swiftly show the information on the screen on
swiping the passport.
(d) Rent
Some points are renting office space. For example, Paidha office is
renting a single room of about 18 x12 feet at a monthly cost of
Shs.120,000. However, there was no valuation report of the Chief
Government Valer or his representative neither was the tenancy
agreement availed to enable me ascertain and establish the rental
charge, the terms of tenancy.
(e) Office Imprest
Most offices do not receive any office imprest which renders
operations difficult especially when officers have to travel to town to
bank cash collected. Staff at Entebbe Airport Immigration Office are
provided with lunch allowance which is not commensurate with the
cost of living at the airport. Staff members have resorted to
collecting food from outside the airport which is sometimes restricted
by the security. They would wish to have their lunch allowance
raised or lunch physically provided.
(f) Land
It was reported that Vurra Entry Point identified land for its office
construction. However since no payment was made to the owner
there is an apparent attempt to take this land by a private person.
There has not been any follow up by the head office.
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(g) Transport
Transport is also a problem to most of the entry points. The office
like that of Oraba which is in a remote area, nearly 20km from the
town of Koboko, requires means of transport to carry out its
operations like banking and official checks at the border. Entebbe
office has a very old vehicle, a pickup UG 0023 G which breaks down
frequently when either cash is being transported to the bank or
when transporting aliens to the centre.
h) Use of Visa Stickers
Audit inspections revealed that visa stickers of different values
comprising of Single entry (US$50); inland transit (US$50), airside
visa US$30 and gratis (fee Nil) were soon running out of stock.
Therefore, there was a risk of losing revenue due to non availability of
stickers.
19.0 INFORMATION AND COMMUNICATION TECHNOLOGY
19.1 Rent
The National Social Security Fund entered into a Tenancy Agreement as the
Landlord with the Uganda Land Commission to have the Ministry of
Information and Communication Technology rent space on 4th floor
effective from 1st October 2006. Total monthly rentals was Shs.21,977,264.
As at 30th June 2007 rent arrears had accumulated up to Shs.197,795,376
(Nine months rent).
It was however noted that although the tenancy was effective 1st October
2006, the partitioning of offices only started in February 2007 and
completed on 12th March 2007. This implies that for 6 months up to end of
March 2007 the Ministry was incurring rent yet it was not utilising the
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office. I consider Shs.131,863,584 rent incurred for six (6) months
nugatory.
Furthermore although the Standing Committee of Parliament on ICT had
objected to the Ministry moving to NSSF House on the grounds that the
rent is too high, management went ahead and moved. Moreover even the
Top Management meeting held on 3rd November 2006 had recommended
that the Accounting Officer seeks permission from the Committee. There
was however no evidence that permission was granted. It is not clear why
the Ministry left a free building to take up the payment option.
During discussions the Accounting Officer stated that the new Ministry
needed accommodation which was centrally located and he attributed the
accumulation of rent arrears to delays in Treasury releases. It is however
incumbent upon the Accounting Officer, to ensure that a discussion is held
with the Landlord, who is a government entity on the way forward for the
six months that the office space was vacant to avoid total loss of the
Shs.131,863,584.
I await further action by the Accounting Officer.
19.2 Use of Recurrent Funds for Development Expenditure
Out of Shs.178 million paid for partitioning of NSSF House, 4th floor Ministry
offices, only Shs.71 million was paid from the capital development budget
while the balances of Shs.107 million was financed from the recurrent
budget without any evidence of approval to re-allocate funds as required.
The Accounting Officer explained that there were court threats and he had
to pay to avoid further costs. I informed him that it is important to
maintain budget discipline.
19.3 Employee Costs
During the audit of the payrolls for April, May, and June 2007 the following
issues were noted: -
(a) Establishment
Although the established members of staff approved by the Ministry
of Public Service are 110 staff only 37 have been filled as at the time
of writing this report. The Ministry is currently under staffed. This
may lead to delayed implementation of the organisational goals.
(b) Lack of Acknowledgment Receipts for PAYE Deductions
Shs.9, 666,401 deducted as PAYE from employee’s salaries had not
been acknowledged by the tax authority as indicated below. There
is a risk that funds may not reach the intended beneficiary.
PAYE Deductions
Month Amount Comment August 2006 September 2006 January 2007 March 2007 April 2007
922,5461,016,0802,240,0002,713,1822,774,593
Receipt not seen No Schedule seen Receipt not seen Receipt not seen Receipt not seen
TOTAL 9,666,401
The Accounting Officer promised to liaise with Uganda Revenue
Authority for the receipts, but by the time of writing this report, no
such evidence had been availed.
The Ministry should expedite recruitments and regularisation of staff
to fill up the vacant posts to enable pursuit of its objectives.
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20.0 LOCAL GOVERNMENT
20.1 Re-development of the Nakawa and Naguru Housing Estate Following the Kampala District Structure Plan published in 1994, the
government of Uganda through the Ministry of Local Government started
the process of redeveloping of the 66 hectares of land occupied by Nakawa
and Naguru Housing Estates into a modern satellite town. The Ministry
together with a hired consultant identified a developer to undertake the
development of the estate. Open Prime Properties Limited emerged the
best bidder and a Public Private partnership was entered into with the
government of Uganda giving the developer all the financial, technical and
operational obligations and risks in the design, financing, building and
operation of the project. Further the Government signed a Memoranda of
Understanding with the sitting tenants to allow the implementation of the
project.
It was however noted that to date the project has not taken off. The
project was halted pending resolution of disputes with the tenants who filed
a case against the Government over evictions and land ownership.
Meanwhile part of the land has been allocated to other private developers.
With a running contract with the developer and amounts already spent for
hiring consultants, government is urged to resolve the impasse to avoid
litigation for breach of contract and nugatory expenditure.
20.2 Travel Abroad Payments totalling to Shs.43,158,940 made to facilitate various officers to
undertake official travels abroad were not supported by proper
accountability. In the absence of the used air tickets coupons or any other
supporting documentation I could not confirm that the journeys were
undertaken and thus expenditure incurred for the intended purpose.
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I advised the Accounting Officer to enforce timely accountabilities for the
funds advanced to officers for travel abroad.
20.3 Items not taken on charge Examination of accounts revealed that items worth Shs.5,158,720 had not
been taken on charge contrary to the stores procedures which require that
all purchases have to be taken on charge before being put to use. The
practice could be a result of laxity by management to enforce adherence to
stores management procedures which could lead to payment for goods that
have not been delivered. I was therefore unable to verify whether the items
had been delivered and used by the Ministry.
21.0 TOURISM, TRADE AND INDUSTRY
21.1 Stores Weaknesses were noted in stores management procedures. Proper
procedures require that the stores ledgers are updated whenever items are
received in the stores. It was however noted that in most cases items are
not taken on charge and ledgers are not updated. This makes it difficult to
ascertain whether items were actually delivered and used. Items delivered
are not witnessed by a responsible official, as required. This is partly
attributed to lack of store cadres. It was noted that the Ministry does not
have stores cadres to run its stores. Stores are being run by a Senior
Records Officer of the Ministry Registry. The stores management function
should be strengthened by recruiting the right staff who will manage and
streamline the stores records.
21.2 Un accounted for advances Treasury Accounting Instructions, require that before approving an advance
to staff the previous advances must be accounted for and that the
advances must be accounted for immediately after the expense has been
incurred. It was however noted that during the period under audit,
operation advances of Shs.10,887,750 remained un-accounted for.
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The Accounting Officer should follow up the accountability in case of failure
to account recoveries should be instituted in accordance with regulations
21.3 Procurement There were cases where the Ministry made procurements which did not
fully comply with the established Procurement Regulations. For example,
• Shs.99,398,637 was paid to a supplier as part payment for the
supply of two vehicles, one for AGOA Secretariat and another for the
Ministry. The use of the direct method of procurement in this case
was not properly authorised.
The Accounting Officer explained that initially the Ministry had
advertised for 2 vehicles. Bids were received and evaluated but
additional needs came in for purchase of additional 2 vehicles. Due
to limited time left to the close of the financial year, a decision was
made to use the two firms that had already been evaluated.
• Shs.5,099,999 was paid to a firm for the supply of one executive
office furniture. However a review of the procurement process
revealed that the method used of direct procurement was not
approved by the contracts committee in contravention of the PPDA
Regulations.
The Ministry should follow proper procurement procedures in future
to ensure more transparency and value for money.
21.4 Uganda Wildlife Education Centre Trust (UWEC) Project
(i) Land Title
Included in the schedule of land and building, is land of
approximately 704,235 square meters at a value of
Ug.shs.8,450,820,000. However, the Center did not provide me with
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copies of the land titles. It was therefore not possible to certify the
true ownership of this land and the justification of including this
figure in the accounts. I have advised management to make all
possible efforts to acquire the title of this land.
In his response, the accounting officer indicated that currently, the
Uganda Land Commission holds the land in trust for UWEC.
However, the issue is still under review by UWEC Board and the
Ministry of Tourism Trade and Industry.
(ii) Going Concern
It was noted that GEF/PAMSU might not continue providing financial
support towards UWEC operations. This implies that the institution is
likely to face going concern problems. I have advised the accounting
officer to seek for alternative sources of finance to minimize the
effects resulting from GEF/PAMSU winding up its support programme
with the institution.
In his response, the accounting officer has indicated that UWEC is
57% self reliant as at 30th June 2007, from 20% in 2005. Therefore
UWEC is steadily moving towards self-sustenance through cost
control and creation of more revenue earning ventures. Capital
projects like the new front office, the pier, are some of the efforts.
The Government of Uganda has been approached and has expressed
willingness to provide capital to enhance UWEC’s revenue base.
21.5 Protected Areas Management and Sustainable Use Project (PAMSU) A contract between UWA and M/S Gauff Ingenieure, Gmbh & Co. KG JBG of
Ug.shs.236,160,048 signed on 19th June 2006 for consultancy services
exempts the consultants from any form of taxes, duties, levies and other
impositions arising.
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However there is no evidence to show that the tax exemption was
approved by the Ministry of Finance, Planning an Economic Development.
Accordingly withholding tax amounting to Ug.shs.35,424,007 was not
deducted from payments made to the consultants. This implies that UWA
did not comply with tax law and risks being penalized by the relevant
statutory body.
In his response, the accounting officer explained that he had noted the
anomaly with concern and promised to discuss the implication with the
consultants with the view of rectifying the problem in order to comply with
the statutory requirements.
22.0 ENERGY AND MINERAL DEVELOPMENT
22.1 Support to the Energy Fund Account The Energy fund account operated by the Ministry was not disclosed in the
accounts. It was noted that Shs.50 billion was appropriated and released to
the Ministry to cater for taxes under Support to Energy Fund. The amount
was subsequently transferred to Treasury under the Gross Tax Payment
System. However there is lack of clarity on who is responsible for
managing the energy fund. Ministry of Finance currently appears to be
managing the programme.
The operations of the Energy fund should be streamlined by way of a legal
framework and operational guidelines (Regulations).
22.2 Non Deduction and Remittance of P.A.Y.E. Pay As You Earn amounting to Shs.100,799,000 was not recovered from
ex-gratia payments of Shs.341,400,000 made to Ministry staff for their
contribution to the discovery of oil as required by the Income Tax Act.
Statutory deductions should always be promptly made and remitted to the
responsible authorities.
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The Accounting Officer explained although the Ministry requisitioned for the
whole amount including the P.A.Y.E. the Ministry of Finance released only
the net amount and that the Ministry had been notified.
22.3 Non-Payment of Hospitality Fees The Ministry charges hospitality fees for storage of non- Government fuel in
her Jinja Storage Tanks. However, it was observed that one of the oil
companies had not paid hospitality fees to the tune of Shs.90,000,000 in
respect of Diesel stored in the tanks and supplied to Aggreko International
Projects Ltd to produce thermo power. No explanation was provided by the
Ministry for its failure to collect the above revenue. The revenue was also
irregularly omitted from the statement of arrears of revenue in the financial
statements.
The Ministry is advised to follow up the matter with the oil company.
The Accounting Officer explained that although the oil company was billed
for the storage, it was still negotiating with Aggreko to meet the bills since
Aggreko had negotiated with Government to offer free storage facilities for
its fuel. This is why the bills have not been included in the statement of
arrears of revenue in the accounts.
22.4 National Oil and Gas Policy The Ministry has been exploring petroleum in the areas around Lake Albert
along the Uganda-Congo border and it was recently confirmed that there is
a potential for commercial production.
Upon this confirmation, the Ministry came up with the National Oil and Gas
Policy for Uganda, whose goal is to use the country’s oil and gas resources
to contribute to early achievement of poverty eradication and create lasting
value to the society.
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The scope of the policy covers all the upstream (including promotion,
licensing, exploration, development and production) midstream activities
which include transportation and refining of crude oil and gas and
downstream activities which include distribution, marketing and sales. It
also includes relevant comments on the cross cutting issues regarding
managing the social and economic impact of oil and gas activities of the
economy and management of revenues accruing from oil and gas policy
resources.
However, the policy formulation process and the enactment of the
comprehensive enabling law has been slow despite the high speed of
developments in this sector.
It is recommended that the Ministry follows up the enactment of a
comprehensive National Oil and Gas policy into law.
22.5 Licensing Fees for Oil Exploration The Ministry expects to collect revenue in form of signature bonuses
(licensing fees) from about seven exploration firms estimated at about US $
800,000 out of which US $300,000 relates to the year under review.
Signature bonuses for 2004, 2005 and 2006 were estimated at US
$200,000, US $300,000, and US $300,000 respectively.
The Accounting Officer has been requested for an update on the
performance of this revenue source. A report is awaited.
22.6 Extension of Oil Pipeline A total of Shs.150,000,000 was spent on travel and meetings/workshops in
preparation for the extension of the oil pipeline from Eldoret (Kenya) to
Kampala (Uganda) through a joint venture between the Kenya/Uganda
Government and a private company. Records indicate that the
shareholding will be in the ratios of 24½% for each country and 51% for
the private company.
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The Accounting Officer stated that the governments of Kenya and Uganda
selected the private company as the investment partner to develop the pipe
line project. It was assigned with the responsibilities of selecting of the
pipeline route, carrying out engineering design and environmental impact
assessment, preparation of all agreements and project documents and
seeking legal financing for the project. It was also indicated that when the
above responsibilities are successfully completed, the three parties will take
the final financing investment decision, incorporate the joint venture and
the equity share distribution.
However I have indicated to him that the progress appears to be slow
despite the importance of the project to the country. An update on the
progress made on the implementation is awaited.
22.7 NORAD Support to Strengthening The State Administration of the Upstream Petroleum Sector in Uganda
(i) Ineligible expenditure
It was noted that a total of Shs.14,577,500 was spent on
administrative costs, contrary to article IV section 2 & 3 of the
Financing Agreement. The Agreement specifies that all
administrative costs are the responsibility of the Government of
Uganda. This implies that the above expenditure was ineligible for
payment using donor funds.
Management explained that the funds were requisitioned for and
duly refunded using resources from the Government and that from
that time onwards all costs are paid by the Government. I have
requested him to avail evidence of refund.
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(ii) Engraving of Assets
It was noted that some assets were not engraved with the project
name and unique identification numbers. For example the following
assets were not engraved:-
Asset name
Server and storage tape
Dell power vault
Gas chromatography
This makes it difficult to identify the items in case of loss.
Management explained that this was an oversight and would be
addressed.
(iii) Fixed Asset Register
It was noted that the Project does not maintain a fixed asset
register. The project should maintain an asset register with the
relevant asset details.
Management promised to have one opened.
(iv) Bank Reconciliation Statements
It was also noted that although bank reconciliation statements are
prepared they are not checked by a senior official. This can result
into errors and omissions going undetected.
Management explained that the lack of authorization was an
oversight and promised to have all the reconciliations endorsed by
the Programme Manager.
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22.8 Sustainable Management of Mineral Resources Project (IDA CREDIT NO.CR.3835-UG; ADB GRANT NO. 2100155003467 And NDF Credit Number 427)
(i) National Social Security Fund (NSSF Contributions)
Although deductions in lieu of NSSF contributions by project staff
were effected from staff salaries, these were not always remitted to
NSSF. Audit noted an amount of Shs.3,759,146 for eight months not
remitted.
In addition the employers’ contribution of 10% was also not made
during the year under review. The practice contravenes the
requirements of the NSSF Act.
Management explained that this was due to the affected staff not
having NSSF numbers. Project Management is advised to adhere to
the provision of the NSSF Act.
(ii) Pay As You Earn (PAYE)
PAYE totalling Shs.15,784,178 were effected from staff salaries but
were not remitted to URA.
According to section 136 of the Income Tax Act, the practice can
attract interest and penalties.
Management explained that arrangements were being made to remit
these funds to URA. Management is advised to adhere to the
requirements of the Income Tax Act.
(iii) NDF funding
According to the financing agreement, the project was to be funded
as follows:-
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Source Amount (UA) Percentage
IDA 17.37 58.6
NDF 4.86 16.4
AFDB 5.35 18.0
GoU 2.08 7.0
TOTALS
29.66 100
However, it was noted that although the project is in its 3rd year of
operation it has not yet received any funding from the Nordic
Development Fund and this may affect the rate of implementation of
project activities.
Management attributed it to delays arising from lengthy procurement
procedures and reviews.
(iv) Fixed Assets Management
The following fixed assets procured by the project were not included
in the fixed assets register:-
Kyocera copier km 3035 S/N AJK 3109972
2 Refrigerators GR-231, GR-221
Ergonomic Leather arm chair.
6 Air conditioners.
In the absence of a complete fixed assets register it becomes
difficult to monitor the use of the project assets.
Management is advised to ensure that in future the fixed assets
register is kept up-to-date.
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(v) Project Staffing
It was noted that the following key staffing positions specified under
section 4.1 of the Project Implementation Manual (PIP) were not
filled during the year:-
Deputy Project Coordinator
Project Accountant
Procurement Specialist
Failure to fill all the relevant staffing positions can affect the rate of
delivery of project out puts.
Management explained that recruitments were to be discussed
during the mid-term review of the Project. Management is advised to
ensure that all the required staffing positions are filled.
(vi) Procurement
Delayed settlement of an invoice – GOU funding
It was noted that was paid US$1,351,738.65 to a company in
respect of Airborne Geophysical Survey over selected areas of
Uganda from the IDA account. However, this amount represents
90% of the invoice amount (US$1,501,931.83), the balance of 10%
was supposed to be paid from the GOU counterpart funds. However,
this had not been settled by the time of this audit (November 2007)
and may therefore attract a fine of 10% as provided under section
6.5 of the conditions of contract.
Management explained that arrangements were underway to pay
the 10 % to the consultants this financial year.
(vii) Status of Implementation of Project Activities
Delayed implementation of activities:-
It was noted that the following activities included in the work plan
for the year under review were not undertaken during the year:-
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• Air borne Geophysical Data Processing and Interpretation,
• Design and Construction Supervision of civil works under SMMRP,
• Restoration and Establishment of Laboratories rock storage, rural
training centers and Uganda National Seismological network,
• Establishment of GIS Internet/ Intranet,
• Review and Enhancement of the Legal and Regulatory
Framework,
• Consultancy for establishment of a Modern Documentation
Centre,
• Consultancy for Design of Mining Cadastre and Registry System,
• Management and Coordination of small Grants Programme,
• Design of Institutional Model for DGSM,
• Geological Mapping, Geochemical Surveys and Mineral Resources
Assessment (funded by NDF),
• Geological Mapping, Geochemical Surveys and Mineral Resources
Assessment (Funded by IDA),
• Establishment of a Minerals Promotion Unit,
• Establishment of Environmental and Social Management
Framework,
• Consultancy for Management of Mineral Resources by
Communities,
• Consultancy for Monitoring and Evaluation of SMMRP,
• Consultancy for Decentralization of Mining Taxes
Failure to accomplish all planned activities may necessitate extension
of the project life which may lead to extra administrative costs.
Management attributed the delay to lengthy bureaucratic procedures
that require procurement to be subjected to Government and then
Bank procedures some of which are not under the direct control of
the PCU.
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23.0 GENDER, LABOUR AND SOCIAL DEVELOPMENT
23.1 Unapproved expenditure A sum of shs.741,113,254 was incurred on three budget lines item over
and above the approved budget as follows;
Item Amount of over expenditure
Employee costs 16,329,708
Goods and services 389,947,706
Grants paid 334,836,840
Total 741,113,254
Expenditure in excess of approved appropriation may be an indication of
breakdown of controls over budgetary expenditure. The Accounting Officer
explained that the over-expenditure was due to rent and utilities
consumption, workers compensation and transfers to other organisations.
She added that the accumulation of arrears was due to difficulty in
matching the level of activity with the limited MTEF provided by Ministry of
Finance. She also attributed it to increase in tariff rates for utilities.
I advised the accounting officer to regularly carry out trends analyses so as
to make proper estimates and to provide authority for re-allocation.
23.2 Procurement of motorcycles and bicycles
Out of Shs.257,577,992 requisitioned from ministry of Finance for
procurement of motorcycles and bicycles for the national youth council,
Shs.152,967,992 was accounted for leaving a balance of Shs.104,610,992
unaccounted for.
It was also noted that although forty (40) motorcycles were signed for at
the Ministry headquarters, there was no confirmation of receipt by the
districts. Similarly out of 700 bicycles, 604 were allocated to the districts
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leaving 96 bicycles worth Shs.9,120,000 un-accounted for. The Accounting
Officer explained that some of the funds were used to support operations
of the National youth council and for nationwide distribution of the bicycles
and motorcycles. However supporting documents were not availed for
verification.
23.3 Purchase of Air Tickets
In my last report, paragraph 2, I brought to your attention irregularities in
the purchase of air tickets for the officials’ travel abroad. In the year under
review, a total of Shs.82,397,962 was paid to the travel agent as at June
2007. However the outstanding bill of USD 16,730 as at June 30th 2007
from a Tour company was not reflected in the accounts and neither were
the supporting documents availed for verification. In response management
stated that the bill was not included in the payables because of pending
reconciliation with the service provider then.
It is recommended that the bill be subjected to an investigation to establish
its genuineness.
23.4 Unaccounted for Advances A sum of shs.23,698,000 advanced to various chief administrative officers
and an individual to perform official activities remained unaccounted for as
follows:-
Payee Amount(shs)
CAO - Arua 4,400,000
CAO - Katakwi 4,200,000
CAO - Kumi 5,000,000
CAO – Kabale 3,118,000
George Ochieng 6,980,000
Total 23,698,000
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Non accountability for public funds may imply that funds were not put to
proper use. In response the accounting officer explained that a directive
had been issued to officers to account. I await for the accountability.
23.5 Support To The Establishment Of The Equal Opportunities Commission Programme (SIDA Funded)
(i) Counterpart Funds
According to the Project workplan, the Government of Uganda was
supposed to contribute shs.50,000,000 for the period under review.
However, only Shs.5,000,000 was released leading to a shortfall of
Shs.45,000,000. This resulted into failure to implement the following
activities included in the workplan:-
• Translation of the 4 legal Rights materials into 6 main dialects for ease
of use by the population.
• Printing of 10,000 copies of the National Equal Opportunities Policy.
• Launching and validation of the data bank on Ethnic minorities.
• Dissemination and sensitization of the Public on the EOC Act.
• Validation and launching of the human rights mainstreaming strategy
into 5 PEAP Priority areas of water, health, education, agriculture, roads
and works.
• Recruitment of the Members and technical staff of the EOC.
• Completion and launching of the Action Plan on the National Equal
Opportunities Policy.
Management explained that this was due to budgetary cuts and a
constrained ceiling by the Ministry. It was also explained that the Ministry
of Finance, Planning and Economic Development had thereafter issued a
certificate of financial guarantee equivalent to 3.56 billion for the first 3
years of establishment of the EOC.
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(ii) General Standards Of Accounting And Internal Controls
Fixed Assets Management
It was noted that the fixed asset register was not up to date. The motor
vehicle Toyota Hilux, double cabin no UG 0182 Y had not been entered in
the register at the time of this audit in July 2007. In the absence of an up-
to-date fixed asset register, it becomes difficult to verify the existence of
the project assets.
Management explained that entries were to be made to the fixed Assets
Register.
23.6 UNFPA Funded Projects
The following is a summary of the audit findings, implications and
recommendations on some of the control weaknesses identified during the
audit of the three Projects funded by United Nations fund for Population
Development (UNFPA).
23.6.1HIV/AIDS Component – UGA6R208 Project
(i) Activity Reports
It was noted that although activity reports are prepared on execution of
activities there was no evidence that a senior independent officer reviews
the reports to confirm work done. Control over activity performance and
output may not be effectively done. It was recommended that activity
reports be reviewed by an independent officer, and evidence of review be
indicated in these reports.
Management explained that activity reports are being reviewed and signed
by the Project Coordinator, who then forwards them to the Permanent
Secretary.
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Management has been advised to have the documentation ready for my
next audit.
(ii) Refund of Unspent Money
It was noted that although a declaration of unspent funds had been made
in Form D, there was no evidence that the funds (Shs.2,303,1200) had
been remitted back to UNFPA. It was recommended that the letters of
understanding be adhered to with respect to unutilised funds.
Management explained that the process to refund the money was
underway although delayed.
23.6.2Gender Mainstreaming – UGA6G103 (i) Adequacy of the Management Structure
The management structure in place is an old structure relating to 2006.
Lack of an up-to-date management structure may lead to the project being
assessed on the basis of false information. Project management should
endeavour to have an updated management structure.
Management explained that the structure will be updated to give an
accurate reflection of the current status.
(ii) Activity Reports
It was noted that although activity reports are prepared, there was no
evidence that a senior independent officer reviews the reports to confirm
work done. I recommend that activity reports be reviewed by an
independent officer, and evidence of review indicated in these reports.
Management explained that reports are submitted to project oversight
managers (Head of Department/Commissioner Gender and the Director
Gender). However, the reports are not signed or stamped as reviewed by
the oversight managers. This will be addressed.
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(iii) Refund of Unspent Money
It was noted that although a declaration of unspent funds had been made
in Form D, there was no evidence that the funds (U.Shs.4,646,867) had
been remitted back to UNFPA. It was recommended that the Letters of
Understanding be adhered to with respect to unutilised funds.
Management explained that funds are to be refunded to UNFPA after audit
verification exercise.
(iv) Accountability Documents for Withholding Tax Payments
At the time of the audit some receipt documents for withholding tax
payments were not available for verification. Without supporting documents
for payments made, there is no evidence to verify that withholding tax was
actually paid. Copies of tax payments advice should always be attached to
payment documents.
Management explained that all URA receipts are kept in a central
depository in the Accounts Section and that the officer responsible was not
available at the time of the audit exercise.
23.6.3SGVB Project 102 (i) Adequacy of the Management Structure
The management structure in place is an old structure relating to 2006.
Lack of an up to-date management structure may lead to the project being
assessed on the basis of false information. Project management should
endeavour to have an updated management structure.
Management explained that the structure will be updated to give an
accurate reflection of the current status.
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(ii) Refund of Unspent Money
It was noted that although a declaration of unspent funds had been made
in Form D, there was no evidence that the funds amounting to
Shs.1,441,5500 had been remitted back to UNFPA. It was recommended
that the Letters of Understanding be adhered to with respect to unutilised
funds.
Management explained that the funds are to be refunded to UNFPA after
verification by Audit exercise.
(iii) Accountability Documents for Withholding Tax Payments
At the time of the audit some receipt documents for withholding tax
payments were not available for verification. Without supporting
documents for payments made, there is no evidence to verify that
withholding tax was actually paid. Copies of tax payments advice should
always be attached to payment documents.
Management explained that all URA receipts are kept in a central
depository in the Accounts Section and that the officer responsible was not
available at the time of the audit exercise.
24.0 UGANDA POLICE
24.1 Construction of Police Forensic Laboratory at Kiswa Police Station Land situated at Bugolobi Plot 142 -162, Spring Road
A local construction company was contracted to handle Phase 1 of (re-
roofing) of a project for construction of a modern forensic laboratory at
Bugolobi at a contract sum of Shs.99,283,427. A total of Shs.43,723,149.94
was subsequently paid against Certificate No.1. It was however noted that
although the previous roof was removed by the contractor, the structure
was not re-roofed as per contract. Instead the firm made variations to the
original contract that was above the required threshold of 15% by the
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PPDA citing poor structural works. Due to financial constraints,
management changed the plan and decided to instead have the laboratory
constructed at Ntinda. Accordingly, another contractor was identified who
would have the forensic laboratory and the Quartermaster constructed on
Police land in Ntinda under a swap arrangement. The Shs.43 million so far
appears to have been wasted.
It was further noted that the land at Bugolobi (Kiswa Police Station)
estimated to be 5.98 acres on which the project was going to be
constructed is not fenced and much of it has been encroached on by
private developers leaving only 3.724 acres. The value of this land and
property on it has been valued at Shs.2,937,400,000. The Police Force is in
the process of leasing it to a private developer in exchange for a turn key
project at Naguru.
In her response the Accounting Officer explained that construction of the
laboratory at Bugolobi was halted due to poor structural works which had
to be rectified but due to limited funds the works could not be carried out
as planned. She also added that they were in the process of having the
boundaries of Bugolobi land opened to assist them investigate how the land
was encroached.
24.2 Ntinda and Naguru Barracks
(a) Land An inspection of the Police Housing Estate revealed that the Police
Department owns 180 acres of land that comprise Naguru Police College
(100 acres), Police Airstrip (62.0 acres) and other 18.39 acres on which
quarters are constructed. However, although the title is still intact with no
sub-divisions, records indicate that part of the land was given out to
UNAFRI by Government upon its establishment in 1989. It was further
noted that there is ambiguity regarding the boundaries of the land offered
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to UNAFRI. The disagreement between the Police Force and UNAFRI has
not yet been resolved for a long time despite the intervention of the
political leadership. It was also noted that part of the purportedly
allocated land to UNAFRI is being used by a Private Company dealing in car
business.
I have advised the Accounting Officer to have the matters of disagreement
resolved to allow the Police Force plan properly for the redevelopment of
the land.
(b) Naguru Barracks
This has structures with tiled and asbestos roofs which are mainly occupied
by the Mobile Police Patrol Unit. The buildings are all in a dilapidated state
with most of the tiles falling off. The Barracks Administration has lost
interest in this unit.
Twelve of the Senior Officers buildings were part of the units given to
UNAFRI. However the units appear not to be fully occupied as some of the
units were being occupied by private individuals other than officers of
UNAFRI.
(c) Ntinda Police Barracks
This comprises a number of housing units with 8 sets of flats units and
uniports located at the airstrip and, Amudat Coy, E-Coy, together with a
new housing estate built under the hydraform project. Most of the houses
are dilapidated with the foundations hanging without verandas. Many units
are actually no longer fit for occupation but are still being occupied. There
is general congestion in the housing estate with officers and their families
sharing accommodation.
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All the housing units have leakages. The characteristic feature evident in
all houses is tar on roof tops and polythene paper supported with stones to
prevent leakage.
(d) Imprest
Ntinda Barrack receives imprest of only Shs.600,000 per month while that
of Moyo District receives Shs.400,000. This is deemed to be inadequate to
handle the many activities including garbage collection, compound slashing,
continuous sewage blockages and office running.
(e) Quarter-Guard and Fence
Most of the barracks do not have a quarter-guard and are not fenced.
There are a lot of trespassers, who pose a security risk as well as risk of
theft of Police and staff property. This was observed at Ntinda Barrack and
others around the country.
(f) Police Airfield
What used to be the Police airfield at Naguru is no longer one. It is now an
open area with very deep potholes. No clear reasons were given for
abandoning such a very important facility.
(g) Sewage System
The sewage system broke down long ago at Naguru and Ntinda Barracks.
The system has leakages in most parts of the barracks and is now a health
hazard.
A septic tank that had been dug sometime back has never been completed
and this poses a risk to staff children and school children in the vicinity. It
is not known why the septic tank remained incomplete.
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(h) Self-Help Projects
It was established that a number of Police Officers at Naguru barrack have
constructed their small units from mud and old iron sheets without any plan
and this has made the whole barracks appear like a slum in the middle of
town. The situation is worsened by a number of pit latrines which are
constructed through self help basis by officers without any plan. The living
conditions in Naguru barracks are so pathetic that an intervention is needed
to avert a possible epidemic.
The Accounting Officer explained that the construction of several pit
latrines was a result of the breakdown of the sewer system but plans were
under way to overhaul the sewerage system and then dismantle the pit
latrines.
(i) Land Encroachment
Most of the land to the Northern part of the Naguru barrack has been
encroached on by private developers. The encroachers have erected
permanent structures without the knowledge of Police Administration.
There is a need to open up the boundaries using the old land title which
has no single encumbrance. There is need for a conclusion on Naguru. It
is important that the anomalies raised following this inspection be
addressed.
24.3 Inadequate Fire Brigade Services
The Fire Brigade Department is charged with a responsibility of emergency
handling of fire outbreaks and promoting community safety in the country.
It was however noted that despite its critical importance, emergency fire
and rescue services coverage in the country is poorly funded. There are
only eight operational but poorly equipped fire stations in the country,
leaving most of the areas namely; Kasese, Kabale, Arua, Gulu, Lira, Soroti,
Moroto, Lugazi, Mubende and Kitgum without such services. Several fire
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accidents have taken place in these areas and a lot of property and lives of
people lost because of lack of fire brigades in these areas.
The funding for the department is too low to allow it operate effectively.
For instance the Head Office receives Shs.500,0000 per month as imprest
to cater for general office running, servicing of generator as well as
maintenance of barracks and fire fighting equipment. The fire fighting
equipment requiring repair are just heaped in the store which is dilapidated
and also serves as the dormitory and classroom.
There is inadequate protective clothing as the last batch was last bought in
1998. There are no gloves, helmet, face masks and neither are there
breathing apparatus. The turn table ladder truck at headquarters bought in
1982 is now too old and both the fire tender and water tanker are
grounded.
The Accounting Officer explained that the fire brigade services is a direct
responsibility of the Local Governments according to the Local Governments
Act but the Uganda Police Force will continue offering the services until the
law is harmonised.
24.4 Inspector of Vehicles Testing Centre (IOV Office)
The Centre is located at Jinja road adjacent to Naguru Police barracks. Its
main function is to test drivers, test vehicles that get involved in accidents
for road worthiness, and general inspection of vehicles. The following
were my observations:-
• The available structure was constructed in 1956. No renovation or
painting has been done for a long time. There are cracks visible all over
the building including the foundation and the roofs are also leaking.
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There is stench coming from the ceiling as a result of infestation by
bats.
• The IOV has no inspection equipment, neither does it have a wheel
balancing machine, alignment machine or headlight testers and the
officers just view the vehicle from the inspection pit. Therefore, the
inspections are done without the aid of specialised equipment meant for
the purpose. This poses a risk of passing vehicles that are defective
which may also create other risks to other road users.
• The parking yard was full of accident vehicles and some of the vehicles
had been parked for more than seven years. Some vehicles came in
without any records being made. These vehicles are kept until the cases
are concluded by police. Disposal of these vehicles is still difficult
because it requires the traffic department to apply for a court order
after having advertised in newspapers for vehicles liable for auction.
• The office is currently located on the land estimated to be 2.5 acres with
a dilapidated fence, but with no land title. There are plans to have this
land swapped with another developer and the IOV section to be
relocated to Kigowa area, near the northern bypass.
The Accounting Officer explained that management is in the process of
developing a policy for trade in arrangements for turn key projects in
respect of prime land to enable the force provide decent accommodation
for its personnel.
24.5 Irregularities in Salary Payments
A test check on the police payroll revealed that the force personnel raised
several complaints regarding the salary payments. The complaints included
among other things non payment of salary since recruitment into the police
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force (especially for Local Administrative Police), underpayments after
promotions and deletion from payroll on transfer to other sections.
The Accounting Officer explained that they were updating the personal
records of the affected staff and she attributed the delays to the payroll
clearing exercise.
24.6 Audit Inspection Moyo, Lira, Kitgum, Masindi, Nebbi, Arua and Gulu district Police Stations
(i) Accommodation
All the police barracks visited are in dire need of renovation as some of
them have never been renovated since the colonial period and are in a
dilapidated state.
Most of the asbestos roofs are leaking and are held together by stones to
prevent them from being blown off by wind. A few units in Gulu have had
their roofs replaced with iron sheets. In Pader, the officers have
constructed temporary structures being a newly established district station.
The water and sewerage system in all the barracks is no longer functional.
(ii) Office Equipment
All police stations inspected lacked adequate office equipments. For
example, in Moyo District, there is no computer and the manual typewriter
which was in use was also defective. In Nebbi and Arua, there is neither a
fax nor a computer even the radio equipment in use was not functional.
(iii) Imprests District Police Commanders are given imprest of Shs.400,000 per month to
cater for general office running i.e. maintenance of barracks, the medical
department, stationery and general staff welfare. The funding appears to
be too little for efficient and effective management of the district stations.
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Although imprest is meant for daily office operations, it is also used for civil
works like construction of pit latrines and purchase of replacement doors
for the housing units.
(iv) Transport Transport was also a major problem to all stations visited. All vehicles in
use are very old and cannot be used for major operations given the bad
road network in the region and are over due for boarding off. However, of
late some districts are now being facilitated with some bicycles and
motorcycles although the number is still not adequate.
(v) Staffing The staffing levels are very low. Moyo District, for example, comprises of 6
police posts and 1 police station. The district has many refugee settlements
and a population of about 267,000 people but is managed by three staff
members per outpost. This has led to each outpost having only one
policeman while some outposts are run by SPCs. There is also a need to
open another police post in Afoji near the immigration point where a police
post once existed.
Delays in payment of salaries were also noted during inspection. For
example, in Masindi, Nebbi and Arua, by the time of our visit, salaries for
Special Police Constables were in arrears of 3 months, a situation which
demotivate staff. The Accounting Officer explained that this is a general
problem with all the police establishments, mainly arising from under
funding of the budget. She also added that they will review their strategy
to improve living conditions of its personnel upcountry.
25.0 UGANDA PRISONS
25.1 Excess Expenditure The financial statements show that Prisons service incurred expenditure of
Shs.5,613,376,695 in excess of the approved budgetary provisions. This is
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attributed to use of Appropriation-in-Aid at source arising from consumption
of foodstuffs grown at various stations which expenditure is not
appropriated by Parliament.
I did bring up a similar issue to the attention of Parliament in my previous
year’s report paragraph 25.2, but to date, no action has been undertaken
to address it.
In his response, the Accounting Officer promised to take up the matter with
Parliament for regularization.
25.2 Utility Bills A trend analysis for water bills for the main tank at Luzira Prison between
the month of July, 2006 and April, 2007 revealed an increased water
consumption of 100%. This was caused by the excessive leakage that had
been going on for four months uninterrupted, leading to the administration
incurring an extra Shs.200 million on water bills. Similarly, the consumption
of electricity appeared to be on the high side. For instance, between July,
2006 and May, 2007 the bill for electricity alone amounted to
Shs.1,916,117,375. This was attributed to uncontrolled usage on cooking
and lighting.
On the issue of escalating water bills, the Accounting Officer explained that
the Department had undertaken a replacement of the leaking tank with the
assistance from the International Committee of the Red Cross which has
drastically reduced the average consumption back to normal. He further
explained that mitigating measures such as use of energy bulbs and stoves
was being sought.
Proof as to whether mitigating measures had been undertaken and seen to
be working is awaited.
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25.3 Congestion in Uganda Prisons Available statistics indicate that by July, 2007, the total occupancy of the
Prisons stood at 11,289 inmates against an approved capacity of 9,428
leading to an occupancy rate of 105%. This is as a result of failure by
management to renovate the existing, dilapidated structures throughout
the country and construct new ones.
In his reply, the Accounting Officer explained that through the Justice, Law
and Order Sector (JLOS), the rehabilitation of Prison units along side the
construction of the new ones is being systematically handled.
The Accounting Officer should provide the status report of the
interventional measures being undertaken so as to enable me confirm their
effectiveness in addressing the problem under review.
25.4 Irregular Contractual Works All contracts should follow established procurement guidelines as provided
for by the Public Procurement and Disposal of Public Assets Act. However,
examination revealed that a Letter of Credit was opened in Bank of Uganda
in favour of a local company to the tune of Shs.22,900,000 for renovation
of 7th Street Stores without tendering, bills of quantities and program of
works. This omission could lead to settlement of inflated bills by the
Department.
The Accounting Officer’s explanation that procedures were followed could
not be authenticated due to absence of documentation.
25.5 Irregular Salary Payments Examination of the payroll for the month of October, 2006 together with
the Staff List (Nominal Roll) indicated that a total of Shs.20,267,074 was
paid to individuals under doubtful circumstances such as deserters
(Shs4,553,141), dismissals (Shs.695,183), discharged (Shs.2,068,884),
dead (Shs.7,393,961), retired (Shs.4,004,496) and transferred
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(Shs.1,551,409). However, no explanation was provided to support this
irregular expenditure.
The Accounting Officer should provide clarification for paying persons who
had ceased being staff of Uganda Prisons and evidence that such cases
have so far been deleted from the payroll should be availed for verification.
25.6 Nakivubo Land/Nakasongola Construction Prisons Department swapped its housing quarters at Plot No.33 Nakivubo
Road valued at 1 billion with M/s Namayiba Tea Estates. The terms of the
swap was for the transferee to construct a Prison unit at Nakasongola
equivalent to the value of the property given up. However the following
matters were noted:
The contract was not subjected to competitive bidding contrary to
procurement regulations. There was also no evidence that Prisons
Department participated in the development of the specifications as
exemplified by the low height of the structure which was only 3.9 metres.
In his response, the Accounting Officer explained that the construction of
Nakasongola Prison had been satisfactorily completed and a “value for
value” objective had been achieved. He further explained that all the
necessary procedures in support of the contract had been adhered to
although the above have not been produced for verification.
25.7 Audit Inspections Audit inspections of Bugungu Young Offenders, Bugungu Youth, Bufulubi,
Kitalya, Mubuku, Ruimi, Ibuga, Isimba, Jinja Remand and Jinja Main Prisons
was carried out during June and July 2007 and the following were my
observations:-
(i) Buildings and Infrastructure
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The general state of buildings and infrastructure remained very poor. This
was attributed to the vandalization during the liberation wars of 1979 and
1986.
In his response, the Accounting Officer explained that through the Justice,
Law and Order Sector (JLOS), the rehabilitation of the Prison Units along
side the construction of the new ones was being systematically handled.
A status report of the interventionary measures being undertaken is
awaited.
(ii) Farm Produce Stores
In Bugulubi Prison farm, it was observed that maize grain was being
bartered for milling charges in the ratio of 1:1 leading to a loss of
Shs.12,912,310. Besides, controls over movement of maize out of the
station remained poor.
In his response, the Accounting Officer explained that the practice of
bartering maize for milling charges was as a result of breakdown of the
tractor operated hammer mill that was being used at the station. However,
this financial year, a tractor operated mill is planned to be procured and a
new officer in charge has been posted to ensure store controls are adhered
to.
The procurement of the hammer mill should be expedited in order to curb
the losses currently associated with the barter system of meeting milling
expenses.
(iii) Understaffing
In all the stations inspected, the ratio of uniformed staff to inmates stood
at 1:6 to 1:8 against the recommended 1:3. This issue has always featured
216
in my previous reports to Parliament but little progress is being made to
address it.
In his response, the Accounting Officer admitted that understaffing was a
general problem in all prison units. However, to address the problem, 700
Prison Warders/Wardresses had been recruited and are under going
training in the Prisons Training School. According to him this input is
expected to raise the ration to 1:5.
Recruitment of more staff should be encouraged so as to raise the ratio to
the recommended levels.
(iv) Encroachment on the Prisons Land
All the prisons units inspected, did not have copies of land titles to confirm
ownership. Moreover, land purportedly owned was grossly underutilised.
As a result, much of this land has been encroached on and in some cases
allocated by government to the landless people such as the Basongora
Herdsmen. This issue has been featuring in my previous audit reports to
Parliament (refer to paragraph 25.9 of 2003/04, paragraph 25.5 of 2005/06
and paragraph 26.6 of 2001/02), though no action appears to have been
undertaken.
The Accounting Officer explained that following the recommendations of
the Inter-Ministerial Committee of Cabinet, part of Ibuga land was
degazetted to settle the Basongora herdsmen. In all other cases, the
department was in the process of re-surveying the remaining portions and
acquiring their respective land titles.
There is need to obtain land titles to all the land belonging to Uganda
Prisons so as to minimize cases of the rampant encroachment.
(v) Transport and Communication
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It was observed that Katalya and Ibuga prisons did not have any means of
transport, while Jinja Remand had an old lorry and pick up which require
major overhaul or replacement. This had created difficulties in
transportation of prisoners to court and foodstuffs and other essentials to
substations.
The Accounting Officer explained that an arrangement exists where nearby
stations such as Ibuga prison share vehicles with Ruimi and Mubuku prisons
which have brand new Tata Lorries as arrangements are being made to
procure their own.
It is recommended that more funds are provided for procurement of
vehicles to ease the transport problem that the prison units are faced with.
(vi) Welfare of Staff and Inmates
Apart from the inmates of Jinja Main/Remand and Bugungu Prisons who
had been facilitated with an additional pair of uniforms from Non
Governmental Organisations and Well Wishers, the inmates in the rest of
the prisons inspected above had one torn pair of uniforms each.
Furthermore, the prisons staff had one pair of uniforms which was supplied
three years ago which had compelled them to supplement with informal
attire. It was also noted that inmates had to eat in turns as a result of
inadequacy of food bowls and cups. All these are indicators of non-
prioritization of welfare of staff and inmates by prisons management.
The Accounting Officer explained that the department had procured
prisoners and staff uniforms, food bowls and cups to cover all stations.
(vii) Over-payment to a Contractor for abandoned Project
The Prisons department entered into an agreement with a company to
construct buildings at Ibuga Prison farm at a contract sum of
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Shs.517,732,571. Total payments by the time the project was abandoned
was Shs.305,840,813 comprising of advance guarantee of Shs.103,546,751
and three certificates of Shs.202,294,062. However, the following matters
were noted:-
o The advance guarantee of Shs.103,546,751 had not been recovered by
the time the contractor abandoned the project. This, if offset by a total
of Shs.43,073,987 comprising retention of shs.20,198,987 and materials
on site of Shs.23,875,000, would leave an over-payment of
Shs.59,472,764.
o Similarly, the bank guarantee purportedly from Barclays Bank which was
used to obtain an advance of Shs.103,546,751 from prisons was found
to be not authentic.
o The contract was neither tendered nor cleared by the Solicitor General
as required by PPDA Act and regulations.
There is a likelihood of prisons losing Shs.59,472,764 following the
disappearance of the contractor from the site.
The Accounting Officer explained that the over payment of Shs.59,472,764
excluded Shs.26,090,422 from two notable items of recovery on advances
(Shs.20,709,342) and unpaid works on staff houses and wards
(Shs.12,673,000). He further explained that Barclays Bank had been
contacted to verify the authenticity of the bank guarantee and if found
forged, the matter would be referred to Police. On the issue of the Solicitor
General’s clearance, he stated that the contract was approved in line with
PPDA although this could not be verified.
The Accounting Officer should provide a status report and feed back from
Barclays Bank regarding authenticity of the Bank Guarantee and the steps
that have been undertaken to recover the overpayment. Similarly evidence
regarding observance of tender regulations should be produced.
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(viii) Cows Belonging to Private Individuals
Out of 263 cows found at Isimba Prison farm, 184 belonged to
Government, while the other 79 were for private individuals. Some of the
owners of these private cows happened to be prisons senior staff. Meagre
resources of the farm had to be diverted for the treatment and general
upkeep of this private stock.
The Accounting Officer explained that the owners of the private cows had
been directed to remove them from the station, although this is yet to be
verified.
26.0 NATIONAL AGRICULTURAL RESEARCH ORGANISATION (NARO)
26.1 Unappropriated Project Funding A total of Shs.13,393,521,369 was received by NARO from various donors
during the year. It was however noted that only Shs.4,356,846,700 was
approved by Parliament. The balance of Shs.8,856,674,669 is extra
budgetary and lacks Parliamentary authority. This funding caused the
organization to incur excess expenditure outside the Parliamentary
appropriation on various items of expenditure as indicated below:-
Item Budget Actual
Over
Expenditure
Employee costs 11,074,836,000 11,669,877,987 595,041,987
Goods and
Services 8,835,648,700 15,835,209,839 6,999,561,139
Consumption of
property 1,987,117,000 2,208,019,343 220,902,343
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This expenditure is extra budgetary and is an indication of a breakdown
of controls over budgetary expenditure.
26.2 Staff provident fund The organisation runs a staff provident fund where the employees
contribute 5% and the employer 15% of the monthly gross salaries. To
date the fund has accumulated deposits to the tune of Ushs 6.1 billion
which is invested in long term deposits with various banks. Social security
services are a responsibility of the National Social Security Fund (NSSF) in
line with section 7 of the NSSF act CAP.222. Although the act exempts
some organisations/companies from contributing with the NSSF, NARO has
never obtained a Certificate of Exemption to allow it operate its own
scheme. The fund is thus being run illegally and could attract
sanctions/penalties in accordance with the Act.
In his response the accounting officer stated that they were in the process
of registering the scheme under the Companies Act, after which they will
seek for the exemption. I still await the outcome.
26.3 Unvouched Expenditure During the financial year a total of Shs.140,237,559 was transferred to the
Agricultural Research Information Centre: Shs U shs 44,128,199 being in
respect of recurrent while the balance of U shs 96,109,360 was in respect
of development expenditure. The entire release was spent by the end of
the financial year. However, payment vouchers together with their
supporting documentations for payments totaling to Shs 94,498,948 were
not availed for audit.
A review of the bank reconciliation statements revealed 3 cheques
amounting to Shs.8,173,000 drawn from the bank that were not posted to
the cash book while another 3 cheques amounting to Shs.24,400,000 were
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irregularly posted totalling Shs.8,400,000. These transactions need to be
investigated further.
26.4 Unexplained Receipts A review of the bank statement revealed that cash deposits totalling
Shs.6,609,000 had been banked on the centre’s bank account during the
period of January to June 2007. The sources of these funds were not
satisfactorily explained.
26.5 Flouting of PPDA Regulations (i) Procurement of the intercom service at Kachwekano ZARDI
The institutes made a procurement of the intercom communication
system at Shs.33,960,400 from a firm without going through the
normal procurement procedures. Although quotations were received,
requests for the quotations were not formally made in writing.
Besides, quotations were not subjected to formal evaluation and
authority for award was not obtained from a competent contracts
committee.
(ii) Procurement of computer servers
A contract worth US$82,478 was awarded to a local company for the
supply of 22 computer servers. The company supplied servers that
did not meet the specifications that were ordered by NARO.
Whereas the latter ordered for the PE2800 with Processor Bus Speed
of 2x800MHz, the company supplied PE2900 with processor bus
speed of 2x667 MHz which speed, as per the System Administrators
report, was much slower. The same were however received in the
stores and still lack the software for the intended purpose. The
servers (18 in number) still lie idle, more than a year after purchase,
at the headquarters. With the short life span associated with
computer accessories the same are likely to become obsolete before
being used.
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26.6 Unaccounted for funds A total of Shs.31,540,200 advanced to officers to carry out various activities
had not been accounted for by the time of this report. In the absence of
the accountabilities, I could not ascertain whether the funds were used for
the intended purposes or made to the bonafide payees. I advised the
accounting officer to enforce timely accountabilities for advances to
officers.
26.7 Inspections
26.7.1National Cereals Crops Research Institute (NACCRI)
(i) Hire of grain dryer
The institute received a grain drier in 2001 from the IDEA project to
enhance the cereals research activities at the station. In August
2001 an agreement was entered into between the institute and an
individual to hire the drier for a period of two months effective 29
August 2001 at a monthly rate of Shs.300,000. The dryer was
retained by the hirer until February 2008 when it was returned to the
institute. However, the dryer was not functional by the time it was
returned. Management did not demonstrate tangible interest in the
functioning and safety of the dryer, the reason it was abandoned
with the hirer for that long. It was also noted that a total of
Shs.21,600,000 charged for the period has not yet been recovered
from the individual. Management should make efforts to recover the
amount.
The Accounting Officer explained that recovery is being handled by
NARO Legal Department.
26.7.2National Semi-Arid Resources Research Institute (NaSARRI)
(i) Cotton Ginnery
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The institute received a cotton ginnery from the Cotton Sub sector
Development Programme to improve on the efficiency in the cotton
research activities.
The machinery was installed at the station but has not been used/
tested for functionality and still lies idle, depreciating and could have
developed some malfunctions in the process. In such circumstances
the necessity/contribution of the machinery is put to question and
there are also doubts whether proper planning was done prior to the
acquisition.
In his response the Accounting Officer stated that the machine is not
being used due to insufficient power supply at the institute. To run
the machinery would require an additional estimated Shs.40,000,000
to install a transformer. Currently the institute uses the old
machinery for the ginning processes whose attendant says its output
and quality is inadequate.
I advised the accounting officer to expeditiously source for the
required funding to have the ginnery operational so as to avoid loss
of the machine due to depreciation and obsolescence.
(ii) Lease of a plot of land to MTN
During the inspections it was established that the institute had
leased some plot of land to the Mobile Telecommunications Network
(MTN) for erection of a transmission mast within the institute land at
a premium of Shs.2,000,000 and an annual rental of Shs 1,200,000
effective December 2004. By the time of audit no revenue had been
collected. In his response, the Accounting Officer explained that he
was in the process of recovering the money.
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26.7.3National Livestock Resources Research Institute (NaLIRRI) Land encroachment at Lugala substation During inspections it was noted that the land harboring the substation had
been massively encroached upon by the local communities estimated at
over 2,000 house holds, with a trading centre, landing site and market.
The station is not substantially being used by the institute with 10 heads of
animals and no much research activity being carried out.
Management should have the land reclaimed and surveyed to protect it
from encroachers.
26.7.4National Forestry Resources Research Institute (NaFORRI) Hire of Sawmill The institute purchased a mobile circular sawmill to enable it carry out
research demonstrations and some commercial activities. To enhance its
mandate and benefit clients, the Saw Mill was contracted out to National
Forestry Authority (NFA) under a ‘Memorandum of Understanding’ at a fee
of Shs.6,000 per cubic metre of logs harvested and delivered at the mill
site. In addition, while at the NFA, the mill was to be used by the institute
in carrying out logging and saw milling studies.
By the time of this report there was no evidence of collection of revenue
from NFA. Equally, application of the mill for research purposes was not
evident.
27.0 NATIONAL AGRICULTURAL ADVISORY SERVICES (NAADS)
27.1 Background of the Programme
In the fight against poverty, the Government of Uganda put in place the
Poverty Eradication Action Plan (PEAP) as a framework go guide sector
planning. Under PEAP the Plan for Modernization of Agriculture (PMA) was
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designed to provide guidelines for the transformation of agriculture from
subsistence to commercial agriculture.
Consequently, NAADS programme came into being under an Act of
Parliament known as the National Agricultural Advisory Services Act, 2001
as one of the seven (7) components of the PMA. The overall goals of the
programme are to improve the productivity and livelihoods of Ugandan
farmers through the establishment of a farmer-led and contract based
agricultural advisory service.
A programme support document was signed in November, 2001 with the
following donors:-
• The World Bank through the intermediary of the International
Development Agency (IDA)
• The European Union (EU)
• The Netherlands
• The Danish International Development Agency (DANIDA)
• The Irish Aid
• The International Fund for Agricultural Development (IFAD)
An audit of the programme was under taken for the year ended 30th June
2007 and a separate audit report issued. Here below are the summarised
findings that were brought to the attention of management:-
27.2 Secretariat 27.2.1Findings relating to the financial statements 27.2.2Basket Funds Statement
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The Basket Funds Statement does not reconcile with the receipts and
payments accounts in both prior year and current year by shs.40,030,000
and shs.22,121,000 respectively.
This implies that the Basket Funds Statement and Statement of Fund
Balance may not present fairly in all material respects of the Funds received
and expenditure incurred as at 30th June 2007.
Programme management should provide a reconciliation statement
between the Basket Funds Statement and the Receipts and payments
account regularly.
Management has explained that the differences arise from the end of year
balances on the project accounts which were in operation when the
programme was being financed through the project mode. A reconciliation
of the balances on the two statements will be provided to the audit team
for review.
27.3 Compliance with the Memorandum of Understanding and the laws
and regulations of the Government of Uganda 27.3.1Withholding tax
Withholding tax totaling to shs.4,937,650 was not deducted from various
payments to service providers.
This contravenes the MoU and GoU regulations.
Programme management should ensure that all WHT is appropriately
deducted from all applicable expenditure that is incurred.
27.4 Findings relating to the Internal Control System.
27.4.1Verification by the internal auditor
The following expenditure was not verified by the internal auditor:-
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Date Voucher # Amount Payment Details Ushs 20/12/06 Rs 82 9,466,832 Payee on gratuity of Cate Kiisa,
Jenifer, Peter & Barbara 28/05/07 D29 3,384,000 Supply of 45,000 suckers of
pineapples to Butumbule S/C 22/12/06 Rs 81 23,582,436 PAYE for December 2006 13/10/06 Rs 63 4,916,882 Payee on leave pay for Dr Silim
Okecho & Agnes 13/10/06 Rs 62 4,314,368 Payee on Dr. Onyokos gravity 30/10/06 D82 1,410,800 Funds for photo coping print and
binding documents in color. 22/22/06 Rs 38 13,131,633 NSSF contribution for month
December 2006 19/09/06 Rs 106 2,738,510 Loading of fuel cards 19/09/06 R91 3,592,000 Loading of fuel cards
This contravenes the financial management manual guidelines and may
lead to ineligible expenditure being incurred
Programme management should ensure that all expenditure is verified by
the internal auditor before expenditure is incurred.
Programme Management explained that internal audit department endorses
all payments. These isolated cases came because at times the auditors are
out of station undertaking quality assurance in the districts. As a corrective
measure, the vouchers have been passed to the auditors for endorsement.
27.5 Findings relating to compliance with the MoU and other GoU regulations - Districts
27.5.1Co – funding obligations
The following districts did not comply with their co – funding obligations:-
District Expected Co
– funding UGX
Actual Co – fundingUGX
Variance
UGX Abim 4,512,000 1,350,000 (3,162,000) Amolatar 4,427,000 2,500,000 (1,927,000) Bududa 3,097,000 3,030,000 (67,000)
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Busia 5,263,160 1,000,000 (4,263,160) Hoima 7,726,950 5,620,040 (2,106,910) Kabarole 6,155,650 5,875,000 (280,650) Kamuli 8,437,750 1,810,000 (6,627,750) Kasese 4,407,050 - (4,407,050) Kotido 6,050,000 3,356,000 (2,694,000) Luwero 4,479,000 1,030,000 (3,449,000) Lyantonde 2,744,300 2,530,350 (213.950) Manafwa 2,844,500 2,155,500 (689,000) Masindi 3,464,000 2,000,000 (1,464,000) Moyo 4,830,000 1,850,000 (2,980,400) Nakapiripit 4,296,000 3,000,000 (1,296,000) Namutumba 5,000,000 2,050,000 (2,950,000) Nebbi 4,448,000 30,000 (4,418,000) Sembabule 4,550,000 1,000,000 (3,550,000) Soroti 10,134,000 5,247,735 (4,886,265) Tororo 4,504,000 - (4,504,000) Yumbe 4,710,000 500,000 (4,210,000) 106,080,360 45,934,625 (60,145,735)
Non – compliance with the co – funding requirements impairs the available
resources for the programme and therefore affects its implementation.
Programme management has attributed the low co-funding to low revenue
base and failure by government to remit graduated tax compesation funds
to local governments.
27.5.2Withholding tax
The following districts did not remit 6% withholding tax to the Uganda
Revenue Authority in relation to payments regarding professional services
that were above Ugx 1,000,000.
District Payment Details Amounts UGX
Gulu 04/05/07; Voucher # 005/05; Chq # 5258; Impulse communications.
1,692,560
Hoima and Kasese
All payments -
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Nebbi 30/01/07, Vr. No, 016/01, chq. No 5089 Dr. Okwir Anthony; Payment was made in respect of publication of NAADS activities by M/s Impulse Communication Options Ltd, but the payment voucher was made in the names of the District NAADS Coordinator.
1,419,000
3,111,560
This contravenes the Income Tax Act, 1997.
Programme management should ensure that 6% withholding tax in relation
to payments that are above Ugx 1,000,000 regarding professional services
is regularly remitted to the authorities.
Management explained that it was an oversight on their part not to deduct
the 6% WHT and indicated that they are going to make a claim from the
respective suppliers to remit the taxes to URA.
27.5.3Release of funds
Funds were released and received late in the following districts as indicated below:-
District Quarter Date received Amuru First Quarter Did not receive funds in this
quarter. Kayunga First Quarter 11/10/2006 Kayunga Second Quarter 14/02/2007 Kayunga Third Quarter 15/02/2007 Kayunga Forth Quarter 08/06/2007 Kasese Second Quarter 22/11/2206 Kasese Third Quarter 07/02/2007 Mityana Second Quarter 22/11/2006
The implication is that implementation of the programme activities becomes
difficult within the required timeframe.
230
GoU in liaison with the MFPED should ensure that timely release of funds to
the districts is made so as to ensure timely implementation of programme
activities.
Management has explained that in some districts, the money delayed on
the district collection account and hence could not get the funds into the
District NAADS A/C.
Management also indicated that the matter will be handled with the
Ministry of Finance Planning and Economic Development.
27.5.4Statutory deductions
The following districts did not remit statutory deductions within the
required statutory timeframe.
District Month Statutory deduction
Date remitted
Bugiri July, August’ 2006 NSSF October 2006 Kabarole July ‘2006 to February
‘2007 NSSF 28th June 2007
Kamuli September ‘2006 PAYE No proof of remittance
Kasese June ‘2006 to August ‘2006
NSSF Not remitted
Kibaale July’ 2006 to February’ 2007
NSSF 22nd March 2007
Kyenjojo April, May and June’ 2007 Wrong computations
Kaabong November – June PAYE Not remitted Kaabong November – June NSSF Not remitted Mityana June 2007 WHT 10thAugust 2007 Nakaseke September ‘06, October’
06, November’ 06, December 06, January’ 07 and February ‘07.
NSSF 30th April 2007
Sembabule August 2006 (Ugx 283,320) March 2007 (Ugx 1,222,949) June 2007 (Ugx 338,100)
WHT WHT WHT
20th September 2006 30th April 2007 26th September 2007
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Non – compliance with statutory requirements may result into penalties thereby increasing the implementation costs of the Programme.
Programme management should ensure that all statutory deductions are remitted within the required statutory timeframe.
27.5.5Sub - counties 27.5.5.1Co – funding obligations
It has been noted that out of the expected co-funding of
Shs.472,741,631 from Sub - counties and Farmers’ forums in the
respective sub – counties, only shs.213,772,617 was realized leading to a
variance of shs.258,969,014. Many Sub-counties and farmers forums did
not comply with their five did not comply with their five percent (5%) and
two pecent (2%) co – funding obligations.
Non – compliance with the co – funding requirements impairs the available
resources for the programme and therefore affects its implementation.
Programme management should ensure that co – funding is adhered to
regularly.
27.5.5.2 Withholding tax
Four sub - counties did not remit 6% withholding tax totaling shs.626,246
to the authorities in relation to payments regarding professional services
and goods that were above Ugx 1,000,000. This contravenes the Income
Tax Act 1997.
Programme management should ensure that 6% withholding tax in relation
to payments that are above Ugx 1,000,000 regarding professional services
is regularly remitted to the authorities.
Management has promised to address this issue in the general circular to
be issued to all the participating districts and subcounties.
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27.5.5.3 Release of funds
Funds were received late in most sub – counties. Implementation of the
programme activities becomes difficult within the required timeframe.
GoU in liaison with the MFPED should ensure that timely release of funds to
the districts and respective sub – counties is made so as to ensure timely
implementation of Programme activities.
Mangement has explained that it’s the transfer systems and bureaucracies
within the districts that cause the delay to transfer funds to Sub-counties.
27.6 Internal Control System
27.6.1Districts 27.6.1.1Programme Governance
District authorities transfer Sub County Chiefs and sub accountants
regularly and there is no formal handover of NAADS activities to new
officers.
The practice leaves a lot of uncompleted assignments in the S/Cs and
Districts and the new appointees face a lot of problems to complete the
assignments. This often resulted into disclaiming responsibilities over issues
raised.
Programme management should ensure that all authorities that are
responsible for the financial period under review are available at the audit
site during the audit exercise and formal handover reports should be
prepared to enable a smooth tracking of NAADS activities.
233
Programme management has explained that It’s the mandate of the
districts to transfer its staff. What they have always advised is that the
technical staff should be transferred within sub-counties participating in the
NAADS Programme. Management will emphasise this recommendation
including proper handover processes in a general circular to the all
participating districts.
27.6.1.2Bank reconciliations
The following districts did not have their reconciliations approved by the
District NAADS Coordinator (DNC) and CAO.
District Hoima Kyenjojo Masindi
None approval of bank reconciliations results in a breakdown in a vital
internal control system and could result in errors and frauds remaining
undetected.
Programme management should ensure that bank reconciliations are
regularly reviewed and approved by the DNC and CAO.
Management has agreed with the recommendation. It is however an
improvement in that previously, reconciliations were not being made and
reviewed by the authorities. This is one of the issues to be emphasized in
the Limited audit exercises.
27.6.1.3Asset register
The following districts did not have and / or maintain an asset register for
NAADS Programme assets.
District Bugiri, Busia, Butaleja, Hoima, Iganga, Kaliro, Kamuli, Luwero,
234
Namutumba, Pallisa and Tororo.
An asset register enables the tracking and safe use of assets and recovery
of assets becomes difficult in case of theft and burglary.
Programme management should ensure that a separate assets register in
relation to NAADS assets is initiated and regularly maintained.
Programme Management noted the recommendation and promised to have
the assets registers maintained.
27.6.1.4Asset engraving
The following districts did not engrave their NAADS assets.
District Assets not engraved Busia Sony Video Camera Butaleja Sony Digital Camera Lyantonde 1 Table, 1 Exc. Arm chair, 6 Metallic chairs Masaka Filing cabinet and chairs Tororo Sony Video Camera, Still Camera, Sony Digital
Camera, Tape Recorders and Scanner.
Recovery of assets becomes difficult in case of theft and burglary.
Programme management should ensure that all porgramme assets are
engraved by the programme initials, names and unique identification
numbers.
Programme Management noted the recommendation and promised to have
the assets engraved.
27.7 Vehicle fleet management
The following districts either did not have log sheets to record vehicle
movements or the log sheets were inaccurately recorded.
235
There
is no basis to ascertain whether or not all movements of the vehicle and the
related maintenance costs were for the benefit of the project.
District Issues raised Bugiri, Iganga, Kamuli and Tororo. No log sheets
Log sheets should be introduced and particulars of movement of vehicles
accurately recorded regularly.
Programme Management noted the recommendation and promised to have
logsheets introduced and maintained.
27.8 Quarterly Internal Audit Reports
Quarterly internal audit reports were not availed to us for our review in the
following districts and / or the frequency with which internal audit was
carried out was insufficient as disclosed below.
District Dates of
internal audit visits
Number of visits
Abim, Amolatar, Amuru, Busia, Kaberamaido, Kaabong, Kaliro, Kamuli, Kotido, Namutumba, Maracha-terego, Masindi, Moyo, Pader, Yumbe.
Not disclosed
Kabarole Not disclosed
1
We were unable to ascertain whether the internal auditors’
recommendations were implemented in the period. Insufficient visits by
the internal audit results into the programme misallocating funds since the
provision of checks and balances is being eroded.
Programme management should ensure that internal audit reports are filed
and made available to external independent reviewers.
27.9 Procurement reports
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Procurement report were either not prepared in accordance with the NAADS approved format or not availed to us for review in the following districts.
District Issues raised Amuru and Luwero
Report was not prepared in accordance with the NAADS approved format.
Gulu, Kasese and Pader.
Procurement report and procurement plan were not prepared.
Kayunga, Moyo and Mubende.
Report was not availed to us for review.
Non – compliance with the NAADS financial management guidelines renders
them worthless and impairs the control objectives and Programme
monitoring.
Programme management should ensure that procurement reports are
prepared in accordance with NAADS financial management guidelines and
are always made available to independent external reviewers.
Programme management has indicated that there are two issues to this.
One is the limited capacity pertinent with local governments. This issue is
being addressed through the trainings undertaken during the limited audits
in addition to recent recruitment of professional procurement officers in
local governments to backstop this process. However, the rampant
transfers affect this cause. Two has been enforcement. However, of late
they have requested all districts/sub-counties to file procurement plans for
the year and every quarter. Reporting after making a plan becomes easy.
This will be enforced.
27.10 Status of accounting records and bookkeeping
It has been noted that at least 21 districts either had incomplete financial
reports or did not prepare financial reports.
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This renders the audit trail difficult and we were unable to verify the
validity, accuracy, existence and completeness of the expenditure incurred
and /or income received.
Programme management should ensure that all required reports are
prepared regularly in accordance with the financial management guidelines
issued by the NAADS Secretariat.
Programme management has indicated that it will follow up the matter.
27.11 Stamped “PAID”
Payment vouchers were not stamped “PAID” in at least 12 districts.
Payment vouchers and supporting documents can be presented more than
once for payment resulting into misallocation of funds.
Programme management should ensure that all payment vouchers and
supporting documents are cancelled with stamped “PAID” on initiation of
payments.
Programme management has indicated that it will follow up the matter.
27.12 Unreconciled amounts
The financial report did not reconcile with the activity analyzed expenditure
report in the following districts.
District Payment Details
Amounts as per the financial report
Amounts as per the activity analyzed
Difference
expenditure report
UGX UGX UGX Kayunga 293,527,554 291,288,941 2,228,613 Kibaale 118,586,128 116,944,458 1,641,670 Manafwa Agric-
business and market linkage
8,943,400 3,556,000 5,387,400
Manafwa Agric-business and market linkage
7,036,400 3,010,000 4,026,400
Mbale NAADS District NAADS coordinator
4,201,500 5,670,000 (1,558,500)
Mbale FID normal NAADS
1,688,750 1,010,000 (678,750)
433,983,732 421,479,399 12,504,333
We were unable to verify the validity, accuracy, existence and
completeness of Ugx 433,983,732 disclosed in the report. Ugx 12,504,333
was either misallocated or misappropriated and is considered to be
ineligible expenditure.
Programme management should ensure that the financial report regularly
reconciles with the activity analyzed expenditure report.
Programme management has indicated that the issue will need to be
verified to the cashbook and the reports. It is possible that this is an issue
of capacity.
27.13Inadequately supported amounts
238
239
The financial and the activity analyzed expenditure report amounts did not
reconcile with third party supporting documents in 18 districts by a variance
of shs.57,160,260.
I was unable to verify the validity, accuracy, existence and completeness of
shs.57,160,260 and/or shs.57,160,260 was either misallocated or
misappropriated.
Programme management should ensure that amounts disclosed in the
financial and activity analyzed expenditure reports regularly reconcile with
third party supporting documents.
Programme management has indicated that Districts/sub-counties with
missing accountabilities will be requested to provide them or the respective
officers will be requested to refund the money to the programme.
27.14 Authorization by the NAADS Coordinator
The following expenditure was not approved or authorized by the NAADS
coordinator in the following Districts.
District Expenditure details Luwero Voucher /
Cheque # Date Amounts
UGX Payment Details
5579 945,000 Supply of fuel to the NAADS programme
Ntungamo 1/1 02/01/07 915,000 Muyambi.S.K; Financial audit of sub - counties
Ntungamo 25/3 29/03/2007
300,000 Alex Ampairwe; Allowance for March to Intern
Soroti 102487 30/06/07 23,770,000 Construction of a sweet potato prcessing plant
Expenditure that does not achieve value - for - money of the programme
could be incurred resulting into misappropriation of funds.
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Programme management should ensure that all expenditure incurred in the
implementation of the programme is approved or authorized by the NAADS
coordinator.
27.15 Sub - counties 27.15.1Quarterly Internal Audit Reports
Quarterly internal audit reports were not availed to us for our review in 28
sub - counties and / or the frequency with which internal audit was carried
out was insufficient.
We were unable to ascertain whether the internal auditors’
recommendations were implemented in the period. Insufficient visits by the
internal auditors results into the programme misallocating funds since the
provision of checks and balances is being eroded.
Programme management should ensure that internal audit reports are filed
and made available to external independent reviewers. District internal
auditors should visit the sub – county on a quarterly basis.
27.15.2Procurement procedures
It has been noted that at least 63 sub - counties did not comply with the
required procurement procedures during the implemtation of the activities
for the Technology Fund.
Ineligible expenditure could be incurred. Non – compliance to the
procurement procedures results into misuse of programme funds and
eventual withdrawal funding by participating partners.
Programme management should ensure that all procurement procedures
are adhered to regularly through out the financial period.
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27.15.3 Procurement reports
It has been noted that at least 38 sub - counties either had an incomplete
procurement reports or did not prepare procurement report
This renders the procurement procedures’ audit difficult and we were
unable to verify the validity, accuracy existence and completeness of the
procurement expenditure incurred.
Programme management should ensure that a procurement report is
regularly prepared in accordance with the procurement guidelines issued by
the NAADS Secretariat.
27.15.4Status of accounting records and bookkeeping
It has ben noted that atleast 73 sub - counties either had incomplete
financial reports or did not prepare financial reports.
This renders the audit trail difficult and we were unable to verify the
validity, accuracy existence and completeness of the expenditure incurred
or income received.
Programme management should ensure that all required reports are
prepared regularly in accordance with the financial management guidelines
issued by the NAADS Secretariat and should be consistent with each other.
The management should ensure that the internal control system is effective
and efficient throughout the period under review.
Programme management has indicated that the issue of capacity in
bookkeeping and reporting is still a challenge under lower local
governments. This issue is being addressed through continuous training
under limited audits and our recent printing of user friendly combined
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Cashbooks / Activity analysis Books is expected is expected to minimize
reporting errors and mistakes.
27.15.5 Release advises
The following sub - counties did not disclose to us the release advises in the respective quarters below.
District Sub – county Quarters Luwero Bamunanika April – June’ 2007 Masindi Nyangahya October – December’2006,
January – March’2007. and April – June’ 2007.
Nakaseke Kapeka October – December’2006 and April – June’ 2007
Nakaseke Ngoma In all quarters. Nebbi Kango 1st Quarter Nebbi Erussi 1st Quarter
We were unable to verify the validity, accuracy existence and completeness
of the funds received in the sub – counties during the period.
Programme management should ensure that release advises are regularly
collected from the District and made available to independent external
reviewers.
Programme management has indicated that whenever funds are released,
the Secretariat generates release advises that guide the districts on how to
distribute the Programme funds. The office of the District NAADS Co-
ordinator is expected to ensure that each respective sub-county is issued
with the advice to ensure proper appropriation of programme funds. This
issue will be emphasized in a general circular to districts on implementation
of Audit recommendations.
27.15.6Unreconciled amounts
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It has been noted that the financial report did not reconcile with the activity analyzed expenditure report by a total of shs.10,571,896 in 12 sub – counties as shown below:-
District Sub –
county Amounts as per the financial report
Amounts as per the activity analyzed expenditure report
Difference
UGX UGX UGX Bushenyi Kabira 10,595,620 6,649,690 3,945,930 Bushenyi Kabira 3,561,000 5,977,130 (2,416,130) Bushenyi Kabira - 2,498,100 (2,498,100) Bushenyi Kabira 9,523,681 12,689,836 (3,166,155) Ibanda Bisheshe 10,833,700 13,825,400 (2,991,700) Ibanda Bisheshe - 9,523,950 (9,523,950) Ibanda Bisheshe 9,825,900 12,014,950 (2,189,050) Ibanda Bisheshe 3,258,050 1,069,000 2,189,050 Kibaale Bwamiramira 121,416,209 119,966,209 1,450,000 Kiruhura Kashongi 3,309,000 1,608,000 1,701,000 Masindi Nyangahya 56,611,737 56,482,937 128,800 Mukono Ntenjeru 93,712,480 69,770,279 23,942,201 322,647,377 312,075,481 10,571,896
I was unable to verify the validity, accuracy, existence and completeness of
shs.322,647,377 disclosed in the report. In addition, shs.10,571,896 was
either misallocated or misappropriated and this could considered to be
ineligible expenditure.
Programme management should ensure that the financial report regularly
reconciles with the activity analyzed expenditure report.
Programme management has noted that this issue is more of capacity to
reconcile records than fraud. The problem of reconciling reports and
financial records will be minimized by the use of the new analysed cash/
activity analysis books. District internal auditors will be required to verify
the accuracy of the reports.
27.16 Inadequately supported amounts
244
The financial and the activity analyzed expenditure report amounts did not
reconcile with third party supporting documents in a total of 76 sub –
counties by a total of shs.227,422,260
This amount was either misallocated or misappropriated and could be
considered to be ineligible expenditure.
Programme management should ensure that amounts disclosed in the
financial and activity analyzed expenditure reports regularly reconcile with
third party supporting documents.
Programme management has noted that the respective entities will be
requested to provide proper accountability for the advances. Respective
officers will be requested to refund monies where they fail to account for
the advances.
27.17 Bank reconciliation statements
Bank reconciliation statements were either not accurately prepared or
approved in the following sub - counties.
District Sub – county Issues Gulu Koch - Ongoko The balance as per cash book indicated in the
bank reconciliation statement of Ugx 3,830,720 is different from amount Ugx 4,329,720/= contained in the cash book availed to us.
Ibanda Kikyenkye Cheque 5080 of Ugx. 6,937,000 bounced during the month of June 2007 and was not reversed in the cashbook but was instead included under uncredited cheques in the bank reconciliation for June.
Kabale Rwamucucu maziba Hamurwa
Apart from the month of June 2007, Monthly bank reconciliations do not bear evidence of internal audit checks and reviews.
Kabarole Kisomoro Bank reconciliation statements were not approved by the Sub-county chief.
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Kyenjojo Bugaaki Bank reconciliation statements were not approved by the Sub-county chief.
Kumi Atutur The bank reconciliation statement reflected a cash balance of Ugx 20,319,861 which was not correct. The cheques reflected in the reconciliation as unpresented were never issued out to the recipients. They remained in the cheque book were availed to us during the audit on 8/03/07. The cheques were as follows; Cheque no: 5111 Ugx 1,071,600, Cheque no:5113 Ugx 6,768,000 and Ugx 432,000,In total they amount to Ugx 8,321,600/= The true cash book balance should be Ugx 28,641,461.
Masindi Nyangahya There is no evidence that the bank reconciliation statements were either approved by the SNC or the sub – county chief.
Masindi Nyangahya The bank reconciliation statement had an uncredited deposit Ugx 680,000 which was more than six months old. It could only be traced to the bank deposit slip of 20th March 2008.
Nakaseke Kikamulo There is no evidence that the bank reconciliation statements were either approved by the SNC or the sub – county chief.
Nakaseke Kinyogoga There is no evidence that the bank reconciliation statements were either approved by the SNC or the sub – county chief.
Oyam Iceme Book balance was Ugx; 15,645,000 but Ugx, 18,613,800 was used as a closing cashbook balance in the bank reconciliation statement. There was no explanation for the variance of Ugx 2,968,800
Rukungiri Nyakishenyi Kagunga
The 2% farmer contributions received by the sub county in cash were not banked immediately so reconciliations between bank statements and cash book entries could not easily be matched.
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Non – review of bank reconciliation statements by responsible officials and
delayed postings of reconciling amounts results into misappropriation of
programme funds.
Programme management should ensure that all bank reconciliation
statements are reviewed by a responsible official and reconciling items that
are more than six months old are reversed immediately as soon as the
requirement appears.
Management has noted the recommendation and promised to address the
matter in future.
27.18 Assets register
The following sub – counties neither had nor maintained an asset register.
District Sub – county Hoima Buhimba Luwero Katikamu Masaka Bigasa Mukono Ntenjeru Wakiso Masulita
Recovery of assets becomes difficult in case of theft and burglary.
Programme management should ensure that a separate assets register in
relation to NAADS assets is initiated and regularly maintained.
Programme Management has noted the recommendation and has promised
to ensure that the fixed asset register for NAADS is put in place.
27.19 Asset engraving
It has been noted that at least 25 sub – counties did not engrave their
assets.
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Recovery of assets becomes difficult in case of theft and burglary.
Programme management should ensure that all porgramme assets are
engraved by the programme initials or names.
Programme management has promised to address the matter in future.
28.0 JUDICIARY
28.1 Extra Budgetary Funding
The Judiciary received Shs.6,253,792,706 in extra budgetary funding from
Danida, European Union and USA which was not appropriated by
Parliament as required by law. The approved budget shows that US$
802,300 equivalent to Shs.1,509,688,000 was appropriated as funding from
Danida. However, Shs.6,121,603,706 was instead received leading to an
extra budgetary funding of Shs.4,611,915,706 which lacked approval of
Parliament. The department also received extra budgetary funding of
Shs.132,189,000 from the European Union and United States of America
(USA) which is yet to be accounted for.
The Accounting Officer, explained that of the extra budgetary funding of
Shs.4,611,915,706, Shs.1,559,528,932 was the balance brought forward
from the previous year.
I have explained to him that balances rolled over to the new financial year
also require Parliamentary appropriation.
28.2 Emoluments
(a) Salary and allowances paid to a Retired Judge
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Salary and allowances totalling to Shs.37,152,000 were paid to a
retired Judge for a period of five and eight months respectively after
retirement in contravention of government regulations. This
anomaly was caused by weaknesses in the payroll management
procedures which allow the department to operate two parallel
payroll systems.
The Accounting Officer promised to recover the funds from the
Judge’s gratuity payment. I await the recovery.
I have advised the Accounting Officer to streamline the system by
transferring all staff to the computerised payroll managed by the
Uganda Computer Services.
(b) Emoluments paid to a Judge during un approved study leave
A judge was paid full annual salary, housing and medical allowances
totalling Shs.61,380,000 and provided a fully fuelled vehicle while on
an unapproved study leave abroad. In response the accounting
officer stated that the error was regrettable and a letter had since
been written to judicial service commission to regularize the study
leave.
28.3 Payables
Note 26 (Payables) to the accounts, shows a balance of Shs.693,680,351 as
miscellaneous account payables balance. However, the relevant
documentation in support of this figure was not presented for verification.
In the same Note, Shs.211,970,708 is reported as withholding tax payable.
This balance is not supported with any cash balances from the cash
balances shown in Note 20 implying that money was utilised at source
contrary to the tax law.
28.4 Bank Reconciliation
249
The bank reconciliation statement for the expenditure account indicates an
amount of Shs.190,394,366 representing credits in the bank but not in the
cash book. However this could not be verified due to lack of supporting
documentation.
28.5 Accounting for Deposits
Apart from the Kampala High Court and Commercial Court deposits of
Shs.3,158,234,744 derived from hearing of civil cases, all other court
deposits were not reported in the financial statements. The courts whose
deposits were not reported include Court of Appeal, Supreme Court, High
Courts of Jinja, Mbale, Soroti, Gulu, Arua, Fort Portal, Mbarara, Masaka,
Nakawa and all chief Magistrates courts countrywide. This practice led to
an understatement of deposits in financial statements.
The Accounting Officer explained that he had written to all stations to file
statements of amounts outstanding.
28.6 Administration/Management of Cash Bails and Fines Imposed
after Banking Hours
Existing Government Non Tax Revenue regulations require that court fees,
fines, licenses and deposits should be paid to URA through designated
commercial banks. However, government offices close business at 5.00
p.m. as opposed to banks which close at 3.00 p.m. There has been a
public (legal community) outcry whereby convicts fined and suspects
granted bail outside banking hours are greatly inconvenienced and are
denied their judicial rights of being released as fines and bail deposits can
not be banked accordingly.
The Accounting Officer is advised to liaise with the Secretary to the
Treasury and the Uganda Revenue Authority to work out a suitable
arrangement to ensure that people’s rights are not violated.
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28.7 Banking of Non-Tax-Revenue
A sum of Shs.33,723,461 was received as NTR collected by upcountry
courts in cash by the cashier at High Court. However, only Shs.28,517,909
was banked on the revenue account in Bank of Uganda leaving a balance of
Shs.5,690,002 not banked and therefore un-accounted for.
In addition, Shs.4,918,410 collected as unpaid salaries was also not
banked.
The Accounting Officer explained that the money was borrowed and used
at source and that it will be refunded from Judiciary monthly releases.
28.8 The Library Fund
A library fund is operated by the Judiciary without authority of the Minister
responsible for Finance contrary to Section 9(3) of the Public Finance and
Accountability Act. The bank statement for the account showed a credit of
Shs.6,936,198 as at 30th June 2007. However I was not presented with the
statements of receipts and expenditure for the fund. I was therefore not
able to ascertain and satisfy myself that all receipts are brought to account
and spent in accordance with the regulations.
The Accounting officer explained that approval of the fund by the Minister
has been sought.
28.9 Audit inspections
Audit inspections revealed failure by courts to maintain proper records of
Non Tax Revenue, warrants of commitment to prison, poor state of court
prison cells and lack of exhibits register as shown in the table below;
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S.no Inspected court
Audit findings Remarks
1. Mbale Chief magistrate’s Court
a) Lack of acknowledgement receipts for NTR of Shs.15, 025,000. b) Lack of exhibits register.
Accountability lacking.
2. Mwanga II Court
a) Court cells: Men are kept in a metallic container with poor ventilation while women are in a wooden structure.
Poor accommodation is a health hazard and amounts to human rights violation.
3. Nabweru Court
a) No evidence of payment of fines or warrant of commitment to prison in default.
Accountability lacking.
Management should ensure that there are proper record keeping systems
at courts of law and that court cells are in a proper state.
29.0 DIRECTORATE OF PUBLIC PROSECUTION (DPP)
29.1 Contract Staff
The Directorate has a number of contract staff many of whom are stationed
upcountry. They are paid wages locally since they are not on the
traditional Public Service payroll.
The Accounting Officer explained that contract staff are a result of the
delays in the recruitment process between the Ministry of Public Service
and Public Service Commission. It was further explained that the
Directorate makes declarations of vacancies and request for staff but few
are approved and this forces them to recruit temporary staff to ensure
continuity in service delivery.
I have advised the Accounting Officer to have their appointments
regularised by the Ministry of Public Service.
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29.2 Non compliance with work plan.
Under the Northern Uganda Post War Recovery Plan, the Directorate
received a total of Shs.192,351,000 to carry out various activities.
According to the work plan Shs.10,541,000 and Shs.12 million was
earmarked for recruitment of staff and purchase of solar panels
respectively. However examination revealed that the two activities were
not implemented according to the work plan as indicated below:-
a) Recruitment of staff
Where as Shs.10,541,000 was released to the directorate to recruit 8
state attorneys, 8 state prosecutors and 24 support staff under the
Northern Uganda Post war recovery plan, the funds were utilised on
transport allowances to newly appointed Prosecutors to report to
their new stations. Lack of sufficient numbers of state attorneys may
hamper timely accessibility to justice by the citizens. In response
management explained that the matter of recruitment of staff was
handed over to the Public Service Commission. I await necessary
action.
b) Installation of solar panels
Purchase and installation of solar panels budgeted at Shs.12,000,000
was not carried out. Management stated that the delay was caused
by unwillingness of bidders to quote before visiting sites. It is not
clear why site visits were not included in the work plan earlier. Lack
of solar panels may adversely affect operation of electrical
equipment in the offices. I await necessary action.
29.3 Overdrawn Bank Account
The certificate of bank balances as at 30th June 2007, indicates that the
Directorate had a bank account No.245.20302.7.1 with a debit balance of
253
Shs.190,696,272. The account is not known to the Accounting Officer and
therefore was not captured in the financial statements.
The Accounting Officer was advised to liaise with Bank of Uganda and the
Accountant General for information relating to the account.
The Accounting Officer explained that he had written to Bank of Uganda for
clarification on the account.
29.4 Funds Wrongly Credited to Another Account
A supplementary funding of Shs.960,828,000 earmarked for the Directorate
of Public Prosecutions (DPP) to cater for the investigation on the report on
the Judicial Commission of inquiry into the alleged mismanagement of
Global Funds was wrongly credited to the Ministry of Internal Affairs and
was therefore not accessed by the Directorate. The activity was thus not
carried out by the Directorate despite its critical importance.
The Accounting Officer should seek for the necessary funding from Ministry
of Finance to have this activity carried out.
30.0 PARLIAMENTARY COMMISSION
30.1 Outstanding Advances to the Members of Parliament During June 2007, Members of the Eighth Parliament were advanced a total
of Shs.3,190,000,000 for Constituency development. This advance was not
retired by year end. I was therefore not able to establish whether the
funds were utilized in accordance with the guidelines issued by the
Parliamentary Commission.
In his response, the Accounting officer explained that only 69 members
submitted accountability leaving 250 members still outstanding. He further
explained that an initiative was made to introduce a law to govern the
scheme but not much progress was made. Meanwhile he has taken
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administrative measures not to release more funds to those who have not
accounted for the previous advances. I have urged him to ensure full
accountability of the advances
30.2 Fixed Assets Register The Commission is in the process of establishing a Fixed Assets Register in
which all fixed assets – furniture, computers and other equipment are
recorded. However the Register being introduced has not been approved
by the Accountant General as required by regulations.
For standardization I have advised the Accounting Officer to consider
adopting the Fixed Asset Register solution that is being deployed in all
Government Ministries by the Accountant General. This will necessitate
liaison with the Accountant General.
31.0 HEALTH SERVICE COMMISSION 31.1 Unauthorized expenditure
The commission incurred unauthorised expenditure of Shs.22,027,057 on
treatment of a former commissioner. This was in addition to a sum of
K.shs.600, 000 that was earlier approved by the medical board.
Though the commission sought retrospective authority to incur the
expenditure, it was not provided.
The Commission is advised to regularise the expenditure.
32.0 JUDICIAL SERVICE COMMISSION 32.1 Payment of Salary against expired contract.
255
The four year contract for one member of the Judicial Service Commission
commenced on 3rd Feb, 2003 and expired on 2nd Feb 2007. The contract
was renewed on 4th May 2007 for another term of four years.
However, it was noted that during the months of February, March and April
2007, salaries totalling Shs.8,700,000 computed at Shs.2,900,000 per
month were paid to the officer. I did not obtain evidence that his
employment with the Commission during this period was regularized. In
the absence of authority, the expenditure remains irregular. In response
management stated that only shs.5,800,000 was recoverable in respect of
February and April. I await necessary evidence of recovery and explanation.
32.2 Utility Bills
During the year, the commission made deposits totalling Shs.15,285,779 to
National Water and Sewerage Corporation (Shs.4,950,227) and Umeme Ltd
(Shs.10,335,552) in settlement of water and electricity bills respectively.
The following anomalies were noted;
32.3 Water Bill overpayment Shs.2,386,762
According to records, farmers House Ltd charges its tenants including the
Commission a monthly flat rate for water of Shs.213,622 monthly, that is
Shs.2,563,464 annually. It was not clear how the charge of Shs.213,622
was arrived at.
During the year, the Commission made a total deposit of Shs.4,950,227 to
National Water and Sewerage Corporation. This appeared to have resulted
into overpayment of Shs.2,386,763 (4,950,227 – 2,563,464) which should
be recovered from M/s Farmers House Ltd.
b) Electricity Bills
There are three electricity meters which the Commission pays for,
but one of them is shared with Uganda Property Holding Ltd and
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other tenants. There is no evidence that these other tenants
contribute to the bills.
In response management stated that negotiations between all the
tenants had been done with regard to water bills and that a request
to UMEME for a separate electricity meter had been forwarded. I
advised the accounting officer that a written memorandum of
understanding between the tenants should be drawn up to address
the issues.
32.4 Civic Education on Public Awareness of Judicial Systems:
Since 2003 about Shs.1,692,435,000 has been received for sensitization of
the public about Judicial systems in thirty districts through workshops
/seminars. However according to invitation lists, only district LCV
executive and their councillors, district heads of departments, LCIII
chairpersons, sub-county chiefs and some of the local NGOs were
requested to attend. The rural people who are the vast majority and
vulnerable to the injustices in the judicial system due to inadequate
knowledge of the roles and responsibilities of institutions are not targeted
by the programme. Besides the evaluation reports and the yardsticks that
would measure the success and impacts of this sensitisation were not
availed for audit.
It is recommended that a credible assessment system of the success and
impacts of the campaigns be put in place and availed for verification.
33.0 ELECTORAL COMMISSION 33.1 Transfer of Un-utilised Bank Balances
257
The Treasury General bank account balance of Shs.1,177,457,155 relating
to the financial year 2005/06 was not transferred back to the Consolidated
fund at year end contrary to regulations.
I did not also obtain explanation for having such huge balances remaining
un-utilised at year end. For the financial year under review this amount
stood at Shs.992,138,070. I have advised the Accounting Officer to liaise
with the Accountant General for necessary action.
33.2 Unaccounted for Funds
A total of Shs.329,815,000 advanced to various Returning Officers
upcountry remained unaccounted at year end contrary to financial
regulations. Unaccounted for advances reflect an apparent breakdown in
controls over advances which may lead to financial loss.
The Accounting Officer is advised to follow up the accountability. 33.3 Litigation Costs
During the year under review, the Commission paid out a sum of
Shs.715,280,825 to various law firms in election petitions arising from the
2006 general elections. The amount was paid to firms that represented
plaintiffs and also to firms that were defending the Commission in various
suits brought against it. The following matters were noted;
• The amount paid of Shs.715,280,825 to various law firms and bailiffs
lacked supporting documents such as court judgments.
• The financial statements for the year under review do not disclose any
quantified contingent liabilities relating to legal suits. This does not
compare well with the earlier outstanding figure of Shs.1,341,947,058
disclosed in the previous year.
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• The statement of non-quantifiable contingent liabilities as at 30th June
2006 indicates a number of court cases that were either dismissed or
withdrawn with costs to the Electoral Commission. It is not known
whether the costs have now been made good.
The Accounting Officer is advised to trace the necessary documentation
and also render accountability for the recoverable amounts from suits won
by the Commission.
33.4 Unaccounted for general receipt books
Two (2) receipt books issued to returning officers for collection of
nomination fees remained unaccounted for at the end of the year under
review.
33.5 Excess Expenditure
The Statement of Appropriation reflects excess expenditure on domestic
arrears totalling Shs.713,109,939 for which no budgetary provision was
made. There is no evidence that the excess expenditure was regularised
by way of reallocation or virement.
33.6 Rent Expenditure
During the year under review, Shs.402,987,840 was paid to various
property owners as rent in order to accommodate Electoral Commission
officials who operate across the country. However, Shs.164,575,200 of this
expenditure was not supported by valuation reports from the government
valuer.
Furthermore the Commission paid Shs.22,680,000 as VAT charge by a local
firm, without a tax invoice contrary to the tax law. In the absence of
evidence of VAT registration, the amount is recoverable from the
payee/landlord.
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34.0 UGANDA HUMAN RIGHTS COMMISSION 34.1 Un-appropriated Projects
The Commission has a number of projects with budgets worth
Shs.1,395,618,271 which were not appropriated by Parliament under the
vote. The Commission received grants from international organisations
outside its budget, totalling Shs.83,374,533. Use of funds which have not
been appropriated by Parliament creates unauthorised extra budgetary
expenditure.
Government may not be able to monitor the utilisation of such funds. All
projects funds should be appropriated by Parliament as required by the law.
Meanwhile efforts should be made to regularise the related expenditure in
accordance with the law.
Management should always seek for supplementary budget approval to
regularise the related expenditure.
34.2 Unauthorised Excess Expenditure
The financial statements show that the Commission registered excess
expenditure of Shs.553,178,855 on employee costs without authority.
I have advised the Accounting Officer to have the expenditure regularised
in accordance with the regulations.
34.3 Illegal Operation of Bank Accounts in Commercial Banks
The Uganda Human Rights Commission (UHRC) operates bank accounts in
various commercial banks in Kampala and upcountry branches for its
financial operations. However, scrutiny of documents revealed that these
accounts are being operated or were operated without authority of the
Accountant General contrary to the existing regulations. Although
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management had sought retrospective authority, the response from the
Accountant General was not seen at the time of this report.
Management should endeavour to follow up the matter with the Accountant
General.
34.4 Hansard Pension Contribution Scheme
During the period of audit, it was noted that the Commission remitted
contributions to the Hansard Pensions Scheme, a private scheme
amounting to Shs.9,900,000 for two Commissioners. Although the
Accounting Officer explained that the scheme had been closed, I could not
establish the total contributions made to the scheme and the surrender
value paid to the Ugandan members who could have relied on the advice of
their employer to make additional savings outside the statutory NSSF
scheme. Besides, the bank account for the scheme was not authorised by
the Accountant General as required.
34.5 Incorrect Registration of Commission Vehicles
The Commission procured five vehicles, three of which were acquired using
the Government of Uganda counter part funds. However, two of the
vehicles were registered under the Ministry of Justice for reasons which
were not explained.
In addition, Shs.139,576,000 that had been allocated to cater for the taxes
for the vehicles was paid to the Treasury as required by the new system of
tax payments. I could not independently verify whether funds eventually
reached the Tax Authority.
Management should ensure that all assets acquired using the Commission
funds are accordingly registered as Commission assets.
34.6 Funds for fuel Unaccounted for
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Out of Shs.112million deposited to Shell Petrol Station during the period
July 2006 to June 2007, Shs.8,000,000 remained unaccounted for contrary
to regulations which require all advances to be retired by the year end.
35.0 PUBLIC SERVICE COMMISSION 35.1 Board of survey
The recommendation by the board of survey to dispose of various obsolete
items was not effected. Among the items were motor vehicle, photocopy
machine, fans, computer, telephone receivers and chairs. Though
management explained that a process of boarding off vehicles has begun,
no values were attached to the items. I await the transparent completion of
the process.
36.0 LAW REFORM COMMISSION
36.1 Staff Establishment
The commission is currently understaffed as a number of posts for technical
staff as well as support staff have remained vacant for a long time. This
was made worse when some technical staff left the commission during the
year.
The Commission faces a risk of poor service delivery which may result into
failure to achieve the intended objectives.
The Accounting Officer explained that recruitment is ongoing but conducted
in phases as advised by the Ministry of Finance. The final recruitment to fill
all the vacant posts will be done in the financial year 2008/09.
36.2 Staff Gratuity
The Commission had outstanding gratuity for staff on contract in arrears of
over 3 years amounting to Shs.11,888,186. This balance was not disclosed
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in the financial statements and the statement of outstanding commitments.
This understates the payables position by the same amount.
The Accounting Officer explained that the Commission has been
constrained to pay technical staff statutory allowances due to inadequate
funding.
37.0 EDUCATION SERVICE COMMISSION
37.1 Un authorized reallocation of funds
In the absence of a Reallocation warrant the diversion of Shs.360,000,000
from recurrent to capital expenditure is considered un authorized. This
practice defeats the original intentions of parliamentary appropriation.
Though management stated during discussions that necessary reallocation
documents were available, they were not provided for verification.
Management should seek necessary approvals for reallocation to comply
with regulations.
37.2 Utilities
Shs.1,880,978 was reallocated from the item; committee, council and board
expenses to settlement of a water bill without necessary authority. This
practice may imply inadequate budgeting process. Management should
seek necessary approvals for reallocation.
38.0 LOCAL GOVERNMENT FINANCE COMMISSION
38.1 P.A.Y.E
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Statutory deductions relating to P.A.Y.E totalling to Shs.16,500,000 were
not made from allowances paid to Commissioners during the year under
review, contrary to the Income Tax Act.
The Accounting Officer is advised to have the deductions made and
remitted to Uganda Revenue Authority.
38.2 Irregular Payment of Allowances:
A total of Shs.60,000,000 was incurred when five part time Commissioners
continued to be paid a monthly consolidated allowance of Shs.1,000,000
each during the financial year 2006/2007, irrespective of whether they sit
or not. This contravenes 58 (1) and (2) of Local Government Finance Act
2003. The same Commissioners were also paid sitting allowances
whenever they attended the Commission meetings.
In his response, the Accounting Officer explained that there was a need to
retain and motivate the Commissioners who undertake serious tasks on
behalf of the Commission. He also stated that these allowances were
approved in the Commission meetings. However, documents in support of
this explanation were not availed for audit.
I advised the Accounting Officer to follow up the matter with the
appropriate Authority in order to regularise these consolidated allowances.
39.0 UGANDA BLOOD TRANSFUSION SERVICES 39.1 Grounded Vehicles
Treasury Accounting Instructions, Part II appendix E, require that where it
is deemed that inventories, vehicles e.t.c. are beyond their useful lives and
uneconomical to repair, lists of these items should be prepared giving
details of age and approximate value. The Accounting Officer should submit
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to the Accountant General these lists requesting that a board be appointed
to inspect these items with a view to their disposal or condemnation.
However, the organisation has a total of 14 motor vehicles and three motor
cycles that have been grounded at its premises for over ten years leading
to deterioration in residual value and loss of revenue to Government. About
six of the vehicles have now become scrap and several of these vehicles
are covered by overgrown bushes causing an environmental risk to the
employees. What could have served as a parking space is now occupied by
grounded vehicles.
The Accounting Officer explained that the disposal process was initiated but
could not be completed because he had to seek clearance from Ministry of
Health and other Development Partners who financed the procurement of
these vehicles. He indicated that the process would be completed in the
financial year 2007/2008.
I await the outcome of this disposal process.
40.0 UGANDA LAND COMMISSION 40.1 Lack of a Statutory Budget:
Under article 155 of the Constitution and sec 54(1) of the land Act, 2000,
the salaries and allowances of the members of the Commission should be a
charge on the consolidated fund. However, contrary to the above, a total of
Shs.34,800,000 and Shs.19,464,800 was paid out as salaries to the
chairman and allowances to the commission members respectively out of
the development and recurrent budgets without proper authority.
The Accounting officer explained that the budgeting process had already
been completed before the Commission became a vote and that this was to
be streamlined in the subsequent year.
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The commission should properly budget for its statutory expenditure in
accordance with the Act.
40.2 Over Expenditure
The Commission incurred a total of Shs.588,838,050 in excess of the
approved budget appropriation without relevant authority. The Accounting
Officer explained that this was caused by property rates paid which had not
been budgeted for by the Commission.
I advised the Accounting Officer to make adequate provision for rates in his
annual budgets.
It was also noted that although the Commission is responsible for
settlement of property rates for all government buildings in all towns and
municipal councils in all districts of Uganda, there is no register being
maintained for all government buildings for which rates are payable. As a
result it is not possible to ascertain the arrears position for property rates.
There is also lack of clarity on who is actually responsible for property rates
management as Ministry of Lands is also carrying out the same function.
The Commission should put in place a complete Register for all government
buildings for which it pays property rates. There is also need for
streamlining the procedures for management of property rates.
40.3 Acquisition and Disposal of Government Land
Article 239 of the constitution gives the Uganda Land Commission the
mandate to hold and manage land in Uganda vested in or acquired by the
government of Uganda in accordance with the provisions of the
constitution. Sections 49 and 53 of the Land Act further gives the
Commission powers to handle all land related matters. However these
provisions appear to be inconsistent with the PPDA Act on matters relating
to acquisition and disposal of government land. Under the PPDA Act, land
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is taken as a Public Asset and hence its acquisition and disposal should
follow the PPDA Act and Regulations. This position has been challenged by
the Commission and there is therefore need to harmonize the two laws so
as not to conflict with the constitution.
The Accounting Officer explained that the issue is to be addressed under
the private sector competitive project II which is funding law reform.
40.4 The Land Fund
According to sec 41(10) of the land Act cap 227 revised edition 2000,the
land fund should have been set up within one year after coming into force
of the (1998) land Act. However this fund has never been operationalised
as required by the law. It was also noted that there is another fund being
proposed under the Ministry of Finance to serve more or less the same
purpose.
There is need to operationalise the land fund envisaged in the Land Act
which should also be harmonised with the proposed Land investment fund.
The Accounting Officer explained that the Draft Regulations for the Land
fund have been made and were about to be submitted to Cabinet for
consideration.
40.5 Non Transfer of Land Ownership
During the year under review, a total of Shs.379,544,000 was spent by the
Commission on acquisition of land from absent land lords in the districts of
Kibaale and Hoima. Over thirty five (35) titles were surrendered to the
Commission together with signed transfer forms by the previous owners.
By the time of writing this report, the titles had not been transferred into
the commission names.
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Failure to transfer the land titles into Uganda Land Commission exposes the
government land to encroachment and fraud.
It was also noted that the Commission has not come up with the
guidelines, for use and distribution of the acquired land.
The commission should expedite the process of securing titles for all the
land purchased by them and also come up with the necessary guidelines
(Regulations) for distribution of the acquired land as required by the law.
40.6 Land Inventory
• The Commission which is legally entrusted with all central government
land does not have a complete inventory of all the land under its
custody. What is in place is an incomplete list/schedule which lacks
major details such as plot numbers, acreage of land etc. A test check on
a sample of Kampala District land transactions revealed that Plots leased
to developers are not captured in the land registry of Uganda Land
Commission to form part of land inventory.
• Government plots of land under the custodianship of the Uganda Land
Commission do not bear the acreage of land that can allow institutions
ascertain and monitor encroachment on the land.
There is need for a country wide data collection exercise in order to
have the inventory updated with the necessary details. In his response
the Accounting officer explained that this activity will be handled under
the private sector competitive project.
40.7 Non Tax Revenue
a) Lack of General receipts
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It was noted that for all the Non Tax Revenue collected by URA on
behalf of the secretary to the ULC, no general receipts were issued
by the commission for the amounts collected contrary to sec 13(c) of
the Treasury Accounting Instructions 2003 part 1. This means that
the commission has no basis for entries to be made in the
commission books for Non Tax Revenue collected and as a result no
cash book was prepared for the collections during the year. In the
absence of this I could not confirm the balances disclosed in the
financial statements as having been collected.
The Accounting Officer should obtain general receipt books from
treasury to receipt all NTR collected in accordance with the Treasury
Accounting Instructions.
b) Lack of controls in monitoring of debtors:
The Commission receives annual lease rentals from those lessees to
whom government land is leased out. However there is no system in
place to monitor lease payments and outstanding rentals.
Therefore, I could not ascertain how much should have been
collected from such a source during the year under review.
The accounting officer attributed this to non operational postal
addresses and non functional telephone numbers provided by the
lessees.
There is need to open up a ledger into which all the above lessees
should be recorded and up dated as and when payments are
received and to put in place mechanisms for reminders whenever
rent is due.
40.8 Guidelines for Valuation of Land
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The Commission raises offers for all lease applications which are successful
showing the total premium and annual lease payments payable. It was
noted that in some instances initial premiums offered are sometimes later
revised downwards.
However, there are no proper guidelines valuation and variation of offers.
The final premium paid appears to depend on negotiations between the
Government Valuer and the applicants. There were also no standard rates
for plots of land in a particular area.
The following offers were revised after acceptance but I did not ascertain
the criteria used to reduce the premiums and rentals.
Plot No. acreage Initial
rental
Revised
premium
Initial
premiums
Revised
premiums
41 Kaggo
Rd Mbuya
0.333ha 2,000,000 1,000,000 40,000,000 20,000,000
37 Kaggo
Rd Mbuya
0.248ha 1,500,000 750,000 30,000,000 15,000,000
33 Kaggo
Rd Mbuya
0.272ha 1,650,000 800,000 33,000,000 16,000,000
35 Kaggo
Rd Mbuya
0.233ha 1,400,000 700,000 28,000,000 14,000,000
39 Kaggo
Rd Mbuya
0.223ha 1,350,000 650,000 27,000,000 13,000,000
In the table above the plot 41 Kaggo Roads Mbuya was offered to an
applicant at a premium of Shs.40,000,000 and annual rental of
Shs.2,000,000. The applicant requested for a reduction because he could
not afford the applicable terms. A reduction was subsequently made to
Shs.20,000,000 as premium and Shs.1,000,000 annual rental. Immediately
after, he requested the Commission to transfer the offer to another
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applicant at the new terms since he could still not pay up. I found this
strange.
The Commission should streamline the procedures for allocation and
disposal of government land to ensure transparency and maximize value.
40.9 Lack of Approved Staff Structure
The Uganda Land Commission was granted self accounting status in July
2006 by parliament specifically to provide for tenure, ownership and
management of land to ensure rational and sustainable utilization of land
for economic development. It was however noted that the Commission still
operates on the same structure which was approved by Ministry of Public
Service when it was still a department under the Ministry of Lands. It has
currently 24 established and 7 contract employees who according to the
Accounting Officer are not adequate for the proper functioning of the
organization.
The Accounting Officer explained that the process of rationalizing of the
work activities and review of the structure was underway.
41.0 UGANDA INDUSTRIAL RESEARCH INSTITUTE
41.1 Governing Board
The Uganda Industrial Research Institute Act, 2002 provides for
establishment of a governing board consisting of a Chairperson and eleven
(11) other members selected from various organisations as specified in the
first schedule to the Act. It was however noted that at the moment the
Institute does not have a fully constituted functioning board. Although
appointments were proposed by Cabinet, the process was not progressed
because of the need to have the Uganda Research Institute Act 2002
amended.
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It was also noted that process of restructuring the Institute has not been
completed as directed by the Cabinet.
The absence of a functioning board and an appropriate organisation
structure for the Institute implies that there is lack of an appropriate
governance framework to give the Institute strategic direction.
41.2 Current Status of Uganda Industrial Research Institute
Uganda Industrial Research Institute (UIRI) is currently a parastatal
organisation established by an Act of Parliament of Uganda under the
auspices of the Ministry of Tourism, Trade and Industry (MTTI).
The Mission of the Institute is “To improve capacity and competence
of the private sector in undertaking viable industrial production
processes, and increase the sector’s ability to produce high quality
marketable products through enhanced research, training and
technical know how”. The other part of the dual mission is to provide
demand driven scientific industrial research and development (R&D) as well
as internationally competitive technical services that will lead to rapid
industrialisation for the benefit of the people of Uganda.
Uganda Industrial Research Institute has traditionally been involved in food
processing, ceramics and analytical laboratory practice.
It is not yet clear whether Uganda Industrial Research Institute is on the
right track as far as its mission attainment is concerned. The National
Planning Authority (NPA) in its June 2005 publication paints a gloomy
picture of the state of industrialisation in Uganda as highlighted by the
Executive Director, UIRI in his paper – the role of Uganda Industrial
Research Institute in industrialisation of Uganda.
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The National Planning Authority Vision 2035 document stated among others
that:-
• Uganda is grossly deficient in technology and lacks adequate indigenous
capability of technological masterly.
• It is estimated that only 12% of Uganda’s exports are high technology
exports compared for example to Malaysia with 58%.
• Uganda currently lacks the necessary technological man-power which
can absorb technology through the process of technology transfer.
• The problem of weak indigenous technological capacity is compounded
by the shortage of scientists, engineers and technicians, who are
specially trained for the purpose of technology adoption and diffusion in
the country.
The Executive Director in his paper also quoted the economic commission
for Africa (E.A) which reported Uganda’s manufacturing sector to have
contributed up to 12% of GDP in the 1960s, 15% by 1974 and only 12%
currently. These findings indicate the future challenges that UIRI has to
address and its role in economic development of the country.
Government through the relevant Ministries should intervene to ensure that
the Mission and Mandate of UIRI are realised and enhanced.
41.3 The Industrialisation and Innovation fund
The industrialisation fund was formally launched in financial year 2005/06
with a budgetary support of UShs.7.25 billion to support commercialisation
of value addition for coffee, banana and cotton. Shs.2.75 billion was also
reportedly provided for the support of development and commercialisation
of suitable technology proto-types and to be co-ordinated by UIRI. The
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Permanent Secretary/Secretary to the Treasury letter ref: ISS/57/255/015
of 13.04.2005 seems to confirm this position.
However, I am not in a position to confirm whether the said fund was
established and how it has been operated.
41.4 Unaccounted for Advances
Contrary to the Public Finance and Accountability Regulations Section 65
that requires retirement of imprest by the end of the financial year,
Shs.2,720,000 advanced to an official for fuel and allowances for carrying
out training remained unaccounted for.
41.5 Renovation of the PCB Laboratory
During the period the Institute carried out renovations on the PCB
laboratory. It was noted that the renovations were carried out by the staff
of the Institute instead of contracting it out to private firms. There was no
evidence that the work was being properly supervised by a competent
authority.
Furthermore materials for the work were bought in many instalments and
most of them lacked proper supporting documents. I could not establish
the total cost of the work because I was not availed with any initial budget
or the completion report on the renovation.
I have advised the Accounting Officer that certificates of work done and
progress reports be availed for review.
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42.0 UGANDA AIDS COMMISSION 42.1 Excess Expenditure
The Statement of Appropriation Account reflects excess expenditure of
Shs.623,803,865 for which management did not obtain Parliament
approval. During discussions, the Accounting Officer explained that the
amount was mainly a result of direct donor funding through projects. I
advised him that the law requires all expenditure including project
expenditure have the approval of Parliament.
42.2 Uganda Aids Commission Building
Since the time the new building was commissioned on the 8th October 2005
the following has been noted.
• The floor tiles are peeling off.
• The climbing stairs have developed loose ends.
• Toilets have been restricted in use because they are broken.
In view of the above the quality of workmanship becomes questionable and
this may lead to higher future maintenance costs.
In his response the Accounting Officer explained that all defects were
corrected during the defect liability period and all subsequent defects are
now being treated as routine maintenance.
I have advised him to provide for an adequate maintenance for the
purpose.
42.3 Uganda HIV/AIDS Control Project; IDA Credit NO.3459
(a) Counterpart Funding
It has been noted that the Government of Uganda budgeted for
shs.625,000,000 to finance project activities. However, only
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Shs.200,000,000 was released leading to a shortfall of Shs.425,000,000.
This affected timely completion of project activities.
As at 30th June 2007, the project management forwarded unsettled
payments amounting to Shs.201,780,315 to the Uganda Aids Commission
(b) General Standards of Accounting and Internal Control
(i) Vehicle costs
It was noted that several district vehicles were repaired by the
project management and yet the vehicle repairs and maintenance
was the responsibility of the districts.
In addition, certain vehicles allocated to the districts were brought to
the project to repair them. However, it was observed that some
vehicles were repaired twice for instance Vehicles Number UAA 577E
for Mayuge district was repaired on 23/2/7 at a cost of 12,768,190
and on 15/3/2007, additional repairs were carried out amounting to
Shs.5,458,680.
Below are vehicle repair costs incurred by the project:-
Sironko 13,522,660
Prisons 12,909,120
Mbarara 16,314,559
Bushenyi 5,453,665
Hoima 9,842,000
Kabale 9,688,803
Masindi 12,876,650
Total 79,454,260
Management explained that owing to continued resource constraints
it became increasingly difficult for some districts to meet the vehicle
operational costs. In such exceptional cases the project office paid
on behalf of districts repair and parts replacement costs.
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He further explained that the intervention was necessary for the
vehicles to remain on road and sustain the district level multi-
sectoral activities as the project support came to an end.
(ii) Fixed Assets Management
The project maintains a fixed assets register. However, additional
project assets procured during the year were not included in the
register. For instance, the following assets were not included in the
fixed assets register.
• 1 desktop dell GX 620
• 2 desktop dell 210
• 2 laptops
• 4 LaserJet printers
• 3 APC 100VA UPS
• 60 conference chairs
• 10 conference tables(6 seater)
• 10 bookshelves with glasses
• 17 open book shelves
• 1 board room table 30 boardroom chairs
• 6 library tables
• 30 library/shelves
• 1 sofa set
Lack of update register may weaken monitoring of fixed assets which
can lead to unwarranted purchases of assets.
Management explained that the assets were subsequently recorded
in the assets register.
Management has been advised to ensure that the fixed assets
register is regularly up-dated.
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(iii) Sustainability
According to the Project Completion Report (PCR) the project
contributed in the multi-sectoral approach to respond to the
HIV/AIDS scourge through a number of Interventions like CHAI,
LQAS and District HIV/AIDS strategic planning which will provide for
subsequent HIV/AIDS programmes. However, it was noted that the
long term sustainability will not be realized unless activities of the
project get mainstreamed in the government budgets. In addition,
the situation of maintaining the HIV/AIDS community support
programme started by the project is not clear.
Management explained that the sustainability has been given due
consideration by:-
• Mainstreaming HIV/AIDS in the Poverty Eradication Action Plan
(PEAP).
• Mainstreaming HIV/AIDS in Local Governments.
• Institutionalization of Community Driven Development (CDD)
• Increased Funding from Development Partners
43.0 MAKERERE UNIVERSITY 43.1 Unauthorised Expenditure
During the year, the University’s actual expenditure on employee costs was
Shs.71,273,850,590 against the approved budget of Shs.60,158,954,140
leading to excess expenditure of Shs.11,114,896,450. No evidence of
reallocation or virement was availed for audit. The practice of spending
beyond the approved limits is an indication of weaknesses in controls over
budgetary expenditure.
I advised the Accounting Officer to always endeavour to spend within the
approved budget and where there is need to re-allocate funds, the right
procedures should be followed as provided by regulations.
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43.2 Un-audited Account Balances
Examination of accounts revealed that various balances like the sundry
debtors balance (Shs.72,345,200), sundry creditors balance
(Shs.4,534,845,982), deposits received (Shs.3,393,570,470), cash and cash
equivalents (Shs.15,088,521,999) and withholding tax payable
(Shs.20,212,196), could not be verified due to absence of supporting
schedules, hence limiting the scope of my audit.
I advised management to update the respective individual account ledgers
and prepare schedules to support those balances appearing in the final
accounts. I recommend further that management should justify holding
over shs.3 billions on its below–the-line account (deposits) without paying
over the funds to its rightful recipients.
43.3 Authority for operating University Bank Accounts
It was further noted that the University operates 132 (one hundred thirty
two) bank accounts. However, although the Universities and Other Tertiary
Institutions Act, 2001 requires the University to seek authority from its
council to operate bank accounts, evidence for the Council’s authority was
not made available for audit. In the absence of such authority the opening
and operations of the accounts is rendered irregular.
In a related development it was noted that various University clients can
transact business with at most four bank accounts of the University. I did
not obtain justification for the operation of so many bank accounts by the
University.
I urged the University management to always seek authority from the
University Council to open and operate any bank account as required by the
law. I recommend further that management should also consider
minimising the number of operational bank accounts to ease supervision
and strengthen financial management controls.
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43.4 Un-authorized Allowances
A total of Shs.4,520,666,098 was paid to academic and non academic staffs
in form of allowances during the year under review. Scrutiny of supporting
documents however revealed that whereas a category of allowances
totalling Shs.2,237,145,861 were approved by the University Council, the
balance of Shs.2,283,520,237 were unlawfully paid. Among the irregular
allowances paid were: examination setting allowance, data entry allowance,
responsibility allowance, Administrative staff examination allowance,
Registration allowance, teaching allowance and department retention
allowance.
Payment of un-approved allowances violates the authority of the University
Council.
In their written response management stated that the allowances were
budgeted for by the faculties and the budgets were approved by the
Council. I advised the accounting officer to further streamline the
allowances payable to staff to ensure that only allowances approved by
University Council are paid and to have the irregular allowances regularised
by the Council.
43.5 Procurement
(i) Procurement Plans
The University does not have a Master Procurement Plan as required by the
PPDA Act. This is partly due to the fact that the individual departments
prepare their plans but these are not consolidated together. Some
departments do not submit procurement plans in spite of reminders.
Management explained that departments have requested for a procurement
staff to be attached to each Faculty so that he/she can give guidance and
advice on procurement matters.
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I advised management to always comply with the PPDA Act and regulations
as far as procurement planning is concerned.
(ii) Assorted Procurements at faculty of Social sciences
The faculty of Social sciences incurred shs.75,641,766 on assorted goods
and services during the period under review. However, contrary to the
Public Procurement and Disposal of Public Assets Regulations Sec. 84, Sec.
117 and Sec. 118, the payments were not supported by Local Purchase
Orders, Delivery Notes and Goods Received Notes. It was noted that
individuals were routinely advanced funds to purchase office items instead
of using the pre-qualified firms through the procurement unit. I was
therefore unable to ascertain whether value for money was derived from
these procurements. The table below gives the breakdown.
S.no Nature of procurement Amount 1. Advances to individuals 19,831,000 2. Single sourcing 55,810,766 TOTAL 75,641,766
I advised management to carry out an investigation to ascertain the probity
of these procurements.
(iii) Painting Faculty Buildings
The Faculty of Law spent a total of Shs.5,294,210 to purchase paints and
materials for painting its buildings. Another sum of Shs.3,185,000 was
incurred on labour charges. However, there was no evidence that technical
advice was sought from the estates department in terms of requirements
and fees chargeable. Besides, the painter was single sourced contrary to
PPDPA regulations which provide for competitive procurement for
purchases above Shs.2 million.
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In response management stated that in future, procurement regulations
shall be followed strictly.
(iv) Stationery
An amount of Shs.19,219,000 was paid to a stationery supplier for having
supplied assorted stationery for the Academic Year 2006/2007 semester 1
for the faculty of Law. Scrutiny of supporting documents revealed that the
procurement was not made by use of a Local Purchase Order as required
by regulations.
The stationery received was recorded in a counter book instead of a stores
ledger. However, usage could not be verified due to the absence of
necessary supporting documentation.
During discussion the Accounting Officer explained that necessary records
would be traced and produced for audit.
I advised the Accounting Officer to investigate the purported supply with a
view to ascertaining value for money and taking corrective action. I
recommend further that all procurements should be handled in accordance
with the PPDA Act and Regulations.
(v) Teaching materials
Various staff of the Faculty of Veterinary were advanced a total of
Shs.111,244,472 for procurement of assorted teaching materials. It was
however noted that the single sourcing method of procurement was used
predominantly, instead of competitive bidding as required by the PPDA
regulations.
I advised the Accounting Officer to investigate the transactions. I
recommend further that all procurements should follow the guidelines
outlined in the PPDA Act and regulations.
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(vi) Micro Procurements of Goods and Services
A sum of Shs.136,866,760 was incurred on Micro Procurement by the
Academic Registrar’s Department. However:-
• Contrary to section 118, 142, 117 of the Act, Shs.78,785,331 worth of
goods were purchased from firms which were not pre-qualified. Single
sourcing was applied to select the suppliers.
• Similarly, single sourcing was applied to purchase goods amounting to
Shs.34,710,150. The Procurement falls under restricted bidding
according to section 115 and 142 of the Act.
• Contrary to regulations a total of Shs.12,265,340 was paid to the
supervisor of works in the University’s Estates Department for direct
labour and supplies.
• Contract Committee authority was not sought for printing services paid
at Shs.11,105,030.
• The number of micro procurements were many and not supported by
user requisitions as required by PPDA Act section 34 (1) (b).
• Repetitive orders were given to some suppliers without rotating them as
required by regulations 143 (4) (a).
Repetitive orders on micro procurement to certain firms and individuals are
not permitted under the PPDA Regulations. The PPDA Act and Regulations
2003 should be adhered to.
I advised the Accounting Officer to ensure that the PPDA Act and
Regulations, 2003 are adhered to.
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(vii) Procurement of Text Books
A local firm was paid Shs.292,216,001 through Bank of Uganda in respect
of supply of text books for the University Library. However in the absence
of bidding documents, evaluation minutes and contracts committee
approval I could not vouch for the regularity of the procurement process.
It was further noted that the delivery notes attached were neither certified
by Internal Audit nor stamped by the Librarian as received and taken on
charge. There is a risk of under delivery of books which would lead to
financial loss.
(viii) Printing Services
A sum of Shs.16,470,000 was paid to a firm for printing the African Crop
Science Journal without subjecting the procurement to competitive bidding.
In addition the firm was not a pre-qualified service provider contrary to
regulation 84, 117 (2) and 142 of the Public Procurement and Disposal of
Assets Act 2003. Improper procurements subject government to the risk of
loss of funds.
I advised the Accounting Officer to ensure that the PPDA Act and
Regulations are adhered to.
(ix) Purchase of binding materials and related stationery
Binding materials and associated stationery worth shs.74,205,452 were
purportedly procured for the university library during the year. However in
the absence of requisition notes, contracts committee approval and local
purchase orders I was not able to satisfy myself that the procurement
complied with the Public Procurement and Disposal of Public Assets Act,
2003. In reply management stated that supporting documents are
available. I await delivery of these documents for verification.
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(x) Irregular Micro Procurement at Faculty of Human medicine
The Faculty of Human medicine incurred a sum of Shs.53,403,991 on
goods and services during the year under review. Scrutiny of supporting
documents revealed that the Faculty did not adhere to the various sections
of the Public Procurement and Disposal of Assets Act/Regulations 2003 as
indicated below:-
• Most payments were not supported by Local Purchase Orders. • Orders were given to pre-qualified service without competition.
• Firms and individual suppliers who were not pre-qualified were issued
with orders to supply goods and services.
• There is no evidence that quotations and proposals for micro
procurement were submitted to the contracts committee for evaluation
and approval.
• There were no delivery notes attached to some payments to confirm
deliveries and to facilitate stores verification.
It would also appear that payments were split to avoid use of
recommended procurement regulations.
I advised the Accounting Officer to investigate the individual procurements
to ascertain whether value for money was derived from the funds spent
and take corrective action where necessary. I recommend further that the
Accounting Officer ensures that the PPDA Act is adhered to in all
procurements made.
43.6 Hire of Lecture rooms
Four faculties incurred Shs.105,735,000 on hire of lecture rooms from other
faculties/departments during the year under review as follows;
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Hiring department/faculty
Amount Fees Receiving department
Computing and information technology
55,800,000 Food science, physics and St. Francis Chapel.
Law 21,735,000 Food science and Senate building Social sciences 13,800,000 Various Institute of Statistics and applied Economics
14,400,000 Technology
Total 105,735,000
However, there is no policy to guide management on the hiring rates,
duration, space size, accessibility to facilities and terms of payment. Lack
of clear policy may lead to some faculties overcharging others.
Management explained that the University Council would review the matter.
I await the outcome of the University Council’s review.
43.7 Irregular remuneration (i) Payments of Salary in Lieu of Leave
A sum of Shs.6,881,170 was paid to sixteen members of support and
administrative staff in the faculty of law in lieu of annual leave. This
practice is irregular because the government abolished the policy of
payment in lieu of leave. Besides the University salary and wages
department did not consent to the payments, nor was the University
administration consulted.
During discussions, management promised to recover the funds. I await
evidence of recovery.
(ii) Double Salary Payments
A member of staff at the faculty of law acting in a post was paid a full
monthly salary attached to an expatriate of Shs.1,142,857 in addition to his
routine salary. This is contrary to regulations which permit payment of
acting allowance which is normally a percentage of gross salary or the
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difference of the two officers’ salaries. Management pledged to recover the
extra payment. I await necessary action.
(iii) Contract Staff Salaries at School of Education
Thirty (31) contract staff were recruited at the school of Education without
following proper recruitment procedures. There was no evidence that the
recruitment was approved by the Human Resource Department with regard
to necessary competences. It would therefore appear that the attributable
wages of Shs.60,084,203 were incurred improperly.
Management explained that in the decentralised system the faculty had
been using an internal committee which would later seek central
administration endorsement. Management was advised to have the
recruitments regularised.
(iv) Payment of Part Time Salaries at the University Hospital
A sum of Shs.10,226,000 was paid out in form of salaries to part time staff
employed by the Hospital. Scrutiny of supporting documents however
revealed that:-
• There were no vacant posts in the establishment to warrant recruitment
of part time staff.
• The Hospital authorities recruited these staff without approval of the
Human Resources Department.
Management explained that the hospital structure is under review and that
the part-time staff are to be regularised. I await evidence of action taken.
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43.8 Advances Not Accounted for (i) Subvention Account
A sum of Shs.71,924,910 was drawn from the subvention account and
advanced to various faculties to enable students carry out industrial
training, field visits and for purchase of surgical sundries. However in the
absence of lists of recipients, dates of visits, receipts for purchases made
and field reports, I was unable to confirm that the funds were used for the
intended purpose.
Faculty Amount Purpose of advance Science 20,647,520 Industrial visits by Industrial Chemistry
students Veterinary 5,316,000 Out of station allowance Medicine 18,055,800 Elective programme during recess term Forestry 9,514,000 Field trips Science 6,419,000 Purchase of teaching materials Science 3,584,000 Students clerkship in Butabika Veterinary 8,388,590 Purchase of surgical sundries Total 71,924,910
(ii) Funds Not accounted For at Various Faculties
A total of Shs.237,166,168 advanced to staff to carry out various activities
at various faculties was not accounted for at the close of the financial year
contrary to financial regulations. I could not ascertain whether the funds
were applied to the rightful purpose.
Faculty Amount (Shs) Purpose
Social Sciences 54,570,000 Student Internship allowances
Medicine 166,793,268 Research, workshops, travel,
stationery, vehicle maintenance.
University Library 15,852,900 Workshops, maintenance, reading
materials etc.
Total 237,166,168
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I advised the Accounting Officer to provide accountability of the funds.
43.9 Operation of Generators
Following recent power shortages experienced in the country, Several
University departments acquired generators. Review of fuel usage at a
sample of departments revealed various anomalies as outlined;
(i) Procurement of Generator
A generator worth Shs.120,761,200 was purchased from a company to
serve the University Library. However scrutiny of procurement documents
revealed that the procurement was not competitively bidded for as required
by the PPDA Regulations. There was also lack of the inspection report on
the quality of the generator by the estates department, neither did it have
an operational manual.
(ii) Generator Fuel
A sum of Shs.54,986,656 was paid to various filling stations in respect of
fuel for the generators under Academic Registrar’s office (Shs.7,232,076).
University Library (Shs.29,349,700), Faculty of Computing
(Shs.14,302,280), and Faculty of Economic Management (Shs.4,102,400).
Fuel worth Shs.8302,000 was also purchased through direct cash payments
by the Directorate of ICT. However, the utilisation and consumption could
not be verified because:-
• There were no requisitions, order forms and goods received notes for
the fuel. Fuel deliveries and issues were not recorded.
• The gauge for the generator for the Main Library was found faulty while
that of the Faculty of ICT, readings were not being taken although the
gauge was working.
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• The estate department plays no role in the supervision and maintenance
of the generators. In many of the departments and faculties this role
has been left to the faculty accountants and the custodian.
I advised management on the need to streamline the procurement,
supervision and maintenance of power back-up systems at the University.
This may also necessitate exploring other alternative cheaper and more
efficient sources.
43.10 Fuel Refund
Two senior officers of the Faculty of law were paid Shs.11,740,000 in cash
to meet fuel requirements for official vehicles. This is contrary to
government policy that stipulates use of Fuel cards to minimize handling of
cash. Besides vehicle movement logbooks were not availed to determine
authenticity of journeys made. I was therefore not able to ascertain the
probity of the expenditure. Management explained that the fuel card
system is to be adopted promptly and that accountability would be availed.
I await necessary action.
43.11 Doubtful Expenditure
Expenditure totalling to Shs.47,811,719 incurred by the University Main
library on various works appeared doubtful as explained below;
• One firm was paid a total of Shs.21,099,359 for various carpentry works
and supplies. All the payments were not supported by user requisitions,
LPOs, delivery notes and contract documents and invoices and the work
was not verified by Estates Department.
• The Department of Mechanical Engineering did some roofing and
fabrication works at a cost of Shs.2,601,000. The University Librarian in
her comment dated 7th August, 2006 pointed out that the same work of
roofing had been done by Estates Department. The additional works
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done by the Mechanical Engineering Department was not verified by
Estates Departments and is therefore considered doubtful. It appears
controls regarding processing of payments are inadequate.
I advised management that there should be thorough scrutiny of repair
claims to ensure that they are genuine and properly supported by
requisitions, LPOs, delivery notes and invoices as required by accounting
regulations.
43.12 Collapse of the Newly Constructed Perimeter Wall at Makerere
University
A newly constructed perimeter wall around the University comprising of
133m along Makerere North Road collapsed on Saturday 8th September
2007. According to the Estates Manager, the total constructed length of the
perimeter wall was 694 meters implying that 20% was affected. Scrutiny of
engineering reports, supporting documents and inspection of the
construction site revealed various anomalies which are outlined in the audit
findings below;
Audit findings:
(i) Procurement
According to a report issued by the PPDA, the procurement for the
construction of the perimeter fence was not conducted in accordance with
the PPDA Act, 2003 and the attendant Regulations. The in-house
procurement method used was carried out without PPDA approval and the
procurement organs established in the PPDA Act such as the PDU and the
Contracts Committee were not involved in the procurement.
(ii) Un Authorised Expenditure
Review of expenditure vouchers together with cheque details revealed that
a total of Shs.160,393,973 was actually spent on the wall fence contrary to
the authorized amount of Shs.126,000,000. The extra amount of
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Shs.34,393,973 was apparently diverted from the budget item meant for
maintenance of university houses and roads. The authority for diversion of
funds from one item to the other was not availed for verification. Diversion
of approved funds distorts the University budget and indicates breakdown
of control over budgetary expenditure.
I urged management to avail authority for diversion of funds from
maintenance of university houses and roads to construction of the wall
perimeter.
(iii) Irregular Procurement Of Labour
A sum of Shs.19,879,908 was paid to various firms and individuals
purportedly for construction labour. However, it is not clear whether a fair
price was paid for the labour since there was no competitive bidding and/or
prequalification of suppliers. There was no evidence of technical evaluation
of the competence of the firms and individuals. The legal status of the firms
is also not known. As a result the University may not succeed in holding the
other parties liable for work done; neither can it succeed in seeking
remedies in court. Moreover in the absence of supervision reports, it is not
clear whether the hired labourers were closely monitored during the course
of construction. Sourcing of service providers appears to have been a
private affair in complete contravention of PPDA Act. It also appears that
the original assertion that the estates department had sufficient capacity to
carry out the job of building the wall was completely inaccurate. Additional
technical anomalies are outlined in paragraph 12.6 of this report.
I advised management to establish the legal status of the service providers
and explore the possibility of seeking remedies from them. The works
supervisors should also be held responsible for negligence of duty. In
future management should abide by PPDA procurement regulations
particularly those relating to pre-qualification of service providers.
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(iv) Procurement Of Building Materials
a) Sand, Stone Dust And Aggregate Stones A sum of Shs.23,437,280 was paid to two firms for supply of sand,
stone dust and aggregate stones without competitive bidding. There
was no contract agreement for supply of the materials. The terms
and conditions by which university Lorries UG O477E and UG 0315E
were used by the firms to ferry sand were not stated.
At delivery the items were neither taken on charge nor recorded at
the point of usage. The quantity and quality of materials together
with the detailed usage could not be ascertained in the absence of
clear records and supervision reports. Further anomalies in the
quality of materials are outlined in paragraph 12.6.
Management has been advised to investigate the legal status of the
suppliers of materials should be investigated with a view to seeking
remedies. I recommend further that the terms and conditions for use
of university vehicles should be availed for audit.
b) Cement and Building Blocks
A sum of Shs.15,707,500 was incurred on 752 bags of cement of
which 627 bags had been issued for block making and construction
of the wall fence at the time of the partial collapse of the wall. In
the absence of clear supervision reports and completion certificates,
it was not possible to ascertain whether all the cement was utilised.
It was further observed that Shs.5,250,000 was purportedly incurred
to purchase building blocks yet cement and sand had been
separately issued for block making. Further scrutiny of the record
books and goods received notes revealed that 500 blocks
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purportedly bought from a company on 5/4/2007 for Shs.750,000
were not recorded as delivered. This purchase is therefore doubtful.
I advised management to carry out further investigation to ascertain
whether all the cement and building blocks were procured and
applied to the intended purpose.
(v) Weaknesses in Record Keeping
The standard of record keeping at the estates department who were the
executors of works was found to be inadequate as explained below;
a) The building materials were posted in counter books which do not
indicate issues and stock balances sequentially. There is a risk that
management would not adequately determine and/or control stocks
of materials in the stores and at site, neither would they determine
re-order levels, usage rates and the corresponding financial
implications.
b) The building blocks made in-house at the estates department were
not recorded. Without proper records, the cost of making blocks
locally could not be determined for subsequent comparison with
buying on the open market.
c) Materials issued from stores were only recorded in the gate pass.
Although this serves as a security measure, it is insufficient for
determining stock balances and planning purchases.
d) The cash receipts were not supported with payment vouchers. It
was not clear whether all purchases were therefore authorized
appropriately.
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I advised management to ensure that proper books of accounts and
documents as outlined in the Treasury Accounting Instructions are
maintained at the estates department.
(vi) Engineering Anomalies
Review of the technical report prepared by the department of Civil
Engineering of Makerere University revealed various technical anomalies
which could have caused the wall collapse. These are summarized in the
matrix below.
S.No
Item Consultant’s design
Actual field observations
Variance Comments
1. Foundation size and Depth
690mm wide by 230mm depth
600mm wide by 150 depth
90mm in width and 80 mm in depth
Shallow foundation depth resulting into weak bearing
2. Concrete quality in foundation
Quality of concrete was very low as evidenced by ease with which rainfall run-off eroded it while leaving aggregates exposed.
Compromised structural strength
3. Intermediate columns
Entire boundary wall to be framed structure with columns of 300mm by 300 mm in size reinforced with 4Y16 main bars and R8 links at 200mm spacing for the long columns and 4Y12 main bars for short columns.
All these columns were omitted and replaced with plain (un reinforced) concrete of 230mm by 230mm to hold and support the metal grilles.
This was fundamental departure from the consultants’ specifications. Eliminating columns meant the entire masonry wall lacks a stiffening mechanism to resist lateral pressure (wind, earth quakes etc).
4. Masonry Walls
230 mm walls to carry only their weight. Concrete columns to resist lateral
200 mm walls to carry both vertical and horizontal loads
Strength and stability of the wall panels was reduced.
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forces ( wind ,earth tremors etc)
5. Compressive strength
Recommended crushing strength (MPa) 3
Actual crushing strength ( MPa) 0.707
Deficiency in strength was 76%
6. Backfilling and Drainage
Exposed foundations after construction. Backfilling and compaction not done. No provision to drain runoff water.
Structural integrity compromised
7. Concrete quality in general
20 mm recommended
Aggregate size used was 50mm, more than two times maximum recommended. Water to cement ratio was high indicating low cement content evidenced by aggregate completely separating from the concrete mix. A general low strength of the concrete evidenced by the ease with which the mixture could be crushed by hand.
Generally the concrete used in the entire construction shows signs of poor quality.
There is need for an engineering analysis to be carried out on the rest of
the wall fence to ascertain its strength particularly in respect to:-
• Structural components • Reinforced columns
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• Appropriateness of materials such s blocks and concrete in terms of
aggregate size, founding soils, mortar joints, etc.
• Adequacy of provision for drainage. I advised management to consider outsourcing the outstanding works so as
to provide for insurance against poor workmanship, where by the
contractor would be required to compensate the University in case of
defects.
43.13 NORAD Support to Makerere University Institutional Development
Programme Phase II
Accountability System.
The following anomalies were noted in the projects accountability system
for advances:
• An amount of Shs.477,650,005 advanced to various activity
implementers remained un accounted for by the time of audit in
December 2007.
• Management does not carry out an age analysis of the advances so as
to be able to follow up advances outstanding for long periods of time.
• Individuals are advanced large sums of monies which they keep for long
periods of time; this makes it susceptible to abuse.
Delays in accounting for funds may lead to falsification of documents.
Management explained that amounts advanced, in this case, were for
research and was 60% of the total research amount and that
researches for which the accountabilities have been submitted are those
whose activities against the advances were completed.
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The rest of the researches are on going and the time for completion of
the research works has been indicated and it is then that the funds will
be accounted for.
I advised management to Institute procedures and controls to track all
advances to researchers.
43.14 Developing Capacity to Improve The Quality and Relevant of Education of Health Professionals in Uganda (PROJECT NO: UGA/082-PARTY A GRANT NO:CF 1880)
(a) Bank Reconciliation Statements
It was noted that although bank reconciliation statements are
prepared they are not checked by a senior officer. This implies that
any errors made whether intentional or otherwise, may not be
detected and corrected.
Management explained that all reconciliations had been done except
that process of checking them had not been completed.
(b) Assessment of Delivery of Output
According to the work plan an amount of €576,161 was budgeted to
be utilized for the years 1 and 2 of the Project life during the period
under review. As at end of year 2 only €.66,372 had been spent as
per the final accounts implying that activities are not implemented
on schedule and according to Work Plans. This may lead to
extending the Project life and extra administrative costs.
During discussions management explained that the Project activities
started late in July 2005 instead of January 2005 because the funds
were released late. Subsequently, the construction which was
supposed to start January 2006, started August 2007 and yet it is
the budget line item that takes a lot of money.
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43.15 Support to Research Activities at Makerere University (SIDA CONTRIBUTION NO: 75007304)
(a) Delayed accountability
It was noted that there were delays in accounting for funds
advanced to activity implementers. For instance, the advances of
$259,977 made to various staff had not been accounted for at the
time of audit in September, 2007:-
In addition funds expended by the Iganga/Mayuge Demographic
Surveillance Site (DSS) for the period covering April, May, and June
2007 amounting to Shs.79,762,921 had not been accounted for.
Delays in accounting for funds may lead to falsification of
documents.
Management explained that by the time of audit some of the above
funds were not yet accounted for, but some were already accounted
for, however the accountability reports were not yet filed in the
respective individual files.
The accountabilities will be verified in the subsequent audit.
I advised management to ensure that activity implementers account
for all the advances.
(b) System of payments
It was noted that the project implementers are advanced large sums
of money in their personal names. This is risky because large sums
of money may be tempting to an individual.
Management explained that researchers are advanced large sums of
money in their personal names because of the nature of the
research they do. These researchers are advanced funds which they
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are able to utilize within a maximum of three months. It is only when
a researcher has to carry out research out side Uganda that he/she
is allowed to have funds to cover the period he/she is to stay out
side Uganda in the field. However the steering committee has
proposed a form which will work as a contract between the
researcher and the program management, stating when to account
for funds. It will restrict the researcher to have a maximum of three
months to account and submit accountability within two weeks after
completion of the activity.
I advised management should advance funds in smaller quantities
and then researchers account for these funds before further funding
is provided.
(c) Fixed Asset Register
It was noted that the following project assets had not been
engraved with both the project name and unique identification
numbers, at the time of this audit in September 2007:-
Item Location
i. 3 Generators Faculties of medicine, Technology and Medicine
ii. Circulating machine Main Library
iii. Laptop Faculty of Computing and IT (Ali Ndiwalana)
iv. Colposcope Faculty of Medicine
v. LEEP-Unit Faculty of Medicine
This makes it difficult to identify a project asset in case of loss.
It was further noted that the Circulating machine procured by the
Main Library in the month of November 2006 was not yet
operational.
I advised management to ensure that all project assets are engraved
soon after delivery.
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(d) Lack of Segregation of Duties at the DSS
It was noted that there is lack of segregation of duties in the
accounts section at the Demographic Surveillance Site (DSS). The
DSS has one accounts assistant who does the following functions:-
• Writing a requisition
• Writing cheques
• Drawing money from the bank
• Paying staff/for activities
• Posting the cashbook and
• Preparing the Bank Reconciliation Statements.
This weakens the internal controls put in place.
I advised management to expedite the recruitment of another
Accountant.
(e) Assessment Of Delivery Of Output
According to the budget and financial statements, an amount of US$
4,305,605 was budgeted to be utilized during the period under
review. However, only US$2,877,227 (equivalent to 66% of the
budget) had been spent by the end of the year. This can imply the
following;-
• Low absorption capacity by the project management
• Activities are not implemented on schedule
• May necessitate extension of the project duration leading to un
necessary administrative costs.
Management explained that this was because the starting of Phase
II activities was delayed to allow completion of planned activities for
Phase I. Phase I activities were extended up to December 2005.
This extension has continually affected operations of the two years
of Phase II. However looking at the rate at which the activities are
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being implemented now, it is evident that there is an improvement,
we hope that by end of2008 all activities will be on schedule. In fact
the absorption rate attained is commendable compared to what
happens elsewhere in the country.
I advised management to ensure that funding implementation of
activities is done according to the Workplan.
44.0 MBARARA UNIVERSITY 44.1 Pay Disparities Between Academic and Non-academic Staff.
Teaching and non-teaching staff at the university who are employed at
similar scales are paid disproportionately to the disadvantage of the latter.
The monthly disparity is Shs.54,645,786 which translates into
Shs.655,749,432 annually owing to the number of non-teaching staff who
are two hundred fifty seven. There is a risk of administrative unrest if the
disparity is not addressed. Management explained that in spite of various
requests to the Ministry of Finance no solution has been found.
Management should continue liaising with the relevant Ministry to
harmonize remuneration of staff who are employed at similar scales.
44.2 Human Resource Management Manual.
The University lacks a human resources management manual that would
give guidance on the different aspects of staff administration such as
recruitment, promotion, training and staff remuneration.
It was also noted that 15 academic staff and 11 non-academic staff who
were due for promotion have stagnated since 2003 due lack of an
additional amount of Shs.137,541,846 for their annual remuneration.
Besides Seven (7) critical staffing gaps in the areas of Pharmacy, Radiology,
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Pathology, Psychiatry, Surgery, dentistry and ENT have remained vacant
due to lack of funds (Shs.196,742,736) for their annual remuneration.
Management explained that a human resources management manual is in
advanced stage of completion and that in spite of requests to ministry of
Finance for funding to enable staff recruitment and promotion, none has
been granted.
In view of the size, complexity and critical mission of the university, a
substantive human resources manual should be developed expeditiously to
guide staff management. The University should continue lobbying
government for additional funds to facilitate recruitment and promotion of
eligible staff.
44.3 Absence of Accounting Manual
In the absence of an Accounting manual, the university lacks clear
procedures for treatment of various revenue and expenditure items. The
basis of sharing revenues and costs between central administration and
income generating units is not documented.
In a written response, management stated that consultations are on-going
with Accountant General to resolve the matter.
It is recommended that an accounting manual should be developed to
prescribe treatment of the various revenue and expenditure items.
44.4 Community Based medical education funding gap
According to the university Mission statement, the university emphasises
science and technology education and its application to community
development. Trainee doctors are attached to community health centres as
part of community orientation training. However out of the budgeted funds
of Shs.40,400,500 for community based education only Shs.22,594,000 was
availed leaving a funding gap of Shs.17,806,500 which represents 44%
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shortfall. Shortfalls in funding impact on the achievement of the training
objectives.
Management explained that efforts to solicit funds from Millennium science
initiative (MSI) to bridge the funding gap had failed.
The University should liaise with ministry of Finance and other development
partners to seek funding for this mission critical activity.
44.5 Unaccounted for Advances.
A sum of Shs.6,136,860 advanced to various officers during the year under
review, remained un accounted for at the time of issue of this report
contrary to treasury accounting instructions part1 section 217 which require
accountability within sixty days. Delays in accounting for advances imply
that funds may not have been put to proper use. It may lead to facilitation
of accountability.
Accountability for the funds should be provided or else recovery measures
be instituted in accordance with the regulations.
44.6 Unaccounted for Research Funds
Research funds amounting to Shs.28,794,980 remained unaccounted for at
the time of this report. It was also noted that the university lacks a
substantive policy which would guide the management of research
activities.
Management explained that a draft research policy has been developed and
is due for approval by relevant organs. It was also stated that some
research projects are pending accountability because they are incomplete.
Management should put in place guidance on the management of research
activities.
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44.7 Lack of Accountability for Overseas Travel
US $ 2,778 that was paid to a tour firm and one officer to facilitate
overseas travel remained unaccounted for at year end. Without original
requisitions and approval for travel, acknowledgement from the tour firm
and the individual officer together with report of proceedings, I was not
able to establish whether the expenditure was rightly spent.
Management was advised to trace the supporting documents.
44.8 Timeline Over-Runs in the Construction of Science Block
The university Science block which has been under construction since the
year 2004 has overshot its completion date of 3rd March 2007 by more than
seven months. Therefore the estimated 500 science students could not be
admitted in the year 2007/2008 due to lack of class and office space.
Management explained that limitation in funding constrained completion of
the building.
I have advised management to continue seeking funding from Ministry of
Finance and development partners to complete the science block.
44.9 Lack of Approval of the University Budget
There was no evidence that the university budget for financial year 2006/07
had been approved by the Minister of Education and Parliament as required
by Sec.62 (1), (3) of the Universities and other tertiary institutions Act
despite submissions by the accounting officer. Funds were therefore utilised
without necessary approvals.
Prompt scrutiny and approval of budgets of universities should be done to
comply with the law.
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45.0 KYAMBOGO UNIVERSITY
45.1 Unauthorised Expenditure
The University incurred an unauthorised expenditure of Shs.1,322,589,358
on employee costs and Shs.2,253,260,224 on goods and services without
relevant authority. Excess expenditure is an indication of breakdown of
controls over budgetary expenditure. The Accounting Officer explained that
the unauthorised expenditure was due to shortfalls in funding on both the
wage bill and the non wage bill by Government. Therefore, the University
was forced to use its internally generated funds. It was however, noted
that excess expenditure on employee costs might have been brought about
by the University paying salaries to its lecturers according to qualification
rather than University salary scale structure.
I advised the Accounting Officer to pursue the matter with the relevant
authorities to regularize the expenditure.
45.2 Funds Unaccounted for
It was noted that laxity by the University management in enforcing prompt
accountability led to a total of Shs.429,563,516 advanced to various
members of staff remaining unaccounted for. The Accounting Officer
explained that he had written reminders to the affected staff to submit
accountability failure of which he would proceed to recover the funds from
their salaries.
45.3 Inconsistency in Salary Structure
Examination of the payroll and staff salary structure revealed that the
University uses educational qualifications to determine and pay staff
salaries contrary to both Public Service Standing Orders and the University
Employment Policy which require salary payments to be made according to
salary scales. This practice led to disparities in salary payments to staff
within the same scales and grades. It led to payment of staff of lower
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grade with higher qualification higher salary than those holding higher
grades. There were also cases of lower grade staff earning equal salary
with those of higher grade. These inconsistencies in salary payments
partially explain the excess expenditures on employee costs.
I advised the Accounting Officer to streamline the salary structure and pay
salaries in accordance with the Public Service Standing Orders and
University Employment Policy.
The Accounting Officer explained that the inconsistencies were caused by
payment of enhancement money to academic staff as an allowance based
on qualification. The decision to pay according to qualification was a result
of pressure the academic staff exerted to management. He further
explained that the discrepancy was a result of a court judgment which
directed the University not to alter entitlements of staff from the former
institutions to their disadvantage. However, he promised to streamline the
salary payment when the University starts paying consolidated salaries
according to scales.
45.4 Violation of PPDA Act
In contravention of the provisions of Public Procurement and Disposal of
Public Assets Act and regulations, Shs.384,617,017 was advanced to an
individual to purchase assorted items for various departments. However,
scrutiny of records revealed that out of the total amount advanced, only
Shs.187,154,092 was accounted for leaving a balance of Shs.197,462,922
unaccounted for.
The Accounting Officer explained that due to the uniqueness of
instructional materials for different departments, the University’s invitations
for prequalification for teaching and specialized items were not responded
to by the service providers.
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45.5 Double Payments
Examination revealed that payments of Shs.2,300,000 and Shs.120,000 in
respect of purchase of teaching materials and plastic carpet respectively
were made twice for the same requisition vide cheque Nos.009778 and
009742 for teaching materials and cheque Nos.005367 and 005363 for the
plastic carpet. Double payments indicate existence of control weaknesses
in the payment system.
The Accounting Officer explained that the double payments were made
good by way of having additional supplies made to the University and that
the second payment related to the carpet had been paid back to the
University.
I have requested the Accounting Officer to provide evidence to that effect.
45.6 Non-Availability of Revenue Receipt Books
During audit, the University management did not make available receipt
books and cash books in respect of students’ tuition fees and the University
farm for verification. Accordingly, I was unable to ascertain the accuracy of
internally generated funds as reported in the University’s financial
statements.
The Accounting Officer promised to have the receipt books and cash books
were available for verification. However, by the time of writing this report,
the books had not been produced for audit.
45.7 Stores Management
Examination of the stores records revealed services weaknesses in the
management of stores. For instance, a review of stores ledgers, menu
books and issue vouchers revealed various cases of foodstuffs delivered but
not accounted for and not recorded at all in the stores ledgers, doubtful
supply of sugar, and doubtful issue of items from the stores. Scrutiny of 12
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issue books revealed that various items were issued out without being
requisitioned for by user departments and authorized by responsible officer.
The specific cases of stores irregularities are highlighted below:-
West End Stores
• Stores ledgers, the revenue book and the stores issue vouchers in
respect of West-End Stores revealed that foodstuffs worth
Shs.139,118,684, were not accounted for as a result of shortages in
delivery to the kitchen.
• Foodstuffs worth Shs.14,307,500 received from suppliers as per the
goods received note and verified by Internal Audit to have been
received in good condition were not entered in the stores ledgers. Their
utilization could not be verified.
Central Stores
• Quantities of sugar worth Shs.3,160,000 issued from Central Stores to
the Store-man of North End Stores were neither entered in the ledger
card nor issued to the kitchen.
• Purchase of 1500 kilograms of sugar worth Shs.3,530,000 received on
goods received note number 10527 dated 12/1/2007 and delivery note
number 0381, invoice number 0162 from a local firm appears doubtful
as the LPO number 6990 quoted as the order had been cancelled and
cash instead advanced to a Procurement Officer to buy sugar because
the same supplier refused to supply due to rising prices.
• 1500 kilograms of sugar worth Shs.3,000,000 received on goods
received note number 7773 dated 18th July 2007 and delivery note
number 197, invoice No.0122 from local firm appears doubtful as the
LPO number 6350 quoted as the order was issued to another firm for
supply of various sizes of envelops worth Shs.8,947,940.
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• 1500 kilograms of sugar worth Shs.3,150,000 received on goods
received note number 13145 dated 22/06/2007 and delivery note
number 099, invoice number 047 from a local firm appears doubtful as
the LPO used for ordering the sugar is not disclosed.
• 2,675 kilograms of sugar worth Shs.5,350,000 issued out to various
people on 12 stores issue books have no authorized requisition forms.
The absence of these records renders the authenticity of such issues
doubtful.
North End Stores
• Foodstuffs worth Shs.10,535,300 received from suppliers as per the
goods received note and verified by internal audit to have been received
in good order are not entered in the stores ledgers. Their utilization
could not be verified.
• Foodstuffs worth Shs.61,165,382 remained unaccounted for due to lack
of the menu book indicating how the foodstuff was issued to the kitchen
and signed for by the head cook on a daily basis.
East End Stores
• Foodstuffs worth Shs.2,493,000 received from suppliers as per the
goods received notes and verified by internal audit to have been
received in good order were not entered in the stores stock sheet.
Their utilization could not be verified.
• East End storekeeper failed to keep stores ledgers for various food items
for the period 1st July 2006 to March 2007 rendering audit of stores very
difficult.
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Records also indicate that there was a store breaking and theft case
No.CRB 1336/06 where two suspects were to appear in court for court
prosecution.
The Accounting Officer promised to carry out comprehensive investigation
into the stores mismanagement and inform me of his findings. I have also
requested him for an update on the case before court.
45.8 Staffing
A review of the staff establishment revealed disparities in staffing of various
positions. Whereas positions of Professors, Associate Professors, Senior
Lecturers and Lecturers are under-staffed by 151 people, there is over-
staffing in the positions of Assistant Lecturers, Teaching Lecturers and
Lecturers by 160.
Without proper and adequate staffing it is difficult for the University to
effectively discharge its functions.
Management should address this issue urgently as it may have a direct
effect on the quality of graduates produced by the University.
The Accounting Officer explained that the under-staffing/over-staffing is
mainly due to unavailability of qualified persons in some specific disciplines,
inability by the University to attract highly qualified persons because of
poor pay and inability for the Appointment Board to recruit new staff and/or
promote staff because of the current court injunction arising out of
miscellaneous cause No.23 of 2007. The problem was also compounded by
the unplanned merger of the three institutions that formed the University.
45.9 Payables
At year end the University had arrears of Shs.2,666,271,188, out of which
Shs.480,986,455 is owed to National Social Security Fund and
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Shs.845,848,859 to Uganda Revenue Authority in respect of P.A.Y.E. There
is need to source for funding to clear this liability as further delays may lead
to penalties.
Management explained that a payment schedule for P.A.Y.E had been
agreed with URA
46.0 GULU UNIVERSITY 46.1 Final Accounts
The principal books of accounts like cash books, revenue, expenditure and
payable ledgers were not properly kept by the University to enable me to
ascertain the accuracy of the balances shown in the financial statements
reliably.
46.1.1Cash and Cash Equivalents
The Statement of Financial Position (Balance sheet) reflects cash balances
of Shs.64,624,276. However, this is not supported with a bank
reconciliation statement. The balance does not reconcile with the cash flow
statement and the statement of reconciliation of movement in cash on Page
11 of the financial statements. I am therefore unable to confirm that the
cash balances were correctly stated in the financial statements.
46.1.2Statement of Changes in Equity
It was noted that the net worth credit balance of Shs.321,099,274 for the
previous year was brought forward in the statement as a debit balance
causing an overstatement in the net worth balance carried forward of
Shs.642,198,548, hence overstating the closing net worth.
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46.1.3Bank Loans
Disclosed in the Statement of Appropriation account (Page 13) is a loan
balance of Shs.132,290,000. However, Note 25 attached to the accounts
on Page 46 indicates that loans from commercial banks amounted to
Shs.119,640,000. The variance of Shs.12,650,000 was not explained.
Whereas the Accounting Officer informed me that the loan was approved
by the University Council as a bank overdraft, I did not obtain the Council’s
Minutes to confirm that approval.
46.1.4Payables
The Statement of Financial Position discloses payables balance of
Shs.888,278,281. However, Note 26 to the accounts indicates payables
balance of Shs.2,598,675,549, represented by Employees Costs
(Shs.1,591,107,268) and committed creditors (Shs.1,007,568,281). The
difference of Shs.1,710,397,268 was not explained.
Employee costs include outstanding statutory obligations relating to NSSF
(Shs.832,747,304), URA/PAYE (Shs.254,177,072) and Salary Enhancement
(Shs.504,182,892).
Unless measures are taken to moderate the pace of expansion and manage
operations within the framework of available resources, the University is
potentially prone to undesirable litigations, penalties and erratic
staff/student strikes.
46.1.5Miscellaneous and Unidentified Revenues
Miscellaneous and unidentified revenues amounting to Shs.374,595,200
reported in Note 8 to the accounts was not captured in the Statement of
Financial Performance and Cash Flow Statement leading to misstatement of
the revenue and cash balances in the two statements.
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46.2 Poor Internal Controls
During the period under review, serious weaknesses were noted in the
internal control system which could have severely compromised the safety
of the University resources as explained below;
46.2.1Improper Keeping of Vote Control Register (VCR)
Proper keeping of the Vote Control Register is a prerequisite for maintaining
sound budget discipline and effective implementation of the Commitment
Control System (CCS). However, the Vote Book was not properly kept by
the University management. For instance, the Accounting Officer was not
initialing on entries posted and key attributes such as amount committed,
total cumulative commitments and total cumulative payments were never
posted. The absence of a vote control register renders control over
budgetary expenditure difficult.
46.2.2Implementation of Internal Audit Recommendations
It is now good practice to enhance the Internal Audit function by having
Audit Committees. In the management of public funds, the requirement of
Audit Committees, their duties and responsibilities are detailed in the Public
Finance and Accountability Act (and Regulations) 2003. The absence of
this committee in the University has rendered the functioning of the internal
audit ineffective. For instance it was noted that all recommendations made
by Internal Auditor were never acted on by management. It was also
noted that the Internal Audit Section is poorly staffed with one person.
With the expansion of the University more staff are needed to beef up the
Unit.
The Accounting Officer appreciated the role of internal audit and he
promised to address weaknesses raised by internal audit in order to
improve on the control systems within the Institution.
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46.2.3Poor Book Keeping
Monthly ledgers are not posted accurately and timely. There was slackness
in the posting and casting off of the cashbooks and preparation of bank
reconciliation statements. Although a number of public works, involving
significant sums of capital outlay, had been contracted out and executed,
the University did not keep proper contracts registers showing contracted
sums, details of works certified and payments to date. Fees registers,
utility ledgers, creditors ledgers were all similarly, either not kept at all or
poorly kept.
46.2.4Cash Transactions
A review of the University’s cash Books revealed that, save for salary
payments, payments were predominantly made by cash. In the month of
July alone, in one cash book (Account 0140087660803), out of
Shs.183,910,394 paid by the University, (Shs.89,833,230) (48%) was cash
payment. The practice is not only contrary to existing financial regulations
but also exposes the system to the risk of misappropriation of government
funds. In any case cash transactions render it difficult to withhold taxes.
I have advised the Accounting Officer to discourage the practice.
46.2.5School Fees Registers
In 2005/2006 audit, I did indicate to management that absence of properly
kept fees registers limit my ability to perform a comprehensive audit and
thus recommended that these registers be kept. Although the Bursar
indicated that a task force to have these records written had been
instituted, not much had been done. Therefore, I was still not able to
confirm whether all fees due and collected are properly accounted for.
The Accounting Officer indicated that school fees registers for financial
years 2005/06 and 2006/07 had been updated. However, the
registers/ledgers were not produced at the time of verification.
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46.3 Diversion of Tax Funds
It was noted that Treasury released Shs.199,999,666 in respect of non
resource taxes on imported machinery and equipment. In accordance with
current guidelines the funds were meant to be remitted to Gross Tax
Receipts Account in Bank of Uganda. However, the funds were neither
remitted nor paid directly to Uganda Revenue Authority. During the audit it
was not possible to relate the tax funds to the expenditure. Consequently,
Shs.199,999,666 remained unaccounted for.
46.4 Understaffing
For its operations, Gulu University has an approved staff structure of 753
comprising 470 teaching and 383 non-teaching staff. Of these, only 170
teaching and 137 non-teaching are in post resulting into a vacancy of 446
posts, representing 60 percent of the approved posts.
Measures should be put in place to improve the staffing position to enable
the University achieve its strategic objectives.
46.5 Doubtful Expenditure
Documents submitted to audit as accountabilities in respect of payments
amounting to Shs.97,603,100 were found not satisfactory.
Verification of accountability documents revealed that some documents
used were photocopies while others appeared fictitious. In addition, some
funds meant for procurement of supplies which should have been officially
tendered out, were drawn in cash by University official and reason (s) to
justify the action were not obtained.
46.6 Land Title
Although effort has been made by management to acquire title to the 742
acres, for which a lease offer has now been obtained from the District Land
Board (DLB), progress has been encumbered by existence of many
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squatters (bona fide occupants) on the land and uncertainties on availability
of sufficient funding for their compensation before eviction.
47.0 MAKERERE UNIVERSITY BUSINESS SCHOOL
47.1 Remittance of PAYE
All emoluments in form of salary and allowances including extra duty and
responsibility allowances are subject to PAYE. However, it was observed
that PAYE deductions in respect of certain allowances and other earnings
were not being appropriately made and remitted to URA. Individual
cheques for extra duty and responsibility allowances were paid separately
from the payroll and hence not subjected to P.A.Y.E deduction.
An audit by Uganda Revenue Authority of the PAYE position of MUBS for
the period from July 2003 to March 2007 ascertained the liability to be
Shs.188,565,331 which has since been paid by the University. Included in
this figure is Shs.38,833,642 interest incurred due to delays in remittance
of PAYE.
This expenditure is considered nugatory as it should have been avoided if
the tax law had been complied with.
47.2 Policy on Management Information Systems and Accounting
Packages
To make better informed decisions, management has put in place various
management information systems that cater for various functions of the
organisation. The different information systems have been computerised
with a view of improving data processing and accuracy.
A review of the information systems and accounting packages used
revealed that MUBS implements the following packages:
• Sage package for managing students ledgers
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• Quick books also for managing students ledgers
• Quick pay for processing salaries
• Ledger works for financial reporting.
All these packages were purchased off-the-shelf with no customization to
the information requirements of MUBS. The following shortcomings were
noted:
• The packages do not directly interface with each other to the extent
that the salary payments from Quick pay have to be manually entered in
Ledger works in order to capture that expenditure for financial
reporting.
• Deductions from staff salaries and other emoluments are also entered
separately.
• Income from students’ fees has to be manually entered in Ledger works
in order to prepare the income statement.
• There are limited controls over the integrity of these packages since
they are run independently.
• Manual entry of data into the packages has a negative bearing on the
accuracy of the final information output.
This has led to duplication of processes and failure to achieve the desired
efficiencies from the use of the software. It has also led to weaknesses in
controls over expenditure and IT resources.
There is need for integration of these packages to achieve the desired
efficiencies.
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The Accounting Officer explained that through a World Bank funded Project
to help African Universities to computerize a software called
SOCKETWORKS had been procured to address the problem and was
expected to be operational by January 2008.
47.3 Absence of Human Resource Manual
The Business School does not have an approved human resource manual to
guide the management of the human resource function. This may lead to
use of inappropriate recruitment and remuneration methods which can
ultimately hamper effective service delivery.
The Accounting Officer explained that the management of the human
resource function is guided by the institution’s human resource policies. I
have however advised that a manual be put in place to facilitate the
implementation of the policies set up by the council.
48.0 MULAGO HOSPITAL
48.1 Domestic Arrears for Utilities Domestic arrears for utilities (water and electricity) for the financial years
2005/2006 and2006/2007 are reported at Shs.2,945,572,895. However,
review of the bills and statements from the utility companies reflected a
total of Shs.2,643,122,039 as outstanding as at 30/6/2007. Therefore the
payables reported in the accounts appear to be overstated by
Shs.302,450,856.
Meanwhile, a total of Shs.634,347,291 paid for utilities during the financial
year lacked supporting documents such as monthly bills and receipts.
The Accounting Officer is advised to regularly reconcile the utility records
with the service provider. Meanwhile supporting documents for the amount
paid should be traced for further verification.
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48.2 Nugatory Expenditure A total of Shs.1,096,309,339 was paid to a construction company in
settlement of domestic arrears relating to unpaid certificates. Included in
the payment was an amount of Shs.88,547,361 that was paid in respect of
interest charges and litigation costs which is considered to be nugatory in
nature as it could have been avoided had the Hospital settled the
outstanding certificates in time.
The Accounting Officer explained that Ministry of Finance did not release
funds to pay the firm despite his requests to the Ministry.
48.3 Uncollected Non-Tax Revenue Arrears of Revenue from the private patients’ scheme at the close of the
financial stood at Shs.1,339,283,965. Of the outstanding amount of
Shs.995,390,763 from the previous year, only Shs.102,173,650 was settled
during the year, indicating weaknesses in debt collection. The hospital does
not have a debt collection policy and it is not certain whether this debt is
collectable.
Much of these debts are owed by government ministries and departments
with Ministry of Defence alone owing the hospital a total of
Shs.1,078,568,890 of the total outstanding amount.
Continuing to offer private medical services which are not paid for
constrains service delivery and may encroach on facilities meant for general
patients.
The Accounting Officer explained that Ministry of Defence had verified their
bills and promised to pay and that meanwhile services to the Ministry had
been suspended.
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I advised the hospital management to set up a clear policy on debt
collection and ensure that all outstanding amounts are collected.
48.4 Lack of Authentic Valid Contracts for Service Providers The Public Procurement and Disposal of Assets (PPDA) Act require that all
government procurements and disposal of goods and services above the
threshold should be backed by authentic valid contracts. To the contrary,
payments amounting to Shs.61,405,320 were made to a security firm
without valid contracts to spell out the terms and conditions of the firm’s
engagement.
The Accounting Officer attributed this lapse to delay in processing the
contracts by the office of the Solicitor General.
48.5 Rented Accommodation A total of Shs.63,979,000 was paid to various landlords for accommodation
of various hospital expatriates during the period January-December 2006.
It was however observed that there is an incomplete Guest House building
under construction, which requires completion so as to alleviate the
accommodation needs. No budget has been forwarded in the recent past
towards its completion. In his reply, the Accounting Officer explained that
the hostel was not meant for staff accommodation but rather an income
generating project under the private patients’ scheme. He further
explained that for over 2000 staff, there are about only 600 housing units,
which are not adequate for the hospital accommodation needs.
The Accounting Officer is advised to explore the possibility of putting up
more housing units for staff and, also further follow up the matters
concerning ownership of the nearby land occupied by the Ministry of
Defence (CMI).
48.6 Flouting of Procurement Procedures Contrary to the Procurement Law and Regulations, Procurements totalling
to Shs.1,223,974,032 were made without valid authority or no authority at
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all from the Contracts Committee. Of the above amount, contracts worth
685,985,032, had their authority expired and not revalidated while those
without authority at all amounted to Shs.592,985,032. It was therefore not
possible to establish the method of procurement used for those lacking
authority.
The Accounting Officer attributed the anomalies to emergencies especially
for drugs and sundries that require timely action. He further stated that
there was revalidation by the Contracts Committee. However, details of
this revalidation have not been availed for audit.
48.7 Withholding Tax Deductions (a) Selective deduction of WHT from drug suppliers
Contrary to the Income Tax Act, Sec.120 (1-5) all suppliers dealing in
drugs and accessories are exempted from WHT payment. Contrary to this
provision, the hospital selectively deducted a total of shs.48,484,697 as
WHT from suppliers of medical drugs and accessories. A number of others
supplying similar items had their full payments made without subjecting
them to WHT deductions. The criterion used to deduct WHT from
particular suppliers and exempt others is not clear. The hospital risks
litigations from firms that are affected by these unlawful deductions.
The Accounting Officer explained that this was an oversight and promised
to consistently apply the law.
(b) Lack of Acknowledgement Receipts
A total of Shs.456,668,007 purportedly remitted to Uganda Revenue
Authority as deductions from various payments to suppliers was not
supported by receipts as proof that these funds were actually received, by
Uganda Revenue Authority.
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(c) Non Deduction of WHT
A total of Shs.36,403,408 was not deducted from various supplies of goods
and services to the hospital as required by the tax law.
48.8 Expired Drugs A number of expired drugs stacked in boxes, without values attached, are
held up in various stores/containers in the hospital. Accessibility to these
places where the expired drugs are kept is limited because of the way they
have been piled up. Some of the stores cannot even be accessed or
opened. Scrap wheel chairs, old basins, beds furniture and equipment are
dumped haphazardly in the same stores.
Some of the expired drugs were impounded and kept by URA for a long
time and later “donated” to the hospital at the time they were expiring. A
lot of space which would otherwise be available for other purposes is
currently holding expired drugs. The hospital will also eventually incur
costs for destroying such drugs. Continued keeping of expired drugs in the
hospital facilities may be a great risk to both the hospital staff and patients
if no urgent plans are made to dispose them off.
The Accounting explained that most of the expired drugs are drug
donations with short shelf life that
48.9 Environmental Audit on Management and Disposal of Waste
An environmental audit on waste management and disposal in Mulago
Hospital Complex was carried out between January and March 2008. A
separate report was issued to management. Here below is the summary of
the significant audit findings made:-
48.9.1. Medical waste policies and strategies
It was noted that Mulago Hospital does not have a hospital waste
management policy and strategy. The policy would address issues like:
identify all the stages of the waste stream; measures to be undertaken to
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ensure waste prevention; the different types of waste and how to handle
each type; segregation of waste; compliance with existing laws and
regulations as well as a clear definition of principles to be followed. In
addition, the policy would identify all the possible risks related with medical
waste management and give guidance on how to manage those risks.
It is important that the hospital sets up a policy and strategy to enable
uniform implementation of its waste management initiatives and ensure
compliance to the national laws and regulations.
48.9.2 Limited access to Legislation and guidelines
It was also noted that there is no direct access to a data base of the
legislation, regulations and procedures relating to waste management, thus
making it impossible for all potential role players in waste management to
acquaint themselves with the legislation and guidelines. For instance in the
X ray unit, the international guideline for handling nuclear materials was
being kept by the head of the unit who had been away for over a week by
the time of our audit visit. No user copies of the legislation and regulations
have been availed to the users.
Management is urged to ensure that access to the applicable legislation is
available to all staff of the hospital.
48.9.3 Lack of awareness of the legislation and guidelines in place
It has been noted that there is lack of awareness by the hospital staff of
the legislation relating to Medical waste. For example although there are
National Environment (waste management) regulations 1999, issued by
NEMA, staff at the wards were not aware of the regulation.
It was also noted that Mulago hospital guidelines on waste management
have been in draft form since 2006 and most staff are not aware of them.
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This implies that any adherence to the regulations and guidelines in place is
coincidental rather than planned. It is important that all staff are made
aware of all the stipulated regulations and guidelines to be followed while
handling all types of waste so as to ensure compliance.
48.9.4Internal medical waste control systems
It was noted that there are no documented internal medical waste control
systems in the hospital. All staff interviewed acknowledged the fact that
there was no written waste management system. Such a system would
guide staff on issues like waste segregation, storage, transporting, and
disposal and also allocate responsibilities to specific staff members
regarding their respective roles concerning the management of medical
waste.
Management is advised to urgently set up and document its internal waste
control system.
48.10 Monitoring
(a) External Monitoring
The National Environment Management Authority (NEMA) is a body that
was established by an Act of parliament as the principal agency in charge
of coordination, monitoring and supervision of all environmental
management issues in the country. NEMA does this in coordination with the
district Environmental officer’s resident in every district in the country.
However, it was noted that there was no evidence that the hospital had
received any monitoring visits either directly by NEMA staff or by the
District Environment Officers.
This implies that the hospital did not receive the necessary technical
guidance that would be derived from the monitoring visits to enable
management take corrective or preventive action where possible.
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(b) Internal Monitoring
It was further noted that internal monitoring is largely inadequate.
• Although there is a committee on infection control, there is no evidence
that it is operational.
• There is no evidence that the private firm that collects and disposes the
waste is supervised as no reports were availed.
• Waste at the storage area is handled in a very dangerous manner; and
this further proves that no one supervises the processes at the store/
incinerator before it’s taken out of the hospital.
Management is advised to set up a monitoring mechanism to ensure proper
management and disposal of waste.
48.11 Staff Protection The following observations regarding use of protective gear were noted
during inspection of some of the hospital wards:-
• At the labour ward, staff are not supplied with masks and gaggles to
protect their faces from infectious fluids that patients discharge.
• Gloves are inadequately supplied and patients are asked to provide their
own for use by the hospital staff for any emergencies however, the
quality of the gloves out sourced from patients, cannot be relied on
leading to exposure of staff to infections.
• Staff at the highly infectious ward (ward 4A), are not given any extra
clothing protection, given the infections they are constantly exposed to.
• The emergency centre that handles staff who may get pricked
accidentally i.e. Post Exposure Prophylaxis (PEP) is closed over the
weekends. This reduces the effectiveness of the unit and leaves staff
vulnerable to infections that could have been avoided.
• Also noted was the fact that ward cleaners are inadequately protected
as many were found using surgical gloves instead of heavy duty gloves
while cleaning the wards and collecting waste which at the end of the
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day exposes them to a lot of infections. Efforts to talk to their
supervisors were futile.
It is important that the use of protective clothing is emphasised for all staff
especially those working in the highly infectious wards to avoid any possible
infections that may result from handling infectious waste.
48.12 Procurement
The following procurement issues were noted as having an effect on waste
management and disposal:-
• Disinfectants like jik and precepts are sometimes not adequate.
Placentas and other dangerous waste are therefore not disinfected as is
supposed to be the case, before their disposal.
• The waste bins procured are inappropriate. It was noted that 50 litre
waste bins (for storage at source) and 100 litre bins (for transportation)
were purchased instead of 70 - litre and 100 - litre respectively. This
may partly explain the overflow of some waste bins in the wards that
was found at the time of audit.
Management is advised to ensure that the above issues are addressed.
48.13 Old and Obsolete Equipment
It was noted that management does not have any disposal plans for old
and obsolete equipment. A lot of old unused and obsolete hospital
equipment is currently being stored at the hospital. These include old
computers and old x-ray machines which for instance may emit dangerous
radioactive materials thus becoming dangerous waste in the hospital.
Management is advised to dispose all the old and obsolete equipment
currently stored at the hospital.
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48.14 Drugs store
During inspection of the drugs bulky store, it was noted that there are no
compartments, bin/stock cards and labels to show the names and
quantities of drugs by type/categories held at any one time in the store.
Boxes of drugs were found heaped on the dirty floor making the store look
very untidy, and which can lead to generation of more waste as a result of
drugs getting spoilt.
Management is advised to ensure that compartments are set up in the
store and that an appropriate environment is established in order to
effectively manage all drugs.
48.15 Waste Separation
As a matter of best practice, it is normally recommended that hospital
waste is separated at the point of its generation; since disposal methods of
each waste are different (i.e. general waste can be disposed at a landfill,
whereas the infectious and hazardous waste has to be incinerated). The
generators of medical waste should separate the waste at the point of
generation to enable this to be applied. However, the following was noted.
(i) Separation of waste is not regularly done. This has lead to an accumulation
of high quantities of waste that has to be incinerated. Since incineration is
expensive (in terms of fuel costs for operating the incinerator), this implies
that the incinerator operating costs are high because of un-necessary
burning of other general waste. This could substantially be reduced if
proper separation is adhered to.
(ii) Waste that is separated at the wards is again put together (mixed) on
transportation and re sorted at the incinerator by the incinerator operator.
This complicates the incinerator operators’ job, as he has to try and
separate the waste at this point.
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Management is advised to ensure strict separation of waste through out the
whole waste stream (i.e. from generation, collection, transportation and
disposal of waste).
49.0 BUTABIKA HOSPITAL
49.1 Nugatory Expenditure A contractor was paid Shs.350,231,291 in March 2007, as outstanding
duties and taxes plus interest on delayed payments of earlier certificates.
Included in the amount is a sum of Shs.106,799,214 paid in respect of
interest accumulated as a result of delayed settlement of outstanding
certificates. The expenditure is considered nugatory as the interest
payment could have been avoided if the certificates were settled in time.
49.2 Hospital Land As previously reported, the Hospital’s original land of 656 acres was
parcelled out and the biggest chunk given to private developers by the
Uganda Land Commission in 2003/2004. However, I am unable to confirm
that the Hospital now properly owns the remaining part of the land because
of lack of a certified copy of the land title.
In my discussions with the Hospital management, it was explained that the
Hospital has not been able to secure a certified copy of the land title inspite
of several attempts to request for it. I advised the Accounting Officer to
continue liaising with Uganda Land Commission by involving higher
authorities to obtain a copy of the land title for the Hospital land.
49.3 Human Resource
(i) Unfilled Vacancies
A review of the Hospital staff list revealed that out of 430 approved
positions only 314 were filled leaving 116 posts vacant.
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The division of mental health that is core to service delivery has an
approved structure of 40, but, only 23 are filled (58%). Of the three
approved posts for senior consultants, only one post is filled. Other key
positions that are vacant include:-
• Principal Psychiatric Officer
• Principal Clinical Psychologist
• Senior Clinical Officers and
• Senior Clinical Psychologist
• Anaesthetic Officer
• Theatre Attendant.
The Accounting Officer explained that he had identified and submitted to
the Health Service Commission all vacant posts for filling and adverts made
in 2007, I am yet to be furnished with the outcomes. I advised the
Accounting Officer to keep pressing the relevant Commissions for optimal
staffing of the Hospital.
(ii) Inadequate Structure
The structure of Butabika hospital appears to be inadequate to address its
current needs. For instance according to the Assistant Commissioner
Nursing, although the ideal ratio of nurses to patients is 1:3 in practice the
ratio is sometimes as high as 1:70.
The Hospital has a fleet of 11 vehicles but there are only 7 approved
positions for drivers list of which only 3 are filled.
It was also observed that the hospital operates an Outpatient’s Clinic that
has been opened to the public. However, there is no provision for
additional staff to cater for the increased work load. The Accounting
Officer explained that Ministries of health and Public Service initiated a
restructuring process intended to rationalise staff structures in hospitals but
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the process has been rather slow. It is hoped that current needs of the
hospital will be addressed during the restructuring process.
(iii) Unconfirmed Staff
A review of a sample of 37 personal files indicated that 15 staff are not
confirmed despite having served for more than 2 years probation.
Furthermore, it was noted that although the staff list had indicated most
employees as confirmed, audit tests showed that 14 staff members
declared confirmed were actually not confirmed. The Accounting Officer
attributed this to understaffing in the Personnel Office that lacked a Senior
Personnel officer for a long time. He further stated that he expected this
status to change after an experienced Senior Personnel Officer was posted
to the Hospital.
(v) Incomplete Records in Personal Files
Open personal files contained very few documents, mainly the most current
such as recent appointment letters, leave forms and pay change reports
leaving out most of the historic records of the staff.
The Accounting Officer explained that these records used to be maintained
by the mother Ministry (MOH) which had retained the human resource
function. With establishment of the function at the Hospital, records could
not be released because of lack of a secure registry. I advised him to
expedite the process of establishing a secure registry in the Hospital and
have all the staff records still lying with the Ministry transferred to the
Hospital.
49.4 X-ray Machine During the year the Hospital procured an X-Ray machine, Comprehensive
X-Ray Unit, at a sum of Shs.119,556,139.
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An audit inspection of the X-ray Unit, revealed that the machine did not
meet the required standards, according to the technical vetting committee.
It was not approved for use in the Hospital and has therefore remained
idle. The Accounting Officer explained that most of the X-ray equipment
was cleared except the examination couch, surgeon tools, linen trolleys, the
2 X-ray units and the ultra sound set. He further stated that supplier was
contacted and requested to re-supply the parts that were rejected. This
had not been done by the time of writing my report.
50.0 ARUA HOSPITAL 50.1 Staff Establishment
The staff establishment set more than ten years ago has not been revised
to match the ever increasing demand for medical services by the
population.
The current establishment list shows that 331 posts are approved of which
306 are filled creating staffing gaps in key posts such as Doctors,
Radiography, Pharmacy and Finance & administration. Although the staff
list indicates overstaffing in other areas such as nursing (overstaffed by 59
staff), the staff available is too thin on the ground.
Understaffing in key areas that are fundamental for effective and efficient
delivery of the required services undermines the reasons for which the
hospital was made a Regional Referral Hospital.
For instance, busy as it is, the assessment centre is staffed with only three
clinical officers, one for the under fives and two for the adults and the three
have to assess hundreds of patients daily. With the standard requirement
that a patient be assessed for a minimum of 15 minutes, it is doubtful
whether this is achieved and patients given sufficient attention. At the time
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of Inspection in the afternoon more than 50 people were in the queue to
see one clinical officer.
Currently the pharmacy is inadequately staffed and is manned by one
person who is a dispenser. This greatly affects not only the operations of
the pharmacy. The Dispenser is only assisted by an office messenger who
was found, at the time of inspection, counting drugs with bear hands, a
practice that may contaminate the drugs and put the lives of patients at
risk.
The Accounting Officer explained that it has become difficult to retain staff
because of lack of accommodation and yet the budget does not provide for
housing allowances. He further stated that Pharmacists could not be
retained because there are private pharmacies for them to supervise in
Arua.
There is an urgent need for hospital management, together with the
concerned authorities to review the current staff establishment in view of
the increasing demands for health services by the population and then
sufficiently staff the hospital with the appropriate numbers and technical
skills.
Equally, there is need to budget for staff accommodation in form of either
allowances or direct renting in the short term and/or construct staff houses
in the medium term, to be able to attract and retain qualified staff.
50.2 Status of the Hospital Infrastructure
The hospital was established in 1937 and upgraded to serve as a regional
referral hospital in 1996, and currently serves the districts of Arua, Nebbi,
Moyo, Koboko, Yumbe, Adjumani and foreigners from DRC and Sudan. It
also serves as the district hospital for Arua district and other surrounding
districts which do not have district hospitals. Despite its catchment area
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with a large population, the hospital infrastructure which was planned more
than seventy years ago has not changed.
i) Out Patients Department.
This is the reception and assessment centre for all patients. Patients
with minor ailments are treated here and discharged while those
who require specialized treatment or admission are sent to the
respective department or ward. An audit inspection of the OPD
showed the following.
• The department, important as it is, operates in small and
dilapidated structure with many cracks on the ceiling and walls,
constructed in the 1930s for a small number of patients. The
status of the building is a threat to the staff and patients.
• All the storage facilities in the various offices are too old and
require immediate replacement.
• There is no adequate space for the casualty cases with only two
small rooms equipped with two beds which were all occupied at
the time of the inspection. Indeed this facility was proved to be
very insufficient on the 13th Nov, when about eight accident
victims were brought in and were given first aid outside on
cement slabs used as benches for patients.
• The minor theater for handling minor operations is inadequately
equipped with old and broken equipment, with crumbling walls
and ceiling.
The accounting Officer explained that he has taken efforts to provide
protective clothing to staff and that the hospital management
together with corporate bodies in Arua were in a fundraising drive to
equip the minor theatre in the OPD as part of Public-Private
partnership.
ii) Female, Male, Paedriatic and Surgical Wards
Following the condemnation of the medical ward more than five
years ago, a few wards were left available for accommodation of
patients. This has led to overcrowding in the few available wards
where some of the patients are floor cases while others have had to
occupy the corridors. For example, the surgical ward that has a bed
capacity of 22 beds was found with 41 beds excluding floor cases
and more patients were being admitted. This is made worse at night
when attendants have to compete for the available space.
This overcrowding may facilitate disease transmission. The situation
is made worse by lack of modern equipment for use by the medical
workers, for example, all autoclaves are non functional in the wards
and instead charcoal stoves are used for sterilisation of equipment.
Such methods may not achieve the degree of sterilisation required.
Sterilisation method used in the ward
Urgent reconstruction of the condemned ward will ease on the
congestion in these other wards.
iii) Maternity Ward
The maternity ward operates with only three delivery beds and one
improvised coach instead of the required eight beds. Use of
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examination coach as delivery bed puts the lives of the mothers and
their babies at risk. The neonatal unit has only two functional
incubators but lack of power for 24 hours constrains their use and
cases of pre-mature births are referred to a private hospital-Kuluva
Hospital.
iv) Private Ward
The private ward has only 6 single rooms and other services are
provided from other departments that are scattered in different
locations. There is need to provide a one stop centre for the private
patients and reduce congestion at the other centers.
The Accounting Officer explained that although management has set
aside land for a private wing, lack of funds has hampered its
development and even the little that is collected is required to be
remitted to the UCF under the Non Tax Revenue guidelines.
v) Regional Mechanical Workshop
This workshop is meant to repair medical equipment for all hospitals
and health centers in the region. Funding is by contribution from the
respective hospitals and health centers and districts. However the
following were noted:-
• Hospitals and health centers are not up to-date with their
contributions and this is affecting its operations.
• The work shop seems to be engaged in doing work for private
clients. This was noted by the Board in its meeting of 16th Aug
2007 and an audit inspection of the workshop also confirmed
this. Over 50 vehicle and motor cycle batteries were found being
recharged for private clients using the hospital power and
workshop facilities.
Motor cycle and car batteries being charged at the workshop
The Accounting Officer explained that funding through contributions
from hospitals and health centers has proved ineffective and makes
planning difficult. There is need to design an effective method to
fund the workshop activities.
vi) Location of Incinerator and medical waste disposal
An incinerator for the hospital to dispose off medical waste was
constructed near other hospital facilities such as the regional
mechanical workshop, the private wing and the training school. The
fumes and gases are blown back to the hospital and are a health
hazard to both the medical workers and the patients. Pic showing
the location just outside the fence is below:
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Location of incinerator near the hospital fence
The Accounting Officer explained that the location is in itself not a
problem but the design was wrong which led to burning of medical
waste other than actual incineration which is supposed to generate
temperatures above 800 degrees centigrade. He stated that a
technical review was being carried out by MSF France to have the
problem rectified and the hospital management was lobbying World
Health Organisation for assistance in waste management.
vii) Sewerage system and sanitary facilities
The sewerage system and sanitary facilities in the hospital are as old
as the hospital itself. With time, the pipes age and often break down
and with the increasing hospital population, they have also become
very inadequate.
The Accounting Officer explained that there is need to overhaul the
entire system and even construct a lagoon for proper waste
management and disposal.
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50.3 Other Non Current Assets
a) Obsolete/Old Equipment and Vehicles
The hospital does not have any policy on the obsolete/old equipment
and vehicles. Irreparable equipment and vehicles are damped/piled
in different locations of the hospital compound while others have
remained in various wards and offices.
Management explained that they are in the process of initiating the
disposal of this old/obsolete equipment.
The out outcome of this process is awaited.
b) Land
Although the hospital land has been surveyed a land title is yet to be
obtained. The survey established that the hospital land has been
encroached on by people who have constructed permanent houses.
There is need to urgently acquire the land title and fence all the land
that belongs to the hospital.
The Accounting Officer stated that submissions to the Uganda Land
commission have been made for the land title. He further explained
that encroachers who have settled on the land need a lot of money
to be compensated and the hospital does not have this money.
50.4 Stores
The hospital procures and receives drugs and sundries from various sources
including JMS, NMS, private suppliers and donors. However an audit
inspection of the stores facility revealed the following:
a) Inadequate Space
The space available in the store is not enough to keep all the drugs
and sundries. As a result a number of items in boxes are piled over
others in the available space. This may cause damage to some of
the items or spoil the drugs. A case of boxes of computers, recalled
gloves and infusion sets piled on top of each other was particularly
noted as shown in the photographs below.
b) Donation of Non Functional Equipment
Included in the boxes piled over each other were computers donated
by the Rotary club of Canada. The computers are old and failed to
function yet they are occupying space in the stores. It is not known
why the authorities allowed the donation to the hospital, which is
already having problems in disposing off its own old equipment.
Acceptance of such donations is using the hospital as a dumping
ground. Donations to government institutions should be properly
screened to avoid using them as dumping grounds for items that are
hazardous to environment.
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c) Poorly Ventilated Stores
The structure where the stores are housed lacks proper ventilation
with only small ventilators which do not allow enough aeration. This
may cause damage to the drugs and sundries which are kept there
for a long period, causing danger to the patients’ lives. Example of
the small ventilator is as in the picture below.
d) Record Keeping and Stores Management
Paragraph 507 of the TAIs requires entries for receipts and issues to
be made in the ledger promptly at all times to correctly reflect the
amount held in stock. Contrary to this requirement, it was noted that
the ledgers are not regularly updated and as at 13th Nov 07, all
receipts and issues for the previous three weeks had not been
posted. Although this was attributed to lack of manpower in the
stores, it was established that it was mainly due to lack of close
supervision and internal monitoring system.
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341
e) Pharmacy
From the stores, drugs are mainly issued to the pharmacy from
where wards and other end users requisition for their daily drug
needs. It is expected that proper records such as stock cards are
maintained at the pharmacy to keep track of the drugs received from
the stores and how they are distributed to other users. However, an
audit inspection of the pharmacy on 13th November 2007 revealed
that the stock cards were last updated on various dates ranging from
June to October 2006. No stock cards have been maintained for the
entire 2007. The officer in charge attributed this to lack of adequate
manpower in the pharmacy department and in the circumstances it
was not possible to confirm that all the drugs requisitioned from the
stores were actually received in the pharmacy and properly
dispensed to the patients/ distributed to other end user.
f) Expired drugs
Found in the stores are 31,200 expired ARVS-Lamivudine Niverapine
Trimune 30 mg expired tablets. These tablets were delivered to the
hospital from National Medical Stores in June 2006 when they had
actually expired two months earlier in April. Because of lack of
storage space these drugs together with three boxes of recalled
gloves are still kept in the drugs stores. The reason why National
Medical Stores had to damp expired drugs in the hospital and failing
to take them back for destruction is not known. Continued keeping
of such expired drugs together with good ones in the same store is
irregular.
50.5 Cleaning services
The hospital pre-qualified and contracted one firm, Lake Foods and Traders
to provide cleaning services for the wards at a monthly fee of
Shs.2,800,000, (Shs.33,600,000 p.a). However, the payments are effected
without proper certification. There seems to be no responsible officer for
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the supervision of the cleaning works. An audit inspection of the wards and
other facilities showed that the floors are not properly scrubbed and cob
webs were hanging in all the OPD facilities and wards except the maternity
ward.
51.0 GULU HOSPITAL
51.1 Staff Establishment
Although the status of staffing improved after the posting of 54 staff, many
of the key posts remained vacant by the time of writing this report. The
total number of vacant posts as at October 2007 was 105 representing
33% of the approved structure of 336. It was also reported that the
existing structure is not adequate to address the current needs of the
hospital. It was noted that the current staffing position at the hospital
affects the effective delivery of services to the public since this is a referral
hospital servicing the whole northern regions.
It was further noted that the stores department was greatly under staffed.
The officer in charge complained that he is overwhelmed with work.
According to Hospital establishment structure the department is supposed
to be manned by 5 staff but instead only 2 staff were posted.
The Accounting Officer explained that the Health Service Commission had
advertised for the vacant posts and that the process of filling them was
ongoing.
51.2 Waste Disposal
The Accounting Officer has indicated that the incinerator that was
constructed is of small capacity and hence cannot handle the rising volumes
of waste from the hospital. There is also no place where to dispose off
non-medical waste. The mortuary is a room which is not refrigerated yet it
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handles so many dead bodies. There is need for funding to enable the
hospital address the problem.
52.0 JINJA HOSPITAL
52.1 Excess Expenditure
The hospital incurred expenditure of Shs.348,976,262 in excess of the
approved budget appropriations without relevant authority. This affected
employee costs (Shs.98,436,683) and goods and services
(Shs.250,484,579). I have advised the Accounting Officer to regularize the
expenditure in accordance with the law.
52.2 Unsupported Purchases
A total of Shs.265,480,889 was paid for various procurements out of which
procurements worth Shs.94,981,042 were not supported by documents like
local purchase orders and Goods Received notes.
In the absence of supporting documents, I was not able to confirm that the
procurements were properly authorized received and utilized for the
intended purpose.
Although the Accounting officer later explained that the documents were in
stores, they were still not presented for verification.
52.3 Lack of Capital Development
The Hospital continued to operate without capital development budget for
major repairs and procurement of new equipment and vehicles. Although
the hospital is a separate vote, the capital development budget continued
to be operated by the mother Ministry (MOH).
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• Buildings
The Hospital lacks funds for capital development to procure new
equipment and maintain its infrastructure. As a result, doctors offices
are located in a dilapidated building. This building has never been
repaired since it last housed the first medical doctor of the Hospital in
the 1960’s. The continuous use of such buildings that are in a sorry
state is a risk to the lives of the users. Photographs are attached
showing the status of some of the hospital structures.
• Equipment and Ambulance
The equipment is inadequate and the existing ones obsolete as most of
them were acquired in the 1930’s. There is generally lack of modern
equipment and an ambulance for the Referral hospital.
• Staff/Patient Accommodation
Some wards were filled to capacity. Patients admitted were found in the
corridors especially in the maternity wards leaving no passage for
movement of the medical staff. Some wards are in a sorry state
especially the psychiatric ward. The ceilings for the room in family
planning are leaking and the walls had cracks. There were also no walk
ways from some of the theatres to the wards.
Similarly, there is acute lack of staff accommodation especially for the
specialized staff whose services are required 24 hours. This type of
staff cadre especially doctors need to reside within the hospital but this
is not possible and even those few houses that do exist are dilapidated.
It is very difficult to attract suitable specialized staff in such un-
conducive environment.
• Hospital Land
The Hospital does not have a title for its land. I am therefore not able to
confirm that the piece of land where the hospital is located belongs to
the hospital.
Old Building housing Doctors’ offices –Front view
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Old Building housing Doctors’ offices –Rear view
Old building housing the Hospital’s main Theater
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Old building with Asbestos sheets, housing the Hospital’s Main Laboratory
The Psychiatric Ward
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Part of the Ceiling in the Psychiatric Ward
Another Part of the Ceiling in the Psychiatric Ward
348
Main Administration Block not renovated for a long time
Asbestos sheets, though no longer in use is a common feature of the hospital’s roofs
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350
53.0 LIRA HOSPITAL 53.1 Understaffing
Lira Referral Hospital is severely understaffed which is likely to impact
negatively on the Hospital’s ability to deliver the required health services.
For example, out of 297 approved posts, 103 posts are vacant.
Posts of salary scale U4 and above are the most affected. Insufficient
recruitment coupled with poor working conditions faced by staff cause
resignations and absconding and poor services.
There is need for government to recruit more staff for the Referral Hospital
and provide adequate funding to cater for improved environment and
working conditions in the Hospital.
53.2 Lack of Ambulance, Vehicles,
Presence of Obsolete Equipment
Lira Referral Hospital has no ambulance to transport patients yet it operates
in over five districts. It was reported that the new Ambulance meant for
the hospital was taken by District Health Office and has refused to hand it
over back. It also lacks motor vehicles for efficient operation. Hospital
equipment is very old and obsolete making work very difficult.
The buildings are also very old and in dire need of extensive renovation.
The working environment especially for the technical staff is generally not
conducive.
Under funding of the Referral Hospital by government for both recurrent
and capital expenditure may be the cause for the needy situation the
hospital is in.
Government should provide adequate funding to cover operating costs, as
well as renovation of the infrastructure and acquisition of adequate
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transport facilities for both technical staff and patients. Management should
continue pursuing for adequate funding for the Hospital.
53.3 Waste Disposal
The hospital does not have a functioning incinerator. The one available got
burnt by fire and broke down three years ago. Disposal is by way of pit
which is considered to be an inappropriate method of waste disposal.
There is need for funds to enable the hospital put up an incinerator and
hence improve on the waste disposal system.
54.0 MASAKA HOSPITAL 54.1 Lack of Capital Budget
The Hospital operates without any capital development budget. This has led
to lack of major repairs and maintenance of the hospital infrastructure and
expansion programs. The following observations are largely attributed to
this, and the photos on pages illustrate the state of the hospital
infrastructure.
54.1.1 Hospital Infrastructure- Buildings
The Hospital has not had any expansion program since it was turned into a
regional referral Hospital. The available infrastructure does not match the
increase in responsibility/number of patients and has led to accommodation
crisis. This was evidenced from the over crowded maternity wards which
were supposed to accommodate 70 patients but had 77 at the time of
inspection thus forcing some of the patients to sleep on the floor.
54.1.2 Lack of Mortuary Facilities
The Hospital does not have a mortuary facility of its own and as such dead
bodies are moved to a nearby isolated old building belonging to the
Municipal Council Authorities. This structure is too old and lacks basic
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mortuary facilities, appears abandoned and has not been renovated in the
recent past.
54.1.3 Shortage and Use of Faulty Equipment
The Hospital has a number of auto claves that are faulty and un-repairable.
This forces staff in most wards and departments which are incapacitated to
use the one in the main theatre or the boiler. For example, the oxygen
concentrator of the Emergency and Accident room was faulty and the
maternity wards consisting of wards 9, 10, 11 and a minor theatre had a
non functional auto clave on the day of inspection but had admitted 77
patients. Its sterilizer was also faulty. The Dental clinic had none and relied
on the boiler. The continuous shortage and use of faulty equipment leads
to poor service delivery and puts the lives of both the medical staff and
patients at a great risk.
54.1.4Inadequate Theatre Facilities
The Hospital has one main theatre which is normally overwhelmed with
numbers as the minor theatre was out of service due to its current sorry
state, and had been turned into a records room.
The main theatre is also neither well equipped nor well maintained and
lacks basic equipment like auto claves. There is lack of proper air
conditioning facilities and suitable walk-ways to the theatre.
With its two operating rooms of one bed each, one room had no operating
lights which forced the Doctors to use an improvised lighting (a single spot
light). In addition, the very old operating beds are used by 6 to 8 patients
per day. The minor theatre in the Emergency and Accident room is also
not operational due to lack of equipment. A referral hospital with
inadequate theatre facilities that are neither well-equipped nor well
maintained cannot offer the necessary services.
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54.1.5 The Hospital Incinerator
An incinerator was constructed for the hospital during the year under
review - courtesy of the Ministry of Health. However, it collapsed before it
was handed over to the Hospital authorities and has not been
reconstructed.
The collapse was attributed to poor workmanship and materials and lack of
technical supervision. As a result, the hospital continues operating without
an incinerator and medical wastes are disposed off through placenta pits
which is considered a crude method. The other sundry waste is disposed
off through open pit burning, and this is also not environmentally safe.
54.1.6 Land Encroachment
The Hospital fenced off part of its land leaving a reasonable portion
unfenced. However, the encroachers have continued to have unlimited
access and use of the remaining unfenced chunk of land by either
constructing permanent houses or tilling on it. Although the boundaries
were opened these squatters have demanded compensation for illegal
structures and crops. The lack of a fence exposes the hospital to the risks
of theft. It was also noted that the much of the hospital infrastructure and
access roads are in a sorry state. The hospital management explained that
they do not have funds to cater for this and appeared to have no other
course of action.
Although the hospital is self-accounting under its own vote, the capital
development funds are still managed under the Ministry of Health. The
Ministry, however, seems not to be considering the hospital’s infrastructure
as a priority as no funds are released for the purpose.
54.2 Staff Establishment
Review of the Hospital’s establishment list shows that the hospital is staffed
to the level of 78% with 252 staff out of the recommended staff of 322.
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There are staffing gaps of 112 representing 22%. The following is the
summary table indicating the staffing position at the time of audit.
Post Recommended Establishment
In post Vacant
Doctors/Consultants 38 26 15 Clinical Officers 12 9 3 Anaesthetic Officers 5 4 1 Orthopaedics 8 7 1 Occupational & Physiotherapy
4 3 1
Radiography Staff 4 2 2 Laboratory Staff 11 9 2 Ophthalmic Staff 5 3 2 Dental Staff 6 9 1 Pharmacy 7 3 4 Psychiatric Clinical 7 5 2 Other Professional 3 2 1 Nursing 113 122 18 Theatre Assistants 5 2 3 Finance & Admin 25 12 17 Maintenance 3 2 1 Support Staff 66 32 36
There is inadequate staffing in key areas like Doctors/Consultants, Nursing
and Finance and Admin, which are crucial for running a referral hospital. In
Finance and Administration, the key operational areas greatly affected are
internal audit, store-keeping and procurement.
In my discussions with the Accounting Officer, he explained that submission
had been made to the Ministry of Public Service and Health Service
Commission for the positions to be filled. He further explained that even if
the posts were filled, the approved structure is no longer adequate to
address the current needs of the hospital.
54.3 Revenue Collection
During the year under review, Shs.27,257,750 was banked as non tax
revenue collected during the year. However, records presented for audit
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showed that only Shs.22,620,450 was collected resulting into an un-
reconciled difference of Shs.4,637,300.
In addition, banking of the collections was not regular contrary to revenue
collection procedures that require all revenue collected be banked at the
earliest possible moment. The irregular bankings may have been due to
utilisation at source of some of the collections on emergencies without
authority.
55.0 FORT PORTAL HOSPITAL
55.1 Undeclared Collections from the Eye Clinic The Hospital operates an eye clinic that was set up with the help of donors.
The operations of this clinic are governed by a Memorandum of
Understanding which required the clinic to be operated as a separate unit.
Revenue is generated from the sale of Intro-ocular lenses and eye
examination fee for purposes of issuance of driving permits, school
examinations, and sale of spectacles whose prices differ depending on
quality.
However, there are no proper controls in place to safeguard collections.
The following matters were noted in relation to this source of revenue:-
• The collections are not captured in the Hospitals non tax revenue
records.
• The collections were made using local cash sale receipts which were
neither headed nor serialized.
• The collections were reportedly being kept in a safe or banked on an
account in Post Bank not known to Hospital management.
• No proper books of accounts are kept for the funds generated.
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In view of the above irregularities, I have not been able to perform an audit
on this source of Revenue.
I have advised the Accounting Officer to liaise with the Accountant General
for guidance on the management of revenue from the eye clinic in
particular. Use of general receipts should be emphasised and collection
should be in accordance with Non –Tax-Revenue Guidelines.
55.2 Payroll 55.2.1 Changes without use of pay change reports
Scrutiny of various payroll bank advice report schedules revealed that
several changes were being made without use of pay change reports.
Names were manually added or removed from the payment schedules to
the banks whenever staff changed banked accounts.
It was also noted deductions in respect of loan recoveries were being made
in disregard of Circular Standing Instruction No. I of 2003 guideline 5 which
requires financial institutions giving loans to apply to Ministry of Public
Service for payroll deduction codes. It was observed that deductions were
locally made and cheques made to the loaning institutions instead of using
deduction schedules prepared by Uganda Computer Services.
Effecting any changes on the payroll without use of pay change reports is
irregular and undermines best practice.
55.3 Unauthorized Virements/Re-Allocations
Contrary to regulation No.39(3) of the Public Finance and Accountability
Regulations, 2003 which subjects all Virements within a vote to prior
authority from the secretary to treasury, a number of Virements/re-
allocations were made across various items within the vote without
authority from Treasury. Even the critical drugs item was not spared when
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actually the item should be protected from such diversions. The
Accounting Officer explained that management was forced to vire due to
pressure from the workers’ union who had threatened to lay down their
tools over the hospital’s non payment of kilometrage allowance. I have
advised him to regularise the expenditure.
55.4 Expired and Expiring Drugs Expired and expiring drugs have remained a common occurrence in the
hospital stores. Expired drugs not only pose a danger to the stores
personnel but are also costly to keep, and occupy space that would be
utilized for other purposes.
The Accounting Officer attributed the problem to the Ministry of Health
through National Medical Stores “push” system whereby drugs and sundries
are simply pushed to the user Hospitals through donations without due
regard to their consumption pertains and habits. It is these donations that
lead to expiry. The Ministry of Health should set up a policy regarding
donation of drugs and other sundries to avoid Referral Hospitals being
turned into dumping grounds for such expired items.
55.4.1Stores manpower
The whole regional referral hospital store is being manned by one staff, a
Senior Supplies Officer, who has to shuttle between the two hospital stores
for Drugs and Sundries which are in separate distant premises.
Insufficient stores man power increases risk of loss and breeds inefficiency.
The Accounting Officer explained that although the vacancies were declared
to the Ministry and interviews for stores cadre held in October, 2007 by the
Public Service Commission, they were still waiting for postings to the
Hospital.
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55.5 Non- Functional X-Ray A visit to the Radiology department established that the regional referral
hospital did not have a functional X-ray. It was reported that the hospital
had an old machine which had become obsolete and had since been written
off. The Ministry of Health reportedly brought in another old machine to fill
the gap as the hospital waits for a new machine but at the time of visit, the
new machine had not been delivered and even the old one meant to act as
a stop gap was not yet fully installed to function due to lack of a radiation
protection part.
Lack of such an essential equipment or use of an old equipment in a
Regional Referral Hospital puts patients who need X-ray examination at
greater risk.
The Hospital Accounting Officer attributed the lack of an X-ray to lack of
capital development budget and explained that although he has submitted
to the Ministry of Health requests for capital development funds, no
response had been received.
55.6 Staff Accommodation
It was noted that a number of staff were accommodated in Institutional
houses. However, the utilities to these houses like power and water were
not separated from the hospital meters. Therefore, included in the utility
bills for the hospital are bills for the staff housed by the Hospital. The
implication is that these staff benefits are irregularly revised upwards when
their utility bills are paid by the Hospital.
I advised management to have these houses de-linked from the Hospital
mains which supply water and electricity and install separate meters for
utilities to these institutional houses.
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56.0 KABALE HOSPITAL
56.1 Procurement Procedures/Practices: 56.1.1 Drugs and other Hospital Sundries not Taken on Charge:
I noted cases where requisitions were initiated by either the Pharmacist or
In-charges of wards and approved by the Procurement Officer. Such items
were neither received in store nor taken on charge by the Supplies Officer
(Store-keeper). Instead the Officer requisitioning acknowledges receipt of
items.
This practice weakens the stores control procedures as it makes it difficult
to track all the supplies made.
The Accounting Officer regretted the anomaly and explained that it was a
result of emergencies arising when the supplies officer was not at the
station. He directly attributed it to staff shortage in the stores department.
There is need to urgently recruit and deploy qualified stores staff to the
hospital to help streamline record keeping in the stores.
56 1.2 Direct Issues to users (Doubtful deliveries):
Audit of the drugs stores revealed that drugs were being ordered and
delivered directly to patients (users) without going through the stores
recording system. There is no mechanism for independent verification for
such deliveries and issues which renders them doubtful.
The Accounting Officer is advised to ensure that all deliveries to hospital
are recorded and issued through stores.
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56.2 Stores:
56.2.1 Expired and near expiry drugs: Expired and near expiring drugs have remained a common occurrence in
the hospital stores. Expired drugs not only pose a danger to the stores
personnel but are also costly to keep, and occupy space that would be
utilized for other purposes.
At the time of audit, the hospital had just received drugs (Aspirin and
Chloroquine tablets) that had not been ordered from various agencies yet
these drugs had short shelf life and were slow moving.
The Accounting Officer explained that expired drugs have been separated
from expired ones to avoid mix-up. He also noted that many times it is
beyond the Hospital’s control i.e. donations which come in large quantities
but with short shelve lives
I advised Management to strengthen the procurement planning system
such that only drugs with acceptable shelf life are purchased/received (in
case of donations), to avoid dumping expiring drugs in the hospital.
56.2.2 Stores Manpower:
The hospital store is being manned by only one Senior Supplies Officer –
assisted by a locally hired staff.
The Accounting officer explained that despite his constant requests to the
Health and Public Service Commissions for more staff, no recruitment has
been done.
56.3 Fuel Utilisation: There are no adequate records over fuel utilization. Whereas non-use of
fuel advantage cards is agreeable considering the location of Kabale
hospital, it was observed that controls such as maximum deposits to the
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fuel station, allocations to the various department vehicles and proper issue
of fuel orders were non existent.
For instance, a sample of payment vouchers for Shs.15,471,780 revealed
that Shs.5,746,100 worth of fuel was consumed without fuel orders. It was
further noted that fuel is consumed on credit and payments made later in
disregard of the commitment control system.
The resultant effect has been unsettled bills (payables) worth
Shs.5,826,400 at the end of the financial year under review.
The Accounting Officer explained that it was not due to weak controls but a
result of external occurrences i.e. exorbitant fuel prices, shortage of diesel,
power cuts and high maintenance of Hospital vehicles and the Generator.
I have advised management to institute strong controls over fuel utilisation
and adopt the advantage card system.
56.4 Hospital Land:
The land registered as Plot No.8-32 Johnstone Street, measuring
approximately 8.59 hectares was leased to Kabale Regional Hospital by
Kabale District Land Board in 2002 for 49 years. However, inspection of
this land revealed that there are four plots and other developments whose
true ownership and legal status are not known and yet they fall well within
the boundaries of hospital land.
Some of the Plots appear to be institutional houses purportedly sold out to
the then sitting tenants during the sale of government pool houses. The
issue as to whether they were actually pool houses or (Hospital)
institutional houses, has remained unresolved to date.
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It was further observed that Kabale Institute of Health Sciences which is a
private institution was illegally developed on the Hospital land.
The Accounting Officer, in his response explained that there is controversy
surrounding Government houses/land which were purportedly bought by
the then sitting tenants. He further explained that he had written to the
occupants to produce evidence of legal ownership but has only received a
response from one occupant who has vacated and returned the house to
the Hospital.
57.0 HOIMA HOSPITAL 57.1 Payment in respect of Outstanding Bills to National Medical Stores
The Hospital paid National Medical Stores Shs.6,843,013 in respect of
outstanding bills. However review of the statement that was used as basis
for payment revealed that Shs.12,546,545 was made on the statement as
“reconciliation correction of double entry” thus increasing the indebtedness
of the hospital to National Medical Stores by this amount. Later the
statement was again debited with the same amount as “reversal of wrong
entry in the bank”. The two debit entries had the effect of increasing the
amount owed by the Hospital by a total of Shs.25,093,090. However no
details were provided to explain the adjustments. I was not provided with
sufficient evidence to show that indeed the hospital owed National Medical
Stores.
Further investigations should be carried out to establish the reasons for the
adjustments and the indebtedness of the hospital to National Medical
Stores at the time.
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57.2 Staff Establishment
Hoima hospital was upgraded to serve as a Regional Referral Hospital for
the districts of Hoima, Masindi, Kibale, Kiboga and Bulisa. As a result, the
hospital’s staffing levels had to increase and the approved structure now
stands at 361 posts. However, only 161 (44.5%) posts are currently filled
leaving 200 (55.5%) posts vacant. Most affected are key technical areas
such as the following:-
Post Approved Filled Vacant
Senior consultants 4 2 2
Consultants 10 2 8
Medical: Special Grade 10 3 7
Medical officers 8 4 8
Nursing 106 99 7
Para-medicals 70 25 45
Administration 28 8 20
Understaffing in such key areas that are essential for effective service
delivery undermines the reasons for which the hospital was upgraded to
the level of a Regional Referral Hospital, bringing services nearer to the
people. Internal Audit and Personnel functions are not staffed at all.
The Accounting Officer explained that he had declared the vacant posts to
the Ministry of Health and Health Service Commission and plans were
underway to fill the vacant posts. However he indicated that it is difficult to
retain newly recruited staff due to lack of accommodation.
57.3 Vehicles
The hospital has only one operational vehicle that was procured way back
in 1994. The other three vehicles are over ten years old and can hardly
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operate as they frequently break down and are overdue for replacement. It
is becoming uneconomical to maintain them.
There is need to have the vehicles replaced to enable the hospital operate
effectively. A capital development budget should be considered for the
purpose.
57.4 Non-Tax Revenue
The hospital collects non tax revenue from sale of tender documents, rent
of canteen and medical fees from the private wing. During the financial
year, a total of shs.4,115,500 was collected by the hospital. However
occupancy of the private wing for the entire financial year was 35 patients
for all the ten side rooms and generated less than two million shillings. This
shows that the rooms may not probably be occupied most of the time
during the year. The Accounting Officer stated that the rooms are not well
furnished and have poor facilities and do not attract patients apart from a
few who want privacy. I advised him either to review the policy to have
the rooms available for other patients who are crammed in the few general
wards available or to endeavour to upgrade the private wing to improve on
the catchment area.
57.5 Stores
(a) Recording
Review of the stock cards revealed that they are not immediately updated
every after a transaction. For example as of 25th July 2006, when stores
were visited, all transactions for July 2006 had not been recorded on the
stock cards. This made it difficult to verify the balances of stock at hand.
The Accounting Officer explained that this has been a long standing
challenge to the hospital management despite rigorous supervision. He
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attributed this to shortage of stores staff whereby the hospital has only one
Stores Assistant manning all the hospital stores.
As reported in my last report to Parliament there is acute shortage of stores
cadres in Government departments. There is an urgent need to recruit and
deploy store keepers in all government departments’ stores for proper
management of stores.
57.6 Hospital Land
The hospital does not have a land title for the land it occupies. It was also
observed that not all the land it occupies is fenced hence exposing the land
to the risk of possible encroachment.
The Accounting Officer explained that the process of obtaining a land title
had progressed following the surveying of the land. He attributed the
failure to fence off the whole hospital to lack of a capital development
budget.
57.7 Disposal of Medical Waste
The hospital does not have an incinerator. Disposal of medical waste is by
placenta pit which is considered to be a crude method of waste disposal.
Disposal of other medical waste (used sundries) is by burning in open pits
which is also considered not to be environmentally safe.
The Accounting Officer attributed the problem to lack of funds. He
explained that the hospital needs Shs.15 million to put up an incinerator
based on the model approved by the Ministry and that so far Shs.1 million
has been raised from well wishers (TATA (U) Ltd).
The hospital should be considered for an adequate capital budget
appropriation to address the problem.
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58.0 SOROTI HOSPITAL 58.1 Staffing
The Hospital was found to be greatly understaffed. Inadequate staffing in
key positions impacts on the efficient service delivery.
I advised the Accounting Officer to liaise with the parent Ministry to ensure
that the staffing gaps within the approved structure are addressed.
The Accounting officer explained that he had made a submission of the
vacant positions to the Ministry of Health for onward submission to the
Health Service Commission and awaits its action. I urged him to make a
follow up of his submission.
58.2 Lack of Capital development funds.
The Hospital does not have a capital development budget to enable it
operate smoothly. Consequently important facilities required like lifesaver
equipment are lacking, the ambulance is too old and expensive to maintain.
There is need for the hospital to have capital development funds in order
to improve service delivery.
58.3 Hospital Infrastructure
The hospital infrastructure looks dilapidated. Some renovations were done
in 1999 and 2000 but covered only a few facilities. It was also noted that
the sewerage system, which was meant to serve a few people, cannot
serve the current capacity of the hospital any longer.
Measures should be put in place to have the hospital infrastructure
rehabilitated so that it depicts the status of a referral hospital.
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58.4 Staff Accommodation
The hospital does not have adequate accommodation for its staff. The few
housing facilities that exist are not in a habitable condition due to the sorry
state they are in. This has created an accommodation crisis for staff as it is
not possible for key medical staff to be near the hospital at all times.
Without decent accommodation it is also very difficult to attract key medical
personnel to work in upcountry referral hospitals.
There is need to have the problem of staff accommodation for referral
hospitals addressed in order to improve service delivery.
58.5 Expired drugs
Expired drugs have piled up in the stores because the hospital does not
have adequate funds and an incinerator to destroy them. It was further
noted that big quantities of drugs especially ARVs from NMS and donors are
normally pushed to the Hospitals when they are about to expire.
There is need for the Hospital to put in place a mechanism to scrutinise all
drugs received especially the expiry dates before accepting them in their
stores. All those that are not required or about to expire should be rejected.
59.0 MBARARA HOSPITAL 59.1 Staffing gaps
Mbarara regional referral hospital does not have an approved staff
structure. Scrutiny of the interim staff structure currently in use revealed
staffing gaps as follows;
S.no Category of staff Required Actual no Staffing gap
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no 1. Doctors and specialists 40 16 24 2. Dental staff 8 2 6 3. Theatre staff 9 3 6
Staff shortages have the effect of constraining the quality of health care
provided by the referral hospital. The existing staff are exposed to the risk
of stress due to overworking.
The Accounting Officer explained that the interim structure was presented
to the Ministry of Health and is now before cabinet for approval after which
staffing gaps shall be filled.
There is need for comprehensive strategies to be initiated to address
staffing gaps at the hospital in consultation with other stakeholders.
59.2 Lack of Capital Development Budget
During the year under review the hospital operated only on recurrent
budget. Without development budget, it can not acquire new equipment to
meet growing needs.
It cannot also carry out the required maintenance of the hospital
infrastructure. Lack of capital development budget has led to the
following:-
• Non-functional x-ray machine
Inspection of the hospital wards revealed that the main X-ray machine
had been non-functional since November 2006 due to faulty parts. A
Pro-forma invoice on file indicated that repair costs would be US $
30,500 which amount of money had however not been budgeted for. As
a result Patients who can afford are referred to private clinics while
those who can not are exposed to fate. Without equipment the quality
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of medical students produced is also compromised. The hospital being
both a teaching and referral hospital requires modern working
equipment to enable it operate effectively.
In response the accounting officer explained that one mobile X-ray
machine has now been repaired and the Ministry of Health promised to
procure a new mobile x-ray for the hospital.
• Overcrowding of the Wards
The hospital wards house 350 beds instead of the recommended
number of 250. As a result some patients are accommodated in the
corridors. Congestion in the hospital has the effect of constraining
mobility by both patients and medical personnel. The possibility of
cross-infection can not be ruled out either. The drug stores were found
to be inadequate and as a result a former kitchen was converted into a
drug store. Storage of drugs in non-designated premises may affect
their effectiveness.
In response the accounting officer stated that the hospital is scheduled
to obtain new structures under ADB loan (SHSSP II) and these will ease
congestion in the wards.
The hospital should continue liaising with Ministry of Finance, Planning
and Economic Development and that of Health together with other
stakeholders to obtain a capital budget for its needs.
• Disposal of Medical Waste
Medical waste disposal is by way of a pit which is a primitive method of
waste disposal. The incinerator constructed by the Ministry of Health is
not in use as it developed cracks shortly after its handover. Lack of
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appropriate methods of waste disposal exposes the staff and people in
the neighbourhood to the risk of environmental contamination.
59.3 Absence of Hospital board
Article 1 subsection 1.3 of the memorandum of understanding between the
hospital and ministry of Health provides for establishment of a management
board for the purpose of monitoring the general administration of the
hospital. However during the year under review, the hospital lacked an
approved management board. As a consequence stakeholders in the form
of a hospital management board did not play any role in monitoring general
administration of the hospital.
The Accounting Officer explained that names of proposed members had
been forwarded to the Minister of Health for approval and a response is
awaited.
Management should follow up the matter and ensure that approval of the
board is done to enhance monitoring of the general administration of the
hospital.
60.0 LONDON MISSION
60.1 Unauthorised Expenditure
The mission incurred unauthorised excess expenditure of Shs.137,471,904
without authority as shown below:-
Item Budget Actual Variance Employee Costs 1,293,111,000 1,315,777,177 22,666,177General expenses
20,000,000 80,610,792 60,610,792
Communication 10,000,000 54,407,095 44,407,095Travel & Transport
40,000,000 78,675,549 38,675,549
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Maintenance 9,000,000 176,165,541 167,165,541Capital Development
NIL 803,946,750 803,946,750
Total 1,372,111,000 2,509,582,904 1,137,471,904
The Accounting Officer in his written submission explained that the mission
received authority for capital development and maintenance to offset these
expenses from the collection account.
However, although authority to spend on capital development was seen,
there was no evidence of approved supplementary budget and allocation
warrants for the excess expenditure.
The Accounting Officer is advised to have the expenditure regularised in
accordance with the law.
60.2 Doubtful Payments
A total of Shs.591,690 (£ 348,053) was incurred on the acquisition of
various goods and services required for the smooth running of the mission.
The following observations were made:
Renovation of Official Residence
A total of Shs.803, 940,750 (£ 231,750) was paid to a local firm for the
renovation of the official residence. However, the payment was
supported by a quotation showing only details of work to be done
without the unit prices. Payments made also lacked certified interim
certificates of work done, and were paid directly from visa account
instead of transferring the funds to the operation account. In the
process the expenditure was not captured in the abstracts. There was
also no budgetary provision for the expenditure and a bigger portion of
the work was still progress by the time of the audit inspection
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General Repairs and Maintenance
The Mission spent Shs.99,560,300 (£28,700 ) in payments to a firm for
cleaning the Chancery and for other general repairs and maintenance.
However, there was no evidence that Procurement procedures like open
tendering, evaluation and contracts committee approval were followed
before contracting the firm. Similarly there was also no contract
attached to support the payment and giving details of the repairs and
maintenance work to be carried out.
I advised the Accounting Officer to provide the supporting documents
and to ensure that procurement regulations are complied with in future.
Rent
An amount of £87,603.28 was paid out to various landlords and/or
housing agencies for the various officers’ accommodation. I was not
provided with the tenancy agreements to confirm that the payments
made were genuine. It was further noted that the landlords did not
acknowledge the amounts paid to them.
I advised Management to provide tenancy agreements and
acknowledgements for the funds paid out.
60.3 NTR Collections
According to the accounts the mission realised a total of Shs.833,085,466
from NTR. The following observations were made:
A sum of Shs.190,973,289 alleged to have been transferred to the
consolidated fund was not supported with remittance advice slips and
acknowledgement receipts from treasury. Similarly the amount was not
recorded in the statement of Arrears of Revenues resulting in the
understatement or revenues collected.
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It was further noted that although the mission collects rent from the
hire of Chancery buildings however, there were no returns made for this
source. It is not clear how much was collected, banked and remitted to
the UCF from that source.
I advised the Accounting Officer to amend the accounts and also to provide
the relevant documents for further verification.
60.4 Internal Controls
Generally the internal controls were not adequate as shown below: (i) Most payments were not initiated by requisitions from users or
demand notes/invoices from suppliers. It was therefore difficult to
authenticate such payments.
(ii) Monthly releases from Treasury were not receipted.
(iii) There were no records or any other correspondences to confirm
whether the Mission handled all procurements and disposals at the
Mission through the existing procurement laws.
(iii) Final Accounts were submitted via e-mail and as such the Accounting
Officer did not sign them. I advised the Accounting officer to
submit a signed copy of the accounts.
(iv) Unauthorised Advance
An advance of Shs.3,469,000 (£ 1,000) was paid to an individual on
his way to Geneva. There was no explanation or details for the
advance and accountability provided for audit. Furthermore, the
officer is not an employee of the Mission.
The Accounting Officer explained that he was in consultation with his
counter part at Uganda’s mission in Geneva where the officer was
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posted to have the funds recovered from the officer and refunded to
the mission. I await the outcome of the consultations.
(vi) Personal Shares
Contrary to standing orders three (3) officers stayed in hotels on
transfer to the Mission on arrival but personal share of the hotel bills
(25%x£ 3555=888.75) amounting to Shs.3,083,074 was not
recovered.
It was further noted that the mission paid Shs.121,415 (£ 35) for the
accommodation of an officer who never turned up to the Hotel after
reservations had been made. This expenditure is considered
wasteful.
The Accounting Officer explained that the payments made were
strictly for accommodation and the officers paid for the meals.
Regarding the officer, the mission was requested by the Ministry of
Foreign Affairs to assist him while in transit but when the
mission booked for him accommodation he never turned up at
the hotel.
I advised the Accounting Officer to provide proof that the payment
made was strictly for accommodation and that the officers paid for
their meals. For hotel reservations made and the officer who never
turned up he should liaise with his counterpart at our Geneva
mission to have the funds recovered from the officer.
(vii) Climatic Clothing Allowance
Whereas Standing Orders provide that climatic clothing allowance be
paid to Foreign Service Officers and home staff posted to Missions.
It was noted that home based officers are in addition paid warm
clothing allowance which is for civil servants (other than Foreign
Service Officers) on training or duty outside the country.
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The Accounting Officer in his written reply explained that his
understanding was that warm clothing is paid to all civil servants
including Foreign Service officers as long as they are travelling to
temperate and cold climates.
I advised the Accounting Officer to liaise with the relevant Ministry
for an interpretation of the regulations otherwise the amount is
considered to be a double payment.
(viii) Wasteful Expenditure
An amount of Shs.1,734,497 (£ 500) being part payment of £ 1,000
was made on un-numbered invoice dated 8/10/05 from Ben
Television on Uganda image-boosting campaign. There was no
satisfactory reason given for image boosting and justification for the
expenditure.
The Accounting officer explained that the payment was to cover a
video presentation regarding the visit of H.E The president and was
meant to counter some negative publicity about the Government of
Uganda.
I advised the Accounting Officer that normally such expenditures
covering the visits of H.E the President are met by State House and
in the absence of satisfactory supporting documents the nature of
the expenditure appears doubtful.
I urged the Accounting officer to improve on the control environment
and also ensure strict adherence to Government regulations.
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60.5 Board of Survey Contrary to regulations, there was no board of survey carried out.
Therefore, a total of Shs.803,940,750 classified as non-residential buildings
appearing in the accounts (in the statement of stores and assets) were not
properly supported. I could not certify its composition and authenticity.
I advised Management to constitute an annual board of survey team to
verify cash and the inventory balances.
60.6 Pension Liabilities
Standing Orders do not allow local staff to be recruited on pensionable and
gratuitable terms. They can however be paid benefits according to the
laws of the host country. There was no evidence provided to show that
British laws require support staff to be employed on gratuity basis. There
is therefore no proper basis for the accruals of pension liabilities in the
accounts amounting to Shs.647,306,154 accrued.
The Accounting Officer explained that there was a provision for the
Employer/employee contribution pension scheme in the British system and
the mission’s payment of gratuity was “in lieu of contribution” to the
scheme and if the mission was to review the policy it would be a breach of
the contracts signed with the staff.
I advised the Accounting Officer to adduce evidence that the British laws
actually provide for such payments.
60.7 Statement of Financial Performance
Unexplained Discrepancies Between Approved Estimates And Estimates In The Statements Whereas the initial budget estimates indicate that Shs.1,591,104,000 was
budgeted for and revised to Shs.1,944,504,280 as per the approved
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estimates, it was noted that, actual transfers received from treasury were
recorded as Shs.2,062,804,000. The source of the difference of
Shs.118,299,720 was not explained. Further more Shs.3,166,097,000 is
indicated in the budget column of the statement instead of the revised
amount of Shs.1,944,504,280.
I advised the Accounting Officer to explain the discrepancies noted above
and also have the figures harmonised.
60.8 Mission Properties
(a) Chancery Apart from the 1st and 2nd Floors, which were renovated by the former
tenant, the rest of the Floors need renovation. All windows need repair,
the ceiling of 4th Floor leaks from the window of the 5th Floor, the toilet on
the 3rd Floor require repair. Glasses on the western side of the 1st and 2nd
Floor (which was not renovated by tenant) have broken window glasses.
The carpets on the 4th Floor are in a sorry torn state. The basement is in
pretty bad shape. Water drips down through the walls.
(b) Furniture
Most furniture including the ones in the High Commissioners office need to
be replaced.
(c) Photocopiers
The photocopiers for which the Mission paid highly are broken down.
In his written submission the Accounting Officer explained that due to
inadequate funding including lack of capital development funds the mission
is not in position to carry out the required repairs and maintenance of its
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properties. He however, noted that the mission had been authorised to use
NTR for the renovation of the official residence and work was in progress.
I advised him to continue lobbying the relevant Government agencies for
more funding and also to ensure that the mission’s requirements are
captured in the Ministry of foreign affairs policy statement to parliament.
60.9 Interest Bearing Liabilities (Borrowings)
Included in the statement are borrowings (interest bearing liabilities) of
Shs.6,873,095 whose details were not properly supported. Further more,
the authority for borrowing has not been provided for audit.
I advised the Accounting officer to provide details of the borrowing.
61.0 NEW YORK MISSION
61.1 Unauthorised Expednditure
The mission incurred unauthorised excess expenditure of
Shs.1,944,297,465 without authority as shown below:
Actual Expenditure
Budget Excess Expenditure
Employee Costs 1,808,779,829 1,288,107,000 520,672,829
Goods and Services 2,123,635,610 732,000,000 1,371,409,746
Consumption of Plant, Property and Equipment
11,378,194 0 11,378,194
Other Expenses
2,637,053 0 2,637,053
Domestic Arrears Paid
16,994,043 0 16,994,043
Advance Paid
21,205,600
Total 1,944,297,465
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Excess expenditure indicates breakdown of controls over budgetary
expenditure. During discussions management attributed the irregularity to
under funding of the Mission, which forces them to borrow from Non-Tax
Revenue to finance various critical like:-
• Expenditure on Mission properties i.e. Uganda House and the official
residence and other rented properties which are not always budgeted
for despite their priority and importance.
• Costs of relocation of Embassy staff which are also not budgeted for.
Pressure is put to the Mission by the Ministry of Foreign Affairs to
finance the cost of relocation of officers yet no budget is provided for
the purpose. In fact, the Mission still had unpaid bills for former officers
who were relocated to other Missions.
I recommend that all mission operations including expenditure on the
Mission properties should be budgeted for and approved by Parliament
as required by the law. The relocation of officers should be properly
planned and an adequate budget provided for the purpose. The policy
on who to finance this relocation should be made very clear to all
Missions. Government should also make a comprehensive review of the
Mission operations with a view of ensuring that the Mission is facilitated
adequately to pursue its objectives.
61.2 Payables
Payables in the accounts were recorded as Shs.1,267,084,856 . However,
the amount is not properly stated, as it does not include the arrears owed
to the New York City Department of Finance of Shs.2,606,378,250
(US$1,489,359) as
explained below:
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(a) Arrears to New York Department of Finance
By 30th June 2007 the Mission owed the New York City Authorities a
total of US$1,489,359.54 in ground rent for Uganda House Property.
This amount comprises of Council property tax of US$1,423,313.54
and interest of US$66,046.
Delayed payment has led to accumulation of interest. It was also
noted that the Mission does not regularly reconcile the assessments
made by the City Authorities with their records to confirm accuracy
of amounts outstanding. There is a risk of the Mission being
improperly assessed and incurring unnecessary expenditure.
I advised the Accounting officer that the financial statements should
be adjusted to reflect the correct position of arrears outstanding as
at 30th June 2007 and any adjustments should be notified to the
Accountant General. The Mission should also regularly reconcile its
arrears records with the City Authorities to mitigate the risk of
incorrect assessments and arrangements should be made to have
the arrears cleared to avoid accumulation of interest and possible
diplomatic embarrassment to the Mission and Government.
(b) Arrears Owed to Ministry of Foreign Affairs
It was further noted that Included in the arrears is Shs.69,952,533
owed by the Mission to the Ministry of Foreign Affairs. The amount
relates to refunds made by the United Nations in respect of travel of
the Uganda delegation to the United Nations General Assembly. It
consists of two refunds relating to financial years 2005/2006 and
2006/2007 made to the Mission which were not remitted to the
Ministry of Foreign Affairs. During discussions management
explained that the Ministry allowed them to utilise the amount to
finance the relocation of officers following their end of tour of duty.
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I urged management to provide the relevant documentation to
support the explanation.
61.3 Non-Tax Revenue (NTR) Collections
A total of Shs.1,959,058,280 (US$1,094,287.02) was realised as collections
of Non-Tax Revenue during the financial year. These collections were in
respect of rent (US$1,034,733.25), Visa fees (US$58,430) and other
Miscellaneous Revenue (US$1,123.77).
However, examination revealed that only US$36,455 was remitted to the
Consolidated Fund leaving a balance of US$1,021,376.82 not remitted
contrary to regulations which require monthly remittance of all NTR to the
Treasury.
Besides, there was no evidence that the US$36,455 was received by the
Treasury.
It was further noted that contrary to regulations the amount not remitted
was utilised at source without authority.
During discussions the Accounting Officer attributed the irregularity to
unrealistic budget appropriations for the Mission, which falls far short of the
Mission requirements.
I advised the Accounting Officer that NTR collections should always be
remitted to the Consolidated Fund promptly and seek authority before
utilising it at source.
61.4 Internal Controls
Weaknesses were noted in the Internal Control System.
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• Fuel Usage and Vehicle Movement.
The Mission owns three vehicles; one for the Head of Mission, one for the
Deputy and a Utility vehicle which are fuelled by way of advancing funds to
the drivers who later account to the Accountant.
However, there is no system in place to control and monitor the movement
of vehicles and hence the usage of fuel. Fuel consumption for each vehicle
cannot be linked to the vehicle movement. There is a risk of misuse of fuel
and vehicles, which can lead to unnecessary increase in vehicle operating
expenses.
I urged the Accounting officer to introduce vehicle movement logbooks and
all staff including drivers be sensitised on their use and importance.
• Counterfoil Register
There was no counterfoil register being maintained to monitor the receipt
and usage of all revenue stationery (visas, general receipt books and
cheques).
This creates a risk of stationery getting lost or misused without being
promptly detected. It is also difficult to monitor usage for purposes of re-
ordering new stocks.
I advised the Accounting officer to open up a counterfoil register to monitor
the utilisation of all accountable stationery.
61.5 Unrefunded Security Deposits
The Mission entered into a rental agreement with a landlord, Westchester
Country Board of Realtors, for the rental of a flat for a former Embassy
staff. The agreement was to run from 1st July 2006 to 30th June 2008 and
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accordingly a security deposit of US$6,600 was paid which was refundable
upon vacation of the flat.
Following the officer’s end of tour of service, he vacated the flat and
accordingly terminated the rental agreement on 31st August 2006. It was
however noted that although the Mission gave the landlord the two months’
notice of termination as required by the Agreement, the Landlord did not
refund the rental security deposit. Efforts by the Mission to have it paid
have been futile.
I advised the Accounting officer to invoke the relevant provisions of the
agreement to have the amount recovered.
61.6 Mission Properties
(a) The Official Residence
This is a five storey residential building located at 111 East 70th Street.
Following years of deterioration, management had it repaired to make it
habitable and attractive for rental purposes. In October 2006, after a
tenant had settled in at a rental of US$30,000 per month the building was
gutted by a fire that started from a neighbouring building. The tenant had
to vacate the house to allow the damage to be rectified.
The building suffered not only fire from the adjacent building but also water
damage during the fire rescue operation by the New York Fire Department.
At the time of inspection (October 2007) repairs were being carried out by
the Mission using Non-Tax Revenue to rectify the damage and enable the
tenant reoccupy it since he still showed interest in the property.
However, efforts by the Mission to pursue a claim with the insurance
company have not yielded any results.
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During discussions the Accounting Officer explained that initially the
company had declined the claim but indications are that the company had
reconsidered its position.
I advised management to continue following up the matter with the
insurance company or seek legal redress and also consider the possibility of
pursuing a claim for compensation against the owners of the house that
caused the fire.
(b) Uganda House
This is a storied building located in Central Manhattan. It accommodates
the Chancery and also three tenants i.e. UNDP, United Nations and
Embassy of the Republic of Burundi.
It is in a fairly good state due to regular maintenance although its heating
and cooling system needs replacement.
I noted the following on the review of the tenancy agreements: -
(i) Embassy of the Republic of Burundi
The Embassy of the Republic of Burundi occupies the 12th Floor having an
area of 2,592 square feet. The initial lease agreement ran from 1st January
1998 to 31st December 2002 and provided for monthly rental of US$7,500.
However, it was noted that ever since the expiry of the lease agreement in
2002, no new agreement has been entered with the Mission. The Mission
drew up a draft lease in 2005, which was also not concluded. Records
indicate that payment is not regular and at the date of audit inspection
(October, 2007), the tenant was in arrears by six months to the tune of
US$45,000. The rental does not reflect the current market rates for such
location.
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(ii) UNDP
UNDP occupies 2nd, 4th, 5th, 6th and 7th Floors. Their lease expired on 31st
May 2007. During this lease period (5 years), the organisation had paid
rent that was well below the prevailing market rate for the area yet the cost
of utilities was increasing.
On expiry of the lease, the Mission proposed a new lease agreement with
an increment of rent from US$29 to US$40 per square feet, which was
declined by the UNDP. UNDP subsequently indicated their intentions to
terminate that lease which was accepted by the Mission.
(d) Titles for Uganda House and Official Residence
The titles for the two properties could not be traced at the Mission.
Management’s view is that they are with the responsible Ministries in
Kampala.
I advised management to follow up the matter with the responsible
Ministries and have copies kept at the Mission.
(e) Civil Works
The Embassy periodically carried out civil maintenance works on the two
properties owned by the Mission. During the year, the maintenance work
included repairs on the fire escape, painting of the interior of Uganda
House, elevator roof, ceiling repairs, plumbing, cooling and heating system
and remedial work on the rented property. It was however noted that
there is lack of proper segregation of duties right from solicitation of firms
to do the work to certification of the work done by the contractors. The
Building Manager sometimes handles the whole process. For instance, he
solicits for firms to do the work, requests them for their quotations,
participates in the evaluation and approval of the firms to do the works in
addition to supervision and certification of the works done by the
contractor.
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These duties should be properly segregated so that there are adequate
checks and balances in the system.
During discussions the Accounting Officer attributed this to poor staffing.
I advised the Accounting officer that duties related to civil works and
maintenance should be properly segregated to enhance proper supervision,
and that all civil works should be properly supervised, approved and
certified by a responsible committee.
(f) Utility Van
The utility van for the Mission (Ford Wind star) has become old for use by
a diplomatic mission. There is need to have it replaced with a new
vehicle.
I urged the Accounting officer to consider the replacement of the utility
van in the mission’s budget.
61.7 Fines and Penalties
The Mission incurred nugatory expenditure of Shs.2,143,750( US$1,225) on
fines and penalties resulting from traffic and parking violations by Mission
drivers. The cause of this is either careless driving, indiscipline on the part
of the drivers, or use of poorly skilled or trained drivers.
I advised management to put in place a code of conduct to address the
indiscipline and carelessness at the work place and also to regularly train
staff to equip them with skills necessary to perform their functions
effectively.
61.8 Local Staff
The Mission employs a number of locally recruited staff. However, I was
not provided with terms and conditions of service for local staff although it
was indicated that they were available. Besides, the personnel files for
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many of the local staff lacked evidence to show that their recruitment was
approved by the Ministry of Foreign Affairs as required by the Standing
Orders. Their schedule of duties was also not made available during the
audit.
I advised management to draw up the terms and conditions of service for
local staff to regulate their recruitment, remuneration and administration.
62.0 WASHINGTON MISSION
62.1 Poor Book-keeping
It was noted that the Mission did not maintain expenditure ledgers to
ascertain how the details of the balances shown the Accounts were
analysed and accumulated into the total yearly expenditure. In addition,
no proper cash book for Non Tax Revenue was kept. For instance, receipts
issued for NTR collections WERE not recorded in the Cash book making
reconciliations with the bank difficult.
62.2 Excess expenditure
The mission spent a total of Shs.342,912,987= on goods/services
consumed and property, plant and equipment in excess of the approved
budget rendering the expenditure unauthorised.
62.3 Payables
The payables balance of Shs.42,075,618= was not supported by the
outstanding commitment list and other documentation. This limited the
scope of my work.
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62.4 Transfers received from other government units
Shs.39,176,716= was reported as received from other government units.
However, the mission did not provide the details which could enable me
verify its source and the purpose for which the funds were received.
62.5 Unspent Salaries
Examination of accounts revealed that one Embassy staff was transferred in
April 2006 without a replacement but the Ministry continued to release to
the Mission the salaries and allowances attached to that post. By the time
of audit inspection, the remuneration had accumulated to US$56,086 which
was being deposited on the Embassy’s development account.
Management, explained that the money was retained in anticipation of
receiving a replacement. I informed the Accounting Officer that the money
constitutes unspent salaries by which law should be remitted back to the
consolidated fund.
62.6 Non Tax Revenue
(i) Sale of temporary travel documents
A total of Fr 910,000 was collected from the sale of temporary travel
documents. However, only Fr 747,900 was remitted to Bank of
Uganda, leaving a balance of Fr 162,100 (Approx. US $292) un-
remitted (not banked).
The Accounting Officer was advised to bank and transfer the balance
to the consolidated funds.
(ii) Fees from sale of visa stickers
During the financial year, the Embassy collected a total of US Dollars
8,740 from sale of visa stickers which were banked and subsequently
remitted to Bank of Uganda. However, there was no evidence of
receipt from the Accountant General to confirm that the funds
reached the Consolidated Fund.
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(iii) Sale of utility car
The Embassy boarded off an old vehicle (Land-Rover 110
(CD15002R) formerly used as utility car at an amount of Fr
1,500,000 (US $2,727.2). Regulations require that such funds be
receipted as NTR and remitted to the UCF. On the contrary, the
funds were banked on the Embassy’s Development Fund Account.
I advised the Accounting Officer to have these funds transferred to
the Consolidated Fund Account.
62.7 Payment of Taxes – VAT
The Embassy is exempted from paying local taxes including VAT. However,
the arrangement is that the tax is paid first and a claim submitted to the
tax authority for refunds by the Embassy. Although records show that
several services were paid for from which VAT exemptions were applicable,
management did not submit claims for VAT refunds to the Tax body.
The Accounting Officer admitted the anomaly and promised to follow up
the matter with the tax body.
62.8 Contract for maintenance of Embassy website
The Embassy contracted an individual to install and maintain the website
for the Embassy. A monthly fee of US $700 (Fr 385,000) is paid to him for
its maintenance. However, this arrangement is not supported by a contract
agreement spelling out the terms and conditions of maintenance. This puts
the Embassy at a great risk in case the vendor is not able to maintain the
website to the satisfaction of the Embassy.
Similarly, no documentation is made by the vendor to prove work done
which could assist management to keep truck of any changes.
I advised the Accounting Officer to draw a contract with the vendor and
streamline his activities with the Embassy.
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62.9 Tenancy Agreements
A review of documents revealed that the tenancy agreement provide for a
three months notice before either party could terminate the contract. The
provision appears unfavourable for the Embassy and indeed it suffered a
payment of Fr 1,650,000 for two extra months for a house formerly
occupied by a Counsellor when his term was ended abruptly. The
Accounting Officer in a preliminary discussion stated that he had taken
steps to revise tenancy agreements to counter the provision for a reduction
to one months notice.
I advised him to expedite the process and negotiate for terms that provide
for unique circumstances where such expenditure could be avoided.
62.10 Other Assets/Inventories:
The inventory at the Chancery; residence of the Ambassador and
inventories in possession by other member of staff are not
engraved/marked to distinguish them from privately owned property.
Besides, the inventory registers maintained by the Embassy are not
updated regularly to reflect the true position of property owned at any one
time by the Embassy.
The Accounting Officer was advised to have the inventory registers updated
regularly. And also cause the assets to be engraved.
The stores ledger was also not properly kept. Although the ledger exists,
purchases were not properly recorded to reflect quantities received, how
they were issued out and the balances. Items purportedly received were
haphazardly recorded, making verification of stores rather difficult.
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62.11 Conversion of Fr to Dollars
The Embassy management preferred to use the open market dealers for
the conversion of currencies which purportedly offered better rates. It was
however noted that the rates used in the conversion process were not
disclosed to enable me ascertain the accuracy of funds in dollars on
conversion and whether these funds were dealt with in accordance with the
existing regulations.
62.12 Non maintenance of creditor’s ledgers
The Embassy had running contracts with a number of service providers
especially Landlords for Chancery and residential houses and security firms.
Payment records indicated that the Embassy owed the Diocese of Kabagayi
a total of US $68,000 in unpaid rent since 1999. However, no ledgers
were maintained for the security service providers. Besides although the
Embassy had substantially reduced this debt, the basis of payment was a
statement from the service provide rather than documents maintained by
the Embassy.
I advised the Accounting Officer to open up ledgers for all service
providers, and ensure that they are properly maintained.
62.13 Procurement Procedures
(a) Lack of Proper Documentation:-
PPDA procedures require that all procurements should be by issue of
LPOs. Contrary to this all procurements of goods and services were
not backed up by any LPOs. Similarly, deliveries were not witnessed
and supported by delivery notes and goods received notes.
(b) Lack of Contracts Committee:-
The Embassy does not have a contracts committee or PDU as
required by the PPDA Act and regulations. Consequently all
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procurements of goods and services were not supported by contracts
committee authority.
However, during discussion with the Accounting Officer, he explained
that it was impossible for the Embassy to have the committee in
place because of the staffing requirements for Contract Committee,
which the mission cannot meet.
I advised him to liaise with PPDA, the Ministry of Foreign Affairs and
Ministry of Finance, Planning and Economic Development to find a
workable solution given the unique situation at the Embassy.
63.0 NEW DELHI MISSION 63.1 Unauthorised Expenditure
According to Statement of Appropriation Account (Based on nature of
expenditure for services voted) the mission incurred expenditure of
Shs.33,830,369 above the approved budget on domestic arrears. This
excess expenditure lacked relevant authority.
I advised the Accounting officer to have the expenditure regularised by way
of a reallocation/virement.
63.2 Non Tax Revenue Collections
A review of the accounts revealed that the mission collected a total of
Shs.82, 391,175 as Non Tax Revenue of which the mission was granted
authority by the Secretary to Treasury to spend at source Shs.15,966,612
(Rs 423,982) on expenses relating to the shifting of the Chancery.
However, the balance of Shs.66,424,563 ( Rs 450,000 ) equivalent to US $
9,683, lacked evidence of its remittance to the Consolidated Fund.
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63.3 Rental Payments for Chancery Premises
It was noted that the Mission shifted its Chancery to new premises on D-
5/4 Vasant Vihar, New Dehl at a rental charge of Rs 4,200,000 ( Rs 350,
000 per month) equivalent to US$ 91,296. The details are as below:-
i) Rent for premises 600,000 (paid to Ravinder Singh)
ii) Rent for Fixtures & Fittings 840,000 (paid to Harmeet Kaur)
iii) Rent for Premises 600,000 (paid to Harmeet Kaur)
iv) Rent for Fixtures 780,000 (paid to Harmeet Kaur)
v) Rent for Premises 1,380,000 (paid to Mr. Kuldip Singh)
However, the following are my observations:- (a) Payment to three different individuals
The payment for rent of the Premises was made to three (3) different
individuals for the same property contrary to the normal practice of making
payment to an individual owning the property or to management of
trustees to the estate.
The Accounting officer explained that the payments to three different
individuals for the same property were caused by the cultural norms in
India whereby the rented property was inherited by two brothers and one
sister who failed to agree on one person receiving the money and that in
the lease agreement it was agreed that payments would be made
individually to the three persons. However, I did not obtain the tenancy
agreement for verification.
(b) High Rental Charges
The original premises at B-3/26 Vasant Vihar were being rented from
Mr.Rustagi at Rs150,000 ( Rent for premises of Rs100,000 and Fixtures at
Rs 50,000) per month. However, rent for the new Premises the Mission
shifted to was at Rs.350,000 which cost is twice as much as the original
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price. I did not review the valuation report for the new premises to remove
doubt of rent being unjustifiably hiked given the fact that the two Premises
were located in the same locality.
The Accounting officer explained that the former landlord refused to renew
the tenancy agreement and thereafter rented the premises to the High
commission of Trinidad & Tobago at a rate of Rs 650,000. She further
noted that the cost of living in New Delhi had increased drastically with
property rentals tripling.
(c) Hire of fixtures and fittings The fixtures and fittings were hired at Rs 1,620,000. There was however no
list attached to verify the quantity, quality and price values attached to
these items. I was therefore, unable to reliably assess and evaluate the
correctness of this charge.
. 63.4 Unspent Balances
Examination of Accounts revealed there were balances on various mission
accounts from the previous year totalling Shs.70,396,920. However, I was
not provided with evidence that the balances were transferred back to the
Consolidated Fund as required by the law.
I advised the Accounting officer to transfer the unspent funds promptly to
the consolidated fund and to amend the accounts accordingly.
63.5 Contingent Liabilities
Supporting documents for the contingent liabilities of Shs.4,9440,390
shown in the statement of contingent liabilities were not provided for audit.
I could not confirm its justification to stand in the mission accounts.
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64.0 CAIRO MISSION
64.1 Cash and cash equivalents
There were no certificates of bank balances and reconciliation statements
presented to support the cash and cash equivalents of Shs.92,490,512
shown in the accounts. I advised the Accounting officer to provide the
documents for verification.
64.2 Unauthorised expenditure
The mission incurred unauthorised expenditure of Shs.49,622,040 (Le
165.406.80) on consumption of property, plant and equipment without
authority. I advised the Accounting officer to provide a re-allocation
warrant for audit.
64.3 Circumvention of Public Procurement Regulations The mission incurred a total of Shs.109,681,221 (US$ 63,965.63 or Le
365,604.07) on the renovation of the Ambassador’s official residence at 48
EL Orouba Street. It was however, noted that the procurement was neither
subjected to competitive bidding through advertisement, nor was it
approved by the mission’s Contracts/ Finance Committee.
Besides, I was unable to appraise the quantity and quality of the works
done because; neither Bills of Quantities (BOQ) nor Certificate of Works
done was availed for inspection.
I advised the Accounting officer to always adhere to Government
procurement regulations and also provide both the BOQ and certificate of
works done for verification.
64.4 Internal Controls
Generally the internal controls were poor as shown below:
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Expenditure vouchers were not stamped “Paid”, initiated, nor signed by
recipients to acknowledge receipt of payments. Similarly supporting hence
limiting my scope of audit.
Contrary to Treasury Accounting instructions there was no petty cash book
maintained.
It was further noted that while the head of mission is mandated to provide
political supervision, he has also assumed the Accounting Officer’s role by
being a signatory to all mission bank accounts. This decision by the
Ambassador contravened the Treasury Accounting Instructions, which give
the Accounting Officer the overall responsibility of financial management at
the Mission.
I advised management to improve on the control environment and also
ensure that the head of mission only provides supervision rather than
directly getting involved in financial management.
64.5 Statement of Appropriation Account(Based on services voted by Parliament)
The statement does not show actual expenditure incurred on each item.
This makes comparison of approved estimates against actual expenditure,
by item, impossible.
I advised the Accounting officer to amend the accounts and include the
figures to facilitate trend analysis
64.6 Unauthorised use of NTR
Examination of accounts revealed that the mission collected NTR totalling
Shs.27,819,449. The following observations were made:
NTR returns for the period March-June 2007 were not provided for audit.
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There were no acknowledgement receipts from treasury to confirm that the
funds were actually remitted to the consolidated fund.
During inspection it was noted that Shs.5,888,016 (Le 18,993.6) was
transferred from NTR collection account to a Local Expenditure account and
subsequently spent without authority. Furthermore, although the
statement of arrears of revenue reflects an amount of Shs.20,400 as due to
the UCF, actual amounts due should have been Shs.7,989,714.
I advised the Accounting officer to provide all NTR returns for the whole
period, acknowledgement receipts for the funds remitted to the Treasury,
recovering all funds utilised at source without authority, and also address
the variances noted above.
64.7 Staff Without Valid Contracts
Two Home Based Officers employed at the Embassy lacked valid
employment contracts. One had his contract expired on 2nd August 2007
and the other on 30th September, 2007. Accordingly Shs.71,819,254 (US
$.41,755.38) paid to them in form of Salary, Foreign service allowances and
representative allowances up to the time of audit was irregular.
Officer When contract expired Amounts Involved
Mr Migadde Lubulwa
2/8/2007 US$ 14,249.08
Mr Arthur Katsigazi 30/9/2006 US $ 27,506.30
Total US $ 41,755.38
I advised the Accounting Officer to ensure that the officers Contracts are
regularized
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64.8 Repair Of The Mission Vehicle
The Mercedes Benz E 280 LL belonging to the embassy was involved in an
accident with a lorry belonging to Cairo Transport Company (CTC).
According to records seen, the accident was caused by the fault of the CTC
driver who should in this case have been held responsible for the repairs.
Subsequently the embassy paid Shs.5,456,100 ( Le 18,187.00) towards the
repair of the vehicle which should have been met by CTC if management
had followed up the case with the relevant authorities.
In a related development all the embassy Vehicles were not insured. This
perhaps explains the reason why management did not pursue the matter
further.
I advised the Accounting officer to ensure that all the embassy vehicles are
insured to avoid such losses to Government and also to recover the funds
incurred on the repairs from the Transport Company.
64.9 Irregular Payment Of Children Allowances
A sum of Shs.30,450,192( US $ 17,703.6 ) was paid to two officers towards
their entitlements upon arrival at the new station. Included is
Shs.5,325,120 ( Us $ 3,096) in respect of Children Allowance for 6 children
whose age is in excess of 15 years limit permissible by the Standing Orders
This expenditure was irregular and is considered recoverable.
I advised the Accounting officer to have the US $ 3,096 recovered from the
concerned officers.
64.10 Overpayment Of Baggage Allowances
Contrary to Standing Orders which entitle an officer to 50 Kg worth of
baggage charges per family (by Air) on return from a Mission to Uganda, an
officer was paid Shs.1,485,000 (Le 4,950) in respect of Airlifting 174 Kg of
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his baggage which exceeded the 50 kgs baggage weight by 124 kgs. In
the circumstances, funds paid for the excess baggage to the officer is
irregular and recoverable.
I advised the Accounting officer to recover all the funds paid in excess.
64.11 Mobile phone bills
Contrary to standing orders which entitle Foreign Service officers who have
official telephones at their residences to two thirds of the cost of un-timed
calls, a total of Shs.6,259,821( Le 20,192.97) was paid out in refunds for
expenses incurred on officers personal mobile phones without deducting
one third of the their contribution amounting to Shs.2,086,610( Le 6,731).
Besides, the regulations only provide for “official telephones” not mobiles
phones.
I advised management that the officers’ contribution should be recovered
and that Mobile phones are prone to misuse and hence a limit should be set
as to the monthly entitlement.
65.0 ADDIS ABABA MISSION
65.1 Penalty on delayed payments
This issue was mentioned in my three previous reports for financial years
2003/2004, 2004/2005 and 2005/2006 under paragraphs 53.7, 57.11 and
57.3 respectively. During the year under review a total of Ethiopian Birr
1,089,963 (approx. US $125,796) was paid to R.H.A Housing Adm.
Department in respect of rent arrears for the Chancery building for the
period February 2004 to September 2006. Included in the payments was
Ethiopian Birr 181,652 (US $20,965) in respect of penalty charges incurred
due to late payment. This expenditure is considered wasteful, as the
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Mission would have avoided it had it paid on time as per the tenancy
agreement.
As stated in my previous reports, I recommend that the Accounting Officer
liaises with the relevant authorities to ensure that sufficient funds are made
available to enable prompt rent payments and elimination of this wastage.
65.2 Circumvention of Public Procurement Regulations
The Mission received capital development funds some of which were
applied on procurement of goods and services equivalent to
Shs.47,908,943. However, contrary to procurement regulations there were
no contract committee in place and procurement plans. Consequently the
Mission opted for “off-the-street” purchases and securing street vendors’
receipts to support the payments.
In a related development an old Mercedes Benz and a utility car (Nissan)
were disposed of at Birr 31150 and 30,000 respectively. However, there
was no evidence that the disposal regulations were complied with.
The Accounting Officer explained that procurement and disposal regulations
are difficult to implement in the Mission and that the matter is being
handled by the Ministry of Foreign Affairs and the PPDA.
I informed the Accounting Officer that the practice is illegal and should be
discouraged until the PPDA comes up with the amended regulations and
guidelines.
65.3 NTR collections.
Examination of NTR returns revealed that the mission collected revenue
totalling Shs.87,105,005. The following observations were made:
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(a) Cash Survey A cash survey held on NTR on 22nd October 2007 at 3.15 pm revealed a
shortage of Birr17, 755.37 and US$14.
I advised the Accounting officer to make good the shortage. I further
recommend that an officer be appointed as a cashier with a prescribed cash
limit approved by the Accountant General.
(b) Contrary to regulations that require NTR to be collected and remitted
intact to Bank of Uganda, the mission utilises the NTR at source, which is
later repaid to Bank of Uganda using the remittances (RBCs).
The Accounting officer explained that due to local banking regulations, the
Mission couldn’t open a separate bank account for NTR from which
remittances to Bank of Uganda can be made. Therefore, collections are
kept in a safe with the Accounting Officer and utilised by her. Since the
Accounting Officer keeps and approves use of the NTR there is risk of
temptation and probably this scenario could have caused the shortage
mentioned above. As advised above, a cashier be designated and
appointed in consultation with the Accountant General who will recommend
the cash limits and proper procedures of managing the cash. Meanwhile,
the Ministry of Finance, Planning and Economic Development be requested
to approve utilisation of NTR in the Mission budget which should be
deducted from the Mission RBCs.
(c) Unused Single Entry Visa Stickers of US$30
Thirteen books of the above visa stickers had not been used when the
US$50 stickers replaced them. They were: -
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Serial Number Number of Books
319701-319950 5 books
320551-320650 2 books
320901-320950 1 book
354351-354600 5 books
Meanwhile, the stock of the new US$50 stickers were used up with
only eight leaves remaining. The Mission was contemplating to use
the old ones of US$30 that had been discontinued by the Ministry of
Internal Affairs.
I advised the Accounting Officer to requisition for the appropriate
stickers and also consult the Ministry of Internal Affairs on how the
old ones were to be disposed of otherwise they risk being misused.
65.4 Internal Controls
Generally the internal controls were poor as shown below:
• Duplicate Copies of Returns
The existing accountability arrangement requires that the original copies
of the monthly accounts returns are submitted for audit while duplicate
copies are retained by the Mission. It was observed that in some
instances original supporting documents to the expenditure vouchers
especially in respect of utilities were retained by the Mission.
I advised the Accounting Officer to seek guidance on the correct system
of account returns to avoid future confusion.
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• Over Expenditure on Allowances and Telecommunication
A review of the vote book for 2007/2008 revealed over expenditure as
at 24th September 2007 on Item 211103 (Allowances) of US$533.21
and Item 222001 (Telecommunication) of US$502.83.
I advised the Accounting officer to put in place a mechanism to control
allowances and telecommunication by requiring officers to justify trips
made and render back to office reports. In case of telecommunication
registers to record authorised faxes and telephones.
• Payees’ Signature
It was further observed that most expenditure vouchers do not bear
signatures of receivers of cash/cheques acknowledging receipt of their
payment casting doubt as to whether the money was actually received
by the rightful beneficiaries.
I advised the Accounting Officer to ensure that payees sign on the
vouchers as they receive their cash/cheques in compliance with
Government regulations.
I urged the Accounting officer to improve on the control environment
and also ensure strict adherence to Government regulations.
65.5 Board of survey
The Board of Survey report on cash for the financial year 2006/2007
revealed the following: -
(a) Local Account No. 01705/171270/00
Cash on hand Birr 75,223.70
Bank balance 13,531.75
88,755.45
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Having cash on hand of Birr75,223.70 equivalent to Shs.14,717,680
at any one time is excessive cash which is risky and tempting.
I recommend that the Accountant General be contacted to prescribe
a cash limit for the cashier. In any case these unspent balances
should have reverted to the Uganda Consolidated Fund in
accordance with the Public Finance and Accountability Act 2003.
(b) US Dollar Account No. 2702/170083/00
The unutilized bank balance on this account amounted to
US$122,556.07. This amount has not been repaid to the
Consolidated Fund as required by the law.
The Accounting officer explained that these amounts were balances
released by the Ministry of Finance to clear domestic arrears of the
Mission and that the she was contemplating seeking authority from
the Ministry of Finance to reallocate the money for other needs of
the Mission.
I advised the Accounting Officer that it was wrong for the Ministry of
Finance to release funds over and above the domestic arrears
requirements as this implies that the domestic arrears budget was
not properly co-ordinated and the funds should revert to the
Consolidated Fund as their authority lapsed.
65.6 Unaccounted for funds
Examination of accounts revealed that a total of Shs.15,307,011 was
advanced to some mission staff for various reasons. The following
observations were made:
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• Personal Advance
A sum of Birr31,800 was paid to an officer as a personal advance.
However, at the time of inspection (22nd October 2007), there was a
balance of Birr5,545.90 (Shs.1,085,067) outstanding.
The officer promised to settle by October 2007. I urged the Accounting
officer to remind the officer and have the balance settled.
• A sum of Shs.14,221,944 was incurred on travel abroad. However, I
was not provided with the field reports made by the officers to confirm
that they actually made the trips.
I advised Accounting officer to obtain the reports from the officers
provide them for audit verification.
65.7 Personnel matters
A review of personal files revealed: -
• Head of Mission
According to appointment letter reference CP 64222 of 10th May 2006
the Head of Mission was appointed for duration of 36 months with effect
from 2nd August 2004 implying that her contract appointment expired in
July 2007. However, she had not obtained a new contract for the
period effective July 2007.
I advised the Accounting Officer to remind the Head of Mission to obtain
a valid contract appointment otherwise her monthly remuneration of
US$3,562.27 effective August 2007 was irregular.
• Locally Recruited Staff
Personal files of locally recruited staff were not up to date as some
lacked application letters for appointment, evidence of qualification,
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employee record card and photograph of identification and confirmation
letters.
I advised the Accounting Officer to ensure that files are updated.
• Implementation of the New Open Staff Performance Appraisal Forms
There was no evidence that the new open staff performance appraisal
system as required by Ministry of Public Service was in place. I urged
management to implement system.
65.8 Status of the mission properties
• Chancery
Condition
The chancery is being rented from a government agency known as the
Agency for Administration of Rented Properties at a monthly rate of
Birr6,781.04 since 1986. According to the available tenancy agreement
dated 8th December 1986, the lesser is required to maintain the
building. It appears however that it has not been maintained for a long
time to the extent that it has no flowing water in the taps and toilets,
the plumbing systems is old and blocked requiring fixing and its external
as well as internal appearance does not appeal.
The Accounting Officer explained that the Agency has been contacted to
remedy the situation but positive response has not been achieved. I
urged her to follow up the matter otherwise the image of the Mission is
at stake. Besides the tenancy agreement needed renewal.
• Old and Obsolete Furniture and Equipment
Two stores full of old and obsolete furniture and equipment were seen.
Furthermore according to the Board of Survey for the financial year
2006/2007, a Mercedes Benz model 1990 was recommended for a
board off.
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I have urged the Mission to obtain appropriate authorities from the
Permanent Secretary/Secretary to the Treasury to have the items
disposed and boarded off otherwise they risk further deterioration in
scrap value and they are occupying store space that can be put to other
use.
• Property Acquisition
The Mission spends Shs.199,633,000 (US$114,076 ) annually in respect
of rent of official residence, chancery and other residences. The Federal
Government of Ethiopia offered Missions plots for development.
Uganda was offered plot for development long ago but up to now no
development has taken place despite the Mission’s effort to raise the
matter with Ministry of Finance as well as Ministry of Foreign Affairs.
I urged the Mission to continue raising the matter with the two
Ministries and in other relevant forums for their appropriate intervention
so as to save the Mission rent obligations.
65.9 Mission Charter
The Embassy of Uganda in Addis Ababa is accredited to the Federal
Democratic Republic of Ethiopia, Djibouti and Yemen. It is also accredited
to the African Union, Un-Economic Commission for Africa and IGAD. The
Mission is charged with implementing its charter as follows: -
Ethiopia
Ensure that Uganda’s interests are fully reflected in the AU Peace Making
and Peace Building initiatives.
Ensure that Uganda’s interests are fully reflected in the ongoing AU
rationalisation of regional economic committees.
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Engage in and report on the formulation of AU position on major
international issues of direct interest to Uganda or which could affect
Uganda’s interests abroad.
Placement of Ugandans in influential senior and policy making positions in
the AU organs/subsidiary bodies of interest to Uganda.
Engage in AU initiatives aimed at addressing refugees problems in Africa
especially Rwandese, Sudanese and Congolese refugees and
Seek co-ordinated position with Ethiopia on matters relating to the Nile
River basin.
Djibouti Ensure that Uganda’s interests are fully reflected in the IGAD led Peace
Making and Peace Building Initiatives and engage in and report on the
formulation of IGAD position on major regional issues of direct interest to
Uganda or which could affect Uganda’s interests within the region.
I noted that the amount of work involved in accomplishing this charter is
enormous and needs to be carefully thought out and planned and yet I did
not see a strategic plan in place.
I advised management that the Mission based on its charter should prepare
a logical strategic plan, which spells out very well interalia, measurable and
realistic outputs. This strategic plan should be costed. The resulting
budget should then be used to solicit for budgetary funding. The
implementation of the strategic plan should then have a mechanism of
regular monitoring, evaluation and reporting.
65.10 Contributions in Arrears
It was reported by the Mission that the Uganda Government has
contributions in arrears totalling to US$4,314,376.67 in respect of IGAD
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1999-2006 (US$3,792,083) and African Union 6th September 2007
US$521,793.67.
I urged the Mission to continue informing the Ministries of Finance and
Foreign Affairs for their intervention to avoid any sanctions that non-
payment of contributions may attract.
66.0 BEIJING MISSION
66.1 Excess Expenditure
During the year under review, the Mission was granted authority by the
Permanent Secretary/Secretary to the Treasury to spend US$108,629 out of
the NTR collected at source so as to meet various out standing
commitments. However, the mission exceeded its approved budget by
Shs.148m which required supplementary approval which the mission did
not obtain.
I advised the Accounting Officer to seek for a supplementary approval for
the amount over spent
66.2 Domestic Arrears
No creditors’ ledger was maintained to keep track of several part payments
made due to insufficient funds available for this expenditure item. This
therefore made it very difficult to verify reliably the domestic arrears
balances of Shs.136,281,089 as indicated in the Statement of financial
position as at 30th June 2007.
Management is advised to maintain creditors’ ledgers to keep track of all
rent transactions.
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66.3 Book Keeping
It was observed that the Mission still uses the old payment vouchers and all
payments have continued to be authorized by the Ambassador rather than
the Accounting Officer contrary to the existing regulations. Besides, the
payment vouchers were not serially numbered neither were they stamped
“PAID” after payment was made as required by Treasury Accounting
Instructions, 2003.
Furthermore, payments from Imprest had no payment vouchers instead,
the Imprest holder recorded payments in a book. In addition, the Imprest
was operated without seeking the authority of the Accountant General. It
was also noted that rent payments constitute a significant percentage of
Mission expenditure.
Management should obtain authority to operate an Imprest from Treasury
and ensure that duly authorised payment vouchers are used to pay by the
Imprest holders. Paid Imprest vouchers should also be stamped “PAID” to
avoid the risk of recycling them.
In his response the Accounting officer explained that he had requested for
the proper vouchers from the treasury and also written to the Accountant
General for authority to operate an imprest.
66.4 Inventory
(a) Engravement of Mission Property and Equipment
In the chancery are very old curtains and other furniture bought in the
1970’s when the Mission was first opened. These were recommended for
boarding off by the Board of Survey carried out in 2000 but they have
never been disposed of. The furniture also requires urgent replacement.
Few items have been replaced in the official residence such as furniture for
the main sitting room, the conference room. However, there is need to
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replace curtains as well as the floor carpet for the main sitting room, and
furniture for the dinning room. This residence needs to be well furnished
to the required standard as it is used for official functions.
In his response the Accounting officer explained that arrangements are
being made to have the property engraved and that the embassy has
submitted a capital development budget proposal for the year 2008/09 to
replace the old items at the chancery as well as official residence.
(b) Condemned Vehicle
The Mission has one Mercedes Benz vehicle that was condemned by the
Chinese traffic authorities. This car has outlived its usefulness according to
the traffic authorities and is no longer roadworthy.
The Accounting Officer should seek for authority from the Permanent
Secretary/Secretary to the Treasury to have the vehicle disposed off.
67.0 OTTAWA MISSION
67.1 Unauthorized Expenditures
During the period under review, expenditure amounting to Shs.257,997,702
was incurred in excess of the appropriation on expenditure item goods and
services consumed. Against an the approved budget of Shs.340,066,000,
the mission spent Shs.598,063,702 thus leading to an unauthorized
expenditure of Shs.257,997,702.
In her explanation the Accounting Officer attributed the over expenditure to
poor funding of the Mission by the Treasury which forces the Mission to
utilize non-tax revenue to fund critical activities of the Mission.
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There is need for government to make a comprehensive review of the
Mission needs and budget for them accordingly. The unauthorized re-
allocations should be regularized in accordance with the law.
67.2 Payables
An amount of Shs.126, 460,542 was reported as payables for the year.
There was however no details to support the figures. I could not therefore,
confirm the balances.
Management was requested for the necessary supporting documentation
67.3 Unacknowledged remittance to the Treasury
US $15,370.59 remitted to Uganda Consolidated Fund account in July 2006
has not yet been acknowledged.
67.4 Incompletely vouched expenditure
US$6,000 transferred to the CND account for payment of urgent bills lacked
details.
67.5 Non-Tax Revenue (NTR)
The Embassy has two NTR accounts, one in US Dollars (US$) and the
second in Canadian Dollars (CND). Examination led to the following
observations.
(i) Remittance to the Treasury
In July 2006, the Mission remitted US$15,370.59 to Bank of Uganda as a
transfer to the consolidated fund. This amount has not been acknowledged
to date. It is also not clear as to which period the above amount relates.
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(ii) Under Banking
Similarly, an amount of CND 98,314 was collected and only CND 98,156
was banked. It was also noted that there was no remittance to the
Consolidated Fund from this account CND 62,892 was transferred to the
operations/expenditure account and subsequently spent at source. It is not
clear why the Mission maintains two accounts for NTR contrary to the
requirement to have all collections remitted promptly.
(iii) Incompletely vouched expenditure
US$6,000 was transferred to the CND account but the details and the
purpose for the transfer was not explained.
Management is requested to remit all the Non Tax revenue collected as per
Treasury regulations.
68.0 TOKYO MISSION 68.1 Excess Expenditure
Parliament approved a total expenditure of Shs.1,392,280,000. However,
the Mission spent Shs.1,401,099,752, leading to an over expenditure of
Shs.8,819,752, which lacked relevant authority. It was further, noted that
expenditure totalling shs.45,780,998 was re-allocated by management
without authority.
I have advised the Accounting Officer to regularize the expenditure in
accordance with the law.
68.2 Unaccounted for
Funds totalling JP yen 7,444,877 (US$ 62,561) advanced as office imprest
had not been retired. It was further noted that the mission operated the
imprest system without seeking for an imprest warrant from the Accountant
General contrary to financial regulations.
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The Accounting Officer should always apply for an annual imprest warrant
from Treasury. Imprests should also be replenished only after the previous
ones have been accounted for.
68.3 NTR Remittances
Of JP yen 98,695,137 collected; the mission remitted JP yen 93,568,180 to
the consolidated fund leaving a balance of JP yen 5,126,957 (US$ 42,725)
not remitted contrary to regulations. This balance appears to have been
utilized at source without authority. The amounts remitted were also not
supported with receipts from Treasury.
68.4 Nugatory Expenditure
It was noted that the mission continued to pay a monthly rental of 30,000
Yen (US$ 252) as parking fees for a vehicle that had been deregistered and
replaced. The vehicle was deregistered in January 2006 after it had
attained the threshold mileage of 100,000 KM, in line with the Japanese
traffic regulations. Although, the assessment by four (4) independent firms
had put the van at a realizable value of JP Yen 130,000 the mission had not
made any effort to get the vehicle disposed off.
I advised the accounting officer to dispose off the van so as to save the
government the unnecessary expenditure and further loss in value of the
asset.
68.5 Poor Bookkeeping
(i) Payment vouchers not marked “PAID”
It was observed that all payment vouchers and their supporting
documents were not stamped “Paid” contrary to para.178 of the
Treasury Accounting Instructions 2003.
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I reminded the Accounting Officer that all paid vouchers together
with their supporting documents should be stamped ‘PAID’ to avoid
the risk of duplication of payments.
(ii) Lack of Registers
There were no registers being maintained for the receipts and visa
stickers. I could therefore not confirm the stocks at hand at the time
of audit
Maintenance of registers facilitates proper reconciliations between
the receipts and issues and physical balances of Visa stickers.
(iii) Lack of Acknowledgement by Beneficiaries
Contrary to Treasury Accounting Instructions, payees did not append
their signatures on most of the payment vouchers acknowledging
receipt of their cash/cheques. This omission rendered the
expenditure doubtful as it was difficult to establish whether the
funds reached their respective rightful beneficiaries.
(iv) Inventory
It was noted that the inventory register was not up to date as at
30th June 2007 and that all purchases made in September and
October had not been recorded in the register.
68.6 Loss of a DVD Player
A review of the board of survey report showed that a DVD player acquired
in September 2007 at a cost equivalent to Shs.378,200 was missing. On
further inquiry, it was revealed that there was a break in at the chancery
during which the said item was stolen.
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The Accounting Officer was advised to notify the Accountant General about
the stolen DVD player as required by the sec 16(1) of the Public Finance
and Accountability Regulations, 2003.
68.7 Staffing
As pointed out last year, the mission is inadequately staffed .This has
resulted into the continued employment of the services of a local staff as
personal secretary to the ambassador a position which should have been
filled by a home based staff‘ administrative attaché given the sensitivity of
the post.
Efforts should be made to ensure that the post is filled by the right staff in
order to enhance confidentiality among others.
69.0 TRIPOLI MISSION
69.1 Inconsistencies in the Financial Statements
Note 10 to the financial statement and the cash flow statement show a sum
of Shs.341,880,034 as expenditure on goods and services consumed while
the statement of financial performance discloses Shs.316,710,716 on the
same item. The inconsistencies in these statements render the financial
statement misleading. Adjustments need to be made to correct the error.
69.2 Visa Register
I was not availed the visa register for the period July to December 2007. I
could therefore not confirm the non tax revenue from the visa sales for the
period.
69.3 Cash Survey
A Cash Survey on NTR and the operation account was held on 16th October
2007. A sum of US$630 was on hand in respect of NTR and agreed with
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the visa records while LYD 275.25 (€166) and €110 which was on hand in
respect of the operational account did not agree with the cash book.
I advised the Accounting Officer to investigate the excess of €266 on the
operational account. The Mission should also consult the Accountant
General for an appropriate cash limit to be held by the cashier.
69.4 Non Compliance with Procurement Law
Procurements totalling to €118,207.8 were made without following the
recommended PPDA procedures for bidding, evaluation and subsequent
award. The purchases therefore may not have guaranteed competitive
prices.
In his written response the Accounting Officer explained that the PPDA
regulations could not be adhered to due to the structure and economic
environment the mission operates in and that he had requested for a
waiver from the PPDA
69.5 Cash Payments
During examination of expenditure it was noted that apart from salaries
and allowances for home based staff, all mission expenditures are paid in
cash. These include purchases of office furniture and equipment, air
tickets, rent, utility bills etc. Cash payments in the month of June 2007
alone amounted to €46,000.
Keeping big amounts of cash at the Chancery is irregular and poses a risk
to government funds. The practice may also lead to temptations by the
cashier to misappropriate public funds.
69.6 Stores Requiring Board off
Two Mercedes Benzes registration number 3/60 and 4/60 models 1988 and
1992 require boarding off as they are old, expensive to maintain and they
are unnecessary since the Mission has procured a new Mercedes Benz that
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was expected to arrive in October 2007, and also has a sound Volvo car
serving as a utility vehicle.
Secondly, very many old stores including furniture and equipment were in a
store which is rented at LYD400 (Shs.52,636) per month.
I advised the Accounting Officer to consult the Secretary to the Treasury
and the PPDA for their appropriate disposal. Otherwise, the vehicles will
further deteriorate and rent being incurred at Shs.6, 283,636 annually on
obsolete stores is wasteful.
69.7 Mission Charter
Tripoli Mission was mandated under its Mission Charter to target a 20%
annual growth rate of investments from Libya in the areas of banking,
housing and ranching, a 50% annual increase in the number of exports to
the Libyan market and the fulfilment of the Libyan pledge of investing in a
coffee processing plant estimated at US$17m among others. However, I did
not see a detailed strategic plan of how the above charter will be achieved.
In his written replies, the accounting officer stated that the mission has in
place a strategic plan but however highlighted that its implementation may
be hampered by budgetary constraints.
69.8 Unused Visa Stickers
The Ministry of Internal Affairs revised visa fees from US$30 to US$50
single entry effective 2007/2008. However, by the time of announcement,
10 books of US$30 (serial No. 240051–240650) were still in stock unused.
The accounting officer in his explanation stated that he was seeking for
advice from the Ministry of Internal affairs. I await the outcome.
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69.9 Review of Personal Files
Incomplete files
A review of personal files revealed that personal some files for both home
based and the local staff were incomplete with documents like; contract
agreements, formal appointment letters, application for employment letters,
evidence of qualifications for jobs assigned and confirmation letters. A case
in point is the file of the former accounts assistant Ms. Katendwa Joy which
had no evidence of accounting knowledge.
It is recommended that the files be appropriately updated and employment
given proven competencies.
69.10 Non-Tax Revenue (NTR)
• Visa Registration Prior to January 2007
The above register was not availed for audit. I could therefore not
confirm the revenue for the period.
• NTR Collections and Remittances to Bank of Uganda
Between January and 16th October 2007, US$2,750 (Shs.4,950,000) was
collected as NTR in respect of Visa fees. Out of the above amount,
US$2,000 was remitted to the Bank of Uganda for the credit of the
Consolidated Fund on 6th March 2007, 26th June 2007 of US$1,100 and
US$900 respectively indicating that remittances are not regular.
I advised that after balancing and reconciling the visa register to the
cash book every month, the remittance to Bank of Uganda should be
similarly made regularly to avoid the likely temptation to use the NTR.
The Chancery Ownership
It was noted that the Libyan government gave the Uganda Government a
building to house the Chancery way back in the 1970. However,
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certification of title has never been obtained to date. Without the title
ownership of the buildings can be challenged.
I urged the Mission to follow up the matter so that title of ownership is
secured from the relevant authorities.
70.0 RIYADH MISSION
70.1 Payables
An amount of Shs.55, 123,070 was reported as payables for the year.
There was however no details to support the figure in the financial
statements.
Management was requested for the supporting documentation.
70.2 Excess Expenditure
With the approved budget of Shs.757,109,000, the mission spent
Shs.771,323,965 thus leading to an unauthorized expenditure of
Shs.14,214,965.
The excess expenditure needs to be regularised by way of supplementary
appropriation. Management should initiate the process accordingly.
71.0 COPENHAGEN MISSION
71.1 Unauthorised Expenditure Allocation
The Mission incurred an expenditure of Shs.61,966,841= in excess of the
approved budget without seeking approval from parliament. Against an
appropriation of U.Shs.1,409,454,337, the Mission spent Shs.1,347,487,496
leading to an over expenditure of U. Shs.61,966,841.
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In addition, Shs.211,846,296= was re-allocated to various expenditure
vote items without following the procedures prescribed in the regulations.
In a written reply the accounting officer explained that the funds were
reallocated due to the under funding on some critical items and that
attempts had been made to seek retrospective authority. I however
informed her that the practice is contrary to the regulations and advised
her to regularize the expenditure.
71.2 Understatement of Expenditure
Note 16 (other operating expenses) to the financial statements indicates
that a foreign exchange of U.Shs.13,894,858 was incurred. It was however
noted that the figure has not been disclosed in the financial statements. In
effect the expenditures have been understated by the loss and the Net
worth equally overstated.
71.3 Advances
Financial statements show a long-standing advance of Shs.1,679,793
against the Ministry of Foreign Affairs. It’s not clear why the money has
not been recovered after all this long.
71.4 Irregular Appointment of local staff
The appointing authority recommended in a letter PO/23 dated 28th July
2004 to appoint Mrs. Margaret Otteskor as a Trade Assistant/Officer under
local recruitment, based on her academic qualifications. However, she was
appointed Foreign Service Officer Grade V (U3 Scale) whereas she does not
possess the minimum qualification required for the post.
Besides although she was locally recruited from Copenhagen, the officer
was paid disturbance allowance contrary to the standing orders.
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I informed the Accounting Officer that the appointment of the officer to a
higher grade, and the payment of the disturbance allowance were contrary
to the regulations
71.5 Nugatory Expenditure
VIP shipping International Ltd, allegedly based in London, was paid Dkr
75,850 (US$ 13,600) to ship personal effects of one of the mission staff.
However, the goods were shipped and abandoned in Mombasa instead.
Another firm, Worldwide Shippers Ltd was contracted and paid Dkr
36,638.41 (US$ 6,496) to clear and transport the goods to Kampala.
Included in this cost was demurrage of Dkr 5,689.8 (US$ 1,016). In
addition another Dkr 1,689.45 (US$ 269) was paid to AIG for insurance
cover. Therefore the additional expenditure of DKr 38,327.86 (US$6,765)
was rendered nugatory. Further investigations revealed that VIP shipping
International does not exist.
In a written response the Accounting Officer explained that matter was
reported to the Police and the Royal Danish Ministry of Foreign Affairs and
that the mission lawyers were pursuing the company to recover the extra
money which the Mission had paid.
71.6 Staff Telephone Bills
A test check revealed that the mission paid for international calls of the
Administrative Attache’ totaling DKr 1,817.94 in contravention of standing
orders’ requirement to pay only 2/3 of all local telephone bills of home
based staff.
In her written response, the Accounting Officer promised to recover the
amount in question in full from the officer.
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71.7 Unspent Balances Irregularly Utilized
It was observed that at the end of the FY 2005/06 a cheque No. 9110859
was written for Dkr 100,050 (US$ 20,000) for the payment to the painter
although no painting had taken place. In July 2006 this cheque was
cancelled. The money which should have been returned to the consolidated
fund as unspent previous year’s balances was instead receipted as if it was
a release in the following financial year (2006/07) and subsequently spent
contrary to the regulations.
71.8 Renovation of Chancery
A total of Dkr 167,500 (US $31,018.51) was paid to M/s. Rodgivende
Ingeinor for the renovation of the cellar of the Chancery, staff kitchen and
hall. Inspection revealed that no work had started.
In his written reply, the Accounting Officer stated that although physical
renovation had not started by year end, the engineering workplan had
been completed. He further stated that a cheque was written to capture
this financial commitment but it was to be released to the contractor only
after the work had been completed.
71.9 Inventory Book
The Mission does not have a proper inventory book. Instead the
inventories are written on lists. In some cases like the reception, no
records were maintained and the temporary lists have a lot of anomalies
like shortages, non-recording, etc. I advised the Mission to open a proper
inventory for all premises either rented or owned.
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71.10 State of Government Assets
71.10.1Official Residence
The residence is located at Niesandrsensves 82 Gentofte. The basement
was damp and water was leaking through the walls from outside. The PVC
sheet of the roof needs replacement as well as the drainage system.
71.10.2The Chancery
This is located at Sofievcj1j Dk 2900 Hellerup. There was a sign of water
leakage in the toilet roof which houses an apartment occupied by the
Administrative attache’. There were cracks in the ceiling and electrical
wires in the basement need attention. The store walls need attention as
well. The basement upper foundation had cracks underneath.
72.0 NAIROBI MISSION 72.1 Un-authorised Excess Expenditure
An Analysis of The Statement of Appropriation Account (Based on nature of
expenditure for services) revealed that there was an over expenditure of
Shs.381,870,355 on various expenditure items during the year for which no
authority had been given to the Mission.
Details are shown below:-
Expenditure item Actual
expenditure Budget Excess
expenditure Medical 79,353,927 55,682,642 23,671,285Printing 35,249,777 31,834,838 3,414,939Banking Charges 5,264,092 2,100,156 3,163,936Telecommunications 57,873,369 60,648,936 2,775,567Rent 80,305,368 79,225,279 1,080,089Travel Inland 25,366,880 24,449,367 917,513Travel Abroad 32,194,706 30,511,820 1,682,886Maintenance 27,570,555 24,966,372 2,604,183Total 39,310,398
In the absence of such authority, the expenditure is deemed irregular.
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I advised the Mission to have the over expenditure regularised in
accordance with the Regulations.
72.2 Payables
Included in the accounts are payables of shs.210,935,207 relating to
outstanding commitments in respect of hospital bills, vehicles maintenance,
telephone arrears. However, I have not been provided with supporting
documents like such as invoices to enable me certify the balance.
Include in these outstanding commitments are telephone expenses which
were overspent by Shs.470,873,369 with much of this expenditure arising
from usage of private telephone lines rather than the official telephone
lines. The Mission appears not to have exercised good control over the use
of telephones.
72.3 East African Compensation Fund (EACF)
Records have revealed that the Mission operates a bank account
No.100354101 at Citi Bank (Kenya) to handle money from the defunct East
African Compensation Fund. On 30.06.07, the account had a credit balance
of shs.5,290,965 (K.Shs.211,638.60).
However, the year end cash balance of K.Shs.211,638.60 was not was not
disclosed in the Mission financial statements for the year 2006/07. The
movements were also not properly explained and disclosed.
72.4 Cash and Cash Equivalents
The Certificates of Bank balances and Bank reconciliation statements
provided to support the cash and cash equivalents figure of Shs.22,626,490
in the accounts do not add up. I cannot therefore confirm that the
balances are fairly stated on these accounts.
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72.5 Advances not Recovered
A total of shs.42, 441,035 advanced to various officers remained un-
accounted for by the end of the financial year contrary to regulations.
I advised that all money advanced to officers should be followed up for
accountability or be recovered in accordance with the Regulations.
72.6 Medical Expenses
The Mission subscribes to Nairobi Hospital (NH) for medical and dental
treatment and hospitalization of staff as is required by the Foreign Service
Standing Orders. However, instead of using NH facilities, staff tendered
reimbursement claims purporting to have obtained treatment from other
private clinics and private Doctors.
During the period under review, funds reimbursed in this manner amounted
to Shs.18,062,050 (K.Shs.722,482). The validity of these claims needs to
be properly explained.
72.7 Renovation of the Ambassador’s Residence
A Local Kenyan firm was contracted to ‘Redecorate the Ambassador’s
residence for a contract sum of shs.12,500,000 (K.Shs.500,000). Whereas
an advance of Shs.9,500,000 (K.Shs.380,000) was initially made to the
firm ,works valued at only shs.4,056,000 (K.Shs.162,240) had been
completed and yet there was no evidence of ongoing contract works.
During the audit inspection carried out in November 2007 the Accounting
Officer admitted in an interview that the contractor had indeed abandoned
the works.
The Mission is likely to suffer a financial loss of Shs.8,444,000
(K.Shs.337,760) being the value of the uncompleted works.
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72.8 Replacement of Existing Two Passenger lifts in Uganda House
In 2004, the Mission undertook to replace the existing lift equipment by
entering into a contract with a Kenyan firm for supplying and installing
two(2) new eight (8) passenger lifts for a contract price of Shs.151,023,125
(KShs.6,040,925). The life expectancy of the two (2) new lifts was quoted
at 30 years. The supplier was paid Shs.146,933,800(K.Shs.5,877,325) of
the contract price with only Shs.4,090,000 (K.Shs.163,600) remaining
outstanding.
Although the new lifts with a stated life expectancy of 30 years were
installed, they did not function as anticipated, and one of them is not
functioning at all. According to a ‘Technical Survey’ commissioned by the
Embassy, several construction items are still outstanding and some of them
are a potential occupational hazard to passengers travelling in these lifts.
The ambassador stated that this matter has been handed over to lawyers
for litigation. The progress on the litigation process is still awaited.
72.9 Outstanding Non-Tax Revenue (NTR)
A total of Shs.804,506,372 was collected in respect of rental income, from
tenants on the Uganda House. However, records submitted for audit
indicate that shs.66,712,825 (K.shs.2,668,513) remained outstanding as at
30.06.07. Efforts by the Kenyan property consultants firm, contracted to
collect the rent have not yet been fruitful in having these arrears recovered.
The Accounting Officer explained that 13 cases were in court and the other
three (3) had been forwarded to the Auctioneers for necessary recovery
action. I await the outcome of this effort.
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72.10 Non Payment of Salary and Foreign Service Allowances and Resettlement of an Officer
A new Foreign service officer posted to the Nairobi Mission did not have his
house rent paid by the Mission since November 2007 at a rate of
Ug.Shs.1,012,500 per month. Due to the Mission’s failure to also furnish his
house, the officer continued staying in a hotel at a cost of Shs.131,125 per
day. The total of Shs.2,229,125 spent by the Mission in this manner is
considered nugatory expenditure.
In addition, the Mission had not paid the new Officer’s entitlement of Salary
and Foreign service allowances totalling Shs.6,841,242, frustrating his need
to settle his family.
73.0 DAR ES SALAAM MISSION 73.1 Un-banked Revenue
A total amount of TZShs.162,000 and US$ 550 collected as revenue at the
mission was found not banked contrary to regulations. The Accounting
Officer explained that the amount was diverted to meet other mission
expenses.
73.2 Temporary Travel Documents
The mission issues Temporary travel documents following application using
a serially numbered form A at a cost of TZ Shs.6,000 each. However due to
a shortage, Form A’s were photocopied, and one serial number was used
by many applicants. This is a control weakness that could be abused to
cause financial loss. The Mission accounting officer stated that she had not
been aware of serially numbered forms issued by the Ministry of Internal
Affairs.
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73.3 Excess Expenditure The mission incurred expenditure amounting to Shs.98,004,145 over and
above the approved budget estimates without required authority. I have
advised that authority be obtained to regularise this expenditure.
73.4 Salaries of Local Based Staff
Total salaries and allowances paid to local staff, including Drivers, cleaners
gardeners and security guards at the Mission increased from TZ
Shs.3,512,00 to TZ Shs.4,827,000 per month since May 2007.
However it was noted that:- • The Salaries are not tagged to any salary scales and lack criteria in
fixing.
• Employees do not have service contracts and there are no defined terms
and conditions of service.
• One staff employed as a house keeper is paid a monthly salary of US$
450 but does not have an appointment letter, and has no personal file
kept at the mission. The terms of his engagement are not clear.
The Accounting Officer stated that consultations were being made to
finalize salary scale structures and terms of service.
73.5 Land and Buildings
The mission owns three properties which were obtained from government
of Tanzania in exchange for properties given to Tanzania government in
Kampala.
• However, as stated in my previous report (2004/05) no copies of titles
were availed to confirm that the Uganda government owns these
properties, or that the transfers were properly completed.
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• The buildings were found completely dilapidated and in the absence of
releases for the development budget , the Mission had to divert part of
staff benefits in order to cater for reconstruction of the building.
I advised that this capital development expenditure be regularized with the
Ministry of Finance.
The Accounting Officer in his response, stated that delay in obtaining land
titles was because the Government of Uganda had been slow in processing
titles to land given to Tanzania government in the swap deal.
73.6 Offloading of Expenditure by Ministry of Foreign Affairs
• Inadequate budget on transfer related costs
A total of US$69,038.8 was incurred by the mission in respect of
reporting and departing Foreign Service Officers’ allowances (Clothing,
disturbance and settlement allowances) and transport. It was however
noted that, allowances for staff transferred to the mission, ordinarily
paid from the Ministry of Foreign Affairs budget were pushed to the
Mission without a corresponding increase in the budget release. As a
result other activities were curtailed in order to make savings for such
payments.
• Courier services
The mission receives Diplomatic bags from the Ministries of Internal
Affairs and Foreign Affairs through DHL. However, the mission pays
courier expenses for diplomatic bags received (not budgeted for) in
addition to paying for the cost of their own diplomatic bags sent to
Ministries. This affects the budget performance of other items.
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73.7 Education Account The Ministry of education remits funds for allowances and transport of
Ugandan students studying in Tanzania, who are required to physically sign
for them. However scrutiny of the payment records revealed that 10(ten)
students had consistently not signed for four allowances totalling US$3,900,
casting doubts over their physical existence.
The Accounting Officer in her response stated that the Ministry of Education
was informed of absentee students together with the accumulated
allowances but advised the Mission to utilise the funds to pay students who
had been left out of the October, 2007 release.
74.0 ABUJA MISSION
74.1 NTR Remittances
Non Tax Revenue totalling ₦ 673,350 equivalent to Shs.52,063,236 was
collected and purportedly remitted to Bank of Uganda for the credit of the
consolidated fund. However Treasury acknowledged receipt of
Shs.18,395,969 leaving a balance of Shs.33,667,267 unacknowledged. I
could therefore not confirm whether the funds were received by the
Treasury.
In a written reply, the Accounting Officer attributed the delays to the Bank
of Uganda and Treasury for issuing and sending acknowledgement receipt
of the funds remitted to the mission.
74.2 Circumvention of the Procurement Regulations
A test check revealed that a sum of ₦ 12,197.50 (Shs.172,872,882) was
spent to purchase a representation car and to renovated the official
residence. However, although the amount involved was substantial, the
mission did not follow the prescribed procurement procedures contained in
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the Public Procurement and Disposal of Assets Act and Regulations contrary
to the procurement procedures without a waiver from the PPDA.
In his written response, the Accounting Officer acknowledged the omission
and stated the Authority had released fresh guidelines for Missions on
Procurement Procedures that will be followed in future.
74.3 Undeveloped Plot
The mission has an undeveloped sizeable plot, strategically located, which
was obtained in 1994. During inspections it was revealed that the local
authorities had threatened to revoke the allocation if the plot remained
undeveloped by December 2009. The mission spends 6.5m Naira (U
Shs.92,125,984) annually on rent for the chancery and residences which
amount could be saved if the plot was developed for the chancery and
other residences.
In his written response, the Accounting Officer stated that the mission has
captured the development of the Plot in the financial years 2008/09-
2010/11.
74.4 Payables
The mission reported long outstanding telephone bills payable to the now
privatized Nigerian Telecommunication Ltd totalling ₦ 2,753,110.22. The
new management of the Company, in a drive to recover the monies,
engaged lawyers to handle the issue on their behalf. The mission may be
faced with litigation and the associated costs if the matter is not addressed
promptly.
I urged the mission to continue soliciting for funds from the Ministry of
Finance to settle these bills and save the mission from an eminent
embarrassing situation.
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In his response, the Accounting Officer indicated that consultations are
being made with the Ministry of Finance to ensure that the bills are paid.
74.5 Mission Charter
The Abuja Mission was mandated under its Mission Charter to target a 30%
increase in Nigeria investment in Uganda, 20% growth of exports to Nigeria
and strengthen inter institutional cooperation between the Uganda and
Nigeria, among others. The report on the implementation of the mission’s
charter was last made in December 2006. However, I did not see a detailed
strategic plan or corporate plan to guide the accomplishment of the charter.
I recommended that the mission should prepare a strategic plan with clear
time frames and measurable outputs to ensure achievement of the
mission’s objectives.
74.6 Official Residences
By time of inspection, some renovation work had started on the official
residence whose roof walls were leaking, had started peeling off and also
developing cracks. The furniture and equipments were as well in a sorry
state and required replacement to give the official residence the status it
deserves.
In his written response, the Accounting Officer emphasized the need for
major renovations but the mission was constrained by the lack of funding.
He promised that some equipment, furniture and furnishing will be done in
the next budget.
74.7 Nigeria Loan to Uganda
It was noted from the bilateral co-operation files that the Government of
the Federal Republic of Nigeria extended US $ 9.0 millions in 1992 to the
Government of Uganda repayable in 16 equal installments effective 1995. It
bore interest of US $ 2,413,972.10 up to 30th January, 2003 when it was to
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be finally repaid. The purpose of the loan was to establish a pharmaceutical
factory as well as an enterprise for manufacturing hardware products. The
loan has never been repaid, (2007).
I asked the mission to get an update from the Ministry of Finance regarding
the utilization of the loan and requested that it be booked in the stock of
Public debt with the view of repayment.
75.0 BRUSSELS MISSION
75.1 Excess Expenditure
The Embassy incurred an excess expenditure of the amount appropriated
for it by Shs.196,182,775 on various items shown below. Excess
expenditure is an indication of lack of budgetary controls.
I have advised the Accounting Officer to seek for retrospective authority for
the excess expenditure.
Item Actual Budget Variance
Goods and Services 465,314,039 416,936,000 48,378,039
Consumption of
property, plant and
equipments
227,804,736 80,000,000 147,804,736
Total 693,118,775 496,936,000 196,182,775
75.2 Non-Tax Revenue (NTR) Collections
NTR returns for the period under review revealed that the Mission collected
a total of €75,749 from the issue of visas and sale of passports.
The following observations were made: -
• There were no remittance advice slips and acknowledgement
receipts provided to confirm remittances of €67,000 to the Treasury.
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• No counterfoils of used visa stickers were provided to enable me
reconcile the reported collections.
The remittance advice slips and acknowledgement receipts for funds
remitted to Treasury and visa stickers should be provided for audit.
75.3 Rent
A total of €65,542.42 was paid to various landlords as rent for the
accommodation of home-based staff.
However, the payments were not supported by tenancy agreements and
acknowledgement receipts to enable me confirm their authenticity.
I have requested the Accounting Officer to avail the tenancy agreements
together with the acknowledgement receipts for audit.
75.4 Staff Salaries
A total of €105,300 and €139,168.31 was paid to local staff and home-
based staff respectively as their monthly emoluments. However, the
payees did not sign for the payments as proof of receipt of funds.
I have advised the Accounting Officer to ensure that all staff sign for any
money they receive as proof of receipt of funds.
75.5 Unauthorised Transfer
The Mission made unauthorised l transfers of funds from visa accounts to
operational account 310-0216600-85. The details are below: -
Date Payees Amount €
2/4/07 A/C 310-0216600-85 20,000.00
24/4/07 A/C 310-0216600-85 21,000.00
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19/10/06 A/C 310-0216600-85 10,000.00
10/5/07 A/C 310-0216600-85 21,000.00
TOTAL 72,000.00
There were also numerous verbal transfers from the operational bank
account to various individuals. Such verbal communications to banks are
prone to abuse and can lead to fraud by unscrupulous personnel.
I have urged Management to desist from such practice.
75.6 Chancery Renovations
A total of €77,236.82 was incurred in respect of renovations of the
Chancery. The renovations included Roof works and Ground floor tile work
done at a cost of €73,976.25 by a local firm WvD Dak & Gevelteniek. The
balance of € 3,260.57 was used to paint the reception & Exterior of the
Chancery. The following observations were made: -
• All the transactions appear not to have been handled by the Mission’s
contracts committee as there were no minutes or any other
correspondences provided for audit. It is not clear how the companies
which did the work were sourced, evaluated and finally awarded
contracts.
• It is not clear whether works were completed or not since no inspection
or certificate of completion was availed for audit. I could not confirm the
quality of the work.
• Although Capital development releases were only Shs
80,000,000(approx€35,000), the mission used €77,236.82 for capital
expenditure. The source of the extra funding is not known.
Management is required to avail details of source of funding, procurement
procedures followed and evidence of completion.
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75.7 Audit Inspection Report
75.7.1 Cash Survey
A total of €250 was found on hand on 27th August 2007 in respect of Visa
(€150) and Imprest (€100). These could not be balanced effectively as the
visa register was written up to 21st August 2007 and no Imprest ledger is in
use. Regulations require cash books to be written and checked on daily
basis.
I recommend that the Accounting Officer strengthens procedures of
monitoring operations
75.7.2 Overpayment of Salary/Foreign Service Allowance
Although the exchange rate of the dollar to the Euro is 1 Euro equivalent to
US$1.29, the Mission pays salaries and Foreign Service Allowances at the
rate of 1 Euro equal to 1 dollar thus overpaying the salary/Foreign Service
Allowance by 29%. The overpayment per month total to €4,213.59 as
detailed in Appendix ‘A’ to this report.
The Accounting Officer should have the excess payments recovered from
beneficiaries and in future put exchange rates into consideration to avoid
exchange rate gains going to staff.
75.7.3 Salary Advance
Salary advance is routinely given. In some instances, these are recovered
in one lump sum but in others in four instalments. Contrary to regulations,
no advances ledger is maintained. Total advances given and recoveries
made could therefore not be verified.
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Authority to pay salary advances should be sought. Procedures to recover
and to record salary advances should follow laid down regulations.
75.7.4 Payment of Utility Bills
The Mission does not recover personal share on telephone and heating
charges from the two Deputy Heads of Mission. According to Standing
Orders, it is only the official residence which enjoys these privileges. The
authority which was produced signed by the Head of personnel on behalf of
the Permanent Secretary had been cancelled by the then Permanent
Secretary.
Management is advised to stop henceforth extending these benefits to the
two deputy heads as it is a violation of standing orders.
75.7.5 Warm Clothing/Climatic Clothing Allowance
The Mission pays climatic allowance of US$500 as well as warm clothing
allowance of US$300. This is a double payment as the latter is for other
public officers not Foreign Service Officers. Standing Orders allow Foreign
Service Officers to be paid only climatic allowance.
I have observed continued disregard of regulations an indication of weak
management controls. It is recommended that Accounting Officer recovers
the double payments made to Foreign Service officers.
75.7.6 Baggage Allowance
Three officers claimed baggage allowance totalling €636 as follows: -
Name Exp. Voucher Amount (€)
1. Mrs. A. Kyeyune 44/6/07 212
2. Mrs. Z. Mayanja 45/6/07 212
3. Mr. R. Byereta 46/6/07 212
Total 636
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However, receipts or airline coupons were not attached thus making the
payment unsupported. Supporting documents should be availed for
verification.
75.7.7 Shared Costs
A total of €2,197.60 (EV 61/6/07) was paid to Savalamos Diamntepoulou
being shared costs of water, hot water, heating, and electricity for the flat
occupied by the Administrative Attaché. No evidence was produced to
show that these costs were indeed originally billed by the various service
providers. 20% was not recovered from the Administrative Attaché as her
personal share for heating and 100% for lighting.
Original bills to support costs of water, heating and electricity should be
availed for verification. The Administrative Attaché should complete
payment of her 20% share.
75.7.8 Medical Treatment
A sum of €7,000 was deposited with Foldi Clinic Germany (EV 20/7/07) for
the treatment of Ambassador Acema. Documentation relating to final bill or
any possible refund from the Medical Insurance was not availed.
The Accounting Officer should endeavour to avail the necessary
documentation for verification.
75.7.9 Property Rate
A total of €247.50 was paid to Gemeente Wassernaor as property rate for
property situated at Fresiaplean 14 2241 xs Wassenaer. This property does
not appear to belong to the Embassy.
An explanation is awaited from the Accounting Officer.
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75.7.10Extra Works
A total of €6,101.50 was paid to Gevetech for extra works without going
through proper procurement process. The work included placing of
waterproof tiles at the entrance and ground floor.
The Accounting Officer should explain why proper procurement procedures
were flouted.
75.8 General Administrative weaknesses
(i) Counterfoil Register
Although a record is maintained on the computer, it does not conform to
the prescribed format in that it does not show the name of the person to
whom counterfoils have been issued to neither do the recipients sign for
them.
(ii) Inventory Book
The Mission does not maintain an inventory book on the prescribed format.
It only maintains lists which it keeps on changing. A verification of those
lists showed a number of anomalies like shortages, non-recording of items,
etc. at the official residence, the Chancery and the residence of the
Minister/Accounting Officer and the Administrative Attaché. Please obtain
and maintain a proper inventory book.
(iii) Safes
There are two safes but one was not opened during audit. It was
explained that it does not work. It is recommended that this safe should
be boarded off.
75.9 Assets
(i) Vehicles
The Mission owns three vehicles: -
• Volvo
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• Lexus 300 GS
• Mercedes Benz E200 (R)
No log sheets for the movement of vehicles were produced for audit. I
could therefore not verify their movement and fuel use.
(ii) Structures
The Mission owns 3 buildings in Brussels: -
• Official Residence – Clos des Lauriers 35 – 1150
This building is located in a prime area and it used to be in a
magnificent shape. It has now been condemned as the roof has caved
in and plumbing and electrical wiring are all rotten. The building is
vandalised and all windows and door glasses have been broken.
• Temporary Official Residence –
Maurice Despnet 22 1933 Sternebeck
The building is in a generally good shape. However, it was noted that
the garage doors are not shutting properly, the sewerage pipe from a
toilet is blocked and the heater is not fully operational. The worst part is
the leakage through the walls up to the ground floor.
• The Chancery – Avenue de Tervunen 317 1150 – Brussels
Although the roof was repaired at a cost of €75,000, ceilings are in a
bad shape. I was informed that the support of the roof is weak which
may lead to the roof to collapse once again. The basement is in bad
shape as cement on the supports are all cracked and the walls are
stained.
All the walls in the Accountant’s office, Driver’s office, Tourist office and
toilets are stained and tiles and/or wall papers in a bad shape. Front and
toilet doors do not shut properly. In the Third Secretary’s office
windows do not close. A number of window glasses are broken.
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Immediate attention should be paid to this.
76.0 ROME MISSION
76.1 Absence of Contracts Commitees
PPDA regulations provide for contracts committee in all procuring and
disposal entities with an independent vote, such as the Embassy. The
embassy, however, does not have a properly constituted contracts
committee and there was no evidence that the committees were ever
nominated and approved in accordance with the provision of the
Procurement Act.
76.2 Transfers received from Treasury
A schedule of releases from the treasury indicates that Shs.1,734,589,417
was released for recurrent expenditure and Shs83,701,000 as
supplementary making a total of Shs1,818,290.,417. However, the
accounts reported Shs.1,949,293,965 as received in the statement of
Financial performance.
I asked the Accounting Officer to provide further explanation of the
difference or else adjust the accounts.
76.3 Non Tax Revenue
A total of Shs52, 036,720 was recorded as revenue collections for the
period. However the collections could not be verified because NTR returns
for the last quarter were not submitted.
Furthermore, the Embassy incurred a shortage in NTR collections of
Shs.2,460,381.
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76.4 Cash and cash equivalents
There were no bank certificates to confirm the Cash and cash equivalents
of Shs.20,384,262 stated in the accounts.
76.5 Payables
Detailed information in form of a schedule to support payables amounting
to Shs.1,249,517,265 included in the accounts, was not provided. I could
not ascertain that these balances are fairly stated.
76.6 Statement of Appropriation Account (Based on nature of expenditure for services)
There was an over expenditure of Shs.631,866,92 during the year for which
no authority was sought by management.
Details are shown below:-
Item Budget Actual Variance Employee costs. 691,151,000 1,029,726,486 338,575,489 Goods And Services consumed
412,338,040 628,762,252 216,424,212
Property plant and Equipment
76,867,191 76,876,791
Total 631,866,892
In the absence of such authority, the expenditure is rendered irregular.
I advised the Embassy to regularise the expenditure in accordance with the
regulations.
76.7 Non – Remittance of Non-Tax Revenue
The embassy had collected NTR amounting to €20,359 largely from Visa
fees and passport renewals. However, all the NTR collected was utilized at
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source contrary to regulations that require an Accounting Officer to ensure
prompt collection and proper accounting for revenue.
Although the Accounting Officer explained that his budget was not
sufficient for the Embassy needs, there was no authority whether from
parliament or secretary to the Treasury for utilization of this NTR from
source. There was also no evidence that NTR collection amounting to
Shs.108,305,189 reported in the last year accounts was remitted to the
Treasury.
76.8 Recall of a Home Based Staff and Related relocation Costs
The audit inspection revealed that, an Officer whose tour of duty in Rome
expired in October 2006, irregularly continued working and drawing all his
allowances up to August 2007. The Ministry of Foreign Affairs directed the
Accounting Officer to meet the costs of the Officer’s relocation with the
shipping costs alone estimated at about €15,000.
Directives of this nature pressure the Embassies into unauthorized
expenditure because Embassies do not budget for relocation costs, a cost
which should be borne by the Ministry.
I recommended that The Ministry of Foreign affairs properly plans and
budgets for posting of officers.
76.9 Medical Refund
Foreign Service standing orders require that officers should register with a
National Health Service and where drugs prescribed are not provided free
through the National Health Scheme, the funds will be chargeable to the
mission budget. However the inspection revealed that officers at the
embassy who are not registered with the National Health Service provider
had been paid a total of €14,120.32 as refunds for medical expenses.
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In the absence of prescriptions to support the refund claims, I could not
rule out that the system is being abused by claiming refunds where no
actual expenses were incurred.
76.10 Rent A sum of Euros 199,926.71 was paid out to various landlords as rent for the
chancery and staff residences. However, I was not provided with translated
tenancy agreements to show the rental payable. Besides the payments are
not acknowledged as received by the payees, thus rendering them
doubtful.
I asked the Embassy to provide translated tenancy agreements and
acknowledgement receipts for the rental payments made.
76.11 Internal Control Weaknesses: Un-authorized Expenditure
An examination of a sample of payment vouchers relating to the
Agricultural Attaché’s office revealed that payments amounting to € 2606.3
in March 2007 and € 3493.98 in May were made without the authority of
the Embassy accounting officer.
The Embassy Accounting officer did not endorse on these vouchers to
confirm that the expenditure was incurred under the authority quoted, or
that the goods and services paid for were duly and properly delivered in
line with regulations. Expenditures of this nature is potentially fraudulent.
I recommended that all payment vouchers must be approved by the
appointed Embassy Accounting Officer as required.
76.12 Remittances to the Agricultural Attache
A semi autonomous office of Agricultural Attaché was established in July
2005 probably to promote Uganda’s agricultural products in Italy and the
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neighbouring countries and to encourage transfer of agricultural technology
from the region. The Headquarters of FAO are also in Rome.
Although the mandate of the Head of the mission ordinarily covers this
scope and the mandate of the accounting officer of the mission also covers
all resources in the mission, operationally the office of the Agricultural
attaché is detached from the normal Embassy operations.
During the financial year 2005/2006 Shs.221,740,650 was remitted directly
from the Ministry of agriculture and Shs143,000,000 was remitted in
2006/2007. These funds were not managed by the substantive Accounting
Officer and instead were accounted for by the Agricultural Attaché himself
directly to Ministry of Agriculture. The Embassy handles other technical
matters such as Tourism, Trade ,Health, Politics, Science and technology all
harmonized under the substantive Accounting Officer.
I recommended that measures be put in place to allow the Embassy
accounting control exercise some control over the funds remitted to the
Agricultural Attache.
76.13 Rent arrears owed to Zambian Government
The Uganda Embassy in Rome was at one time housed in the Zambian
government building under a tenancy agreement which ran from 1995 to
March 2004.The Monthly rental was fixed at US$7,812 (12,500,000 lira) in
1995 later translating to € 6,455.71 with the introduction of the Euro.
Correspondences between the Uganda and Zambia heads of Mission
suggest that the amount owed now stands at about €373,165.44 even after
a recent direct payment of €200,000 by the Government of Uganda.
There has been bitter exchanges between the two Embassies over amount
owing and the settlement of these arrears.
447
I advised that proper reconciliation of the amount due, paid and
outstanding should be done to resolve the problem that could affect the
diplomatic relations between the two countries.
77.0 JUBA MISSION 77.1 Incompletely Vouched Expenditure
Contrary to financial regulations, a total of US$4,802 paid to various
mission officers lacked appropriate supporting documents like loose
minutes, invoices, delivery notes and acknowledgement receipts.
I have requested that the Accounting Officer provides all supporting
documents for audit.
77.2 Payments without Contracts Committee Approval
The procurement law requires that all procurement proposals be approved
by the contracts committee. However, the Mission spent a total of
US$30,275 on purchase of laptops and a Nissan pick-up without following
the recommended procurement procedures.
There is no evidence that the procurement was approved, competed for,
evaluated and approved by the contracts committee. In the circumstances
I could not confirm that the Mission achieved value for money.
77.3 Non tax Revenue
The Mission reported in the accounts a total of Shs.39,707,751 as Non- Tax
Revenue collected for the period. Whereas remittance advice slips were
eventually provided for audit, no acknowledge receipts from Treasury were
448
presented to confirm that the entire amount was remitted and received in
the Consolidated Fund.
I requested that acknowledge receipts from Treasury be provided for. 77.4 Misstatement of Comparative Balances in the Financial
Statements
There are two comparative balances restated in the current year accounts
which differ from the balances reflected in the audited accounts for
2005/2006 as detailed below.
Item 2005/2006 Accounts Balance
Audited Balance posted In current year Accounts.
Grants paid 0 9,869,272 Net cash inflows from operating activities
26,793,742 9,749,904
The Accounting Officer attributed the difference to changes in the financial
statements template. However the adjustments were not properly
explained.
77.5 Internal Control System
General internal control weaknesses observed at the mission included:-
• Claims were not supported by documents like requisitions, invoices
and demand notes as required by the Treasury Accounting
Instructions.
• Payments were made in cash rather than by crossed cheques.
• Payments for rent were not supported with tenancy agreements
while others were not acknowledged as received by the landlord.
• No cash books, ledgers or reconciliations were availed.
• Only photocopies of the Mission’s expenditure vouchers were
submitted for audit.
• Payments for travel were made to individuals instead of flight
company.
449
78.0 KINSHASA MISSION 78.1 Submission Of Incomplete Account Returns
The following documents, which are part of the monthly account returns for
both recurrent expenditure and revenue collection, were not provided
making the returns submitted incomplete for audit. Details are: -
• Revenue Receipts
• Cash book – Expenditure
• Cash book – Revenue
• Expenditure Abstracts
• Bank Statements
• Cash Balance Certificate
• Bank Reconciliation Statement
• Monthly expenditure returns reflecting cumulative releases and
expenditures.
• Monthly revenue returns reflecting cumulative monthly collections
and remittances to Bank of Uganda.
In a related development account Returns for both recurrent and revenue
for the period January – June 2007 were not submitted for audit. This
renders the funds released for that period totalling Shs.600,539,618 un-
accounted for.
I advised the Accounting Officer to ensure that all the missing records and
account returns are submitted for audit.
78.2 Internal Controls
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Generally the Internal controls in place were inadequate as explained
below:
(a) Requisitions For Payment
I noted various expenditure vouchers prepared and paid without
supporting documents like loose minutes form the claimants and
requisitions.
I advised the Accounting Officer to ensure that all payments are
requisitioned and approved as required by regulations.
(b) Vouchers Not Stamped ‘Paid’
All the expenditure vouchers plus their supporting documents were
not stamped ‘Paid’ as required by Treasury Accounting Instructions.
This exposes the mission to the risk of double payment.
I urged the Accounting Officer to always stamp ‘paid’ on all the
expenditure vouchers together with the supporting documents to
mitigate against double payments.
(c) Official Stamp For Accounting Officer And Charge De Affairs
It was noted that the Mission does not have separate official stamps
for the Accounting Officer and the Charge de affairs, which could
have been used to stamp on the vouchers whenever the Accounting
officer’s signature is appended. This would be one way of
minimising signature forgeries.
I urged the Accounting Officer to make arrangements to buy official
stamps for his and Charge de affairs for official use.
78.3 Circumvention of procurement regulations
451
The mission procured a computer at Shs.5,328,750(US$ 3,045) without
using competitive and transparent methods as provided in the PPDA Act
and regulations. At least three (3) quotations from different firms should
have been obtained, compared and evaluated with a view of obtaining the
most economical, efficient and effective services.
I further noted that the supporting invoices/receipts quoted an amount of
only US$ 2,373, thus an overpayment of US$ 672.
I advised the Accounting officer to always follow the procurement
regulations. I further recommend that the amount overpaid to the supplier
be recovered.
78.4 Unspent balances
According to the statement of financial position the mission had unspent
balances on the expenditure account of Shs.362,025,654 representing 48%
of the total transfers from the Treasury. This implies that there is either
over budgeting resulting into the mission being allocated too much funds,
which it cannot put to use or management is inefficient.
I urged the Accounting officer to justify the need for the excess funds. 78.5 Rent payments.
The Mission pays US $3,000 and US $4,000 per month for the
Ambassador’s residence and the Chancery respectively. Although the
Mission is allowed to pay three months in advance, by the end of the
financial year in June, 2007 the Mission had paid up to November 2007,
five (5) months in advance. It appears the Mission’s budget is overstated
to occasion such savings that has enabled upfront payment of 5 month’s
rent.
452
79.0 GENEVA MISSION 79.1 Unauthorised expenditure
The mission incurred unauthorised excess expenditure of Shs.105,522,025
without authority as shown below:
Actual Expenditure
Budget Excess Expenditure
FSA 624,937,648 624,192,000 745,648Welfare & Entertainment 10,683,814 10,000,000 683,814Printing, Stationery, Photocopying and Binding
13,550,424 10,000,000 3,550,424
Telecommunications 32,847,795 10,000,000 22,847,795Insurances 12,409,750 4,999,999 7,409,751Travel inland 21,002,980 10,000,000 11,002,980Travel abroad 32,002,911 10,000,000 22,002,911Maintenance-vehicles 17,799,266 9,000,000 8,799,266Machinery & Equipment 48,479,436 20,000,000 28,479,436Total 105,522,025
Excess expenditure indicates breakdown of controls over budgetary
expenditure.
I recommend that all mission operations should be budgeted for and
approved by Parliament as required by the law and Government should
make a comprehensive review of the Mission operations with a view of
ensuring that the Mission is facilitated adequately to pursue its objectives.
79.2 Unexplained Receivables
Examination of accounts revealed that there were receivables of
Shs.41,166,639 in the statement of financial position which were not
properly explained. A review of the relevant explanatory note 21 referred to
only indicate that they were advances whose details were not provided for
audit.
453
In his written reply the Accounting officer explained that the amount relates
to salary advances to staff and they have been fully recovered.
I recommend that as far as possible management should adhere to
Government regulations on advances. Meanwhile evidence of recovery of all
funds is awaited.
79.3 Overpayment of Allowances
During audit inspection it was noted that officials at Geneva Mission
awarded themselves payments outside the approved terms of service. For
instance, the Head of Mission was paid FSA of US$3,149 instead of
US$2,180 p.m. (total 17,442) and the Accounting Officer was paid
US$2,700 instead of US$1,776 p.m. (total 34,188). The total amount
overpaid to the six officials from the time they were posted to the Mission
to the time of audit inspection amounted to US$112,902, which is
recoverable because payments are contrary to their terms and conditions of
service and entitlements.
In his written submission, the Accounting officer explained that owing to
the high cost of living in Geneva the mission was authorised in 1996 by the
Permanent secretary Ministry of foreign affairs to pay the Geneva Mission
staff Foreign Service allowance based on the Tokyo rate with effect from
July 1, 1996. He also added that there was lack of proper coordination
within the Ministry of Foreign affairs which created the contradictions in the
letters spelling out the emoluments of officers posted to Geneva and what
was actually being paid from July 1, 1996.
I advised the Accounting officer to liase with the relevant authorities to
clarify the matter, otherwise the continuous payment of FSA above the
officers’ entitlement was irregular and the amounts so far over paid
recoverable.
454
79.4 Circumvention of Public Procurement Regulations
Examination of accounts revealed that a total of Shs.107,307,809 (CHF
76,009.75 0r US $ 61,319) was incurred on the acquisition of various
goods and services required for the smooth running of the mission. The
following observations were made:
a) Absence of a Properly Constituted Contracts Committee
The Embassy is an independent vote and therefore qualifies to be a
procuring and disposal entity. Whereas the PPDA Act Section 27-28 and
the PPDA regulations Section 42-56 provide for contracts committees in
procuring and Disposal entities. It was noted that the embassy does not
have a properly constituted contracts committee as indicated below:
Section 27(2) of the Act states, “The members of the contracts
committee shall be nominated by the Accounting Officer and
approved by the secretary to the Treasury”. No evidence of
nomination and approval was availed to me.
Section 27(1) of the Act states “subject to sub-section (2), a
contracts committee shall be composed of the members specified in
the third schedule” The third schedule lists the membership as, a
Chairperson, a Secretary, and a maximum of three other members
appointed by the Accounting officer one of whom shall be a lawyer.
Section 45(2) of the regulations states “the Accounting Officer shall
ensure that any appointment to the contracts committee is made
from among serving Public Officers employed on a full time basis
with the procuring and disposing entity or appropriate external body.
There was no evidence that the above provisions in the Act and
regulations were complied with in the Mission either due to limited
staff numbers or due to lack of balance of professional skills. There
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was no lawyer on the committee as required by the 3rd Schedule of
the Act even though the Mission has a lawyer attached to WTO but
full time in the Mission.
Furthermore, the chairmanship of the contracts committee by the
Head of Mission complicated matters more. Contract Committee is
appointed by the Accounting Officer with the approval of Permanent
Secretary/Secretary to the Treasury and the Committee reports to
the Accounting Officer, who in this particular case is a First
Secretary, many grades below the Head of Mission. This is irregular
and it impairs the decision making of the Accounting Officer.
In his written reply the Accounting explained that given the numbers
of staff at the mission at that time it was not possible to constitute a
contracts committee in accordance with the requirements of the
PPDA Act and regulations. He however, noted that with the improved
staffing position of the mission it is now possible to constitute a new
contracts committee in accordance with the law and regulations.
I urged the Accounting officer to expedite the process.
b) “Off the street purchases”
Examination of accounts further revealed that the Mission was only
purchasing “off the street” and attaching receipts as shown below
Furniture for the Conference CHF 4,446, Projector CHF 1,352, Bed, mattress CHF 1,364, cutlery,
2 Computers CHF 3,040 Configuration of IT security CHF 7,905.2 Photocopier/fax/printer/scanner CHF 12,300
Total CHF 30,407(US$24,530)
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In his written reply the Accounting officer explained that Switzerland
is a very complicated place, with three working languages whereby if
one was to advertise, you would have to first translate into all the
three languages which would be extremely expensive considering
the meagre resource envelope for the Mission. It was for this reason
that the mission’s contracts committee opted for the methods where
they requested for quotations from various specialised firms and also
visiting the main stores in some cases.
I advised management to always follow procurement regulations to
ensure economy, efficiency and effectiveness and also to provide
documentary evidence of evaluations carried out before the
procurements were made.
79.5 Non-Tax Revenue (NTR) Collections
A total of Shs.56, 595,085 (CHF 38,850) was realised as collections of Non-
Tax Revenue during the financial year. It was however, noted that there
was no proof of remittance of funds and acknowledgement receipts from
Treasury provided as evidence.
In his written reply, the Accounting Officer explained that the mission has
always adhered to the regulations and transferred all NTR collections to the
Consolidated Fund.
I advised the Accounting Officer to provide evidence of remittance of the
funds and acknowledgement receipts from Treasury.
79.6 The Implementation of the Mission Charter
The Mission Charter for Geneva was issued on 23rd January 2006. It
outlines specific tasks and activities, which shall be used in appraising the
performance of the Head of Mission.
457
In his progress report on the implementation of the Geneva Mission Charter
dated 06th December 2006, the Head of Mission reported generally that the
Mission staff have participated in the meetings, deliberations and decisions
of the UN and other International organisations based in Geneva. He
stated that the Human Rights image has improved especially after
presentations made by a Ugandan Minister of State to UNHCR. He further
reported that Uganda’s image as a major tourist destination for the Swiss
has also improved.
He however, noted that poor funding of the Mission has affected the
implementation of the Charter and that for instance, Uganda is about to be
suspended from the membership of the International Organisation for
migration (IOM) because Uganda owes the organisation, Swiss Francs
214,049 accumulated during the last 15 years.
I was however noted that the Head of Mission’s report fell short of
clarifying the level of implementation of the Charter. No progress and
performance indicators (financial or non-financial) were given to provide an
essential link between the Charter and the implementation of the Charter.
For instance, if Uganda’s human rights image has improved, is there some
form of new ranking the country can take advantage of? If Uganda is a
new major tourist destination, how many more visitors have we received
and what is the translation of their visits in terms of financial, economic or
investment benefits? What is the new level of the Swiss foreign direct
investment?
In his written reply the Accounting explained that the reporting mechanism
has now been modelled around the ROM format that uses output,
performance indicators and targets to assess performance of mission in a
tabulated format. I await the outcome of the new reporting mechanism.
458
79.7 WTO Mission Internship
The World Trade Organisation (WTO) Secretariat maintains a limited
internship programme in WTO Permanent Missions in Geneva for
Postgraduate students wishing to gain practical experience and a deeper
knowledge of the multilateral trading system. Opportunities are normally
offered to the Ministry responsible for trade. The WTO Secretariat pays the
intern a stipend of CHF 3,000 per month, a return economy ticket and the
necessary visa assistance.
At the time of audit inspections, only 2 out of 3 interns had taken up the
offer. One of the interns is a Senior Commercial Officer from Ministry of
Tourism, Trade and Industry, the 2nd Officer is a Third Secretary from
Ministry of Foreign Affairs. The third officer who did not report is also a
Senior Commercial Officer from Ministry of Tourism, Trade and Industry.
The internship programme under review was running from 16th April 2007
to 12th October 2007. Since Government of Uganda’s input to the
programme is basically providing the staff who wish to gain practical
experience and deepen knowledge of the multilateral trading system, one
would be interested in finding out why we did not take up all our slots,
whether the programme is publicised at home and whether the criteria is
fair to all.
The Accounting officer explained that the mission would continue to work
hard to ensure that as many Ugandans benefit from the programmes in
Geneva through taking up all slots.
I advised management to ensure that in future all slots allocated to Uganda
are taken up, WTO programmes get enough publicity at home and the
criteria for selecting participants is transparent.
459
80.0 PRETORIA MISSION 80.1 Excess Expenditure
A total of Shs.183,705,644 was spent on goods and services in excess of
the approved expenditure budget without seeking appropriate authority.
In his written response, the Accounting Officer attributed the excess
expenditure on insufficient budgeting on some mandatory activities and the
involvement of the mission in the CHOGM preparations.
I advised that the authority should be obtained to regularise this
expenditure.
80.2 Incompletely Vouched Expenditure.
Expenditure amounting to Ug.Shs.25,566,950 (R118,002.850) purportedly
incurred on procurement of goods and services was found lacking
appropriate supporting documentation. I could therefore, not confirm that
the funds were put to proper use.
80.3 Non-Tax Revenue Collection 80.3.1 Visa fees Audit inspection of the Pretoria Mission revealed that Visa fees were
collected by administering Visa stamps rather than using the ‘standard
charge’ Visa stickers. Also Registers of persons issued with visas were not
properly maintained to enable reconciliation of visa fees collections against
the register.
Further, it was noted that Visa fees banked or transferred to the Mission
bank account by the applicants do not include bank charges which are
charged by the bank on each transaction but instead the charge is met by
the mission.
460
It was also noted that before Visas are issued proper verifications and
reconciliations are not undertaken to ensure that the applicants have
actually banked or transferred the money to the Mission Bank Account.
I advised that the mission consults with the Accountant General and
Ministry of Internal Affairs on the treatment of bank charges.
80.3.2 Temporary Travel Documents
Procedures governing issuance and Accounting for temporary travel
documents using PS/1 application form were found inadequate in the
following areas:-
• The Emergency Certificate Register lacked was sufficient details to
differentiate Certificates paid for from those issued free to patients
and deportees. As such, reconciliations could not be done to enable
me establish actual collections from this source of revenue.
• Beneficiaries do not acknowledge receipt of issued Certificates by
signing the register.
• Although copies (Photocopies) of Certificates issued, were required to
be kept on file, quite a number of them were not kept while some
were not properly filed.
Further to this, a physical stock count of PS/1 forms on hand revealed
sequence gaps resulting in 199 forms being unaccounted for.
80.3.3 Passports
Official government receipts were not written for fees collected from issue
of new passports at the mission, making reconciliations of Revenue
collected against passports issued difficult. I could therefore, not confirm
the completeness of revenue collected from passport fees.
461
In his response, The Accounting Officer stated that this was a temporary
situation pertaining at the time of audit and has been rectified.
80.4 Fixed Assets. 80.4.1 Buildings
An inspection of the Building housing the Official residence which is housing
the Ambassador revealed the following Matters:-
• Tiles and plaster had fallen off the walls of several rooms due to
leakages.
• A Balcony floor was logged with rainwater that had failed to drain due
to probably poor workmanship on the drainage system.
• Huge lateral roots of trees that were planted to beautify the
compound had damaged pavers and remain a threat to the building
itself.
I recommended that the old trees be removed and new ones replanted to
maintain the original beauty of the compound.
I further, advised the Mission to undertake maintenance works to stop
further damage to the already deteriorated property.
80.4.2 Other Assets
An inspection of the embassy stores revealed that several pieces of House
furniture and equipment were damaged as a result of poor stacking in store
and reckless handling by staff.
In his response, the High commissioner stated that the mission does not
have enough rooms for all the mission furniture and other properties. He
suggested that Uganda Government should consider investing in
462
purchasing houses for Foreign Service Officers like most other Missions
have done. This he said will reduce and/or eliminate breakages to
properties as in some cases property is damaged when it is being shifted
from rented houses by recalled officers.
I advised that the officers be held responsible for damage of government
property.
80.5 VAT Refunds
Whilst the mission is exempted from VAT payment by the host government,
the system requires that exempted entities pay the tax and subsequent
claim for refunds. By the time of inspection, there was no evidence that
VAT refunds had been claimed by the mission.
In his written response, the Accounting Officer stated that the mission was
in a process of claiming the refund. He explained that the system has been
simplified because claims are now filed electronically to South African
Revenue Services.
80.6 Accounts Staff
The accounts department was found to be headed by a local staff in
possession of Ordinary level elementary accounts certificate and lacking
sufficient qualification, skill and experience to give competent technical
advice on accounting matters.
I asked the Accounting Officer to consult with the Accountant General to
appoint competent personnel to man the Accounts Section.
The Accounting Officer stated that the matter had been discussed with the
Office of the Accountant General.
463
81.0 KHARTOUM MISSION
81.1 Unauthorised Expenditure
The mission incurred unauthorised expenditure of Shs.162,466,679 on
various expenditure items without authority as shown below:
Item Budget Actual Variance Welfare 10,000,000 33,203,665 23,203,665Printing stationery and photocopy
10,000,000 24,125,115 14,125,115
Telecommunications 10,000,000 25,857,921 15,857,921Electricity 10,000,000 32,144,836 22,144,836Water 8,000,000 12,004,326 4,004,326Travel abroad 10,000,000 19,037,302 9,037,302Fuel, Freight & Transport
10,000,000 18,414,146 8,414,146
Freight 17,596,800 17,596,800Maintenance 9,000,000 15,922,430 6,922,430Consumption of plant & equipment
41,160,138 41,160,138
Total 77,000,000 239,466,679 162,466,679
The Accounting Officer explained that the gross under funding of some
expenditure items left him with no option but to re-allocate funds and that
his request for virements was not responded to yet the need for
expenditure in these areas remained critical to the operations of the
mission.
I urged him to follow up his request for virements in order to regularise the
expenditure.
81.2 NTR Collections
Examination of accounts further revealed that the mission collected
Shs.47,696,090 from NTR. However, there were no remittance advice slips
and acknowledgement receipts provided to confirm that the funds were
actually remitted to the consolidated fund.
464
The Accounting Officer explained that all NTR collected was periodically
remitted to Bank of Uganda and that the foreign exchange regulations in
Sudan were changed during the year which affected the banking and
transfer of foreign currency. I informed the Accounting Officer that proof
of remittance of NTR could only be evidenced by way of acknowledgement
receipts from Treasury.
81.3 Internal Controls
Generally the internal controls were not adequate with some payment
vouchers lacking supporting documents and those that had were not
translated although a translator is paid periodically. Besides, most
payments were not initiated and approved by the relevant authorities as
required by the TAI.
The Accounting Officer explained that owing to the unique nature of some
categories of procurement of goods and services the guidelines laid down in
the TAI are difficult to implement in their strict nature and that although
the mission employs a translator he is preoccupied with translating official
letters, newspaper articles, other correspondence and some information
considered critical to the payment system.
I advised him to always abide by Government regulations and to ensure
that all supporting documents for payments are translated to English.
82.0 KIGALI MISSION
82.1 Poor Book-keeping
It was noted that the Mission did not maintain expenditure ledgers to
ascertain how the details of the balances shown the Accounts were
analysed and accumulated into the total yearly expenditure. In addition,
no proper cash book for Non Tax Revenue was kept. For instance, receipts
465
issued for NTR collections WERE not recorded in the Cash book making
reconciliations with the bank difficult.
82.2 Excess expenditure
The mission spent a total of Shs.342,912,987= on goods/services
consumed and property, plant and equipment in excess of the approved
budget rendering the expenditure unauthorised.
82.3 Payables
The payables balance of Shs.42,075,618= was not supported by the
outstanding commitment list and other documentation. This limited the
scope of my work.
82.4 Transfers received from other government units
Shs.39,176,716= was reported as received from other government units.
However, the mission did not provide the details which could enable me
verify its source and the purpose for which the funds were received.
82.5 Unspent Salaries
Examination of accounts revealed that one Embassy staff was transferred in
April 2006 without a replacement but the Ministry continued to release to
the Mission the salaries and allowances attached to that post. By the time
of audit inspection, the remuneration had accumulated to US$56,086 which
was being deposited on the Embassy’s development account.
Management, explained that the money was retained in anticipation of
receiving a replacement. I informed the Accounting Officer that the money
constitutes unspent salaries by which law should be remitted back to the
consolidated fund.
466
82.6 Non Tax Revenue
(i) Sale of temporary travel documents
A total of Fr 910,000 was collected from the sale of temporary travel
documents. However, only Fr 747,900 was remitted to Bank of
Uganda, leaving a balance of Fr 162,100 (Approx. US $292) un-
remitted (not banked).
The Accounting Officer was advised to bank and transfer the balance
to the consolidated funds.
(ii) Fees from sale of visa stickers
During the financial year, the Embassy collected a total of US Dollars
8,740 from sale of visa stickers which were banked and subsequently
remitted to Bank of Uganda. However, there was no evidence of
receipt from the Accountant General to confirm that the funds
reached the Consolidated Fund.
(iii) Sale of utility car
The Embassy boarded off an old vehicle (Land-Rover 110
(CD15002R) formerly used as utility car at an amount of Fr
1,500,000 (US $2,727.2). Regulations require that such funds be
receipted as NTR and remitted to the UCF. On the contrary, the
funds were banked on the Embassy’s Development Fund Account.
I advised the Accounting Officer to have these funds transferred to
the Consolidated Fund Account.
82.7 Payment of Taxes – VAT
The Embassy is exempted from paying local taxes including VAT. However,
the arrangement is that the tax is paid first and a claim submitted to the
tax authority for refunds by the Embassy. Although records show that
several services were paid for from which VAT exemptions were applicable,
management did not submit claims for VAT refunds to the Tax body.
467
The Accounting Officer admitted the anomaly and promised to follow up
the matter with the tax body.
82.8 Contract for maintenance of Embassy website
The Embassy contracted an individual to install and maintain the website
for the Embassy. A monthly fee of US $700 (Fr 385,000) is paid to him for
its maintenance. However, this arrangement is not supported by a contract
agreement spelling out the terms and conditions of maintenance. This puts
the Embassy at a great risk in case the vendor is not able to maintain the
website to the satisfaction of the Embassy.
Similarly, no documentation is made by the vendor to prove work done
which could assist management to keep truck of any changes.
I advised the Accounting Officer to draw a contract with the vendor and
streamline his activities with the Embassy.
82.9 Tenancy Agreements
A review of documents revealed that the tenancy agreement provide for a
three months notice before either party could terminate the contract. The
provision appears unfavourable for the Embassy and indeed it suffered a
payment of Fr 1,650,000 for two extra months for a house formerly
occupied by a Counsellor when his term was ended abruptly. The
Accounting Officer in a preliminary discussion stated that he had taken
steps to revise tenancy agreements to counter the provision for a reduction
to one months notice.
I advised him to expedite the process and negotiate for terms that provide
for unique circumstances where such expenditure could be avoided.
468
82.10 Other Assets/Inventories:
The inventory at the Chancery; residence of the Ambassador and
inventories in possession by other member of staff are not
engraved/marked to distinguish them from privately owned property.
Besides, the inventory registers maintained by the Embassy are not
updated regularly to reflect the true position of property owned at any one
time by the Embassy.
The Accounting Officer was advised to have the inventory registers updated
regularly. And also cause the assets to be engraved.
The stores ledger was also not properly kept. Although the ledger exists,
purchases were not properly recorded to reflect quantities received, how
they were issued out and the balances. Items purportedly received were
haphazardly recorded, making verification of stores rather difficult.
82.11 Conversion of Fr to Dollars
The Embassy management preferred to use the open market dealers for
the conversion of currencies which purportedly offered better rates. It was
however noted that the rates used in the conversion process were not
disclosed to enable me ascertain the accuracy of funds in dollars on
conversion and whether these funds were dealt with in accordance with the
existing regulations.
82.12 Non maintenance of creditor’s ledgers
The Embassy had running contracts with a number of service providers
especially Landlords for Chancery and residential houses and security firms.
Payment records indicated that the Embassy owed the Diocese of Kabagayi
a total of US $68,000 in unpaid rent since 1999. However, no ledgers
were maintained for the security service providers. Besides although the
Embassy had substantially reduced this debt, the basis of payment was a
469
statement from the service provider rather than documents maintained by
the Embassy.
I advised the Accounting Officer to open up ledgers for all service
providers, and ensure that they are properly maintained.
82.13 Procurement Procedures
(a) Lack of Proper Documentation:-
PPDA procedures require that all procurements should be by issue of
LPOs. Contrary to this all procurements of goods and services were
not backed up by any LPOs. Similarly, deliveries were not witnessed
and supported by delivery notes and goods received notes.
(b) Lack of Contracts Committee:-
The Embassy does not have a contracts committee or PDU as
required by the PPDA Act and regulations. Consequently all
procurements of goods and services were not supported by contracts
committee authority.
However, during discussion with the Accounting Officer, he explained
that it was impossible for the Embassy to have the committee in
place because of the staffing requirements for Contract Committee,
which the mission cannot meet.
I advised him to liaise with PPDA, the Ministry of Foreign Affairs and
Ministry of Finance, Planning and Economic Development to find a
workable solution given the unique situation at the Embassy.
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83.0 MOSCOW MISSION 83.1 Unauthorised Excess Expenditure
According to the statement of Appropriation account (based on nature of
expenditure for services voted) the mission incurred unauthorised excess
expenditure of Shs.78,520,344 without authority as shown below:
Actual Expenditure
Budget Excess Expenditure
Goods and services consumed.
285,890,364 237,000,000 48,890,364
Consumption of Property, Plant &Equipments (fixed assets)
29,341,170 Nil 29,341,170
Social benefits 288,810 Nil 288,810Total 78,520,344
Excess expenditure indicates a breakdown of controls over budgetary
expenditure and undermines the rationale of budgeting.
I advised the Accounting officer that all mission operations should be
budgeted for and approved by Parliament as required by the law. Where
there is need for reallocation or virements, procedures should be followed. I
recommend further that Government should make a comprehensive review
of the Mission operations with a view of ensuring that it is facilitated
adequately to pursue its objectives.
83.2 Circumvention of Public Procurement Regulations
Examination of accounts revealed that a total of Shs.318,246,480 was
incurred on goods and services consumed. The following observations were
made:
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c) Absence of a Properly Constituted Contracts Committee
Whereas the PPDA Act Section 27-28 and the PPDA regulations Section
42-56 provide for contracts committees in procuring and Disposal
entities, it was noted that the embassy does not have a properly
constituted contracts committee as required by the law.
I advised the Accounting Officer to constitute a contracts committee as
required by the PPDA Act and regulations or seek for alternative solution
from the PPDA.
(b) Procurement of a utility vehicle
It was further noted that the mission procured a second hand vehicle,
Suzuki Grand Vitara from the embassy of Israel for US $15,000.
However, the criteria used to select the supplier was not explained and
there was no evidence that an evaluation committee was constituted.
As pointed earlier, the composition of the contracts committee if any
that deliberated on the procurement was irregular in itself.
In a related development, Treasury had released US$ 20,000 for the
acquisition of a new vehicle but the mission opted for a used one which
had cost the Israel embassy only US $ 15,730. I was not provided with
satisfactory explanation why the mission opted for a used vehicle
instead of a new one yet it had the funds.
During discussions the Accounting Officer explained that he opted for
the second hand vehicle because of cost factors.
I advised the Accounting that the budgeted funds should have been
used for the intended purpose and that acquisition of a used vehicle
needed approval of PS/ST. I recommend further that accountability for
the balance of US $5,000 from the release be provided for audit.
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83.3 Non-Tax Revenue (NTR) Collections The Accounts show that a total of Shs.8,567,892 was realised from Non-
Tax Revenue collections during the financial year. However, I was not
provided with evidence of remittance of funds and acknowledgement
receipts from Treasury.
I advised the Accounting Officer to provide evidence of remittance of the
funds and acknowledgement receipts from Treasury.
83.4 Internal Control Weaknesses A number of internal control weaknesses were noted which call for
immediate remedial action. For instance during examination, it was found
that most payments did not go through some of the procedures required by
Government regulations such as initiation, authorization and approval.
Some payment vouchers were not stamped “PAID” and some were effected
in cash.
The danger of such control weaknesses is that irregular and double
payments could easily result since the same documents could be presented
for payment again.
I advised the management to improve on the control environment by
ensuring that Treasury regulations and Instructions are strictly complied
with.
83.5 Untransfered Balances
Examination of Accounts revealed there were balances on mission’s
revenue and expenditure accounts totalling Shs.252,001,940 for the
financial year 2005/2006. The following observations were made:
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• I was not provided with an acknowledgement receipt from Treasury to
confirm that the funds were actually returned to the consolidated fund
as required by regulations.
• There was no entry made in the Statement of Changes in Equity for the
amount transferred implying that the closing net worth was over stated.
• For financial year 2006/2007, there was also reasonably large balance of
Shs.150,626,808(Shs.142, 058,916 on the expenditure account and
Shs.8,567,892 on the revenue account). The existence of such big
balances particularly on the expenditure accounts sends wrong signals
that the mission actually receives more funds than what it requires and
will make it difficult for the mission to justify its case for more funds to
accomplish its objectives.
I advised the Accounting officer to transfer the funds immediately to the
consolidated fund and to amend the accounts to reflect the true position
of the closing net worth. I recommend further that the mission comes
up with a detailed and costed work plan to justify the need for improved
funding and ensures that all funds released are spent within the
approved work plan.
83.6 Absence of Statement of Reconciliation between total Expenditure per Statement of Appropriation Account to total Expenditure in Statement of Financial performance
In the absence of the above statement there is unexplained discrepancies
in the following items and figures in the Statement of Financial
performance and Statement of Appropriation Account.
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Item Actual figures as per Statement of Financial performance.
Actual figures as per Statement of Appropriation Account.
Budget figures as per Statement of Financial performance
Budget figures as per Statement of Appropriation Account
Employee costs
335,071,153 248,788,000 358,078,885 248,788,000
Goods and services consumed.
213,745,053 213,400,000 223,719,381 213,400,000
Consumption of property, plant & machinery
27,802,431 Nil 29,434,334 Nil
I advised the Accounting to reconcile the above figures and also prepare
the reconciliation statement between the expenditure as per statement of
Appropriation account and statement of financial performance.
83.7 The Implementation of the Mission Charter
The Mission Charter for Moscow Embassy was issued on 23rd Jan 2006 and
outlines specific tasks, activities and performance outturns to be achieved
which shall be used in appraising the performance of the Head of Mission
In the Mission’s progressive report on the implementation of the charter for
the period 2006/2007, the actual achievements in the areas of trade
were reported as 500 tons of tobacco leaf exports to Russia (no value
attached) and coffee exports to Belarus valued at US $85.000. The mission
target was to increase exports to Russia to US $ 3m by 2008 from the
current US $ 1,312,540 in key products like tobacco, coffee and flowers. I
was not provided with sufficient information to enable me verify how the
current exports were arrived at and if correct, where and how the target
would be achieved with the figures given.
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Further the Investments from Russia to Uganda were targeted to increase
from US $ 2,657,000 to US $4m in the areas of cotton ginning, citrus
processing and assistance to Busitema Agricultural College (Now Busitema
University). The actual achievements reported here include construction of
a ginning factory in Kibuku County in Pallisa district and registration of a
cotton club company in Uganda. The report estimates that the amount
invested is approximately US $ 4m. As mentioned earlier, i could not
independently verify the figures due to lack of sufficient information.
Finally Technical assistance from Russia reported in the areas of human
medicine (six doctors attached to Mulago Hospital), in the military field (like
27 UPDF officers trained in tank mechanics and other 5 in MIG
manoeuvres) and 19 Russian tourist groups were reported to have visited
Uganda during the period.
It’s clearly evident that the mission charter is yet to be fully implemented
and the performance indicators reported still fall short of the targets.
Inadequate funding to the mission could be a contributory factor and stiff
competition from the traditional Russian destinations like Seychelles, the
far East, Kenya etc could be the other factor.
I advised management to lobby the relevant authorities in Kampala to
obtain the required funding in order to enable the mission/embassy cover
all the countries under it’s jurisdiction which include Russian Federation,
Ukraine, Republic of Belarus, Khazakhstan, Almenia, Republic of Kurguzstan,
Georgia, Republic of Azerbaijan, Turkmerustan, Tajikistan, Uzbekistan.
83.8 Staffing Matters
The mission was re-opened in August 2003 by one staff after the June
2000 closure. Its charter mandates the embassy to cover Moscow, Ukraine,
Belarus and the Commonwealth countries of independent states. Moscow
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alone is a big city and Russia is a huge country with good prospects for
trade and investment. Surprisingly there was only 2 home-based staff, the
Ambassador and First secretary/Accounting Officer. The number of local
staff was also not sufficient. During the time of inspection it was noted
that the Accounts Assistant was also the Driver for the pool vehicle.
In a related development the salaries paid to local staff are so low that
attracting and retention is difficult given the costs of living in Moscow and
the local labour laws. For instance a housekeeper is paid as low as US $250
p.m, an office attendant US $360 p.m and a long serving secretary US $
500 p.m.
I advised management to liaise with the relevant authorities in Kampala to
improve on the staffing levels of the mission. I recommend further that the
terms of service for local staff be improved to enable the mission attract
high calibre and quality staff to improve service delivery.
83.9 Rent
Examination of accounts revealed that whereas the mission’s quarterly
release from the Treasury for rent is about US $21,408.90 the actual total
quarterly rent required is US $ 24,725.94 resulting into a quarterly shortage
of about US $3317.04(equivalent to US$ 13,268.16 annually). It was
further noted that by the time of closure of the embassy in 2000, records
show that the rent arrears was US $ 237,595 and the Russian Government
was reluctant to provide premises due to the unpaid rent at the time.
Although the rent arrears were later paid in full, a situation that leads to
accumulation of rent should not be allowed to re-occur.
I advised the Accounting Officer to liaise with the Permanent Secretary/
Secretary to the Treasury to ensure that rent due is fully paid for using rent
releases other than diverting funds from other sources.
477
83.10 Recall of an Officer
An officer at the Embassy ended his tour of duty and was recalled in June
2007. The costs of his recall were met by the Embassy instead of the
Ministry of Foreign affairs, which is responsible for such an activity.
Consequently an amount of US $15,353.84 was paid to a shipping company
for transporting the personal effects of the said officer. Similarly the air
tickets for both the departing and incoming officers were also paid for by
the embassy. I have reported on this matter previously about similar
practices in other Embassies but the ministry has persistently directed
embassies to divert funds meant for other programmes to meet costs of
recall even when re-location of staff is clearly the mandate of the ministry
and is budgeted for.
I recommend that the Ministry of Foreign Affairs should manage the
deployment of staff within its budget and Accounting Officers in the
embassies abroad should not be directed to meet costs outside their
budgets.
84.0 BERLIN MISSION 84.1 Non Tax Revenue collections.
A review of the accounts revealed that the mission realised a total of
Shs.179,490,968 from Non Tax Revenue and transferred Shs.145,689,677
to Treasury.
However, the documents in form of remittances advice slips and
acknowledgement receipts from Treasury were not availed for verification
to confirm that the funds were actually remitted to the Consolidated Fund.
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Non Tax Revenue returns for the period July-September 2006 were also not
submitted for audit. Consequently, I could not reliably ascertain the
accuracy of total collections reported in the accounts.
84.2 Unauthorised expenditure
According to Statement of Appropriation Account (Based on nature of
expenditure for services voted) the mission incurred unauthorised excess
expenditure of Shs.23,682,255 on consumption of property, plant &
equipment.
I advised the Accounting officer to request for a retrospective authority to
regularise the expenditure.
84.3 Internal Controls
Generally, the internal controls were inadequate. For instance, most
payments lacked supporting documents like requisitions, loose minutes,
invoices and acknowledgement receipts. The RBC returns were either
submitted late or in some cases like for the period July-September 2006,
they were not submitted for audit.
I urged the Accounting officer to improve on the control environment, as
weak controls pose a high risk to management in its responsibility of
managing Public Funds adequately.
84.4 Unspent Balances.
Examination of Accounts revealed there were unpent balances from the
previous year on three (3) mission bank accounts totalling Shs.143,787,961
for the financial year 2005/2006.
However, I was not provided with evidence that the funds were actually
remitted back to the Consolidated Fund as required by the law.
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I advised the Accounting officer to transfer the unspent funds promptly to
the Consolidated Fund and disclose in the accounts accordingly.
85.0 PARIS MISSION
85.1 Excess Expenditure
Expenditure incurred in excess of the approved budgetary provisions
totalled Shs.159, 321,101 affecting the following budget items: -
Actual Budget Variance
(Excess
Expenditure)
Employee Costs 930,300,930 919,458,296 10,842,634
Goods and Services 645,471,144 628,046,156 17,424,988
Consumption of Property,
Plant & Equipment 131,053,479
- 131,053,479
Total 159,321,101
This expenditure is extra budgetary and is an indication of breakdown of
controls over budgetary expenditure.
In her explanation the accounting officer attributed the over expenditure to
poor funding of the Mission by the Treasury which forces the Mission to
utilise Non-Tax Revenue to fund critical activities of the Mission.
The excess expenditure needs to be regularised by way of supplementary
appropriation. Management should initiate the process accordingly.
There is need for government to make a comprehensive review of the
Mission needs and budget for them accordingly.
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85.2 Irregular Payment of Salaries and Wages
Examination of accounts revealed that three embassy staffs were paid
salaries and allowances US$ 82,692 over and above the entitlements
stipulated in the Foreign Service Standing Orders ( Group 3).
It was explained by the accounting officer that it was management decision
to apply higher rates owing to the high cost of living in Paris and she had
written to the responsible ministries seeking for clearance. I await the
outcome.
85.3 Mission Properties
(a) Title Deeds
The Mission owns a building located at 13th Avenue Raymond
Poncaire in Paris which is used as the Chancery building. However,
the title deed could not be traced at the Embassy. Without a title
deed the rights of ownership of the property can be challenged.
In her response, the accounting officer stated that she had initiated
inquiries with the relevant authorities. I await the outcome of the
process.
(b) State of the Property
Following the closure of the Mission, the property suffered extensive
deterioration due to lack of regular maintenance.
Efforts have since been made to renovate it using proceeds from
Non-Tax Revenue. However, a lot still has to be done to fully
renovate the building and make it reflect the status of a chancery
building. The lift is too old to be used and poses a risk both to the
users of the building and the neighbourhood. The fourth floor of the
building is not in use due to dilapidation. It has glassy roofing
supported by rusty joints which may require replacement. Its
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windows and floor also require redoing, painting and polishing. This
floor, if renovated has the potential to generate a lot of revenue for
the Mission.
In her written response, the accounting officer indicated that they
were committed to the renovation works and considering sourcing
funds from financial institutions.
There is need for the Mission to be availed with the required funds
to fully renovate the building. The Ministry could also consider the
financing proposal put forward by the Mission in which the Mission
would negotiate a loan (€350,000) with one of the bankers to
finance the complete renovation of the building and make it more
attractive for rental purposes.
(c) Tenancy for Embassy of the Republic of Tanzania
The Embassy entered into a rental agreement with the Embassy of
the Republic Tanzania in 1995 for the rental of office space until
October2004. In September 2004 the lease agreement was
renewed for a further period of three years expiring on 30th October
2007 at a monthly rental of €6,152 and an additional charge of €600
to cover utilities and garbage collection. The lease agreement
provided that major renovations were soon to be carried out on the
building but once completed the rental would be reviewed. This
would allow the mission earn economic rates from the tenancy.
It was however noted that the rental has never been revised despite
renovations were done on the property.
There is need to renegotiate the lease agreement so that the Mission
can earn economic rates.
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85.4 Design of Mission Website
The Mission contracted a company to design a website and provide
technical support service and training for site maintenance at a cost of
€3,300. It was however noted that the award did not follow the
recommended procurement procedures. Instead the decision to contract
was made by the Head of the Mission when she met the CEO of that
company while attending a Conference in Uganda. This practice does not
only contravene the regulations but it denies the government of a chance
to source for alternative cheaper and better service providers.
There is also no evidence to show that the company completed the work by
March 15th as per contract terms. Further more an extra €1,000 was paid
to the firm in excess of the contract price.
Procurement regulations should always be adhered to by the Mission.
Meanwhile the €1,000 should be explained.
85.5 Local Staff Appointments
A review of local contract and non contract staff files revealed that some
staff files lacked appointment letters. There was also no evidence of
probationary appointment for some staff contrary to the existing
recruitment procedures for local staff. Records also showed that although
many of the local staff had just been reappointed, the Head of Mission had
issued an instruction to have their appointments rescinded for reasons
which are yet to be explained. This is likely to lead to staff demotivation if
not handled properly.
Such cancellation of employment appointments or contracts has legal
implications which can sometimes lead to nugatory expenditure.
Management should have also staff files updated. There is also need to
ensure that the recruitment procedures are strictly complied with.
483
86.0 TEHRAN MISSION 86.1 Unauthorised excess expenditure
A review of the statements of appropriation accounts and cash flow
statement revealed that the mission incurred unauthorised expenditure of
Shs.114,430,637 on various expenditure items without authority as shown
below:
Item Budget Actual Variance Employee Costs 248,788,000 335,071,153 86,283,153
Goods & Services
Consumed
213,400,000 213,745,053 345,053
Consumption of property, plant and equipment.
Nil 27,802,431 27,802,431
Total 114,430,637
The actual expenditure is reflected in the Statements of Appropriation.
I advised the Accounting officer to have the expenditure regularised in
accordance with the regulations.
86.2 NTR collections
Examination of accounts further revealed that the mission collected
Shs.8,887,364 from NTR. However, there were no remittance advice slips
and acknowledgement receipts provided from Treasury to confirm that the
funds were actually remitted to the consolidated fund.
The Accounting Officer explained that all NTR collected was remitted to the
consolidated fund on two occasions. I informed the Accounting officer that
proof of remittance of NTR could only be evidenced by way of
acknowledgement receipts from Treasury.
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86.3 General Observations
The following observations were made which merit mention:
Contrary to regulations officers at the mission claim both climatic and warm
clothing allowance. It should be noted that warm clothing is for only civil
servants (other than Foreign Service Officers) on training or duty outside
the country for a limited period of time.
The Accounting Officer explained that posting letters from the parent
Ministry for all Foreign Service officers state clearly that the officers are
entitled to both climatic and warm clothing allowances. I advised the
Accounting officer that Foreign Service officers are only entitled to climatic
allowance on posting but not both and that recovery measures should be
initiated for the irregular payments made.
Procurements are not handled transparently as per regulations. There was
no evidence of minutes of the contracts committee meetings to confirm
whether they handled all the procurements in a prescribed manner.
Instead procurements like computers worth Rials 22,840,000 (approx
US$2,460) laptop R28,260,000 (US$3,059), furniture for R33,300,000 (US
$3,604 and cutlery and utensils worth Rials 19,300,000 (US $2,079) were
purchased off the street on the recommendation of one officer. It was
also noted that the Mission does not prepare a procurement plan as
required by the law.
In a related development all the above procurements were made without
procurement Plan.
The Accounting officer explained that it was an oversight to exclude the
contracts committee minutes in the expenditure returns and the mission
also had a procurement plan. I urged the Accounting officer to provide the
documents for review.
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87.0 CANBERRA MISSION 87.1 Unauthorised Expenditure The mission incurred unauthorised expenditure of Shs.134,853,103
without authority as shown below:
Item Actual Budget Variance FSA 267,050,439 257,763,000 9,287,439Welfare & Entertainment
10,853,288 10,000,000 853,288
Telecommunications 27,821,164 10,000,000 17,821,164Rent produced properties
216,807,245 190,000,000 26,807,245
Electricity 15,183,531 10,000,000 5,183,531Travel inland 41,920,499 8,000,000 33,920,499Travel abroad 50,804,481 10,000,000 40,804,481Fuels, oils, & lubricants
8,175,456 8,000,000 175,456
Total 638,616,103 503,763,000 134,853,103
I advised the Accounting Officer to have the excess expenditure regularised
in accordance with the regulations.
87.2 NTR Collections
According to the accounts the mission realised a total of Shs.189,523,021
from NTR collections. The following matters were noted:-
• Remittances Un-receipted
Treasury has so far only acknowledged the receipt of Shs.97,069,294.
The balance of Shs.92,453,727 remains unaccounted for.
I advised the Accounting officer to provide acknowledgement receipts
from Treasury as evidence of remittance of the entire amount collected.
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• Non Submission of NTR Returns
The Mission never submitted NTR Returns for the entire financial year
contrary to regulations. I was therefore unable to confirm whether the
NTR reported in the accounts was properly stated.
I advised the Accounting officer that all revenue returns with detailed
information as required by government regulations should be written
and submitted for audit.
Revenue collections
Whereas the mission’s reported NTR in the accounts was
Shs.189,523,021 (Aus$132,450), a review of the available documents
revealed that total banking on NTR account for the period amounted to
Shs.203,402,774 (Aus$142,150) causing an over banking of
Shs.13,879,753 (Aus 9,700) whose source was not explained.
I advised the Accounting officer to reconcile the collections for the
period with the bankings made and the performance of the previous
year.
87.3 Internal Controls
Generally the internal controls were poor as shown below:
(i) Unauthorized Reallocation of Funds
A total of AUS $ 7611.44 was paid to Ms Esanda Finance in respect
of eight (8) instalments (@ $951.43) for Utility Car Hire Purchase for
the Mission. This being a capital asset, funds should have been
budgeted and sourced for under the capital budget. Instead
recurrent funds were used to purchase the vehicle. This
unauthorized reallocation of funds not only depletes funds for other
activities for which funds were budgeted but also distorts budgetary
control mechanisms.
487
During inspection the Accounting Officer accepted the anomaly and
stated that this was so because the Mission has never been allocated
capital development funds. She further stated that she is currently
charging the expense on the transport item.
I advised the Accounting officer to continue lobbying the relevant
authorities for capital development budget to enable spending
according to the set laws and regulations.
(ii) Personnel Records
Most of the personnel files were incomplete to facilitate a through
review of the records.
During discussions the Accounting Officer stated that the Mission is
new, and was in the process of opening up all books and records of
the Mission. I urged the Accounting officer to expedite the process.
(iii) Use of Telephone
It was further noted that the Mission on average pays AUS $ 1000
monthly in respect of telephone expenses for the Chancery.
However, there was no telephone register in place at the Mission to
enable verification of usage of telephones. It is also not clear
whether private calls are not included in the bills.
I advised the Accounting Officer to ensure that a register is opened
and maintained.
(iv) Record Keeping
Although there was marked improvement in the record keeping as
compared to the last audit inspection in September 2006 the
following matters were noted;
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(a) Books of Accounts
The mission maintains a vote control register according to the
commitment control system, however there are no abstracts and
ledgers being maintained. This made the verification of final
accounts difficult.
I advised the Accounting officer to immediately open up the
accounting records to facilitate the compilation of final accounts in a
systematic manner.
I recommend further that Treasury should consider authorising the
purchase of accounting software for all Missions to enable faster,
easier and more accurate system of compilation of accounts.
(b) Visa Returns
Examination further, revealed that records of visa stickers are not
being maintained and submitted for audit regularly. At the time of
inspection an attempt was being made to have a counterfoil register
opened.
I recommend that visa stickers be accounted for and submitted in
the monthly returns just like the expenditure returns. There is also
need for visa usage to be reflected in the visa register and the ledger
folio records properly maintained to enable tracking of the visa
books and stickers in stock, used and cash collected.
(v) Asset Management
(a) Record keeping
Examination and inspection both revealed that furniture and
equipment bought by the Mission since its inception, were not
recorded in an inventory book / asset register as required by
regulations.
489
(b) Assets that do not belong to the Mission
It was further noted that the Mission is functioning using furniture
purchased by the Ambassador using his personal funds. This
furniture includes desks and chairs and constitute a bigger
proportion of all furniture used at the Mission. These assets are also
not recorded in the inventory register.
I advised management on the need to immediately have a record of
the assets purchased recorded in the Mission books. I further
recommend that the assets of the Ambassador be properly recorded
and modalities be initiated by the Accounting Officer to have the
furniture purchased and recognized as Mission furniture.
87.4 Nugatory Expenditure
Examination of accounts revealed that the mission incurred a total of
Shs.28,943,233 (US$16,538.99) on transportation of an officer’s personal
effects from Canberra to Kampala. Out of the above amount, Shs.4,837,210
(US$.2,764.12) was for demurrage charges. This expenditure is considered
nugatory as it could have been avoided had the concerned officers acted
responsibly.
It was further noted that in the Permanent Secretary/Secretary to the
Treasury’s letter authorizing usage of Visa money, the Accounting Officer
was advised to seek for supplementary expenditure to cover the expense
according to set laws. The request for supplementary as advised was not
sought, thereby causing an over expenditure.
I advised the Accounting officer to always avoid wastage. I recommend
further that a request for a supplementary be made to the PS/ST to avoid
excess expenditure.
490
87.5 Computational and clerical errors in the accounts
The following errors were noted in the accounts:-
a) Statement of Financial Performance Transfers received from Treasury were recorded as 695,532,554 in
the accounts. However, a schedule of releases from Treasury for the
period revealed that the figure was actually Shs.698,510,000. There
is need to reconcile the two figures to ensure accurate disclosure.
b) Statement of Reconciliation of Total Expenditure on The Statement
of Financial Performance And Statements of Appropriation.
The figure for the total expenditure from the statements of
appropriation to be transferred for the reconciliation is
Shs.775,382,813 and not Shs.778,040,276, while the figure to be
reconciled from the statement of financial performance is
Shs.936,885,256 and not 935,885,256. There is need to reconstruct
the statement.
c) Statement of Stores and other Assets
Whereas there is no figure posted for stores and other assets
acquired during the year, it was noted from examination of vouchers
that various equipment and furniture were acquired during the year,
for instance a photocopier, 2 computers, furniture and equipment.
All these should have been recorded in the statement to ensure
completeness. There is also need for adequate disclosure as to the
source of the funding for the purchases made since no capital
development funds were released to the Mission.
I advised the Accounting Officer that all the above errors in the
financial statements be explained.
491
87.6 Salary Payment
Examination of accounts revealed that the salary being paid to the
Ambassador of US 2,227 is above the approved rate. The highest salary
being earned by officials at his rank is US$1,696. This payment calls for an
explanation and proper authorisation.
During the inspection it was discovered that the correspondence detailing
the entitlements of the Ambassador from Ministry of Foreign affairs
Kampala indicated that HE was to receive US$2,227. However, the
correspondence did not indicate the source of authority for the pay.
I urged the Accounting Officer to provide further information on the
emoluments and their regularity and evidence that Public Service duly
authorized
