Report of the Auditor General

OFFICE OF THE AUDITOR GENERAL

THE REPUBLIC OF UGANDA

REPORT OF THE AUDITOR GENERAL

ON THE FINANCIAL STATEMENTS OF BUTABIKA NATIONAL MENTAL REFERRAL

HOSPITAL FOR THE YEAR ENDED 30TH JUNE 2014

OFFICE OF THE AUDITOR GENERAL

UGANDA

TABLE OF CONTENTS

PAGE Table of Contents ...... i

List of Acronyms ...... ii

Report of the Auditor General on the Financial Statements of Butabika National Mental Referral Hospital for the Year Ended 30th June 2014 ...... 1

Detailed Report of the Auditor General on the Financial Statements of Butabika National Mental Referral Hospital for the Financial Year Ended 30th June 2014 ...... 3

1.0 Introduction ...... 3

2.0 Background Information ...... 3

3.0 Objectives of the Hospital ...... 3

4.0 Function of the Hospital ...... 4

5.0 Financing of the Hospital ...... 4

6.0 Audit Scope ...... 4

7.0 Audit Procedures Performed ...... 4

8.0 Audit Findings ...... 5

ACRONYMS

GoU Government of Uganda

IFMS Integrated Financial Management System

PFAA Public Finance and Accountability Act

PHC Primary Health Care

PPDA Public Procurement and Disposal of Public Assets

PS/ST Permanent Secretary/Secretary to Treasury

UGX Uganda Shillings

REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF BUTABIKA NATIONAL MENTAL REFERRAL HOSPITAL FOR THE YEAR ENDED 30TH JUNE 2014

THE RT. HON. SPEAKER OF PARLIAMENT I have audited the accompanying financial statements of Butabika National Mental Referral Hospital for the year ended 30th June 2014. These financial statements comprise of the Statement of Financial Position as at 30th June 2014, Statement of Financial Performance, Statement of Changes in Equity, Cash flow Statement together with other accompanying statements, notes and accounting policies.

Management Responsibility for the Financial Statements Under Article 164 of the Constitution of the Republic of Uganda, 1995 (as amended) and Section 8 of the Public Finance and Accountability Act (PFAA), 2003, the Accounting Officer is accountable to Parliament for the funds and resources of the Hospital. The Accounting Officer is also responsible for the preparation of financial statements in accordance with the requirements of the Financial Reporting Guide, 2008, and for such internal controls as management determines are necessary to enable the preparation of financial statements that are free from material misstatements, whether due to fraud or error.

Auditor’s Responsibility My responsibility as required by Article 163 of the Constitution of the Republic of Uganda, 1995 (as amended) and Sections 13 and 19 of the National Audit Act, 2008 is to express an opinion on the financial statements based on my audit. I conducted my audit in accordance with the International Standards on Auditing. Those standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing audit procedures to obtain audit evidence about the amounts and disclosures in the financial statements as well as evidence supporting compliance with relevant laws and regulations. The procedures selected depend on the Auditor’s judgment, including the assessment of risks of material misstatement of the financial statements whether due to fraud or error. In making those risk assessments, the Auditor considers internal controls relevant to the entity’s preparation and fair presentation of financial statements in order to design audit procedures that are appropriate in the circumstances, 1

but not for purpose of expressing an opinion on the effectiveness of the entity’s internal controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.

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 during the audit which have been brought to the attention of management.

PART "A"

Opinion

In my opinion, the financial statements of Butabika National Mental Referral Hospital for the year ended 30th June 2014 are prepared, in all material respects in accordance with the Financial Reporting Guide, 2008 and section 31(6) of the Public Finance and Accountability Act, 2003.

John F. S. Muwanga AUDITOR GENERAL

27th February 2015

PART “B”

DETAILED REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF BUTABIKA NATIONAL MENTAL REFERRAL HOSPITAL FOR THE FINANCIAL YEAR ENDED 30TH JUNE 2014

This section outlines in detail the audit scope, audit findings, my recommendations and management responses in respect thereof.

1.0 INTRODUCTION

Article 163 (3) of the Constitution of the Republic of Uganda, 1995 (as amended) requires me to audit and report on the public accounts of Uganda and all public offices including the courts, the central and local government administrations, universities, and public institutions of the like nature and any public corporation or other bodies or organizations established by an Act of Parliament. Accordingly, I carried out the audit of the Hospital to enable me report to Parliament.

2.0 BACKGROUND INFORMATION Butabika Mental Referral Hospital was established in 1955 and currently is the only National Referral Mental Health Institution in the country. The Hospital provides specialist care and management for all patients with mental and psychosocial problems on a referral basis. At the same time, it is a teaching Hospital for all cadres specializing in mental health, ranging from nursing cadre to postgraduate students. Butabika Hospital also provides general outpatient services to people from the surrounding area.

3.0 OBJECTIVES OF THE HOSPITAL The Hospital has the following objectives:  Provide specialised curative and rehabilitative mental health services together with the associated research, training and advocacy;  Undertake and support mental health related services;  Carry out and support training in mental health related research;  Provide outreach and mental health support supervision to Kampala District and mental units in Regional Referral Hospitals;  Provide Primary Health Care (PHC) services to the surrounding communities;  Provide advice to Government on mental related policies; and 3

 Provide advocacy for mental health.

4.0 FUNCTION OF THE HOSPITAL The major function of Butabika is to provide specialised curative and rehabilitative mental health services together with the associated research, training and advocacy.

5.0 FINANCING OF THE HOSPITAL The Hospital is wholly financed by the Government of Uganda (GoU) and UGX.8.82 billion was received out of the approved budget of UGX.9.59 billion, representing about 92% level of performance.

6.0 AUDIT SCOPE The audit was carried out in accordance with the International Standards on Auditing and accordingly included a review of the accounting records, agreed procedures as was considered necessary. In conducting my reviews, special attention was paid to establish whether:- a. The Financial Statements for the Hospital have been prepared in accordance with the requirements of the PFAA, 2003, and the modified cash basis of accounting and that they present fairly the financial performance and position of the Hospital as at 30th June 2014; b. Sufficient internal controls have been applied consistently throughout the year to safeguard the assets of the Hospital and mitigate the risk of misstatement of the financial statements; c. All necessary supporting documents and records have been maintained and are in agreement with the financial statements presented; d. Goods and services have been procured in accordance with the Government of Uganda (GoU) procurement regulations; and e. The Hospital’s assets were well managed in the period under review.

7.0 AUDIT PROCEDURES PERFORMED 1) Revenue/Receipts Obtained schedules of receipts and reconciled the amounts to the Hospital’s cashbooks and bank statements.

2) Expenditure Vouched transactions to establish whether documentation in support of the expenditures agreed with the amounts and descriptions on the vouchers; reviewed and reconciled the bank statement transactions to test for occurrence and whether they were properly controlled and accounted for.

3) Internal Control System Reviewed the internal control system and its operations to establish whether the controls were sound and were applied throughout the period under review.

4) Procurement Reviewed the procurement of goods and services during the period under review and reconciled with the procurement plan.

5) Fixed Asset Management Reviewed the use and the management of the Hospital’s assets during the period under review.

6) Financial Statements Examined, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessed the accounting principles used and significant estimates made by management; as well as evaluating the overall financial statement presentation.

8.0 AUDIT FINDINGS 8.1 Mischarge of Expenditure Treasury Accounting Instructions require that transactions should be recorded in the books of account using the Government of Uganda Chart of Accounts as prescribed by the Accountant General. The detailed explanations for each account prescribe what expenditures should be charged on the account. It was noted that out of the total hospital operating expenditure of UGX.8,718,327,417, UGX.74,863,427 (0.9%) was charged on codes other than those under which it was appropriated leading to mischarge of expenditure on these accounts. The financial statements are misrepresented to the extent of the mischarge.

The Accounting Officer regretted the anomaly and attributed it to under/over estimation of some items during the budgeting process. However, during the bidding process, actual costs varied from the estimates leading to deficits and surplus on some items. It was not possible to obtain authority for a virement from Permanent Secretary/Secretary to the Treasury, as the funds had already been released and uploaded on IFMS.

I have advised management to streamline the budgeting process and, ensure that payments are correctly charged on the item codes to enable proper implementation of the Hospital’s programmes.

8.2 Un authorised additional funding above contractual figures Regulation 105(1)(c) of PPDA Regulations, 2003 prohibits procuring and disposing entities from initiating any procurement proceedings or activities for which funds are neither available nor adequate, except where the Permanent Secretary/Secretary to Treasury (PS/ST) has confirmed in writing that the required funding shall be made available.

Review of the procurement records and the consolidated procurement plan revealed that the Hospital estimated to buy a dental chair at a cost of UGX.40M and to fence a football pitch and private wing of the hospital at a cost of UGX.60M. It was however noted that the cost of the dental chair was UGX.67,200,000 while that of fencing the football pitch and private wing was UGX.115,969,990. I was not provided with evidence of confirmation of additional funding.

In response, the Accounting Officer explained that the purchase of these items was under budgeted in comparison with the actual contract values, while the transport equipment – Ambulance, was over budgeted. Given the need to fence off the football pitch to secure land from encroachment and the high numbers of both in and out patients demanding for dental services, the savings from the Ambulance were used to top-up the under budgeted items.

I advised the Accounting Officer to ensure that the Hospital operates within the accounting warrant or else seek for authority to spend over and above the budgeted amounts in a timely manner.

8.3 Staffing gaps in Butabika NMRH Butabika National Mental Hospital staffing was restructured in 1999/2000 as part of the overall restructuring of Government and the Ministry of Health resulting into the current establishment of 433 staff of which 346 positions are filled leaving 87 vacancies. Analysis of the current patient load revealed a need for filling of the vacancies and further review of the staffing structure given the nature of patients who require dedication of more time by the medical staff. The table below refers;

S.no Nature of Planned average Current average Increase in Period clinic No of patients No of patients average No of patients 1. In patients 550 800 250 Daily

2. out-patients 27,500 40,000 12,500 Annually clinic 3. mental clinic 16,875 27,000 10,125 Annually

Understaffing and inadequate staff establishment may result into deterioration of delivery of medical services to the patients.

Management indicated that a proposal for a new structure of 762 staff had been forwarded to the Ministries of Health and of Public Service.

I have advised the Hospital Management to follow up with the line Ministry and other stake holders to ensure that the staffing requirements of the Hospital are addressed.