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Office of the Auditor General THE REPUBLIC OF UGANDA REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF IMPROVEMENT OF HEALTH SERVICE DELIVERY IN MULAGO HOSPITAL AND IN THE CITY OF KAMPALA PROJECT (MKCCAP) FOR THE YEAR ENDED 30TH JUNE 2015 IDA CREDIT NO. 4531-UG OFFICE OF THE AUDITOR GENERAL UGANDA TABLE OF CONTENTS PAGE LIST OF ACROYNMS ............................................................................................................................. 3 REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF ............................ 4 REPORT OF THE AUDITOR GENERAL ON INTERNAL CONTROL STRUCTURE FOR THE .......... 6 (IDA CREDIT .4531-UG) FOR THE YEAR ENDED 30TH JUNE, 2015 .......................................... 6 REPORT OF THE AUDITOR GENERAL ON INTERNAL CONTROL STRUCTURE FOR THE .......... 8 (IDA CREDIT .4531-UG) FOR THE YEAR ENDED 30TH JUNE, 2015 .......................................... 8 1.0 INTRODUCTION ...................................................................................................................... 10 2.0 BACKGROUND TO THE PROJECT ......................................................................................... 10 3.0 Project financing ..................................................................................................................... 10 4.0 PROJECT OBJECTIVES ........................................................................................................... 11 5.0 AUDIT SCOPE .......................................................................................................................... 12 6.0 PROCEDURES PERFORMED ................................................................................................... 12 7.0 AUDIT FINDINGS .................................................................................................................... 13 2 LIST OF ACROYNMS ADB African Development Bank ADF African Development Fund CRMU Compliance Review and Mediation Unit GoU Government of Uganda IAS International Accounting Standards KCCA Kampala City Council Authority LC Letter of Credit MKCCAP Mulago Kampala City Council Authority Project MNRH Mulago National Referral Hospital MoFPED Ministry of Finance Planning and Economic Development MoH Ministry of Health NSSF National Social Security Fund NTF Nigeria Trust Fund TAI Treasury Accounting Instruction UA Unit of Account UGX Uganda Shillings USD United States Dollars 3 REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF IMPROVEMENT OF HEALTH SERVICE DELIVERY IN MULAGO HOSPITAL AND IN THE CITY OF KAMPALA PROJECT (MKCCAP) FOR THE YEAR ENDED 30THJUNE 2015 THE RT. HON. SPEAKER OF PARLIAMENT I have audited the accompanying financial statements of the Improvement of Health Service Delivery in Mulago Hospital and Kampala Capital City Authority (MKCCAP) for the year ended 30th June, 2015. These financial statements comprise of the Statement of Financial Position as at 30th June 2015, Statement of Income and Expenditure, Detailed Schedule of Expenditure by Project Component and Category together with other accompanying statements, notes and accounting policies. Management Responsibility for the financial statement Under Article 164 of the Constitution of the Republic of Uganda, (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 the project. The Accounting Officer is also responsible for the preparation of financial statements in accordance with the requirements of the Public Finance Management Act 2015, and the Financial Reporting Guide, 2008,the Project Financial Agreement and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement 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 4 statements in order to design audit procedures that are appropriate in the circumstances, but not for purpose of expressing an opinion on the effectiveness of the entity’s internal control. 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 Mulago Kampala Capital City Authority for the year ended 30th June, 2015 are prepared, in all material respects in accordance with the Financial Reporting Guide, 2008 and Section 51(1) of the Public Finance Management Act, 2015. Other matter; Without qualifying my opinion, I consider it necessary to communicate the following matter other than those that are presented or disclosed in the financial statements. Delayed government contribution and payment of VAT The Ministry of Health signed a contract with a local Construction Company for the rehabilitation and upgrading of Mulago Hospital at contract price of USD.29,617,820.64 inclusive of Value added tax of USD.4,517,972.67 in October 2014. However, by the time of audit, government had neither honoured its counterpart funding of USD. 1,358,069.88 nor additional funds for the VAT component of USD.4,517,972,67 yet the project (Through the contractor) had an outstanding VAT obligation with URA. John F.S. Muwanga AUDITOR GENERAL 9th December 2015 5 REPORT OF THE AUDITOR GENERAL ON INTERNAL CONTROL STRUCTURE FOR THE IMPROVEMENT OF HEALTH SERVICE DELIVERY IN MULAGO HOSPITAL KAMPALA CAPITAL CITY PROJECT (MKCCAP) (IDA CREDIT .4531-UG) FOR THE YEAR ENDED 30TH JUNE, 2015 THE RT. HON. SPEAKER OF PARLIAMENT I have audited the financial statements of Improvement of Health Service delivery in Mulago Hospital and Kampala Capital City Authority Project (MKCCAP) (IDA Credit .4531-UG) for the year ended 30th June 2015. In planning and performing the audit, I considered the internal control structure in order to determine the auditing procedures for the purpose of expressing an opinion on the financial statements. Management Responsibility for the Internal Controls Management is responsible for establishing and maintaining an internal control structure. In fulfilling this responsibility, estimates and judgment are required to assess the expected benefits and related costs of internal control structure policies and procedures. Auditor’s Responsibility My examination was made in accordance with International Standards on Auditing (ISA) and accordingly included such tests of the accounting records, verification of assets and liabilities and such other auditing procedures I considered necessary in the circumstances. For the purpose of this report, I have classified the significant internal control structure policies and procedures in the following categories: Control over preparation of withdrawal applications for funds from the Grant account Bank and cash Purchases and payments Monitoring, evaluation and reporting. For all the internal control structure categories listed above, I obtained an understanding of the design of the relevant policies and procedures and whether they have been placed in operation and I assessed control risk. 6 Reportable Conditions No material reportable conditions were observed as management had put in place a satisfactory internal control system and measures to ensure proper accountability for all project funds. John F.S. Muwanga AUDITOR GENERAL 9th December, 2015 7 REPORT OF THE AUDITOR GENERAL ON INTERNAL CONTROL STRUCTURE FOR THE IMPROVEMENT OF HEALTH SERVICE DELIVERY IN MULAGO HOSPITAL KAMPALA CAPITAL CITY PROJECT (MKCCAP) (IDA CREDIT .4531-UG) FOR THE YEAR ENDED 30TH JUNE, 2015 The RT. Honourable I have audited the Special Account Statement of Improvement of Health Service delivery in Mulago Hospital and i Kampala Capital City Authority Project (MKCCAP) (IDA Credit .4531- UG) for the year ended 30th June 2015. Management Responsibility for the Special Account Statement Management is responsible for the preparation and fair presentation of the special account statement on the basis of cash deposits and withdrawals for the purpose of complying with the Loan Agreement and for such internal
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