OFFICE OF THE AUDITOR GENERAL

THE REPUBLIC OF

REPORT OF THE AUDITOR GENERAL

ON THE FINANCIAL STATEMENTS OF KIRA MUNICIPAL COUNCIL

FOR THE YEAR ENDED 30TH JUNE 2017

OFFICE OF THE AUDITOR GENERAL UGANDA

TABLE OF CONTENTS

LIST OF ACROYNMS ...... 2 Key Audit Matters ...... 4 Other Matter...... 4  Failure to Implement Budget as approved by Parliament ...... 4  UPE Under Releases of Capitation Grant ...... 5  Understaffing ...... 5 Management’s Responsibility for the Financial Statements ...... 6 Auditor’s Responsibilities for the Audit of the Financial Statements ...... 6 Appendices...... 9 Appendix 1: Budget Performance (Financial) ...... 9

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LIST OF ACROYNMS

Acronyms Meaning DLG District Local Government ICT Information Communication Technology ISSAI International Standards of Supreme Audit Institution LGFAM Local Governments Financial and Accounting Manual 2007 LGFAR Local Governments Financial and Accounting Regulations 2007 MoESTS Ministry of Education Science and Technology and Sports MoFPED Ministry of Finance Planning and Economic Development NMS National Medical Stores PFMA Public Finance Management Act 2015 PPDA Public Procurement and Disposal of Assets UGX Uganda Shillings PDU Procurement and Disposal Unit HC Health Centre KM Kilometer DMO District Medical Officer UPE Universal Primary Education

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REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF KIRA MUNICIPAL COUNCIL FOR THE YEAR ENDED 30TH JUNE 2017

THE RT. HON. SPEAKER OF PARLIAMENT

Opinion I have audited the financial statements of Kira Municipal Council which comprise the Statement of Financial Position as at 30th June 2017, and the Statement of Financial Performance, Statement of Changes in Equity and statement of Cash flows together with other accompanying statements for the year then ended ,and notes to the financial statements ,including a summary of significant accounting policies.

In my opinion, the financial statements of Kira Municipal Council for the year ended 30th June 2017 are prepared, in all material respects in accordance with section 51 of the Public Finance Management Act, 2015 and the Local Government Financial and Accounting Manual, 2007.

Basis for Opinion I conducted my audit in accordance with International Standards of Supreme Audit Institutions (ISSAIs), the National Audit Act 2008 and the Audit Methodology of my Office. My responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of my report. I am independent of the municipal council in accordance with the Constitution of the Republic of Uganda (1995) as amended, the National Audit Act 2008, the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to my audit of the financial statements in Uganda. I have fulfilled my other ethical responsibilities in accordance with these requirements and the IESBA Code. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

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Key Audit Matters Key audit matters are those matters that, in my professional judgment, were of most significance in my audit of the financial statements of the current period. These matters were addressed in the context of my audit of the financial statements as a whole, and in forming my opinion thereon, and I do not provide a separate opinion on these matters. I have determined the matter described below as key audit matter to be communicated in my report.

Other Matter I consider it necessary to communicate the following matters other than those presented or disclosed in the financial statements:

 Failure to Implement Budget as approved by Parliament

Section 45 (3) of the Public Finance Management Act, 2015 states that “ An Accounting Officer shall enter into an annual budget performance contract with the Secretary to the Treasury which shall bind the Accounting Officer to deliver on the activities in the work plan of the vote for a Financial year, submitted under section 13 (15)” of the said Act.

I observed that out of the budgeted revenue of UGX.13,937,110,754 ; Council received UGX.12,564,974,045 (90%) resulting into a shortfall of UGX.1,372,136,709 (10%). I observed that, a number of planned outputs procurement of computers, printers and furniture and inspection of Secondary and Primary as shown in Appendix 1.

Failure to implement activities denies service to the beneficiary communities and defeats the purpose for which budgeting and budgetary controls are instituted. The failure to implement all the planned activities may have been a result of inadequate releases or may be an indication of inefficiency.

According to the Accounting Officer, they received less than budgeted.

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The Accounting Officer should engage the relevant authorities and ensure that budget deficiencies are addressed and that all the allocated funds are released and all activities are implemented according to the budget as approved by parliament.

 UPE Under Releases of Capitation Grant The policy guidelines for participating Government aided primary schools under UPE states that Government shall pay a capitation grant of UGX.7,800 per pupil. Analysis of UPE capitation grant received by schools in Kira Municipal council in comparison with the total number of pupils in these schools revealed that the schools received a grant of UGX.3,394 per pupil on average leading to an under funding of UGX.61,866,271 as shown in appendix 2

Under funding affects the UPE schools planned activities and academic perfromance of pupils.

According to the Accounting Officer; a letter has been written to the Ministry requesting for the challenge to get addressed and It is hoped that the Council will include the challenge in the budget framework paper for F/Y 2018-2019.

I advised the Accounting Officer to take up the matter with the relevant Ministries to ensure release of adequate funds to the schools.

 Understaffing The Municipal Council has an approved staff structure of 153 positions. Out of the approved staff structure only 42 (27.5%) are filled leaving a staffing gap of 111 (73%) positions as shown in appendix 3. Understaffing overstretches the available staff beyond their capacity, creates job-related stress to the fewer staff and negatively affects the level of public service delivery to the community.

The Accounting Officer explained that Authority was granted to fill some gaps but due insufficient wage bill not many will be filled.

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The Accounting Officer was advised to continue engaging the Ministry of Public Service, the Ministry of Local Government and the Ministry of Finance Planning and Economic Development to address the challenge.

Management’s Responsibility for the Financial Statements Under Article 164 of the Constitution of the Republic of Uganda, 1995 (as amended) and Section 45 of the Public Finance Management Act, 2015, the Accounting Officer is accountable to Parliament for the funds and resources of Kira Municipal Council.

The Accounting Officer is also responsible for the preparation of financial statements in accordance with the requirements of the Local Governments Financial and Accounting Manual, 2007 and the Public Finance Management Act 2015 and for such internal control as management determines necessary to enable the preparation of financial statements that are free from material misstatement whether due to fraud or error.

In preparing the financial statements, the Accounting Officer is responsible for assessing the Municipal Council’s ability to continue delivering its mandate, disclosing, as applicable, matters related to affecting the delivery of the mandate of the Municipal Council, and using the Local Governments Financial and Accounting Manual, 2007 and Public Finance Management Act 2015 unless the Accounting Officer has a realistic alternative to the contrary.

The Accounting Officer is responsible for overseeing the Municipal Council’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements My objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISSAIs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,

6 they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with ISSAIs, I exercise professional judgment and maintain professional scepticism throughout the audit. I also:

 Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.  Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the municipal’s internal control.  Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.  Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the municipal’s ability to deliver its mandate. If I conclude that a material uncertainty exists, I am required to draw attention in my auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of my auditor’s report. However, future events or conditions may cause the municipal council to fail to deliver its mandate.  Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

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I communicate with the Accounting Officer regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit.

I also provide the Accounting Officer with a statement that I have complied with relevant ethical requirements regarding independence, and to communicate with him/her all relationships and other matters that may reasonably be thought to bear on my independence, and where applicable, related safeguards.

From the matters communicated with the Accounting Officer, I determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. I describe these matters in my auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, I determine that a matter should not be communicated in my report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

John F.S. Muwanga AUDITOR GENERAL 05th December, 2017 (Seal of the Auditor General)

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Appendices

Appendix 1: Budget Performance (Financial)

Source of Approved Budgeted Actual Amounts Variance %age Audit Remarks Management Response funding UGX. realized UGX UGX variance Conditional 7,748,774,648 6,665,347,752 (1,083,426,896) 13.9 Performance Government The variance was caused by budget below target Grants cuts Transfers 2,077,336,106 1,828,470,319 (248,865,787) 11.98 received from As above The variance was caused by budget Other Gov’t cuts Units Local revenue 4,087,000,000 4,071,155,974 (15,844,026) 0.38 Target not met. The major cause of the under- performance was mainly park fees, Business Licenses and Advertising fees. Park fees. A new policy on Revenue from park fees which came up during the course of the Financial year was resisted. This greatly affected Revenue from the source.

Business Licenses and advertising fees. A new policy was introduced by Ministry of Finance and Advertising fees where all businesses were required to go through formalization before being issued with a trading license. This hindered the payment of Trading Licenses in time and hence the under-

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performance. Donor funds 24,000,000 0 (24,000,000) 100 No follow up of funds. Total Budget 13,937,110,754 12,564,974,045 1,372,136,709 9.84 Target not met

Budget Performance (Physical)

Departme Item Description Planned Actual varian Budgeted Released Variance Audit Remarks Management Response nt Output Output ce (UGX) (UGX) (UGX) Administra computers, 32 18 14 300,000,0 237,953,000 62,047,000 Target not This project was not fully tion printers and sets of 00 achieved. accomplished because we were office Underperformed furniture purchased promised more computers under IFMS Programme. Production Trade sensitization 4 (Public 3 (Farmers 1 5,000,000 6,800,000 1,800,000 Excess funds of Despite receiving excess 36%, the cost and meetings organized awareness sensitized on 36% received of materials, equipment and services marketing at the of Trade Reforestatio but 25% target district/Municipal development n output not increased in comparison to what had Council and achieved. earlier been budgeted. This hindered Promotion the fourth training from being carried services) out. Education No. of secondary 55 (All 26 (All 29 27,128,00 33,742,000 6,614,000 24.3% excess The department involved Vocational schools learning learning 0 funds realized institutions and nursery schools that Inspected institutions institutions but Municipal Municipal 52.7% of had not earlier been captured. This Council wide Council wide secondary substituted the secondary schools. Inspected Inspected schools The department funded other co- inspections not curricular activities in the department achieved of primary Education that were found 74.6% of the necessary like Music, dance and drama primary schools which substituted the primary schools not inspected yet it was necessary. No. of primary 375 (All 95 (All 280 schools learning learning inspected institutions institutions Municipal Municipal Council wide Council wide inspected inspected)

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Natural No. of monitoring 12 3 9 5,000,000 14,634,000 (9,634,000) 75% of the The inputs for field resources and activities not activities which were compliance surveys carried out undertaken planned were under costed during the Budgeting process, so in execution the exercise were to costly. Works Routine Manual 24km 0 24km 0 100% activity Road gangs not recruited maintenance 16,836,00 (16,836,000) not carried due 0 to non- recruitment of road gangs

Appendix 2

Under Releases of Capitation Grant

S/N Code School Name Total Expected Actual Rate Computed quarterly releases on Variance/ under Enrolment Rate per per student/ amount per average funding student/ term term term 1 8010 COU 1274 7,800 3,034 9,937,200 3,864,763 6,072,438 2 280073 Bweyogerere Muslim 403 7,800 4,610 3,143,400 1,857,953 1,285,448 3 8004 Hassan Tourabi 498 7,800 3,852 3,884,400 1,918,157 1,966,243 4 8056 St. Joseph Catholic, 922 7,800 3,218 7,191,600 2,967,432 4,224,168 Kirinya 5 8011 St. Thomas Bazadde 764 7,800 3,396 5,959,200 2,594,738 3,364,462 6 8057 Kirinya COU 1057 7,800 3,136 8,244,600 3,314,323 4,930,277 7 8060 Boys' 794 7,800 3,380 6,193,200 2,683,611 3,509,589 8 8077 Namugongo Girls' 1178 7,800 3,709 9,188,400 4,369,332 4,819,068 9 8061 Umea 354 7,800 4,479 2,761,200 1,585,600 1,175,601

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10 8059 Namugongo Mixed 229 7,800 5,973 1,786,200 1,367,718 418,483 11 8048 Kamuli COU 1677 7,800 1,094 13,080,600 1,835,017 11,245,583 12 8047 Army 733 7,800 4,213 5,717,400 3,087,841 2,629,560 13 8036 Kireka Umea 579 7,800 3,491 4,516,200 2,021,364 2,494,836 14 8044 Kireka COU 450 7,800 3,141 3,510,000 1,413,588 2,096,413 15 8019 St. Gonzaga – Kamuli 221 7,800 5,372 1,723,800 1,187,105 536,696 16 80037 Kireka Home for 82 7,800 - 0 0 0 Mentally handicapped 17 8029 Kira COU 454 7,800 4,067 3,541,200 1,846,485 1,694,715 18 280080 Buwaate C/S 261 7,800 4713 2,035,800 1,230,108 805,693 19 8031 Buwaate COU 79 7,800 9,402 616,200 742,740 -126,540 20 8028 St. Francis 414 7,800 3,234 3,229,200 1,339,049 1,890,151 21 8023 Kijjabijo 318 7,800 3,985 2,480,400 1,267,332 1,213,068 22 8071 Melisa – Nakwero 337 7,800 3,735 2,628,600 1,258,777 1,369,824 23 8081 Nambogo Memorial 344 7,800 3,801 2,683,200 1,307,513 1,375,687 24 8022 Kimyanyi Umea 368 7,800 3,623 2,870,400 1,333,315 1,537,085 25 280078 395 7,800 4,413 3,081,000 1,743,278 1,337,723 Total 14185 3,394 110,003,400 48,137,139 61,866,271

Appendix 3 Understaffing

NO JOB TITLE SALARY SCALE APPROVED ESTABL. NO. FILLED NO. VACANT Office of the Town Clerk 1 Town Clerk (Chief Township Officer) U1SE 1 1 0 2 Driver U8 1 1 0 3 Personal secretary U4 1 0 1 Sub total 3 2 1 Administration 1 Deputy Town Clerk (Deputy Township Officer) U1E 1 1 0 2 Senior Assistant Town Clerk U3 1 0 1

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4 Assistant Town Clerk U4 1 0 1 5 communications Officer U4 1 0 1 6 Records Officer U4 1 0 1 7 IT Officer U4 1 0 1 8 Personal Secretary U4 2 0 2 9 Stenographer Secretary U5 2 1 2 10 Assistant Records Officer U5 1 0 1 11 Records Assistant U7 1 1 0 12 Senior Law Enforcement Officer U5 1 1 0 13 Law Enforcement Officer U6 1 0 1 14 Office Attendant U8 6 2 4 15 Driver U8 7 3 4 16 askari U8 4 1 3 Sub-total 31 10 21 Finance and Planning 1 Principal Treasurer U2 1 1 0 2 Senior Accountant U3 1 0 1 3 Senior Finance Officer U3 1 0 1 4 Senior Planner U3 1 0 1 5 Statician/Planner U4 1 0 1 6 Accountant U4 2 1 1 7 Senior Accounts Assistant U5 3 3 0 10 Assistant inventory management officer U5 2 1 1 Sub-total 12 6 6 Human Resource Management Unit Senior Human resource Officer U3 1 0 1 Human resource officer U4 1 1 0 Sub-total 2 1 1 Procurement and disposal Unit Senior procurement officer 1 0 1 Procurment officer 1 1 0 Sub-total 2 1 1 Internal Audit 1 Senior Internal Auditor U3 1 1 0 2 Internal Auditor U4 1 0 2 Sub-total 2 1 1 Works

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1 Municipal Engineer (Principal executive Engineer) U2 1 0 1 2 Senior Engineer (civil) U3 1 1 0 3 Mechanical & eclectrical 2 0 2 3 Senior Physical Planner U3 1 0 1 4 Physical planner U4U 1 1 0 5 Senior Environment Officer U3 1 0 1 6 Assistant Engineering Officer U4 1 1 0 7 Physical Planner U4 1 0 1 8 Environment Officer U4 1 0 1 9 Road Inspector U6 1 1 0 10 surveyor 1 0 1 11 Land Supervisor U6 1 0 1 12 Plant Operator U8 4 1 3 13 Plant Attendant U8 4 0 4 14 Porter U8 2 1 1 Sub-total 22 6 16 Education Department 1 Principal Education Officer U2 1 0 1 2 Senior Education Officer U3 1 1 0 4 Inspector of schools U4 2 1 1 5 Education Officer (special needs) U4 1 0 1 6 Assistant Sports Officer U4 1 0 1 Sub-total 6 2 4 Community Based services 1 Principal Community Development Officer U2 1 0 1 2 Senior Community Development Officer U3 1 1 0 3 Labour Officer U4 1 0 1 4 Probation Officer U5 1 0 1 5 Librarian 1 0 1 6 Assistant librarian U6 1 0 1 7 Library attendant 1 Sub-total 7 1 6 Production and Marketing 1 Principal Commercial Officer U2 1 0 1 2 Senior Veterinary Officer U3 1 0 1 3 Agriculture Officer U4 1 1 0 4 Veterinary Officer U4 1 1 0

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5 Fisheries Officer U4 1 0 1 6 Commercial Officer U4 1 0 1 7 Assistant Commercial Officer U5 1 0 1 8 Assistant Animal Husbandry officer U5 1 0 1 9 Assistant agricultural officer 1 0 1 Sub-total 9 2 7 Public Health 1 Medical Officer of Health (Princ. Med. Officer) U2 1 0 1 2 Principal Health Inspector U3 1 0 1 3 Health Educator U4 1 0 1 4 Health Inspector U5 1 1 0 5 Health Assistant U7 2 2 0 Sub-total 6 3 3 Staff Establishment for Kira Municipal Divisions 1 Senior Assistant Town Clerk U2 3 0 3 2 Assistant Town Clerk U4 3 0 3 3 Treasurer U4 3 0 3 4 Assistant Treasurer U5 6 6 0 Community development officer U4 3 1 2 Senior accounts Assistant 3 0 3 6 Assistant Community Development Officers U6 3 0 3 7 Pool Stenographer U6 3 1 2 8 Law Enforcement Officer U5 6 1 5 10 Town Agents U7 3 0 3 11 Assistant Law Enforcement Officer U8 3 0 3 12 Office Attendant U8 3 0 3 13 Driver U8 6 0 6 Sub- Total 48 9 39 Grand Total 151 42 109

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