OFFICE OF THE AUDITOR GENERAL

THE REPUBLIC OF

REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF DISTRICT LOCAL GOVERNMENT FOR THE YEAR ENDED 30TH JUNE 2017

OFFICE OF THE AUDITOR GENERAL UGANDA

Table of contents

Table of contents ...... 1 list of Acronyms ...... 2 Failure to Implement Budget as approved by Parliament ...... 2 Stock outs at Kiboga Hospital and Health Centre ...... 3 Understaffing ...... 3 Management’s Responsibility for the Financial Statements ...... 4 Auditor’s Responsibilities for the Audit of the Financial Statements ...... 4 Appendices ...... 7 Appendix: 1 Drug stock outs at Kiboga Hospital ...... 7 Appendix 2: Drug stock outs at Bukomero Health Center IV ...... 7 Appendix: 3 Staffing Gaps ...... 8

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LIST OF ACRONYMS DLG District Local Government DMO District Medical Officer ICT Information Communication Technology ISSAI International Standards of Supreme Audit Institution LGFAM Local Governments Financial and Accounting Manual 2007 LGFAR Local Governments Financial and Accounting Regulations 2007 MoESTS Ministry of Education Science and Technology and Sports MoFPED Ministry of Finance Planning and Economic Development NMS National Medical Stores PFMA Public Finance Management Act 2015 PPDA Public Procurement and Disposal of Assets UGX Uganda Shillings URA Uganda Revenue Authority VAT Value Added Tax WHT Withholding Tax

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REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF KIBOGA DISTRICT LOCAL GOVERNMENT FOR THE YEAR ENDED 30TH JUNE 2017

THE RT. HON. SPEAKER OF PARLIAMENT

Opinion I have audited the financial statements of Kiboga District Local Government 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 Kiboga District Local Government 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 for 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 Kiboga District 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, are 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 taken as a whole, and in forming my opinion thereon, and I do not provide a separate opinion on these matters; I have determined that there are no key audit matters to communicate 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.17,388,429,577 the district received UGX.16,589,641,709 (95.4%) resulting into a shortfall of UGX.798,787,868 (4.6%). Consequently, a number of planned outputs were not implemented. These included a 30 Hectares of Agro forestry demonstrations budgeted at UGX.5,000,000 and planting of 105 hectares of trees budgeted at UGX.26,300,000. 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 lack of capacity and inadequate releases or may be an indication of inefficiency. According to the Accounting Officer, the failure to implement all the planned activities was due to failure to realise the planned funding

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

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 Stock outs at Kiboga Hospital and Bukomero Health Centre Part 3 of the MMHS manual requires that management establishes policies, procedures and techniques to maintain an optimum amount of stock of each item at all Health Facilities to minimize stock outs and expiry. I analyzed the delivery cycles, balances on stock cards. I observed that 6 (six) items out of the 11 (eleven) selected indicator EMHS experienced stock outs ranging from 1 day to 222 days as shown in appendix 1 and 2. The stock out may be a result of failure by NMS to supply drugs in the quantities ordered by Health centers and lack of reliable information on drugs usage and stocking positions. The stock outs; erodes patient confidence in the health sector which leads patients to explore alternative, inappropriate and expensive systems of health care. The Accounting Officer explained that the credit line allocated to Kiboga Hospital is only UGX.60,500,000 against a budget of UGX.86,600,000 required.

The Accounting Officer should liaise with NMS to ensure continuous optimum stock of medicines and supplies. This will require lobbying for the requisite funding.

 Understaffing Regulation 15 (a) of the Standing Orders 2010 mandates the Ministry of Public Service to determine the structure, terms and conditions of service of Local Government. Out of the approved structure of 192 positions at the District Local Government, 181 at Kiboga Hospital and 48 at Bukomero Health Centre IV; 111 positions are still vacant as shown in Appendix 3.

The Accounting Officer explained that submission for clearance to ministry of Public service seeking authority to recruit staff has been made. Understaffing overstretches the available staff beyond their capacity, creates job-related stress to the few available staff and negatively affects service delivery.

The Accounting Officer should liaise with Ministry of Public Service and fill the vacant posts.

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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 Kiboga District Local Government. The Accounting Officer is also responsible for the preparation of financial statements in accordance with the requirements of the Act Local Governments Financial and Accounting Manual, 2007 and the Public Finance Management 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 Districts’ ability to continue delivering its mandate, disclosing, as applicable, matters related to affecting the delivery of the mandate of the district 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 District’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, 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

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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 Districts 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 district’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 district 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.

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.

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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

KAMPALA

5thDecember, 2017

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Appendices

Appendix: 1 Drug stock outs at Kiboga Hospital S/ Drug Date of NIL Date of Number of days of stock- Remarks No stock balance replenishment out 1 Coartem 25/4/2016 5/12/2016 222 days Out of stock 18 2 Determin 13/2/2017 17/2/2017 4 days Out of stock e HIV kit 3 Determin 21/2/2017 22/2/2017 1 day Out of stock e HIV kit 4 PGA 21/9/2016 10/10/2016 117 days Out of stock Sutures G20 5 PGA 29/10/2016 22/2/2017 67 days Out of stock Sutures G20 6 PGA 18/4/2017 23/6/2017 At the time of audit, Out of stock Sutures replenishment had not been G20 made

Appendix 2: Drug stock outs at Bukomero Health Center IV Kiboga District S/No Drug Date of NIL Date of Number of Remarks stock balance replenishment days of stock-out 1 Coartem 18 25/4/2016 5/12/2016 222 days Out of stock 2 Determine HIV kit 13/2/2017 17/2/2017 4 days Out of stock 3 Determine HIV kit 21/2/2017 22/2/2017 1 day Out of stock 4 PGA Sutures G20 21/9/2016 10/10/2016 117 days Out of stock 5 PGA Sutures G20 29/10/2016 22/2/2017 67 days Out of stock 6 PGA Sutures G20 18/4/2017 23/6/2017 At the time of Out of stock audit, replenishment had not been made

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Appendix: 3 Staffing Gaps Designation Approved Posts Filled Positions Vacant Positions

Assistant Statistical Officer 1 0 1 Ass. Fish Development Officer 2 1 1 Chief Finance Officer 1 0 1 District Education Officer 1 0 1 District Internal Auditor 1 0 1 District Planner 1 0 1 District Engineer 1 0 1 District Health Officer 1 0 1 Driver 5 1 4 Education Officer 1 0 1 Examiner of Accounts 3 0 3 Inspector of Schools 2 1 1 Laboratory Technician 1 0 1 Office Attendant 1 0 1 Office Typist 2 0 2 Personal Secretary 2 1 1 Pool Stenographer 1 0 1 Records Assistant 2 0 2 Records Officer 1 0 1 Senior Agric Engineer 1 0 1 Senior Agric Officer 2 1 1 Senior Entomologist 1 0 1 Senior Fish Officer 1 0 1 Senior Office Supervisor 1 0 1 Senior Planner 1 0 1 Sports Officer 1 0 1 Stores Assistant 1 0 1 Sub-Total 39 5 34

KIBOGA HOSPITAL

Designation Approved Posts Filled Positions Vacant Positions

Medical Officer SG (Community) 1 0 1 Medical Officer SG (Inter Med) 1 0 1 Medical Officer SG (Surgery) 1 0 1 Medical Officer SG (Peadtrics) 1 0 1 Medical Officers 4 3 1 Dental Attendant 1 0 1 Dispensers 2 1 1

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Principal Nursing Officer 1 0 1 Senior Nursing Officers 5 3 2 Nursing Officers 17 14 3 Public Health Nurses 1 0 1 Enrolled Psychiatry Nurses 2 1 1 Enrolled Nurses 46 26 20 Enrolled Midwives 25 14 11 Ass. Health Educator 1 0 1 Health Inspector 1 0 1

Ass. Entomological officer (Med) 1 0 1 Radiographers 2 1 1 Physiotherapist 1 0 1 Occupational Therapist 1 0 1 Anesthetic Officers 3 2 1 Anesthetic Attendants/ Theatre assistant 2 1 1 Hospital Administrator 1 0 1 Personnel Officer 1 0 1 Stores Assistants 2 0 2 Accounts Assistants 2 0 2 Office Typist 1 0 1 Darkroom Attendant 1 0 1 Drivers 2 1 1 Artisans Mates 3 2 1 TOTAL 133 69 64

BUKOMERO HEALTH CENTRE IV

Designation Approved Posts Filled Positions Vacant Positions Medical Officer 1 0 1 Nursing Officer Psychiatry 1 0 1 Health Inspector 2 0 2 Health Educator Assistant 1 0 1 Anesthetic Officer 1 0 1 Anesthetic Assistant 2 0 2 Office Typist 1 0 1 Nursing Assistant 5 3 2 Guards 3 2 1 Support 3 2 1 Sub-Total 20 7 13 Grand Total 111

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