Office of the Auditor General

OFFICE OF THE AUDITOR GENERAL

THE REPUBLIC OF UGANDA

REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF

KAYUNGA DISTRICT LOCAL GOVERNMENT

FOR THE YEAR ENDED 30TH JUNE 2018

OFFICE OF THE AUDITOR GENERAL UGANDA TABLE OF CONTENTS

Basis for Opinion...... 4 Key Audit Matters ...... 5 1.0 Performance of Youth Livelihood Programme ...... 5 1.1 Underfunding of the Programme...... 5 1.2 Noncompliance with the repayment schedule ...... 6 1.3 Transfer of the Recovered Funds to the Recovery Account in BOU ...... 6 1.4 Inspection of Performance of Youth projects ...... 6 1.4.1 Kayonjo Piggery Youth Project ...... 7 1.4.1.1 Record keeping ...... 7 1.4.2 Bwetyaba Youth dairy Production ...... 7 1.4.2.1 Record Keeping ...... 8 1.5 Failed Youth Livelihood Projects...... 8 2.0 Implementation of the Uganda Road Funds ...... 8 2.1 Budget Performance...... 9 2.2 Status of implementation ...... 9 2.2.1 Routine manual maintenance ...... 9 2.2.2 Under Utilization of Road Gangs ...... 9 2.3 Routine mechanized maintenance ...... 10 2.4 Periodic maintenance ...... 10 2.4.1 Burnt district Grader ...... 11 Emphasis of matter ...... 12 3.0 Outstanding Pensions ...... 12 4.0 Outstanding Commitments...... 13 Other Matter ...... 13 5.0 Construction of Nakyesa Public Latrine ...... 13 6.0 High School Dropout Rates ...... 14 7.0 Failure to collect Local service Tax (LST) from Non-Government employees .. 14 Other Information ...... 15 Management Responsibilities for the Financial Statements ...... 15 Auditor General’s Responsibilities for the audit of the Financial Statements ...... 16 Other Reporting Responsibilities ...... 17 Report on the Audit of Compliance with Legislation ...... 18 8.0 Management and Utilization of Natural Resources ...... 18

8.1 Ruining and encroachment on wet land ...... 18 8.2 Failure to demarcate wetlands ...... 20 9.0 Lack of a District Environmental Action Plan ...... 20 10.0 Status of Essential medical equipment at the Kayunga General Hospital .... 21 11.0 Challenges faced by Kayunga HCIVs ...... 21 11.1 District Road Equipment Inadequate Road Equipment...... 22 12.0 In adequate Infrastructure in Primary schools ...... 22 Appendices...... 24 Appendix 1: Non-compliance with Repayment Schedules ...... 24 Appendix 2: Failed YLP Project ...... 26 Appendix 3: Uganda Road Fund (URF) Budget Performance ...... 27

LIST OF ACRONYMS

BOU Bank of Uganda

DLG District Local Government

HCIVs Health Centres

IESBA International Ethics Standards Board for Accountants

INTOSAI International Organization of Supreme Audit Institutions

ISSAI International Standards of Supreme Audit Institution

KMs Kilometres

LGFAM Local Governments Financial and Accounting Manual 2007

LGFAR Local Governments Financial and Accounting Regulations 2007

LGMSD Local Government Management and Service Delivery

LST Local Service Tax

MoESTS Ministry of Education Science and Technology and Sports

MoFPED Ministry of Finance Planning and Economic Development

MoGLSD Ministry of Gender Labour and Social Development

MoPS Ministry of Public Service

MOWE Ministry of Water and Environment

NAA National Audit Act

P/S Primary School

PFMA Public Finance Management Act 2015

PLE Primary Leaving Examination

S/C Sub-County

UGX Uganda Shillings

UPE Universal Primary Education

URF Uganda Road Fund

YIG Youth Interest Groups

YLP Youth Livelihood Programme

REPORT OF THE AUDITOR GENERAL

ON THE AUDIT OF FINANCIAL STATEMENTS OF KAYUNGA DISTRICT LOCAL GOVERNMENT FOR THE YEAR ENDED 30TH JUNE, 2018

THE RT. HON. SPEAKER OF PARLIAMENT

Opinion

I have audited the accompanying financial statements of Kayunga District Local Government which comprise the statement of Financial Position as at 30th June 2018, 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 Kayunga District Local Government for the year ended 30th June 2018 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). 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 District in accordance with the Constitution of the Republic of Uganda (1995) as amended, the National Audit Act, 2008, the International Organization of Supreme Audit Institutions (INTOSAI) Code of Ethics, the International Ethics Standards Board for Accountants Code of Ethics for Professional Accountants (Parts A and B) (IESBA Code), and other independence requirements applicable to performing audits of Financial Statements in Uganda. I have fulfilled my other ethical responsibilities in accordance with the IESBA Code, and in accordance with other ethical requirements applicable to performing audits in Uganda. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

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 matters described below as the key audit matters to be communicated in my report.

1.0 Performance of Youth Livelihood Programme The Youth Livelihood Programme (YLP) is a Government Programme being implemented under the Ministry of Gender, Labour and Social Development (MoGLSD) through the Local Government Administrations. The programme, which started in the financial year 2013-2014, was to respond to the existing challenge of unemployment among the Youth. The programme is implemented through the District and support to the vulnerable youth in form of revolving funds for skills development projects and income generating activities.

The audit focused on an amount of UGX.384, 795,000 disbursed to the District in the Financial Year 2014/2015 whose recovery period of three years had expired by 30th June 2018. The audit procedures performed included ascertaining the following;

 Whether all funds budgeted for YLP during the period under review were actually released and used only for the program.  Whether all funds advanced to the youth groups were repaid in accordance with the agreed repayment schedule and to establish reasons for failure or delays to repay the funds.  Whether all funds recovered during the period under review were transferred to the revolving fund account in Bank of and  Whether on a sample basis the funded projects exist and are operating.

I made the following observations;

1.1 Underfunding of the Programme. A review of the approved budget for the YLP program revealed that whereas the District had budgeted for a total amount of UGX.432,861,000 for the financial year 2014/2015, only UGX.384,795,000 (89%) was released resulting in a shortfall of

UGX.48,066,000 (11%). This undermined the intended objective of responding to the challenge of unemployment amongst the Youths.

The Accounting Officer attributed this to the deferred files whose issues were later rectified, resubmitted and projects funded.

I advised the Accounting Officer to always ensure timely follow up on the allocation and disbursement of resources to the Youth groups.

1.2 Noncompliance with the repayment schedule

It was observed that whereas the groups funded in 2014/2015 were expected to have repaid a total amount of UGX.384,795,000 by close of the financial year 2017/2018, only UGX.169,579,200 (44%) had been collected leaving a balance of UGX.231,225,150 (56%) outstanding as shown in appendix 1.

Delayed repayment was attributed to various causes like; complete failure of some projects and disagreements among the group members. Failure to repay in a timely manner implies that other eligible groups were unable to access the funds since this is a revolving fund. The Accounting Officer explained that the district was trying its level best to enforce recoveries from the groups.

I advised the Accounting Officer to ensure that all outstanding advances to the groups are recovered to enable other eligible YIG access the funds.

1.3 Transfer of the Recovered Funds to the Recovery Account in BOU A review of the bank statements of YLP collection account revealed that out of the collected amount of UGX.169,579,200 the district had not transferred UGX.3,079,200 to the National Revolving Fund Collection Account by the end of the financial year 2017/18. This undermines the effective implementation of the program.

I advised the Accounting Officer to transfer the balance to the Recovery Account.

1.4 Inspection of Performance of Youth projects

Physical inspection was carried out on three selected projects namely Ndeeba youth tents, chairs and Ceremonial Services, Bwetyaba youth Dairy production and Kayonjo

piggery youth (2014/2015) to ascertain whether they were being implemented in accordance with the operational guidelines. The following observations were made;

1.4.1 Kayonjo Piggery Youth Project Kayonjo Piggery Youth Project is located in Busaana Sub County however; I could not confirm that the project visited is indeed Kayonjo Piggery Youth Project as the project lacked a sign post casting doubt on its existence.This was attributed to laxity on the side of management to enforce the guidelines.

The Accounting Officer explained that the group was instructed to put a sign post for easy identification of the project.

I await the outcome of the Accounting Officer’s directive.

1.4.1.1 Record keeping

Section 4.1 (viii) of the implementation guidelines requires each beneficiary group to maintain basic financial management, community financial procurement procedures and reporting and accountability. I was however not availed records for review at Kayonjo Piggery Youth Project. I could not therefore ascertain that the funds received by the group were put to their intended use.

I advised the Accounting Officer to take up the matter and ensure compliance with the Project guidelines.

1.4.2 Bwetyaba Youth dairy Production Bwetyaba youth dairy production is located in Kayunga Sub County however; I could not confirm that the project visited was indeed Bwetyaba youth dairy production as the project lacked a sign post casting doubt on the project’s existence. This could be as a result of laxity on the side of management to enforce the guidelines.

I advised the Accounting Officer to follow up this matter and ensure a sign post is installed by the group. The Accounting Officer explained that the group was instructed to put up a sign post.

I await the outcome of the Accounting Officer’s instruction.

1.4.2.1 Record Keeping

I was however not availed such records for review at of Bwetyaba youth dairy production Project. I could not ascertain that the funds received by the group were put to their intended use.

I advised the Accounting Officer to enforce compliance with the Project guidelines.

1.5 Failed Youth Livelihood Projects

A review of the inspection reports that quite a number of projects had failed and no longer existing. It was noted that funds to the tune of UGX.105,103,888 were either diverted or mismanaged by some members as shown in the Appendix 2.

This was attributed to greed by some members or lack of adequate sensitization of the groups by the concerned stakeholders. I was not availed response to this matter.

I advised the Accounting Officer to continue sensitizing the youth about the benefits of the progrramme and establish the root cause of the failed projects.

2.0 Implementation of the Uganda Road Funds

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.

Regulation 18(3) of the Local Government Financial and Accounting regulations 2007 requires budget estimates to be based on objectives to be achieved for the financial year and during implementation, effort to be made to achieve the agreed objectives or targets as per the programme of Council.

It has been observed over years that planned and budgeted for activities of a number of Local Governments are not implemented thereby affecting service delivery.

During the overall office wide planning, I identified risks such as inadequate release of funds and failure to undertake budget monitoring and supervision that are likely to be the causes of failure to implement the planned activities under Uganda road fund. The focus was put on the planned major outputs under Uganda Road Fund which greatly impact on service delivery in the Local Governments.

Consequently, I developed specific audit procedures which included ascertaining whether;

 The budgeted URF releases for Local Governments for the year under review were actually received;  The planned URF outputs were achieved;  The monitoring and supervision was carried out by reviewing reports to assess performance.

Based on the procedures performed, the following observations were made; 2.1 Budget Performance

A total of UGX.708,642,894 was budgeted to cater for routine manual maintenance, routine mechanised maintenance, periodic maintenance and emergency activities on several district roads using Road gangs and the force Account mechanism. However, the district only realised UGX.613, 740,389 (87%) below budget. UGX.94, 902,505 (13.4%) was not realised.

2.2 Status of implementation

A review of planned outputs against actual performance is as shown in appendix 3.

2.2.1 Routine manual maintenance

A total of 330 kms at an estimated cost of UGX.66, 022,000 was planned to be undertaken. However, audit revealed that 324.4 kms (98%) were actually undertaken at a cost of UGX.66, 000,000 (99.96%). A length of 5.6km (1.7%) was no covered.

2.2.2 Under Utilization of Road Gangs

Guideline 4.5 of Ministry of works and Transport Manual routine and Mechanized routine road maintenance Guidelines, 2013 states that the road workers (Road Gangs)

will be employed on a one (1) year contract (renewable) and at a gross monthly salary of UGX.100, 000. However, a review carried out on the Works department activities revealed that the road gangs were engaged for only four (4) months in a year instead of the recommended twelve (12) months.

Failure to comply with the recommended guidelines affects effective road maintenance.

The Accounting Officer explained that because of the low indicative planning figure it was agreed that the number of working months for routine manual maintenance by the road gangs be limited to four months maintenance but there was no evidence to support this claim.

I advised the Accounting Officer to always comply with the road maintenance guidelines for the communities to realize value for URF funds.

2.3 Routine mechanized maintenance

A total of 71.8kms at an estimated cost of UGX.292, 000,000 was planned to be undertaken. However, audit revealed that 81.8kms (114%) were actually undertaken

at a cost of UGX.280, 323,600 (96%) leading to a saving of UGX.11, 676,400 (4%).

2.4 Periodic maintenance

A total of 8kms at an estimated cost of UGX.71, 368,000 was planned to be undertaken as shown in appendix I. It was observed that this activity was fully achieved at 100% performance.

On inspection of a sample of roads in August 2018, revealed that road headwalls were not well maintained as they had cracks and were bushy. The picture below shows some of the roads inspected.

Damaged headwalls Busy and blocked drainage

This was attributed to failure by the district to utilise road gangs throughout the year and or lack of monitoring and supervision.

The Accounting Officer explained that road gangs were deployed in the months of September 2018 and October 2018 and the situation improved. He committed to improve on supervision and explained that head walls repair is another routine activity but carried out during routine mechanized maintenance of the respective roads by the district using force account unit.

I await the outcome of the Accounting Officer’s commitment to improve on monitoring and supervision.

2.4.1 Burnt district Grader

During the review; it was established that a Grader Registration No.LG0017-49 got completely burnt on Thursday, the 15th of February, 2018 while working in Kyampisi- Namataba UNRA road in Mukono district under unclear circumstances. At the time of audit (August 2018) no feedback had been received from the police investigation and the burnt Grader was still parked at the district parking yard as shown in the picture below;

A district Grader which got burnt in Mukono District

This was attributed to lack of clear operations and maintenance policy. Such practices expose the district assets to waste.

The Accounting Officer explained that the equipment was under the operational care of UNRA who had requested for it and stated that the case was reported to Kayunga Police Station under Police Case no.34/15/02/2018. However; no report from Police was availed for verification.

The matter requires investigation.

Emphasis of matter

Without qualifying my opinion, I draw attention to the following matters presented or disclosed in the financial statements;

3.0 Outstanding Pensions

The district had not paid pension arrears totalling to UGX.373, 155,000 as disclosed in the Statement of Financial Position on page 16 of the Accounts. Accumulation of pension arrears affects the wellbeing of the pensioners. I advised the Accounting Officer to follow up the matter with MoFPED and Ministry of Public Service for timely settlement of the liability.

4.0 Outstanding Commitments

The district had unpaid commitments in salaries of UGX.312,643,466 as shown in Note 22 of the financial statements and in the commentary by the Head of Finance. Delayed payment of salaries of staff affects performance. I advised the Accounting Officer to clear outstanding salaries at the earliest time possible.

Other Matter

In addition to the matters raised above, I consider it necessary to communicate the following matters other than those presented or disclosed in the financial statements.

5.0 Construction of Nakyesa Public Latrine

In order to improve sanitation and hygiene within the community, the district entered into a contract to construct a 3-stance emptiable toilet and 3 bathrooms, at Nakyesa Rural Growth Centre in Kayonza S/C at a contract price of UGX.24, 246,160. However; inspection carried out on 14th August, 2018 revealed that the community latrine was constructed at the Police Station as shown in the picture below where the community cannot easily access the facility.

A community toilet which was built at a police station

There is a risk that this facility could benefit police alone and not the entire community.

The Accounting Officer explained that this was the only location the Sub-county provided for the construction of the public toilet and communities were sensitized.

I advised the Accounting Officer to always plan adequately and ensure projects are placed in locations that are easily accessible to the communities.

6.0 High School Dropout Rates

During the review; it was noted that the school dropout rate in the district was very high standing at a rate of 15% based on the registration and conduct of Primary leaving Examinations (PLE) year by year. The schedule below shows the average pupil attendance for some of the schools as reported by the school inspectors during the year.

S/N School Registered Actual Absence/ Dropout Dropout average % Enrolment attendance 1 Nazigo Dem 429 239 190 44.3 2 Nsiima C/U 423 261 162 38.3 3 Kirindi R/C 304 140 164 53.9 4 Nakatooke R/C 436 253 183 42.0 5 Katikanyonyi C/U 273 121 152 55.7 6 Ntenjeru R/C 106 80 26 24.5 7 Tente C/U 410 396 14 3.4 8 Kanjuki Umea 716 599 117 16.3 9 Kanjuki C/U 475 385 90 18.9 10 Kajuki R/C 148 137 11 7.4 11 Buwungiro C/U 532 482 50 9.4 12 Kyanya C/U 360 238 122 33.9 13 Bukujju Umea 255 182 73 28.6 14 Bishop Brown 932 790 142 15.2 15 Mugema PS 611 480 131 21.4 16 Busaana C/U 1280 1020 260 20.3 17 Kiwangula C/U 427 322 105 24.6 18 Nangabo C/U 240 110 130 54.2 19 Kyengera C/U 531 295 236 44.4 20 Ssekagya Islamic 513 483 30 5.8 21 Busaale R/C 115 95 20 24.6 22 Busaale C/U 361 275 86 54.2 Total 9,877 7,383 2,494 25.2%

This was attributed to early marriages, early pregnancy, failure to provide mid-day meals, lack of scholastic materials and un-interested parents. There is a risk that if dropout rates continue to escalate the objectives of UPE program may not get achieved in the district.

I advised the Accounting Officer to develop strategies to lower the dropout rates including continuous sensitization programs to the community.

7.0 Failure to collect Local service Tax (LST) from Non-Government employees

Section 1(b) and 2 of the Local Government Act (Amended), 2008 requires Local Governments to levy local service tax on all persons in gainful employments, professions or business and commercial farmers on a large scale. Contrary to this,

the District only levies Local service tax on Government employees within the District. This leaves the non-Government employees and persons residing within the District untaxed. This could be attributed to poor revenue assessment methods and collection that leads to loss of revenue to Government.

The Accounting Officer explained that management has devised means of at least collecting LST from some people in gainful employment and also on every License Issued. But the revenues are collected by the Sub Counties and they remit 35% to the District.

I advised the Accounting Officer to ensure that persons who qualify to pay LST in the district regularly pay the tax for National development.

Other Information

The Accounting Officer is responsible for the other information. The other information comprises the statement of responsibilities of the Accounting Officer and the commentaries by the Head of Accounts and the Accounting Officer, and other supplementary information. The other information does not include the financial statements and my auditors’ report thereon. My opinion on the financial statements does not cover the other information and I do not express an audit opinion or any form of assurance conclusion thereon.

In connection with my audit of the financial statements, my responsibility is to read the other information and, in doing so, consider whether the other information is materially consistent with the financial statements or my knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work I have performed, I conclude that there is a material misstatement of this other information; I am required to report that fact. I have nothing to report in this regard.

Management Responsibilities 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 Kayunga District Local Government.

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

15 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 District’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting, unless the 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 General’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 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 judgement 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 my 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 Company’s internal control.  Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the 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 Company’s ability to continue as a going concern. 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 Company to cease to continue as a going concern.  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 them 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.

Other Reporting Responsibilities

In accordance with Section 19 (1) of the National Audit Act, 2008, I report to you, based on my work described on the audit of Financial Statements, that; except for the matters raised in compliance with legislation section below, and whose effect has been considered in forming my opinion on financial statements, the activities, financial transactions and information reflected in the financial statements that have come to my notice during the audit, are in all material respects, in compliance with the authorities which govern them.

Report on the Audit of Compliance with Legislation

The material findings in respect of the compliance criteria for the applicable subject matters are as follows;

8.0 Management and Utilization of Natural Resources

The Second schedule of the Local Government Act CAP 243 Part 2 section 15 requires District Councils to assist the Government to preserve the environment through protection of forests, wetlands, lake shores, streams and prevention of environmental degradation. A review of management and utilisation of natural resources in the district revealed the following;

8.1 Ruining and encroachment on wet land

Chapter 153, Section 36(1) (a, b & e) of the National Environment Act, on restriction on the use of wetland, states that no person shall reclaim or drain any wetland; erect, construct, alter, destroy, damage or disturb any wetland in a manner that has or is likely to have adverse effects on the wetland unless he or she has written approval from the authority.

A review of natural Resources minutes and an inspection carried out on the district’s wetland revealed that the district’s wetland was encroached on by illegal developers without authority. Some farmers in the district are planting rice, maize and yams in the swamp.

The most ruined sections of the wetland were in Nazigo, Ntunda, Kayunga, and Kasawo sub-counties. Available records indicate that the wetland which measures about 80 miles had shrubs, reeds; woodland and natural grasslands before but the growing demand for agriculture and sand mining has left it depleted. This has resulted in silting of other small swamps which finally drain in Lake Kyoga. Below are some of the pictures of wetlands encroached on by the community;

Wetland/ Status/Findings Pictorial view of the destroyed environment Sub county Musamya – Partially Cleared Kyabazala for rice growing, River flow maize, pumpkins and vegetables

Nazigo Cleared for Forest Agricultural Reserve farming like, (50acres) sweet potatoes, cassava and maize

Nakabale Partially cleared Swamp to plant rice and (Kayunga cassava TC)

Katenga Partially cleared Swamp to grow rice, (bordering cassava and Kayunga yams and

Bukoloto)

Other areas encroached on in the /district Location Name of the Status/condition wetland Galiraya Kanda Wetland . Mainly used for communal grazing. . Ownership is public with some areas having private mailo land tenure. Sezibwa Wetland . Bush burning during the dry season by hunters Bbaale Misanga wetland . Cleared for maize growing and cattle rearing system . Encroached by settlement at the landing site. Kayonza Kayonza Wetland . Cleared by Sugar cane investors (Metha and Madhvan companies) . Cleared for charcoal production . Cleared for Maize growing Kitimbwa Matumbwe Wetland . Cleared by Sugar cane investors (Metha and Madhvan companies) . Cleared for Maize growing  Encroached upon by rice growers Kayunga S/C Namulanda wetland  Partially cleared for rice growing Busaana Kabumbuzi Wetland . Partially cleared for rice growing, . Cleared for sugar cane growing, maize and vegetables . Partly planted with eucalyptus trees. Nazigo Musamya Wetland . Partially cleared for rice growing.  Partially cleared for vegetable, Pumpkins and maize growing Kangulumira Kalagala/Nile bank . River bank demarcated with concrete mailo stones along the wetland system 100m zone by Ministry of water and Environment (MWE). . Partially grown with domestic crops along the river bank.

This was attributed to lack of sensitisation of the public on natural resources. In addition; lack of monitoring and weaknesses in environmental protection units by the responsible officers contributed a lot to the worrying trend of depletion.

In response; the Accounting Officer explained that the department in conjunction with Ministry of Water and Environment (MoWE) under the support of the World bank has facilitated demarcation of the river banks along Victoria-Nile river in Kangulumira Sub-county and a stretch of more than 20km has already been demarcated with concrete pillars.

I advised the Accounting Officer to liaise with the relevant authority to free wetlands from encroachers and where evictions are done, measures be put in place to ensure that no one returns to the wetlands.

8.2 Failure to demarcate wetlands

Section 44(1) of the Land Act Chapter 227 states that the Government or a Local Government shall hold in trust for the people and protect natural lakes, rivers, ground water, natural ponds, natural streams, wetlands, forest reserves, national parks and any other land reserved for ecological and touristic purposes for the common good of the citizens of Uganda.

However, inspection and document review revealed that all the wetlands in Kayunga lacked clear boundaries or demarcation and thus had no known boundaries to the district management. Failure to demarcate natural resources makes it difficult for the surrounding community to know which areas to avoid. This also poses a challenge for Kayunga district to protect the wetlands.

The Accounting Officer explained that MoWE under the support of the World bank has started facilitating demarcation of the river banks along Victoria-Nile river in Kangulumira Sub-county.

I advised the Accounting Officer to seek more support from the relevant Authorities so as to have all the wetland boundaries clearly known in order to eliminate encroachment.

9.0 Lack of a District Environmental Action Plan

Section 18 of the National Environment Authority Act stipulates that every district environment committee shall, in consultation with the authority, prepare a district environment action plan to be revised every three years or such other lesser period as may be considered necessary by the authority. On the contrary; I noted that the

District did not have an environmental action plan in place. There is a risk that the district is not guided on environmental matters and protection of the environment.

The Accounting Officer explained that the process is a bottom up planning approach that involves mobilization and data collection from village level to district level and the process had started.

I advised the Accounting Officer to expedite the process.

10.0 Status of Essential medical equipment at the Kayunga General Hospital

A review of the hospital inventory and an inspection carried out to assess the status of basic Medical Equipment in Kayunga General Hospital revealed that the status of equipment ranged from incomplete sets, non- functional, not in use, missing equipment and equipment in excess of the required. In addition; the same challenge was noted at Kangulumira and Bbaaale HCIVs.

Lack of adequate equipment in the health facilities has led to the degeneration of services in the health facilities besides; failure to repair and or service the equipment in time may lead to high repair costs.

The Accounting Officer explained that the Ministry of Health central medical workshop at Wabigaro Kampala carries out servicing of Medical equipment at health facilities but they usually come once a year.

I advised the Accounting Officer to follow up the matter with ministry of health for an urgent solution to the challenge.

11.0 Challenges faced by Kayunga HCIVs

During inspection of the Kangulumira and Bbaaale HCIVs it was noted that the health centres are faced with various challenges as summarised below; Basic Requirements Current status/Observation Kangulumira HCIV - Lack of Functional Ambulance,

- Insufficient supply of drugs and non-functional blood bank.

Lack of essential equipment and facilities impacts negatively on health service delivery Bbaale HCIV -The theatre lacks an Anaesthetic Officer and its floor was poor. Without an Anaesthetic Officer; operations cannot go on.

-At the Laboratory Department; the Colorimeter in good condition was not in use due to lack of reagents.

The listed challenges affect effective health service delivery.

I advised the Accounting Officer to take up the matter with responsible authorities to ensure the challenges are addressed.

11.1 District Road Equipment Inadequate Road Equipment

Under the force account policy, agencies were to use their own labour and equipment to perform work. A complete set of the road equipment under the control of LGs include; Motor Grader, wheel Loader, bulldozer, excavator, cargo truck, drum trucks, mobile crane, mobile workshops, pedestrian rollers double drum, plate Compactors, water bowser, wheeled backhoe loader, bitumen distributor tank and others. However, a review of the status of the road equipment as shown below revealed that the district does not have some of the equipment which makes it difficult for the district to adequately implement and follow force on account guidelines. No Equipment Quantity Status 1 Motor Grade 35 2 Moving (1 got burnt) 2 Dump truck 5 Moving 3 Pick up 2 Moving 4 Wheel loader 1 Moving 5 Roller 2 1 Moving (1 Grounded) 6 Transcavator 1 Grounded

As a result, the district hired road equipment at almost the same rates as the contractors thereby undermining the use of force on account. Hiring of road equipment is costly. In addition; the district lacks First aid tools (tool box); Portal Grease Pump; Store; Parking yard, Service pit/Ramp and others. Absence of the stated equipment affects effective road maintenance.

The Accounting Officer explained that the district hired a piece of equipment only when the equipment could not be got from the Regional workshop upon request.

I advised the Accounting Officer to lobby for the fully-fledged road equipment for effective road maintenance. 12.0 In adequate Infrastructure in Primary schools

Paragraph 2.2.1 of the revised Local Governments (LGMSD) Operational Manual provides minimum service delivery package for a primary school. The package includes; classrooms; pupil desks, pit latrines (for pupils and teachers), teachers desks, teachers chairs, teachers houses and water availability. However; inspection of Busaana Church of Uganda primary school revealed the following shortcomings;

Status of Infrastructure Current status/Observation (Condition) Scarcity of water The school shares one borehole with the community and a lot of time is wasted lining for water instead of concentrating on reading books. It is risky to pupils. Congested classrooms The classrooms were congested with over 200 pupils instead of 55 which is the recommended number. The school lacks desks and the pupils use their laps for writing as shown in the picture below;

A congested Primary four (P.4) class Congestion and lack of desks affects the learners’ academic performance. Inadequate Pit latrines The school does not has enough pit latrines as 3-stances were for 621 boys; a ratio of 1:276 and 7-stances for 620 girls reflecting a ratio of 1:89 contrary to the recommended ratio of I stance:40 Pupils. The latrines were in a sorry state as shown in the pictures below;

A boys’ latrine in a sorry state

This is risky to pupils and poses sanitation challenges. Inadequate number of The current teacher pupil ratio was 1 teacher: 90 pupils contrary to the Teachers recommended 1:55. Teachers may not closely guide the pupils as expected. Lack of teachers’ It was noted that there were no school houses and teachers walk long distances. houses This impact negatively on the academic performance of pupils.

The stated challenges affect the staff welfare and academic performance of the pupils.

The Accounting Officer is advised to take up the matter with Ministry of Education for solutions to the stated challenges.

John F.S. Muwanga AUDITOR GENERAL 18th December, 2018

Appendices Appendix 1: Non-compliance with Repayment Schedules

NAME OF YOUTH GROUP DATE OF AMOUNT INTEREST AMOUNT AMOUNT AMOUNT DUE LOAN RECEIVED TO DATE DUE RECOVERED 2014/2015 Jiira Animal Traction Plough 13/08/2014 6,000,000 300,000 6,300,000 1,940,000 4,360,000 Youth Project Namirembe Cattle Keeping 12/08/2014 7,615,000 380,750 7,995,750 1,100,000 6,895,750 Youth Development Project Bbaale East Trust Worthy 13/08/2014 8,483,000 424,150 8,907,150 3,600,000 5,307,150 Youth Goat Rearing Dev't Kabaku Piggery Youth 12/08/2014 10,807,000 540,350 11,347,350 5,300,000 6,047,350 Project Kanamugadu Piggery Project 13/08/2014 5,604,000 280,200 5,884,200 700,000 5,184,200 Bbaale West Carpentry 12/08/2014 9,000,000 450,000 9,450,000 850,000 8,600,000 Project Lusenke Youth Vegetable 12/08/2014 9,086,000 454,300 9,540,300 810,000 8,730,300 Growing Project Kayonjo Piggery Youth 13/08/2014 9,920,000 496,000 10,416,000 5,500,000 4,916,000 Project Busaana Youth Boutique 12/08/2014 10,884,000 544,200 11,428,200 8,612,000 2,816,200 Project Nekoyedde youth tomato gro 12/08/2014 6,270,000 313,500 6,583,500 2,720,000 3,863,500 Namirembe youth animal 13/08/2014 5,500,000 5,775,000 1,678,000 4,097,000 traction project 275,000 Kawongo A General Whole 13/08/2014 9,000,000 450,000 9,450,000 820,000 8,630,000 Sale & Retail Shop Kirubo Animal Traction Youth 19/08/2014 9,300,000 465,000 9,765,000 5,350,000 4,415,000 Project Nabityanka Youth Ox Plough 13/08/2014 6,020,000 301,000 6,321,000 5,870,000 451,000 Project Kawongo Mukama Asobola 12/08/2014 5,950,000 297,500 6,247,500 3,000,000 3,247,500 Youth Canteen project Kangulumira Youth Passion 13/08/2014 4,820,000 4,820,000 4,820,000 - & Paw-paws Mirembe Youth Cattle 12/08/2014 7,000,000 350,000 7,350,000 4,320,000 3,030,000 Rearing Project Kiwugu Youth Piggery 12/08/2014 5,268,000 263,400 5,531,400 - 5,531,400 Project Kayunga Youth Poultry 12/08/2014 6,152,000 6,152,000 6,154,100 (2,100) Project Kamira Coffee Nursery bed 13/08/2014 10,140,000 507,000 10,647,000 1,300,000 9,347,000 Youth Project Kisega Fruit Prossesing 13/08/2014 7,400,000 370,000 7,770,000 - 7,770,000 Enterprise Bugiri Mbulakati Youth 13/08/2014 7,828,000 7,828,000 7,828,000 - Motorcycle Enterprise Project Kyamugongo Blue Ranks 12/08/2014 8,224,000 411,200 8,635,200 1,750,000 6,885,200 Dairy Youth Project Bukerere Kewerimidde 13/08/2014 6,230,000 311,500 6,541,500 3,500,000 3,041,500 Piggery Youth Project Nyondo Piggery Youth 13/08/2014 5,600,000 280,000 5,880,000 3,330,000 2,550,000 Project Nakabango Piggery Youth 12/08/2014 5,950,000 297,500 6,247,500 1,600,000 4,647,500 Project Nakyesa IV Biyinzika Youth 13/08/2014 7,440,000 372,000 7,812,000 2,800,000 5,012,000 Buying&Selling Agro Store Lukonda twezimbe maize mill 13/08/2014 6,700,000 335,000 7,035,000 4,970,000 2,065,000 youth project Katuugo animal traction 13/08/2014 5,000,000 250,000 5,250,000 4,200,000 1,050,000 Kabalira United Animal 13/08/2014 5,700,000 285,000 5,985,000 2,860,000 3,125,000

Traction Youth Project Wabwoko B Sekampola 12/08/2014 3,650,000 182,500 3,832,500 2,610,000 1,222,500 Piggery Youth Project Kitimbwa Ii Bayoda Poultry 12/08/2014 5,885,000 294,250 6,179,250 878,100 5,301,150 Rearing Youth Project Tweyagalire B Twezimbe 12/08/2014 6,270,000 313,500 6,583,500 2,750,000 3,833,500 Maize Buying & Selling Youth Proj Kyerima A Produce Buying & 12/08/2014 5,500,000 3,028,300 2,471,700 Selling Youth Project Kitimbwa Town Cattle Trade 12/08/2014 5,680,000 284,000 5,964,000 3,680,000 2,284,000 Youth Project Kitimbwa town balugazi 12/08/2014 5,700,000 5,700,000 5,700,000 - tents and chairs Kiwuba Pineapple Growing 12/08/2014 8,695,000 434,750 9,129,750 1,002,000 8,127,750 Youth Project Kirindi Fish Farming Youth 12/08/2014 10,000,000 500,000 10,500,000 500,000 10,000,000 Project Nazigo Hq Coffee Nursery 12/08/2014 5,500,000 5,500,000 5,500,000 - Bed Youth Project Nazigo gombolola boda boda 12/08/2014 10,800,000 540,000 11,340,000 8,265,000 2,535,000 youth project Bukamba B Piggery Youth 13/08/2014 10,396,000 519,800 10,915,800 830,000 10,085,800 Project Wabusonko youth poultry 12/08/2014 6,750,000 337,500 7,087,500 - 7,087,500 project Kiteredde youth agric 12/08/2014 6,000,000 300,000 6,300,000 - 6,300,000 produce dealers project Kayunga Central Piggery 13/08/2014 8,800,000 440,000 9,240,000 1,000,000 8,240,000 Youth Project Bwetyaba youth dairy 12/08/2014 5,000,000 250,000 5,250,000 - 5,250,000 production Busaale youth poultry project 12/08/2014 4,818,000 4,818,000 4,818,500 - Kyampisi youth kroiler 13/08/2014 5,465,000 273,250 5,738,250 500,000 5,238,250 poultry production project Namatogonya youth afaayo 1/09/2014 5,000,000 250,000 5,250,000 2,385,200 2,864,800 maize Growing project Katikamu youth maize 5,000,000 5,000,000 5,000,000 - growing project Namagabi B Youth Maize 13/08/2014 5,000,000 250,000 5,250,000 - 5,250,000 buying and selling Kayunga west youth dairy 13/08/2014 8,500,000 8,500,000 8,500,000 - prodn project Asoni Kaggwa youth book 18/08/2014 5,939,000 296,950 6,235,950 4,750,000 1,485,950 project Ndeeba Youth Tents, Chairs 13/08/2014 10,400,000 520,000 10,920,000 2,100,000 8,820,000 & Ceremonial Service Namagabi B Rice Buying & 13/08/2014 11,156,000 557,800 11,713,800 8,500,000 3,213,800 Selling Youth Project Total 384,795,000 16,548,850 395,843,850 169,579,200 231,225,150

Appendix 2: Failed YLP Project

Sub Project Name Amount Remarks county Disbursed 2016/2017 Bbaale Misanga C Youth Animal 8,000,000 Funds were still on the account due to Traction misunderstanding among the executive committee Kayonza Bukerere Zibulaatudde Youth 6,000,000 The project doesn’t exist. Part of the funds was Tomato Growers shared among the group members and part misappropriated by the group chairperson 2015/2016 Bbaale Tangoye Youth Produce Buying 7,000,000 The project is not on the ground, & Selling Store(Kyeswa Simon) Kayonza Bugoma Youth Poultry Project 6,238,888 The project died and the poultry house was empty (Sekabira Moses) funds were diverted. Busaana Kayonjo Piggery Youth Project 9,920,000 The project no longer exists. Galilaya Kawongo Mukama Asobola 5,950,000 The project misappropriated the funds and the Youth Canteen project group no longer exist. Kayonza Kyamugongo Blue Ranks Dairy 8,224,000 The project funds had been diverted to maize Youth Project buying Kayonza Bukerere Kewerimidde Piggery 6,230,000 The project no longer exist funds were diverted. Youth Project Kayonza Nyondo Piggery Youth Project 5,600,000 The Members abandoned the group. Kayonza Nakabango Piggery Youth 5,950,000 All the pigs were sold Project Kayonza Nakyesa IV Biyinzika Youth 7,440,000 Funds were diverted to Mobile money business Buying & Selling Agro Store Kitimbwa Kitimbwa Ii Bayoda Poultry 5,885,000 The project no longer exist Rearing Youth Project Nazigo Kirindi Fish Farming Youth 10,000,000 Funds were misappropriated. Project Nazigo Bukamba B Piggery Youth 10,396,000 The funds of the project were misused. Project Kayunga Kanjuki fish farming youth 5,000,000 The pond dried and The chairperson and treasurer project disappeared with the money Busaana Nekoyedde youth tomato gro 6,270,000 The project members misused the funds and members took off. The project does not exist. Kayunga Namagabi B Youth Maize buying 5,000,000 The project doesn’t exist. Chairperson ran with the and selling money. Total 105,103,888

Appendix 3: Uganda Road Fund (URF) Budget Performance

Item Planned Actual Varian Amount Amount Amount spent Audit Remarks Output Output ce Budgeted Released (UGX) (UGX) (B) Variance Output (UGX)) (A) (A-B) Routine 330km 324.4km 5.6km 66,022,000 66,000,000 22,000 98.3% target manual Total release for met maintenanc all planned e (road maintenance gangs) 583,740,389 Routine 71.8km 81.8km (14.1k 292,000,000 280,323,600 11,676,400 102% target mechanized m) met maintenanc e Periodic 8km 8km 0 71,368,000 71,368,000 0 100% target maintenanc met e & culverts works Emergency 12km 12km 0 0 30,000,000 30,000,000 0 100% executed Other Allowances 154,253, 154,252,000 0 100% target qualifying to 000 met work supervisors and machine operators Sub-Total 583,643,000 613,740,389 601,943,600 11,698,400 30M was emergency release Emergency 125,000,000 30,000,000 30,000,000

Total 708,642,894 613,740,389 574,445,118