Office of the Auditor General

THE REPUBLIC OF UGANDA

OFFICE OF THE AUDITOR GENERAL

ANNUAL REPORT OF THE AUDITOR GENERAL

ON THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30TH JUNE 2016

LOCAL AUTHORITIES

ii Table of Contents

Table of Contents ...... iii

List of Acronyms ...... xii

Definitions ...... xiv

PART I ...... 1

1.0 INTRODUCTION ...... 1 2.0 STATUS OF COMPLETION OF AUDITS ...... 1 3.0 KEY AUDIT FINDINGS ...... 3 4.0 CROSS CUTTING ISSUES IN LOCAL GOVERNMENTS ...... 6 PART II ...... 19

5.0 REPORT AND OPINION OF THE AUDITOR GENERAL ON THE ANNUAL CONSOLIDATED FINANCIAL STATEMENTS OF LOCAL GOVERNMENTS FOR THE YEAR ENDED 30TH JUNE 2016 ...... 19 PART III ...... 33

6.0 OTHER SIGNIFICANT FINDINGS ...... 33 6.1 ARUA BRANCH ...... 33

6.1.1 ADJUMANI DLG ...... 33

6.1.2 ARUA DLG ...... 35

6.1.3 KOBOKO DLG ...... 35

6.1.4 MOYO DLG ...... 38

6.1.5 NEBBI TC ...... 39

6.1.6 YUMBE DLG ...... 40

6.1.7 ZOMBO DLG ...... 40

6.1.8 ZOMBO TC ...... 42

6.2 FORT-PORTAL BRANCH ...... 43

6.2.1 BULIISA TC ...... 43

6.2.2 BUNDIBUGYO DLG ...... 44

6.2.3 BUNDIBUGYO TC...... 44

6.2.4 NYAHUKA TC ...... 45

6.2.5 KABAROLE DLG ...... 45

6.2.6 FORT-PORTAL MC ...... 46 iii 6.2.7 RWIMI TC ...... 46

6.2.8 RUBONA TC ...... 47

6.2.9 HOIMA DLG ...... 48

6.2.10 HOIMA MC ...... 48

6.2.11 KAMWENGE DLG ...... 49

6.2.12 KAMWENGE TC ...... 51

6.2.13 KASESE DLG ...... 52

6.2.14 HIMA TC ...... 53

6.2.15 KATWE KABATORO TC ...... 53

6.2.16 KIBAALE DLG...... 54

6.2.17 KIBAALE TC ...... 55

6.2.18 KAGADI TC ...... 56

6.2.19 MUHOORO TC ...... 56

6.2.20 MASINDI DLG ...... 57

6.2.21 MASINDI MC ...... 57

6.2.22 KYEGEGWA DLG ...... 59

6.2.23 KIRYANDONGO DLG ...... 60

6.2.24 KIRYANDONGO TC ...... 62

6.2.25 KYENJOJO DLG ...... 62

6.2.26 KYENJONJO TC ...... 63

6.2.27 KYARUSOZI TC ...... 64

6.2.28 KARAGO TC ...... 64

6.2.29 NTOROKO DLG ...... 65

6.2.30 KARUGUTIU TC ...... 65

6.2.31 RWEBISENGO TC ...... 66

6.2.32 KIBUKU TC ...... 67

6.3 GULU BRANCH ...... 68

6.3.1 AMOLATAR DLG ...... 68

6.3.2 AMURU DLG ...... 70

iv 6.3.3 APAC DLG ...... 72

6.3.4 APAC TC ...... 73

6.3.5 ADUKU TC ...... 73

6.3.6 AGAGO DLG ...... 74

6.3.7 ALEBTONG DLG ...... 75

6.3.8 PADIBE TC ...... 76

6.3.9 DOKOLO DLG ...... 77

6.3.10 GULU DLG ...... 78

6.3.11 GULU MC...... 80

6.3.12 KOLE DLG ...... 80

6.3.13 KITGUM DLG ...... 80

6.3.14 KITGUM TC ...... 81

6.3.15 LAMWO DLG ...... 82

6.3.16 LAMWO TC ...... 86

6.3.17 LIRA DLG ...... 87

6.3.18 LIRA MC ...... 87

6.3.19 NWOYA DLG ...... 90

6.3.20 OTUKE DLG ...... 90

6.3.21 OTUKE TC ...... 92

6.3.22 OYAM DLG ...... 92

6.3.23 OYAM TC ...... 94

6.3.24 PADER DLG ...... 94

6.3.25 KALONGO TC ...... 96

6.4 JINJA BRANCH ...... 96

6.4.1 BUGIRI DLG ...... 96

6.4.2 BUYENDE DLG ...... 98

6.4.3 IGANGA DLG...... 101

6.4.4 IGANGA MC ...... 104

6.4.5 JINJA DLG ...... 105

v 6.4.6 JINJA MC ...... 108

6.4.7 BUGEMBE TC ...... 109

6.4.8 KAKIRA TC ...... 110

6.4.9 KALIRO DLG ...... 111

6.4.10 KAMULI DLG ...... 115

6.4.11 KAYUNGA DLG ...... 121

6.4.12 LUUKA DLG ...... 123

6.4.13 MAYUGE DLG ...... 124

6.4.14 NAMUTUMBA DLG ...... 127

6.4.15 NAMAYINGO DLG ...... 128

6.5 KAMPALA BRANCH ...... 129

6.5.1 BUIKWE DLG ...... 129

6.5.2 BUIKWE TC ...... 133

6.5.3 BUVUMA DLG...... 134

6.5.4 BUVUMA TC ...... 137

6.5.5 GOMBE TC ...... 137

6.5.6 GOMBA DLG ...... 138

6.5.7 LUWERO DLG ...... 141

6.5.8 WOBULENZI TC ...... 146

6.5.9 MPIGI DLG ...... 147

6.5.10 MPIGI TC ...... 148

6.5.11 MUKONO DLG ...... 148

6.5.12 MUKONO MC ...... 150

6.5.13 NAKASEKE DLG ...... 151

6.5.14 NAKASEKE TC ...... 154

6.5.15 NAKASEKE-BUTALANGU TC ...... 154

6.5.16 NAKASONGOLA DLG...... 155

6.5.17 WAKISO DLG ...... 158

6.5.18 WAKISO TC...... 162

vi 6.5.19 ENTEBBE MC ...... 164

6.5.20 KAKIRI TC ...... 166

6.5.21 KIRA MC ...... 166

6.5.22 NANSANA MC ...... 168

6.5.23 KAKOOGE TC ...... 169

6.5.24 MIGEERA TC ...... 170

6.5.25 MASULITA TC ...... 171

6.6 MASAKA BRANCH ...... 172

6.6.1 KALANGALA DLG ...... 172

6.6.2 BUKOMERO TC ...... 173

6.6.3 LYANTONDE DLG ...... 173

6.6.4 LYATONDE TC ...... 174

6.6.5 MASAKA DLG ...... 175

6.6.6 MASAKA MC ...... 175

6.6.7 MITYANA DLG ...... 176

6.6.8 MUBENDE DLG ...... 178

6.6.9 MUBENDE MC ...... 179

6.6.10 BUTEMBA TC ...... 179

6.6.11 BUKOMANSIMBI DLG ...... 180

6.6.12 KALUNGU DLG ...... 180

6.6.13 KALUNGU TC ...... 182

6.6.14 LUKAYA TC ...... 182

6.6.15 LWENGO DLG ...... 183

6.7 MBALE BRANCH ...... 184

6.7.1 BUDAKA DLG ...... 184

6.7.2 BUDAKA TC ...... 187

6.7.3 BUDUDA DLG ...... 188

6.7.4 BUDUDA TC ...... 191

6.7.5 BUKWO DLG ...... 192

vii 6.7.7 BUSIA DLG ...... 196

6.7.8 BUSIA MC ...... 197

6.7.9 BUSOLWE TC ...... 200

6.7.10 BUTALEJA DLG ...... 201

6.7.11 KAPCHORWA DLG ...... 203

6.7.12 KIBUKU DLG ...... 205

6.7.13 KIBUKU TC ...... 205

6.7.15 MANAFWA DLG ...... 209

6.7.16 MANAFWA TC ...... 213

6.7.17 MBALE DLG ...... 214

6.7.18 MBALE MC ...... 216

6.7.19 PALLISA DLG ...... 218

6.7.20 SIRONKO DLG ...... 221

6.7.21 TORORO DLG ...... 222

6.7.22 MALABA TC ...... 225

6.7.23 NAGONGERA TC ...... 226

6.7.24 BULAMBULI DLG ...... 227

6.7.25 BULAMBULI TC ...... 231

6.7.26 BULEGENI TC ...... 232

6.7.27 NAKALOKE TC ...... 232

6.8 MBARARA BRANCH ...... 234

6.8.1 BUSHENYI DLG ...... 234

6.8.2 BUSHENYI-ISHAKA MC ...... 236

6.8.3 IBANDA DLG ...... 239

6.8.4 IBANDA TC ...... 241

6.8.5 ISINGIRO DLG ...... 242

6.8.6 ISINGIRO TC ...... 243

6.8.7 KABEREBERE TC ...... 243

6.8.8 KABUYANDA TC ...... 245

viii 6.8.9 KABALE DLG ...... 245

6.8.10 KABALE MC ...... 248

6.8.11 KATUNA TC ...... 249

6.8.12 KABWOHE-ITENDERO TC ...... 250

6.8.13 KANUNGU DLG ...... 251

6.8.14 KANUNGU TC ...... 254

6.8.15 KIHIHI TC ...... 254

6.8.16 KIRUHURA DLG ...... 255

6.8.17 KAZO TC...... 256

6.8.18 KISORO DLG ...... 256

6.8.19 KISORO TC ...... 261

6.8.20 MBARARA DLG ...... 262

6.8.21 MBARARA MC ...... 263

6.8.22 NTUNGAMO DLG ...... 263

6.8.23 NTUNGAMO MC ...... 266

6.8.24 RUSHANGO TC ...... 266

6.8.25 RUKUNGIRI DLG ...... 267

6.8.26 RUKUNGIRI MC ...... 268

6.8.27 KAMBUGA TC ...... 269

6.8.28 BUTOGOTA TC ...... 271

6.8.29 SHEEMA TC ...... 272

6.8.30 BUHWEJU DLG ...... 273

6.8.31 NSIIKA TC ...... 274

6.8.32 MITOOMA TC ...... 275

6.8.33 RWASHAMAIRE TC ...... 276

6.8.34 RUBIRIZI DLG ...... 276

6.8.35 RUBIRIZI TC ...... 279

6.8.36 KATERERA TC ...... 279

6.9 SOROTI BRANCH ...... 280

ix 6.9.1 ABIM DLG ...... 280

6.9.2 AMUDAT DLG ...... 281

6.9.3 AMUDAT TC ...... 286

6.9.4 AMURIA DLG ...... 286

6.9.5 BUKEDEA DLG ...... 289

6.9.6 BUKEDEA TC ...... 292

6.9.7 KABERAMAIDO DLG ...... 293

6.9.8 KABERAMAIDO TC ...... 294

6.9.9 KABOONG DLG ...... 294

6.9.10 KATAKWI DLG ...... 298

6.9.11 KOTIDO DLG ...... 300

6.9.12 KOTIDO TC ...... 302

6.9.13 KUMI TC ...... 303

6.9.14 MOROTO DLG ...... 304

6.9.15 MOROTO MC ...... 304

6.9.16 NAKAPIRIPIRIT DLG ...... 305

6.9.17 NAKAPIRIPIRIT TC ...... 307

6.9.18 SOROTI DLG ...... 308

6.9.19 SOROTI MC ...... 308

6.9.20 NAPAK DLG ...... 309

6.9.21 NGORA DLG ...... 310

6.9.22 SERERE DLG ...... 312

Tables

Table 1: Details of Significant Cross cutting issues per OAG Branch Offices...... 24

Table 2: Arua Branch Significant Crossing Cutting Issues …………………..………..25

Table 3: Fortportal Branch Significant Crossing Cutting Issues ……………………..26

Table 4: Gulu Branch Significant Crossing Cutting Issues …………………..………..27

Table 5: Jinja Branch Significant Crossing Cutting Issues …………………..………..28

Table 6: Kampala Branch Significant Crossing Cutting Issues …………..…………..29

Table 7: Masaka Branch Significant Crossing Cutting Issues ……………..………….30

Table 8: Mbale Branch Significant Crossing Cutting Issues …………………..………31

Table 9: Mbarara Branch Significant Crossing Cutting Issues ………………….……31

Table 10: Soroti Branch Significant Crossing Cutting Issues …………………..…….32

APPENDIX: Consolidated Financial Statements of The Government of The Republic of Uganda For the year ended 30 June 2016……………………………....315

xi List of Acronyms

AO Accounting Officer BOQs Bills of Quantity CAO Chief Administrative Officer CIID Criminal Investigation & Intelligence Department DA District Administration DC District Council DEC District Executive Committee DLG District Local Government DLG District Local Government DPAC District Public Accounts Committee DSC District Service Commission GOU Government of Uganda HC I Health Centre I HC II Health Centre II HC III Health Centre III HC IV Health Centre IV HLG Higher Local Government IAS International Accounting Standard IDP Internally Displaced People IFRS International Financial Reporting Standard INTOSAI International Organization of Supreme Audit Institutions LC I Local Council One LC II Local Council Two LC III Local Council Three LC IV Local Council Four LC V Local Council Five LGA Local Government Act LGBFP Local Government Budget Framework Paper LGDP Local Government Development Programme LGFAM Local Government Financial and Accounting Manual LGFAR Local Government Financial and Accounting Regulations LGMSD Local Government Management of Service Delivery LGPAC Local Government Public Accounts Committee

xii LLG Lower Local Government LST Local Service Tax MC Municipal Council MoFPED Ministry of Finance Planning and Economic Development MoLG Ministry of Local Government MoPS Ministry of Public Service NAA National Audit Act NAADS National Agricultural Advisory Services NDP National Development Plan NSSF National Social Security Fund OAG Office of the Auditor General OPM Office of the Prime Minister PAYE Pay As You Earn PFAA Public Finance and Accountability Act PHC Primary Health Care PPDA Public Procurement and Disposal of Public Assets Authority PFMA Public Finance Management Act PSC Public Service Commission PWDs People with Disabilities SAI Supreme Audit Institution SC Sub County SFG School Facilitation Grant TC Town Council TC Town Clerk UGX Uganda Shillings ULGA Uganda Local Governments Association UPE Universal Primary Education URA Uganda Revenue Authority URF Uganda Road Fund USMID Uganda Support to Municipal Infrastructure Development Program VAT Value Added Tax VFM Value For Money WHT Withholding Tax YLP Youth Livelihood Programme

xiii

Definitions Accountant General Means the person designated under Section 7 of the Public finance and Accountability Act 2003. Accounting Officer means a person designated under Section 8 of the Public Finance and Accountability Act 2003 as Accounting Officer and Section 64(1), 65 (2) (a) and 69(2) of the Local Government Act 1997 Cap 243 of the Laws of Uganda as amended in respect of Chief Administrative Officer of a District, Town Clerk of an Urban Council and Sub-county Chief and Head teachers respectively. Auditor General Means the Auditor General appointed under article 163(1) of the Constitution. Adverse opinion Means an opinion issued by the Auditor General whereby the financial statements contain material misstatements or errors and there is disagreement with management to the extent that it is concluded that the financial statements do not represent a fair presentation of the financial position of the entity as at the financial year end. Consolidated fund Means the consolidated fund of Uganda established under article 153 of the Constitution. Disclaimer opinion Means an opinion issued by the Auditor General whereby the financial statements contain material misstatements based on limitations on scope of the audit work to the extent that there is uncertainty on the fairness and truthfulness of the financial statements and therefore an audit opinion cannot be given because of the gravity of the uncertainty. Doubtful Expenditure Means expenditure that has not been confirmed as genuine considering the circumstances under which it was incurred. Escrow account Means an account established in the custody of a third party to hold revenues which will be disbursed upon the fulfillment of the conditions specified.

xiv Emphasis of matter Refers to a matter that does not affect the Auditor’s Opinion but is of such fundamental importance to users in understanding of the financial statements so as to warrant its inclusion in the Auditor’s report immediately after the opinion. Financial year Refers to an accounting period of twelve months. Force on account Means construction works undertaken by use of a procuring and Disposing Entity’s own personnel and equipment. Generally accepted Means accounting practices and procedures recognized by the accounting practice accounting profession in Uganda and approved by the Accountant General as appropriate for reporting financial information relating to government, a Ministry or department, a fund, an agency or other reporting unit and which are consistent with the Public Finance and Accountability Act and any other relevant appropriation Act. Grade X Means Pupils who did not sit exams. Grade U Means Children who failed or Un-graded. Government Means the Government of Uganda. Higher Local Refers in the context of this report, Districts, Municipal Councils and Governments Town Councils. Incompletely vouched Means expenditure that is not supported by adequate accountability documents. Internal audit Means a process to measure, evaluate and report to the management of an entity on the efficiency of the system of internal control used to ensure the validity of financial and other information. Internal control Means a set of systems to ensure that financial and other records are reliable, complete and ensure adherence to the entity Management policies, orderly and efficient conduct of the entity, proper recording and safeguarding of assets and resources. Local Government Means a council referred to in article 180 of the Constitution. Council Nugatory Expenditure Means wasteful expenditure.

xv Qualified “except for” Refers to the audit opinion issued by the Auditor General whereby opinion the material misstatements or errors are not pervasive and “except for” these misstatements or errors being adjusted for the rest of the financial statements fairly present in all material respects the financial position of the entity. Unqualified opinion Refers to the audit opinion issued by the Auditor General whereby the financial statements contained no material misstatements or errors. Unvouched Means funds spent without preparing vouchers or expenditure that Expenditure is not supported with payment vouchers.

xvi LOCAL AUTHORITIES

PART I 1.0 INTRODUCTION I am required by Article 163(3) of the Constitution of the Republic of Uganda, Section 13, 16 and 19 of the National Audit Act 2008, Section 87 of the Local Government Act 1997 as amended and Section 51(4) of the Public Finance Management Act 2015 to audit and report on Local Governments.

Under Section 82(4) of the Public Finance Management Act 2015, I am now required to submit to Parliament by 31st December annually a report of the Accounts audited by me for the year immediately preceding. I am therefore issuing this report in accordance with the above provisions.

Volume 3 of this Annual Report to Parliament covers financial audits carried out on District Local Governments, Municipal and Town Councils and Lower Local Governments.

Part 1 of this volume I give an overview of the financial audit work carried out, status of completion of the audits, a summary of the audit opinions issued on the financial statements of the entities audited and the major audit findings in Local Governments arising from the results of the audits carried out.

Part II gives the Auditor General’s Report and Opinion of the consolidated financial statements on Local Governments.

Part III gives the other significant audit findings on the Local Government entities audited that need urgent attention.

I, therefore, urge all stakeholders to review this report with utmost interest and concern to ensure effective implementation of the recommendations therein and ultimately improve the lives of our people.

2.0 STATUS OF COMPLETION OF AUDITS

I am required to audit and report on a total of 1,786 accounts of Local Authorities, Regional Referral Hospitals, Secondary Schools and Tertiary Institutions. I am pleased to report that my office was able to audit and complete 1,168 accounts including all the 307 Higher Local Governments (HLGs) and 440 Lower Local Governments (Sub-

counties) and 277 secondary schools and tertiary institutions. The table below shows the number of entities and the audit completion status:

Table 1: Number of Entities and Audit Completion Status

Entities Planned Number of Status Entities Audited Pending Districts 111 111 - Municipal Councils 22 22 - Town Councils 174 174 - Sub Counties and Divisions (FY 1,189 440 749 2014/2015) Secondary Schools/Tertiary 277 277 - Institutions (Year 2014 and 2015 Total 1,773 1024 749

Audit of 1,189 sub-counties for the financial year 2015/2016 remain outstanding due to lack of funds.

Similarly, I was only able to audit 277 secondary schools and tertiary institutions out of a population of 1,280 schools and tertiary institutions due to limited funding provided for the audit.

2.1 AUDIT OPINIONS The table below shows a summary of the audit opinions of HLG for the financial year under review including a comparison with audit opinions of the previous two years. Table 2: Summary of Audit Opinions for the three financial years

2012/2013 2013/2014 2014/2015 2015/2016

Local Local Local Percen Local Percen Percenta Percent 1 Govern Governm Governme tage Govern tage Opinion ge age ments ents nts ments 69.38 Un qualified 116 37.4% 213 279 91 263 85.7% % Except for 29.64 183 60% 91 27 8.7 43 14.0% (qualified) % Disclaimer 7 2.3% 03 0.98% 01 0.3 1 0.3% Adverse 0 0% 0 0% 0 0% 0 0 TOTAL 307 100% 307 100% 307 100% 307 100%

From the above, it is noted that unqualified opinions increased from 37.4% in 2012/2013 to 69.38% in 2013/2014 to 91% in 2014/15 and decreased to 85.7% in 2015/16. The qualified opinions decreased from 60% in 2012/2013 to 29.64% in 2013/14 to 8.7% in 2014/15 and then increased 14% in 2015/16. The disclaimer opinions decreased from 2.3% 2012/2013 to 0.98% in 2013/14 to 0.3% in 2014/2015 and 2015/2016.

The details of audit opinions issued for each entity regarding financial statements of 2015/16 are shown on pages 33 to 354.

3.0 KEY AUDIT FINDINGS

A summary of the key findings arising from the audit of Local Governments is highlighted below:-

 Payroll Anomalies

Section (B-a) (7) of the General rules on Payment of Salaries in Public Service Standing Orders,2010 requires salaries to be paid correctly, promptly and as a lump sum in accordance with the approved salary structure for the Public Service. However, Payroll analysis carried out revealed that a sum of UGX.11,390,722,259 was paid irregularly. The irregularities include:- No. Irregularities Amount UGX. 1 Over payment 1,163,414,641 2 Unsupported Pension Payments 9,569,870,082 3 Wrongly Paid Salaries 657,437,536 Total 11,390,722,259

The Accounting Officers attributed the irregularities to challenges encountered during decentralization of salary payments on the Integrated Financial Management system (IFMS) and Integrated Personnel and payroll system (IPPS) and outright errors during the salary payment process. Many of the Accounting Officers explained that they had initiated the process of recovering the overpaid amounts and training of staff to build capacity and address the challenges. I await for evidence to that effect.

 Procurement Anomalies

33 Local Governments procured items worth UGX.27,548,079,906 without following Public Procurement Regulations and Guidelines. The amount is comprised of UGX.1,310,729,577 which lacked procurement files , UGX.21,225,982,459 where there was breach of procurement procedures, UGX.4,695,910,417 involving inadequate contract management and UGX.315,457,453 of unauthorized contract variations. Consequently, it becomes difficult to ascertain whether value for money was achieved. The shortcomings were attributed to lack of technical capacity, understaffing and deliberate flouting of PPDA regulations. There is need for the Accounting Officers to develop capacity building strategies and to engage the Ministry of Public Service to address the understaffing problem. In addition Accounting Officers are encouraged to invoke the relevant sections of the Law for noncompliance.

 Funds not Accounted for Expenditure amounting to UGX.3,896,976,469 was identified as funds unaccounted for. Consequently, I could not confirm that the funds were utilized for the intended purposes. The delayed submission of accountability may also lead to falsification of documents resulting into loss of funds. This was caused by failure by accounting Officers to enforce accountability controls and lack of advances ledger to monitor advances. There is need for Accounting Officers to enforce controls relating to financial management and accountability.

 Under Collection of Local Revenue Regulation 32 of the Local Governments Financial and Accounting Regulations, 2007 requires Councils to ensure collection of all budgeted revenue in an approved manner. Review of revenue performance revealed significant under collection of Local revenue in 161 Councils amounting to UGX.17,165,844,562.

The shortfall in revenue collection was attributed to failure to carry out revenue enumeration and assessments, non-enforcement of contracts with private revenue collectors, understaffing and incomplete revenue records. There seems to be little effort in ensuring effective collection of local revenue.

I advised the Accounting Officers to sensitize tax payers on the relevant taxes and to develop strategies and enforce lawful measures to enhance revenue collections.

 Understaffing

Staffing levels of vacant posts in Local Government has not significantly improved as shown in the table below;-

No. Level of understaffing No of Entities 1 Above 40% 119 2 Between 20%-40% 45 3 Below 20% 143

The levels ranged from 10% in Kibuku District Local Government to 89% in Kamuli Town Council.

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.

This was attributed to limited wage bill and a ban on recruitment by the Ministry of Public Service. The Accounting Officers are 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. Meanwhile government is advised to address this phenomenon to ensure improvements in service delivery at local level.

 Under-absorption/Unspent balances The Public Finance Management Act (PFMA) Section 45 (3) of 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).

However, it was observed that 84 districts had failed to utilise UGX. 13,189,396,027 by the end of the financial year.

The Accounting Officers attributed under absorption to IFMS failures, delayed delivery of late releases of funds and delayed delivery of services by the contracted suppliers

I advised the Accounting Officers to engage Ministry of Local Government and Ministry of Finance Planning and Economic Development to address the bottle necks.

Assets Management

 Lack of Land Titles

Out of 307 Local Governments, 148 entities representing 48% of the Local governments lacked land titles for the land where council properties are located. There is a risk that council land is exposed to encroachment and disputes which later leads to litigation in courts of law arising from land disputes between the Councils and the Communities.

The Accounting Officers attributed this to lack of funds to process land titles and the absence of District Land Boards. There is urgent need for the Accounting Officers to prioritize and allocate funds and ensure that the land titles are secured. The District Councils are also advised to ensure that the District Land Boards are constituted.

 Un-utilized Capacity Building Infrastructure Development Funds Under (USMID)Project

It was observed that 14 Municipal Councils under the USMID project had not fully utilized funds released to them amounting to UGX.94,783,335,602. The unutilized funds were meant for settlement of VAT, Municipal Development (Municipal Development Grants) and Capacity (Capacity Building Grants).

Failure to utilize the released funds reflects lack of effective implementation of project programs disadvantaging the community who are intended to benefit from the program.

Management attributed the low absorption of the capacity Building funds to the failure of the Municipal Councils to procure key retooling equipment for surveying, engineering and environment among others partly due to lack of technical capacity to procure such specialized equipment. In addition the delay to utilise the infrastructure development funds was attributed to failure to attract responsive bidders for the jobs.

There is need to enhance the absorption capacity to ensure full utilization of the funds released.

4.0 CROSS CUTTING ISSUES IN LOCAL GOVERNMENTS

The following cross cutting issues arose in the audit of Local Governments, namely:-

1. Revenue Under collection of Local Revenue Irregular levy of Development tax

2. Expenditure Procurement anomalies Payroll anomalies Funds not accounted for 3. Internal control and Governance issues Understaffing Shoddy works/incomplete projects Outstanding commitments Lack of ICT policy 4. Assets management Lack of land titles Receivables Un spent balances Under absorption under USMID The summary of these findings are in the table below and further detailed in table 8 on pages 24-32.

Table 1 Details of Significant Cross cutting issues per OAG Branch Offices

4.1 REVENUE

4.1.1 Under Collection of Local Revenue Regulation 32 of the Local Governments Financial and Accounting Regulations, 2007 requires Councils to ensure collection of all budgeted revenue in an approved manner and the revenue banked intact in Council accounts. However, a review of revenue performance of 161 Councils revealed that under collection of Local Revenue amounting to UGX. 17,165,844,562

This implies that all planned activities for the year were not implemented. This was attributed to lack of revenue enumeration and assessment and failure to supervise collection of contracted revenue. There is need for the Accounting Officers to carry out revenue assessments, maintain proper revenue records, sensitize the tax payers and strengthen controls relating to collection of revenue.

With regard to 108 Lower Local Governments (Sub Counties), an amount of UGX. 1,007,693,692 remained uncollected during the period.

The shortfall in revenue collection was attributed to; failure to carry out revenue enumeration and assessments, non-enforcement of contracts with private revenue collectors, understaffing and incomplete revenue records. There seems to be little effort in ensuring effective collection of these revenue sources.

I advised the Accounting Officers to sensitize tax payers and develop strategies and enforce lawful measures to enhance revenue collection.

4.2 EXPENDITURE

4.2.1 Procurement Anomalies

The Public Procurement and Disposal of Public Assets (PPDA) Act 2003, and the Local Government PPDA Regulations 2006 require that all public procurement of goods, services and works comply with the procurement law. However, 33 Local Governments procured

items and services worth UGX.27,548,079,906 without following Public Procurement Regulations and guidelines as shown in the table below:

Table 4 Procurement Anomalies

Category Amount (UGX) %age Breach of procurement procedures 21,225,982,459 77 Contract management weaknesses 4,695,910,417 17 Lack of procurement files and records 1,310,729,577 4.8 Unauthorized contract variation 315,457,453 1.2 Total 27,548,079,906 100

The shortcomings were attributed to lack of technical capacity, understaffing and deliberate flouting of PPDA regulations. There is need for the Accounting Officers to develop capacity building strategies and to engage the Ministry of Public Service to address the understaffing problem. In addition Accounting Officers are encouraged to invoke the relevant sections of the Law for noncompliance with the regulations.

4.2.2 Funds not Accounted for

Regulation 43 (2) of the Local Government Financial and Accounting Regulations 2007, require Administrative advances to council employees to be authorized by the Chief Executive and accounted for within a month. During the year under review UGX.3,896,976,469 in respect of HLGs comprising of administrative advances, incompletely vouched expenditure, unvouched expenditure and doubtful expenditure remained outstanding as shown in the table below:-

Table 5 Funds not accounted for

Category Amount (UGX) Percentage Unaccounted for Administrative advances 95 3,697,520,680 Incompletely vouched expenditure 3 126,878,410 Missing Vouchers 2 72,577,379 Total 3,896,976,469 100

In addition, UGX.1,081,996,613 remained outstanding in the 418 Lower Local Governments (Sub Counties) audited as shown below;

Table 6: Funds not accounted for in 418 Lower Local Governments

Category Amount (UGX) Percentage Incompletely vouched 575,329,158 53% Unvouched expenditure 328,326,188 30% Outstanding administrative advances 178,341,267 17% Total 1,081,996,613 100

Consequently, I could not confirm that the funds were utilized for the intended purposes. The delayed submission of accountability may also lead to falsification of documents resulting into loss of funds. This was caused by failure by Accounting Officers to enforce accountability controls and lack of advances ledger to monitor advances. There is need for Accounting Officers to enforce controls relating to financial management and accountability.

4.2.4 Payroll Anomalies Section (B-a) (7) of the General rules on Payment of Salaries in Public Service Standing Orders,2010 requires salaries to be paid correctly, promptly and as a lump sum in accordance with the approved salary structure for the Public Service. However, Payroll analysis carried out revealed that a sum of UGX. 11,390,722,259 was paid irregularly. The irregularities include:- No. Irregularities Amount UGX. 1 Over payment 1,163,414,641 2 Unsupported Pension Payments 9,569,870,082 3 Wrongly Paid Salaries 657,437,536 Total 11,390,722,259

the process of recovering the overpaid amounts and training of staff to build capacity and address the challenges. I await for evidence to that effect.

4.2.5 Unsatisfactory Civil Works Section 14 of the PPDA regulations require an Accounting Officer to have the overall responsibility of the successful execution of the procurement, disposal and contract management processes and ensure that implementation of the contract as per the agreed terms. Audit inspection of the works in the roads, water, schools, health centres and other buildings revealed that there were several projects with unsatisfactory construction works amounting to UGX. 3,493,600,252. This implies that value for money may not have been achieved. The Accounting Officers attributed this anomaly to inadequate technical staff, delayed procurement process and inadequate capacity of the local contractors to execute the works.

I advised the Accounting Officers to enhance monitoring and supervision of contracts to avoid such reoccurrences and to source for competent contractors.

4.3 Internal Control and Governance Issues

4.3.1 Under Staffing The audit revealed that high levels of vacant posts in Local Government have not significantly improved as shown in the table below:- No. Level of understaff Number of Local Governments 1 Above 40% 119 2 Between 20%-40% 45 3 Below 20% 143 4 Total 307 .

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.

This was attributed to limited wage bill and a ban on recruitment by the Ministry of Public Service.

I advised the Accounting Officers to continue engaging the Ministries of Public Service, Local Government and Finance Planning and Economic Development to address the challenge. Meanwhile government is advised to address this phenomenon to ensure improvements in service delivery at local level. 4.3.2 Outstanding Commitments Regulation 11(d) of the Local Government Financial and Accounting Regulations, 2007 requires the Head of Finance to ensure that commitments are not approved unless there is sufficient and committed funds available. However, a number of Higher Local Governments for the year under review failed to adhere to the commitment control system which resulted in committing Councils beyond the available financial resources. Consequently fifteen entities accumulated outstanding commitments amounting to UGX.9,101,467,408

The outstanding commitments can lead to litigation or confiscation of Council assets if not settled timely. The Accounting Officers attributed the anomaly to under collection of local revenue and shortfall in release of grants from Central Government.

I advised the Accounting Officers to adhere to provisions of the commitment control system to eliminate arrears and ensure financial discipline.

4.4 Assets Management

4.4.1 Lack of Land Titles

Regulation 9 (j) of the Local Government Financial and Accounting Regulations, 2007 require the Accounting Officers to ensure safe custody of all assets of Council. It was observed that out of 307 Local Governments, 148 entities representing 48% of the Local Governments lacked land titles for the land where council properties are located. There is a risk that council land is exposed to encroachment and disputes. The Accounting Officers attributed this to lack of funds to process land titles and absence of District Land Boards. There is urgent need for the Accounting Officers to prioritize and allocate funds

and ensure that the land titles are secured. The District Councils are also advised to ensure that the District Land Boards are constituted.

4.4.2 Receivables Paragraph 2.3.2.3 of the Local Governments Financial and Accounting Manual 2007 states that money owed to Council represents an asset that is idle, as it denies the Council the opportunity of using the money to provide services promptly. Fifty seven (56) Local Governments failed to collect outstanding revenue from different sources amounting to UGX.11,294,653,082. This was attributed to laxity on the part of the Accounting Officers to follow up collection of the debts.

Uncollected revenue adversely affect service delivery and have an additional risk of loss of revenue. I advised the Accounting Officers to develop debt recovery strategies to ensure that all outstanding debts are collected.

4.4.3 Unspent balances Section 17(2) of the Public Finance and Management Act, 2015 requires a vote that does not expend money that was appropriated to the vote for the financial year at the end of the financial year to repay the money to the consolidated fund.

It was however, observed that in sixteen (16) entities an amount of UGX. 11,550,319,031 of conditional grants remained unexpended at year end.

The Accounting Officers attributed the shortcoming to the late release of funds and promised to repay back the funds to the consolidated fund.

I advised the Accounting Officers to ensure that the funds are repaid to the consolidated fund.

4.4.4 Unutilized Capacity Building Infrastructure Development Funds Under (USMID)Project

Failure to utilize the released funds reflects lack of effective implementation of project programs disadvantaging the community who are intended to benefit from the program.

There is need to enhance the absorption capacity to ensure full utilization of the funds released.

4.5 FINANCIAL REPORTING

4.5.1 Financial Statements for Secondary Schools, Primary Schools and Health Centres

Regulations 61-64 of the Local Government Financial and Accounting Regulations 2007 require District Hospitals, Health Units, Secondary Schools and Primary Schools to prepare and submit financial statements to the Chief Executive on regular basis as indicated below;

Table 7 Financial Statements for Secondary Schools, Primary Schools and Health Centres

Entity Period Chief Executive District Hospitals Monthly and Annually Chief Administrative Officer Health Units Monthly Sub-county Chief and copy Administrative Units Secondary Schools Each academic term and Chief Administrative Officer Calendar year Primary Schools Each Academic term Sub-County Chief

The regulations further provide that where a head teacher and the in-charge of the Primary Schools and Health centre respectively are unable to prepare the financial statements, assistance may be sought from the sub accountant of the Sub-county. Regulations 70 requires the Chief Executive to submit the accounts prepared in accordance with these regulations to the Auditor General for audit.

In my three previous year audit reports, I observed that the entities lacked clear guidance on the nature of books of accounts and specific financial statements to be prepared. The primary schools and Heath Centres also lacked the necessary manpower to prepare the books. These issues have not been addressed.

It is advised that the Ministry of Finance Planning and Economic Development together with Ministry of Local Government issue relevant accounting manuals and guidelines for preparation of financial records and statements in the schools and Health Centres.

4.5.2 Lack of Standard Financial Reporting Framework for Schools It was observed again that there was no standard financial reporting framework for secondary schools. This was attributed to lack of financial and accounting manual. As a result, there was no uniform classification and coding of account balances, format and presentation of financial statements. Section 29 (2) (b) of Education (Board of Governors) regulations require the board to prepare within three months financial statements in the form approved by the Minister or district secretary for Education. There is need for the Minister or District Secretary for Education in consultation with the Accountant General to prescribe the form of the financial statements for the Secondary Schools.

4.5.3 Financial Statements for Lower Local Governments

In my three previous year audit reports, I noted that there was still a problem with presentation of financial statements in the Lower Local Governments. In the financial year under review, the shortcomings were still identified. The anomalies include;

 Non-adherence to presentation and disclosure requirements as per Local Government Financial and accounting Manual 2007, for example, lack of cash flow statements, schedule of commitments, and others.  Misstatement of account balances.  Non- preparation of primary books of accounts such as Ledgers, cash books, and vote books.  Lack of Board of survey reports  Lack of Bank reconciliation statements and certificates of Bank balance.  Unbalanced Budgets  Lack of other statements, schedules and Notes to the accounts.

 Missing budget figures in income and expenditure accounts.  Non-disclosure of losses. Preparation of Financial statements is a stewardship role in which accountability for application of resources entrusted to Accounting Officers is reported to the stakeholders. Failure to present financial statements properly impairs interpretation and analysis of entity performances. This is attributed to understaffing, lack of training, Low levels of practical experience by clerks and non-adherence to the guidance provided in the Local Governments’ Financial and Accounting Manual 2007 and other accounting standards.

Accounting Officers should liaise with responsible authorities to ensure the staffing gaps are addressed and the necessary training undertaken.

PART II

5.0 REPORT AND OPINION OF THE AUDITOR GENERAL ON THE ANNUAL CONSOLIDATED FINANCIAL STATEMENTS OF LOCAL GOVERNMENTS FOR THE YEAR ENDED 30TH JUNE 2016

THE RT. HON. SPEAKER OF PARLIAMENT

I have audited the accompanying consolidated annual financial statements of local governments for the year ended 30th June 2016. These annual consolidated financial statements comprise the Statement of Financial Position as at 30th June 2016, Statement of Financial Performance, Statement of Changes in Equity, Cash flow Statement together with other accompanying statements, Schedules, Notes and accounting policies.

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 Officers are accountable to Parliament for the funds and resources of the Votes/Entities under their control. The Accountant General is also responsible for the preparation of Consolidated Financial Statements in accordance with the section 52(1) (b) of the Public Finance Management Act, 2015, and the Financial Reporting Guide, 2008, 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), section 87of the Local Governments Act cap243(as amended) and Sections 13,16 and 19 of the National Audit Act, 2008 is to audit and express an opinion on these statements based on my audit. I conducted the audit in accordance with International Standards on Auditing (ISA). Those standards require that I comply with the ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing audit procedures to obtain 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 financial statements whether due to fraud or error. In making those risk assessments, the Auditor considers internal control relevant to the entity’s preparation and fair presentation of financial statements in order to design audit procedures that are appropriate in the circumstances but not for purposes 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.

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

Part “A” of this report sets out my qualified opinion on the consolidated 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 and will form part of my annual report to Parliament.

PART “A”

Basis for Qualified Opinion

 Payroll anomalies

An amount of UGX 11,390,722,259 was paid in respect of salaries and pension contrary to the regulations. The amount included over payments, unsupported pensions payments and wrongly paid salaries.

 Unaccounted for funds

A total of UGX.3, 896,976,469 remained un-accounted for by the time of audit. Consequently I could not confirm that the funds were utilized for the intended purposes.

Qualified Opinion

In my opinion, except for the possible effects of the matters described in the Basis for Qualified Opinion paragraph, the consolidated annual accounts on Local Governments for the year ended 30th June 2016 are prepared, in all material respects, in accordance with the local government financial and accounting manual,2007, the Public Finance Management Act, 2015,the Local Governments Financial and Accounting Regulations ,2007 and the Local Governments Act cap.243(as amended) of the Laws of Uganda.

Emphasis of matter

Without qualifying my opinion further, attention is drawn to the following additional matters which are also included in part B of this report and my annual report to Parliament;

 Unspent Balances

84 Districts had failed to utilize UGX 13,189,396,027 by the end of the financial year and the amount should be returned to the Consolidated Fund as required by the Public Finance Management Act.

Failure to utilize the funds as appropriated undermines service delivery.

 Under Collection of Local Revenue

There was a significant under collection of Local Revenue in 161 Councils amounting to UGX.17, 165,844,582.

Under collection of Local Revenue adversely affects the implementation of the planned activities.

Other Matters

I consider it necessary to communicate the following matter other than those that are presented or disclosed in the financial statements that, in my judgment, are relevant to the users’ understanding of the audit report.

 Delayed Implementation of IFMS in Local Governments

Government in a bid to improve transparency and Accountability Developed Strategy on installing IFMS in District Local Governments and Urban Councils by 2016/2017. However since the start of the strategy in FY 2011/2012, only seventy three (73) Local Governments out of 307 Local Governments have been integrated .

Delayed implementation affects the achievement of the overall objective of ensuring improved transparecny, accountability and audit in Local Governments.

 Outstanding Commitments

There were accumulated commitments in 15 Local Governments amounting to UGX 9,101,467,408 despite adopting the commitment control system. Delayed settlemnet of the commitments may lead to litigation, fines and penalities.

John F.S. Muwanga AUDITOR GENERAL

22th December, 2016

PART "B"

DETAILED REPORT OF THE AUDITOR GENERAL ON THE ANNUAL CONSOLIDATED FINANCIAL STATEMENTS LOCAL GOVERNMENTS FOR THE FINANCIAL YEAR ENDED 30TH JUNE 2016

This Section outlines the detailed audit findings, management responses and my recommendations in respect thereof.

1.0 INTRODUCTION Article 163 (3) of the Constitution of the Republic of Uganda, 1995 (as amended) requires me to audit and report on the public accounts of Uganda and all public offices including the courts, the central and local government administrations, universities, and public institutions of the like nature and any public corporation or other bodies or organizations established by an Act of Parliament. Accordingly, I carried out the audit of the Consolidated Government of Uganda Financial Statements for the year ended 30th June 2016 to enable me report to Parliament.

2.0 BACKGROUND INFORMATION Under Article 164 of the Constitution of the Republic of Uganda, 1995 (as amended) and Section 45 of the Public Finance Management Act, 2015, an Accounting Officer shall be responsible and personally accountable to Parliament for the activities of a vote.

The Accountant General is responsible for the preparation and fair presentation of the annual Consolidated Financial Statements of Local Governments in accordance with the requirements of the Public Finance Management Act, 2015, and the modified cash basis of accounting.

The accompanying Consolidated Financial Statements on Local Governments provide a record of Local Governments’ financial performance for the year 2015/16 and the financial position as at 30th June 2016, in accordance with the Public Finance Management Act, 2015.

3.0 AUDIT SCOPE The audit was carried out in accordance with International Standards on Auditing and accordingly included a review of the accounting records and agreed on procedures as was considered necessary. In conducting my reviews, special attention was paid to;

a. Establish whether the consolidated financial statements have been prepared in accordance with consistently applied Accounting Policies and fairly present the revenues and expenditures of government for the year and of the consolidated financial position of the Consolidated Fund as at the end of the year.

b. Establish whether All funds were utilized with due attention to economy and efficiency and only for the purposes for which the funds were provided.

c. Evaluate and obtain a sufficient understanding of the internal control structures of government, assess control risk and identify reportable conditions, including material internal control weaknesses.

d. Establish whether Management was in compliance with the Government of Uganda financial regulations.

e. Establish whether all necessary supporting documents, records, and accounts have been kept in respect of all activities, and are in agreement with the consolidated financial statements presented.

4.0 AUDIT PROCEDURES PERFORMED The following audit procedures were undertaken;

a. Revenue

Obtained schedules of all revenues collected and reconciled the amounts to the entity’s cashbooks and bank statements.

b. Expenditure

The entity payment vouchers were examined for proper authorization, eligibility and budgetary provision, accountability, and support documentation.

c. Internal Control System

Reviewed the internal control system and its operations to establish whether sound controls were applied throughout the period audited.

d. Consolidated Financial Statements

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

5.0 Budget Performance During the year under review, Local Governments realised revenue amounting to UGX.- 2,339,185,500,194 out of the projected amount of UGX.2,766,159,438,492 representing 85% the approved budget as summarized in the table below.

Table showing Budget Performance by Classification

Summary Approved Estimates Actual Released Performance (Ugx) (Ugx) Percentage District Councils 2,513,856,964,385 2,187,563,864,328 87 Urban/municipal 252,302,474,107 151,621,635,866 60 Councils Totals 2,766,159,438,492 2,339,185,500,194 85

6.0 FINDINGS

6.1 Categorization of Findings The following system of profiling of the audit findings has been adopted to better prioritise the implementation of audit recommendations;

Table showing categorisation of findings No Category Description

1 High Has a significant/material impact, has a high likelihood of reoccurrence, significance and in the opinion of the Auditor General, it requires urgent remedial action. It is a matter of high risk or high stakeholder interest. 2 Moderate Has a moderate impact, has a likelihood of reoccurrence, and in the significance opinion of the Auditor General, it requires remedial action. It is a matter of medium risk or moderate stakeholder interest. 25

No Category Description

3 Low Has a low impact, has a remote likelihood of reoccurrence, and in the significance opinion of the Auditor General, may not require much attention, though its remediation may add value to the entity. It is a matter of low risk or low stakeholder interest. Accordingly, the table below contains a categorized summary of the findings that follow in the subsequent paragraphs of the report;

Table showing categorized summary of the findings No Finding Significance 7.1 Funds not Accounted for High 7.2 Payroll Anomalies High 7.3 Outstanding Commitments High 7.4 Receivables High 7.5 Unspent balances High 7.6 Under Collection of Local Revenue High 7.7 Delayed implementation of IFMS In local governments High 7.8 Consolidation Anomalies High

7.0 DETAILED AUDIT FINDINGS This section outlines the detailed audit findings, management responses thereof and my recommendations.

7.1 Funds not Accounted for Regulation 43 (2) of the Local Government Financial and Accounting Regulations 2007, require Administrative advances to council employees to be authorized by the Chief Executive and accounted for within a month. During the year under review UGX.3,896,976,469 in respect of HLGs comprising of administrative advances, incompletely vouched expenditure, unvouched expenditure and doubtful expenditure remained outstanding as shown in the table below:-

Table 1 Funds not accounted for

Category Amount (UGX) Unaccounted for Administrative advances 3,697,520,680 Incompletely vouched expenditure 126,878,410 Missing Vouchers 72,577,379 Total 3,896,976,469

Consequently, I could not confirm that the funds were utilized for the intended purposes. The delayed submission of accountability may lead to falsification of documents resulting into loss of funds. This was caused by lack of advances ledger to monitor advances and failure by Accounting Officers to enforce accountability controls. There is need for Accounting Officers to enforce controls relating to financial management and accountability.

7.2 Payroll Anomalies Section (B-a) (7) of the General rules on Payment of Salaries in Public Service Standing Orders,2010 requires salaries to be paid correctly, promptly and as a lump sum in accordance with the approved salary structure for the Public Service. However, Payroll analysis carried out revealed that a sum of UGX. 11,390,722,259 was paid irregularly. The irregularities include:- No. Irregularities Amount UGX. 1 Over payment 1,163,414,641 2 Unsupported Pension Payments 9,569,870,082 3 Wrongly Paid Salaries 657,437,536 Total 11,390,722,259

The Accounting Officers attributed the irregularities to challenges encountered during decentralization of salary payments on the Integrated Financial Management system (IFMS) and Integrated Personnel and payroll system (IPPS) and outright errors during the salary payment process. Many of the Accounting Officers explained that they had initiated the process of recovering the overpaid amounts. They indicated that they had also embarked on training of staff to build capacity and address the challenges. I await the outcome of the Accounting Officers commitment.

7.3 Outstanding Commitments Regulation 11(d) of the Local Government Financial and Accounting Regulations, 2007 requires the Head of Finance to ensure that commitments are not approved unless there is sufficient and committed funds available. However, a number of Higher Local Governments for the year under review failed to adhere to the commitment control system which resulted in committing Councils beyond the available financial resources.

Consequently fifteen entities accumulated outstanding commitments amounting to UGX.9,101,467,408

I advised the Accounting Officers to adhere to provisions of the commitment control system to eliminate arrears and ensure financial discipline.

7.4 Receivables Paragraph 2.3.2.3 of the Local Governments Financial and Accounting Manual 2007 requires Council to minimize debtors by following up the collection of debts in a timely, systematic and vigorous manner. However, it was observed that Fifty Seven (57) Local Governments failed to collect outstanding revenue from different sources amounting to UGX.11,294,653,082. This was attributed to laxity on the part of the Accounting Officers to follow up collection of the debts.

Money owed to Council represents an asset that is idle, as it denies the Council the opportunity of using the money to provide services promptly.

I advised the Accounting Officers to develop debt recovery strategies to ensure that all outstanding debts are collected.

7.5 Unspent Balances Section 17(2) of the Public Finance and Management Act, 2015 requires a vote that does not expend money that was appropriated to the vote for the financial year at the end of the financial year to repay the money to the consolidated fund.

It was however, observed that in sixteen (16) entities UGX. 11,550,319,031 in respect of conditional grants remained unexpended at year end and was not returned to the consolidated fund contrary to the law.

The Accounting Officers attributed the shortcoming to the late release of funds and promised to repay back the funds to the Consolidated Fund.

I advised the Accounting Officers to ensure that the funds are repaid to the Consolidated Fund.

7.6 Under Collection of Local Revenue Regulation 32 of the Local Governments Financial and Accounting Regulations, 2007 requires Councils to ensure collection of all budgeted revenue in an approved manner and the revenue banked intact in Council accounts. However, a review of revenue performance of 161 Councils revealed under collection of Local Revenue amounting to UGX. 17,165,844,562

Under collection of local revenue implies that all the planned activities for the year were not implemented. This was attributed to lack of revenue enumeration and assessment and failure to supervise collection of contracted revenue. There is need for the Accounting Officers to carry out revenue assessments, maintain proper revenue records, sensitize the tax payers and strengthen controls relating to collection of revenue.

I advised the Accounting Officers to sensitize tax payers and develop strategies and enforce lawful measures to enhance revenue collection.

7.7 Delayed Implementation of IFMS in Local Governments Government in a bid to improve transparency and accountability developed a strategy on installing IFMS in District local governments and Urban councils by 2016/2017. However since the start of the strategy in FY 2011/2012, only seventy three (73) local governments out of 307 local governments have been integrated .

Delayed implementation affects the achievement of the overall objective of ensuring improved transparecny, accountability and audit in Local Governments.

The matter requres urgent attention.

7.8 Consolidation Anomalies Section 52(1) (b) of the PFM Act 2015 requires the Accountant General within three months after the end of the financial year to submit consolidated annual accounts of the Local Governments. However, the following anomalies have been identified:-

 Incomplete Consolidation It was observed that the annual consolidated accounts submitted for audit excluded the financial statements of lower Local Government rendering the submission incomplete.

 Different Accounting Frame works During the year the Accountant General issued two different accounting frameworks to Local Government namely modified cash basis of accounting and accrual basis of accounting to apply to Districts and Municipal Councils respectively. Consequently the consolidation has two parts.

The matter requires urgent attention.

Table 2 Arua Branch Significant Crossing Cutting Issues.

Table 3 Fortportal Branch Significant Crossing Cutting Issues.

Table 4 Gulu Branch Significant Crossing Cutting Issues.

Table 5 Jinja Branch Significant Crossing Cutting Issues.

Table 6 Kampala Branch Significant Crossing Cutting Issues.

Table 7 Masaka Branch Significant Crossing Cutting Issues.

Table 8 Mbale Branch Significant Crossing Cutting Issues.

Table 9 Mbarara Branch Significant Crossing Cutting Issues.

Table 10 Soroti Branch Significant Crossing Cutting Issues.

PART III

6.0 OTHER SIGNIFICANT FINDINGS

6.1 ARUA BRANCH

6.1.1 ADJUMANI DLG

1. Lack of Adequate Classrooms Section 2.1.2 (a) of the Local Government Management and Service Delivery (LGMSD) Programme Operational Manual for Local Government, 2011 establishes the standard for classroom pupil ratio 1:55.

However, an analysis of school enrolments in four (4) primary schools revealed classroom pupil in excess of the standard as shown in Table 2.

Current Minimum Quality School Name Class Male Female status Standards (MQS) Biyaya P/S P 1 69 78 1: 147 1:54 P 2 65 59 1: 124 1:54 P 3 79 86 1: 165 1:54 P 4 93 96 1: 189 1:54 P 5 69 73 1: 142 1:54 P 6 59 67 1: 126 1:54 P 7 31 29 1: 60 1:54

Sub-Total 465 488 953 1:54 Unna P/S P 1 68 97 1: 165 1:54 P 2 60 68 1: 128 1:54 P 3 99 91 1: 190 1:54 P 4 93 119 1: 212 1:54 P 5 85 120 1: 205 1:54 P 6 50 77 1: 127 1:54

Sub-Total 455 572 1027 1:54 Pakele P/S P 1 68 88 1: 156 1:54 P 2 70 86 1: 156 1:54 P 3 80 98 1: 178 1:54 P 4 101 124 1: 225 1:54 P 5 89 67 1: 156 1:54 P 6 69 73 1: 142 1:54 P 7 32 38 1: 70 1:54

Sub-Total 509 574 1083 1:54 33

Current Minimum Quality School Name Class Male Female status Standards (MQS) Olia P/S P 1 54 60 1: 114 1:54 P 2 31 37 1: 68 1:54 P 3 56 34 1: 90 1:54 P 4 71 73 1: 144 1:54 P 5 33 34 1: 67 1:54 P 6 39 37 1: 76 1:54

Sub-Total 284 275 559 1:54

Failure to attain the requisite classroom Pupil ratio leads to congested classrooms that do not provide a conducive learning environment.

The Accounting Officer explained that the classroom pupil ratio stands at 1:100 on average due to influx of refugees.

I advised the Accounting Officer to liaise with the relevant authorities to address the matter.

2. Non Disposal of Assets Section 2.3.1.5 of the LGFAM, 2007 requires assets that are not in use to be disposed of in accordance with the procedures in the Local Government Public Procurement and Disposal of Assets (LGPPDA), 2006 regulations after recommendations from the Board of Survey report.

It was however observed that a number of vehicles that were recommended for boarding off had not been disposed off as shown below;

Abandoned cars parked at works department

Failure to dispose off these assets results in further deterioration of value.

The Accounting Officer explained that the district could not dispose of the vehicles because their registration books were still with the line ministries.

I advised the Accounting Officer to expedite the process of disposal.

6.1.2 ARUA DLG 1. Salary Payment Anomalies Section B (7) of the Uganda Public Standing Orders, salaries shall be fixed at annual rates and paid correctly, promptly and as a lump sum in accordance with the approved salary structure for the Public Service.

However, a review of the payroll data and IFMS payments, revealed that there was salary over and under amounting to UGX.21,888,563. This could have been due to failure to reconcile salary amounts to salary scales before effecting payment.

I advised the Accounting Officer to ensure that salary overpayments are recovered and in future, necessary reconciliations are made before payments are effected.

6.1.3 KOBOKO DLG

1. Wasteful Expenditure Regulation 9 (2) (b) of the Local Government Financial and Accounting Regulation provides for the duties of the Chief Executive to include among others ensuring that

public properties and resources for which he is entrusted as an Accounting Officer are properly managed and safe guarded. A review of the records for the year under review revealed that the district paid M/S Big G General Enterprises UGX.25,521,630 on payment voucher number 01/09/15/16 dated 1/9/2015 for construction of the park yard on a land belonging to Ministry of Agriculture and Fisheries located at Oraba near the border of Southern Sudan. The expenditure on the construction to date amounted to UGX 103,671,630 as shown in the table below;

Vr. No Date Payee Amount F/Y 05/03/14/1 Big G General 2014/1 05/03/14/15 18,526,370 5 Enterprises 5 12/02/14/1 2014/1 14/02/14/15 Big G General 59,623,630 5 Enterprises 5 01/09/15/1 2015/1 01/09/15/16 Big G General 25,521,630 6 Enterprises 6 103,671,63 Total 0

However, it was observed that when the district sought retrospective permission to use the land from the Ministry of Agriculture and Fisheries, the Permanent Secretary in his letter dated 22nd October 2015 rejected the request stating that the land in question is a gazetted animal quarantine station. Consequently, the expenditure incurred is wasteful and a loss to the District. The Accounting Officer explained that the park yard was meant to generate local revenue for the district.

I advised the Accounting Officer that he should have sought prior permission of the Ministry of Agriculture and Fisheries before undertaking the project.

2. Non Disposal of Assets Regulation 122(6) of the Local Government Public Procurement and Disposal of Assets (LGPPDA), 2006 requires the Accounting Officer to ensure that the assets of a council are reviewed on an annual basis to identify those which are obsolete and be subject to disposal and further requires the Accounting officer to appoint a Board of Survey to verify the assets of the council to be boarded off. 36

It was observed that the obsolete assets that the Board of Survey report for 2014/15 recommended for disposal had not been disposed of at the time of writing this report as shown below:

The delayed disposal of the assets may lead to further deterioration in value. The Accounting Officer indicated that the process to dispose off the vehicles was ongoing.

I advised the Accounting Officer to ensure that the obsolete assets are disposed off.

3. Over Payment for a Motor Cycle Regulation 24 (1) of the Local Governments Financial and Accounting Regulations, 2007 provides that expenditure for which there is insufficient or no provision in the approved estimates shall not be incurred until a supplementary estimate has been approved. It was observed that UGX 19,352,000 was paid to M/s Nile Shipping Company Ltd on payment voucher No PV-PN00014 for the Supply of Yamaha Motor cycle for the audit department against the invoice value of UGX 15,500,000. Although the Head of Finance attribute the over payment to error in the IFMIS system, there was no evidence to show that management made efforts to recover UGX.3,852,000 erroneously paid to the supplier.

I advised the Accounting Officer to recover the fund over paid to the supplier.

4. Non Implementation of DPAC Recommendations Section 88(7) of the Local Government Act 1997 requires the District Local Government Public Accounts Committee to examine the reports of the Auditor General, Chief Internal Auditor and any reports of commissions of inquiry and may, in relation to the reports, require the attendance of any councilor or officer to explain matters arising from the reports. Section 88(9) further provides for the Chairperson of the Council and the Chief Administrative Officer or Town Clerk to implement the recommendations of the Local Government Public Accounts Committee.

A review of DPAC report dated 30th December 2015 revealed that although District Public Accounts Committee (DPAC) recommended the Accounting Officer to account or recover advances totaling UGX.57,812,531 which was however still outstanding.

The Accounting Officer promised to submit the reports to the Council.

I advised the Accounting Officer to implement the District Public Accounts Committee (DPAC).

5. Failure to meet the Minimum Standards of Health delivery at Koboko Hospital Section 2.1.1(D) of the Local Government Management and Service Delivery (LGMSD) Programme Operational Manual for Local Governments 2011, prescribes minimum standards of Health Centre IV/District Hospitals. However an audit inspection of the hospital revealed the following shortcomings:-

Koboko Hospital

Basic Requirements Current status Approved 190 posts 44 posts filled Transport No vehicle Running Water No running water Electricity Only for emergency Equipment Ultra-Sound machine has never been used since it was donated due to lack of trained staff Mortuary Mortuary No mortuary attendant, no fridge Pit Latrine Pit latrines were unhygienic

The Accounting Officer admitted the shortcomings and explained that the hospital had not started using the Ultra sound machine due to lack of steady power supply and trained manpower to operate the machine.

I advised the Accounting Officer to liaise with the relevant authorities to ensure that the challenges are addressed.

6.1.4 MOYO DLG 1. Hospital Land under Dispute It was observed that management of Moyo Hospital constructed the Out Patients Department partly on a land belonging to the community neighboring the hospital and on the road from the Town Council to the surrounding village before reaching an

agreement with members of the community and management of the Town Council. Consequently, community opened a court case against the district but the Arua High court Judge referred the case to the alternative dispute resolution. The District Council under the council minute dated 22nd December 2015 agreed to pay UGX.665,333,864 to the community as a compensation for the land. Subsequently the district started evicting members of the community from the land before compensation and in total disregard of the advice from the judge. This case had not been resolved by the time of writing this report hence causing a contingent liability to the district.

It was further observed that the pending settlement was neither recognized nor disclosed in the district financial statements.

The Accounting Officer explained that the disputed land belonged to the hospital; however it was erroneously given to the complainants by the District Land Board sometime back with some condition, which the complainants failed to oblige. But the Ministry of Health is willing to compensate the complainants.

The matter requires urgent attention.

6.1.5 NEBBI TC 1. Abandoned market shade at Namrwodho The Town Council contracted MS Mola and Sons Trade Supplies Limited to construct a market shade at Namrwodho at a contract sum of UGX.9,071,682 under Peace Recovery and Development Plan (PRDP) funds. The start date was 12th August 2015 and end date was 12th November 2015. However, audit inspection revealed that the market shade was in the bush and appeared to have been abandoned implying no value for money spent as shown below.

Picture of the completed market shade that was left to waste and not put to use.

The Accounting Officer explained that the market shade was completed in June, 2016, and that construction of the pit latrine was expected to start in the second quarter of 2016/17 financial year.

The matter requires urgent attention.

6.1.6 YUMBE DLG

1. Loss of Funds Regulation 9 (2) b of the Local Finance and Accounting Regulations 2006 requires the Accounting Officer to ensure that public monies, property and resources for which he or she is responsible as Accounting Officer to be properly managed and safeguarded. A report for criminal case dated 20th October 2015 issued by Clerk to Council revealed that cash totaling UGX.23,000,000 was stolen from the UNICEF account.

However, according to the Accounting Officer the funds were not stolen from the account but had been withdrawn to pay various teams on immunization campaign exercise.

The matter requires urgent attention.

2. Inspection of Yumbe Health Center IV An inspection of Yumbe Health Center IV carried out on 24th August 2016 revealed several shortcomings as detailed below:

Basic Requirements Current status

1. 25 Bed Female Ward Congested with 39 beds.

2 Mortuary No refrigerator

3 Compound Littered with garbage

4 Laboratory No refrigiration

5 Radiology Unit Unoperational due to poor standard

Lack of facilities adversely affects service delivery.

The Accounting Officer explained that the district no longer receives PHC development funds hence the shortcomings.

I advised the Accounting Officer to engage the relevant authorities to address the challenges.

6.1.7 ZOMBO DLG

1. Supply and installation of culverts at Nyandima Bridge A review of district records revealed that funds to supply and installation of culverts were received in January 2016 but signing of the contract agreement with the contractor was done on 20th May 2016. This delay let to rolling over of the project to the subsequent financial year. The contract was awarded at a contract sum of UGX.49,864,065 and by 27th June 2016, UGX.39,993,480 representing 80% of the contract sum had been paid to the contractor. Inspection carried out on 15th September 2016 revealed the following shortcomings:  The Contract had long expired and the contractor had also abandoned the site  The road was not passable by the motorists  The design was poor and the culverts could not accommodate the water during heavy rains. See the Picture below:

The Accounting Officer stated the contractor was requested to suspend the works awaiting new design. The new design had been prepared and work is to commence soon after approval by the Contracts Committee. I advised the Accounting Officer to ensure that the works are properly compelled.

2. Undistributed Bicycles Regulation 9(2)(b) of the Local Government Finance and Accounting Regulations 2007 requires the Accounting Officer to ensure that the public moneys, property and resources for which he or she is responsible as accounting officer are properly managed and safeguarded.

It was observed that the District procured 756 bicycles at UGX.170,856,000 for village and Parish Chairpersons during the financial year 2013/14. It was however observed that 117 bicycles costing UGX.26,442,000 remained undistributed.

I advised the Accounting Officer to ensure that the bicycles are distributed.

3. Construction of phase one OPD block at Alangi Health Centre III The construction of phase one OPD block at Alangi Health Centre III was awarded to Bosan Investment Uganda Limited at UGX 20,086,085 to be completed in three months as per agreement dated 18th of May 2016. By the time of the audit a total of UGX 19,080,941 had been paid to the contractor but the following anomalies were noted during audit inspection carried out on 16th September 2016;  The OPD block was still at foundation level, the contractor had abandoned the site and the health centre was using a make shift structure as their OPD as shown in the picture below:

 There is no general ward and so cases that require admission are referred to Kango HCIII and Zeu HCIII.  Patient mattresses were left lying on the compound.

 The health centre was unattended to by the time of inspection. The Accounting Officer explained that the district had an agreement with Baylor Uganda to construct the OPD. However Baylor Uganda wounded up operations before fulfilling the obligation.

I advised the health inspector to carry out close supervision on health facilities and construction works.

6.1.8 ZOMBO TC

1. Irregular Payment of Council Emoluments Section 4 of the First Schedule of the Local Governments Act states that the expenditure of a Local Government Council in a financial year on emoluments and allowances of chairperson, councilors, members of the district service commission, the district tender board, the Local Government Public Accounts Committee and other District Council Committees shall not exceed 20 percent of the total Local Revenue collected by that Local Government Council in the previous financial year contrary to the regulation, Council spent of UGX.4,668,400 above the authorized amount.

Excess payment of the emoluments suffocates implementation of the planned activities.

The Accounting Officer attributed the expenditure to political pressure.

I advised the Accounting Officer to comply with the provisions of the law

6.2 FORT-PORTAL BRANCH 6.2.1 BULIISA TC 1 Non Compliance with Statutory Obligations Section 119 (1) of the Income Tax Act, 1997 requires that where the Government of Uganda, a Government Institution, a local authority, or any company controlled by the Government of Uganda, pays an amount or amounts in aggregate exceeding one million shillings to any person in Uganda for a supply of goods or materials of any kind; or for a supply of any services, the payer shall withhold tax on the gross amount of the payment. Further, Section 123 (1) of the same Act requires that a Withholding Agent shall pay to Uganda Revenue Authority (URA) tax that has been withheld within 15 days after the end of the month.

It was however observed that UGX. 4,986,108 of Withholding Tax was not remitted to the tax authority.

Non-compliance with the tax obligations may attract fines and penalties from the tax body.

I advised the Accounting Officer to ensure that taxes are remitted to the Tax Authority.

6.2.2 BUNDIBUGYO DLG 1 Non Remittance of shared Local Revenue by the Sub-Counties

Section 85 (2) of the Local Governments Act 1997 requires that in rural areas, revenue shall be collected by the Sub-County Councils, and a Sub-County Council shall retain 65 percent, or any other higher percentage as the District Council may approve, of the revenue collected by it and pass the remaining percentage over to the district. However, it was observed that the District had not received the 35% from its respective Sub-Counties as required. Consequently the implementation of planned activities funded by such revenue were not implemented.

The Accounting Officer explained that Council had set aside a vehicle to facilitate the monitoring of revenue collection in sub-counties and enforce remittance.

I advised the Accounting Officer to ensure that the share of local revenue due from the sub-counties collected.

2 Use of Non Prequalified Service Providers Regulation 34 (7) of the LGPPDA, 2006 requires that only the pre-qualified providers receive invitations to tender where prequalification is a requirement. However, it was noted that procurements worth UGX 13,758,800 where prequalification was a requirement were sought from un-prequalified suppliers. Use of non-prequalified service providers is irregular.

I advised the Accounting Officer comply with the procurement law.

6.2.3 BUNDIBUGYO TC 1 Non Remittance of shared Revenue Regulation 15 (A) of part V of the Fifth Schedule of the Local Government Act 1997 (as amended), requires a Town Council to remit 10% and 25% of the total local revenue collected to Parish and Village Councils that make up the Town Council respectively.

However, the Town council did not remit UGX 27,460,680 to Parishes and Village Councils the shared local revenue as shown below:- Amount Collected 35% Amount Due Amount Remitted Amount Unremitted (UGX) (UGX) (UGX) (UGX) 44

88,544,800 30,990,680 3,530,000 27,460,680

The Accounting Officer explained that the Town Council directly implemented some of the Parish and Village Councils’ action plans instead of remitting cash to them. This impairs the participation of Parish and Village Councils in the implementation of community programs.

I advised the Accounting Officer to remit the shared local revenue as required by law.

6.2.4 NYAHUKA TC

1 Failure to Deduct and Remit Taxes Section 123(1), 116(1) and 119 (1) of the Income Tax Act, 1997 as amended requires the deduction of WHT and PAYE by withholding agents and prompt remittance of the Tax to URA.

However, it was observed that tax deductions amounting to UGX.21,751,858 had not remitted to URA by the time of audit.

Failure to remit tax may attract fines and penalties from the tax body.

The Accounting Officer explained that funds have been computed and they pledged to remit them to Uganda Revenue Authority.

I await to see the outcome of the Accounting Officer’s promise.

6.2.5 KABAROLE DLG

However, it was observed that tax deductions amounting to UGX 18,379,947 were not or remitted to URA by the time of audit. Failure to deduct or remit tax may attract fines and penalties from the tax body. 45

The Accounting Officer was advised to comply with the tax laws.

6.2.6 FORT-PORTAL MC 1 Non-remittance of Pay As You Earn (PAYE) Section 116 (1) of the Income Tax Act 1997 as amended requires every employer to withhold tax from a payment of employment income to an employee and Section 123 (1) of the same Act requires that a Withholding Agent shall pay to Uganda Revenue Authority (URA) tax that has been withheld within 15 days after the end of the month.

It was observed that Council did not remit UGX.89,448,778 to URA, as shown in the table below;

Table showing Monthly PAYE deductions & URA payments

Month Amount - UGX July 48,931,647 August 51,046,136 September 53,686,457 October 50,921,934 November 52,019,526 December 52,538,339 January 52,026,624 February 52,350,281 March 51,977,155 April & May 103,954,310 June 55,191,608 Total PAYE deducted 624,644,017 Less: Total Payment to URA 535,195,239 Outstanding Liability to URA 89,448,778

Delayed payments of tax can attract fines and penalties from URA.

I advised the Accounting Officer to comply with the Tax Law.

6.2.7 RWIMI TC

1 Non Compliance with the Statutory Obligations Section 123 (1) of the Income Tax Act 1997 requires that a Withholding Agent shall pay to Uganda Revenue Authority (URA) tax that has been withheld within 15 days after the end of the month.

However, it was observed that taxes in form of PAYE amounting to UGX 2,304,000 were not remitted to the Uganda Revenue Authority.

Failure to remit taxes may attract fines and penalties by URA.

I advised the Accounting Officer to comply with the tax law.

2 Non Remittance of Shared Revenue Section 15 (A) of part V of the Fifth Schedule of the Local Governments Act 1997 (as amended), requires a Town Council to remit 10% and 25% of the total Local Revenue collected to Parish and Village Councils that make up the Town Council respectively.

However, it was observed that Council did not remit UGX.27,606,250 to Parishes and Village Councils as shown below. Amount Collected 35% Amount Due Amount Unremitted 78,875,000 27,606,250 27,460,680

This impairs the participation of Parish and Village Councils in the implementation of Government programs.

The Accounting Officer explained that revenue collections from wards were found to be too little and therefore, council resolved that wards be given one million as a one off fund to facilitate their activities.

I advised the Accounting Officer to comply with the law.

6.2.8 RUBONA TC

1 Lack of a Master Development Plan Section 32 (1) (b) (iii) of the Third Schedule of the Local Governments Act as amended requires an Urban Council to have a master plan for its land. 47

It was however, observed that the Town Council does not have a master plan for its land. This creates a risk of uncoordinated developments in the Town Council.

The Accounting Officer explained that the development of a physical plan had been incorporated in the Strategic plan for the subsequent five years but cited the shortage of funds for frustrating earlier efforts to have one prepared.

I advised the Accounting Officer to liaise with the relevant authorities and ensure that the master development plan for the Town Council is developed.

6.2.9 HOIMA DLG

1 Lack of a Fixed Assets Register Regulation 58 (4) of the LGFAR of 2007, states that in order to comply with required accounting systems, the properties, and assets of a local government, shall be properly registered, titles issued, and valued and that requirement shall apply to both movable and immovable properties and assets and it shall constitute a fixed asset register.

However, the fixed assets register was not presented for verification.

In the absence of a fixed assets register, the verification of the fixed assets was rendered difficult.

The Accounting Officer was advised to present the fixed assets register for verification.

6.2.10 HOIMA MC 1 Un-Verified Top-up ON USIMID Funds The audit noted that the MDG Account was credited with UGX.226,768,899 which was supposedly a top-up as a result of foreign exchange difference (Ref: Vr D14/05/2015-16 dated 18/5/2016, transfer of USD.1,050,688.17 (equivalent2 to UGX.3,478,460,790).

2 Exchange rate of USD 1=UGX.3,310 48

Similarly the capacity building account received funds of UGX.27,566,199 as top up due to variation of exchange rate in respect of amounts disbursed in dollars USD124.303, equivalent to UGX.413,685,356, at a rate of USD 1 = UGX 3,328.04).

The detailed calculation of the top up and correspondences culminating to the decision and thereafter the remittance of the said top-up funds were however not availed to the audit team for verification. In the absence of which, audit cannot confirm whether there was justification for the top-up and whether it was commensurate to the exchange losses.

I advised the Project Management to always accompany the top-up remittances with breakdown of the losses suffered arising from the exchange rate fluctuations to ease audit trail.

6.2.11 KAMWENGE DLG

1 Health Service Delivery

1.1 Failure to meet the Minimum Standards Paragraph 2.1.1 (D) of the Local Government management and service delivery (LGMSD) Programme operational manual for local Governments sets minimum standards for the proper functioning of health centres. Inspection of the District Hospital and Health Centres revealed failure to meet the standards of health service delivery as shown below: Health Centre National Standard Status Comment Ntara HC IV Out Patient Department Small – does not Health Centre was accommodate the upgraded to HC IV but numbers. structures remained small Mortuary None Incinerator None 3 Doctors’ houses 1 Doctor’s house 2 houses lacking Transport facility for None emergency Biguli HC III Establishment of 19 staff Only 11 staff in post 8 vacant posts Essential drugs Out of stock Transport facility None Busiriba HC II Essential drugs Out of stock No explanation given Transport facility None Establishment of 9 staff Only 5 in post 4 vacant posts. Kyakarafu HC II Essential drugs Out of stock No explanation given Transport facility None Establishment of 9 staff Only 4 in post 5 vacant posts. Kiyagara HC II Essential drugs Out of stock No explanation given

Transport facility None

Management attributed the inadequate standards to inadequate funding and explained that negotiations with the Ministry of Health has been engaged to increase the funding to address the inadequate standards.

I await to see the outcome.

2 Weak Internal Audit Regulation 12 (a) of the LGFAR of 2007 requires that the Head of Internal Audit is tasked to maintain an efficient and effective internal audit unit able to carry out the functions of the unit.

However, it was observed that the unit does not design programmes for audit. There is no documentation of work done. The planned audits were not carried out and their scope is limited to a few departments at the District. It was also noted that there were no reviews on books of accounts during the first quarter. Due to the above observations the oversight role of the internal audit is compromised and the risks, errors and misstatements may not be detected on time.

Management noted the recommendation and promised to improve.

I await to verify the results of the promised improvement.

3 Vacant Positions at the District

The Public Service Standing Orders, under para (A – a) Section 14, stipulate that “The overall responsibility for ensuring proper implementation of Human Resource Management procedures, policies, practices, structures, systems and terms and conditions of service for the Public Service is vested in the Responsible Permanent Secretary.”

I noted that the district had a number of key positions which have remained unfilled for a long period. Given the seniority attached to these positions, continuing to go unfilled will certainly negatively affect service delivery. The table below refers;

Table showing vacant posts SN POST SN POST

1 Principal Internal Auditor 7 Staff Surveyor 2. District Engineer 8 Principal Veterinary Officer 3. Chief Finance Officer 9 Senior Fisheries Officer 4. Principal human resource officers 10 Senior Commercial Officer 5. Senior Labour Officer 11 Senior Planner 6. Senior Environment Officer 12 Senior Entomologist

The Accounting Officer explained that the district sought clearance from the Ministry of Public Service to recruit people in these positions; however, approval has not yet been granted.

I advised the Accounting Officer to continue liaising with the relevant stakeholders to ensure that the vacant posts are filled.

6.2.12 KAMWENGE TC 1 Irregular Award of Revenue Collection Contracts Regulation 51(3) of the LGPPDA 2006 requires that the Procurement and Disposal Unit to compile and maintain a list of reserve prices approved by the contracts committee, where applicable to which comparison may be made when awarding tenders. Kamwenge Town Council entered into agreement with various contractors to collect Revenue for the financial year 2015/2016 on behalf of the Town Council. However, it was observed that Mamba Investment was contracted to collect Property tax at a reserve or contract price of UGX.18,000,000 but only remitted UGX.3,000,000 to the Council. The balance of UGX.15,000,000 has not been remitted to date.

Relatedly, the contract for revenue collection from the Bus/Taxi Park was awarded to Kamwenge Tax Drivers Association at a price of UGX 42,000,000 despite the recommended reserve price being 46,523,400. The Town Council lost UGX 4,523,400 from this contract. In both instances the Council lost revenue which is critical for service delivery. This was attributed to poor Town Council policies of considering only companies within Kamwenge for tender opportunities thereby denying tender opportunities to other eligible companies outside Kamwenge. Management attributed the anomaly to the District Procurement Unit which is the secretariat of the contracts Committee.

The Accounting Officer is advised to comply with the Public Procurement and Disposal of Assets regulations

2 Non Remittance of 35% Shared Local Revenue Regulation 15 (A) of part V of the Fifth Schedule of the Local Government Act 1997 (as amended), states out how Locally Collected Revenue should be shared out among counties, parishes and village councils.

It was observed that the Town Council did not remit an amount of UGX 30,923,770 to the Lower Local Councils. Failure to remit the funds impairs the participation of the lower local Councils in the implementation of community programs. The Accounting Officer admitted the shortcoming and promised to remit funds in the financial year 2016/2017.

I advised the Accounting Officer to comply with the law.

6.2.13 KASESE DLG

1 Lack of Personal Files for the Support Staff Chapter (P-d) paragraph 5(b) of the Public Service Standing Orders, 2010 requires that all officers including Support Staff irrespective of rank or terms of service shall have an open personal file.

Contrary to the regulation, an amount of UGX.30,215,256 paid to support staff lacked personal files.

The Accounting Officer explained that efforts have been made to have the personal files in place.

The matter require urgent attention.

6.2.14 HIMA TC

1 Uninstalled Culverts – Nyakakindo Road Section 5.4.1 of the Local Governments Financial and Accounting Manual (LGFAM) 2007 states that when there is need for goods or services in a department, the Vote Controller shall raise a written request to the Chief Executive. It was observed that UGX.4,138,200 spent on the purchase of eight (8) culverts for Nyakakindo road. However, the culverts were not installed. The Accounting Officer explained that the culverts had been procured but their installation had been hampered by the budget cuts in respect of urban roads.

I advised the Accounting Officer to ensure that the culverts are installed.

6.2.15 KATWE KABATORO TC

1 Diversion of Public Library Funds Regulation 37(2) of the Local Government Finance and Accounting Regulations of 2007 (LGFAR of 2007) requires that Conditional grants from the Government shall be part of local government revenue but planned for, recorded and accounted for according to the grant conditions.

However, it was noted that UGX. 8,179,000 received during the year as a Conditional Grant for Public Libraries had been spent by the entity for other activities.

In this case, the funds were not used for public library activities as required.

The Accounting Officer should ensure that grants are spent as per grant conditions.

2 Unexecuted – Culverts Installation During the Financial Year 2015/2016, the entity procured from Ms Jennex Enterprises 200 pieces of 600mm culverts at a cost of UGX. 41,000,000 vide Voucher number 10/6 under Roads Account. The items were to be used on planned works for various roads that included; Kikasamba road, Kabatoro zone B roads, Kabatoro zone A roads and Hambumbe road. However, it was observed that the items were not installed as planned as shown in the pictures below:

The Accounting Officer explained that the culverts installation had been halted by inadequate funding as a result of budget cuts.

I advised the Accounting Officer to ensure that the culverts are installed.

6.2.16 KIBAALE DLG

1 Outstanding Arrears Section B, paragraph 25 of the Public Service Sanding Orders, 2010 provide that salary arrears that accrue to a Public Officer within a financial year shall be paid through the payroll within the same financial year.

Contrary to the above standing order, the district accumulated salary arrears amounting to UGX.12,271,922 during the year.

Delayed payment of salaries demotivates staff and negatively impacts on service delivery.

The Accounting Officer explained that employees temporarily missed salary because of the loan and tax deductions exceeding 50% of their net salary which was later, rectified and their salary arrears paid. However, no evidence of payment was availed for review.

The Accounting Officer was advised to ensure that the arrears are paid.

2 Outstanding Rental Collections Regulation 32 of the LGFAR, 2007, states that the Head of Finance is responsible for ensuring that revenue collectors, defined under these regulations, carry out their duties properly to ensure that all revenue due to the Council is promptly collected in the approved manner and banked intact.

The District owns residential units which were allocated to selected staff at a subsidised monthly rental fee.

However, out of ten staff currently occupying the houses, only one staff pays the rental fees through monthly salary deduction while the other 9 are not paying as shown in the table below:

Institutional quarters Title Monthly rental Annual rental fee fee Gordon Twesiime DE 600,000 50,000 DR Kyamanywa Dan DHO 600,000 50,000 Robert Mutungi DCAO 600,000 50,000 Balisanyuka Joseph CAO 600,000 50,000 Mary Mugisa Secretary 420,000 35,000 Peter Sentayi DPO 600,000 50,000 Mugoya Amma Information Officer 420,000 35,000 Nsekanabo M Secretary 420,000 35,000 Basirika Florence Secretary 420,000 35,000 4,680,000 390,000

Consequently, for the year under review, a sum of UGX.4,680,000 remained uncollected.

The Accounting Officer explained that arrangements had been put in place to ensure that recovery is made from the monthly salaries of the affected staff including arrears effective from 1st July 2016 on the affected staff through the payroll to recover rent from their monthly salaries including rental arrears effective from 1st July 2016.

I await for evidence regarding the recovery of the rental income.

6.2.17 KIBAALE TC

1 Non-Remittance of Shared Local Revenue Regulation 15(A) of Part V of the Fifth Schedule of the Local Government Act, 1997, (as amended) requires a Town Council to remit 10% and 25% of the total local revenue collected to Parish/Wards and Village Councils that make up the Town Council respectively. However, Council did not remit an amount of UGX 36,177,291 to Parishes and Village Councils contrary to the law.

The Accounting Officer explained that the Council directly implemented some of the Parish and Village Councils’ action plans instead of remitting cash to them. Failure to remit such funds impairs the participation of Parish and Village Councils in the mobilization and implementation of Government programs.

I advised the Accounting Officer to remit the shared local revenue to the Lower Council as required by law.

6.2.18 KAGADI TC

1 Internal Borrowing Regulation 37(2) of the LGFAR 2007 requires that conditional grants from Central Government are planned for, recorded and accounted for in accordance with the grant conditions and guidelines.

Contrary to the provision, UGX.14,465,000 was borrowed from Local Government Management Service Delivery Programme (LGMSDP) and Road Fund Accounts to finance Council administrative activities. The borrowing meant that the planned programs under those projects remained unimplemented. By the time of audit, the refunds had not been paid back.

The Accounting Officer admitted the shortcoming and explained that UGX 10,000,000 (Ten million shillings only) was refunded but there was no evidence presented for audit verification.

I advised the Accounting Officer to ensure that all the funds borrowed are refunded.

6.2.19 MUHOORO TC

1 Non-Remittance of Shared Local Revenue Regulation 15(A) of Part V of the Fifth Schedule of the Local Government Act 1997 (as amended) requires a Town Council to remit 10% and 25% of the total local revenue collected to Parish/Wards and Village Councils that make up the Town Council respectively. It was observed that Council did not remit of UGX.28,470,610 to the Parishes and Village Councils as required by the Act. Failure to remit shared local revenue impairs

the participation of Parish and Village Councils in the mobilization and implementation of Government programs.

The Accounting Officer explained that the Council directly implemented some of the Parish and Village Councils’ action plans as the legal status of LC 1 and LC 11 was not clear. I advised the Accounting Officer to ensure that the shared local revenue is remitted to the lower units as requires by law.

6.2.20 MASINDI DLG 1 Lack of Management of Information Technology Section 110(1) of the Local Government Finance and Accounting Regulations 2007 requires the Chief Executive to designate an officer to ensure that adequate Information and Communication Technology policies are established and are applied to enable adequate security and protection over computers and of data held on computers or information systems operated by Council. Audit inspection observed that despite the district having desktops, laptops and other computer equipments, it does not have an IT policy to govern their control and management. This may result into loss or misuse of IT equipment, software and information. The Accounting Officer explained that a draft IT Policy was in place awaiting approval.

I advised the Accounting Officer to ensure that an IT policy is developed and approved expeditiously.

6.2.21 MASINDI MC 1 Salary Arrears Section 25 (B-a) of the Public Service Standing Orders (2010) states that Salary arrears that accrue to a Public Officer within a financial year shall be paid through the payroll within the same financial year.

However, it was observed that there were salary arrears amounting to UGX. 87,338,360 at year end.

Delays to pay salary demotivates staff and adversely affects service delivery.

The Accounting Officer explained that they have made several correspondences to the Permanent /Secretary to Treasury but funds meant to pay these salary arrears have not been released.

I advised the Accounting Officer to engage the relevant authorities and ensure that the arrears are cleared. 2 Poor Road Drainage Systems Section B5 of the District Roads Technical Manual (Manual A) (2004) lays out the standards, roles and descriptions of the different road drainage structures. The following shortcomings were identified in respect of the drainage works executed on the various Municipal roads during the year:  There were incomplete side drain works on Ntuuha Road on which an amount of UGX.18,508,000 had been spent under PRDP programme during the year.  Culvert inlets and outlets at Ntuuha Road were also not supported with aprons which might result in water bypassing the drainage system and damaging the road.  There were unused construction materials (Hardcore) and 13 uninstalled culverts along Kijura Academy Road. The purchase price of these items was estimated at UGX. 15,928,000 as shown below;

Incomplete stone pitching Exposed culvert along Eroded culvert surroundings works along Ntuuha road Ntuuha road and base with water flowing under a culvert along Ntuuha road

Uninstalled culverts lying along Kijura Academy Road Culvert rings being delivered at along side heaps of hardcore stones the time of audit inspection for works on Kijura Academy road

The Accounting Officer explained that the implementing unit of urban roads resealing under Ministry of Works and Transport was still on ground and stone pitching works are still on going up to the completion of the planned scope of 420m2and promised to ensure that both quality and quantity are not compromised. The matter requires urgent attention.

3 Poor Stores Management Paragraph 2.3.2.2 (2) of the LGFAM of 2007 requires Local Governments to provide a system of stores records that among other things registers the issuing of stores against pre-numbered accountable stationery. On the same note, guideline 7.1 (h) of Revised Guidelines for Manual and Mechanized routine and periodic road maintenance (2013) requires the maintenance of documentation on tools and implements issuance and other stores information.

However, it was observed that during the year, various items worth UGX.51,485,000 were purchased and issued out in respect of road works without stores requisitions or issue vouchers.

The Accounting Officer explained that by the time of audit, the officer in charge of the stores was not on station but the stores requisitions are available for verification. However, they were not provided for audit verification.

I advised the Accounting Officer to ensure that the relevant documentation is maintained for reference.

6.2.22 KYEGEGWA DLG

1 Irregular Direct Procurements Regulation 40(1) of LGPPDA, 2006; allows the use of the direct procurement method only where exceptional circumstances prevent the use of competition; and the Contracts Committee shall approve a direct procurement method. The exceptional circumstances include emergency cases, series are available from only one provider and procurements where no advantage can be obtained by further completion etc.

It was observed that direct procurements worth UGX 28,204,000 were undertaken without justification.

The Accounting Officer explained that the district used a direct method of procurement under exceptional circumstances.

I advised the Accounting Officer to ensure that direct procurement method is applied as required by regulations.

2 Lack of an Update Fixed Asset Register Regulation 85, 86 and 87 of the LGFAR 2007 charge the heads of departments to ensure proper recording and custody of all inventories of vehicles, light and heavy plant, working equipment and loose tools.

However, it was observed that the register had not been updated in assets like digital cameras, filling cabinets purchased during the year. This weakens controls over the fixed assets.

I advised the accounting officer to ensure the fixed asset register is updated regularly.

6.2.23 KIRYANDONGO DLG 1 Outstanding Hospital Electricity Bills Paragraph 3.11 of the LGFAM of 2007 requires that no expenditure is incurred on a service which cannot be completed with the funds authorized for it within a financial year. It was observed that UGX 164,583,258 was outstanding as at June 2016 as shown below.

DATE A/C No. AMOUNT INCURRED AMOUNT PAID BALANCE

Bal b/d (2014/15) 200372524 34,444,192 - 34,444,192

July (2015) 200372524 6,566,721 3,000,000 3,566,721

Nov (2015) 205278134 13,819,214 3,000,000 10,819,214

Feb (2016) 205278134 25,958,150 3,000,000 22,958,150

March (2016) 205278134 28,116,349 3,000,000 25,116,349

April (2016) 205278134 23,017,216 - 23,017,216

May (2016) 205278134 18,337,560 - 18,337,560

June (2016) 205278134 24,766,636 - 24,766,636

March (2016) 205395304 200,000 - 200,000

April (2016) 205395304 274,392 - 274,392

May (2016) 205395304 49,248 - 49,248

June (2016) 205395304 263,937 - 263,937

July (2016) 205395304 769,643 - 769,643

Total 176,583,258 12,000,000 164,583,258 60

The Accounting Officer explained that they are trying to settle the bill in instalments and as a measure to reduce the bill further, staff houses shall be disconnected from the hospital metre.

The matter requires urgent attention.

2 Lack of a Risk Management Policy Regulation 103 (1&4) of the LGFAR of 2007, requires the Head of Finance to establish a documented risk management system, since it is his/her the responsibility to advice on risk management and effectiveness of internal control systems. It was observed that the District does not have a risk management policy. This weakens the internal control systems.

The Accounting Officer admitted the shortcoming and promised to constitute a task force to draft the policy for tabling before Council.

I await to see the outcome of the Accounting Officer’s promise.

3 Failure to meet the minimum Education Standards The Local Governments Management and Service Delivery (LGMSD) operational manual 2.1.2 (a) requires Local Governments to deliver services in conforming with Primary Education minimum standards of service delivery. However, it was observed that the District is operating below the minimum standards as shown in table below:- National Standard District Status Teacher Pupil Ratio 1:53 1:65 Pupils Latrine Stance Ratio 1:25 1:54 Pupil Classroom Ratio 1:40 1:83

This was attributed to insufficient funding. The inadequacy in school facilitation negatively impacts on service delivery.

The Accounting Officer explained that together with Government and the development partners more classrooms will be constructed to help solve the problem.

I advised the Accounting Officer to continue engaging the various stakeholders and ensure that the challenges are addressed.

6.2.24 KIRYANDONGO TC

1 Non Remittance of Shared Local Revenue The Local Governments Act 1997 (as amended), fifth schedule, part V(15A), requires a Town Council to distribute 5% and 20% of the total local revenue collected among its parishes and village councils respectively. However, the Town Council did not remit UGX.17,383,592 to the Lower Councils.

Failure to remit the share Local Revenue impairs the participation of the lower local Councils in the implementation of community programs.

The Accounting Officer explained that the Town Council directly implemented the Parish and Village Councils action plans instead of remitting cash to them, however, there was no evidence confirm this.

I advised the Accounting Officer to ensure that the shared local revenue is remitted to the lower units.

6.2.25 KYENJOJO DLG

1 Doubtful Payment to Baylor

Paragraph 5.4.6 (1) of the LGFAM of 2007 requires that before any voucher is passed for payment the Head of Finance shall ensure that the voucher and any supporting documents are correct in all relevant particulars, and that sufficient provision is available in the relevant item to meet the expenditure.

However, management paid UGX.5,928,000 to M/s. Baylor Uganda purportedly in respect of an unaccounted for funds Baylor was demanding from various Health Centres because a staff of Baylor had lost accountability. I was not availed the Memorandum of Understanding(MoU) between the District and Baylor Uganda to justify the expenditure. In the absence of the memorandum of understanding, the payment made to Baylor is rendered doubtful.

The Accounting Officer claimed that the memorandum of Understanding was available but it was presented for audit.

I advised the Accounting Officer to provide the Memorandum of Understanding with Baylor Uganda for verification.

2 Delayed Deletion from the Payroll Section 5.6.3 (2) of the Local Government Finance and Accountability Manual, 2007 requires that staff who have left the Local Government service should be immediately deleted from the payroll.

However, it was revealed that some of the staff who left during the year continued to access the payroll resulting into a financial loss of UGX.2,659,750. Delayed deletion from the payroll causes financial loss to the entity.

Management acknowledged the oversight and promised to make recoveries from the retirement benefits of the individuals identified.

I advised the Accounting Officer to ensure that the individuals identified are deleted from the payroll and the accounts recovered from their retirement benefits.

6.2.26 KYENJONJO TC

1 Non Remittance of Shared Local Revenue Regulation 15(A) of Part V of the Fifth Schedule of the Local Government Act 1997 (as amended) requires a Town Council to remit 10% and 25% of the total local revenue collected to Parish and Village Councils that make up the Town Council respectively. The Town Council collected local revenue of UGX. 241,101,560 but failed to remit UGX. 56,475,390 to parishes and Village Councils as shown below:

Collected 25% amount due Amount remitted Amount Unremitted 241,101,560 60,275,390 3,800,000 56,475,390

The Accounting Officer claimed that the Town Council is strained by insufficient funds.

The failure to remit the shared local revenue impairs the participation of the lower local councils in the implementation of community programs.

I advised the Accounting Officer to remit the shared local revenue to the lower councils as required by law.

6.2.27 KYARUSOZI TC

1 Non Remittance of Shared Local Revenue Section 15 (A) of Part V of the Fifth Schedule of the Local Governments Act, 1997 (as amended) requires a Town Council to remit 10% and 25% of the total Local Revenue collected to Parish and Village Councils that make up the Town Council respectively.

However, it was observed that Council did not remit UGX 14,964,042 to the Parishes and Village Councils as required by the Law as shown below.

Collected 35% amount due Amount remitted Amount Unremitted 4,000,000 14,964,042 54,182,977 18,964,042

The Accounting Officer promised to remit the balance.

I await the outcome of the Accounting Officer promise.

6.2.28 KARAGO TC 1 Non-remittance of Shared Local Revenue Section 15 (A) of Part V of the Fifth Schedule of the Local Government Act 1997 (as amended), requires a Town Council to remit 10% and 25% of the total Local Revenue collected to Parish and Village Councils that make up the Town Council respectively.

The Town Council collected Local Revenue of UGX.47,213,500 but failed to remit UGX. 16,524,725 to parishes and Village Councils.

The failure to remit the shared Local Revenue impairs the participation of the lower local councils in the implementation of community programs. Management explained that the wards and parishes requested for the direct implementation of the activities.

I advised the Accounting Officer to ensure that all monies due to wards are remitted on time to aid implementation of Government activities. 64

6.2.29 NTOROKO DLG

1 Anomalies in the in Drilling of Four Boreholes The construction of four boreholes were awarded to Sumadhura Technologies LTD at a contract sum of UGX 109,538,220. Review of supporting documentations and inspections revealed the following shortcoming;-  The water quality analysis, a report by NWSC was not presented for audit verification.  The inspection report dated 7th/April/2016 and the supporting measurement sheet, revealed that the works verified to have been done to completion by the contractor amounted to UGX 103,711,061. However, UGX 108,643,461 was applied on the payment certificate to calculate amount due after deducting retention which is in excess of verified works by UGX 4,932,400. The Accounting Officer was advised to ensure that anomalies are rectified.

2 Irregular Levy of 3% Tax Part IV, Other Revenues Section 13 (o) of the Fifth Schedule of the Local Government Act, requires any other source of revenue to be approved by the Minister for Local Government before its assessment and collection.

However, it was observed that the District levied 3% tax and collected UGX.2,043,607 from contracts funded by conditional grants without the Ministers approval contrary to the law.

The Accounting Officer explained that Council had approved thee measures to raise local revenue since taxes on produce had been suspended by the Minister and the District had since abandoned its collection.

I advised the Accounting Officer to only levy taxes which are approved by the Ministry as requires by the regulations.

6.2.30 KARUGUTIU TC 1 Non Remittance of Shared Local Revenue Regulation 15(A) of Part V of the Fifth Schedule of the Local Government Act 1997 (as amended), requires a Town Council to remit 10% and 25% of the total local revenue collected to Parish and Village Councils that make up the Town Council respectively. 65

It was noted that Council collected UGX 52,182,828 as local revenue during the period of audit. However, the Town council did not remit UGX 18,263,990 to Parishes and Village Councils as shared local revenue as required by the Act as detailed below:

Collected(UGX) 35% amount due(UGX) Amount Unremitted(UGX)

52,182,828 18,263,990 18,263,990

The Accounting Officer explained that they have so far remitted UGX.3,000,000 and will remit the rest before the end of the financial year.

I advised the Accounting Officer to ensure that all monies due to wards are remitted on time to aid implementation of government activities.

2 Non Compliance with Statutory Obligations Section 123(1), 116(1) and 119 (1) of the Income Tax Act, 1997 as amended requires the deduction of WHT and PAYE by withholding agents and prompt remittance of the Tax to URA.

However, it was observed that tax deductions amounting to UGX .3,022,559 had not been remitted to URA by the time of audit. Failure to deduct or remit tax attracts penalties and fines from the Tax body authority.

The Accounting Officer stated that so taxes had been paid on the contract sum, however, there was no evidence to confirm the remittance.

I advised the Accounting Officer to comply with the tax law.

6.2.31 RWEBISENGO TC 1 Non Remittance of Shared Local Revenue Section 15(A) of Part V of the Fifth Schedule of the Local Governments Act, 1997, (as amended), requires a Town Council to remit 10% and 25% of the total Local Revenue collected to Parish and Village Councils that make up the Town Council respectively.

It was observed that Council did not remit UGX 5,724,909 to Parishes and Village Councils as shared Local Revenue as required by the law as shown below:-

Amount Amount Collected 35% amount due Unremitted Unremitted 27,214,025 9,524,909 3,800,000 5,724,909

The Accounting Officer explained that the amount that was so far remitted had not been accounted for and therefore could not remit more funds.

I advised the Accounting Officer to ensure that all the shared local revenue is remitted to the lower units as required by law.

2 Lack of Up-to date Revenue Registers Regulation 33 of the LGFARs of, 2007, provides for recording of revenue details in the revenue registers and Paragraph 4.6.2 (2) of the LGFAM 2007 requires the maintenance of each source of revenue in a separate revenue register.

However, it was observed that the revenue register incomplete and not up-to-date. This weakens the controls over local revenue collections.

The Accounting Officer explained that an on job training on how to fully update the revenue registers was going on in the district.

I advised the Accounting Officer to ensure that the revenue registers are regularly updated.

6.2.32 KIBUKU TC

1 Non Compliance with Statutory Obligations Section 119 (1) of the Income Tax Act, 1997 as amended requires that where the Government of Uganda, a Government Institution, a local authority, or any company controlled by the Government of Uganda, pays an amount or amounts in aggregate exceeding one million shillings to any person in Uganda for a supply of goods or materials of any kind; or for a supply of any services, the payer shall withhold tax on the gross amount of the payment. Section 123 (1) requires that a Withholding Agent shall pay to Uganda Revenue Authority (URA) tax that has been withheld within 15 days after the end of the month.

However, it was observed that withholding tax of UGX.7,593,266 was not deducted.

Non compliance with the tax law may attract fines and penalties from the tax body.

I advised the Accounting Officer to comply with the Tax Law.

2 Non Remittance of Shared Local Revenue Regulation 15 (A) of Part V of the Fifth Schedule of the Local Government Act 1997 (as amended), requires a Town Council to remit 10% and 25% of the total local revenue collected to Parish and Village Councils that make up the Town Council respectively.

However, it was observed that Council did not remit UGX 2,325,227 to Parishes and Village Councils as shown below:

Collected 35% amount due Amount Remitted Amount Unremitted 11,482,078 4,225,227 1,900,000 2,325,227

The Accounting Officer explained that the Town Council directly implemented some of the Parish and Village Councils’ action plans instead of remitting cash to them but there was no documentary evidence to this effect. This impairs the participation of Parish and Village Councils in the implementation and mobilization of Government programs.

I advised the Accounting Officer to ensure that the share local revenue is remitted to the lower units as required by law.

6.3 GULU BRANCH 6.3.1 AMOLATAR DLG 1. Capitation Grant anomalies

1.1 Failure to meet national minimum standards of service delivery in the education sector

Paragraph 2.1.2 of the revised Local Government Management and Service Delivery (LGMSD) Operational Manual, 2009, requires schools to meet specific standards as follows:- one teacher for every 55 pupils; one class room for every 55 pupils; one desk for every 3 pupils; and one latrine stance for every 40 pupils. It was however observed that the district had schools that exceeded the required ratios which has caused pupils to study in bad conditions.

There is a risk that the practice may lead to poor academic performance coupled with sanitation challenges. The Accounting Officer attributed the challenges to inadequate funding.

I advised the Accounting Officer to liaise with the relevant authorities to ensure that the national standards are met in all schools for better performance.

1.2 Variation in Pupils Enrolments

UPE guidelines require that a school should be given a grant of UGX.9,500 per pupil per year basing on the number of enrolments at schools.

It was however observed that there were variance of 2,182 pupils between the enrolment data submitted to the Ministry of 20,514 pupils and that held at schools of 22,696 pupils. Audit also noted that this led to an under-funding of UGX.36,782,962 from the sampled schools in the district.

Underfunding to schools leads to difficulties in running schools under UPE programme by Head teachers. Accounting Officer attributed the variances to the high rate of absenteeism and drop out of pupils during rainy and harvest seasons which creates disparities in the enrolment submitted to the Ministry and actual numbers established during head count.

I advised the Accounting Officer to ensure that the correct enumeration data is submitted to the Ministry of Education.

1.3 Inadequate UPE funding

Examination of budgets for Capitation grant of sampled UPE schools in the district for the financial year 2015/16 revealed that, out of the total budget of UGX.184,593,429, only UGX.161,933,351was realized leading to a shortfall of UGX.22,660,078 representing 11%. There is a risk of funds not being sufficient to support the learners leading to poor performance. The Accounting Officer explained that the district has very little control if any on the releases of funds other than those from the Ministry of Finance. I advised the Accounting Officer to liaise with various stake holders to ensure improvement in the UPE funding.

6.3.2 AMURU DLG 1.0 Health Service Delivery

1.1 Failure to meet minimum Health Standards by Atiak HC IV Paragraph 2.1.2 (D) of the Local Governments Management and Service Delivery (LGMSD) Program Operational Manual for Local Governments sets minimum standards for proper functioning of Health centers. An inspection of Atiak HC IV revealed the following short comings:-

Items Minimum HC IV Audit Remarks Standard Current Status Maternity ward 1 1 Dilapidated General wards 2 1 1 general ward shared by both children and adults, dilapidated structure Medical waste 1 0 The incinerator is in dilapidated state and out of pit the HCIV land boundary Placenta pit 1 1 The placenta pit is dilapidated and out of land boundary Stance pit 2 blocks of 2 Only 1 block 2stance pit latrine latrine 8 stance pit latrine Theater 18 staff 0 There is no functioning theatre; however a establishme construction under the funding of World Bank nt was being made by the time of audit Mortuary 1 0 No mortuary Transport 1 1 One ambulance shared by all the centers in the district as indicated by the in-charge Beds (Bed - 20 Children were observed sleeping on the floor capacity 30)

Inspection of the health facility revealed other anomalies as shown in the pictures below;

Collapsing sealing board in the in-patient Hepatitis B machine not being used ward because of lack of toner

Insufficient number of beds in children Open-door women’s toilet, broken ward, admitted child sleeping on the floor doors

Goats roaming in OPD, HCIV not fenced In patient ward with Broken windows

Abandoned medical supplies for general Abandoned general ward since 2011 ward since 2011

The Accounting Officer explained that a committee had been appointed to inspect the health facilities and identify the challenges so that measures may be devised to improve their status.

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

1.2 Missing medicines at Atiak Health Centre IV A reconciliation of the bin card recordings and the actual medicines was done on 1st/09/2016 to verify whether the stock balances as recorded on the bin-cards match the actual quantities of medicines on the shelves.

It was however observed that there were variances between the bin-card stock records and the actual medicines on the shelves as shown below;-

Sampled Drug Stock Card Physical Count Variance Balance Cotrimoxazole 960 37000 35000 2000 mgs Quinine tabs 2000 1000 1000 Artesunate 2370 1950 420 Metrogen 346 190 156 41,716 38,140 4,980

The variances were attributed to the Nursing Assistant who does not update bin cards whenever medicines are issued from stores instantly.

The in-charge explained that the responsible officer is still new and not yet familiar with proper stock-taking and documentation.

I advised the Accounting Officer to build capacity of the stores personnel responsible for the medicines.

6.3.3 APAC DLG

1. Alleged theft of drugs from Apac Hospital There was an alleged theft of 14 boxes of Lumartem (30 x 18), 112 boxes of Lumatem (30 x 12), 169 boxes and 120 boxes of Artefan/Coatem (30 x 6) and Lumarten (30 x 24) in Apac Hospital. However, there were no efforts towards recovery of these medicines by the hospital and district management, the matter was left in the hands of the health monitoring team from Ministry of Health. This was attributed to laxity in medicines supervision by hospital management and District team.

I advised the Accounting Officer to follow up the issue till it is settled or medicines recovered. 2. Outstanding utility bills for Apac Hospital The Local Government Financial and Accounting manual 2007 requires all local governments recurrent and capital development expenditure transactions to be processed through the Commitment Control Systems (CCS) However, it was observed that the hospital had outstanding electricity bill amounting to UGX.211,791,268 as at 30th June 2016. The hospital is at a risk of power disconnection by the utility company.

The Accounting Officer explained that efforts to settle outstanding bills were being handled with Ministry of Health.

I advised the Accounting Officer to ensure that the outstanding bill is settled promptly to avoid disconnection.

3. Lack of Information communication Technology (ICT) Policy Regulation 110(1) of Local Government Financial and Accounting Regulation, 2007 provides that the Chief Executive shall designate an officer to ensure that adequate information and communication technology policies are established and are applied to enable adequate security and protection over computers and of data held on computers or information systems operated by the council. However, it was observed that there was no IT policy to guide staff on the use of IT equipment, and the software. 72

I advised the Accounting Officer to develop an IT Policy.

4. Un-acknowledged Withholding Tax Remittances Section 127(1) of the Income Tax Act 1997 ( as amended) requires a withholding agent shall maintain, and keep available for inspection by the Commissioner, records showing, in relation to each year of income - payments made to a payee; and tax withheld from those payments.

However, it was observed that 6% withholding tax totaling to UGX.32,725,867 deducted from service providers and purportedly remitted to Uganda Revenue Authority lacked acknowledgement receipts from the Tax Authority.

Non-remittance of taxes attracts fines and penalties from the tax body.

I advised the Accounting Oficer to obtain the acknowledgement receipts from URA and present them for audit verification.

6.3.4 APAC TC 1. Lack of an up-to-date Valuation List

Section 4 of the Local Government (Rating) Regulations, 2006 requires a Local Government to produce a valuation list every five years. However, it was observed that the Town Council has never carried out valuation of its properties. Consequently, the values applied may not be the prevailing market rates leading to under-collection of local revenue. The Accounting Officer explained that the Council uses values produced by valuers procured by Central Government in 2006/2007 which were supposed to be reviewed in 2011/2012 but due to financial constraints; the Council is unable to procure valuers.

I advised the Accounting Officer to ensure that an up-to-date valuation list is produced.

6.3.5 ADUKU TC

1. Lack of a Valuation List

Section 4 of the Local Governments (Rating) Regulations, 2006 requires a Local Government to produce a valuation list every five years. However, the Town Council did not have a valuation list. Consequently, there is a risk of under assessment of taxes leading to under-collection of Local Revenue.

The Accounting Officer explained that Council will engage a professional valuer to value all the properties for the appropriate taxation.

I advised the Accounting Officer to ensure that valuation of properties is carried out and the values of the existing properties are ascertained as required by the regulations.

6.3.6 AGAGO DLG

1. Payment for no work done Regulation 9.2 (b &c) of the local governments financial and accounting regulations, 2007 requires the accounting officer to ensure that the public moneys, property and resources for which he or she is responsible as accounting officer are properly managed and safe guarded. The district awarded contracts to two companies (Ms. Sri Balaji Industries EA Ltd and Ms. Ebowa Investment Ltd) at contract sums of UGX.136,474,080 and UGX.151,488,400 respectively for silting, drilling, pump testing, water quality analysis and installation of deep boreholes during the period under review. The contracts start and end dates were 10th March, 2016 and 10th June, 2016. However, audit inspection carried out on 25th and 26th June, 2016 revealed that no work had been done by the two contractors at the sites. However, it was observed that Council made payments of UGX.129,534,780 and UGX.138,650,400 respectively on 30th June, 2016 for no work done.

The matter requires urgent attention.

2. Irregular award of Contract Regulation 43 (3) of the PPDA Local Governments Regulations requires all procurements to be conducted in a fair manner to maximize competition and achieve value for money, irrespective of the procurement method used or nature of the works. It was observed that the Contracts Committee acted against the decision of the Evaluation Committee which had recommended M/s. Icon Project Ltd for Sitting, drilling, pump testing, water quality analysis, casting and installation of eight (8) deep boreholes at a contract sum of UGX 152,000,000 in various areas within the District and instead awarded the contract to M/s. Sri Balaji Industries (EA) at a contract sum

of UGX.136,474,080 which did not observe the execution period but got full payment before work was done.

The reasons for disregarding the Evaluation Committee recommendation were not disclosed.

I advised the Accounting Officer to investigate the matter and take appropriate actions against the culprit if any.

3. Lack of Information Communication Technology (ICT) Policy Regulation 110(1) of Local Government Financial and Accounting Regulation, 2007 provides that the Chief Executive shall designate an officer to ensure that adequate information and communication technology policies are established and are applied to enable adequate security and protection over computers and of data held on computers or information systems operated by the council. However, it was observed that there was no IT policy to guide staff on the use of IT equipment, and the software.

I advised the Accounting Officer to develop an IT Policy.

6.3.7 ALEBTONG DLG 1. Rehabilitation of Abedober- Obile Primary School Road

Ms Blesshand (U) LTD was contracted to rehabilitate 2 spots on Abedober- Obile Primary School road at a contract sum of UGX 35,438,150 within the three months starting on 29/1/16 and ending on 29/4/16. By the time of audit, the contractor had been fully paid including retention although there were defects on the road as shown below:-

Gravel and fill material being washed away Sinkhole

Gravel and fill material being washed away Gravel and fill material being washed away

Apron not constructed Cracked headwall

The defects were attributed to non-compaction of fill material and gravel leading to rain water easily washing away the fill and gravel material. The Accounting Officer admitted the shortcomings and promised to have the defects rectified.

I advised the Accounting Officer to initiate measures and the defects are rectified.

6.3.8 PADIBE TC

1. Lack of an up-to-date revenue register

Regulation 33 (1) and (2) of the Local Governments Financial And Accounting Regulations, 2007 requires various forms of revenue, to have revenue register showing details of revenue due, revenue collected and all arrears, including a record of steps taken to collect all arrears.

However, it was observed that Council did not update its revenue register to show details of revenue due, revenue collected and revenue arrears as required by the regulation.

Lack of an up-to-date revenue register weakens controls over revenue collections.

The Accounting Officer ackowledged the shortcoming and attributed it to shortage of staff.

I advised the Accounting Officer to ensure local revenue registers are maintained and updated regularly.

2. Lack of a Valuation list

Section 4 of the Local Governments (Rating) Act (Chapter 242) requires a Local Government to produce the first valuation list and thereafter a valuation list, at least once in every five years, or such longer period as the Minister may approve.

However, the town council has no valuation list to guide the council in assessment of local revenue.

Consequently, there is a risk of under-assessment leading to under-collection of local revenue.

The Accounting Officer attributed the lack of a valuation list to high costs of hiring a Valuer to conduct the valuation exercise that will produce the valuation list.

I advised the Accounting Officer to ensure that valuation of properties is carried out and a valuation list produced.

6.3.9 DOKOLO DLG

1. Failure to meet minimum standards in UPE Schools Paragraph 2.1.2 of the revised Local Government Management and Service Delivery (LGMSD) Operational Manual, 2009 requires schools to meet specific standards as follows:- one teacher for every 55 pupils; one class room for every 55 pupils; one desk for every 3 pupils; and one latrine stance for every 40 pupils. However, it was observed that 17 primary schools inspected had inadequate infrastructure which did not met the minimum basic requirements as shown below;

Name of schools No of RATIOS pupils Teacher Classroom Desk 1:3 Latrine 1:55 1:55 stance 1:40 1 Kachung P/S 1037 1:69 1:58 1:6 1:130 2 Hassa Memorial P/S 851 1:65 1:85 1:19 1:106 3 Akwanga P/S 907 1:91 1:113 1:11 1:91 4 Angwenya P/S 946 1:86 1:105 1:4 1:63 5 Adeknino P/S 902 1:69 1:156 1:5 1:82 6 Atabu P/S 1149 1:82 1:104 1:6 1:115 7 Apye P/S 760 1:58 1:84 1:6 1;58 8 Agwata P/S 1153 1:82 1:105 1:8 1:77 9 Atur P/S 1208 1:81 1:101 1:4 1;81 10 Angwecibange P/S 1457 1:69 1:121 1:8 1:58 11 Alwitmac P/S 953 1:64 1:106 1:6 1:159 12 Dokolo P/S 1012 1:53 1:84 1:3 1:36 13 Akolodong P/S 778 1:49 1:56 1:5 1:32 14 Ageni P/S 1133 1:87 1:71 1:7 1:113 15 Apewotneki P/S 1105 1:79 1:65 1:6 1:55 16 Munamun P/S 1209 1:110 1:101 1:11 1:76

17 Awiri P/S 1090 1:68 1:68 1:3 1:109

Failure to meet the Ministry minimum basic standards may affect the overall academic performance of the schools.

The Accounting Officer attributed the matter to insufficient funding under the School Facilities Grant.

I advised the Accounting Officer to engage the Ministry of Education and to ensure that funds are provided.

2. Lack of Information Technology Policy Regulation 110(1) of Local Government Financial and Accounting Regulation, 2007 provides that the Chief Executive shall designate an officer to ensure that adequate information and communication technology policies are established and are applied to enable adequate security and protection over computers and of data held on computers or information systems operated by the council. However, it was observed that there was no IT policy to guide staff on the use of IT equipment, and the software.

I advised the Accounting Officer to develop an IT Policy.

6.3.10 GULU DLG

1. Missing motorcycles Regulation 94 (1) of the Local Governments Financial and Accounting Regulations 2007 state that every officer who is in possession of any public moneys, stores, other assets, land and buildings, is responsible for their safe custody and protection and for any loss. Regulation 94 (2) further states that an officer who has the duty to inspect, control or supervise another officer in possession of any public moneys, stores, other assets, land and buildings shall accept responsibility for a loss unless it can be demonstrated that the loss was not facilitated by his failure or neglect to carry out his duty or to make adequate arrangements to secure safe custody and protection.

A total of 13 motor cycles assigned to various officials could not be verified. The Accounting Officer explained that Council had taken note and promised to make a follow up and take appropriate action.

The matter requires urgent attention. 2. Failure to meet the Minimum Standards in UPE Schools Paragraph 2.1.2 of the revised Local Governments Management and Service Delivery (LGMSD) operational manual, 2009 requires schools to meet specific standards as follows:- one teacher for every 55 pupils; one class room for every 55 pupils; one desk for every 3 pupils; and one latrine stance for every 40 pupils. However; it was observed that some schools were operating above the required ratios as shown below:-

Name of No Teacher Class Desk Stance Annual Teachers school of pupil ratio pupil pupil pupil UPE houses pupil ratio ratio ratio funding 1:55 1:55 1:3 1:40 per pupil Gweng diya 821 1:68 1:59 1:7 1:55 7,464 4 units p/s Pageya p/s 1171 1:47 1:90 1:4 1:83 4,019 4 units Cwero p/s 1133 1:60 1:125 1:4 1;113 16,420 nil Laminto p/s 408 1:45 1:58 1:6 1:34 15,058 4units Lapuda p/s 515 1:51 1:51 1:5 1:74 6,812 6 units Aswa-Camp 244 1:24 1:30 1:7 1:49 11,495 nil p/s Akonyibedo 932 1:67 1:466 1:4 1:92 7,839 6 units p/s Awach p/s 937 1:117 1:78 1:2 1:62 83,857 1 unit Omoti Hill 713 1:51 1:237 1:7 1:118 9,797 2 units p/s St. Martin 758 1:58 1:76 1:3 1:95 8,077 3 units p/s Kulu Opal 1017 1:68 1:92 1:7 1:101 6,934 5 units p/sn Patiho 818 1:48 1:58 1:4 1:33 6,992 3 units prison p/s Angaya p/s 641 1:64 1:92 1:4 1:64 9,522 2 units Gulu PTC 604 1:36 1:60 1:3 1:50 11,508 nil Demon p/s Ogul p/s 560 1:47 1:93 1:2 1:112 11,386 4 units Oguru p/s 752 1:58 1:68 1:4 1:75 7,891 2 units

Inadequate infrastructure negatively impacts on the academic performance of the pupils. The Accounting Officer agreed to the finding and promised to implement the audit recommendation. 79

I advised the Accounting Officer to engage the relevant stake holders to mobilize adequate resources to ensure that the minimum standards are met.

6.3.11 GULU MC

1. Lack of Risk Management Policy

Regulation 103 (1&4) of the LGFAR of 2007, requires the Head of Finance to establish a documented risk management system, since it is his/her the responsibility to advice on risk management and effectiveness of internal control systems. It was observed that the Council does not have a risk management policy. This weakens the internal control systems.

The Accounting Officer admitted the shortcoming and explained that the issue has been discussed in the Technical Planning Committee (TPC) meeting and is being forwarded to executive for consideration.

I advised the Accounting Officer to ensure that the policy is developed.

6.3.12 KOLE DLG 1. Un- acknowledged Tax Remittances Section 127(1) of the Income Tax Act 1997 ( as amended to 2002) requires a withholding agent shall maintain, and keep available for inspection by the Commissioner, records showing, in relation to each year of income - payments made to a payee; and tax withheld from those payments. However, it was observed that 6% withholding tax totaling UGX.79,005,876 deducted from payments to various contractors was purportedly remitted to Uganda Revenue Authority (URA) but lacked acknowledgement receipts. Non-remittance of taxes attracts fines and penalties leading to loss of funds.

I advised the Accounting Officer to obtain the acknowledgement receipts and present them for audit verification.

6.3.13 KITGUM DLG

1. Delayed completion of construction of two classroom blocks at Potuke Primary School Ms. Lujong United Limited was contracted to construct a 2 class room block at Potuke primary school in Kitgum Matidi Sub County at a contract sum of UGX.52,000,000. The contract was expected to be executed in a period of 3 months ending 13th May 2016.The bill of quantities indicated that completed works should include installation of shutters, doors, plastered and painted walls and cemented floors. By the time of the audit, UGX.44,315,136 had been paid to the contractor representing 85% of the contract sum.

However, it was observed that the contractor had abandoned the site and there was no door frames and the floor screed was not completed as shown below;-

The classroom block without doors and Pupil occupying the incomplete structures shutters

A section of the incomplete floor Sections of the incomplete veranda

The Accounting Officer explained that additional fund has been identified to complete the work.

I advised the Accounting Officer to engage the contractor and address the defects.

6.3.14 KITGUM TC

1. Lack of a Valuation list

Section 4 of the Local Government Rating Act (Chapter 242) requires a Local Government to produce the first valuation list and thereafter valuation list once at least in five years or such longer period as the Minister may approve.

However, the town council has not carried out any property valuation to produce a valuation list.

Consequently, there is a risk of under-assessment leading to under-collection of local revenue.

The Accounting Officer attributed the matter to inadequate funding and indicated that the Council has requested for support from the Ministry of Local Government.

I advised the Accounting Officer to ensure that valuation of properties is carried out and produce a valuation list to guide local revenue assessments.

6.3.15 LAMWO DLG

1. Doubtful expenditure on hire of equipment Section 3.1 (c) and (d) of Force Account Guidelines Circular no. 3 of 2012 , states that the Procuring And Disposing Entity is required to ensure that the supplies and works undertaken are costed and budgeted for and works are supervised by a qualified supervisor for the purposes of ensuring efficiency in the application of the Force Account.

Contrary to the above, Ms. Northcross and Abayo Foundation were contracted to supply equipment to Council and the following matters were noted;

• The department was manually recording the number of hours the equipment had purportedly worked which was not reliable as there were no odometer readings. Besides, there instances where manual recordings were not done.

• The manual recording of hours depicted a lot of forgery as it was overly crossed and not consistent.

• Hire of motor roller (5days), Heavy duty motor grader (7days) and water bowser (6days) for the 16.5km Lugwar-Paracelle Road had activities overlapping from 21/03/2016 to 24/06/2016 with hire of hydraulic excavator which had forged accountability thus rendering the payment doubtful.

• Voucher number 19/16/2016 for Hire of lowbed for 2days and supply of 14 600mm diameter culverts on Olebi-Lelabul road totaling to UGX.7,162,800 had an amount of UGX.4,400,000 not approved by the engineer. 82

• There was no inspection report on the suppliers’ equipment yard by the engineer. Consequently, I was unable to confirm the authenticity of the expenditure. The Accounting Officer stated that odometers mounted on the equipments read hours for which the engine has been running not necessarily the work done by the machine. It was stated that management’s interest was hours of work by these machines. The Accounting Officer further explained that management had assigned a staff on a full time basis at the site for day-to-day supervision and documentation. His role was to take note on the starting hours, breakdown hours, lunch break hours and closing hours from which actual machine productive hours could be computed. However, given my earlier observation on unreliability of the manual recording system, I found this explanation unsatisfactory.

I advised the Accounting Officer to ensure that payment for hire of equipment is supported by hour recordings of actual usage.

2. Audit Inspection of Kirombe-Kal road Paragraph 3.5.4 (6) of the LGFAM (2007) requires each activity to have its own work plan and budget. This is amplified by paragraph 5.4 of the Force on Account Guidelines Revised (Planning for Mechanized Routine Maintenance). It was observed that Council through the Engineering Department budgeted to execute road rehabilitation of 5km on Kirombe-Kal Road. The scope of work included grading, drainage works, full gravelling and completion of works at an estimated cost of UGX.132,780,300 under PRDP funding.

However, audit Inspection of the works revealed the following matters;-

• The road was adjusted to 7.3km without seeking authorization and approval from Contracts Committee.

• Gravelling was not done on Chainages 8.2-10.4(1.6km), and from 12.4 to 12.44 (0.4km) giving a total of 2km out of the 7.3km not graveled leading to a financial loss of UGX.22,400,000. • Although UGX.128,650,416 representing 97% of the estimated cost had already been paid to the suppliers of culverts and gravels and to the Force Account manager, the works were incomplete.

• Two project sign posts costing UGX.1,576,000 had not been installed by the time of audit inspection on 28th/06/2016.

• The culverts purportedly installed worth UGX.23,622,200 were not visible on site

• Summary of progress reports availed by the Engineering department indicated the project as completed of 5km at UGX.132,779,000, contrary to the actual status of the road and actual payment availed for audit giving a variance of UGX.4,128,584 which could not be traced.

• Shoddy work was observed at some sections of the road.

Road section completely not gravelled (2.4km). This road section is prone to accidents

Bridge section where 19 pcs of 900 mm diameter culverts were purportedly installed could not be seen, shoddy works observed although the work is claimed to be completed

The Accounting Officer explained that management thought it would be prudent to open up the entire road length for Public use rather than leaving a 2.3Km section busy and impassable and that management had made submission to Contracts Committee for approval of change of scope of work.

I advised the Accounting Officer to address the shortcomings above.

3. Health Service Delivery 3.1 Failure to meet the Health Minimum Standards Paragraph 2.1.2 (D) of the Local Governments Management and Service Delivery (LGMSD) Program Operational Manual for Local Governments sets minimum standards for proper functioning of Health centers. An inspection of Padibe HC IV revealed the following matters;-

Item Minimum HC IV Current Status Standard Padibe HC IV

General wards 2 1 General ward shared by both children and adults Medical waste pit 1 The incinerator is in dilapidated state Placenta pit 1 The placenta pit is dilapidated

stance pit latrine 8 of 2 stance Only one 3stance pit latrine pit latrine Beds(Bed capacity 36 - Only 14 beds available

Incinerator house in a poor condition

Dilapidated general ward Dilapidated general ward

General ward in a sorry state

Poor storage of drugs as they are not put on shelves but packed on the floor exposing them to damage.

The Accounting Officer stated that management had taken the advice of the Auditor General to engage the relevant authorities.

I advised the Accounting Officer to engage the relevant authorities to address the issues identified.

4. Failure to meet the minimum Education Standards in UPE Schools Paragraph 2.1.2 of the revised Local Government Management and Service Delivery (LGMSD) operational manual, 2009 requires schools to meet specific standards as follows:- one teacher for every 55 pupils; one class room for every 55 pupils; one desk

for every 3 pupils; and one latrine stance for every 40 pupils. However, it was observed that the District is operating below the minimum standards as shown in table below:- Ratio National Standard District Status Teacher Pupil Ratio 1:55 1:80 Pupils Latrine Stance Ratio 1:40 1:54 Pupil Classroom Ratio 1:40 1:83 Desk: Pupil 1:3 1:20

• Inadequate Teachers Houses: - most schools either had one teacher house or none with several grass thatched in a sorry state.

• Additionally some schools like Liri Primary school lacked a borehole the nearest one being 2km away from the school

Inadequate infrastructure negatively impacts on the performance of the pupils as already evidenced from the PLE results of 2015.

The Accounting Officer was in agreement with the audit observation and expressed commitment to implement the audit recommendation.

I advised the Accounting Officer to engage the relevant stake holders to mobilize adequate resources for infrastructural development in the schools.

6.3.16 LAMWO TC

1. Unapproved excess expenditure

Regulation 24(1) of the Local Governments Financial and Accounting Regulations 2007 states that expenditure for which there is insufficient or no provision in the approved estimates shall not be incurred until a supplementary estimate has been approved. However, it was observed that the Council spent UGX.596,666,967 against the budgeted UGX.238,435,784 leading to an unapproved excess expenditure of UGX.358,231,183.

The Accounting Officer explained that the amount was brought forward from the previous financial year and used to implement the project of resealing, however; there was an over sight that this balance was not provided for in the budget of the financial year under review.

I advised Accounting Officer to seek Council’s approval before spending.

6.3.17 LIRA DLG

1. Unacknowledged Taxes

Section 127(1) of the Income Tax Act 1997 ( as amended to 2002) requires a withholding agent shall maintain, and keep available for inspection by the Commissioner, records showing, in relation to each year of income - payments made to a payee; and tax withheld from those payments. It was observed that Pay as you earn (PAYE) amounting to UGX.23,721,600 deducted from councilors’ payments and remitted to Uganda Revenue Authority (URA) lacked acknowledgement receipts. Unremitted taxes attract fines and penalties from the tax authority leading to loss of public funds.

The Accounting Officer explained that efforts were being made to obtain receipts from URA head office in Kampala as they normally do not provide receipts promptly.

I advised the Accounting Officer to ensure that acknowledgement receipts are obtained from URA.

6.3.18 LIRA MC 1. USMID Project 1.1 Diversion of Funds Paragraph 3.6 of the USMID Operational Manual states that courses must be undertaken in Uganda. It was observed that UGX.7,722,000 was paid to Council staff as night allowance and 20 days out of pocket to attend a course on Capacity Building Program on Local Administration for Uganda held from 3rd to 23rd April, 2016 in Seongnam and Wanju - Republic of Korea contrary to the USMID operational manual rendering the expenditure ineligible and tantamount to diversion of funds.

The Accounting Officer should institute recovery measures from the concerned officer.

2. Failure to meet Minimum National Standards of Service Delivery in the Education Sector

Paragraph 2.1.2 (a) of the Local Governments Management and Service Delivery (LGMSD) Program operational manual states that Local Governments will deliver services in conformity to the standards as dictated by minimum national standards of service delivery.

However, inspections carried out in Universal Primary Education schools revealed that the current infrastructural status in the municipal schools fall below the minimum standards in terms of classroom: Classroom: pupil ration, stance: pupil ratio and house: teacher ratio.

The Accounting Officer explained that the Municipality has tried with the available resources to improve the infrastructure in schools as they await for the Government interventions.

I advised Accounting Officer to engage the relevant stake holders to mobilize adequate resources for infrastructural development in the school.

3. Failure to meet the national minimum standards of service delivery at Health Centres

Paragraph 2.1.2 (D) of the Local Governments Management and Service Delivery (LGMSD) Program Operational Manual for Local Governments sets minimum standards for proper functioning of Health centers. An inspection of selected health centers revealed the following short comings:-

Name of health Minimum Current Audit remarks facility/required standard standards status

AYAGO HCIII One OPD block with community 1 1 One OPD with no shed shed One maternity ward 1 1 8 beds available Two general ward 2 0 None, apportioned maternity ward to act as a general ward, also has art clinic and injection room Two staff houses type 1 2 1 I block for the in charge One staff house type 2 1 2 2 Blocks of twin house-PRDP and NUSAF Two staff houses type 3 2 0 None.

Eight two stance pit latrines 8 4 2 stance, water flash nun-functional and another stances 2 doors .ie.4 functional stance One medical waste pit 1 1

One placenta pit 1 1

One water source 1 1 Medical equipment Adequate 2 Microscope, fridge

Furniture Adequate Appropriate level however some they need replacement

Adyel HCIII One OPD block with community 1 1 No operational funds shed One maternity ward 1 1 No operational funds Two general ward 2 0 None Two staff houses type 1 2 1 Insufficient One staff house type 2 1 0 None Two staff houses type 3 2 0 None Eight two stance pit latrines 8 2 Insufficient One medical waste pit 1 0 None One placenta pit 1 1 No operational funds One water source 1 0 None Medical equipment Adequate 0 None Furniture Adequate 0 None

3.1 Other issues at the health centers  Adyel Health Center III is not yet accredited though functional and as a result, the staffs and drugs at the facility are re-allocated from other health centers.  Operational funds are borrowed from the neighboring health centers. In Ayago the following were also noted  There are no toilets for patients  There is only one mid-wife  The Enrolled nurse is acting as the in-charge  No land tittles for both health facilities The Accounting Officer attributed lack of patients’ toilet to failure to release PHC development funds, but explained that the Council is in the process of acquiring land titles for the health facilities.

I advised the Accounting Officer to liaise with the relevant authorities to ensure that the outstanding gaps are urgently filled. 89

6.3.19 NWOYA DLG 1. Failure to meet the Minimum Standards of Health Services at Alero HCIII

Paragraph 2.1.1 (D) of the Local Governments Management and Service Delivery (LGMSD) program Operational Manual, 2009 and Guidelines for Designation, Establishment and Upgrading of Health Units by Ministry of Health, 2011 sets out Health Service Delivery packages or minimum standards for functioning of health centres. However; Inspection carried out at Alero HC III and Koch Lii HC II revealed the following shortcomings;-

Health Facility Basic requirement Current Status Alero HC III OPD Block; Maternity, and  Dilapidated OPD General ward  Newly constructed waste pit was already falling in while the old waste pit had not yet been filled

Waste pit Water source  The entity lacked a reliable and proper water source i.e. the borehole was faulty

At least 1 pit latrine  There is no latrine for staff

Access to modern energy The maternity ward has no stable lighting for maternity and electricity laboratory

Lack of the minimum basic requirements adversely affects service delivery.

The matter requires urgent attention.

6.3.20 OTUKE DLG

1. Failure to meet the Minimum Standards in UPE Schools Paragraph 2.1.2 of the revised Local Governments Management and Service Delivery (LGMSD) Operational Manual, 2009 requires schools to meet specific standards as follows:- one teacher for every 55 pupils; one class room for every 55 pupils; one desk for every 3 pupils; and one latrine stance for every 40 pupils. However; it was observed that some schools were operating below the required ratios as shown below;

SN School Sub Enrollment Teacher: Classroom: Staff H: Pupil : Pupil Name County Pupil Pupil Teacher Latrine : stance Desk 1 Abilonyero Adwari 1043 1:69 1:208 0 1:104 1:35 2 Acane Adwari 653 1:72 0 1:9 1:65 1:6 3 Ader Adwari 610 1:61 1:203 1:5 1:61 1:7 4 Aliwang Adwari 1383 1:62 1:345 1:11 1:138 1:4 5 Okee Adwari 625 1:56 1:156 0 1:62 1:7 6 Okeremomkok Adwari 609 1:55 0 0 1:60 1:6 7 Okwong Adwari 715 1:51 1:357 1:3 1:71 1:3 8 Amele Okwang 725 1:65 1:145 0 1:145 1:4 9 Amunga Okwang 814 1:67 1:407 1:6 1:162 1:6 10 Baralegi Okwang 641 1:64 1:80 1:2 1:64 1:5 11 Bar Ocok Okwang 752 1:57 1:188 1:6 1:75 1:4 12 Ogoro Okwang 803 1:73 1:200 1:2 1:80 1:3 13 Anyalima Ogor 617 1:68 0 1:2 1:61 1:4 14 Arom Ogor 719 1:79 1:179 1:2 1:79 1:4 15 Ociro Ogor 701 1:70 1:233 1:2 1:70 1:5 16 Oderokech Ogor 683 1:48 0 1:3 1:68 1:4 17 Oluro Ogor 706 1:70 1:353 1:2 1:70 1:5 18 Omwonylee Ogor 723 1:80 1:90 1:4 1:72 1:3 19 Aleri Olilim 727 1:72 1:242 1:5 1:72 1:3 20 Aluga Olilim 614 1:76 0 1:2 1:61 1:8 23 Atirayon Olilim 640 1:71 0 1:4 1:64 1:4 25 Ikwee Olilim 675 1:61 1:337 1:5 1:67 1:9 26 Ogwete Olilim 545 1:60 0 1:2 1:77 1:5 27 Olilim Olilim 765 1:58 0 1:3 1:76 1:5

Inadequate infrastructure negatively impacts on the learning environment of the pupils. The Accounting Officer attributed this situation to low funding received by the

education sector.

I advised the Accounting Officer to engage the relevant authorities and ensure that the minimum standards are met.

2. Underfunding under UPE A review of the approved budget revealed that some schools in the district were not fully funded with UPE capitation grant based on the total enrollment and budget. Some schools severely suffered to a tune of 49% shortfall.

Failure to receive sufficient funds affects the operations of the schools and may lead to poor academic performance of the pupils and the schools at large.

I advised the Accounting Officer to liaise with the Ministry of Education and Ministry of Finance Planning and Economic Development to ensure that UPE capitation grant is released as budgeted.

6.3.21 OTUKE TC 1. Lack of Internal Audit Department

Section 90 (1) and (2) requires every local Government to have an Internal Audit department and to prepare quarterly audit reports and submit them to council for onward discussion. However, it was observed that Council lacks an internal audit unit.

Lack of an internal audit function weakens the internal controls.

The Accounting Officer explained that efforts were being made to recruit the Head of Finance to enable the acting Head of Finance resort back to his substantive appointment as Head of Internal Audit.

I advised the Accounting officer to ensure that the internal audit department is established.

6.3.22 OYAM DLG 1. Health service delivery

1.1 Suspected theft of Mosquito Nets in Anyeke Health Centre IV

Paragraph 5.4.4.1 of the Local Government Financial and Accounting Manual, 2007 requires all goods delivered to be inspected and received in stores. It was observed that Anyeke Health Centre IV received 60 bales of long lasting Insecticide treated mosquito nets from TASO, each bale containing 40 nets worth USD 6,960 from Crane health services as per delivery note No. 063. However, Council loss report form revealed that 29 bales were stolen from the Health Centre. It was further observed that the nets were not supported by Goods Received Notes nor were they received in stores. Besides, the loss was not disclosed in the financial statements.

The Accounting Officer explained that the matter was in court.

I advised the Accounting Officer to follow up the matter and ensure that the loss is disclosed in the financial statements.

2. Failure to meet the Minimum national standards of Education service delivery

Section 2.1.2 (a) of the Local Governments Management and Service Delivery (LGMSD) Operational Manual, 2011 requires Local Governments to deliver services conforming to Primary Education minimum standards of service delivery. However, it was observed that the District is operating below the minimum standards as shown in table below:-

School Sub- Enrolm Classroom:Pup Teacher:Pupi Latrine: House county ent il Ratio l Ratio Pupil Ratio :Teacher Ratio Minimum national standard 1: 40 1: 55 1: 40 1: 1 Anotoocao 756 1:151 1:84 1:76 0:9 P.S LORO Omolo P.7 Loro 879 1:220 1:68 1:88 1:7 School Angweta Iceme 1,077 1:539 1:83 1:107 1:4 P.S. Acokara Otwal 1,251 1:626 1:70 1:125 1:18 P.S. Lelapala Aleka 1,373 1:687 1:92 1:137 1:15 P.S. Adel P.S Minakulu 1,656 1:166 1:75 1:166 1:7 Iyanyi P 7 Loro 1,068 1:534 1:59 1:134 0: 18 School Aber P.S. Aber 1,943 1:278 1:84 1:130 1:8 Akwangi Iceme 860 1:430 1:54 1:86 1:8 P.S. Adili P.S Iceme 889 1:222 1:68 1:89 1:7

The inadequate infrastructure in schools negatively impacts on academic performance of the pupils. The Accounting Officer explained that efforts were being made to address the inadequate standards through Government interventions like SFG, PRDP funding and other development Partners like World Vision and International Agencies.

I advised the Accounting Officer to engage the relevant authorities to mobilize resources for infrastructural development of the schools.

6.3.23 OYAM TC

1. Lack of a Valuation List

However, the Town Council has not carried out a property valuation contrary to the regulation.

Consequently, there is a risk of under-assessment leading to under-collection of local revenue.

The Accounting Officer explained that most buildings in the town are incomplete and is costly to hire government valuer.

I advised the Accounting Officer to ensure that valuation of properties is carried out and to produce a valuation list to guide local revenue assessments.

6.3.24 PADER DLG 1. Non submission of expenditure records Section 87 (1) of the Local Government Act CAP 243 states that ‘The accounts of every local government council and administrative unit shall be audited by the Auditor General or an auditor appointed by him or her.

Contrary to the above requirements, management did not provide the expenditure vouchers and records in relation to expenditure under the Production Department amounting to UGX.81,684,200.

In absence of expenditure documents, I was unable to confirm whether the expenditure incurred during the year in relation to the production department was genuine and for the intended purpose.

The Accounting Officer explained that the matter was being investigated and the expenditure documents had been taken by the Criminal Investigation and Intelligence Department of the Police.

I await the outcome of the investigations.

2. Lack of Information Communication Technology (ICT) Policy Regulation 110(1) of Local Government Financial and Accounting Regulation, 2007 provides that the Chief Executive designates an officer to ensure that adequate information and communication technology policies are established and are applied to enable adequate security and protection over computers and of data held on computers or information systems operated by the council.

However, it was observed that there was no ICT policy to guide staff on the use of IT equipment and software.

I advised the Accounting Officer to develop an IT Policy.

3. Failure to meet the Minimum Standards in UPE Schools Paragraph 2.1.2 of the revised Local Government Management and Service Delivery (LGMSD) operational manual, 2009 requires schools to meet specific standards as follows:- one teacher for every 55 pupils; one class room for every 55 pupils; one desk for every 3 pupils; and one latrine stance for every 40 pupils. However; it was observed that some schools were operating above the required ratios as shown below:-

School Name Enrollment Teacher: C/Rooms: Desks: Pupil Latrine Stances: Pupil Ratio Pupil Ratio Ratio Pupil Ratio Standard Ratios 1:55 1:55 1:3 1:40 St Joseph Ogan 523 1: 75 1:75 P/S 1:10 1:52 Papaa P/S 1055 1: 75 1:88 1:5 1:53 Gore P/S 759 1:127 1:108 1:7 1:152 Amilobo P/S 518 1:74 1:74 1:5 1:104 Olambyera P/S 536 1:77 1:77 1:8 1:54 Pagwari P/S 546 1:78 1;78 1:5 1:55 Paipir P/S 1149 1:82 1:96 1:6 1:57 Opolacen P/S 516 1:74 1:74 1:12 1:103 Ogom P/S 462 1:66 1:66 1:6 1:46 Amoko Lagwai 489 P/S 1:70 1:70 1:5 1:49 Lacekocot P/S 1591 1:84 1:159 1:6 1:106 Lamogi O'k'mac 751 P/S 1:107 1:107 1:9 1:150 Laguti P/S 559 1:93 1:56 1:4 1:56 Pajule P/S 1050 1:58 1:175 1:5 1:70

Dure P/S 849 1:77 1:94 1:6 1:57 Wanduku P/S 879 1:110 1:110 1:10 1:88 Lanyatido P/S 794 1:113 1:113 1:11 1:99

Failure to meet the required standards may lead to poor academic performance.

I advised the Accounting Officer to engage the relevant authorities to ensure that the challenges are addressed.

6.3.25 KALONGO TC

1. Borrowing of Uganda Road Fund Regulation 37(2) of the Local Government Financial and Accounting Regulations (LGFAR) 2007 requires that conditional grants from Central Government are planned for, recorded and accounted for in accordance with the grant conditions and guidelines.

It was observed that UGX.2,087,000 was lent out from the Uganda Road Fund account to finance activities under the Operation Account. However by the close of the financial year, the funds had not been refunded to the Uganda Road Fund Account.

I advised the Accounting Officer to ensure the funds are refunded.

6.4 JINJA BRANCH 6.4.1 BUGIRI DLG 1. Health Sector

1.1 Lack of Health Management Committees Section 5.4 of the Ministry of Health Guidelines requires the Health Management Committee to meet at least quarterly to conduct health related business. However, all Health Units did not have the Management Committees.

I advised the Accounting officer to ensure that the Management Committees are constituted.

1.2 Understaffing in the Health Department The Health Department has an approved structure of 646 staff. However, out of the approved staffing structure of 350 employees, only 329 (53%) are filled leaving a

staffing gap of 328 positions, representing 47% understaffing as shown in a table below;

UNIT APPROVED FILLED VACANT DHOs Office 11 8 3 Bugiri Hospital 190 144 46 HC IV 58 38 20 HC III 190 118 72 HC II 207 42 165 Total 656 350 306

The Accounting Officer attributed the gap to inadequate payroll budget by the center.

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.

I advised the Accounting Officer to continue engaging the relevant Ministries to ensure that the vacant positions are filled.

2. Failure to meet the minimum standards of Education Service Delivery

Guideline 2.1.2 (a) of the Local Governments Management and Service Delivery Program (LGMSD) Operational Manual for Local Governments 2009 prescribes minimum national standards of service delivery for primary education as shown below; SN Indicator MNSSD District Ratios 1 Teacher Pupil ratio 1:55 1:65

2 Classroom Pupil ratio 1:55 1:95 5 Desk pupil ratio 1:3 1:7

6 Permanent teacher At least 4 teachers 1:25 accommodation 7 Latrine stance pupil ratio 1:40 1:55

This is attributed to inadequate funding. The inadequacy in school infrastructure negatively impacts on education service delivery.

I advised the Accounting Officer to follow up the matters with Ministry of Education and Sports for more funds so that minimum standard requirements are complied with.

3. Failure to pay Salary Arrears

Section (B-a) paragraph 25 of the Public Service Standing Orders 2010 requires that salary arrears to a public officer be paid through the payroll within the same financial year.

A review of the payroll revealed that a number of staff had not been paid salary amounting to UGX.12,093,701.

The Accounting Officer explained that all the salaried staff were fully paid. He undertook to investigate why the salaries in question were not received.

Failure to pay salaries greatly demoralizes and may hinder service delivery.

The Accounting officer should ensure that all officers access the payroll and are paid promptly.

6.4.2 BUYENDE DLG 1. Unaccounted for funds Section 43(2) of LGFAR, 2007 requires that, "Administrative advances to council employees shall be authorized by the Chief Executive and shall be accounted for within a month." An amount of UGX.162,829,016 had not been accounted for at the time of audit. In the absence of the accountability, it was difficult to confirm that the funds were utilized for the intended purposes.

I advised the Accounting Officer to ensure that the accountability documents are obtained or else effect recovery from the responsible officers.

2. Missing Receipt books

Regulation 108 (2) of the Local Government Financial and Accounting Regulations, 2007 requires that the Auditor General shall have rights of access to all documents and information necessary for reaching an audit opinion. The district is required by law to have possesion of the used receipt books before new ones are issued to revenue collectors. The district reported UGX.105,762,724 as local revenue collected during the financial year 2015/2016. However, the revenue receipt books were availed for audit verification.

in the absence of the used receipt books, it becomes difficult to confirm the completeness and accuracy of the reported figures of local revenue collected.

I advised the Accounting Officer to avail the revenue documents for audit verification.

3. Procurement anomalies

3.1 Procurement using non-pre-qualified firms Regulation 18 sub section (1) (3) of PPDA Regulations, 2014 stipulates that a procuring and disposing entity may use pre-qualification under open domestic or open international bidding to obtain a shortlist of bidders.

It was observed that the evaluation committee in its sitting of 14th and 15th July 2015 evaluated companies for pre-qualification and a report was submitted to and approved by the contracts committee. However, from a sample of 15 procurements 9 companies were reported as best evaluated yet they did not appear on the evaluation report for pre-qualification as shown in the table below; Details Category SIMU Tech Enterprise Construction work KALISA Devine enterprise Construction work MWAMBA General Services Construction work Joseph Associates Construction work Bukose Bulaire General company Construction work BATWAK General Investments Construction work Interlipath systems limited Computer accessories Alticom services limited Supply of MV tyres and tubes Kamuli General Enterprise Supply of drugs

In addition, the PDU awarded Ms. SIMU Tech enterprise and Ms. Bukose Bulwaire General Enterprise contracts worth UGX.4,822,200 and UGX.17,303,619 respectively without going through the tendering process.

I advised the Accounting Officer to comply with the PPDA law.

3.2 Lack of evaluation reports for contracts

PPDA Regulation (evaluation) 2014 Section 35 (1) the evaluation committee shall prepare an evaluation report which shall indicate

It was observed that the district awarded contracts for the provision of goods and services worth UGX.1,624,912,120 and revenue tenders amounting to 99

UGX.152,611,000 to various companies and individuals. However, audit was not availed with approved evaluation reports, evaluators score sheet (LG PP Form 12 C) and submission to contracts committee (request for approval of evaluation report LG PP Form 13) in complete disregard to the Procurement Regulations.

I advised the Accounting Officer to ensure that the procurement records are presented for verification.

4. Non-remittance of Local service tax to Lower Local Governments Section 2.6.1 Option 2; Local Service Tax, 2008, the total LST accruing from all the entities shall be shared as 35% to the residential LG and the remaining 65% to all LGs hosting the venture in proportion to the contribution to the total revenue of the proprietor.

It was observed that Council did not remit UGX.13,792,605 to the lower councils as shown in the table below;

Amount received 52,264,585 Amount to be transferred to LLG 18,292,605 Actual transfers 4,500,000 Under remittance 13,792,605

Failure to remit taxes to Lower Local Governments negatively affects service delivery at the Lower Local Councils. The Accounting Officer promised to pay in the current financial year.

I advised the Accounting Officer to ensure that the shared local revenue is remitted to the Lower Local Governments as required by law.

5. Lack of effective Internal Audit Function

The approved structure of the internal audit unit has 7 approved positions. However, only one post of Auditor is filled as shown in the table below;- Category Scale Number Status District Internal Auditor U2 1 Not filled Senior Internal auditor U3 1 Not filled Internal Auditor U4 1 Filled Examiner of Accounts U5 3 One Vacancy Office Typist U7 1 Not filled

This weakens the internal control system. 100

The Accounting Officer explained that Council had sought for authority to recruit and fill the positions.

I advised the Accounting Officer to engage the relevant authorities and ensure that the vacant positions are filled.

6. Payroll anomalies

An amount of UGX.34,924,410 was paid to individuals who had ceased to serve the District as shown below;-

Category Amount Retired staff 8,466,152 Abandonment cases 467,685 Resigned 3,744,000 Transfers to other entities 6,467,636 Non-deleted staff from payroll 15,778,937 TOTAL 34,924,410

The Accounting Officer promised to make recoveries.

The matter requires urgent attention.

6.4.3 IGANGA DLG 1. Unpaid salary arrears Section B, Paragraph 25 of the Public Service Standing Orders, 2010 provides that salary arrears that accrue to a public officer within a financial year shall be paid through the payroll within the same financial year.

It was noted that some staff in the district had accumulated salary arrears in financial year 2013/14 amounting to UGX 47,369,822 and 2014/15 amounting to UGX 74,430,015 giving a total of UGX 121,799,837 as shown in the summary below;

Financial Year 2014/2015 2013/2014 Total arrears Primary 54,194,635 26,974,849 81,169,484 PHC 671,547 3,709,504 4,381,051 Traditional 4,241,804 2,362,848 6,604,652 Tertiary 2,304,648 0 2,304,648 Secondary 13,017,381 14,322,621 27,340,002 Grand Total 74,430,015 47,369,822 121,799,837

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The Accounting Officer attributed it to delays by some staff in accessing the payroll due to transfers, promotions, under payments due to system errors and loan deductions. Failure to pay salaries demotivates staff leading to poor outputs which negatively impacts on service delivery.

I advised the Accounting Officer to liaise with the line Ministry of Public Service and the Ministry of Finance Planning and Economic Development to ensure that staff salary arrears are paid.

2. Failure to meet minimum standards in Primary Schools The Local Governments Management and Service Delivery (LGMSD) operational manual section 2.1.2 (a) requires Local Governments to deliver services in conformity with Primary education minimum national standards of service delivery.

Analysis of the statistics for the schools in the District revealed that the standards were below minimum as shown in the table below:

Standard Minimum standard Current standard Classroom pupil ratio 1:55 1:95 Latrine Stance Pupil ratio 1:40 1:65 Teacher Pupil ratio 1:55 1:44 Desk pupil ratio 1:3 1:6 Teacher House Ratio 1:4 1:10

This is attributed to inadequate funding. The inadequacy in school infrastructure negatively impacts on education service delivery.

I advised the Accounting Officer to follow up the matters with Ministry of Education and Sports for more funds so that minimum standard requirements are complied with.

3. Failure to meet minimum standards in the Production Service Delivery The Local Governments Management and Service Delivery (LGMSD) operational manual, 2009 section 2.1.2 (e) requires Local Governments to deliver services in conformity with production sector minimum national standards of service delivery. It was noted that Iganga district is operating below the set minimum standards.

This is attributed to inadequate funding and understaffing in the department. This inadequacy negatively impacts on agriculture service delivery. 102

The Accounting Officer is advised to follow up the matters with Ministry of Agriculture for more funds so that minimum standard requirements are complied with.

4. Failure to meet minimum standards in the Health Service Delivery Paragraph 2.1.2 (b) of the Local Governments Management and Service Delivery (LGMSD) Program Operational Manual for Local Governments sets minimum standards for proper functioning of health centers while Paragraph 2.1.2 (D) shows the required Health Service Delivery Packages.

4.1 Accommodation A sample of the health centres in the District revealed accommodation gap of 60 housing units as shown in a table below shows;

Health Centre Minimum No of staff Variance (Gap) Standard Accommodated Busesa HC IV 11 6 5 Bugono HC IV 11 4 9 Iganga T/C H/C III 5 0 5 Busembatia HC III 5 1 4 Lubira HC III 5 4 1 Igombe HC III 5 0 5 Bulamagi HC III 5 0 5 Busowobi HC III 5 2 3 Nakalama HC III 5 0 5 Nambale HC III 5 0 5 Kasambika HC III 5 2 3 Nawandala HC III 5 0 5 Bunyiiro HC III 5 0 5 77 19 60

The Accounting Officer acknowledged the above shortcomings and attributed them to inadequate funding.

5. Unreplaced furniture at Iganga Hospital The Ministry of Health in 2012 contracted Sino Africa Medicines and Health Limited under procurement reference number MOH-UHSSP/SUPLS/2010-11/00014(D) to supply medical furniture which was delivered to the hospital on 15th/08/2013 (delivery

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note number UHSSP/LOT4/IGANGAH1. National Advisory Committee on Medical Equipment(NACME) made an inspection of the supplies and some were rejected on grounds of poor quality. The supplier was instructed to withdraw all the rejected items and make replacements in a letter dated 22nd/06/2015 from the Ministry Permanent Secretary. However, the items have never been replaced. The withdrawn items are listed in the table below; Item’s Description Quantity supplied Quantity withdrawn Filling cabinets 10 3 Steel cupboards 8 5 Instrument trolleys 11 5 Patient trolleys 11 9 Instrument cupboards 4 3 Examination couch 2 1 Patient beds 43 31 Patient screens 14 4 Bowl stand 20 12

The newly constructed laboratory lacks furniture among other units.

I advised the Accounting Officer to engage the Ministry of Health to have the above issues on health service delivery addressed.

6.4.4 IGANGA MC 1. Lack of Information Communication Technology (ICT) Policy Regulation 110 of the LGFARs of 2007 requires the Chief Executive to designate an officer to ensure that adequate Information and Communication Technology policies are established and applied to enable adequate security and protection over computers and data held thereon or Information Systems operated by the Council.

There is no ICT policy to guide staff on management of IT equipment, security of hardware and data. In addition there are no general and application controls to ensure proper logical, physical access and security over data. The Accounting Officer acknowledged the audit recommendation.

There is a risk of loss of data and equipment.

I advised the Accounting Officer to develop an IT policy.

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2. Lack of revenue registers

Regulation 33 (1) of the Local Governments Financial and Accounting Regulations (LGFAR), 2007 requires that a prescribed revenue register to be used to show details of revenue due, revenue collected and all arrears, including a record of steps taken to collect all arrears.

However, it was observed that council did not maintain revenue registers for the different local revenue sources. The Accounting Officer attributed this to capacity gaps.

The absence of revenue registers weakens controls of revenue collection.

I advised the Accounting Officer to establish the revenue registers.

3. Low bidder participation

Section 43(3) of PPDA Local Governments Regulations provides that all procurement and disposal shall be conducted in a manner to maximize competition and achieve value for money irrespective of the method of procurement used or the nature of the works, services or supplies to be procured.

However, a review of procurement records revealed that ten (10) procurements were carried out using open bidding process with a low bidder turn out. It was observed that only one bidder turned out for each of the contracts.

The Accounting Officer explained that Council had used open bidding.

In the absence of competition, value for money may not have been achieved.

I advised the Accounting Officer to comply with the PPDA regulations.

6.4.5 JINJA DLG 1. Failure to meet the minimum national standards of Health Service Delivery

Paragraph 2.1.1 (D) of the Local Governments Management and Service Delivery (LGMSD) Program Operational Manual for Local Governments sets minimum standards for proper functioning of health centers.

The following shortcomings were identified;-

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a) Health Services Accessibility indicators

Post National standard Jinja District Doctor 1:24,000 1:45,449 Nurses 1:1,700 1:3,289 Midwife 1:900 1:944

b) Accommodation Staff without housing shown in the table below and in Appendix 1. Unit No. of National Jinja status Variance HCs standard HC IV 3 33 20 13 HC III 7 35 14 21 HC II 9 18 11 7 Total gap 86 45 41

The Accounting Officer attributed the shortcoming to the financial constraints occasioned by the removal of Capital Development Fund from the budget but pledged to close the accommodation gaps in a phased manner whenever funds will be available.

Inadequate accommodation adversely impacts on service delivery as patients cannot access the health workers as and when circumstances warrant.

I advised the Accounting Officer to engage the relevant authorities to address the challenge.

2. Failure to meet the minimum national standards of Education Service Delivery

The Local Governments Management and Service Delivery (LGMSD) operational manual section 2.1.2 (a) requires Local Governments to deliver services in conformity with Primary Education Minimum National Standards of Service Delivery. A review of the District school infrastructure and staffing levels as compared to the National standards set by the Ministry of Education and Sports revealed standards below the minimum.

The Accounting Officer attributed this to inadequate funding and a recruitment ceiling for teachers in the respective schools.

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The inadequacy in school infrastructure and staffing negatively impacts on Education service delivery.

I advised the Accounting Officer to follow up the matter with the Ministry of Education, Science, Technology and Sports so that more funds are allocated to the district. This will go along way in enabling the district to meet the minimum standard requirements.

3. Lack of a Land Board

Section 56 (I) of the Uganda Land Act 1995 as amended requires that every District must have a nominated and fully constituted Land Board for the effective management of the District land.

However, it was observed that the term of the members of the District Land Board expired on 25 October 2015 and by the time of audit in September 2016 a new board had not been constituted.

The Accounting Officer explained that the members had been nominated for appointment to the District Land Board these were under investigation by the IGG’s Office and the courts of Law.

I advised the Accounting Officer to engage the relevant authorities to ensure that the District Land Board is constituted.

4. Payroll audit

4.1 Multiple Payments An employee was paid more than once with the employee receiving payments totaling to UGX.730,292.

This was attributed to weak controls in the management and processing of the payroll. This could result in a loss of funds to government if not recovered.

The Accounting Officer explained that the incident was an isolated case that occurred in error and that a recovery shall be made in subsequent months.

I await the Accounting Officer’s action.

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6.4.6 JINJA MC

1. Failure to meet the minimum standards of Education Service Delivery

Guideline 2.1.2 (a) of the Local Government Management and Service Delivery Program (LGMSD) Operational Manual for Local Governments 2009 prescribes minimum national standards of service delivery for primary education as indicated below; School Classroom: Pupil Latrine: Pupil Standard 1:55 1:40 Walukuba East P/S 1:81 1:79 (boys) 1:83 (girls) Kiira P/S 1:64 1:50 Jinja Army Boarding P/S 1:61 1:36 Walukuba West P/S 1:62 1:54 Mpumudde Estate P/S 1:64 1:64 Masese Co Educ. P/S 1:65 1:75 Lake Site P/S 1:60 1:90

This is attributed to inadequate funding.

The inadequacy in school infrastructure negatively impacts on education service delivery as revealed in the analysis of UPE performance for the previous years.

2. Failure to Update the Contracts Register

Section 5.4.7 (2-3) LGFAM 2007 provides that every PDU should maintain contracts information in one central repository, showing key information relating to the contracts, contract number, and contract manager, key dates of the contract and details of payments made on each contract. However, it was observed that the contracts register had not been updated with details of the payment to contractors as shown in the table below.

PROCUREMENT REF CONTRACT CONTRACTOR CONTRACT SUM NO. DETAILS (UGX.) JMC 755/WRKS/15- Construction of a 2 Batuli Investments 16/00055 Classroom block at Ltd 58,114,174 Lake site P/s JMC 755/WRKS/15- Construction of a 2 Zebra Associates 16/00054 Classroom block at Ltd 56,317,919 Walukuba East P/s

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JMC 755/SUPLS/15- Revenue collection Lubas Road market 16/00001 from Lubas road Traders 5,076,000 market JMC 755/SUPLS/15- Revenue collection Jimflo Building Co 16/00012 from Tobacco Parking Ltd 11,664,000

JMC 755/SUPLS/15- Revenue Collection Jinja Abattoir 16/00003 from Abattoir traders Association 35,160,000

The Accounting Officer acknowledged the shortcoming and promised to update the register. In the absence of an up-to date contracts register, it becomes difficult to monitor and supervise the contractors effectively.

I advised the Accounting Officer to ensure the contracts register is updated on a regular basis.

6.4.7 BUGEMBE TC

1. Missing Revenue Receipts

Section 4.2.5 of the LGFAM, 2007 requires a revenue collector to safeguard stocks of receipt books entrusted to him or her and to produce them for official inspection and audit. It was observed that 2 revenue receipts books no. GR 3101-3150 and GR 4701- 4750 went missing from the Council stores. There is a risk that the receipts could have been misused.

The Accounting Officer attributed the shortcoming to lack of a designated Stores Officer.

The matter requires urgent attention. 2. Failure of Revenue Contractors to honor their obligations

Section 104 (b & c) of the Local Governments Public Procurement and Disposal of public Assets (PPDA), 2006, states that the user departments shall be responsible for performance of the contracts.

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It was observed that there was poor contract management leading to under-collection of UGX.10,685,500 in local revenue as detailed below;-

Contract details Contractor Assessed Total collection Shortfall Amount for the year

Management of revenue Kiwanuka 22,320,000 13,434,500 8,885,500 collection from Hotel tax in Stephen Bugembe TC Management of revenue Kiwanuka 2,000,000 200,000 1,800,000 collection from sign posts Stephen in Bugembe TC Total 10,685,500

The Accounting Officer attributed the shortcoming to the District which offered the tender.

I advised the Accounting Officer to engage the contractors to ensure that they honours their obligations.

6.4.8 KAKIRA TC

1. Incomplete civil Works

The contract for construction of the floor at Kakira Market was awarded to Mercy Commercial Agencies at UGX.41,200,000 on 1st/3/2016 for a contract period of three months.

However, inspections carried out on 7th/November/2016 revealed that the works had been abandoned by the contractor.

The Accounting Officer reported that the contractor had abandoned the site claiming to have under-quoted for the construction.

I advised the Accounting Officer to follow up the matter and ensure that the works are completed.

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6.4.9 KALIRO DLG

1. Failure to meet minimum national standards of production service delivery

The Local Governments Management and Service Delivery (LGMSD) operational manual section 2.1.2 (e) requires Local Governments to deliver services in conformity with production sector minimum national standards of service delivery.

The production department in the District is meant to provide support to the farmers in the district to ensure that there is adequate food production both for home consumption and for commercial purposes.

It was observed that the district is operating below the set minimum standards.

This is attributed to inadequate funding and understaffing in the department. This inadequacy in both funding and staffing negatively impacts on agriculture service delivery.

I advised the Accounting Officer to lobby the relevant Ministries for more funds so that the staffing gaps are closed and the minimum standard requirements are complied with.

2. Failure to meet minimum standards in Primary Schools

Analysis of the statistics for the schools in Kaliro District revealed that the District standards were below the national minimum standards as shown in the table below: Standard Minimum standard Current standard Classroom pupil ratio 1:55 1:132 Latrine Stance Pupil ratio 1:40 1:95 Teacher Pupil ratio 1:55 1:52 Desk pupil ratio 1:3 1:14 Teacher House Ratio 1:4 1:25

The inadequacy in school standards negatively impacts on education service delivery.

The Accounting Officer explained that effort had been made to present data regarding infrastructure and staffing levels to the Central Government for redress. he further explained that measures are being initiated to improve on pupils’ performance. 111

I advised the Accounting Officer to follow up the matter with the Ministry of Education, Science, Sports and Technology and Ministry of Finance, Planning and Economic Development to address the matter.

3. Failure to meet minimum national standards in the water sector

Paragraph 2.1.1 (C) of the Local Governments Management and Service Delivery (LGMSD) Program Operational Manual for Local Governments sets minimum standards for proper functioning of water sources. The following shortcomings were identified;-

3.1 Water Service coverage Minimum Standards for Service Delivery (MSSD), the Service Coverage which set the percentage of people served by a water source at 77% by 2015. However, the percentage rural safe water coverage in the district is 55% which is below the national target.

3.2 Unserved Communities According to the Minimum National Standards of Service Delivery every LC 1 should a water source. However, it was noted that some villages within Kaliro District do not have water sources and this has contributed to the low service coverage mentioned above. Un-served communities stand at 45%.

3.3 Latrine coverage The Minimum National Standards of Service Delivery, set a minimum rural latrine coverage should be 90%. It was however, noted that the latrine coverage in Kaliro district is at 67%. Management attributed the failure to attain the minimum national standards in the areas highlighted above to inadequate funding but pledged to improve the situation when funds will be available.

I advised the Accounting Officer to engage the relevant authorities to address the challenges.

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4. Non-remittance of shared local revenue

Section 85(4) of the Local Governments Act states that a district council may with the concurrence of a Sub county collect revenue on behalf of the sub county council but shall remit 65% of the revenue so collected to the relevant sub county. In addition, regulation 39(2) of the Local Government Financial and Accounting regulation states that the Chief Executive of a higher local government shall ensure that revenue collected by the higher Local Government is remitted to the lower local government.

It was however observed that the District did not remit UGX.85,015,225 to the lower councils contrary to the law.

Non-remittance of revenue to the Lower Local Governments negatively impacts on service delivery to the community.

The Accounting Officer explained that the challenge was lack of LST data base per Lower Local Governments to guide in computation of the 65% due.

I advised the Accounting Officer to ensure that the shared local revenue is remitted to the lower councils as required by law.

5. Failure to meet minimum standard of Health service delivery

Paragraph 2.1.1 (D) of the Local Governments Management and Service Delivery (LGMSD) Program Operational Manual for Local Governments sets minimum standards for proper functioning of health centers. 5.1 Patient Load An analysis carried out on the District health services revealed that the District has a huge patient load compared to the set national standards which has slowed down the progress of the District in meeting the national development goals as well as those on the international level like the World Health Organization (WHO) goals as shown in the tables below;

Post WHO Standard National standard Kaliro District Doctor 1:600 1:24,000 1:63,512 Nurses 1:500 1:1,700 1:7,057 Midwife 1:500 1:900 1:2,087

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This has been attributed to inadequate wage bill to recruit more health workers. However, inadequate accommodation for staff in the health facilities may also have contributed to health workers’ shunning the job offers in those facilities.

I advised the Accounting Officer to lobby for more funds from the relevant stake holders to increase the wage bill and construct more staff houses which may attract health workers to these facilities.

5.2 Staff Accommodation

A sample of the health centers in the District revealed shortage of staff accommodation as shown below;

Health Facility Standard Status Variance Bumanya HCIV 11 10 1 Gadumire HCIII 5 3 2 HC II Budomero HCII 2 0 2 Kaliro Town Council HCII 10 0 10 Total 28 13 15

This has resulted in absenteeism and late coming by staff since most of them live in rented houses in trading centers or their villages which in most cases are distant from the health facilities. This adversely impacts on service delivery as patients cannot access the health workers as and when circumstances warrant.

The Accounting Officer attributed this to financial constraints occasioned by removal of capital development fund from the budget but pledged to close the accommodation gaps in a phased manner whenever funds are available.

I advised the Accounting Officer to engage the relevant Government agencies and Donors so that more accommodation can be availed to the health workers.

5.3 Lack of an IT Policy

Section 110 of the Local Government Financial and Accounting Regulation (LGFAR) (2007) requires the chief executive to designate an officer to ensure that adequate Information and Communication Technology Policies are established and are applied to enable adequate security and protection over computers and data held on computers or information systems operated by the District.

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However, no IT policy has been developed to guide staff on the measures to regulate the use of IT resources. This can lead to abuse and loss of data. The Accounting Officer attributed this to lack of an IT expert but has pledged to work on it.

I advised the Accounting Officer to designate an officer to develop an IT Policy.

6.4.10 KAMULI DLG

1. Health Sector

1.1 Kamuli District Hospital

Section 2.1.2 of the revised Local Government Management and Service Delivery Program Operational Manual, (LGMSD), 2009 sets out the minimum standards required. However, inspections of Various Health Centre’s within the district revealed the following shortcomings; Key Facility Observation 190 staff 174 staff Equipment No xray and utra sound machines Proper infrastructure Shortage of Hospital Infrastructure as shown in Appendix 2 Ambulance No ambulance A proper waste disposal No waste disposal at the hospital

Lack of adequate facilities at the Health Centre adversely affects service delivery.

The Accounting Officer explained that the PHC Grant has remained stagnant for the past five years yet the patient load has kept on swelling.

I advised the Accounting Officer to continue lobbying the relevant authorities in order to have the matter addressed.

2. Failure to meet minimum standards of Health Service delivery in Nankandulo Health Centre IV

Key Facilities Observation

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Incinerator None

The Accounting Officer explained that they had budgeted for the incinerator in the current year.

The matter requires urgent attention.

3. Failure to meet minimum standards of Health Service delivery in Namwendwa Health Centre IV

Facility Existing Store None Incinerator medical waste None

I advised the Accounting Officer to follow up with Ministry of Health, and Ministry of Finance, Planning and Economic Development to ensure the shortcomings are addressed.

4. Follow up on previous years Audit recommendations

a) Non Functional X-ray and Ultra sound machines Kamuli General Hospital became functional in 2005 with the different departments including Radiology which was equipped with x-ray and ultrasound machines. However, during the Inspections of the General hospital for the financial year 2015/16, Audit inspections observed that at the time of Commissioning of the hospital in 2005, Ultra sound machines and X-ray had been delivered to the Radiology department with the help of the Spanish Grant at an estimated cost of UGX.200 million. However, the machines have never worked since 2005 since the time of delivery, installation and commissioning of the hospital.

No functional x-ray at the hospital

Several appeals were made to the Central Government through the Ministry of Health for the repair of the machines and promises were made that they would be worked on.

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The Hospital made an attempt at repairing them contacting private biomedical engineers who came on the ground to assess the equipment’s and they were willing to repair the machines, but they needed a lot of money which the Hospital could not raise. The residents of the five surrounding Districts remain unserved.

The matter requires urgent attention.

5. Production Service Management

5.1 Failure to meet the Minimum set standards

The government set up the production department at every district to boost agriculture through extension services. Agricultural activities carried out include dairy farming, fishing, bee keeping, crop and animal production. It was noted that the district is operating below the set minimum standards. It was further noted that the district has 12 veterinary extension workers and 14 extension workers against the 85,348 farming households. The extension worker to farmer ratio was 1:7,112 for veterinary, 1:6,096 for crops and 1:7,112 for animal production and entrepreneurship compared to the standard of 1:500 as per the MNSSD.

The Accounting Officer attributed the shortcoming to inadequate funding and understaffing in the department. This inadequacy negatively impacts on agriculture service delivery.

I advised the Accounting Officer to follow up the matter with the Ministry of Agriculture so that more funds are made available to ensure that minimum standard requirements are complied with.

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6. Education Service Management

6.1 UPE Infrastructure and Staffing Levels

Ministry of Sports and Education has set minimum infrastructure standards. It was noted that in all the sample of schools inspected, performance was below the set national standards as detailed in the table below: SN Indicator MNSSD District Ratios 1 Classroom Pupil ratio 1:55 1:76 2 Latrine stance pupil ratio 1:40 1:201

The ratios for the district are way above the national recommended ratios for schools to perform to the expected standards.

The Accounting Officer attributed the shortcoming to inadequate funding. The inadequacy in school infrastructure negatively impacts on education service delivery.

I advised the Accounting Officer to follow up the matters with Ministry of Education and Sports for more funds so that minimum standard requirements are complied with.

6. Water service Delivery a. Dry Wells Section 6 of the Statement of requirements of the contract between the district and the siting and supervision contractor states that the Consultant shall use the best professional judgement to ensure that all boreholes sited have a minimum yield of 500 l/hr. In case 15% or more of the boreholes sited yield less that 500 l/hr, the consultant shall pay the Client an equivalent of the Cost of silting and drilling supervision for each of the failed source above the 15% limit. The district awarded Aquatech Enterprises (U) Ltd a contract for silting and drilling supervision of 9 boreholes Lot 2. However 6 dry wells were successful and 3 were not representing a 33% failure rate.

Dry borehole Dry borehole

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The Accounting Officer explained that the technology used by the contractors is never perfect since it is basically an approximation with un acceptable provision for up to 2% failure rate.

I advised the Accounting Officer to ensure that the costs above are recovered from the Consultant.

7.1 Walking distance for water sources in Bugabula and Buzaya counties Chapter 2.1.2 Section F Part A (SN1) water and sanitation Minimum National Standards of Service Delivery sets out the maximum walking distance to a water source for a community to be one kilometre. It was however observed that the average walking distance for communities in Kamuli district to a water source is 1.46km contrary to the guidelines. Attention should be drawn to Namasagali and Kagumba sub-county with an average distance of 1.8KM. Details are presented in the table below Sub county Standard distance Current Status Nabwigulu 1.0km 1.4 km Balawoli 1.0km 1.4 km Kagumba 1.0km 1.8 km Namasagali 1.0km 1.8 km Butansi 1.0km 1.2 km Magogo 1.0km 1.2 km Average distance 1 1.46 km

Inadequate water facilities lead to poor sanitation and as a result, a high disease prevalence. The Accounting Officer indicated that they are lobbying for funding from Non- Government Organisations.

I advised the Accounting Officer to lobby for more funds from other Government Agencies to provide more boreholes and shallow wells closer to people.

7.2 Functionality status of protected water sources in Bugabula and Buzaaya counties LGMSD Chapter 2.1.1 Section C water service delivery package requires. i) Geographical survey before deciding on the location to establish the water yield

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ii) Water quality testing during the design stage of the water facility It was noted that Bugabula and Buzaaya counties have 40 non-functional bore holes and 44 abandoned boreholes in the areas. There are 14 non-functional shallow wells and 47 abandoned shallow wells in the same counties. The non-functional boreholes and shallow wells can be repaired but there were no enough funds to do so. Details in the table below;-

Status Functional Non functional Abandoned Boreholes 653 40 44 Shallow wells 392 14 47 Protected springs 12 0 0

The Accounting Officer reported that they were lobbing for funding from stakeholders. He also noted that the boreholes and shallow wells had been abandoned because they had poor quality water yield and some were dry.

I advised the Accounting Officer to lobby for more funds from other government agencies to repair boreholes and shallow wells that were non-functional in different areas.

8. Encroachment of Local Forest Reserve

Section 3 of the Forests Act Chapter 146 mandates the Minister to issue statutory order, declaring any area to be a central/ local forest reserve. It was however, noted that the District is located on a local forest reserve land contrary to the regulations. Management explained that efforts are underway to relocate the forest reserve as advised by the Ministry of Lands, Housing and Urban Development. The occupation of land belonging to a forest reserve is illegal and may attract fines and penalties to the District.

I advised the Accounting Officer to expedite the process of finding alternative land for the forest or account for the encroachment so far made.

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6.4.11 KAYUNGA DLG 1. Payroll anomalies

1.2 Delays in Accessing the District Payroll

According to the Standing Orders 2010 - General rules on Payment of Salaries (B - a) 11, the Accounting Officer shall ensure that the public officer accesses the payroll within four (4) weeks from the date of assumption of duty.

However, it was observed that by 30th June, 2016, a number of employees had not accessed the IPPS and were not receiving salary. The Accounting Officer explained that after the district was given clearance to recruit, the exercise was done but the delayed release of additional funds delayed entry of the new employees onto the payroll.

I advised the Accounting Officer to ensure that staff accesses the payroll in accordance with the regulations. 2. Failure to meet the Minimum Standards of District Health Service Delivery

2.1 Doctor/Nurse-Patient Ratio An analysis carried out on the District health services revealed that the District was not meeting the required Doctor/nurse patient ratio as shown in tables below;

Cadre WHO Standard National Standard Kayunga District Doctor 1:600 1:24000 1:41673 Nurses 1:500 1:1700 1:3410

The Accounting Officer indicated that the situation was improving and had requested for the Ministry of Health and Ministry of Finance, Planning and Economic Development to recruit.

I advised the Accounting Officer to make a follow-up and ensure that the required number of doctors and nurses are recruited.

2.2. Staff accommodation

Review of Health Service delivery report revealed that some health centres in the District had acute accommodation gaps while other centres have no accommodation facilities at all as shown in table below;

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Health Centre Standard No of staff Variance (Gap) accommodation Accommodated requirement Kayunga Hospital 142 86 56 Kangulumira HC IV 11 07 4 Bbaale HC IV 11 11 Ntenjeru HC III 5 08 Busaana HC III 5 02 3 Nazigo HC III 5 07 Galiraya HC III 5 05 Lugasa HC III 5 08 Wabwoko HC III 5 03 2 Nkokonjeru HC III 5 04 10 Kawongo HC III 5 08 Total 168 102 66

The matter requires urgent attention.

The Accounting Officer explained that whereas capital development projects had earlier on been carried out, the Ministry of Health had since retained PHC funds which as a consequence had left the district with no funds to undertake capital development.

3. Failure to meet the Minimum National Standards of Education Service Delivery The Local Governments Management and Service Delivery (LGMSD) operational manual section 2.1.2 (a) requires Local Governments to deliver services in conformity with Primary education minimum national standards of service delivery. Standard Minimum standard Current standard Classroom Pupil Ratio 1:55 1:85 Latrine Stance Pupil Ratio 1:40 1:83 Teacher Pupil Ratio 1:55 1:57 Desk Pupil Ratio 1:3 1:5 Text Book Pupil Ratio 1:3 1:5 Teacher House Ratio 1:4 1:10

This was attributed to inadequate funding. The inadequacy in school infrastructure negatively impacts on the academic performance.

The Accounting Officer is advised to follow up the matters with Ministry of Education and Sports to address the challenges.

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4. Lack of Information Communication Technology (ICT) Policy Regulation 110 of the LGFARs of 2007 requires the Chief Executive to designate an officer to ensure that adequate Information and Communication Technology (ICT) policies are established and applied to enable adequate security and protection over computers and data held thereon or information systems operated by the Council.

However, it was observed that there is no ICT policy to guide staff on use of IT equipment, hardware and data.

There is a risk of data loss and unauthorized manipulation due to the inadequacy of physical controls over the computer system.

I advised the Accounting Officer to develop an IT policy.

6.4.12 LUUKA DLG 1. Failure to meet the Minimum Health Standards of service delivery 1.1 Kiyunga Health IV Paragraph 2.1.1 (b) of the Local Governments Management and Service Delivery (LGMSD) Program Operational Manual for Local Governments 2009, sets minimum standards for proper functioning of health centre IV. However, audit inspection of Kiyunga Health Centre revealed that the Health Centre did not meet the minimum standards as shown below;

Standard Minimum Standards Status Parameter Transport Reliable No ambulance Theater 1 None functional Electricity 2 sources None existent

Lack of proper infrastructure negatively affects service delivery.

I advised the Accounting Officer to lobby for funding and ensure that health service delivery is improved.

2. Production Service Delivery The Local Governments Management and Service Delivery (LGMSD) operational manual, 2009 section 2.1.2 (e) requires Local Governments to deliver services in conformity with production sector minimum national standards of service delivery.

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It was observed that the district is operating below the set minimum standards.

This is attributed to inadequate funding and understaffing in the department. This inadequacy negatively impacts on agriculture service delivery.

The Accounting Officer was advised to engage the Ministry of Agriculture and ensure that the issues are addressed.

6.4.13 MAYUGE DLG 1. Payroll anomalies 1.1 Non-Remittance of PAYE

Section 19(1) (a) of Income Tax Act Cap 340 provides for taxation of employment income in form of PAYE (Pay As You Earn). In addition, Section 123 (1) of the Income Tax Act requires that a withholding agent shall pay to the Commissioner any tax that has been withheld or that should have been withheld under this part within fifteen days after the end of the month in which the payment subject to WHT was made by the agent.

Contrary to the above, it was observed that deductions in respect of PAYE amounting to UGX.168,646,621 withheld from staff salaries for the month of June 2016 had not been remitted to the tax body by September 2016. Besides, the figure is not reflected as a payable in the financial statements.

Delayed payments of the deductions can attract penalties of up to 2% per month from when payment fell due, which would be a financial loss to the district. In addition, none disclosure of the deducted taxes payable to URA implies that the accounts are misleading.

The Accounting Officer acknowledged the observation but informed me that there was no release made from the Ministry of Finance for that purpose by the time of the audit.

I advised the Accounting Officer to pay all outstanding tax arrears to avoid accumulation of late payment penalties and to have the financial statements adjusted to that effect.

1.2 Poor storage of personnel records

According to Regulation 9 (j) of the LGFARS 2007, the Accounting Officer is required to establish proper storage facilities with accounting and financial control systems to

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ensure efficient receipt, issue and safe custody of stores, vehicles, plant and other assets.

During the audit inspection, it was observed that personnel files are stored in the registry with no restricted access. In addition, files are stacked on top of the cabinets and others on the ground as shown in the photos below;

The Accounting Officer explained that there is a challenge with office space but the district is soon getting more space that will resolve this issue.

I advised the Accounting Officer to ensure proper and safe storage of files to avoid loss of records.

2. Failure to meet the minimum standards of health service delivery

Paragraph 2.1.1 (D) of the Local Governments Management and Service Delivery (LGMSD) Program Operational Manual for Local Governments sets Minimum National Standards of Service Delivery (MNSSD) for proper functioning of Health Centers. However, inspection of the Health Centers revealed the following shortcomings:-

a) Kigandalo Health Center IV Package Minimum Observation Remarks standard Operation Theatre 1 1 Non Functional due to lack of personnel Means of Transport Reliable 0 Staff Houses 11 4 13 staff accommodated while 10 staff are not Waste Pit 1 1 Garbage littered all around OPD 1 1 No shade for patients Incinerator Functioning 1 Not functioning Mortuary Functioning 0 No plans to construct one

b) Kityerera Health Center IV

Package Minimum Observation Remarks standard

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Operation 1 1 Non Functional due to lack of personnel Theatre Means of Reliable 0 Transport Staff Houses 11 4 8 staff accommodated out of 36 OPD shade 1 1 No shade for patients Water Source Reliable 0 Incinerator Functioning 0 No plans to construct one Mortuary Functioning 0 No plans to construct one

c) Other Indicators

Name KIGANDALO HC KITYERERA HC Aggregate for Remarks IV IV all the HC 3

MNSSD Actual MNSSD Actual MNSSD Actual

Doctor 1;600 1;34,981 1;600 1:49,378 NA NA One doctor Patient averages Ratio 40,000 patients Nurse 1;500 1:5,830 1;500 1 : 4,580 1;600 1 : One Nurse Patient 4,774 averages 4000 Ratio patients Target 100,000 32,643 100,000 49,378 20,000 44,00 HC 4 are Population 3 underutilized Served yet HC III are over utilized

Failure to meet the minimum national standards adversely affects service delivery.

I advised the accounting officer to engage the relevant authorities to ensure that the challenges are addressed.

3. Failure to meet minimum national standards in the Education service delivery

Section 2.12 (a) of the Local Governments Management and Service Delivery (LGMSD) Programme, Operational Manual for Local Governments, 2011 prescribes Minimum National Standards as Service Delivery (MNSSD). However, it was observed that the minimum standards had not been met as detailed below;-

Indicator Current status MNSSD Teacher ; Student 1: 61 1:55 Student ; Classroom 1 ; 100 1:55 Teacher ; House 1 : 76 1:3 Pupil: Latrine stance ratio: 1:95 1:40 Pupil: Desk ratio: 1:7 1:3

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Pupil: Textbook ratio: 1:6 1:3 Drop-out rate: 42% O

The low standards adversely affect the academic performance of schools.

I advised the Accounting Officer to engage the Ministry of Education and Sports to ensure that the challenges are addressed.

4. Lack of an ICT policy

Regulation 110(1) of Local Government Financial and Accounting Regulation, 2007 provides that the Chief Executive shall designate an officer to ensure that adequate Information and Communication Technology policies are established and are applied to enable adequate security and protection over computers and of data held on computers or Information Systems operated by the council.

However, it was observed that there was no ICT Policy to guide staff on the use of IT equipment, and the software.

I advised the Accounting Officer to develop an ICT Policy.

6.4.14 NAMUTUMBA DLG

1. Failure to meet minimum standards at Nsinze Health Centre IV Paragraph 2.1.1 (D) of the Local Governments Management and Service Delivery (LGMSD) Program Operational Manual, 2009, sets out Health Service Delivery packages or minimum standards for functioning of health centres. However, audit inspection carried out at Nsinze Health Centre IV revealed lack of basic requirements as shown below;-

MNSSD CURRENT STATUS MNSSD stipulates 2 staff houses No staff house One mortuary None Two doctors houses One exists One operating theatre The theatre is not operational due to lack of a doctor and an Anesthetic officer Ten two stance pit latrine Six two stance lined pit latrines exist Means of transport No functional ambulance Equipment Lacks equipment (Details in Appendix III) Dental Services Lacks equipment (Details in Appendix IV) 127

I advised the Accounting Officer to liaise with the responsible Ministry and National Medical Stores to improve the conditions of the Health Facilities for better health services.

6.4.15 NAMAYINGO DLG

1. Poor Water Coverage

The District Development Plan (DPP) for the period ended 30th June 2016 set out Sector objectives of increasing water coverage to 77%. However, a review of water supply and sanitation status shows that the rural Water coverage in the District was only 34% which is far less the set target of 77%. Further, the review of the District water coverage and functionality report reveals that the functionality rate was 21% as shown below;

Sub County Total Boreholes Total Populati Coverage Population on % Served Functional None ity Functionali ty Banda 55,100 62 16 78 13,302 24 Buhemba 32,600 53 28 81 9,346 29 Buswale 33,600 59 13 72 20,530 61 Buyinja 25,800 49 8 57 12,366 48 Mutumba 48,800 25 10 35 14,466 30 Namayingo 14,900 30 10 40 9,245 62 TC Sigulu 42,000 61 5 66 8,018 19 Total 252,800 339 90 429 87,270 34%

The low water coverage exposes the communities to unsafe water hence a risk of water borne diseases. The Accounting Officer explained that the District Water Development plan had been developed and would enable management to lobby for financial support.

I advised the Accounting Officer to expedite the process as the matter needs urgent attention.

7. Failure to meet the minimum standards of Health Services

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Section 2.1.2 of the Local Government Management and Service Delivery Programe Manual (LGMSD), 2009 states that Local Governments will deliver services in conformity to the standards as dictated by the laws and regulations of Uganda. Under Section 2.1.1, health service delivery packages or minimum standards for proper functioning of health centres were set.

Facility/ Package Minimum Available Remarks standard BUYINJA HCIV Water The health centre lacks running water. Ambulance None Separate shared The children wards are being used by wards for both children and old female patients. male, female and Children 11 staff 7 houses Mortuary Small Functioning Non Incinerator functional Functioning Non The generator has not been functional Generator functional for over two years. SIGULU HC III Adequate Broken beds beds Reliable Faulty solar Power system Reliable Boat only Transport Water none Lack of running water in the labour suite and the laboratory

The Accounting Officer admitted the shortcoming and promised to lobby for funding to address them.

I advised the Accounting Officer to lobby for funding and ensure that health service delivery at the Health Centres is improved.

6.5 KAMPALA BRANCH 6.5.1 BUIKWE DLG

1 Under Deduction of Local Service Tax Paragraph 3(1) of The Local Governments (Amendment)(No.2) Act, 2008 requires that Local Service Tax on persons in gainful employment and earning a monthly take-home

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salary exceeding UGX.100,000 to be levied in various bands up to a maximum of UGX.100,000.

However, my review of the payrolls prepared for 2015/16 showed that deductions made from several staff were less than the rates prescribed in the above-mentioned provision, leading to under deduction of UGX.962,500. Failure to apply the correct rates implies that the concerned local governments were denied the much-needed revenue to implement their programs.

The Accounting Officer in response attributed this lapse to a number of factors including new staff who joined the payroll in the middle of the year, leavers and staff who absconded from duty. I advised the accounting officer to strictly follow the law regarding the deduction of Local Service Tax as well as to ensure that recoveries are made of the said amounts from subsequent payments.

2 Delayed Payment of Pension It was noted that payment of pensioners was decentralized to districts in January 2014. However, at the time of audit (September 2016) more than 24 months later, 17 pensioners had not yet accessed pension payroll.

The Accounting Officer attributed this to several reasons among which approval by the Ministry of Public service featured prominently. Delays to pay gratuity and monthly pension denies the retired staff their entitlement and negatively impacts on their livelihoods. In addition, non-payment of pension leads to accumulation of pension arrears.

I advised management to liaise with the responsible stakeholders, particularly Ministry of Public Service in order to ensure the timely payment of pension for all entitled retired staff.

3 Delayed Civil Works During the review; it was noted that funds totaling to UGX.63,706,900 was released to Sacred Heart SS, Najja in the financial year 2011/2012 for the completion of a two (2) classroom block at the school. At the time of inspection in July 2016, the classrooms had not been completed as they lacked windows and doors and the floor had not been screeded, while the classrooms had not been painted as shown below;

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Incomplete Classrooms at Sacred Heart SS

The unfinished work was attributed to misappropriation of the funds released to the school amounting to UGX.27,985,741 by the then management of the school.

The Accounting Officer explained that the then Headmaster of the school has since disappeared but the matter was being handled by the Criminal Investigation Department.

I advised the Accounting Officer to complete the classroom block while awaiting for outcome of the police investigation.

4.0 Health Services

4.1 Failure to meet minimum standards at Kawolo Hospital

Inspection carried out at Kawoolo Hospital, revealed the following shortcoming;

Basic Requirements Current status Kawoolo Hospital

Funding Underfunding of Hospital operations;

Staffing - Several critical staff positions like a mortuary attendant, Radiographer, a pharmacist, a dental surgeon, and medical Officers special grade like Community Health, Obstetrics, Internal medicine, surgery and pediatrics were lacking. 131

X-Ray Services Lack of X- Ray services; - The X-ray machine has not been working for some time due to a reported mechanical problem. Electricity Outstanding Electricity bill; - The hospital had an outstanding electricity bill of UGX.80,659,997

The Accounting Officer attributed the current situation of the hospital to inadequate funding.

I advised the accounting officer to engage the Ministry of Health and Ministry of Finance Planning and Economic Development (MOFPED) to address the matter.

4.2 Lack of Monitoring of Government Grants to NGO Hospitals by the District During the period under review, of UGX.316,328,000 was released to three (3) Non- Governmental Hospitals of Nyenga, Nkokonjeru, St. Charles Lwanga and seven lower level Non-Governmental Health Units in the district. However, it was observed that there was inadequate monitoring of government grants by the district in all these non- governmental organization Hospitals. For instance at St. Charles Lwanga Hospital, it was noted that the Hospital did not open a separate account for the government grant and therefore funds were comingled with other Hospital funds. Consequently, there were no books of accounts maintained, no financial reports and no work plans in respect of Government grants.

Lack of monitoring of Government grants may lead to misuse.

The Accounting Officer explained that within its means, the district had been supporting the NGO Hospitals through regular integrated support supervision, training and human resource support.

I advised the Accounting Officer to strengthen monitoring of the Government grant.

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6.5.2 BUIKWE TC

1 Lack of Garbage Dumping Site Section 5 of the public health Act Cap 281 require every local authority to take all lawful , necessary and reasonably practical measures to safeguard and promote public health One of the major functions of an urban council is to collect and manage garbage. However, it was observed that the Town Council does not own a garbage dumping site. Consequently, refuse collected were dumped in a wet land within the Town Council.

Garbage represents a threat to human health if not handled or disposed off properly.

The Accounting Officer explained that the Town Council was in the process of acquiring a joint landfill with Lugazi Municipal Council.

The matter requires urgent attention.

2 Lack of a Physical Development Plan Section 25(1) and (6) of the Physical Planning Act 2010 requires an urban council physical committee to cause preparation of a physical development plan and the same to be submitted to the National Physical Planning Board for approval. It was however observed that the town council has not prepared a physical development plan for approval by the National Physical Planning Board. Lack of an approved physical development plan may result into development of slums.

The Accounting Officer explained that the Council did not have resources to develop the physical development plan and management had on several occasions written to the relevant authorities for both financial and technical assistance to have the Town planned.

I advised the Accounting Officer to priorities the development of a physical development plan for proper planning.

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6.5.3 BUVUMA DLG

1 Non Operational Medical Equipment at Buvuma District Health Centre IV

Paragraph 2.1.1 (D) of the Local Governments Management and Service Delivery (LGMSD) Program Operational Manual 2011 for Local Governments requires Health Centres IV to have functional medical equipment. However, inspection of Buvuma District Health Centre IV revealed that there were medical equipment supplied by the Ministry of Health to Buvuma District Health Centre IV which were not in use as shown below. S/R ITEM Quantity 1 Hot Air Ways 2 2 Guerdon Air ways 2 3 Incubator, culture 1 4 Infant, incubator 3 5 Infant warmer 1 6 Microscope binocular 1 7 Otoscope 4 8 Oxygen therapy apparatus 3 9 PH meter 1 11 Pulse oximeters 2 12 Refrigerator, Blood Bank 1 13 Stool surgeon 3 14 Bed pediatric 1 15 Microscope binocular 1 16 Otoscope 1 17 Oxygen therapy apparatus 1 18 Examination couch 6 19 Photocopying machine 1 20 Auto clave 1 21 Tuttnayer Auto Clave 1 22 Scanning Machine 1 23 Oxygen concentrator 1 24 Weighing scale (Adult) 1

The Accounting Officer explained that the equipment could not be used because electricity was still lacking in Buvuma District.

I advised the Accounting Officer to engage the relevant authorities and ensure that the equipment is put to use.

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2 Failure to meet the minimum standard of Primary Schools Paragraph 2.2.1 of the revised Local Government (LGMSD) Operational Manual, 2011, provides minimum service delivery package for a primary school. However, inspection carried out at Kitiko primary school revealed the following shortcomings:- Basic Requirements Current status Kitiko Primary School

Class rooms: pupil  P1, P2 and P3 pupils were studying in one classroom. ratio See the picture below; 1:55

 Some class rooms were made of Papyrus as shown in the picture below;

latrine stance : pupils An old pit latrine was shared by teachers and pupils as shown 1:40 in the picture below;

Poor standards negatively affects the learners’ performance.

The Accounting Officer explained that a request had been made to the Ministry of Education and Sports requesting for additional funding to address the challenges of infrastructure in schools.

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

3 Non-disposal of obsolete Assets Regulation 122 (1) of the PPDA Regulations 2006, requires disposal of Council assets, including assets identified by a board of survey to be carried out in accordance with 135

the Act, Regulations and the guidelines. However, it was observed that there were several obsolete assets which had not been boarded off by the year end.

Delayed disposal of the assets may lead to further deterioration in value.

The Accounting Officer explained that the annual board of survey where recommendations for the disposal were made was submitted to council seeking for resolution to dispose off the assets.

The matter requires urgent attention.

4 Lack of a Risk Management Policy

Section 2.4.1 of the LGFAM, 2007 states that the Head of Finance is responsible for advising on risk management and effective systems of internal controls so as to ensure compliance with all applicable legislation and regulations and other relevant statements of best practice and ensure that public funds are properly safeguarded, used economically, efficiently and effectively. Contrary to the regulation Council had not developed a risk management policy to guide the process.

This weakens the Internal Control System.

The Accounting Officer admitted the shortcoming and indicated that Council was to develop one.

The accounting officer was advised to ensure that a risk management policy is developed.

5 Lack of Information Technology (IT) Policy

Section 110 of the LGFRA (2007) requires the Chief Executive to designate an officer to ensure that adequate information and communication technology policies are established and are applied to enable adequate security and protection over computers and of data held on computers or information systems operated by the council. However, it was observed that Council had not formulated effective procedures to ensure proper use of the IT resources. 136

This creates a risk of misuse of computer equipment, software, loss of data.

The Accounting Officer promised to develop the IT policy.

The matter requires urgent attention.

6.5.4 BUVUMA TC 1 Non Remittance of Shared Local Revenue to Lower Local Councils Section 15 (A) of the Local Governments Act (as amended), Fifth Schedule requires a Town Council to distribute local revenue collected to the Parishes (5%) and villages (20%). However, it was observed that the Council did not remit UGX.5,153,558 to the respective wards contrary to the law. This leads to failure of the lower Council to implement their work plans.

The Accounting Officer explained that revenue collections were affected by a very sharp decline which affected almost all budgeted items that was mostly due to political pronouncements during the electioneering period but indicated that efforts have been put in place to ensure that as revenue stabilizes, disbursements will be made.

I advised the Accounting Officer to remit the shared local revenue to the respective parishes in accordance with the law.

6.5.5 GOMBE TC 1 Lack of a Valuation List Section 3(1) of the Local Authority Rating Act provides that every local authority shall levy such rates as it may determine on the basis of the rate able value of properties within a rating area. Section 4 of the same Act states that the local authority shall cause to be made for every rating area, within its limits the first valuation list and thereafter a valuation list once at least in every five years, or such longer period as the minister may approve. It was however, observed that no valuation list has ever been carried out. This has resulted into the council realizing low returns from property rates as the properties are not valued.

The Accounting Officer explained that the Council was still mobilising resources to secure the services of a competent valuer to undertake property valuation.

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I advised the Accounting Officer to ensure that valuation list is in place to guide on the collection of property rates.

2 Lack of a Physical Development Plan Section 25(1) and (6) of the Physical Planning Act 2010 requires an urban council physical committee to cause to be prepared a Physical Development Plan and the same to be submitted to the National Physical Planning Board for approval. It was however, observed that the Town Council had not prepared a physical development plan for approval by the National Physical Planning Board. Lack of an approved Physical Development Plan may result into unplanned developments resulting in slums and their associated challenges.

The Accounting Officer explained that the Council lacks a structural plan mainly due to resource deficiencies but indicated that the Ministry of Local Government promised some start-up funds to the cause.

I advised the Accounting Officer to ensure that the Physical Development Plan is developed.

6.5.6 GOMBA DLG

1 Un-Receipted Revenue

Section 4.5.1 of the LGFAM, 2007, states that each Revenue Collector must immediately in the presence of the payer count the cash and issue an acknowledgement receipt for the revenue collected. However, it was observed that revenue from market/gate charges of UGX.27,958,000 was not receipted. Lack of revenue acknowledgement receipts may lead to under-declaration of revenue.

I advised the Accounting Officer to ensure that all revenue received by the District is acknowledged.

2 Failure to Meet the Minimum Standards of Health Service Delivery

Paragraph 2.1.1 (D) of the Local Governments Management and Service Delivery (LGMSD) program Operational Manual, 2009 and Guidelines for Designation,

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Establishment and Upgrading of Health Units by Ministry of Health, 2011 sets out Health Service Delivery packages or minimum standards for functioning of health centres. However, audit inspection carried out at Bulwadda Health centre II, Maddu Health Centre IV and Kanoni Health Centre III in Gomba District revealed the following shortcoming:- Minimum Standards Current status Bulwadda Health centre II in Kabulasoke Sub County findings Basic Requirements - The health centre had three (3) staff but only one was found Staffing at the station. OPD, block. - The health centre operates in one small building

Limited space

Maddu Health Centre (1V) in Maddu Sub-county

Means of transport - The ambulance was non–functional. Modern energy - The Generator was not operational due to the reported high fuel lighting, Laboratory expenses. and basic equipment - There was no power as it was reported disconnected. - The fridge for drugs was not functioning. Operating Theatre - The theatre room was being used as a store as shown in the pictures below;

Kanoni Health centre III Staffing - There was only one nurse on duty out of the 19 staff that were supposed to be at the Health centre with no duty roster.

Medical Some hospital beds were lying outside the staff houses.

Staff Housing Units - The staff houses were dilapidated

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Lack of essential facilities adversely affects service delivery at the health centre.

I advised the Accounting Officer to follow up the matter with relevant authorities to ensure that the minimum standards of Health service delivery are achieved.

3 Audit Inspection of 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. Inspection of a sample of 5 UPE schools in Gomba district (Bulwadda C/U, Nsambwe P/s, Kifampa P/s, Kandegeya P/s and Kyayi P/s) revealed the following shortcoming; a) Nsambwe Primary School Basic Current status Requirements - Some school structures were in a sorry state as shown in the pictures Classrooms below;

The old structures

There is a risk that these could collapse any time and injure staff and pupils.

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Library - The Library has no glasses in the windows which exposes the books to theft and destruction by rain as shown below;

No glasses in classrooms and Library room.

Staff Houses - There were no staff houses

Kifampa Primary school in Kabulasoke Classrooms - The classrooms were dilapidated as shown below:-

Old classroom at the verge of collapsing

Desks - There were insufficient desks in classes

Latrine stance - The school has a 5 stance pit latrine which is used by both the male 1:40 and female pupils and the staff. - There was no facility for washing hands after visiting the latrine.

The above shortcomings were attributed to inadequate funding.

I advised the Accounting Officer to take up the matter with the relevant authorities.

6.5.7 LUWERO DLG

1 Allocation of Land Titles in the Forest Reserve Section 32 (1b) of the National Forest and Tree Planting Act, 2003 prohibits clearing, usage and occupancy of any forest reserve for agricultural, recreational, commercial, residential, industrial or hunting purpose without a license. However, it was observed that the District Land Board allocated land titles within the forest reserve contrary to the Act as shown below; Plot Number Area in Remarks hectares 1322 16.339 141

1323 207.40 Sub divided into plots 2487 to 2507 1507 12.117 Sub divided into plots 2851 to 2852 & 2854 1508 4.047 1509 4.047 1510 4.047 1511 0.809 1512 0.405 1513 0.405 1514 0.617 1515 13.588 2851 6.414 2852 9.710 Residue by computation 2854 1.039 Residue by computation( road) 2507 12.502 Residue by Balance

The Accounting Officer explained that the information regarding those who were given leases/freehold titles was not at the district but rather at the Ministry of Lands in Kampala where it can be obtained on request. The matter requires urgent attention.

2 Failure to meet the Minimum Standards in UPE Schools Paragraph 2.1.2 of the revised Local Government Management and Service Delivery (LGMSD) operational manual, 2009 requires schools to meet specific standards as follows:- one teacher for every 55 pupils; one class room for every 55 pupils; one desk for every 3 pupils; and one latrine stance for every 40 pupils. However; it was observed that some schools were operating above the required ratios as shown below:-

RATIOS Latrine No of Teacher Classroom stance Name of school pupils 1:55 1:55 Desk 1:3 1:40 Bombo Umea Primary School 786 1:56 1:79 1:11 1:157 Makonkonyigo Primary School 673 1:67 1:96 1:16 1:112 Kyangabakama C/U Primary School 527 1:59 1:75 1:13 1:105 Kamira C/U Primary School 557 1:56 1:93 1:9 1:186 Lukole Umea Primary School 861 1:62 1:123 1:6 1:144 Namakofu C/U Primary School 653 1:65 1:93 1:8 1:109 Mulajje Mixed Primary School 638 1:64 1:64 1:7 1:128 Kkalwe Primary School 758 1:69 1:95 1:7 1:126 Mazzi Primary School 444 1:56 1:56 1:11 1:63 St. Kaloolo Katagwe Primary School 503 1:63 1:126 1:10 1:50 St. Jude Katagwe Primary School 603 1:60 1:86 1:10 1:60 Timba Primary School 597 1:60 1:100 1:17 1:85

Failure to meet the required standards may lead to poor academic performance of the schools in question. 142

The Accounting Officer attributed the shortcomings to inadequate School facilitation Grant funding and high attribution rate and the seven (7) teachers plus one (1) policy where all schools are supposed to have eight (8) teachers irrespective of the numbers of pupils in a class and one extra teacher per additional 55 pupils.

I advised management to engage the relevant authorities to ensure that education policies are harmonized to national standards. 3 Inspection of the Primary Schools Infrastructure The audit inspections revealed the following shortcomings:- a) Mamuli R/C Primary School

The School is located in Kigombe Parish, Katikamu Sub County. The inspection revealed the following shortcoming;  The school had one classroom block that was dilapidated and lacked windows as shown below;

 There were many broken desks heaped in classrooms as shown below;

 There was no administration block and staff room;  The latrines constructed by an NGO had caved in and dangerous to pupil lives.  Although the school was in an isolated area it lacked a fence and below is a pictorial description of some of the structures of the school.

The poor state of infrastructure may impact negatively on the pupils academic performance and service delivery by the teachers.

The Accounting Officer explained that the district planned to construct two (2) classroom blocks at the school during the FYR 2016/17 and stated that the school also

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received 37 desks in the financial year under review. It was further stated that the district authorities have encouraged the Head teacher to mobilize the School Management Committee to repair the broken desks and latrine due to inadequate funding from the centre.

b) Koko Primary School

The school is located in Kalagala Sub-county with a population of 589 pupils. The inspection revealed the following shortcoming;  Lack of a staff quarters  Lack of a playground and a fence.  Lack of desks The Accounting Office attributed the state of affairs of the school to inadequate resources.

I advised the Accounting Officer to engage the relevant authorities to improve on the state of infrastructure in the school. 4 Non Operational anaesthetic Machines Supplied by NMS Health Center IVs were supplied with anesthetic machines (the detex Ohameda GE 9100C) to ensure that patients in the operating theatre had an accurate and continuous supply of medical gases. However, it was observed that the machines require the use of anesthetic vapors which were not supplied by NMS rendering the machines un-operational.

The Accounting Officer explained that the anesthesia machines require anesthetic vapors(halothane) and pressurized oxygen to function which are expensive and usually out of stock in NMS. The HC IVs use local anesthesia (spinal anesthesia) which is regarded to be the safest, Cheaper and faster.

I advised the Accounting Officer to take up the matter with NMS and Ministry of Health.

5 Failure to meet the minimum standard of Health Services Paragraph 2.1.1 (D) of the Local Governments Management and Service Delivery (LGMSD) program Operational Manual, 2009 and Guidelines for Designation,

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Establishment and Upgrading of Health Units by Ministry of Health, 2011 sets out Health Service Delivery packages or minimum standards for functioning of health centres. However; Inspection carried out at Luwero HC IV, Nyimbwa HC IV, Magala HC IV and Kigole HC II showed some anomalies and lack of basic requirements as shown below;

Health Facility Basic requirement Current Status Luwero HC IV OPD Block; Maternity Ward;  Dilapidated Structures Operating theatre  Lack of air conditioning Nyimbwa HC IV Placenta Pit  Placenta Pit broken Operating theatre  Roof is leaking Running Water  No Water supply Magala HC IV Staff houses  Dilapidated Kigobe HC II Staff houses  No staff houses Electricity Grid or solar  Solar has no battery

The Accounting Officer promised to follow up the matter with Ministry of Health.

I advised the Accounting Officer to engage the relevant authorities and ensure that the shortcomings are addressed.

6 Inactive District Road Committee Section 25 (2) of the Uganda Road Fund Act 2008 requires Districts, as designated agencies of Uganda Road Fund to have District Road Committees (DRCs), comprising; the district chairperson or mayors of every local authority in the districts, all Members of Parliament from the districts, the Chief Administrative Officer, the District Road Engineer and the Secretary for works. However, it was observed that the district lacks fully functioning district road committee.

Lack of an active District Road Committee makes it difficult to track and monitor work programs and may lead to utilization of funds on non-priority roads.

The Accounting Officer explained that the District Road Committee was finally constituted. There were no minutes of the Committee.

I advised the Accounting Officer to ensure that the Committee is active.

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6.5.8 WOBULENZI TC 1 Non Remittance of shared Local Revenue to Lower Councils Part V (15A) of the Local Governments Act 1997 (as amended) requires a Town Council to distribute 5% and 20% of the total shared revenue to Parishes and Village Councils respectively. However; it was observed that the Town Council did not remit the shared Local Revenue amounting to UGX. 69,945,092 to Parishes and Village Councils as shown in the below:- Total Collections 316,867,519 Less Property tax 37,087,150 Total sharable 279,780,369 25% for LLGs 69,945,092

Failure to remit revenue to the lower Councils impacts negatively on service delivery at the lower units.

The Accounting Officer explained that Council was implementing activities in all LC.1 areas which projects were identified during participatory planning.

I advised the Accounting Officer to ensure that shared local revenue is remitted to the lower councils as required by law.

2 Lack of Information Communication Technology Policy Section 110 of the LGFAR (2007) requires the Chief Executive to designate an officer to ensure that adequate Information and Communication Technology policies are established and are applied to enable adequate security and protection over computers and data held on computers or information systems operated by Council.

It was observed that the Council did not have an IT Policy to regulate the use of IT resources.

The Accounting Officer admitted the shortcoming and explained that the new staff structure provided for the IT officer and it is expected that the IT Officer will be recruited in 2017/2018.

I advised the Accounting Officer to develop an IT policy. 146

6.5.9 MPIGI DLG

1 Underfunding of UPE Schools According to Universal Secondary Education (USE) guidelines students enrolled by each Universal Secondary Education (USE) school are funded by the Ministry of Education and Sports. However, during the review it was observed that some schools were underfunded by UGX.52,421,976 during the calendar year 2015 as shown below:-

School Number of Budget Actual release Deficit Students obtained Buyiga Seed Secondary School 57 7,011,000 3,900,000 3,111,000 Cardinal Nsubuga S.S.S- ,Kitakyusa 503 64,794,000 58,500,000 6,294,000 Bulaamu Seed Secondary School 627 86,013,000 62,195,951 23,817,049 Kibuuka Memorial S.S 443 61,860,000 60,666,090 1,193,910 St. Phillip’s Equatorial S.S- 415 54,429,000 36,442,983 18,006,017 Nabusanke Total 2,045 274,107,000 221,705,024 52,421,976

Underfunding USE schools affects both the school operations and academic performance of the students. I advised the Accounting Officer to liaise with the ministry of Education and MOFPED to ensure for adequate funding in order to realize governments objectives under this programme.

2 Failure to Board off Old Vehicles

Section 2.3.4.1 of the Local Governments Financial and Accounting Manual (LGFAM), 2007 requires the Accounting Officer to constitute a board of survey to recommend for boarding off of stores and fixed assets that have become redundant, obsolete or unserviceable through normal wear and tear. On the contrary; mdistrict vehicles were grounded and wasting away without being disposed of as shown in the Pictures below;

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Failure to board off old vehicles leads to further deterioration in value.

The Accounting Officer explained that a request was made to the Chief Government Valuer to conduct a valuation of the items recommended for boarding off and promised to follow up on the valuation report to facilitate the disposal process.

I advised the Accounting Officer to expedite the process of disposing off the assets.

6.5.10 MPIGI TC

1 Un-updated Valuation List Section 4 of the Local Government (Rating) Regulations, 2006 requires the Local Government to produce a valuation list every five years. It was however observed that property valuation in Mpigi Town Council was last done in 2008. Consequently, taxes may not be charged at the prevailing market rates. Besides, all the premises established after 2008 are not included on the property valuation list and therefore not charged.

The Accounting Officer attributed failure to update the list to lack of funds yet the exercise requires certified valuers who are expensive to engage.

I advised the Accounting Officer to ensure that funds are mobilized and the exercise is undertaken.

6.5.11 MUKONO DLG 1 Failure to meet the Minimum Standards at the Health Centres Paragraph 2.1.1 (D) of the Local Governments Management and Service Delivery (LGMSD) program Operational Manual, 2009 and Guidelines for Designation, Establishment and Upgrading of Health Units by Ministry of Health, 2011 sets out Health Service Delivery packages (Minimum Standards) for functioning of health 148

centres. However, audit inspection carried out at Kojja Health centre IV, Kasawo Health centre III and Nakifuma Health Centre III revealed the following shortcoming as shown below; Basic Requirements Current status Kojja Health Centre Essential The following equipment were lacking; Apparatus/Equipment - Hematology machine - Chemistry machine - Radiography machine - Ultra sound scan. - Dental equipment

Ambulance - No ambulance. OPD, Maternity and The Wards lacked; General wards - Separate areas for male and female patients; - IV stands - Water in the bathrooms. Storage facility and Lack of a storage facility Records management Kasawo Health Center III Modern energy lighting, - No Autoclave for sterilizing equipment in Laboratory and basic maternity ward equipment - No Refrigerator - No Glucometer strips were lacking Nakifuma Health Center III Essential No ultra sound machine Apparatus/Equipment Dental lack dental equipment.

Lack of essential equipment negatively affects health service delivery.

The Accounting Officer explained that some health centres were earmarked to receive grant medical equipment on top of the construction works while the lack of medical equipment was communicated to the Ministry of Health.

I advised the Accounting Officer to follow up the matter and ensure that the challenges are addressed.

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6.5.12 MUKONO MC

1 Failure to meet the Minimum Standards in UPE Schools Paragraph 2.1.2 of the Revised Local Government Management and Service Delivery (LGMSD) operational manual, 2009 requires schools to meet specific minimum standards of one class room for every 55 pupils; and one latrine stance for every 40 pupils. However, it was observed that 18 primary schools had inadequate infrastructure which did not meet the minimum basic requirements as shown below;

Name of School Students classrooms Latrines RATIOS stances Classroom to Latrine stance to pupil Pupil 1:55 1:40 Mukono Town Moslem 964 9 9 1:107 1:107 Kiwanga UMEA 770 8 8 1:96 1:96 Nyenje 462 7 7 1:66 1:66 Bishop West 556 5 12 1:111 1:46 St Peters Nantabulirwa 739 7 8 1:106 1:92 Mother Kevin 871 10 7 1:87 1:124 Mokono Boarding 832 13 12 1:64 1:69 Misindye C/U 542 8 10 1:68 1:54 Kiwango Umea 451 7 7 1:64 1:64 Kyesereka 426 7 8 1:61 1:53 Bishops Central 710 11 14 1:65 1:51 Jinja Misindye 514 7 8 1:73 1:64 Seeta Umea 958 8 9 1:120 1:106 Ngandu 421 7 8 1:60 1:53 Kiwanga C/U 391 7 9 1:56 1:43 Namilyango Junior Boys 1309 17 35 1:77 37 Bishop East 447 7 12 1:64 37 St Augustine 633 7 8 1:90 1:79

Failure to meet the Ministry minimum basic standards may affect the overall academic performance of the schools.

The Accounting Officer attributed the shortcoming to insufficient funding under the School Facilities Grant.

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I advised the Accounting Officer to engage the Ministry of Education and to ensure that funds are provided to address the anomaly.

2 Poor Health Service Delivery at Mukono Health Centre IV

Paragraph 2.1.2 (b) of the Local Governments Management and Service Delivery (LGMSD) program operational manual for Local Governments 2009 provides service delivery package for proper functioning of Health centres. However, audit Inspection of Mukono Health Centre IV revealed the following shortcomings as shown below :- Item Current status/Conditions Placenta pit Placenta pit was full and not in use Maternity ward . The maternity ward had insufficient beds. Consequently, some mothers in labor were sleeping outside.

Medical equipment . There were only four (4) delivery sets despite the health center handing over 20 deliveries a day. . No functioning thermometer and weighing scale . No functioning inclinator. Consequently, medical waste was being heaped at various locations of the health facility.

Electricity (grid and . The sterilizer in the maternity wing was not being used solar) and generator due to the reported high cost of electricity;

OPD block  The OPD was congested with some patients standing while others waiting from outside.  The dispensary room was also used as the injection room, wound dressing and at times staff changing room;

Means of transport  The Ambulance had broken down

The Accounting Officer explained that when the Health Centre was elevated from level III to level IV, the infrastructure was not enhanced to match the level. However, requests were made to Ministry of Health to elevate the Health Centre to a general hospital that is better funded, staffed and equipped.

I advised the Accounting Officer to follow up the matter with Ministry of Health.

6.5.13 NAKASEKE DLG

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1 Lack of up-to-date Property valuation List

Section 4 of the Local Governments (Rating) Regulations, 2006 requires the Local Government to produce a valuation list every five (5) years. However, the district last carried out this exercise in 2007 which means that all new premises established after 2007 have never been included on the property valuation list. This may result in the Council losing revenues.

The Accounting Officer explained that the valuation exercise is very expensive for the district.

I advised the Accounting Officer to mobilize resources and carry out valuation exercise to enhance revenue collection.

2 HEALTH SECTOR

2.1 Failure to meet the Minimum Health Standards Paragraph 2.1.1 (d) of the Local Governments Management and Service Delivery (LGMSD) Program Operational Manual for Local Governments provides the minimum Health Service Delivery standards. However, inspection of Semuto HC IV and Kikamulo Health Centre III revealed the following shortcoming:- Health Facility Health Service Delivery Status / Condition at the Health Packages Facility Semuto HC IV Medical Equipment  No suction machine  No scissor set/kit to aid in operations  No sterilizers in OPD  No blood bank / reserves  No oxygen gas Means of transport  No ambulance Staff houses  Inadequate staff accommodation Kikamulo HC Two staff houses type 1 No staff houses III One staff house type 2 Two staff houses type 3 One maternity ward Maternity ward lacks beds

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The Accounting Officer promised to engage the relevant authorities to address the matter. The matter requires urgent attention.

3 Non deduction of Local Service Tax Section 80 (1a) (b) of the Local Governments Act, Amendment No.2, 2008 requires local service tax to be levied on all persons in gainful employment or who are practising any profession. My review of the payroll revealed that Local service tax worth UGX.1,725,000 was never levied on 69 district staff for the FY 15/16. Non-deduction of LST resulted into loss of revenue.

The Accounting Officer acknowledged the error of non-collection of local service tax.

I advised the Accounting Officer to recover the undeducted tax from future payments to staff and address the control weakness that resulted in this lapse.

4 Failure to recover prior year overpayments Section B (16) of the Uganda Public Standing Orders requires the Accounting Officer to deduct any monies due to Government from an Officer’s salary.

In my previous report to parliament I indicated that Nakaseke Local Government had effected overpayments worth UGX.34,581,251 and the Accounting Officer promised to recover the funds from the affected staff. However, a year later, the funds remained unrecovered and are not disclosed in the financial statements as receivables.

The Accounting Officer did not provide response on this matter.

I advised the Accounting Officer to initiate recovery measures, and open individual personal advance accounts to record the amount due to the District.

5 Poor Primary Leaving Examination Results Analysis of performance of the Universal Primary Education (UPE) for the past five (5) years revealed that the performance of UPE was not good with the highest number of pupils passing in Divisions two (2), three (3), four (4) and U. Although Division one showed a steady increase in performance; the grades were still few compared to other grades as shown below;

Year Division 1 Division 2 Division 3 Division 4 U X Total 2013 188 1627 917 503 549 173 3957 153

2014 233 1640 945 543 530 236 4127 2015 294 1661 938 611 715 183 4402 Total 715 4928 2800 1657 1794 592 12,486

The pupils who obtained grades U and X are unable to proceed to the next level of Education which limits their future career development. Poor performance was attributed to poor class attendance of pupils and a high labour turn-over of teachers in the education sector due to lack of teachers’ accommodation in the district. The Accounting Officer explained that the District faces many challenges including transport facilities for DEO and school inspectors, inadequate teachers’ houses, inadequate classrooms and seats and inadequate funding to UPE schools.

I advised the Accounting Officer to engage with the relevant authorities to address the matter.

6.5.14 NAKASEKE TC

1 Lack of an approved Physical Development Plan Section 25(1) and (6) of the Physical Planning Act 2010 requires an urban council physical committee to cause to be prepared a physical development plan and the same to be submitted to the National Physical Planning Board for approval. However, it was observed that the Town Council had not prepared a physical development plan for approval by the National Physical Planning Board. Lack of an approved physical development plan may lead to unplanned developments.

The Accounting Officer explained that the Town Council submitted its physical development plan to the National Physical Planning Board for approval.

I advised the Accounting Officer to ensure that a physical development plan is approved.

6.5.15 NAKASEKE-BUTALANGU TC

1 Non Remittance of Local Revenue to Lower Local Councils Section 15A of the Local Governments Act (as amended), Fifth Schedule requires a Town Council to distribute local revenue collected to the Parishes (5%) and villages (20%). However, it was observed that the Council did not remit UGX.3,030,200 being 154

25% of shared to the respective wards. Failure to remit shared local revenue to lower councils adversely impacts on implementation of activities at the lower levels the locally required services.

The Accounting Officer indicated that a communication was made to the Local councils but there was no response.

I advised the Accounting Officer to always remit the funds to Lower Councils promptly.

2 Lack of Street Lights Paragraph 2.1.2 of the Local Government management and service delivery (LGMSD) Program operational manual for local Governments provides urban roads minimum national standards of service delivery of 10% street lighting coverage of an interval of 25m along the street. However, it was observed that the Council remained without street lights contrary to the standard. The Accounting Officer explained that the council is constrained with funds to cater for street lighting.

I advised the Accounting Officer to plan and ensure installation of street lights in accordance with the operational manual of Local Governments.

6.5.16 NAKASONGOLA DLG

1 Health Service Delivery in the District

1.1 Failure to meet the Minimum Health Standards Paragraph 2.1.1(D) of the Local Governments Management and Service Delivery (LGMSD) Program Operational Manual for Local Governments provides the minimum Health Service Delivery standards. However, inspection of Njeru Health Centre II, Kiwambya Health Centre II, Kalungi Health Centre III and Nakayonza Health Centre III revealed that there were a good number of operational deficiencies and lack of basic requirements as summarized below;

Basic Requirements Current status 155

Njeru Health Centre II, Sanitation - There was no medical porter and the sanitation condition of the unit was in a sorry state. Transport facilities - The unit's motorcycle is grounded thus affecting movement of staff and service delivery. Kiwambya Health Centre II - The current In-charge, took over office without a formal handover report from his predecessor. Management of Resources

- Funds transferred to the unit were being spent with no authority from the Health Unit Management Committee besides; there was no approved work plan in place.

Kalungi Health Centre III; Management of Resources - There was lack of a physical plan and land title. - The Public Health Assistant was not at the unit and the cash book was not posted up to date. Nakayonza Health Centre III; - Funds were being spent with no authority from the Health Unit Management Committee as indicated by lack of approved work plan. Management of Resources - Minutes of the Health Unit Management Committee were not availed for review.

The above challenges were attributed to inadequate supply of essential health items National Medical Stores.

I advised the Accounting Officer to engage the relevant authorities and ensure that the shortcomings are addressed.

2 Unauthorised Expenditure Regulation 24(1) of the LGFAR requires that expenditure for which there is insufficient or no provision in the approved estimates should not be incurred until a supplementary estimate has been approved while Regulation 25(1) of the Local Governments Accounting Regulations 2007 requires appropriate authorization of re-allocations in compliance with the legislative framework. Contrary to the above, the council spent UGX.5,455,128 on repairs of water borne toilets at district headquarters and ceiling for CAO’s office under works department without approval of the Council or reallocation authority rendering the expenditure un-authorized.

Unauthorized expenditure is an indication of budgetary control indiscipline.

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The Accounting Officer explained that maintenance of district buildings was planned and budgeted for in the works department work plan for FYR 2015/2016 under maintenance of water borne toilet and office ceiling but no evidence was availed during verification to support the expenditure.

I advised the Accounting Officer to always observe financial guidelines.

3 Non Disposal of boarded off Vehicles Section 2.3.4.1 of the LGFAM, 2007 requires the Accounting Officer to constitute a board of survey to recommend for boarding off of stores and fixed assets that have become redundant, obsolete or unserviceable through normal wear and tear. It was however observed that various council vehicles were grounded and wasting away as shown below without being disposed of.

Ford Ranger D/Cabin Toyota Hilux Vigo

Suzuki Car

These assets have continued to lose value and or revenue that would have been earned due to further deterioration caused by delayed disposal. Besides; the assets are prone to vandalism, theft or loss.

The Accounting Officer explained that the vehicles that were recommended for disposal by the board of survey were undergoing the process of valuation.

I advised the Accounting Officer to expedite the process.

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6.5.17 WAKISO DLG 1 Irregular Procurement of Contractor for Seguku-Kasenge-Buddo - 10Km

Contrary to section 43 of the PPDA 2003, all procurements should be conducted in a manner that promotes transparency, accountability and fairness and in a manner to maximize competition and achieve value for money.

It was noted that a firm was awarded a contract to work on Seguku-Kasenge-Buddo (10 Km) and Lubowa Quality Super market Hill view close (2.1km), at a contract price of UGX.15,188,224,517, instead of awarding it to a firm that had bided for the same works at UGX.9,871,635,060, leading to apparent overspending by UGX.5,316,589,450. It was observed that the lowest bidder was eliminated due to the failure to back the schedule of general experience with signed agreement forms and certificates of completion despite verification letters by some of the contracting entities (Ministry of works and Transport, and Uganda investment Authority) that the firm had been contracted before, for similar works. The evaluation team on the other hand waived off a major criteria of financial performance that required applicants to have an average turnover of UGX.20 Billion for the last 3 years citing noncompliance by all participants but the awarded bidder had an average turnover of UGX.14 billion far below the other bidders with average turnover of UGX.41.8 Billion and UGX.2 Trillion respectively.

It was also observed that the firm awarded lacked the experience of having 2 successfully and substantially (70%) completed contracts in the last recent 3 years each with a value of at least UGX.12 billion as the company only attached certificates amounting to below UGX.4 Billion and UGX.12 Billion, which was only 10% completed works. The waiver gave an unfair advantage to the awarded firm leading to unfair competition and apparent overspending of UGX.5,316,589,450.

The Accounting Officer acknowledged the finding adding that the Evaluation team waived off some criteria under Financial Performance under average annual turnover in line with the job being undertaken and the firm in question did not meet both the general experience of having contracts in the last recent 5 years prior to the bid submission deadline with activity in at least 8 months in each of the last recent 5 years (2011, 2012, 2013, 2014& 2015). This was considered a deliberate override of regulations by the evaluation and contracts committees.

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I advised the Accounting Officer to abide by the basic principles of procurement as laid down in regulation 43 and follow up this matter for possible action on whoever is found to have been responsible for this loss to government.

2 Irregular award of Framework Contracts

Regulation 94(1) of the PPDA Regulations requires Council to enter into framework contracts for repetitive supplies but where the quantity and timing of the requirement cannot be defined in advance. This is meant to reduce procurement costs or lead times for a requirement which is needed repeatedly or continuously over a period of time by having them available on a "call off" basis.

However a review of a sample of the districts’ frame work contracts revealed that, call off orders were made for procurements amounting to UGX.146,429,768 for items that were not repetitive in nature and whose need could be defined in advance, thus not fitting within the definition of framework contracts. Similarly, procurement of repair services amounting to UGX.67,823,485 were procured by the district without holding mini competitions to perform financial comparison of quotations from the various suppliers prior to issue of the call off orders.

The Accounting Officer explained that items that have standardized costs can be procured under framework contracts for easy procurement. It was observed however that the practice may have been used to circumvent the requirement for proper procurement procedures, thus compromising value for money in the procurement.

I advised the Accounting Officer to ensure that going forward, conditions governing framework contracts are always observed.

3 Budget Performance

Regulation 18(3) of LGFAR, 2007 requires budget estimates to be based on objectives to be achieved in the financial year and during the implementation, efforts to be made to achieve the agreed objectives or targets as per programs of Council.

It was noted that out of the approved budget of UGX.74,355,833,259, a total of UGX.71,603,629,091 was received resulting into a shortfall of UGX.2,445,480,341 which represents an underperformance of 3.3%. This was largely attributed to a shortfall in GOU releases of UGX.906,916,693, as well as transfers from other government units (especially lower Local Governments) of UGX.1,644,946,275 as shown in the table below; 159

Table summarizing the District Revenue Outturn Source Budget (Ugx) Actual (Ugx) Variance (Ugx)

Local Revenue 2,483,699,969 2,479,238,002 4,461,967 GoU releases 64,377,818,568 63,470,901,875 906,916,693 Donor funds 521,777,000 632,621,594 110,844,594 Transfers from other 6,972,537,722 5,327,591,447 1,644,946,275 government units Total 74,355,833,259 71,910,352,918 2,445,480,341

Furthermore, collection of revenue by the lower local governments, as well as budget cuts by the Ministry of Finance Planning and Economic Development, across the entire government might have also affected budget performance.

In response, management explained that this was a direct result of non-realization of funding from the observed sources, adding that this issue is perennial, sometimes results into failure to fully implement approved work plans for planned service delivery.

I advised the Accounting Officer to carry out a deep analysis of the budget performance with a view of devising mechanisms to address such shortcomings, especially those affecting revenue collection by the lower local governments.

4 Irregular Contract Award

Regulation 102(1 and 3) of the Local Government PPDA regulations, 2006, requires a security to be in a form and from an institution that is wholly acceptable to the Bank of Uganda and valid for a period prescribed in the tender documents.

It was noted that two construction firms submitted bids for the renovation of Makindye Sabagabo Sub-county offices (now Makindye Municipal council), at bid prices of UGX.163,300,355 and UGX.181,689,257. However, the Best Evaluated Bidder submitted a bid security in form of a cheque of UGX.500,000 in favor of Wakiso DLG (Stanbic bank, dated 5/2/16) which does not qualify as a bid security, as per the above regulation.

A review of the standard bid document and the instruction to bidders (clause ITB 18.1), however, exclusively stated that "A Bid security shall not be required". It was however noted that the lowest price bidder was evaluated as non-compliant basing on failure to submit a bid security. This appeared contradictory.

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In view of the above, the disqualification of the lowest priced bid on such grounds and the award of contract in favor of a higher bid is considered irregular and resulted into an excess expenditure that could have been avoided.

The Accounting Officer stated that the unsuccessful bidder did not provide evidence of experience of handling contracts of more than one hundred million or works of similar complex nature and would not pass the technical evaluation stage.

I advised the Accounting Officer to follow the regulations and also exercise due care in scrutinizing the evaluation reports before accepting the recommendations of the evaluation and contract Committees.

5 Information Technology (IT) Policy

Section 110 of the LGFAR (2007) requires the chief executive to designate an officer to ensure that adequate information and communication technology policies are established and are applied to enable adequate security and protection, over computers and of data held on computers or information systems operated by the Council.

It was observed that the district has a number of computers and their accessories meant to improve processing of information. However, there are no proper procedures formulated to guide use of this equipment and there is no designated officer to handle IT matters contrary to the law. Consequently, there was no effective general and application controls in existence in the District that would ensure proper logical and physical access and security over data. Absence of IT controls, poses a risk of wastage and loss of vital information. In his response, the Accounting Officer promised to have an information policy in place to address this issue by end of the financial year. I advised the Accounting officer to expedite the process of formulating IT policies, to guide in management of IT resources and also fully harness the use of ICT as a business enabler.

6 Review of Internal Audit Function

Section 90 of the Local Government Act, 1997 as amended, requires every District, City, Municipal and Town Council to provide for an Internal Audit Department who should prepare quarterly audit reports and submit them to the Council giving a copy to the District Public Accounts Committee (DPAC) LGFAR, 2007. In addition, ISSAI 161

1610 allows the External auditor to place reliance on the work of the internal auditor in accordance with ISA 315 after consideration that the Internal Audit is likely to be relevant to the Audit.

However, our review of the internal audit department and its operations revealed that the department was weak. While the district establishment of the department indicated nine (9) staff, only two (2) were in place. In addition, according to internal audit, the actual operational funds availed to the department of UGX.169 Million (about 0.001% of the district budget of UGX.74 Billion) appear to be meagre, given the extent of audit work they would have to undertake across the District. I further noted the absence of internal audit plans and inadequacies in internal audit reports. In the absence of a strong and functional internal audit department, the risk of the existence of weak internal controls cannot be understated.

The Accounting Officer stated that the audit staff were assigned duties in newly created Municipalities and Town Councils, but they were in a process of formalizing appointments for internal audit staff.

I advised the Accounting officer to ensure that the Internal Audit Department is strengthened to enhance the internal control system of the district.

6.5.18 WAKISO TC 1 Unauthorized Over Expenditure Regulation 27 of the Local Government Financial and Accounting Regulations (LGFAR), 2007 requires the Chief Executive to submit the application for re-allocation to the Executive Committee for approval before he/she issues a re-allocation warrant to the vote controller concerned to incure expenditure where there is insufficient or no provision in the approved estimate. However, it was observed that the Council incurred over expenditure of UGX.371,516,550 under works department without seeking approval of the Executive Committee as shown below; Approved budget Financial statements Description Variance 2015/16 (page 3) 2015/16(page 12) Works 359,339,000 730,855,550 371,516,550

This is irregular.

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I advised the Accounting Officer to always seek approval of the Executive Committee for excess spending.

2 Payment of VAT without- Tax Invoice Sec 29 (1) of the Value Added Tax Cap 349 states that a taxable person making a taxable supply to any other person shall provide that other person, at the time of supply with an original tax invoice for the supply. It was however observed that supplies whose contract sums were VAT inclusive of UGX.10,662,660 were paid using Non Tax Invoices as shown in the table below; V. Chq Date No No. Payee Details Amount Remarks VAT Development account Kasse VAT of Construct 2,972,160 was 12/1 ion and Supply of charged but the 0/20 02/ 126/1 contracto gravel 13,000,00 invoice is not a 15 10 27 rs Ltd materials 0 tax invoice 2,972,160 Roads a/c

Nayasa - Kasengejje Kasse rd-Supply Consulta of No tax invoice 14- nts & 1150tonne yet VAT of Sep- 08/ Contract s of 27,692,00 UGX.4,450,500 15 9 238 ors marram 0 was charged. 4,450,500 Tax invoice not Amalgam Nayasa - attached yet 1- ated Kasengejje VAT of Sep- 02/ Engineeri rd, Supply 17,790,00 UGX.3,240,000 15 09 232 ng svrs of gravel 0 Was charged. 3,240,000

Total 10,662,660

Consequently, I was unable to confirm that the value added tax was paid by the contractors.

The Accounting Officer stated that management had taken on the advise for proper usage of Tax Invoices.

I advised the Accounting Officer to always pay VAT to only VAT registered suppliers using VAT invoices.

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3 Lack of Garbage Dumping Site Section 5 of the public health Act Cap 281 require every local authority to take all lawful , necessary and reasonably practical measures to safeguard and promote public health and one of the major functions of an urban council is to collect and manage garbage. However, it was observed that the Town Council does not own a garbage dumping site. Consequently, refuse collected were dumped in a wet land within the Town Council as shown below;

Wakiso Town council truck dumping the Rubbish in the swamp and road rubbish in swamp and in the road.

Garbage posses a threat to human health if not handled or disposed off properly.

The Accounting Officer explained that management was finding it hard to supervise garbage collection and disposal and hence decided to engage service providers in 2016/17.

The matter requires urgent attention.

6.5.19 ENTEBBE MC

1 Non-Disposal of Assets Section 122(1) of the Local government’s PPDA Regulations 2006, stipulates that disposal of Council assets, including assets identified by a board of survey, and shall be carried out in accordance with the Act, these Regulations and the Guidelines. However, I noted that the Council had a number of assets in the yard which have not been disposed of as shown below;

No Name Number plate Location Condition 1 Tata Lorry Green LG-0039-34 Council Yard vandalized 2 Tractor Duetz UX0815 Council Yard vandalized 3 Suzuki UM0122 Council Yard vandalized 4 Emptier UPG Council Yard Vandalized 5 Emptier UPG Council Yard vandalized 6 Suzuki M/cycle UE 883 Council Yard Scrap 7 Suzuki M/cycle No Number plate Council store Scrap 164

8 Vespa No number plate Council store Scrap 9 Old engine Council store Scrap 10 Old Skips Council store Scrap 11 Old Boiler Pipes Council store Scrap

Obsolete items in the council yard

The delay to dispose off the assets may lead to further deterioration in value. The Accounting Officer explained that the Council had written to the Chief Mechanical Engineer to value the assets in preparation for disposal.

I advised the Accounting Officer to make a follow up and ensure the obsolete assets are disposed.

2 Lack of an Information Communication Technology (ICT) Policy Section 110 of the LGFAR (2007), requires the Chief Executive to designate an officer to ensure that adequate information and communication technology policies are established and are applied to enable adequate security and protection over computers and of data held on computers or information systems operated by Council.

However, there are no proper procedures formulated to guide the use of IT equipment. In addition there was no designated officer to handle IT matters contrary to the regulation.

Consequently, there is no effective general and application controls in existence that would ensure proper logical and physical access and security over data.

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The Accounting Officer explained that an IT unit would be incorporated in the proposed Municipal Council structure that is awaiting approval by the relevant authorities and that the ICT policy awaits Council approval.

I advised the Accounting Officer to ensure that an ICT policy is developed.

6.5.20 KAKIRI TC

1 lack of up-to-date Valuation List Section 4 of the Local Government (Rating) Regulations, 2006 requires the Local Government to produce a valuation list every five years. It was however observed that property valuation was last done in 2009 which means that the current values may not be at the prevailing market rates and that all the new premises established after April 2009 were not included on the property valuation list.

Lack of un-updated valuation list may lead to under collection of local revenue.

The Accounting Officer explained that a request had been made to the District Procurement unit for the identification of a valuer to carry out the valuation exercise.

I advised the Accounting Officer to expedite the process of producing a current valuation list.

6.5.21 KIRA MC

1 Failure to meet the Minimum Standards of the Health Centres Paragraph 2.1.1 (D) of the Local Governments Management and Service Delivery (LGMSD) program Operational Manual, 2009 and Guidelines for Designation, Establishment and Upgrading of Health Units by Ministry of Health, 2011 sets out Health Service Delivery packages or minimum standards for functioning of health centres. However, audit inspection carried out at various Health Centres revealed the following shortcomings;

Health Basic Current Status Facility requirement Kira HC OPD Block; - Old delivery bed III Maternity Ward; - Lack of bathroom in the labour ward 166

Medical Equipment, - Lack of running water in the laboratory Laboratory - Lack of Ambulance Running water Ambulance Kimwanyi OPD Block; - The facility needs serious face lifting in terms of HC II Maternity Ward; painting and re-roofing Running water; - Lack of constant running water Security and - Lack of security guards and cleaners cleaning

The Accounting Officer attributed the inadequate standards to budgetary constraints.

I advised the Accounting Officer to engage the relevant authorities and ensure that the challenges are addressed.

2 Non Disposal of Obsolete Assets

Regulation 122 (1) of the PPDA Regulations 2006, requires disposal of council assets, including assets identified by a board of survey to be carried out in accordance with the Act, these Regulations and the guidelines. However, a number of old assets were observed deteriorating in the council’s yard. Delays to dispose off the assets may lead to further deterioration of value.

The Accounting Officer explained that Ministry of Works and Transport sent a team to value the vehicles for boarding off in June, 2016 and the report is awaited.

The matter requires urgent attention.

3 Lack of a Risk Management Policy

Section 2.4.1 of the LGFAM, 2007 states that the Head of Finance is responsible for advising on risk management and effective systems of internal controls so as to ensure compliance with all applicable legislation and regulations and other relevant statements of best practice and ensure that public funds are properly safeguarded and used economically, efficiently and effectively. Contrary to the above; however, there was no risk management policy to guide staff on management of risks.

The Accounting Officer explained that a draft policy has been prepared by the Head of Finance and discussed by Technical Planning Committee ready to be presented to the Executive Committee and finally to Council for approval. 167

I await the outcome of the Accounting Officer promise.

6.5.22 NANSANA MC

1 Lack of an up-to-date Valuation List Section 4 of the Local Government (Rating) Regulations, 2006 requires a Local Government to produce a valuation list every five years. However, it was observed that property valuation by the Council was last produced in 2007. The values applied may not be at the prevailing market rates. Besides, all the new premises established after 2007 were not included on the property valuation list. Consequently, there is a risk of under assessment leading to under collection of Local Revenue.

The Accounting Officer explained that the valuation exercise was costly but indicated that the process of sourcing for a service provider was under way and hoped to complete the valuation by end of the subsequent financial year.

I advised the Accounting Officer to ensure that an up-to-date valuation list is produced.

2 Non Disposal off Assets Section 2.3.4.1 of the Local Governments Financial and Accounting Manual (LGFAM), 2007 requires the Accounting Officer to constitute a board of surveys to recommend for boarding off of stores and fixed assets that have become redundant, obsolete or unserviceable through normal wear and tear. However; it was observed that two council vehicles wasting away without being disposed off as shown below:-

LG-0028-55 Tata pick-up LG-0060-55 Tata pick-up

The delayed disposal of the assets may lead to further deterioration in value.

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The Accounting Officer explained that arrangements were underway to have the assets disposed off.

I advised the Accounting Officer to expedite the process of disposing off the vehicles.

6.5.23 KAKOOGE TC

1 Un-updated Valuation list Section 3(1) of the Local Authority Rating Act provides that every local authority shall levy such rates as it may determine on the basis of the rateable value of properties within a rating area. Section 4 of the same Act states that the local authority shall cause to be made for every rating area, within its limits the first valuation list and thereafter a valuation list once at least in every five years, or such longer period as the Minister may approve. However, it was observed that property valuation by the town council was last done in the FYR 2007/2008 (eight years ago) implying that the rateable value for the council properties may have been under estimated.

Besides; all the new premises established after 2007/2008 have not been included on the property valuation list. Consequently, the Council is losing potential revenue from undervalued/unvalued properties.

The Accounting Officer attributed failure to update valuation list to insufficient funding yet the process is very costly. I advised the Accounting Officer to plan and update the list for effective collection of revenues from rate payers.

The matter requires urgent attention.

2 Non Remittance of Shared Revenue

The Local Governments Act 2007 Fifth schedule provides that 25% of the Town council's total revenue collections shall be remitted to Lower Local Councils with villages getting 20% and wards 5%. However, It was observed that the lower Local Governments’ share of UGX. 5,800,222 was not remitted. Contrary to the law.

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Non remittance of share revenue to the Lower Local Councils, impacts negatively on service delivery at the grass roots. The Accounting Officer attributed the matter to non-existence of elected leaders for the Lower Local Governments in the Town Council.

I advised the Accounting Officer to remit the shared local revenue to the Lower Councils as required by law.

6.5.24 MIGEERA TC

1 Lack of an approved Physical Development Plan

Section 25(1) of the Physical Planning Act 2010 requires an urban council physical committee to cause to be prepared a physical development plan. Sub section (6) requires a Town Council Physical Development Plan adapted by the respective physical planning committee to be submitted to the National Physical Planning Board for approval. However, it was observed that The Town Council’s Physical Development Plan has not been approved by the National Physical Planning Board. Lack of an approved physical Development Plan may lead to unplanned developments within the Town Council.

The Accounting Officer explained that the Town Council development plan was submitted to the National Physical Planning Board for approval.

I advised the Accounting Officer to make a follow up on the matter and ensure that a Development is approved.

2 Outdated Valuation List of Property Tax Section 4 of the Property ratings Act, states that a Local Government shall cause to be made for its area of jurisdiction a first valuation list and there after a valuation list once at least in every five years, or such longer period as a local government may determine. However, it was observed that the council valuation list was last updated in 2007/2008. This may result in council realizing low returns from property tax.

The Accounting Officer explained that the council planned for the valuation of properties in the current five year development plan.

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I advised the Accounting Officer to update the valuation list to improve on local revenue collection performance.

6.5.25 MASULITA TC

1 Non deduction and Remittance of Withholding Tax Section 119 of the Income Tax Act Cap 340 (Withholding Tax on Goods and Services) states that where Government of Uganda, a Government institution, a local authority, a company in which Government has interest or any person designated in a notice issued by the Ministry of Finance pays amounts in aggregate exceeding one million shillings to any person in Uganda for the supply of goods, materials of any kind or services, the payer is required to withhold 6% of the gross amount. The withholding agent is required by law to remit to URA the tax withheld (or that should have been withheld), within 15 days after the end of the month in which the payment was made. Contrary to the law, the Town Council did not deduct 6% withholding tax of UGX.1,908,270 as shown below;

Date VR particulars Payee Amount 6% WHT un No deducted 17/02/16 128 supply & Rockfront 2,650,000 159,000 installation of Investments Ltd culverts 25/02/16 127 supply Rockfront 3,400,000 204,000 &installation of Investments Ltd culverts 27/5/16 3048 supply of gravel Jabana Enterprises 18,700,000 1,122,000 material &fill Ltd material 27/6/16 203 repair of Tractor Ssenge Garage & 1,954,500 117,270 LG0022-109 Spare parts

17/5/16 3111 supply Rockfront 5,100,000 306,000 &installation of Investments Ltd culverts TOTAL 31,804,500 1,908,270

Failure to deduct tax may lead to fines and penalties by Uganda Revenue Authority.

I advised the Accounting Officer to comply with the Tax Law.

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6.6 MASAKA BRANCH

6.6.1 KALANGALA DLG 1. Low absorption of Production and Marketing Grant

Section 3.0(i) of the guidelines for Use of Production and Marketing Grant (PMG) by Local Governments provides that 55% of the PMG to be incurred on Development/ Capital Expenditure which will be for infrastructure undertakings and other development projects such as slaughter slabs, cattle markets, cattle dips, water reservoirs, fisheries infrastructure, irrigation demonstrations etc.

Contrary to the guidelines, the district allocated only UGX.2,000,000 towards development expenditure instead of UGX.45,425,050 leading to under expenditure of UGX 43,425,050.

Failure to adequately utilize the Production and marketing grant for capital expenditure undermines the infrastructure developments; and the grant may fail to achieve its intended objectives.

The Accounting Officer explained that the PMG guidelines for the period under review were not specific as in relation to today and work plans were customized to Local Government Sector needs and approved. But today the guidelines have been specific and this is what is being implemented. The earlier guidelines management talked about were never availed to me to confirm the assertion.

The matter require urgent attention.

2. Low Coverage during Child Days Immunization Program

The Government of Uganda under delivery of Health services earmarked Child days as a special immunization program for children less than five years of age. The target numbers was over 95% of the age group.

However, in Kalangala the coverage has been so low that the expenditure of UGX. 30,000,000 is rendered worthless.

During a review, it was observed that the National set standard of over 95% coverage was not achieved.

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This was caused by a strategy that was not tenable to the population in Kalangala as it is a hard to reach area.

The strategy applied may have been inappropriate to meet the requirements of the Child days of over 95% coverage which was eventually at 45%

I advised the Accounting Officer to adopt a strategy that compels the population to embrace the immunization program.

6.6.2 BUKOMERO TC

1. Lack of Revenue Registers

Regulation 33(1) of the LGFARs of 2007 requires every Local Government Council to maintain revenue registers showing all forms of revenues and steps taken to collect all arrears. However, the Town Council did not maintain revenue registers contrary to the regulations. The absence of revenue registers weakens controls over local revenue collection. The Accounting Officer explained that they were instead preparing abstracts of revenue which could give the same information but regretted the failure to prepare revenue registers.

I advised The Accounting Officer to ensure that the revenue registers are established.

6.6.3 LYANTONDE DLG

1. Failure to Prepare Bills of Quantities on Force on account

Guideline 5.3.2 and 5.4 of the Force Account Guidelines, 2013 requires that management shall budget for road works to be executed using the BOQ concept to capture details of equipment, labour and road construction materials to be used as detailed in the program schedule for force account works Form – A, Annex 14.

On the contrary, it was observed that management executed road works of UGX.151,460,000 without BOQs as shown in the table below; PROJECT NAME AMOUNT Emergency works on Kikasa Swamp 30,480,000

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Periodic Maintenance of Kalyamenvu – Mpumudde – Buyaga- 60,980,000 Kyemamba-Kabingo Road (28.8km) Nakinobe- Kyewanula-Kasese – Buyanja Road (11km) 20,000,000 Kabuula – Kinuuka – Kaliiro (11km) 40,000,000 TOTAL 151,460,000

Failure to prepare BOQs casts doubt on the correctness of the expenditures incurred by the district in respect of executed road works.

The Accounting Officer explained that using the Force Account methods, the Works department prepares work-plans and scope of works as per B.O.Qs.

I advised the Accounting Officer to always document the scope of works in respect of the executed road works.

2. Non-disposal of grounded vehicles

Section 2.3.1.5 of the Local Government Finance and Accounting Manual, 2007 requires that Assets are supposed to be disposed off after recommendations from the Board of Survey Report and using procurement procedures which are provided for under the Local Governments (Public Procurement and Disposal of Public Assets) Regulations, 2006 so as to maximize the value realized by Council on disposition of the assets.

However, it was observed that the district has a number of grounded vehicles in the parking yard. The delay to dispose them off may lead to further deterioration of value. The Accounting Officer explained that Council constituted a team involving the District Engineer, Planner and Examiner of Accounts to conclude the exercise.

I urged the Accounting Officer to expedite the process of disposal.

6.6.4 LYATONDE TC 1. Non-remittance of shared local revenue to Lower Local Governments

Part V of the Local Governments Act, 1997 as amended requires a Town Council to remit 5% and 20% of the total Local Revenue collected to parish and village councils respectively; that make up the Town Council. 174

It was observed that Council did not remit an amount of UGX.51,941,985. Failure to remit shared revenue to lower councils adversely affects implementation of community programmes. The Accounting Officer explained that although the law provides for remittances to the lower local councils, a Memorandum of Understanding (MOU) was made between Lyantonde Town Council and the lower local councils under which it was agreed to retain part of their revenue because bulk of services delivered to the local residents was borne by Lyantonde Town Council.

I advised the Accounting Officer to ensure that the shared local revenue due to the lower councils is remitted as required by law.

6.6.5 MASAKA DLG

1. Poor Contracts Management

Sec 119(3) of Local Governments Public Procurement and Disposal of Assets Regulations (LGPPDA), 2006 states that upon receipt of a copy of a contract, the contract supervisor shall prepare a contract implementation plan and forward a copy to the head of user department, secretary of the contracts committee among others for monitoring purposes. Additionally, section 119 (10) (f), requires the contract manager to submit reports on the progress or completion of a contract as required by PDU or the Accounting Officer. It was, however, observed that contract managers did not prepare the implementation plans on file for the contract undertaken during the year of UGX.538,930,579. Poor management of contracts may result in shoddy works and poor service delivery.

I advised the Accounting Officer to comply with the PPDA regulations.

6.6.6 MASAKA MC

1. Non-compliance with the statutory obligations Paragraph 5.6.3 (5) (b) of the LGFAM of 2007, requires all payments for PAYE to be submitted to Uganda Revenue Authority (URA) with the schedules of payers not later than the 15th day of the following month.

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However, it was observed that an amount of UGX.91,956,469 was not remitted. Failure to remit taxes may attract penalties and fines from Uganda Revenue Authority (URA).

I advised the Accounting Officer to comply with the tax law.

6.6.7 MITYANA DLG

1. Poor state of infrastructure in Primary Schools Inspection of four PLE schools in the District revealed that a number of schools had dilapidated infrastructure as shown below; Name of School Photograph Kabule COU P/S

Kiryokya COU P/S

Bbambula COU P/S

The poor state of infrastructure in primary schools adversely affects proper learning. The Accounting Officer attributed the poor state of the infrastructure to under-funding.

I advised the Accounting Officer to prioritize the rehabilitation of the structures mentioned above.

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2. Procurement anomalies

2.1 Failure to rotate members of the evaluation committee

Regulation 27 of the Local Government Public Procurement and Disposal of Public Assets Regulations (LGPPDAR), 2006 requires Procuring and Disposing Entities (PDE) to have an Evaluation Committee for each bid consisting of Technical Officers and persons recommended by the Procurement and Disposal Unit (PDU) and approved by the Contracts Committee.

However, a review of procurement files worth UGX.559,556,019 revealed that the district maintained the same evaluation committee across several bids with limited representation of the user departments.

The Accounting Officer explained that it was not possible to change the committee for each bid.

I advised the Accounting Officer to ensure that Evaluation Committees are appointed for each bid and are rotated in compliance with the regulations.

2.2 Failure to invite bidders for selective tendering

Section 38 (2) of the Local Governments Public Procurement and Disposal of Public Assets Regulations, 2006 on selective national tendering provides that the invitation to tender under selective national tendering shall be addressed to a limited number of potential tenderers on a short list without advertising the opportunity in a tender notice. The shortlist shall include sufficient tenderers to ensure effective and real competition. Inspection of procurement files for procurements amounting to UGX.287,344,171 lacked evidence of invitation of other shortlisted bidders to bid for the various procurements. Failure to invite other bidders defeats the principle of competition.

The Accounting Officer explained that bidders on the short list were called upon and also e-mailed but no documentary evidence was provided to support the explanation.

I advised the Accounting Officer to ensure that there is adequate invitation to bidders to comply with the regulations.

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2.3 Failure to verify the authenticity of performance securities Regulation 59 (1) of the LGPPDAR, 2006 on due diligence test on tenderers provides that a P rocuring and D isposing E ntity (PDE) may at any time during a procurement and disposal process carry out a due diligence test on a tenderer and shall not be confined to the pre or post-qualification stage or the procedure or content relating to these stages.

There was no evidence that the Procurement and Disposal Unit (PDU) verified the authenticity of submitted performance securities for procurements amounting to UGX.438,868,346 where this was a requirement.

Failure to verify the authenticity of performance securities may lead to the entity relying on documents which are not genuine thereby leaving it unprotected in case of failure to perform the contract by the provider.

I advised the Accounting Officer to always document the verification of the authenticity of Performance Securities.

6.6.8 MUBENDE DLG 1. Hire of Road Equipment without following the Force account guidelines

Section 5.7.4 of the Force Account Guidelines, 2013 (Scheme for maintenance of District and Urban Roads using own equipment and Road gangs) requires the local authorities to solicit road equipment from a regional centre or neighboring Local Government.

However, it was observed that UGX.306,763,736 was spent on hiring road equipment before soliciting from the regional centre or neighboring Local Government as required by the Guidelines.

Failure to follow Force Account guidelines may lead to excessive costs and failure to attain the intended objectives.

The Accounting Officer explained that authority to use force account and hire of equipment was sought and granted. He also stated that hiring of road equipment is

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justified by long road network which cannot be worked upon by only two graders, one which is constantly breaking down.

I advised the Accounting Officer to always adhere to Force on Account guidelines.

6.6.9 MUBENDE MC

1. Uncollected park fees

Section 2.1 of the signed contract between the Mubende Municipal Council & Ms. Jjemuva Enterprises Limited for collection of park fees required that the contractor pays in advance on a quarterly basis an amount of UGX 3,500,000 to the Municipal Council Account. It was observed that only UGX.6,637,500 was remitted leaving a balance of UGX.7,362,500. The Accounting Officer explained that during the year under review, there was political pronouncement during the campaign which caused the tax payers to refuse to pay taxes and the contractors refused to remit money to the Council claiming that the tax payers had refused to pay. Management further explained that when they sued the Contractor, the Chief Administrative Officer intervened and dictated the amount he should pay to the Municipal Council.

I advised the Accounting Officer to ensure that the outstanding amount is recovered.

6.6.10 BUTEMBA TC

1. Non-Remittance of shared local revenue

Paragraph 16, of Part V of the Fifth Schedule of the Local Governments Act, requires 25% of the total of what a town council collects to be distributed among the village councils within its area of jurisdiction, and 10% among the parish or ward councils. On the contrary, it was observed that Council did not remit the 25% amounting to UGX.8,837,500 to the villages and parish councils. Failure to remit local revenue to Lower Local Government Councils negatively affects service delivery at the lower units.

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The Accounting Officer explained that leaders of the respective councils were consulted and agreed on development activities that would benefit the entire community.

I advised the Accounting Officer to remit the shared local revenue to the lower councils as required by law.

6.6.11 BUKOMANSIMBI DLG

1. Irregular Utilization of Road Fund

Section 22 of the Road Fund Act 2008, requires road funds to be applied to routine and periodic maintenance of existing roads. However, it was observed that the District instead used UGX.10,540,000 to open up a new road, Nsololo – Kagologolo – Bitelero contrary to the Road Fund Act. The Accounting Officer attributed his action to the need of the road to serve those communities.

I advised the Accounting Officer to comply with the URF Act or seek authority of the Road Fund in case of the need for opening new roads.

6.6.12 KALUNGU DLG

1. Under-absorption of Lake Victoria Environmental Management Project (LVEMP) funds

The District received funds from LVEMP to carry out; enhancement of local forest reserves at Kalongo, Nabijolla, Avenue tree planting, construction of pier at Kamuwunga landing site, environmental catchment management plan at Bwesa and Kalumagga valley tanks in Lwabenge and promotion of fuel wood energy saving stoves in institutions. it was observed that UGX.134,375,649 was received from for LVEMP but by the end of the year, only UGX.41,090,836 had been utilized leaving a balance of UGX.93,909,164. Failure to absorb the funds denied services to the community.

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The program coordinator explained that the low absorption level was attributed to the recommendation from the Permanent Secretary who advised the District to halt all activities and payments under LVEMP due to earlier shoddy works.

The matter requires urgent attention. 2. Poor state of infrastructure in Primary Schools

Inspection of a sample of four (4) UPE schools in the District revealed a number of shortcomings as shown below:- Name of School& Facility Photo  Kabungo Primary School The school was established in 1933. The existing structures are very old.

 Kyamusoke Primary School The structures are in a poor state and soon collapsing.

Pit Latrines The school has a 2 stance pit latrine serving a population of 689 pupils. The administration decided to improvise a structure pictured below as a urinal and bathroom for girls

 St. Charles Lwanga Kisitula Primary School The block is incomplete with no windows and doors, the floor is not cemented.

 Mukoko Muslim Primary School The latrines were in a sorry state, full and at the verge of collapsing.

The poor infrastructure in schools impacts negatively on pupils’ learning. The Accounting Officer explained that the poor infrastructure is a result of inadequate funding.

I advised the Accounting Officer to engage the relevant authorities and ensure that the infrastructure is rehabilitated.

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3. Items not taken on charge

Section 5.4.4.1 of the Local Governments Financial and Accounting Manual 2007 requires that when the supplier delivers goods to the Council stores or to any other location as may be directed by the Council, the storekeeper shall count them and check their conformity with the LPO, and then raise a Goods Received Note for acknowledgement. In addition, all supplies shall be recorded in the stores ledger. It was observed that items amounting to UGX.15,495,250 were not recorded in the stores ledger nor were Goods Received Note raised for them. Failure to record stores may pose a risk of stock pilferages and misuse of items. Management attributed this to inadequate staffing.

I advised the Accounting Officer to ensure that store records are always kept up to date.

6.6.13 KALUNGU TC

1. Failure to maintain revenue registers

Paragraph 4.6.2 (2) of the Local Government Financial Accounting Manual, 2007 and Section 33 (1) of the Local Government Finance and Accounting Regulations, 2007 requires management to maintain each revenue source in a separate register. To the contrary, it was observed that the Town Council did not maintain revenue registers for the different local revenue sources as required by the regulations. Failure to maintain revenue registers weakens controls over revenue collection.

The Accounting Officer attributed the failure to the shortage of staff in the finance department.

I advised the Accounting Officer to establish the revenue registers.

6.6.14 LUKAYA TC 2. Non-remittance of shared local revenue Part V (15A) of the Fifth Schedule of The Local Government Act 1997 (as amended) provides that a Town Council is required to distribute 5% of the total local revenue collected amongst its parishes and 20% amongst its Village Councils. Council budgeted and actually collected UGX.305,431,626 as local revenue. 182

However, it was observed that Council did not remit UGX.76,357,907 to the parishes and villages contrary to the law. Failure to remit local revenue to Lower Local Government Councils negatively affects service delivery at the lower units. The Accounting Officer explained that for the last 10 years there has been no election of the Local Council Committees which renders it difficult for the Town Council to transfer funds to these entities as it would be impossible to account for these funds.

I advised the Accounting Officer to comply with the law.

6.6.15 LWENGO DLG

1. Dilapidated Classroom Structures at Kitooro Primary School

Indicator 2 (d) (i) of the minimum standards indicators for Education institutions 2010 requires a school to have buildings that meet occupational safety standards set in various laws. However, the inspection of Kitooro Primary School revealed that there is a dilapidated classroom structure which is a danger to the lives of both the students and staff. The classrooms were also overcrowded as shown in the pictures below;-

Dilapidated classrooms Overcrowded classrooms

The Accounting Officer explained that Kitooro is one of the schools which are supposed to benefit from World Bank project; and construction is about to commence since procurement process has started.

The matter requires urgent attention.

2. Abandoned Borehole at Kyananganzi

During the year, management contracted Samadhula Engineering to construct a borehole at Kyananganzi at a cost a of UGX.21,000,000. However, audit inspections revealed that the water had turned salty and the users have abandoned it. 183

The Accounting Officer explained that during the construction, water was tested and it was of good quality. However, about two months after construction water impurities of iron were observed leading to salty taste. Management indicated that plans are underway to construct an iron removal pant (Low cost Technology) to reduce on salinity of water.

I advised the Accounting Officer to speed-up the process of constructing an iron removal pant.

6.7 MBALE BRANCH 6.7.1 BUDAKA DLG 1 REVENUE 1.1 Failure to conduct Local Revenue Assessment and Enumeration Section 4.3 of the Local Governments Financial and Accounting Manual (LGFAM), 2007 requires Councils to conduct proper assessment of their revenue starting with the enumeration exercise.

However, the District did not present the revenue assesment and enumeration reports for the period under review for audit verification. This was attributed to lack of Tax assessment Committee.

Failure to properly assess the local revenue may lead to under collection of local revenue.

I advised the Accounting Officer to appoint a Tax assessment Committee to ensure regular assessment of the council's local revenue sources to enhance the District local revenue collections.

2 FIXED ASSETS MANAGEMENT 2.1 Failure to dispose obsolete assets

Section of 2.3.2.2 of the Local Government Financial and Accounting Manual (LGFAM), 2007 requires that assets that are not in use be disposed of in accordance with the procedures in the Local Government Public Procurement and Disposal of Public Assets (LGPPDA), 2006 regulations, after recommendations from the Board of Survey.

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It was observed that several assets which had been recommended for disposal by the board of survey during the previous financial year had not been disposed off.

The delays in disposing off the items can lead to further deterioration in value of the assets.

The Accounting Officer explained that council was committed to disposing of the said assets but lacked ownership rights as log books were still with the line Ministries. However, council had written to the concerned ministries for authority to dispose of the assets but had not received any response.

The matter requires urgent attention.

3 Doubtful Tax Remittance Regulation 123 of the Income Tax Act, 1997, requires a withholding agent to pay to Uganda Revenue Authority (URA) any tax that has or should have been withheld within fifteen days after the end of the month in which the payment subject to withholding tax was made. It was however observed that, UGX.1,492,133 deducted from suppliers as WHT and PAYE from councilors allowances lacked acknowledgement receipts from Uganda Revenue Authority (URA).

Non remittance of tax may attract fines and penalties from Uganda Revenue Authority (URA).

I advised the Accounting Officer to ensure that the acknowledgement receipts are obtained from URA and presented for audit verification.

4 Weak Internal audit Function Section 2.3.4 (1) (d) of the Internal Audit Manual, 2007 requires the Internal Auditor to maintain a Permanent File, Control File and Current Audit (Working Paper) File as a minimum. However the records were not presented for audit verification being maintained. Consequently, I could not assess the work work of internal audit.

This weakens the Internal Audit Function.

The Head of Internal Audit was advised to ensure that audits are carried out to an acceptable standard.

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5 Audit of Medicine Supply Chain Management by National Medical Stores 5.1 Failure to meet the Minimum Health Standards of the Health Centres

Paragraph 2.1.1 (D) of the Local Governments Management and Service Delivery (LGMSD) program Operational Manual, 2009 set out in the Health Service Delivery packages or minimum standards for functioning of health centres. However, audit inspection carriedd out at Budaka Health Centre IV and Katira Health Centre III revealed the following shortcomings:-

Budaka Health Centre IV Basic Requirements Current status - Operating Theatre Not operational due to lack of equipment.

- One medical waste pit - Lacks a medical waste pit

- 18 Housing Units + Ancillary - The HC has 16 units of which 10 were in poor state. structures. Medical Equipment - Lacks an x-ray machine. Means of transport -No ambulance making referrals especially at night very difficult. - The HC constructed to cater for - Currently serves a population of 23,000 people. 100,000 people. Katira Health Centre III Security - Lacks a fence.

The Accounting officer attributed the general poor condition of the health facilities to inadequate funding.

The matter requires urgent attention.

6.0 Failure to meet the minimum Education Standards 6.1 Bulalaka Primary School Section 2.1.1(A) of the LGSMD service delivery packages for Primary schools provides that for a school to be fully functional it should have a classroom pupil ratio of 1:55 and permanent teacher accommodation of at least four teachers. However, physical inspection carried out on 20th July, 2016 revealed the following shortcomings:-

 The school has a classroom: pupil ratio of 1:163. The primary classes were conducted under trees.  Teachers have no accommodation.  The school lacks a staff room and teaches conduct their business under trees.

The Accounting Officer explained that the district has had a declining trend in funding of education instructions making it difficult for the district to construct the basic infrastructure. 186

I advised the Accounting Officer to engage the relevant authorities and ensure that the challenges are addressed.

6.7.2 BUDAKA TC 1 Diversion of Local Government Management and Service Delivery (LGMSD) Program funds Regulation 37(2) of the Local Government Financial and Accounting Regulations, 2007, requires that conditional grants from Central Government are planned for, recorded and accounted for in accordance with the grant conditions and guidelines.

It was however observed that the Town council borrowed an amount of UGX.15,488,950 from the Local Government Management Service Delivery (LGMSD) to finance operations and refunded UGX.2,200,000 leaving UGX.13,288,950 outstanding as shown in the table below;

Date Voucher No. Refund Borrowing 17/03/2016 01/03/2016 Un authorized Borrowing to 6,000,000 Operations from LGMSD 09/12/2015 09/12/2015 Authorized Borrowing to 8,488,950 Operations from LGMSD 14/10/2015 04/10/2015 Un authorized Borrowing to 1,000,000 Operations from LGMSD Total borrowing 15,488,950 23/05/2016 46/5/16 Refund to LGMSD 1,200,000 09/11/2015 53/11/15 Refund to LGMSD 1,000,000 2,200,000

Outstanding 13,288,950

Failure to refund Local Government Management Service Delivery (LGMSD) funds imply that some of the planned activities were not implemented.

The Accounting Officer explained that above funds were borrowed to address crucial issues of Town Council including; payment of power (UMEME), repair of water pipes and renovation of the office block.

I advised the Accounting Officer to ensure that the funds are refunded.

2 Non remittance of Shared Local Revenue According to the Local Governments Act, 1997, (as amended), fifth schedule, Part V (15A), a Town Council is required to distribute 5% of the total local revenue collected amongst its parishes and 20% amongst its village councils. However, it was observed

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that the Town Council did not remit an amount of UGX.11,115,000 to be remitted to the parishes and villages.

Failure to remit funds to lower local governments undermines service delivery at the grass root levels.

The Accounting Officer explained that Town Council had urgent commitments to attend to including implementing some projects in various wards.

I advised management to comply with the law.

6.7.3 BUDUDA DLG 1 Failure to meet Minimum Standards at Bududa Hospital Paragraph 2.1.1(D) of the Local Governments Management and Service Delivery (LGMSD) program Operational Manual, 2009 and Guidelines for Designation, Establishment and Upgrading of Health Units by Ministry of Health, 2011 set out Health Service Delivery packages or minimum standards for functioning of health centres. However, audit inspection carried out at Bududa Hospital and Bushika Health Centre III on 21/09/16 indicated lack of basic requirements as shown in the table below;

Bududa Hospital

Basic Requirements Current status Operating theatre The operating theatre was non-operation due to lack of substantive an aesthetician. Staff houses Eleven (11) Staff houses were in a dilapidated state. Medical Equipment No functional X-ray unit Storage of Drugs Stores lacked shelves for drugs Incinerator The hospital lacks an incenerator. Running water The hospital lacks running water. The existing Gravity Flow scheme tanks are not functional. Electricity grid Power supply is unreliable with black out some times lasting for a whole week. Generator house The available generator only supports the new OPD and the theatre. Means of transport The hospital lacks an operational vehicle. Staffing Only 102 of the required 191 staff are employed at the hospital. This represented 53%.

Failure to meet minimum standards negatively impact on the capacity of the hospital to deliver health services.

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The Accounting Officer attributed the shortcomings to inadequate funding and further explained that management was working with all relevant stakeholders to improve health services at the hospital.

I advised the accounting officer to continuously liaise with the relevant authorities to address the challenges.

2 ASSET MANAGEMENT Failure to Dispose of Obsolete Assets Regulation 122(1) of Local Government Public Procurement and Disposal of Assets requires eligible assets identified by the board of Survey to be disposed off. It was observed that several items recommended by the Board of survey for disposal had not been disposed off.

Failure to dispose off these assets may result to further deterioration in value.

The Accounting Officer explained that the process to have the asset disposed off were ongoing.

I advised management to implement all the recommendations of the board of survey to avoid further diminution in the value of the assets.

3 Lack of Risk Management Policy Section 103 (1) of the Local LGFAR, 2007 stipulates that the Head of Finance requires the Head of Finance to establish a documented risk management and effective internal control system and also establish it for future review. It was however observed that the District had not developed a risk management policy.

This weakens the Internal Control Systems.

The Accounting Officer admitted the anomaly.

I advise management to develop a risk management policy.

4 Road Works

4.1 Poor Road Works The district spent UGX.14,510,000 on gravelling of Bumasata-Bushiyi and Bududa- Busano road. However audit inspection done on 22/09/16 revealed shoddy works on

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Bududa -Busano 7.6km Road. The gravel poured on the road was not well compacted and as a result was being eroded by running water as can be seen in the photograph below.

Un- compacted gravel being carried

Shoddy works results in wasteful expenditure as the road deteriorates faster requiring re- works.

The Accounting Officer attributed the defects to inadequate funding and equipment including a compactor and consequences of heavy rains in the region.

I advised the Accounting Officer to ensure that all the defects are rectified.

4.2 Rehabilitation of Buwakhata-Namutembi 2.5km section on Namutembi- Buwakhata road During the year under review (2015/2016) the District contracted Ms Greenland building Contractors and Civil Engineers Co. Ltd to carry out rehabilitation of Buwakhata-Namutembi 2.5km road at a contract price of UGX.54,970,743. At the time of audit, UGX.49,453,022 had been paid out leaving retention amount of UGX.5,507,721. However audit inspection carried out on 22/09/16 revealed the following shortcoming:-

 Whereas the bills of quantities provided a total of UGX.13,359,375, for gravelling works (Item No.5.2), the gravel did not appear to have been enough by the growing vegetation was visible in the middle of the road. (Photograph No. 3)  Deep potholes were seen in some parts of the road. The road was also bushy as can be demonstrated by the photograph below( Photograph No. 2)  Some culverts lacked headwalls as shown by the photograph below (Photograph No. 1)

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1- One of the culverts 2-A section of the 3- Growing bush in the middle of without head walls road with deep the road suggesting inadequate potholes gravel

The Accounting Officer explained that the scope of works increased making it difficult for the contractor to complete the entire road. He however indicated that he had written to the contractor to correct the defects.

I advised the Accounting Officer to ensure the identified defects are rectified before payment of retention money.

6.7.4 BUDUDA TC

1 Doubtful Tax Remittances Regulation 123 of the Income Tax Act, 1997, requires a withholding agent to pay to URA any tax that has or should have been withheld within fifteen days after the end of the month in which the payment subject to withholding tax was made. However, it was observed that payments amounting to UGX.I,045,650 purportedly paid to URA lacked acknowledgment receipts.

In the absence of the acknowledgement receipts, I could not confirm that the funds were received by Uganda Revenue Authority.

Non-compliance with the tax law may attract fine and penalties.

I advised the Accounting Officer to obtain the receipts from the tax authority and present them for audit verification.

2 Long Outstanding Advances Regulation 42 and 43 of Local Governments Financial and Accounting Regulations, 2007, require funds to be properly vouched and accounted for within a period of a 191

month. However, administrative advances amounting to UGX.2,171,200 had been outstanding for more than one year.

Delayed accountability can lead to falsification of documents.

The Accounting Officer explained that Council had opened advance ledgers and written to the staff concerned to pay back the money.

I advised the Accounting Officer to recover the funds from the salary of the responsible offers.

6.7.5 BUKWO DLG

1 Failure to meet the minimum Health Standards Paragraph 2.1.1 (D) of the Local Governments Management and Service Delivery (LGMSD) Program Operational Manual for Local Governments sets minimum standards for proper functioning of health centers. However, inspection of Bukwo hospital and Kapkoloswo health center 111 revealed a number of shortcomings as shown below;

1.1 Bukwo Hospital Inspection of the hospital revealed the following shortcomings:-

Minimum Standard Current Status Administration Block None One OPD with Community shed None Drug store with HSD Office None Mortuary -The hospital lacks a mortuary One medical waste pit None Incinerators None Kitchen, Laundry, Askari’s house and None fence Staff Houses Five staff houses type 1- None Two staff house type 2- None Two staff houses type 3- None Medical Equipment - Essential equipment like an x-ray and scanning machines are lacking at the hospital. Electricity grid -The Hospital and the district as a whole was not on the electricity grid. Means of transport -The hospital has only one functional vehicle, an ambulance Reg. No UG 4492M which serves as an ambulance for patients on referral. The other vehicle UG 4052M is non-functional having broken down for over a year now and cannot be repaired due to inadequate funds. Staffing -The hospital currently has only 112 out of the required 237 staff establishment representing 47% establishment.

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1.1.2 Kapkoloswo Health Center III

Minimum Standard Observation - One maternity ward - Construction of the maternity ward that started Two (2) years ago is incomplete. Two general wards None

One medical waste pit None One placenta pit None Staff accommodation The health center lacks adequate accommodation. It Two staff houses type 1 has only 4 units which are not enough to house its 14 - One staff house type 2 staff. - Two staff houses type 3 Transport facilities The health center lacks an ambulance and has no other mode of transport in case of referral. Drugs availability -There was shortage of drugs. It was noted that at the time of inspection, there were no stocks for essential medicines including; Panadol, Amoxicillin de worming tablets Alberdazole and mabendazole, ARV drugs were out of stock for adults.

The Accounting Officer attributed the shortcomings to inadequate funding and further explained that Council was using every possible means to improve health services in the district.

I advised that Accounting Officer to continue engaging the Ministry of Health and Ministry of Finance, Planning and Economic Development to provide funds to improve the infrastructure of the hospital.

2.0 District Education Services

2.1 Failure to meet the Minimum Standards in Primary Schools Section 2.1.2 (a) of the Local Government Management and Service Delivery (LGMSD) Programme Operational Manual 2011, sets minimum national standards of service delivery in the education sector.

A review on statistical data provided by the District Inspector of Schools revealed that the level of service delivery in the primary schools significantly fell short of the Ministry of Education Minimum National Standards as shown in the table below;

S/No Bukwo DLG Total Number Ratio to Pupil National Ratio 1 Pupils 35,883 2 Teachers 506 1:70 1:53 3 Classroom 271 1:126 1:53

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4 Latrine Stances 329 1:104 1:50 5 Desks 4,353 1:7 1:3 6 Staff Houses 26 1:9 1:3

Inadequacy of facilities adversely affect academic performance of the schools.

The Accounting Officer attributed the poor state of schools in the district to declining funding. He indicated that while the school enrollment was going up, funding was going down. He further explained that the district was working with all stakeholders to improve the status of schools in the district.

I advised the Accounting Officer to continue engaging the relevant stakeholders to have the poor infrastructure in primary schools addressed.

3 Academic performance at Primary Leaving Examinations (PLE)

A review of the 2013, 2014 and 2015 PLE results revealed that the district has been registering very bad performance over the years. It was observed that out of the 2764 candidates who sat for PLE, only 19 (0.6%) passed in Division I,370 (13.3%) in Division II, 625 (22.6%) in Division III, 533(19.2%) in Division IV, while (44%) candidates failed i.e. scored either grade U or X. Trend analysis also indicated that the standards were declining as can be demonstrated by analysis in the table below;

Year Div 1 Div 2 Div 3 Div 4 Div U Div X Total 2013 21 574 579 390 659 63 2286 2014 37 559 574 470 877 45 2564 2015 19 370 625 533 1153 64 2764

The poor performance implies that the district will continue to lag behind in development. It also means that candidates who obtained Grades U and X could not proceed to the next level thereby limiting their future career choices.

The Accounting Officer explained that a stakeholders meeting was conducted to discuss strategies for improvement and the recommendations were now being implemented.

I advised that the Accounting Officer in consultation with the district council should continue to investigate the causes of poor performance and institute practical measures for improvement. 194

4 Lack of Information and Communication Technology (ICT) Policy Regulation 110 of the LGFARs of 2007 requires the Chief Executive to designate an officer to ensure that adequate Information and Communication Technology policies are established and applied to enable adequate security and protection over computers and data held thereon or information systems operated by the Council.

However, it was observed that there was no designated IT focal person and no documented policy to guide staff on management of IT equipment, and hardware.

This creates a risk of loss of equipment and data maintained thereon.

The Accounting Officer explained that he had assigned the senior planner to assist in the management on information technology Hardware and software as the district they waited for recruitment of an IT officer.

The matter requires urgent attention.

5 Lack of documented Risk Management Policy

Local Government Financial and Accounting Regulation, 2007 section 103 (1&4) require management have established and documented management Policy.

It was observed that management had not have not developed policy on risk management by the time of audit.

This weakens the internal control system.

The Accounting Officer explained that council had written to head of finance to guide council on mitigation measures on risks to ensure economy, efficiency and effectiveness of the institution including service delivery.

The matter requires urgent attention.

6.7.6 BUKWO TC 1 Non- remittance of shared local revenue According to the Local Government Act 1997 (as amended), fifth schedule, Part V (15A), a town council is required to remit 5% of the total Local Revenue collected to parishes and 20% to village councils. The Town Council collected local revenue of UGX.11,931,500 but failed to remit UGX.2, 982,875 to parishes and Village Councils. 195

The failure to remit the shared local revenue impairs the participation of the lower local councils in the implementation of community programs.

I advised the Accounting Officer to remit the shared local revenue to the lower councils as required by law.

6.7.7 BUSIA DLG 1 Failure to meet the Minimum Health Standards Paragraph 2.1.1(D) of the Local Governments Management and Service Delivery (LGMSD) program Operational Manual, 2009 and Guidelines for Designation, Establishment and Upgrading of Health Units by Ministry of Health, 2011 set out Health Service Delivery packages or minimum standards for functioning of health centres. However, audit inspection carried out at Masafu Hospital in Busia District revealed the following shortcomings:-

ASAFU HOSPITAL BUSIA Basic requirements Current status Medical store -The hospital had a very small medical store that cannot accomadate all the drugsand medical supplies. - No shelves in the store. Drugs are just piled on the floor as can be demonstrated in the photograph below;

80 housing Units+ Ancillary - The hospital had only 15 housing unit structures Means of transport - No functioning motor. The available ambulance had had been out of function for several months after it developed a mechanical fault. Medical Equipment - The X-ray machine and baby incubators have not been functional since 2009. - Two anasytic machines delivered to the hospital two years ago but had never been utilised alledgedly due to lack of small comopnents namely; T-juctions to attach them to oxygen cylynders, and the theater lights.

Medical waste pit/Placenta pit The hospital lacks an appropriate medical waste disposal pit and had no incinerator.

2 Failure to Dispose of Obsolete Assets Section 2.3.2.2 of the LGFAM, 2007 requires assets that are not in use to be disposed of in accordance with the procedures in the Local Government Procurement and

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Disposal of Assets (LGPPDA), 2006 regulations, after recommendations from the Board of Survey. On the contrary, a review of the board of survey report revealed that items recommended for board off in 2014/2015 financial year, had not been boarded off at the time of audit in September, 2016 as shown in the table below;

Item Condition Recommendation Mitshibishu truck LG 0012-08 Non functional To be boarded off Motor cycle UG 2656R Non functional To be boarded off Filling Cabinet Poor condition To be boarded off Desktop computers Non functional To be boarded off

The delays to disposing off the assets may lead to further deterioration in value.

The Accounting Officer explained that the district was planning to carry out valuation of the assets before tabling it to council for approval.

The Accounting Officer is advised to ensure that the absolete assets are disposed off.

6.7.8 BUSIA MC

1 Health Sector An audit inspection carried out at Busia Health Center IV revealed the following shortcomings:

1.1 Failure to meet the Minimum Standards of Health Service Delivery Paragraph 2.1.1 (D) of the Local Governments Management and Service Delivery (LGMSD) program Operational Manual, 2009 and Guidelines for Designation, Establishment and Upgrading of Health Units by Ministry of Health, 2011 set out Health Service Delivery packages or minimum standards for functioning of health centres. However, audit inspection carried out at Busia Health Centre IV on 21/10/16 revealed lack of basic requirements as shown in the table below;

Busia HCIV

Basic Requirements Current status -One OPD block with community The existing OPD block lacks a waiting shed, No eye shed clinic - Treatment rooms in OPD lacked mattresses - Mortuary No mortuary

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- Drug store with HSD office No medical store - 18 Housing Units + Ancillary - 8 housing units structures. Medical Equipment - Anaesthetic machine non functional for 2 years - No Incubators - No chemistry analyser - No humatology analyser - No dental equipment. Means of transport - Ambulance and the pickup had broken down. Uniform Staff lacked uniforms. Furniture -No furniture in the laboratory

Lack of bank requirements, negatively impact on the district health service delivery. The Accounting Officer attributed the low standards of health services to inadequate funding. I advised the Accounting Officer to engage the relevant authorities and ensure that the challenges are addressed.

2 Doubtful Tax Remittance Section 123 of the income tax act, 1997 requires a withholding agent to pay URA any tax that has or should have been withheld within fifteen days at the end of the month in which the payment subject to WHT was made. However, vouchers amounting to UGX.3,577,500 in respect of PAYE were not supported by acknowledgement receipts from URA as shown in Appendix IV.

Non remittance of tax may attract fines and penalties from Uganda Revenue Authority (URA).

I advised the Accounting Officer to ensure that all acknowledgement receipts are obtained from URA.

3 Failure to meet the Minimum Standards of UPE Schools Paragraph 2.1.2 of the Local Governments Management and Service Delivery Operational Manual requires Local Governments to deliver services in conformity with Primary Education Minimum National Standards of service delivery.

The audit inspection of Buchicha Primary School revealed the following shortcomings: ITEM MINIMUM STANDARDS CURRENT STATUS 1 Desks 1:3 1:4.1

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2 Classrooms 1:55 1:103 3 Toilets 1:50 1:137

It was further observed that the school lacked a staff room, the few existing pit latrines and the classrooms were also in a dilapidated state as below;

The inadequacy in the school infrastructure negatively impacts on education service delivery.

I advised the Accounting Officer to engage the relevant authorities to address the challenges.

4 Lack of IT Policy Regulation 110 (1) of the LGFAR 2007, requires the Chief Executive to designate an officer who should ensure that adequate Information and Communication Technology (ICT) policies are established and are applied to enable adequate security and protection over computers and of data held on computers or information systems operated by the council.However, it was observed that the district had failed to formulate an IT policy despite the matter having been pointed out in prior year reports.

The Accounting Officer explained that management was waiting to recruit an IT officer to guide the process of developing the policy formulation.

I urged the Accounting Officer to ensure that an ICT policy is developed.

5 Lack of Risk Management Policy Section 2.4.1 of the Local Governments Financial and Accounting manual 2007 requires the Head of Finance to be responsible for advising on risk management and effective systems of internal control. This role is expected to be carried out in collaboration with the Internal Audit function. However, the Municipal Council did not have a risk management policy.

This weakens the Internal Control Systems. 199

The Accounting Officer explained that the Audit Department had been tasked to develop a risk management policy.

I advised the Accounting Officer to expedite the process of developing the risk management policy.

6 Delayed Civil Works Regulation 9(2b) of the Local Governments Financial and Accounting Regulations (LGFAR), 2007 require the Accounting Officer to ensure that the public monies, property and resources for which he or she is responsible as Accounting Officer are properly managed and safeguarded.

During the financial year 2013/2014, a contract worth UGX.1,807,699,504 was awarded to M/s Engineering Trade Links Ltd to construct the main office block at Busia Municipal Council with a completion date of 29th December 2016. The contractor abandoned the work after being paid a total of UGX.482,164,902.

The audit inspection revealed that the civil works were behind schedule as shown in the photos below;

Abandoned site

The Accounting Officer explained that whereas termination of the contract had been mooted and the contractor informed, the decision was reviewed on the advice of the Council Lawyer after the contractor wrote threatening letters to Council.

The matter requires urgent attention.

6.7.9 BUSOLWE TC 1 REVENUE MANAGEMENT

1.1 Non- Remittance of Shared Local Revenue According to the Local Governments Act, 1997, (as amended), fifth schedule, Part V (15A), a Town Council is required to distribute 5% of the total Local Revenue collected

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amongst its parishes and 20% amongst its village councils. However, it was observed that the Town Council did not remit UGX.9,736,575 to the Wards and Village Councils contrary to the law. This undermined service delivery at Parishes and Wards.

The Accounting Officer explained that the Executive Committee and Technical Planning Committee agreed to use the hitherto monies to the Lower Councils to fund the street lighting.

I advised the Accounting Officer to ensure adherence to the Regulations and remit shared revenues.

6.7.10 BUTALEJA DLG 1 District Health Services 1.1 Failure to meet the Minimum Standards of the Health Centres Paragraph 2.1.1 (D) of the Local Governments Management and Service Delivery (LGMSD) program Operational Manual, 2009 and Guidelines for Designation, Establishment and Upgrading of Health Units by Ministry of Health, 2011 set out Health Service Delivery packages or minimum standards for functioning of health centres. The audit inspections revealed the following shortcomings:-

S/ Minimum required Current Status N Standard BUSOLWE HOSPITAL 1 Running Water The hospital lacks running water. This seriously compromises the hygiene at the hospital.

2 Medical Equipment The hospital lacks functional x-ray and ultra sound machines. 3 Prompt disposal of There were expired drugs and medical waste- that had not been expired drugs destroyed due to non- functional incinerator. 4 Staff structure-(190 staff) Only 121 filled leaving 69 vacant representing 63%. 5 Adequate drug supplies The hospital experiences inadequate drug supplies. Out of the required budget of 114million required per cycle, only UGX. 56.1 million is allocated leading to drug stock outs. (Appendix IV). NABIGANDA HEALTH CENTRE IV 1 Running water No running water in maternity ward and Out Patient Department(OPD) 2 Medical equipment - No operating ultra sound machine, x-ray among others. 3 operating threatre -No operating theatre 4 - 18 Housing Units + - Only 6 units available Ancillary structures. 4 - Operating theatre The theatre constructed 4 years ago has never been functional due to lack of the requisite equipment(thetre bed, surgical equipment etc). 5 -Mortuary - The Health center lacks a mortuary 6 Transport -The hospital neither has an ambulance nor other vehicle to facilitate operations. 201

7 Approved staffing structure - Only 26 positions filled representing 54% of 48 staff 8 Adequate drug supplies - The HC experiences drug stockouts. For example the HC on average receives 100 patients who are treated with amoxlyicine, but only 15 tins (enough to treat only 30 patients) is allocated.

The matter requires urgent attention.

2 Education Services 2.1 Status of Universal Primary Education Schools

A review on statistical data provided by the District Education Officer and the physical inspections carried out revealed that the level of service delivery at the schools significantly fell short of the Ministry of Education Minimum National Standards.

S/No Butaleja DLG Ratio to Pupil National Ratio 2 Teachers 1:64 1:53 3 Classroom 1:122 1:53 4 Latrine Stances 1:85 1:50

The inspection revealed that primary school children of P1 & P2, P.3 & P.4 were sharing classes, the teachers and pupils were sharing the toilets. This negatively affects the performance of the schools.

The Accounting Officer explained that the resource envelope is not adequate to procure enough facilities and therefore central government should intervene.

The matter requires urgent attention.

3 Lack of Information Technology Policy Regulation 110(1) of Local Government Financial and Accounting Regulation, 2007 provides that the Chief Executive shall designate an officer to ensure that adequate information and communication technology policies are established and are applied to enable adequate security and protection over computers and of data held on computers or information systems operated by the council.

However, it was observed that the district continues to operate without an IT policy to guide staff on the use of IT equipment, and the software.

The Accounting Officer attributed the shortcoming to lack of an IT officer to spear head the process pf developing the policy. 202

I once again advised the Accounting Officer to ensure that IT policy is developed.

4 Lack of Documented Risk Management Policies Section 103 (1&4) of the Local Government Financial and Accounting Regulation, 2007 require management have established and documented management Policy. It was noted management did not have a documented risk policy at the time of audit. This weakens the Internal Controls Systems.

The Accounting Officer indicated in his response that efforts were being made to develop the policy but failed to provide evidence.

I advised the Accounting Officer to ensure that a risk management policy is developed.

6.7.11 KAPCHORWA DLG 1 Lack of Documented Risk Management Policy Section 103 (1) of the LGFAR, 2007 stipulates that the Head of Finance is responsible for advising on risk management and effectiveness of the internal control system and also establish it for future review. According to LGFAR, “Risk management” means the establishment of policies, procedures and practices to identify, analyse, quantify, monitor, and control financial and other exposures of the Council so as to minimize potential losses. It was however observed that management had not developed a risk management policy.

This weakens the Internal Control Systems.

The Accounting Officer explained that Council had initiated the process of developing the policy.

I advised the Accounting Officer to develop a risk management policy. 2 Failure to meet the Minimum Standards in UPE Paragraph 2.2.1 of the revised Local Governments Management and Service Delivery (LGMSD) operational manual provides minimum service delivery package for a primary school. However, review of the education services in Kapchorwa District carried out on a sample basis revealed serious shortfalls as outlined below; Facility: Pupils Recommende Current status Remarks d ratio Kapsirikwo P/S 203

Classroom: Pupils 1: 50 1: 77 Below the required ratio standard for efficient learning Toilet: Pupils ratio 1:48 1: 100 “ Teacher: pupil Ratio 1:50 1:67 “ Kobil P/S Classroom: Pupils 1: 50 1: 81 Below the required ratio standard for efficient learning Toilet: Pupils ratio 1:48 1: 95 “ Teacher: pupil Ratio 1:50 1:52 While the school enjoys a good teacher: pupil ratio, the advantages cannot be realised due to limited classrooms.

The inadequacies in School Infrastructure negatively impact on education service delivery.

I advised the Accounting Officer to liaise with the Ministry of Education for more funds so that the minimum standard requirements are complied with.

3 HEALTH SERVICES 3.1 General Standards of the District Hospital PHC guidelines for 2015/16 set out Health Service Delivery packages and minimum standards for functioning of district hospitals. However, audit inspection carried out at Kapchorwa hospital indicated lack of basic requirements as shown in the table below;

KAPCHORWA DISTRICT HOSPITAL Basic Requirements- PHC guidelines Current status - One OPD department The existing OPD does not have a dental unit, clinical rooms and a laboratory as separate units. - One maternity ward -The maternity wards were congested with 25 beds instead of the required standard of fifteen (15). - The hospital has only two delivery beds yet it delivers fifteen (15) mothers on average daily. Operation Theatre (2) - One operating theatre which lacked functional oxygen concentrators and other essential equipment including; C-section sets, laparotomy sets, skin grafting instruments, and boilers. 80 housing units Only 20 very old dilapidated units as shown in the photograph below;.

Means of transport Only one ambulance and lacks a vehicle for administration/operational purposes. Established structure of 199 staff Only 138 out of the required 199 staff. representing 69%

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6.7.12 KIBUKU DLG

1 FIXED ASSETS MANAGEMENT

1.1 Failure to dispose of obsolete assets

Section of 2.3.2.2 of the LGFAM, 2007 requires assets that are not in use to be disposed off in accordance with the Local Government Public Procurement and Disposal of Assets (LGPPDA), 2006 regulations, on recommendation by the Board of Survey. However, the district had not disposed off a number of vehicles as shown below;

The delay to dispose off the assets may lead to further deterioration in value.

The Accounting Officer explained that the grounded vehicles were given to the District by the mother district without logbooks and therefore disposal became difficult since the district did not legally own them.

The matter requires urgent attention.

6.7.13 KIBUKU TC

1 Non Remittance of Shared Local Revenue According to the Local Governments Act 1997 (as amended), fifth schedule, Part V (15A), a town council is required to distribute 5% of the total local revenue collected amongst its parishes and 20% amongst its village councils. However, the council failed to remit UGX.4,785,875 to parishes and village councils.

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The failure to remit funds impaired the participation of the lower local councils in the implementation of council programs which affects service delivery at lower councils. The Accounting Officer admitted the shortcomings and explained that Council had started to remit the funds as required.

I advised the Accounting Officer to remit the shared local revenue to the villages and parishes as required by law.

6.7.14 KWEEN DLG

1 Failure to meet the Minimum Standards of the Health Services

Paragraph 2.1.1 (D) of the Local Governments Management and Service Delivery (LGMSD) program Operational Manual, 2009 sets out Health Service Delivery packages or minimum standards for functioning of health centres. However, audit inspection carried out at Kaproron Health center IV and other health centers III revealed the following shortcomings.

a) Kaproron Health Center IV Minimum required Current status Standard Approved structure of 36 28 posts were filled. positions Medical equipment - The unit lacks an X-ray machine. - Ultra sound machine was not functional due to lack of a technical staff to operate it. Transport No ambulance - Operating theatre No operating theater - 18 Housing Units + - Six (6) housing units Ancillary structures. - Drug Supplies An antibiotic (amoxicillin ) was not supplied. b) Binyinyi Health center III Item Observation - Two general wards No ward

Eight two stance pit latrines - (2) stance pit latrines

1O housing Units + Ancillary 4 units structures

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Staffing structure of 19 12 staff approved positions

Means of transport - No ambulance Drug supplies  Erythromycin, Amoxicillin, cciphenicol, ampicillin  Antiprotozoal- I.V Metronidazole  Injectable 3rd generation Certrofraxone  Antimalarial prophylaxis (fansider)  Antihemithetic – Mebendazole  Analgesic- paracetamole, ibrofen. c) Kaptum Health center III Item Observation Staffing Gaps -The unit has 9 staff out of the approved 19 staff Means of transport - No means of transport including an ambulance One maternity - No maternity ward wards Two general wards - No male, female and pediatric wards. Medical buildings - The HC is housed in a very small temporary structure as can be shown in the photograph below;

Semi-permanent structure a temporary toilet housing Health Centre

- 1O housing Units None + Ancillary structures Drugs supplies The Health center had excess drugs. This was because it does not admit patients yet it receives drugs like any other health Centre III which has admissions.

The Accounting Officer admitted the shortcomings and explained that the commitment to providing better services was limited by inadequate funding and facilitation.

I advised the Accounting Officer to engage relevant Ministry to ensure that the challenges are addressed.

2 Failure to meet Minimum Standards of UPE Schools

Inspection of various UPE schools revealed that there was shortage of teachers, inadequate and inferior latrine facilities, inadequate desks and classrooms among others and this negatively affects the performance of pupils in the schools.

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A review on statistical data provided by the District Education Office revealed that the level of service delivery at the schools fell short of the Ministry of Education Minimum National Standards as shown below:

S/No Kween DLG Total Number Ratio to National Ratio Pupil 1 Pupils 22,202 2 Teachers 430 1:51 1:53 3 Classrooms 266 1:83 1:53 4 Desks 5181 1:4 1:3 5 Latrines 220 1:100 1:50 6 Staff Houses 24 1:17 1:3

These conditions negatively affect learning and pupils’ overall performance.

The Accounting Officer attributed the poor standards in schools to inadequate funding.

I advised the Accounting Officer to engage the Ministry of Education and technology and Sports and ensure that the challenges are addressed.

3 Lack of Documented Risk Management Policy Local Governments Financial and Accounting Regulation, 2007 section 103 (1&4) require management to establish and document management Policy. It was noted management did not have an established and documented policy by the time of audit. This weakens the Internal Control Systems.

The Accounting Officer explained that Council had designated the The Chief Finance Officer to take lead in establishing risk management policy.

The Accounting Officer was advised to develop the Risk Management Policy.

4 Management of Information and Communication Technology Regulation 110 of the Local Government Financial and Accounting Regulations (LGFAR) of 2007 requires the Chief Executive to designate an officer to ensure that adequate Information and Communication Technology policies are established and applied to enable adequate security and protection over computers and data held thereon or information systems operated by the Council.

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It was however observed that whereas there was a designated IT focal person the district lacked a policy to guide staff on management of IT equipment, security of hardware and data.

Lack of ICT policy may lead to misuse of IT facility.

The Accounting Officer explained that the IT Focal Point Person was tasked to spear head the process of developing the policy.

I advise management to ensure that an ICT policy is developed.

6.7.15 MANAFWA DLG 1 PAYROLL ANOMALIES 1.1 Under Payment of Salaries An analysis of the payroll revealed that some staff had salary under payments totalling to UGX.38,665,484.

This was also attributed to failure to reconcile salary amounts to salary scales before effecting payment. Such underpayments demotivate the affected staff and lead to accumulation of salary arrears.

In response, the Accounting Officer attributed this to insufficient human resource to manage the payroll but asserted that they had now boosted the section for better performance. I advised the Accounting Officer to streamline the payroll management process by ensuring proper verifications are undertaken before effecting salary payments. I further advised that he should initiate a process make good the salary underpayments in question.

2 Failure to Dispose of Obsolete Assets Section 2.3.1.5 of the Local Government Financial and Accounting Manual (LGFAM), 2007 requires assets that are not in use to be disposed of in accordance with the procedures in the Local Government Public Procurement and Disposal of Assets (LGPPDA), 2006 regulations. It was however observed that many grounded vehicles and motor cycles had not been disposed of despite the recommendation of the Board of Survey.

Failure to dispose of these assets may lead to further deterioration in value.

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I advised the Accounting Officer to ensure that obsolete assets are disposed of in a timely manner.

3 Failure to meet the minimum education standards Paragraph 2.2.1 of the revised Local Government Management and Service Delivery (LGMSD) Program operational manual provides minimum service delivery package for a primary school. However, review of the education services in Manafwa revealed the following shortcomings:

Nuusu primary School Facility: Recomme Current Remarks Pupils nded ratio status Classroom: 1: 50 1:101 - Shortage of classrooms lead to some of Pupils ratio the classes to be conducted under trees. Existing classes are also in a bad shape as can be illustrated below;

Pupils studying under the tree

Status of the existing classrooms

Toilet: 1:48 1:202 - The existing latrines are shared among Pupils ratio the pupils and teachers and are in bad condition.

SAAMBA PRIMARY SCHOOL Classroom: 1: 50 1:128 Below the required standard for efficient Pupils ratio learning Toilet: 1:48 1:153 “ Pupils ratio

Congested classes, fewer teachers and lack of adequate toilet facilities undermine effective learning and hence poor academic performance.

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The Accounting Officer attributed the poor facilities in schools to inadequate funds. The Accounting Officer pledged to continue lobbying the Ministry of education to increase the level of funding.

I advised the Accounting Officer to continuously engage the Ministry of Education and Sports to ensure that conditions of the facilities are improved for better service delivery.

4 Inadequate District Health Services Bubulo Health Centre IV

a)Lack of a Medicine Procurement Plan Section 5.2 (VI) of the Primary Health Care (PHC) guidelines requires local governments to prepare detailed procurement plans for medicines for the whole financial year and submit to National Medical Stores (NMS) with copies to Ministry of Health (MOH). However, the procurement plans for the financial year were not provided for audit. There is a risk of National Medical Stores supplying inadequate drugs and medical supplies to the district.

The matter requires urgent attention.

b) Non -operational Health Centre II’s A status review of health centers in Manafwa district revealed that five (5) health Centers were constructed by the district using various sources of government funding but remained non-operational due to lack of operational financing as shown in table below: S/N Health Center Sub-County 1 Kitongo Bukhaweka S/C 2 Nangetsa Mukoto S/C 3 Sisatsa Busukuya S/C 4 Namunyali Namabya S/C 5 Buwuma Lwakhakha TC

Failure to functionalize the Health Centre’s also means that potential beneficiary communities will have to continue to travel to move long distances to access health services.

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The Accounting Officer attributed the anomaly to change of government priorities and limited funding where new Health Centre IIs are not being funded.

The matter requires urgent attention.

c) Failure to meet the minimum standards of the Health Centres Paragraph 2.1.1 (D) of the Local Governments Management and Service Delivery (LGMSD) program Operational Manual, 2009 sets out Health Service Delivery packages or minimum standards for functioning of health centres. However, audit inspection carried out at Bubulo Health Centre IV and Bukhabusi Health Centre indicated lack of basic requirements as shown in the table below;

Bubulo Health Centre IV BASIC REQUIREMENTS CURRENT STATUS Medical Buildings -The health centre does not have a community shed -One OPD block with a and dental unit. community shed. - Operating Theatre - The operating theatre which was constructed four (4) years ago remains un operational due to lack of equipment. - Mortuary - The health centre lacks a mortuary - 18 housing units - Only 8 very old dilapidated units. Medical Equipment - The medical equipment was reportedly inadquate. These include; PB machines, trolleys kidney dishes, Gully pots. - The, maternity ward has only one delivery bed. Running water -The health centre lacks running water. The existing borehole has been down for more than a year. Generator house - No generator Staff establishment of 48 The HC is understaffed with only thirty one (31). personnel. Bukhabusi health centre III - Eight two stance pit latrines Dilapidated Latrines - The health centre has only one 3-stance latrine which is shared between the patients and hospital staff and is in a dilapidated state as shown below;

The above shortcomings negatively impact on the district health service delivery.

The Accounting Officer explained that management was aware of the existing situation but was limited by funding. He indicated that management was making a follow-up with the line Ministry for better facilitation. 212

I advised the Accounting Officer to continue liaising with the responsible Ministry and National medical stores (NMS) to improve the conditions of the health facilities for better health services.

5 Lack of Risk Management Reports

Section 2.4.1 of the Local Government Financial and Accounting Manual (LGFAM), 2007 requires that the Head of Finance to be responsible for advising on risk management and effective systems of internal control. This role is expected to be carried out in collaboration with the Internal Audit function. These arrangements need to ensure compliance with all applicable legislation and regulations, and other relevant statements of best practice, and ensure that public funds are properly safeguarded and used economically, efficiently, and effectively in accordance with the statutory and other provisions that govern their use.

Contrary to the above regulation, no risk management reports were presented for audit verification.

This weakens the internal control systems.

The Accounting Officer explained that Council was closely working with other districts and the Ministry of Finance Planning and Economic Development (MoFPED) to come up with the policy on the matter.

The matter requires urgent attention.

6.7.16 MANAFWA TC 1 Irregular Cash Procurements S.119 (1) of PPDA regulations provides that a procurement process under direct procurement shall follow the procurement rules and processes. Sub-section (2) further provides that a contracts committee shall approve a direct procurement method prior to the commencement of a procurement process using this method.

However, it was noted that procurements worth UGX.55,340,000 were made by the Town council in cash. Cash procurements are prone to abuse and do not lead to achievement of Value for Money (VFM) as they lack the element of competition. 213

The Accounting Officer is advised to ensure that procurements are made in a competitive manner to realize full value for the money spent.

6.7.17 MBALE DLG

1 Poor state of Kigezi Health Centre II Section 2.1.2 (b) of the Local Government Management and Service Delivery (LGMSD) Programe Operational Manual, 2011 require Health Center IIs to have an Out Patients Department (OPD).

Inspection of Kigezi Health Centre II revealed that the health center was operating in a dilapidated building made of mud and wattle. It was further observed that the walls and floor had developed deep cracks and holes which render the building unsafe for patients and medical workers as shown below:

Deep holes on the Collapsing walls and deep Dilapidated building floor holes in the interior formed of Mud

The Accounting Officer explained that the district had included construction of an Out Patients Department (OPD) in its development plan and would be constructed in F/Y 2018/2019 under Primary Health Care (PHC) development grant.

I advised the Accounting Officer to engage the Ministry of Health and other relevant authorities to ensure that the hospital infrastructure is rehabilitated.

2 Ineffective District Public Accounts Committee (DPAC) Section 16 (1) &(2) of the LGFAR 2007 requires the Local Governments Public Accounts committee to examine the reports of the Auditor General, the Head of Internal Audit and any other reports of commissions of Inquiry in accordance with section 88 of the Act and produce reports for submission to the council and the minister.

Contrary to the regulation, the LGDPAC did not discuss reports from the head of the internal audit for the financial 2015/16

Failure to review internal audit and Auditor General Reports weakens the overall oversight function of the committee. 214

The Accounting Officer explained that DPAC was busy clearing the backlog of reports from the Municipality, Town Councils and Sub Counties. He however indicated that the review had been planned to be handled in the second quarter of F/Y 2016/2017.

I advise the Accounting Officer to ensure that DPAC discharges its oversight role.

3 Salary Payments to Retired Officers

General rules on payment of Salaries (B - a) section 12 of the Uganda Public Service Standing Orders 2010 requires payment of a salary to a Public officer to be stopped immediately the officer ceases to render services to Government under whatever circumstances including death. However, comparison of the list of retired officers and the Bank of Uganda salary payment register for the year 2015/16 revealed that the district paid salaries amounting to UGX.13,446,684 to officers who had hit the retirement age of 60 years.

The anomaly was attributed to inefficiencies in the human resource function. The Accounting Officer acknowledged the anomaly and promised to effect. He indicated that recovery.

I await for evidence regarding the recovery of the funds.

4 Works Services 4.1 Poor contract works at Budwale Primary school Inspection of the school carried out in September, 2016 revealed that newly constructed three class room block had defects already. It was observed that the iron sheets had started rusting barely one year after construction as can be demonstrated by the photograph below;

3 classroom block Rusted iron sheets

It appears there was poor contract management.

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The Accounting Officer explained that he had communicated to the contractor (Kiinars Company Limited) to correct the defects.

The accounting officer is advised to strengthen contract management processes to achieve high value for money on future projects. In the meantime, contract managers should take responsibility for the mess.

5 Delayed Completion of Civil Works

The district signed an agreement with Mirembe General Enterprises on the 29th June 2011 for UGX.158,400,000 to construct sub county chiefs’ house, kitchen and two bedroomed staff house at Wanale Sub County. The project was expected to be completed on the 24th April 2013. However, inspection of the project carried out on the 15th September 2016 revealed that the project had stalled for three (3) years as shown below:-

The Accounting Officer indicated that contract had been terminated and another contractor was yet to be appointed.

I advised the Accounting Officer to expedite the process of sourcing for another contractor.

6.7.18 MBALE MC 1 USMID PROJECT 1.1 Extra cost incurred on road works As stated above, the contractor was awarded the road works contract at initial cost of UGX.10,345,941,339, however extra cost of UGX.1,969,296,209 was incurred resulting in increase in the total contract price by 19% to UGX.12,315,237,548.

This arose from delays due to the halting of works to enable the Council authorities conduct a design review. It was also noted that the initial engineering design on these roads was not properly done as it caused the overflow of running water into shops and other residential buildings adjacent to the roads. Owing to the fact that the authorities

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ought to have undertaken proper design before commencing the construction, the extra cost of UGX.1,969,296,209 therefore is nugatory expenditure and a financial loss to Government.

The project management should always ensure that proper designs are done before projects are embarked on to avoid incurring extra costs.

2 Doubtful Tax Remittances Regulation 123 of the Income Tax Act, 1997, requires a withholding agent to pay to Uganda Revenue Authority (URA) any tax that has or should have been withheld within fifteen days after the end of the month in which the payment subject to withholding tax was made. However, it was observed that payments amounting to UGX.48,484,813 purportedly paid to Uganda Revenue Authority lacked acknowledgment receipts.

Non-compliance with the tax law may attract fines and penalties.

I advised the Accounting Officer to obtain the receipts from Uganda Revenue Authority and present them for audit verification. 3 Lack of Risk Management Policy

Section 2.4.1 of the Local Governments Financial and Accounting Regulations (LGFAM), 2007 requires the Head of Finance to be responsible for advising on risk management and effective systems of internal control. This role is carried out in collaboration with the Internal Audit function. These arrangements need to ensure compliance with all applicable legislation and regulations, and other relevant statements of best practice, and ensure that public funds are properly safeguarded and used economically, efficiently, and effectively in accordance with the statutory and other provisions that govern their use.

Contrary to the above regulation, it was observed that the Municipal Council did not have a documented risk management policy in place.

This weakens the Internal Control Systems.

The Accounting Officer admitted the anomaly but promised to develop one in future.

I advised the Accounting Officer to develop the risk management policy.

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6.7.19 PALLISA DLG 1 HEALTH SERVICES 1.1 Non- operational Health Centres

Pallisa district spent a total amount of UGX.860,722,127 on construction and improvement of health centre IIIs and IIs between the period 2011/2012 and 2012/2013 as shown below.

S/N NAME PERIOD OF TOTAL COST OF CONSTRUCTION CONSTRUCTION 1 Opwateta HC III 2011/2013 173,100,402 2 Akisim HCIII 2011-2013 120,849,381 3 Chelekura HCIII 2011-2013 152,292,200 4 Olok HC III 2011-2013 137,538,625 5 Nasuleta HCII 2011-2013 95,792,830 6 Aolai HC II 2011-2013 86,258,657 7 Kadokolene HC II 2011-2013 94,890,032 TOTAL 860,722,127

However, the health centres remain non-operational to-date allegedly due to lack of

operational funds.

The Accounting Officer explained that Council had written to Permanent Secretary Ministry of Health to plan and operationalize the facilities.

The matter requires urgent attention.

1.2 Failure to meet the Minimum Standards of Health Service Delivery

Paragraph 2.1.1 (D) of the Local Governments Management and Service Delivery (LGMSD) program Operational Manual, 2009 and Guidelines for Designation, Establishment and Upgrading of Health Units by Ministry of Health, 2011 set out Health Service Delivery packages or minimum standards for functioning of health centres. However, audit inspection carried out at Pallisa Hospital and Butebo Health Centre IV indicated lack of basic requirements as shown in the table below;

Pallisa Hospital

Basic Requirements Current status -lacks operating light; - Operation Theatre [2 rooms] - The two existing autoclaves had broken down. -A machine for controlling breeding, which was supplied over two years ago by DHSSP project of Ministry of Health has not been utilised because it lacked a component - The existing mortuary was in a dilapidated state, lacks a working Mortuary table on which to carry post-mortem, does not have refrigeration facilities and is very small as it can only handle one body at a time.

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- Only 30 units which are in a dilapidated state. - Ancillary structures No activity - In service training, consultation and research to community based health care programmes - The hospital lacks a fence. Security

Staffing requirement- 195 -139 staff. personnel.

Five(5) consultants No Consultant - No pharmacist, Aesthetician, physiotherapist and an occupational - Pharmacist, Aesthetician, therapist. physiotherapist and an occupational therapist.

Running water - The available reservoir (tank) was installed in 1969 when the hospital was constructed. It’s very old and leaking.

Butebo Health Centre IV

Transport No ambulance

Lack of proper facilities hinder effective service delivery.

I advised the accounting officer to engage the relevant authorities and ensure that the challenges are addressed.

1.3 Failure to meet the Minimum Standards of Education Service Delivery Paragraph 2.2.1 of the revised Local Governments Management Service Delivery (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, documentation review and the inspection carried on a sample of schools revealed the following:-

2 Chelekura Primary School

It was observed that the district constructed a four (4) stances pit latrine for the boys at Chelekura Primary School. However, the inspection revealed that the pit latrine was yet to be handed over by the contractor. Consequently, children continue to use the old one which is in a dangerous state. 3 Kanyum Primary School The inspection revealed the following;

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 The roof of the classroom one block which was accommodating P.1, P.2, P.3 and P.4 was blown off by a stormy rain in March, 2016. The classes affected are now being conducted under trees around the school.  One pit latrine of 5 stances had collapsed.  The head teacher lacked an office.  The structures were dilapidated and require rehabilitation.

The Accounting Officer explained that the parents and sub counties had been engaged to make contributions to address the issues of pit-latrine in the school. The district also planned to provide for a two classroom block, an office and a store in the coming financial year to beef up the existing ones.

The matter requires urgent attention.

4 Failure to dispose off obsolete assets Section of 2.3.2.2 of the Local Governments Financial and Accounting Manual (LGFAM), 2007 requires assets that are not in use to be disposed of in accordance with the procedures in the LGPPDA, 2006 regulations, after recommendations from the Board of Survey. However, physical inspection of assets and board of surveys report revealed that three (3) Pickups vehicles; UG-1114A, LG-0009-40 and four (4) graders had been grounded for long without being disposed of as shown below;

Failure to dispose of the assets may lead to further deterioration in value

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The Accounting Officer explained that the process of valuation had begun with the Ministry of Works but the disposal plans for the road equipment had been stayed with the hope that funds for repair would be found.

I advised the Accounting Officer to expedite the process of disposing of the assets.

5 Lack of Documented Risk Management Policy

Section 103 (1) of the LGFAR, 2007 stipulates that the Head of Finance is responsible for advising on risk management and effectiveness of the internal control system and also establish it for future review. According to LGFAR, “Risk management” means the establishment of policies, procedures and practices to identify, analyse, quantify, monitor, and control financial and other exposures of the Council so as to minimize potential losses. It was however observed that management had not established and documented risk management policies.

This weakens the Internal Control Systems.

The Accounting Officer explained that Council had tasked the Head of Finance and Planning Unit to come up with a draft.

I advised the Accounting Officer to ensure that a risk management policy is developed.

6.7.20 SIRONKO DLG 1 Doubtful Tax Remittance Regulation 123 of the Income Tax Act, 1997, requires a withholding agent to pay to URA any tax that has or should have been withheld within fifteen days after the end of the month in which the payment subject to withholding tax was made. It was however noted that UGX.6,289,455 deducted from suppliers as WHT and PAYE from councilors lacked evidence of remittance to URA.

Non compliance with the tax low may attract fines and penalties from the tax body.

The Accounting Officer was advised to comply with the tax law.

2 Lack of a District Medical Store Regulation 9(j) of the LGFAR, 2007 specify the duties of the chief executive to include, among others establishing proper storage facilities with accounting and financial

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control systems to ensure efficient receipt, issue and safe custody of stores, vehicles, plant and other assets. However, physical inspection carried out at the district revealed that the Council lacked a substantive store for drugs. The items were scattered in different rooms at the District Health Office and corridors.

This creates a risk of drugs either being stolen or damaged.

The Accounting Officer attributed the shortcoming to inadequate development funding available for the health sector.

The matter requires urgent attention.

3 Lack of Documented Risk Management Policy Section 103 (1) of the LGFAR, 2007 stipulates that the Head of Finance require the Head of Finance to establish a documented risk management and effective internal control system and also establish it for future review. It was however observed that management had not developed a risk management policy.

This weakens the Internal Control Systems.

The Accounting Officer promised to develop the policy during the F/Y 2016/2017.

The Accounting Officer was advised to develop the risk Management Policy.

6.7.21 TORORO DLG 1 Failure to meet the Minimum Health Standards Paragraph 2.1.1 (D) of the Local Governments Management and Service Delivery (LGMSD) program Operational Manual, 2009 and Guidelines for Designation, Establishment and Upgrading of Health Units by Ministry of Health, 2011 set out Health Service Delivery packages or minimum standards for functioning of health centres. However, audit inspection carried out at Tororo Hospital and Mulanda Health Centre IV and Kiyeyi Health Centre III and SopSop Health Centre II revealed the following shortcomings:- a) Tororo Hospital Basic Requirements Current status - 80No. Housing Units+ The hospital has only 32 housing units in a very poor Ancillary structures state as shown in the photographs below;

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Equipment -. A scannner and Exray machine broke down in year 2009. Security - The hospital lacks a fence b) Mulanda Health Centre IV - One maternity ward - Overcrowded - Mortuary - No mortuary - 18 Housing Units + - Only Three (3) units were available Ancillary structures. Medical Equipment - An Aesthetic machine which was supplied in the year 2013 remained unoperational due to lack of a trained person (an aesthetician) to operate it. - Other non-functional equipment include; weighing scales, beds, refrigerators and height boards. Means of transport - No ambulance. Security - Not fenced. Staffing - Only 28 of the required 48 staff are employed at the health centre. This represented 42% c) Kiyeyi Health Centre III Medical equipment - Lacks sterilising equipment (An autoclave and gas cylinder). Established structure of - Ten (10). This representing 53% capacity. Nineteen (19) staff Security - No security personnel c)Sop sop Health Centre II -Furniture - There is lack of office furniture Power source -No power Staffing levels of Nine(9) - The Health Centre had only two(2) staff

The Accounting Officer admitted the shortcomings and explained that the commitment to providing better services was limited by inadequate funding and facilitation.

I advised the Accounting Officer to engage the relevant Ministry and ensure that the challenges are addressed.

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2 Failure to meet the Minimum Education Standards Paragraph 2.2.1 of the revised Local Government 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, the audit inspections revealed the following shortcomings:-

a) St. Jude Kachinga Primary School The school revealed that the school did not have a single classroom for its total population of 631 pupils. It was observed that the pupils study under trees as shown below;

One of the classes being conducted Another class being conducted under the under a tree. Besides is the church that tree accommodates P6

The head teacher attributed the state of affairs to lack of support from the relevant authorities and further explained that efforts to have the district allocate at least one classroom block had been futile. The head teacher however, indicated that the districtwill include the school under Scool Facilitaton Grant (SFG) construction in the FY 2017/2018. The lack of classrooms has affected learning especially in the rainy seasons where the school closes immediately there are any signs of rains.

I advised the Accounting Officer to make continuous follow up as the situation is of an urgent nature.

3 Delayed Execution of Civil works Section (14 of the PPDA regulations require an Accounting Officer to have the overall responsibility of the successful execution of the procurement, disposal and contract management process and ensure that implementation of the contract as per agreed terms. Audit inspection revealed that several projects were behind schedule. This delay was attributed to inefficiencies on the side of the contractor and lack of proper supervision. 224

The delayed completion of the civil works may lead to extra administrative costs.

I advised the Accounting Officer to ensure that contractors execute the contracts in accordance with the contract terms and conditions.

4 Failure to Dispose of Obsolete Assets Section of 2.3.1.5 of the LGFAM, 2007 requires assets that are not in use to be disposed of in accordance with the procedures in the Local Government Public Procurement and Disposal of Assets (LGPPDA), 2006 regulations, after recommendations from the Board of Survey report. However, it was observed that a number of vehicles and motorcycles had not been disposed off.

Failure to dispose off the assets may lead to further deterioration in value.

The Accounting Officer attributed the shortcoming to failure to secure response from the Government valuer.

I advised the Accounting Officer to ensure that obsolete assets are disposed off.

6.7.22 MALABA TC 1 Non- Remittance of Shared Local Revenue According to the Local Government Act 1997 (as amended), fifth schedule, Part V (15A), a Town Council is required to remit 5% of the total Local Revenue collected to parishes and 20% to village councils. However, during the year, Council collected UGX.447,884,004 but failed to remit UGX.22,394,200 to the wards and UGX.89,576,801 to the village councils respectively.

The failure to remit the shared Local Revenue to the lower units impairs service delivery at the grass roots. The Accounting Officer attributed the shortcomings to failure by the ward Agents to submit bank accounts details. He promised to remit the funds.

I advised the Accounting Officer to ensure compliance with the law.

2 Outstanding Advances Regulation 42 and 43 of Local Governments Financial and Accounting Regulations, 2007, require funds to be properly vouched and accounted for within a period of a

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month. However, administrative advances amounting to UGX.15,085,000 had been outstanding for more than one year.

Delayed accountability can lead to falsification of documents.

The Accounting Officer explained that the recovery of these advances had been difficult because most of the affected payees were no longer staff of the Town Council.

I advised the Accounting Officer to make efforts to recover the funds.

6.7.23 NAGONGERA TC 1 Non Compliance with the Statutory Obligations

Section 123 of the Income Tax Act, 1997, requires a withholding agent to pay to URA any tax that has or should have been withheld within fifteen days after the end of the month in which the payment subject to withholding tax was made. It was however observed that UGX.3,156,750 deducted from suppliers as WHT and PAYE was not remitted to URA.

Non-remittance of tax exposes the Council to the risk of penalties and fines from tax Authority.

The Accounting Officer was advised to comply with the tax law.

2 Poor road Works on Ochola, Kopoi and Abattoir Roads

The Council spent a total of UGX.79,675,330 on opening and maintenance of Ochola, Kopoi and Abattoir Roads. However, inspection of the roads revealed a number of defects as shown below;  Culverts were poorly installed with no headwalls.  Some of the culverts had cracks.  The road had already developed potholes as shown below:-

Potholes and open culverts on Ochola road Cracks, open culverts on Kipoi road 226

No head wall on Abbatoir road This was attributed to lack of effective supervision and monitoring of projects by management. The Accounting Officer attributed the defects to hash weather conditions.

The matter requires urgent attention.

3 Lack of Risk Management Policy

Section 103 (1&4) of the Local Government Financial and Accounting Regulation, 2007 require management to have established and documented a risk management Policy. It was observed that Council did not have documented risk policy at the time of audit.

This weakens the Internal Control Systems.

The Accounting Officer promised to develop the risk management policy.

I advised the Accounting Officer to ensure a risk management policy is developed.

6.7.24 BULAMBULI DLG

1 Lack of up to-date Contracts Register Regulation 5.4.7 (2) and (3) of the Local Governments Financial and Accounting Manual (2007) require that a Procurement and Disposal Unit should keep a contract register to record all the contract details including payments, retention monies and penalties, if any. However, contrary to the regulation, the Procurement Unit did not maintain an up to-date contract register.

Lack of an up-to-date weakens controls over contracts management.

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I advised the Accounting Officer to ensure that contracts register is regularly updated to enable effective monitoring of the contracts.

2 Failure to carry out Local Revenue Assessment and Enumeration Section 4.3 of the Local Governments Finance and Accounting Manual 2007 requires the accounting officer to carry out assessment of the council's revenue base regularly. However, the District did not present the Local Revenue assessment and enumeration reports for audit verification.

The Accounting Officer explained that revenue assessment was carried out and that the district had annual revenue enhancement plan.

I advised the Accounting Officer to regularly carry out the local revenue assessment as required by the regulations.

3 Staff acting beyond the required statutory period The Uganda Public Service Standing Orders 2010, Section A regarding appointment procedures (A-c) (9) requires that an appointment on acting basis is expected to last not more than six months and is subject to direction by the Appointing Authority. It further provides that any period of acting appointment beyond six months is irregular, unless the Appointing Authority extends the appointment for another period of six months, but shall not exceed 12 months in total. It was however observed that some posts had not been substantively filled for more that the statutory period.

The Accounting Officer explained that staff files had been forwarded to the District Service Commission for action.

The matter requires urgent attention.

4 Inadequate performance of the Local Governments Public Accounts Committee (LGPAC) Regulation 16 (1) and (2) of the Local Government Financial and Accounting Regulations 2007 requires Local Governments Public Accounts Committee (LGPAC) to examine the reports of the Auditor General, the Head of Internal Audit and any other reports of commissions of inquiry in accordance with section 88 of the Act. In

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additional, the Local Governments Public Accounts Committee shall produce reports for submission to the council and the Minister.

However, the District Local Government Public Accounts Committees (LGPAC) did not hold meetings to deliberate on reports of Internal Audit during the financial year under review.

This weakens the oversights and internal control systems at the district.

The Accounting Officer explained that the District Public Accounts Committee sits on Quarterly basis but was still handling backlog.

The Accounting Officer is advised to ensure that District Public Accounts Committee (DPAC) is facilitated to discuss the internal audit reports.

5 Lack of Risk Management Policy Section 2.4.1 of the LGFAM, 2007 requires the Head of Finance to be responsible for advising on risk management and effective systems of internal control. This role is carried out in collaboration with the Internal Audit function. These arrangements need to ensure compliance with all applicable legislation and regulations, and other relevant statements of best practice, and ensure that public funds are properly safeguarded and used economically, efficiently, and effectively in accordance with the statutory and other provisions that govern their use.

However, no report on risk management was presented for audit verification.

The Accounting Officer promised to address the matter in the current financial year (2016/2017).

The Accounting Officer was advised to develop a risk management policy.

6 Lack of Audit Committee Section 49(1) of the Public Finance and Management Act 2015 requires the Minister to establish an audit committee for each sector of Government and audit committees for a number of votes in Local Governments. The committee is meant to assist the accounting officer in carrying out the oversight responsibilities relating to financial

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practices, internal controls, corporate governance issues, compliance with laws, ethics audit matters and risk management. It was however observed that the audit committee had not been established.

The Accounting Officer explained that Ministry of Finance had not yet constituted the committee.

The matter requires urgent attention.

7 Failure to meet Minimum Standards of Health Services Paragraph 2.1.1 (D) of the Local Governments Management and Service Delivery (LGMSD) program Operational Manual, 2009 and Guidelines for Designation, Establishment and Upgrading of Health Units by Ministry of Health, 2011 set out Health Service Delivery packages or minimum standards for functioning of health centres. However, audit inspection carried out at Muyembe Health Centre IV, Buyanga Health Centre III and Bunambutye Health Centre III revealed the following shortcomings:-

BASIC REQUIREMENTS CURRENT STATUS Muyembe Health Centre IV Operating Theatre The aesthetic machine) was not functional.

Drug store with HSD office The drug store lacks shelves. Drugs were found piled on the floor. Mortuary The mortuary lacks water supply and power.

18 Housing Units + Ancillary The HC has only 9 housing units. structures. Medical Equipment No resuscitation equipment kit (equipment that is used to supply oxygen to new born babies with breathing complications) Means of transport The ambulance broke down. Buyaga Health Centre III Medical pit No Medical pit Eight two stance pit latrines One (2 stance) pit latrine Two general wards One general ward.

One maternity ward No maternity ward One placenta pit No planeta pit. One medical waste pit No medical waste pit 1O housing Units + Ancillary No staff housing units. structures Medical equipment No resuscitation machine and no baby weighing scales. No Blood pressure (BP) machine. Bunambutye Health Centre III Power No electricity in maternity ward, OPD and delivery room. Security The unit lacks a fence

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1O housing Units + Ancillary Only six rooms available structures Medical Equipment The HC lacks Blood pressure machine, resuscitator,thermometers, stethoscope and artery forceps for dressing wounds.

The shortcomings were attributed to inadequate funding.

I advised the Accounting Officer to engage the relevant Ministry to address the matters.

8 Poor Education Services at Bulaago Primary School Inspection of Bulaago Primary School revealed the following shortcomings:-

 The classrooms had deep cracks and at the verge of collapsing.  The school lacks adequate facilities and some pupils were sitting on the floor with no desks,  Classes were overcrowded with an average of 7 pupils sharing a desk as shown in the photograph below;

Deep holes in Pupils sitting on the Crowded classroom classroom floor

The conditions negatively affect learning and pupils’ performance. The matters require urgent attention.

6.7.25 BULAMBULI TC 1 Lack of Information and Communication Technology (ICT) Policy Regulation 110 (1) of the LGFAR 2007, requires the Chief Executive to designate an Officer who should ensure that adequate Information and Communication Technology (ICT) policies are established and are applied to enable adequate security and protection over computers and of data held on computers or information systems operated by the Council. However, it was observed that the Town Council did not have an ICT policy.

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This could expose the organization to risks of misuse, loss of data and physical equipment.

The Accounting Officer explained that plans are under way to submit a request for the recruitment of an IT officer who will spear head the process of developing and implementing the ICT policy.

I urged the Accounting Officer to expedite the process of developing the ICT policy.

6.7.26 BULEGENI TC 1 Lack of Physical Development Plan Section 11 &12 of the Physical Planning Act, 2010 provides that each urban authority or city shall establish an urban physical planning committee which shall cause to be prepared urban and local physical development plans and detailed plans; to recommend development applications to the board for change of use of land and to determine the development application relating to location, dumping sites or sewerage treatment which may have injurious impact on the environment among other responsibilities. However, it was observed that the Town Council lacked a physical development plan.

The absence of a physical planning undermines orderly and organised town development.

The Accounting Officer explained that the Town Council had sought technical support from the Ministry of Lands, Housing & Urban and was waiting for the response.

I advised the Accounting Officer to ensure that a Physical Planning Committee is undertaken.

6.7.27 NAKALOKE TC 1 Lack of Documented Risk Management Policy Section 2.4.1 of the LGFAM, 2007 requires the Head of Finance to be responsible for advising on risk management and effective systems of internal control. This role is carried out in collaboration with the Internal Audit function. These arrangements need to ensure compliance with all applicable legislation and regulations, and other relevant

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statements of best practice, and ensure that public funds are properly safeguarded and used economically, efficiently, and effectively in accordance with the statutory and other provisions that govern their use.

Contrary to the above regulation, the Town Council did not have a documented risk management policy.

This weakens the internal controls.

The Accounting Officer explained that council had facilitated the Internal Auditor to attend a Risk Management Workshop in Moroto as a first step towards developing the policy.

I urged management to expedite the process and ensure that a risk management policy is developed.

2 Lack of an Information Connection Technology (ICT) Policy Regulation 110 (1) of the LGFAR 2007, requires the Chief Executive to designate an officer who should ensure that adequate Information and Communication Technology (ICT) policies are established and are applied to enable adequate security and protection over computers and of data held on computers or information systems operated by the council. The Town Council had various IT equipment and an ICT focal person. However, council does not have a policy to guide staff on use and management of IT equipment, and the hardware.

This creates a risk of misuse and loss. The Accounting Officer explained that management of the Town Council had developed a draft policy which was yet to be approved by Council.

I urged the Accounting Officer to ensure that an ICT policy is developed and approved by the Council.

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6.8 MBARARA BRANCH 6.8.1 BUSHENYI DLG 1 Loss of a District Motor Cycle Paragraph 2.3.4.8 of the Local Governments Financial and Accounting Manual (LGFAM), 2007 requires the head of department in which a loss has occurred to make immediately on discovery of the loss, a report of loss and preliminary report to both the head of internal audit and the Head of Finance and a copy to be sent to the Accounting Officer. It was observed that a motorcycle registration number UDX 356Y valued at UGX.15,000,000 was lost and no report of loss was presented for audit verification. The Accounting Officer explained that the case was reported to Sheema Police immediately the incident occurred and recovery measures instituted.

The matter requires urgent attention.

2 Non-disposal of obsolete assets Section 2.3.1.5 of the LGFAM, 2007 requires assets that are not in use to be disposed of in accordance with the procedures in the Local Governments Public Procurement and Disposal of Assets (LGPPDA), 2006. However, a number of district vehicles had been grounded and in a deplorable state as shown in the pictures below:

Failure to dispose of the vehicle may result in further deterioration in value.

The Accounting Officer explained that the grounded vehicles were recommended for boarding off by the Board of Survey. I advised the Accounting Officer to ensure the assets are disposed off.

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3 Unaccounted for funds under USE Schools Paragraph 217 of Part 1 of the Treasury Accounting Instructions (TAI) 2003 requires advances to be accounted for within 60 days from the date of payment. A review of expenditure of funds under Six (6) Universal Secondary Schools (USE) revealed that UGX.83,377,409 remained unaccounted for at the time of audit. This was mainly attributed to the shortage of financial management skills in USE Schools. The Accounting Officer promised to organize trainings for head teachers and bursars in financial management. I urged the Accounting Officer to ensure that the promised action is implemented.

4 Lack of a District Land Tribunal (DLT)

Section 74 (1) and (2) of the Land (Amendment) Act, 2004 establishes the Office of District Land Tribunal (DLT) consisting of a Chairperson and two (2) other members who shall be persons with knowledge and experience in land matters, appointed by the Chief Justice (CJ) on the advice of the Judicial Service Commission (JSC). It was observed that the district is engaged in land disputes on land boundaries and did not have a District Land Tribunal. Consequently, land disputes cannot be settled expeditiously. The Accounting Officer explained that the district land tribunal was going to be constituted before December 2016 in consultation with the Judicial Service Commission.

I await the Accounting Officer’s promised action.

5 Salary account periodic reconciliations

Paragraph 6.4.2.6(2) of the Local Governments Financial and Accounting Manual, 2007 requires bank reconciliation statements to be prepared and entered into the cash book not later than fifteen days after the end of each month. The statement shall be certified as correct by the Head of Finance.

Contrary to the above provision, it was noted that periodic reconciliation statements for the district salary bank account were not being prepared and approved. This was attributed to laxity amongst the accounts staff involved in payroll management. I 235

informed management that this presents a risk of errors and fraud going undetected for long periods. In response, the Accounting Officer regretted this anomaly and promised to have it addressed going forward.

I advised that there is need to observe strict adherence with the provisions in the Accounting Manual.

6.8.2 BUSHENYI-ISHAKA MC 1 Untaxed Retention Allowance Section 19 (1) (a) of Income Tax Act Cap 340 as amended defines employment income to include among others wages, salary, gratuity, bonus, or other allowance. Audit of payrolls for the months of July 2015 to March 2016 revealed that UGX.27,000,000 paid as retention allowance to medical doctors was not subjected to Pay As you Earn (PAYE) worth UGX.8,100,000 as shown below: -

Monthly Annual First Period Employee Last Name Retention Retention PAYE Due Name Allowance not taxed Jul 15- 000000000854941 AARON KASULE Mar 16 1,500,000 13,500,000 4,050,000 Jul 15- 000000000863239 VIOLA NINSIIMA 1,500,000 13,500,000 4,050,000 Mar 16 Total 3,000,000 27,000,000 8,100,000

Non compliance with tax law may attract fines and penalties from Uganda Revenue Authority. The Accounting Officer explained that after payroll decentralization, it was realized that retention allowances for medical officers was not taxed and promised that the unpaid tax from July, 2015 to March, 2016 will be recovered from the affected officers The promised action of the Accounting Officer is awaited.

2 Lack of up to date Valuation List Section 4 of the Local Governments (Rating) Act requires Council to review its valuation list at least once in every 5 years, or such longer period as the Minister may approve. However, it was observed that Council did not have an up-to-date valuation list since the valuation lists used had expired. 236

This creates a risk that property rates as a source of local revenue might not be exploited to its full potential and besides the applied rates may be below the current market rates. The Accounting Officer explained that the shortcoming was due to lack of funds to update valuation list. I advised the Accounting Officer to update the valuation list.

3 Failure to meet minimum health standards in Health Centres Paragraph 2.1.1 (D) of the Local Governments Management and Service Delivery (LGMSD) Operational Manual for Local Governments sets minimum standards for health service delivery by health centres. The inspection of the health centres revealed the following shortcomings:- Bushenyi Health Centre IV Package Minimum Status Remarks standard Operational Theatre 1 1 Not operational due to Lack of Equipment. Doctors’ House 2 1 Staff House Type 3 2 1 Inadequate making some staff rent outside the Health Centre Two Stance Pit Latrine 10 6 Generator House 1 0 No generator to House the Generators; at the health Centre Means of Transport (Not to 1 0 No Ambulance be funded by LGMSD) Incinerator Functioning 0 Not Available

Ruharo HC III

Package Minimum Municipality Remarks standard Status Maternity 1 0 No Maternity Ward General Ward 2 0 No Ward 2 Stance Pit 8 1 Inadequate Pit Latrines Latrine Staff Houses type 2 1 Inadequate Accommodation making 1 some staff rent outside the health Centre Staff Houses type 1 0 No Staff House making some staff 2 rent outside the health Centre One Placenta Pit 1 0 No Placenta Pit Laboratory 1 0 No Laboratory

The lack of minimum requirements adversely affects service delivery.

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I advised the Accounting Officer to engage the Ministry of Health to ensure that the issues affecting the Health Services are addressed.

4 Failure to meet minimum standards for UPE Schools

Section 2.1.2(a) of the Local Governments Management and Service Delivery (LGMSD) Operational Manual provides minimum national standards of education service delivery. Documentation review revealed that the Municipal standards are below the national standards as shown below-

Particular Standard Municipal Minimum Remarks Council achieved Standard level Text books Text book Pupil 1:5 1:3 Inadequate books ration hindering learning Stance latrines Pupil latrine ration 1:60 1:40 Unhygienic, teachers share with pupils Number of Desk pupil ratio 1:16 1:3 Congestion impairs desks learning Number of Teacher to staff 1:10 1:4 Inadequate staff houses house ratio Accommodation

The high ratios imply that the learning environment may make it difficult for teachers to deliver and pupils to adequately learn. The Accounting Officer attributed the low standards to inadequate funds and indicated that the standards will improve when they receive more funds.

I advised the Accounting Officer to liaise with all stakeholders with a view of soliciting for more funds for improvement of education service delivery.

5 Poor Book Keeping and Financial Management of UPE Funds

Regulation 64(4) of Local Governments Financial and Accounting Regulation, 2007 requires primary Head teachers to maintain a cash book for recording receipts, and payments of the school transactions and the cash book to be monthly reconciled to the bank statement. During the year under audit, UGX.30,971,493 was released to eight (8) UPE schools in the Municipal Council. However, review of records revealed the following shortcomings:-  Payment vouchers were not numbered sequentially  Requisitions are not used to initiate payments  Non display of release charts  There were instances of over payment and under payment of capitation grant 238

The above weaknesses may lead to non-achievement of the objectives for which the UPE program was established. The Accounting Officer pledged to have the head teachers trained in book keeping.

I urged the Accounting Officer to ensure that the promised action is implemented.

6.8.3 IBANDA DLG 1 Non Deduction of PAYE

Section 19(1) (a) of Income Tax Act Cap 340 requires that tax (Pay As You Earn) be deducted from all employment income. In addition, Section 5.6.3 (3) of The Local Governments Financial and Accounting Manual, 2007 requires staff in the salaries subsection to ensure that staff advances recovery and other deductions are made before salaries are paid. It was however observed that retainer allowances were paid to staff without deduction of PAYE of UGX.18,000,000. This exposes the district to a risk of fines and penalties from Uganda Revenue Authority. The Accounting Officer explained that Council had written to the Ministry of Public Service requesting that the retention allowance of medical officers be taxed and to automate recoveries for the same, however, this was not done. He further explained that they have instituted measures to recover all unpaid taxes from staff. I advised that there is need to strengthen the payroll processing system to include verifications before effecting payments. In the meantime, I await the outcome of the Accounting Officers commitment.

2 Non-deduction of Local Service Tax (LST)

Section 80 (1a) (b) of the Local Governments Act, Amendment No.2, 2008 requires local service tax to be levied on all persons in gainful employment or who are practicing any profession. Review of the district payroll revealed that Local service tax totaling UGX.2,710,000 was not levied on 60 district staff for the FY 15/16. The Accounting Officer attributed the shortcoming to failure by the Ministry of Public Service to activate the codes for deduction of LST on the system. Management also assured me that they have since begun the process to recover the un-deducted tax

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from district employees. It should however be noted that these codes are active for all other districts. I await the outcome of the management action.

3 Payment of Salary to Absconded Staff

Section (A-n) (19) of the Uganda Public Service Standing Orders provides that in the absence of communication from an officer and failure to resume duty within 30 days, the officer shall be deemed to have abandoned duty. As such, officers in this category should be deleted from the payroll. Review of personal files for selected staff revealed that some members of staff abandoned their duties and this was communicated to management by line managers; however, the district delayed to remove them from the payroll leading to a financial loss of UGX.2,741,085, as shown below:- Table Showing Abscondment cases

Employee Number Date of first notification of abscondment Amount paid - UGX

836338 22nd October 2014 2,068,887 836342 23rd September, 2015 672,198 Total 2,741,085

The Accounting Officer attributed their reluctance to delete the staff names off the payroll to the ongoing process by the disciplinary committee as any deletions may later lead to legal action. I advised management to put in place measures so that disciplinary proceedings are dealt with in a timely manner by the responsible committees. In addition, the Accounting Officer should also consider suspension of payments as they await outcomes of the disciplinary committees.

4 Lack of Documented Risk Management Policy

Regulations 103 (1) of LGFAR, 2007 requires the Head of finance to advise on risk management and effective systems of internal controls. However, it was observed that Council did not have a documented risk management policy. This weakens the Internal Control Systems. The Accounting Officer explained that the district had embarked on risk assessment so as to come up with a comprehensive risk management policy.

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I advised the Accounting Officer to ensure that a Risk Management Policy is developed.

5 Failure to meet the Minimum Standards under Primary Education Section 2.1.2 (a) of the Local Government Management and Service Delivery Operational Manual provides Guidelines for Primary Education Minimum National Standards of Service Delivery. The analysis of data from schools revealed the following shortcomings:- Particular Sample Standard Current Minimum Ratio Standard Pupils (No) 30,959 Classroom to Pupil 1:81 1:55 Ratio Latrine stances 412 Latrine to Pupil Ratio 1:75 1:40 Number of text 185,754 Test book to Pupil 1:3 books ratio 1:6 Number Of Desks 5,699 Desk to Pupil Ratio 1:54 1:3

The schools facilities are inadequate and this negatively affects the academic performance. The Accounting Officer attributed the inadequate school facilities to inadequate funding.

I advised the Accounting Officer to follow up the matter with Ministry of Education and Sports and ensure that the challenges are addressed.

6.8.4 IBANDA TC

1 Lack of Documented Risk Management Policy

Regulations 103 (1 & 4) of the LGFAR, 2007, requires the Head of finance to establish a documented risk management policy. However, it was observed that management has not developed a documented risk management policy as required. This weakens the Internal Control System.

I advised the Accounting Officer to develop a risk Management Policy.

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6.8.5 ISINGIRO DLG 1. Failure to Meet the Minimum Standards for Education in Primary Schools Guidelines 2.1.2 of the Local Government Management and Service Delivery (LGMSD) Guidelines, 2009 provides the Minimum National Standards of Service Delivery for UPE schools. Analysis of statistics for the schools in the district revealed a number of shortcomings as shown in the table below:

Details Standard District achieved Minimum standard level Number of class Classroom pupil ration 1:70 1:55 rooms No of Text Books Text book Pupil ration 1:8 1:3 Stance latrines Pupil latrine ration 1:49 1:40 Number of desks Desk pupil ratio 1:7 1:3

Failure to meet the minimum standards of Education Service delivery negatively impacts on academic performance of pupils. The Accounting Officer explained that measures are being put in place to solicit for more funds from the relevant authorities and Non Governmental Organisations as well. The matter requires urgent attention.

2 Poor Infrastructure in Primary Schools The audit inspection carried out in three schools of Mpambazi, Guma Memorial and Kyanza Primary Schools located in Birere Sub-County, Isingiro Town Council and Nyamuyanja Sub-County revealed the following shortcomings:-

School Facilities (With Pictures) Remarks Mpambazi Primary Lack of furniture School 349 pupils, 8 teachers Inadequate space as the Head Teacher shares his office with the library. Dilapidated Staff Quarters

Guma Memorial Primary Temporary structures were put School up to accommodate pupils for 185 pupils, 5 lessons. teachers Unfinished Structures which were also being used for lessons due to limited space.

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Inadequate Furniture in Classroom where five (5) pupils were sharing a desk Kyanza Primary Inadequate Infrastructure School where the Head Teacher 299 pupils, 7 shared his office with library teachers. Pupils were having lessons under a shade.

Lack of Latrines for Pupils at the School

The poor infrastructure negatively affects students learning. The matter requires urgent attention.

6.8.6 ISINGIRO TC 1 Lack of up to date Valuation Lists Section 4 of the Local Governments (Rating) Act requires the Council to review its valuation list at least once in every 5 years, or such longer period as the Minister may approve. However, it was observed that the Council did not have an up-to-date valuation list. There is a risk that the local revenue base might not be exploited to its full potential. The Accounting Officer attributed this to limited local revenue to facilitate valuation of businesses but indicated that it had been provided for in the budget of financial year 2017/2018.

I advised the Accounting Officer to ensure that the valuation list is updated.

6.8.7 KABEREBERE TC 1 Lack of Valuation Lists Section 4 of the Local Governments (Rating) Act requires the Council to review its valuation list at least once in every 5 years, or such longer period as the Minister may approve. However, it was observed that the Council did not have an up-to-date valuation list since the valuation lists used had expired. There is a risk that property rates as a source of local revenue might not be exploited to its full potential and besides the applied rates may be below the current market rates.

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The Accounting Officer explained that since valuation of property for property tax is expensive, they have engaged the Chief Administrative Officer to contact valuer on behalf of the Town Councils.

I urged the Accounting Officer to ensure that the valuation list is updated.

2 Uncollected Local Service Tax (LST) Regulation 32 of the Local Governments Financial and Accounting Regulations (LGFAR), 2007 requires the Head of Finance to collect all budgeted revenue and bank it intact. A review of the financial statements indicated that the Town Council budgeted for local service tax of UGX.4,400,000 but only received UGX.773,000 resulting in a shortfall of UGX.3,627,000. The shortfall constituted 82% of the budgeted LST collections. The Accounting Officer attributed the uncollected local service tax to the failure by the District to remit the collected LST.

I advised the Accounting Officer to follow up the matter with the District to ensure that LST is collected.

3 Lack of Information Communication Technology (ICT) Policy

Regulation 110(1) of the LGFAR, 2007 requires the Chief Executive to designate an officer who should ensure that adequate Information and Communication Technology (ICT) policies are established and are applied to enable adequate security and protection over computers and of data held on computers or information systems operated by the Council. It was observed that the Town Council neither designated an Officer to be in charge of ICT management and to develop an ICT policy to guide staff in handling IT equipment and information.

The Accounting Officer promised to develop the Information Communication Technology Policy. The promised action of the Accounting Officer is awaited.

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6.8.8 KABUYANDA TC 1 Lack of full details about the assets in the Assets Register Paragraph 2.3.1.4(2) of the Local Governments Financial and Accounting Manual, 2007, requires the maintenance of a fixed assets register that contains information such as detailed description of the asset, invoice reference, historical cost of acquisition, date of acquisition, name of supplier, warranty details, estimated life and estimated date of retirement and maintenance records. It was observed that the Assets Register did not show full details of the assets like asset value, date of purchase and location. This renders the verification of assets difficult.

I advised the Accounting Officer to ensure that the Assets Register is updated with the details about the assets.

6.8.9 KABALE DLG 1 Salary payment anomaly The Public Service Standing Orders, General Rules on Payment of Salaries (B - a)1 requires salary payment to be paid to bonafide employees who execute official work in the Public Service and Section 12 stipulates that officers who have ceased employment have their salaries stopped. In addition, Section (P-d) 4 states that “all documents which affect the official record on a public officer must be kept properly regardless of the source.” It was observed that a total of UGX.25,832,974 was paid to six (6) individuals who lacked personnel files at the district as shown below: Name of staff Amount paid - UGX 1 Akankwasa Judith 5,476,496 2 Akunda John Willy 3,840,988 3 Akatwijuka Julius 4,132,404 4 Atuhaire Winnie 4,395,087 5 Atukwase Prudence 4,675,505 6 Aturinde Esau 3,312,494 TOTAL 25,832,974

I advised the Accounting Officer to present the personnel files for the individuals for audit verification.

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2 Failure to meet the minimum health standard at the Health Centre IV Paragraph 2.1.1 (D) of the Local Government Management and Service Delivery Guidelines provides the frame work for the minimum standards for health service delivery. However inspections of Muko Health Centre IV revealed a number of shortcomings. The Accounting Officer attributed shortcomings to the retention of the 80% funds for infrastructure at the ministry meant for capital development. I advised the Accounting Officer to engage the Ministry of Health and other stakeholders and ensure that the health service delivery is improved.

3 Detected losses of medicines Chapter 5 of the management of medicines and health supplies manual requires physical count to verify the stock levels of medicines. However, a physical count carried out revealed variations in a number of medicines as shown below:- Kabale District Health Store: STORES AUDIT STOCK DRUGS VARIANCE RECORD COUNT Liponavir Ritonavir 57 89 (32) Fancidar 8 6 (14) Mabendazole 24,150 96,000 (71,850) Clotrimazole 17 15 2 Diazipam 11 22 (11) piriton 5 0 5 Glibenclamid 19 1 18 Paracetamol 15 10 5 Total 24,282 96,143 (71,877)

This is an indication of poor record keeping and stores management. I advised the Accounting Officer to establish an effective stores control system and to ensure that proper records are maintained.

4 Lack of Contract Implementation Plans Regulation 119 (2) & (3) of LG Public Procurement and Disposal of Assets (PPDA) Regulations, 2006 requires the user departments to nominate a member of staff with appropriate skills and experience as a contract supervisor and inform the Accounting Officer in writing and copy to internal audit department, secretary contracts committee and any other relevant stakeholders informing them of the delegated contract 246

supervisor who shall take full responsibility. A contract manager is required to prepare a contract implementation plan and give copies to Head of procurement and disposal unit, Secretary Contracts committee, and internal audit for monitoring purposes. Contract implementation plans for the contracts amounting to UGX.1,406,538,664, were not presented for audit verification. Failure to undertake contract supervision may lead to delayed completion of projects and shoddy works. I advised the Accounting Officer to always ensure that contract managers prepare the implementation plans for proper supervision and monitoring of contracts.

5 Failure to meet the minimum standards in Primary Schools Paragraph 2.1.2 of the Local Government Management and Service Delivery Guidelines provides the minimum national standards of education service delivery. Analysis of the statistical data for the schools in the district revealed the following shortcomings:- Particular Standard District Minimum Remarks achieved Standard level Stance latrines Pupil latrine ration 1:59 1:40 Poor hygiene Number of Desk pupil ratio 1:16 1:3 Congestion, poor desks learning environment Number of staff Teacher to staff 1:6 1:4 Late houses house ratio coming/absenteeism.

I advised the Accounting Officer to follow up the matters with the Ministry of Education and Sports and ensure that the shortcomings are addressed.

6 Lack of Information Communication Technology (ICT) Policy Regulation 110 of the Local Governments Financial and Accounting Regulations (LGFAR), 2007 requires the Chief Executive to designate an officer to ensure that adequate information and communication technology policies are established and are applied to enable adequate security and protection over computers and of data held thereon or information systems operated by the council. A review of the IT general and application controls revealed that management has not formulated an IT policy.

The Accounting Officer explained that a staff had been assigned as system administrator and expects improvements in general and application controls for proper logical and physical access and security over data.

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I advised the Accounting Officer to develop the IT policy

7 Lack of a Risk Management Policy Regulation 103 (1 and 4) of the LGFAR, 2007 requires that, the Head of Finance establishes a documented risk management system. However, it was observed that the Head of Finance had not provided guidance for proper planning, appraisal, authorization and controlling of their operations in order to achieve continuous improvement on economy, efficiency and effectiveness and for achieving their financial performance targets. This weakens the Internal Control system. The Accounting Officer admitted the shortcoming and promised to develop the risk management policy in the following financial year.

I advised the Accounting Officer to expedite the process of developing the risk management policy.

6.8.10 KABALE MC 1. Non Remittance of Shared Local Revenue to the Divisions Section 14(1) Part V of the Fifth Schedule, of the Local Government Act 1997 (as amended), states that the minimum of 30 percent of the total revenue collected and remitted by all city or municipal divisions to a city or municipal council shall be distributed as grants to division councils. Contrary to this provision, the Municipal Council did not remit the 30% shared of local revenue of UGX.83,560,563 to divisions. Non remittance of shared revenue negatively affects the implementation of the planned programmes by the divisions. The Accounting Officer explained that remittance to Divisions had started and so far UGX.20,000,000 had been remitted.

I advised the Accounting Officer to ensure that all outstanding shared local revenue is remitted to the Divisions as required by the law.

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2. Failure to meet minimum standards of health service delivery Paragraph 2.1.1 (D) of the Local Government Management and Service Delivery (LGMSD) Guidelines provides the frame work for the minimum standards for health service delivery. However, audit inspection carried out at Kamukira Health Centre IV revealed several shortcomings. The Accounting Officer explained that the lacking equipment and the construction of the building which houses the theatre stalled due to limited funding.

I advised the Accounting Officer to engage relevant authorities to address the challenges.

3. Failure to meet the minimum standards for Primary Schools Paragraph 2.1.2 of the Local Government Management and Service Delivery (LGMSD) Guidelines provides the minimum national standards of education service delivery. Analysis of data for the schools in the Municipality revealed a number of shortcomings as shown below:- Particulars Standard Municipal Council Minimum Remarks achieved level standard Text books Text book Pupil 1: 5 1: 3 Ratio Number of Teacher Pupil 1: 24 1: 55 Inadequate delivery teachers Ratio by teachers Stance latrines Latrine Pupil Ratio 1: 23 1: 40 Health hazard

The Accounting Officer explained that Council budgeted for rehabilitation of teachers` house at Kabale Preparatory School in Financial Year 2016/2017 and other schools would be renovated in subsequent years.

I advised the Accounting Officer to ensure that funds are secured to improve facilities in Primary Schools.

6.8.11 KATUNA TC 1. Lack of a Master Plan Section 32, Part 1 (b) Third schedule of the Local Governments Act, Cap 243 requires an urban Council to have a master plan for proper land use and coordinated development. Katuna Town Council was formed in 2010/11. Since that time,

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management has not secured an approved master plan for the town council from the Ministry of Lands Housing and Urban Development (MLHUD). This exposes the Town Council to risks of unplanned developments. The accounting Officer attributed the lack of a master plan to inadequate funds for its expedition. The Accounting Officer explained that the exercise proved expensive for the town Council and had requested Ministry of Lands for possible assistance.

I advised the Accounting Officer to engage the relevant authorities and ensure that a master plan is developed.

6.8.12 KABWOHE-ITENDERO TC 1 Stalled Office block construction

The Town Council entered into a contract with a local firm, M/s Arber Contractors Ltd to construct an office block at a contract sum of UGX.198,289,000. The start date and completion dates were 13th January 2015 and 13th May 2015 respectively. By the time of audit in November 2016, UGX 108,000,000 had so far been paid to the contractor which was equivalent to 54% of the contract price. However, the works had been abandoned at foundation stage as shown in the pictures below;

The Accounting Officer explained that funds were exhausted at phase 1 of the Office block construction. The matter requires urgent attention.

2 Lack of Revenue Registers

Regulation 33(1) of the Local Governments Financial and Accounting Regulations, 2007 requires every Local Government Council to maintain revenue registers showing all forms of revenue and a record of steps taken to collect all arrears. However, I observed that Council did not maintain revenue registers for the different local revenue sources. Lack of revenue registers weakens the controls over revenue collection. I advised the Accounting Officer to establish the revenue registers.

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3 Irregularities in application on Force Account mechanism

During the year, UGX.38,220,250 was paid for routine mechanized maintenance on a number of roads under the Force Account. However, the following shortcomings were identified:-  The supervisor did not submit detailed work program and management work plan to the Accounting Officer for the executed works.  There was no evidence of supervision of the progress of works and no completion certificates were issued for road works executed as there were no monitoring/supervision reports attached on payments.  The Force Account manager did not fill in daily work sheets indicating resources used and amount of works executed, and also did not submit to the supervisor, periodic reports and final reports after completion of works.  There was no master roll for road workers which should be kept and maintained by the head man.  Movement charts for the grader to show distances travelled and fuel consumed on a daily basis were not maintained.  Log books for operational vehicles were also not maintained Failure to adhere to Force Account guidelines may lead to misuse of funds. The Accounting Officer explained that records regarding Force Account were mixed up during the formation of Sheema Municipality.

I advised the Accounting Officer to follow up the matter and ensure that the records are presented for audit verification.

6.8.13 KANUNGU DLG 1 Delayed Payroll Deletions Paragraph 5.6.3(2) of the Local Governments Financial and Accounting Manual, 2007 requires that the Personnel Officer should ensure that staffs that have left the service of the Local Government are removed immediately from the payroll. It was observed that payroll deletions had been delayed for two (2) officers leading to the District paying UGX.8,098,138.

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The Accounting Officer explained that Council had written to all heads of departments and Heads of institutions instructing them to always report cases of death, transfers out and abscondment early enough for timely payroll cleaning to avoid loss.

I advised Accounting Officer to ensure prompt deletions of staff who have left service and to ensure recovery of funds..

2 Unapproved Supplementary Budget

Regulation 24 of the Local Governments (financial and accounting) Regulations, 2007 requires that expenditure for which there is insufficient or no provision in the approved estimates shall not be incurred until a supplementary estimate has been approved by Council.

In a letter dated 24th June 2015 to the Permanent Secretary/Secretary to Treasury, Ministry of Finance and Economic Development (MoFPED), the Accounting Officer requested for an additional wage for newly recruited staff totalling to UGX.664,733,340 to cater for staff who were appointed after preparation of the June payroll. This request was honoured and funds were subsequently remitted to the district Salary account in Bank of Uganda for utilisation. However, this was done without the knowledge of the District Council as there was no evidence of deliberation and approval by the Council. I informed management that the practice is in contravention of the above regulation and undermines the authority and controls of Council.

I advised the Accounting Officer to always seek approval from Council for supplementary funds requirements.

3 Payroll Audit

3.1 Un-deducted PAYE from staff salaries

Section 5.6.3 (3) of the Local Governments Financial and Accounting Manual, 2007 requires that staff in the salaries sub-section must ensure that staff advances and other deductions are deducted before the payment is made. However, a review of the payrolls revealed that a total of UGX.2,667,360 in form of Pay as You Earn (PAYE) was not deducted from some employees’ salaries.

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I explained to the Accounting Officer that failure to deduct PAYE exposes the district council to penalties and fines that can be imposed by Uganda Revenue Authority. The Accounting Officer explained that Council had written to the Ministry of Public Service IPPS Administrators to correct the anomaly. I advised that the district ought to recover the taxes in question from future salaries and remit the same to the tax body.

3.2 Non Deduction of Taxes

Section 123 (1) of the Income Tax Act, 1997 requires a withholding agent to pay Uganda Revenue Authority any tax that has or should have been withheld within fifteen days after the end of the month in which the payment subject to Withholding Tax was made. It was observed that taxes amounting to UGX.894,300 in respect of 6% withholding tax was not deducted from the supply of goods and services. Non-deduction of tax exposes Council to the risk of penalties and fines from URA. The Accounting Officer admitted the shortcoming and promised to take action.

The promised action of the Accounting Officer is awaited.

4 Poor record keeping at the UPE Schools

Regulation 64(4) of Local Governments Financial and Accounting Regulation, 2007 require primary head teachers to keep proper cash books in respect to all sums of money received and expended by the school and the matters in respect of which receipt and expenditure take place. During the year under audit, UGX.457,126,475 was released to different UPE schools in the district. However, documentation review of the sample of 9 schools revealed the following shortcomings: -  Payment vouchers were not numbered sequentially  Requisitions were not used to initiate payments  Non-display of release on the charts

The Accounting Officer explained that Council has been issuing guidance on accountability of funds to Head teachers and issued warning letters to those that do not comply. 253

I advised the Accounting Officer to facilitate training in book keeping and financial reporting for the Head Teachers.

6.8.14 KANUNGU TC 1 Lack of Information and Communication Technology (ICT) Policy

Regulation 110(1) of the LGFAR, 2007 requires the Accounting Officer to designate an officer to ensure that adequate Information and Communication Technology (ICT) policies are established and applied to enable adequate security and protection over computers and data held thereon. However, It was observed that the Town Council lacked an ICT Policy to regulate the use of ICT resources. This exposes the Town Council to risk of loss of information and equipment. The Accounting Officer attributed the lack of an ICT policy to the absence of an ICT officer who is not recognized in the staff establishment.

I advised the Accounting Officer to ensure that an ICT Policy is developed.

6.8.15 KIHIHI TC

1. Non Remittance of Shared Local Revenue The Local Governments Act 1997 (as amended), Fifth Schedule, Part V (15a), requires the Town Council to distribute 5% and 20% of the total local revenue collected amongst its wards and village councils respectively. Contrary to this provision, the Town Council did not transfer UGX.51,872,713 to Wards. Non remittance of shared local revenue denies the Lower Local Governments the opportunity to fully implement the planned Government programmes. The Accounting Officer attributed the non-remittance of local revenue to a court ruling that ruled against the operations of Local Councils.

I advised the Accounting Officer to ensure that the funds are remitted to the Wards and Village Councils in accordance with regulations.

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2. Lack of Information Communication Technology Policy Regulation 110(1) of the LGFAR, 2007 requires the Chief Executive to designate an officer who should ensure that adequate Information and Communication Technology (ICT) policies are established and are applied to enable adequate security and protection over computers and of data held on computers or information systems operated by the Council. It was observed that the Town Council had neither designated an officer to be in charge of ICT management, nor developed an ICT policy to guide staff in use of IT equipment and information. The Accounting Officer explained that the staff establishment of Town Councils does not provide for an IT officer.

I advised the Accounting Officer to designate an officer to be responsible for developing the IT Policy.

6.8.16 KIRUHURA DLG 1 Non compliance with the statutory obligations Section 19 (1) (a) of Income Tax Act Cap 340 as amended defines employment income to include among others wages, salary, gratuity, bonus, or other allowance. The payroll audit for the months of July 2015 to March 2016 revealed that UGX.55,164,367 paid as allowance to medical doctors was not subjected to pay as you earn (PAYE) amounting to UGX 12,600,000. The District risks fines and penalties from Uganda Revenue Authority. The Accounting Officer explained that the mechanism to deduct PAYE under IPPS is embedded in the system. However, at the time of introducing Retention Allowance on payroll, the system had been not upgraded to tax Retention Allowance until April 2016. The monies will be recovered through the payroll.

I advised the Accounting Officer to comply with the tax law.

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2 Lack of an Up-to-Date Fixed Assets Register

Paragraph 2.3.1.4(2) of the Local Governments Financial and Accounting Manual, 2007 requires the maintenance of a fixed assets register to show; location, title number/ reference, description, cost, additions and disposals for each item of the fixed assets. However, it was observed that the fixed assets register lacked information on location, title number or reference, description, cost, additions, disposals contrary to the regulations. In the absence of an up to date fixed assets register, the verification of the assets was rendered difficult. The Accounting Officer attributed this to man power gaps and indicated that some of the districts assets require revaluation to derive their true values but the district does not have a Government Valuer in place to facilitate the process.

I advised the Accounting Officer to ensure the fixed assets register is updated.

6.8.17 KAZO TC 1 Doubtful Tax Remittance to Uganda Revenue Authority Section 123(1) of the Income Tax Act, 1997 as amended provides that a withholding agent shall pay to the Commissioner any tax that has been withheld or that should have been withheld within 15 days after the end of the month in which the payment subject to withholding tax was made by the withholding tax agent. However, an amount of UGX.3,020,160 purportedly remitted to URA lacked acknowledgement receipts. Failure to remit taxes may attract fine and penalties from Uganda Revenue Authority.

I advised the Accounting Officer to obtain the acknowledgement receipts from URA and present them for audit verification.

6.8.18 KISORO DLG 1 Shortfall in Government Releases

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Regulation 18(3) of the Local Governments Financial and Accounting Regulations 2007 requires budget estimates to be based on objectives to be achieved for the financial year and during implementation, effort should be made to achieve the agreed objectives or targets as per the programs of Council. It was observed that Council budgeted for UGX.29,905,338,615 however, only UGX.27,885,334,819 was released leading to a shortfall of UGX.2,020,003,796. The shortfall negatively affects service delivery.

I advised the Accounting Officer to liaise with the Ministry of Finance to ensure that all budgeted funds are released to enable implementation of all the planned activities.

2 Failure to meet the minimum Education Services Standards Paragraph 2.1.2 of the Local Governments Management and Service Delivery Operational Manual provides minimum standards for education service delivery in health schools. Inspections carried out in a sample of 40 schools revealed a number of challenges that affect provision of education services as shown below;

Particular Sample Standard Current Ratio Minimum Standard Pupils (No) 72,540 Classroom Pupil Ratio 1: 70 1:55 Latrine stances 1,071 Latrine Pupil Ratio 1:70 1:40 Number of Classrooms 969 Desk Pupil Ratio 1:5 1:3 Number of Desks 16,068

The Accounting Officer attributed the current state of affairs to insufficient funding by the Central Government which is not commensurate with the growing population and enrolment in the primary schools. For the last 5 (five) years the School Facilities Grant to Kisoro District Local Council had remained constant at UGX. 210,000,000 annually.

I advised the Accounting Officer to follow up the matter with the Ministry of Education and Sports and ensure that the challenges are addressed.

a. HEALTH SERVICE DELIVERY Paragraph 2.1.1 of the Local Governments Management and Service Delivery Operational Manual provides minimum standards for health service delivery in health units.

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Inspections carried out at Kisoro Hospital revealed the following shortcomings:- a) Congested Wards The maternity wards were designed to accommodate 25 patients at a time. However, at the time of inspection, It was observed that the ward was accommodating 36 patients with some of them sleeping on the floor. It was also observed that there was an acute shortage of mattresses. The congestion was attributed to preference of patients to access the medial services at the hospital rather than Health Centre’s which lacked some services and the fact that the hospital also serves people from the neighboring countries of Democratic Republic of Congo and Rwanda. Congested patient wards do not provide a healthy environment for the patients and may cause more spread of diseases.

I advised the Accounting Officer to liaise with the relevant authorities to improve on the services of the lower health centers.

b) Sorry state of the Wards It was observed that most of the wards were in poor state with urgent need of rehabilitation as shown in the male ward below:-

The windows were broken and with no fasteners. The poor state of the wards may cause more health problems to the patients.

The Accounting Officer explained that hospital was constructed in 2001 and since then there has been no renovations done. However, bills of quantities (BOQs) were prepared and sent to Ministry of Health for consideration for renovation and there has been no response to date. I advised the Accounting Officer to follow up the matter with the Ministry of Health.

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c) Non-Functional Medical Equipment A number of critical medical equipment were found non-functional. The hospital had several autoclaves which were not functional due to lack of spares and its only X-Ray machine had been locked by the Atomic Energy Centre because of the failure to pay the subscription fees as shown below:-

Non-functional auto clave due to lack of spare A non-functional X-Ray machine locked parts. with a chain and padlock.

The patients who require X-ray services have to seek the services from private hospitals. The matter requires urgent attention.

3.1 Understaffing in the Health Centre’s The health sector has an approved staff establishment of 444 positions; only 318 positions were filled leading to a shortage of 126 which is 30% as shown below:-

Health Grade Doctors Clinical Nurses Other Staff Centres/Hospital Officers E AS V E AS V E AS V E AS V Kisoro Hospital Hospital 11 2 9 6 6 0 111 78 33 78 48 30 Rubuguri HC IV 2 2 0 2 2 0 8 8 0 27 18 9 Chahafi HC IV 2 2 0 2 2 0 8 8 0 27 18 9 Busanza HC IV 2 2 0 2 2 0 8 8 0 27 18 9 Gasovu HC III 0 0 0 2 2 0 6 6 0 11 8 3 Nteko HC III 0 0 0 2 2 0 6 6 0 11 8 3 Nyabihuniko HC III 0 0 0 2 2 0 6 6 0 11 8 3 Nyakinama HC III 0 0 0 2 2 0 6 6 0 11 8 3 Bunagana HC II 0 0 0 0 0 0 2 2 0 7 3 4 Gapfurizo HC II 0 0 0 0 0 0 2 3 -1 7 4 3 Busengo HC II 0 0 0 0 0 0 2 2 0 7 4 3 Gitovu HC II 0 0 0 0 0 0 2 2 0 7 4 3 Zindiro HC II 0 0 0 0 0 0 2 2 0 7 4 3 Total 17 8 9 20 20 0 169 137 32 238 153 85

Key E - Establishment AS- Actual Staffing V - Vacancies

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Under staffing negatively affects service delivery. I advised the Accounting Officer to engage the Ministries of Public Service and Health to have more staff recruited and posted to the health centres and the hospital.

3.2 State of Health Centre’s The following Seven health centres were inspected in the course of audit;

Health Centres Grade Location Rubuguri HC IV Kirundo S/County Busanza HC IV Busanza S/County Buhozi HC III Busanza S/county Nteko HC III Nyabwishenya S/County Kagano HC III Kanaba S/County Nyarubuye HC III Nyaurubuye S/County Gitovu HC II Busanza S/County

The following shortcomings were identified:-  All the health centres did not have the improved energy stoves for sterilization and the autoclaves were non-functional.  There was lack of access to lighting energy in all the facilities visited. The Accounting Officer explained that renovation of health facilities was being budgeted for on PHC development but for the financial year under review there were no allocations to PHC development for Kisoro District.

I advised the Accounting Officer to engage the relevant authorities to ensure improvement of conditions of the health centers.

4 Non submission of list of Revenue Arrears to the District Executive Committee Paragraph 4.8 of the Local Governments Financial and Accounting Manual, 2007 requires the Head of Finance to prepare a list of revenue arrears at the year end and to submit it to the District Executive Committee for action. However, it was observed that the Head of Finance did not submit to the District Executive Committee a list of arrears amounting to UGX.89,124,694. Council is exposed to loss of revenue due to failure to take enforcement measures on the defaulters. The Accounting Officer explained that the list of revenue arrears was presented to the District Executive and had also sought advice of the Solicitor General to recover the funds. 260

I advised the Head of Finance to initiate measures and ensure that all the revenue arrears due to the Council are collected.

5 Irregular Payment of Allowances Section (E-A), Paragraph (1) of the Uganda Public Service Standing Orders, 2010 defines an allowance as a payment payable to an officer to facilitate the proper execution of an assignment or duty. However, a review of the payroll for the financial year revealed that a total of UGX.20,378,736 in form of consolidated, lunch and hardship allowance was paid to staff on study leave. The payments are irregular. The Accounting Officer attributed the payments due to a system error and promised to recover all the funds from the officers. The matter requires urgent attention.

6 Lack of Documented Risk Management Policy Regulations 103 (1&4) of the LGFAR, 2007, requires that the Head of Finance establishes a Documented Risk Management Policy. However, it was observed that management has not established and documented the risk management policy as required. This weakens the Internal Control Systems.

I advised the Accounting Officer to ensure that a Risk Management Policy is developed.

6.8.19 KISORO TC

1. Lack of Documented Risk Management Policy Regulations 103 (1 & 4) of the LGFAR, 2007, requires the Head of Finance to establish a documented risk management policy. However, it was observed that management has not developed a risk management policy. This weakens the Internal Control Systems. The Accounting Officer explained that the development of the policy was in progress. I advised the Accounting Officer to expedite the process of developing a Risk Management Policy.

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6.8.20 MBARARA DLG 1. Shortfall in Central Government Grants

Regulation 18(3) of the Local Governments Financial and Accounting Regulations, 2007 requires budget estimates to be based on objectives to be achieved for the financial year and during implementation, effort should be made to achieve the agreed objectives or targets as per the programs of Council. Whereas a total of UGX.30,307,751,004 was budgeted for in respect of Central Government Grants, only UGX 26,799,740,834 (88%) was realized, leading to a shortfall of UGX 3,508,010,170 i.e 12%. This was due to budget cuts from the Ministry of Finance, Planning and Economic Development. Shortfall in government grants leads to failure to implement all the planned activities thus affecting service delivery to the community. I advised the Accounting Officer to engage the Ministry of Finance, Planning and Economic Development to ensure that funds are released as budgeted.

2. Failure to dispose off Assets Regulation 122(2) of the LGPPDA Regulations, 2006 requires the Accounting Officer to appoint a Board of Survey to verify the assets of Council to be boarded off. The Board of Survey recommended boarding off vehicles and motorcycles. However, the assets had not been disposed off by the time of audit. Failure to dispose boarded off assets may lead to further deterioration in value. The Accounting Officer explained that boarding off was on-going for vehicles that belonged to the district but some line ministries objected the request to board off ministry vehicles.

The matter requires urgent attention.

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6.8.21 MBARARA MC 1 Lack of a Risk Management Policy Regulation 103 (1 & 4) of the LGFAR, 2007 requires that the Head of finance establishes a documented risk management policy. However, it was observed that management has not established and documented the risk management policy as required by the regulations. This weakens the Internal Controls. The Accounting Officer explained that a committee had been constituted to prepare the policy and preliminary consultations with various stakeholders had been done.

I advised the Accounting Officer to ensure that a Risk Management Policy is developed.

2 Un-verified top-up The audit noted that DG Account was credited with UGX.298,797,411 on 15th of July 2015 which was supposedly a top-up as a result of foreign exchange difference. Although management explained that the top-up arose from foreign exchange differences, owing to remittances by Bank of Uganda in US dollars, the correspondences with leading/culminating to the decision and thereafter remittance of the said top-up were however not availed to the audit team for verification. In the absence of which, audit could not confirm whether there was justification for the top-up and whether it was commensurate to the exchange loss. The Project Management Unit should always justify the top-up remittances with breakdown of the losses suffered arising from the exchange rate fluctuations to enable audit verification.

6.8.22 NTUNGAMO DLG 1 Procurement anomalies 1.1 Purchases not Taken on Charge Paragraph 5.4.4.1 of the Local Governments Financial and Accounting Manual, 2007 requires that on receipt of goods delivered, the store keeper shall count them and check for conformity with the local purchase order (LPO) and raises goods received note (GRN) for acknowledgement and take the goods on charge. However, it was

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observed that, purchases totalling to UGX.33,669,130 were not recorded in the stores ledger. Consequently, I was unable to confirm that the items were supplied. I advised the Accounting Officer to always ensure that all purchased items are recorded in the stores ledger and the issues properly documented.

1.2 Lack of Confirmation of receipt of bid documents from tenderers Regulation 66(4) of Local Governments Public Procurement and Disposal of Public Assets Regulations (LGPPDAR), 2006 requires a procuring and disposing entity to obtain a signed receipt or other confirmation of receipt of the documents from a tenderer to whom the documents are sold or issued. However, no evidence of receipt by invitation of tenderers for procurements worth UGX 172,463,903 were presented for audit verification. I advised the Accounting Officer to comply with the PPDA law.

2 Failure to meet the Minimum Standards of Health Services Paragraph 2.1.1 (D) of the Local Government Management and Service Delivery (LGMSD) Guidelines provides the frame work for the minimum standards for health service delivery. However, inspection of Itojo Hospital revealed the following weaknesses;

Particular Standard Itojo Minimum Comments Hospital standard Operating Number of operating 2 1 The operating theatre lacked Theatre theatres sufficient lighting and operating equipment Mortuary Number of mortuaries 1 1 The mortuary has no refrigeration, this poses a challenge in storage of dead bodies Doctors’ Number of doctor’s 1 2 The available houses are in bad Houses houses state and in dire need for renovations Staff Houses Number of two stance 1 2 The staff houses are not Type 2 staff houses type 2 enough. Most Junior level staff share a unit with 2 or 3 families Electricity Whether connected to At the time of audit on (Grid Or Solar) electricity and source 9/9/2016, The hospital owed UMEME LTD UGX 219,208,544 in unpaid electricity bills and this posed the threat of being cut off electricity supply 264

Medical Adequacy of medical Not Yes The operating theatre lacked Equipment equipment (State the Adequate sufficient lighting and operating available number and equipment. the variance if any)

Lack of adequate facilities in the Health Centre negatively affects service delivery. I advised the Accounting Officer to engage with the Ministry of Health to ensure that health service delivery is improved.

3 Staff on Interdiction for More than 3 Months Section (F-s) Paragraph 8 of the Public Service Standing Orders, 2010 states that interdiction is the temporary removal of a public officer from exercising his or her duties while an investigation over a particular misconduct is being carried out. This shall be carried out by the Responsible Officer who shall ensure that investigations are done expeditiously in any case within (three) 3 months for cases that do not involve the Police and Courts and 6 months for cases that involve the Police and Courts of Law. However, It was observed that 5 staff remained on interdiction beyond 3 months for cases that did not involve the police and courts of law and for more than 6 months for cases with the police and courts of law. Failure to expeditiously dispose of the cases may result in litigation.

The Accounting Officer was advised to liaise with the District Service Commission to expeditiously dispose of the cases.

4 Non Disposal of obsolete Assets Paragraph 2.3.4.1 of Local Governments Financial and Accounting Manual, 2007 states that when stores and fixed assets have become redundant, obsolete or unserviceable through normal wear and tear, they shall be written off accordingly. A board of survey should be convened to examine and recommend their boarding off. I noted that many motor vehicles were grounded in the district yard without disposing them of. The delayed disposal may lead to further deterioration of value. The Accounting Officer explained that the Chief Government Valuer (CGV) valued the vehicles and other obsolete assets and Council is waiting for the report.

I advised the Accounting Officer to ensure that the assets are disposed off.

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6.8.23 NTUNGAMO MC 1 Non Deduction of Local Service Tax

Section 80(1) (a) & (b) of the Local Governments Act, Amendment No.2, 2008 established Local Service Tax (LST) to be levied on all persons in gainful employment or who are practicing any profession. However, a review of payrolls for the months of July 2015 to October 2015 revealed that the Municipality did not levy, charge and collect LST worth UGX.7,700,000. Non-deduction of Local Service Tax results into loss of revenue to the Municipality. The Accounting Officer explained that Local service Tax is a statutory deduction and the deductions from the affected staffs were done in the subsequent months.

I urged the Accounting Officer to ensure that LST deductions are always effected in accordance with the regulations.

6.8.24 RUSHANGO TC

1 Shortfall in Government Releases Regulation 18(3) of the Local Governments Financial and Accounting Regulations (LGFAR), 2007, requires budget estimates to be based on objectives to be achieved for the financial year and during implementation, effort should be made to achieve the agreed objectives or targets as per the programs of council. It was observed that Council received grants of UGX.288,190,920 against a budgeted amount of UGX.771,814,402 leading to a shortfall of UGX 483,623,482 (63%). The shortfall leads to non-implementation of some of the planned activities. The Accounting Officer explained that a follow up will be made with the Ministry of Finance, Planning and Economic Development regarding the unreleased funds. I advised the Accounting Officer to engage the relevant authorities and ensure that the full budgeted amount is released.

2. Lack of Documented Risk Management Policy Regulations 103 (1 & 4) of the LGFAR, 2007, requires the Head of finance to establish a documented Risk Management Policy. However, it was observed that management has not established and documented the risk management policy.

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This weakens the Internal Control Systems. The Accounting Officer explained that a risk management policy will be put in place so as to strengthen the internal controls.

I advised the Accounting Officer to ensure that a risk management policy is developed.

6.8.25 RUKUNGIRI DLG

1 HEALTH SECTOR

1.1 Failure to meet the Minimum Standard of Health Services Paragraph 2.1.2 of Local Governments Management and Service Delivery Operational Manual 2009 provides guidelines for minimum standards of health service delivery. However, it was observed the Health Centre IVs in the district do not meet the standards as shown below:- Requirement Status Mortuary None Two Doctors’ Houses None Two staff house type 2 None Two staff houses type 3 None

Lack of the minimum health facilities adversely affects the quality of service delivery. I advised the Accounting Officer to engage the Ministry of Health to address the matter.

1.2 Lack of Land Title for Kebisoni Health Centre (IV) Regulation 58 (4) of Local Governments Financial and Accounting Regulations, 2007 requires properties and assets of a Local Government including land to be properly registered. It was observed that Kebisoni Health centre IV did not have a title to the land where it is located. Lack of land title for the health facility poses a risk of loss of its land to encroachers. 267

The Accounting Officer promised to budget funds for processing of land titles and to fence off.

I advised the Accounting Officer to expedite the process of securing the land title.

6.8.26 RUKUNGIRI MC 1 Non disposal of obsolete assets Paragraph 2.3.1.5 of the Local Governments Financial and Accounting Manual, 2007 requires assets to be disposed of after recommendations of the board of survey. However, it was observed that there are Council trucks and trailers which appear to have been long abandoned as shown in the pictures below:-

Failure to timely dispose of the assets may lead to further deterioration in value. The Accounting Officer explained that Council had communicated to the Ministry of Works requesting for a government valuer and was still awaiting response.

I advised the Accounting Officer to follow up the matter with the Ministry of Works and have the assets disposed of.

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2 Audit of Supply Chain Management of Drugs 2.1 Failure to meet the minimum Health Standards Paragraph 2.1.1(D) of Local Government Management Service Delivery (LGMSD) Operational Manual for Local Governments, 2009 spells out service delivery packages for a Health Centre IV. It was however observed that Rukungiri Health Centre IV did not have the required facilities as shown in the table below:-

Standard Required Status Variance Remark Mortuary 1 0 1 Challenges to store dead bodies Doctors’ house 2 0 2 Doctors inaccessible at night for emergency cases Staff houses type 1 5 2 3 Staff inaccessible at night for emergency cases Staff houses type 2 2 0 2 Health Centre staff inaccessible at night for emergency cases Two staff houses type 2 0 2 Health Centre staff 3 inaccessible at night for emergency cases Two stance pit latrines 10 1 9 Poor hygiene at the facility Generator house 1 0 1 No standby power source

Lack of the required facilities affects service delivery. The Accounting Officer explained that the policy guidance for operationalization of HC IV lies with the Ministry of Health. I advised the Accounting Officer to liaise with the Ministry of Health to address the challenges.

6.8.27 KAMBUGA TC 1. REVENUE 1.1 Non Remittance of Shared Local Revenue The Local Governments Act 1997 (as amended), Fifth Schedule, Part V (15a), requires the Town Council to distribute 5% and 20% of the total local revenue collected amongst its Wards and Village Councils respectively. However, it was observed that the Town Council did not transfer UGX.7,211,074 to Wards. Non remittance of shared revenue denies the Lower Local Governments an opportunity to fully implement the planned Government programmes.

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The Accounting Officer explained that they had entered into an agreement with the Lower Local Councils to pay them after completion of a debt the Town Council had on renovation of the Town Council office block.

I advised the Accounting Officer to ensure that the funds are remitted to the Wards and Village Councils in accordance with the regulations.

1.2 Central Government Grants Regulation 18(3) of the LGFAR, 2007 requires budget estimates to be based on objectives to be achieved for the financial year and during implementation, effort should be made to achieve the agreed objectives or targets as per the programmes of Council. Whereas a total of UGX.293,672,159 was budgeted for in respect of Central Government Grants, only UGX.264,067,355 was realized, leading to a shortfall of UGX.29,604,804(10%). This leads to failure to implement planned activities in the town council, thus affecting delivery of service to the communities. The Accounting Officer attributed the shortfall in Government Grants to budget cuts by the Ministry of Finance, Planning and Economic Development.

I advised the Accounting Officer to liaise with the Ministry of Finance, Planning and Economic Development for timely releases of funds to ensure that planned projects and activities are implemented.

1.3 Lack of a Master Urban Development Plan Section 32 Part 1 (b) Third schedule of the Local Governments Act 243 requires an urban Council to have a master plan for proper land use and coordinated development. However, it was observed that there was no approved structural plan for the Town Council. This exposes the Town Council to a risk of unplanned developments. The Accounting Officer explained that the Council did not have enough funds and budgeted for the activity in the financial year 2017/2018.

I advised the Accounting Officer to ensure that the Town Council develops a master plan.

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1.4 Lack of Information Communication Technology Policy

Regulation 110(1) of the LGFAR, 2007 requires the Chief Executive to designate an officer who should ensure that adequate Information and Communication Technology (ICT) policies are established and are applied to enable adequate security and protection over computers and of data held on computers or information systems operated by the Council. It was observed that the Town Council neither designated an officer to be in charge of ICT management nor put in place an ICT policy to guide staff in IT equipment and information. The Accounting Officer explained that the staff establishment of the Town Councils does not provide for an IT Officer.

I advised the Accounting Officer to ensure that an officer is designated to develop an IT Policy.

6.8.28 BUTOGOTA TC 1. Non Remittance of Shared Local Revenue The Local Governments Act 1997 (as amended), Fifth Schedule, Part V (15a), requires the Town Council to distribute 5% and 20% of the total local revenue collected amongst its wards and village councils respectively. However, It was observed that the Town Council did not transfer UGX.11,452,588 to Wards. Non remittance of shared local revenue negatively affects implementation of planned Government programs. The Accounting Officer explained that they agreed with Local Council I and IIs that they keep using this percentage as co funding for projects in their wards. I was not availed evidence of the agreement.

I advised the Accounting Officer to ensure that funds are remitted to the wards and Village Councils as per the law.

2. Lack of a Master Development Plan Section 32 Part 1(b) Third schedule of the Local Governments Act 243 requires an Urban Council to have a master urban development plan for proper land use and

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coordinated development. However, there was no approved master plan for the Town Council. This exposes the Town Council to a risk of unplanned developments. The Accounting Officer explained that the Town Council lacks adequate funds to develop a master urban development plan.

I advised the Accounting Officer to allocate resources and ensure that a master development plan is in place.

3. Lack of Information Communication Technology (ICT) Policy Regulation 110(1) of the LGFAR 2007 requires the Chief Executive to designate an officer who should ensure that adequate Information and Communication Technology (ICT) policies are established and are applied to enable adequate security and protection over computers and of data held on computers or information systems operated by the council. It was observed that the Town Council neither designated an officer to be in charge of ICT management nor put in place an ICT policy to guide staff in use of IT equipment and information. The Accounting Officer explained that the staff establishment of Town Councils did not provide for an IT officer.

I advised the Accounting Officer to liaise with the Ministries of Local Government and Public Service with a view of addressing the need of IT staff in Local Government structures.

6.8.29 SHEEMA TC

1 Lack of Local Revenue Assessment

Paragraph 4.3 of the Local Governments Financial and Accounting Manual, 2007 requires the Accounting Officer to regularly carry out proper assessment of the Town Council’s local revenue. The tax assessment is supposed to be carried out by a Tax Assessment Committee which should be established by the Town Council. It was observed that local revenue assessment had not been conducted for the last 2 years. It was also observed that the Town Council had not constituted a Tax Assessment Committee.

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Failure to conduct revenue assessment could lead to ineffective collection of local revenue. The Accounting Officer explained that the process of revenue assessment had started with identification and enumeration. He also stated that Local Service Tax and trading license had been assessed. I urged the Accounting Officer to ensure that revenue assessment is conducted regularly.

2 Lack of full details about the assets in the Fixed Assets Register Paragraph 2.3.1.4(2) of the Local Governments Financial and Accounting Manual, 2007 requires the fixed assets register to contain information such as detailed description of the asset, invoice reference, historical cost of acquisition, date of acquisition, name of supplier, warranty details, estimated life and estimated date of retirement and maintenance records. It was observed that the Town Council assets register did not show details of the assets like asset value, date of purchase, location e.t.c. Lack of full details about the fixed assets in the register weakens controls over the fixed assets. The Accounting Officer promised to update the fixed assets register. The promised action of the Accounting Officer is awaited.

6.8.30 BUHWEJU DLG 1 Poor State of the infrastructure (UPE) Schools

The Local Governments Management and Service Delivery (LGMSD) Operational Manual provides guidelines for minimum standards of education service delivery. Audit inspection in the sample of 2 schools dilapidated are shown below:-  Nyakahita UPE School in Burere Sub County

 Muddy collapsing classroom block for P3 and P4.  No chairs  Karende UPE School in Bihanga Sub County

 collapsing classroom block  No chairs

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The poor infrastructure negatively affects the academic performance.

I advised the Accounting Officer to engage the relevant authorities to ensure that school infrastructure is improved.

2 Lack of Equipment and Facilities at Health Centre IV

Section 3.0 of the Ministry of Health Guidelines on standard equipment for health centres II – IV, district, and regional referral hospitals, 2003 defines the facilities that are supposed to exist at the Health Centre IV. Audit inspection of Nsiika Health Centre IV revealed several shortcomings. Lack of adequate facilities and equipment at the health center denies the community effective health service delivery. The Accounting Officer explained that the district management has plans to expand the health centre but lacks funds.

I advised the Accounting Officer to engage the relevant authorities so as to improve on the facilities at the Health Centre.

6.8.31 NSIIKA TC

1. Lack of a Master Urban Development Plan Section 32 Part 1 (b), Third schedule of the Local Governments Act 243 requires an Urban Council to have a master plan for proper land use and coordinated development. However, it was observed that there was no approved master urban development plan for the Town Council. This exposes the Town Council to a risk of unplanned developments. The Accounting Officer explained that the Town Council lacked adequate funds to develop a structural urban development plan.

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I advised the Accounting Officer to allocate resources and ensure that a master urban development plan is developed.

2. Lack of Information Communication Technology Policy Regulation 110(1) of the LGFAR, 2007 requires the Chief Executive to designate an officer who should ensure that adequate Information and Communication Technology (ICT) policies are established and are applied to enable adequate security and protection over computers and of data held on computers or information systems operated by the Council. It was observed that the Town Council neither designated an officer to be in charge of ICT management nor put in place an ICT policy to guide staff in use of IT equipment and information. The Accounting Officer explained that the staff establishment of Nsiika Town Council did not provide for an IT officer.

I advised the Accounting Officer to designate an officer to develop an IT Policy.

6.8.32 MITOOMA TC

1 Doubtful Tax Remittances

Section 123(1) of the Income Tax Act, 1997 as amended provides that a withholding agent shall pay to the commissioner any tax that has been withheld or that should have been withheld within 15 days after the end of the month in which the payment subject to withholding tax was made by the withholding tax agent. However, it was observed that an amount of UGX.3,523,856 was purportedly remitted to Uganda Revenue Authority. However, the acknowledgment receipts from URA were not presented for audit verification. Consequently, I could not confirm that the funds were received by the tax authority. The Accounting Officer promised to obtain the acknowledgement receipts from the tax body.

I advised the Accounting Officer to obtain the receipts and present them for audit verification.

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6.8.33 RWASHAMAIRE TC 1 Non Compliance with the Statutory Obligations Section 123(1) of the Income Tax Act CAP 340 requires a withholding agent to pay the Commissioner any tax that has been withheld or that should have been withheld within fifteen days after the end of the month in which the payment subject to withholding tax was made by the withholding agent. I observed that pay as you earn (PAYE) amounting to UGX.1,469,054 was not deducted from staff allowances. I also observed that withholding tax of UGX.1,123,151 was not deducted from suppliers. Non deduction of taxes exposes Council to the risk of penalties and fines. The Accounting Officer promised that the acknowledgement receipts for the taxes deducted and remitted will be availed.

I urged the Accounting Officer to always ensure that acknowledgements are obtained from URA.

2 Lack of a Master Plan Section 32 Part 1 (b) Third schedule of the Local Governments Act 243 requires an Urban Council to have a master plan for proper land use and coordinated development. Rwashamaire Town Council came into existence in 2010/11 financial year. Since that time, management has not secured an approved structural plan for the town council from the Ministry of Lands Housing and Urban Development. This exposes the Town Council to a risk of unplanned developments. The Accounting Officer explained that the process has been started on and by end of the financial year, the plan would have been gazetted for approval.

I urged the Accounting Officer to follow up the matter with Ministry of Lands, Housing and Urban Development to have an approved master plan for the Town Council.

6.8.34 RUBIRIZI DLG

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1 Health Sector 1.1 Inadequate Storage Space for the Medicines During audit inspection of Rugazi Health Centre IV, I observed that the facility had inadequate storage space for the medical supplies. There is one store being used to all assets including medicine as shown below:-

Such a practice may contaminate drugs. The Accounting Officer explained that GAVI promised to construct a store at the district headquarters which is expected to improve the situation.

The matter requires urgent attention.

1.2 Understaffing in Health Sector The health sector has an approved staff structure of 173 Positions. However, out of the approved 173 positions only 107(62%) were filled leaving 66(38%) positions vacant as shown below:- Health Sector Establishment Filled Vacant %Percentage of Vacant to Establishment

Health Centre IV 49 39 10 20% Health Centre III 58 40 18 31% Health Centre II 66 28 38 58% Total 173 107 66

The Accounting Officer explained that submissions were made to the district but the district could not proceed due to inadequate wage.

I advised the Accounting Officer to engage the relevant authorities to ensure that the vacant positions are filled.

1.3 Lack of Ambulances at the Health Centres During audit inspections, it was noted that the Health Centre’s within the District lacked ambulances making it hard to transport patients in critical conditions. A case in point is Rugazi HCIV that had 423 referrals during the year with no proper means of

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transport. The double cabin improvised by the health Centre is currently grounded due to high maintenance costs. Grounded vehicles at Rugazi Health Centre IV

Grounded vehicle at Rugazi HCIV which had been used as an ambulance but now grounded. The Accounting Officer explained that the budget for vehicle maintenance is high and the vehicle is becoming old (acquired in 2005) The district has made the necessary communication to Government. I advised the Accounting Officer to liaise with the relevant authorities to enable possible acquisition of an ambulance.

1.4 Non-Disposal of Grounded/Obsolete Vehicles Paragraph 2.3.1.5 of Local Governments Financial and Accounting Manual, 2007 stipulates that disposal of assets is done after recommendation by the Board of Survey. It was observed that a number of assets including vehicles are grounded at the district compound and had been recommended for boarding off in the Board of Survey report for financial year 2013/14 as shown below:-

Delays to dispose them off may lead to further deterioration in value. The Accounting Officer explained that some of the vehicles don’t belong to the district; but permission to dispose of had been sought though it had not been received.

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The matter requires urgent attention.

2 Dilapidated Infrastructure in Primary Schools The audit inspection of Kyambura and Mugyera Primary Schools revealed the dilapidated buildings with cracked and unfinished walls as shown in the pictures below:- Kyambura Primary School Mugyera Primary School

The schools had no proper staff houses. There were structures that are plastered with mud and this may demotivate staff thus affecting their morale and performance. Such infrastructure demotivates both learners and teachers. The Accounting Officer promised to work on the structures in the subsequent planning and budget executions. The matter requires urgent attention.

6.8.35 RUBIRIZI TC 1 Lack of Valuation lists Section 4 of the Local Governments (Rating) Act requires Council to review its valuation list at least once in every 5 years, or such longer period as the Minister may approve. However, it was observed that the Town Council did not have an up-to-date valuation list and the valuation lists used had expired. There is a risk that Local revenue might not be exploited to its full potential. The Accounting Officer explained that Council had not yet valued the properties due to lack of funds.

I advised the Accounting Officer to ensure that the funds are allocated to update the valuation list.

6.8.36 KATERERA TC

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1 Lack of a Master Urban Development Plan Section 32 Part 1 (b) Third schedule of the Local Governments Act 243 requires an urban Council to have a master plan for proper land use and coordinated development. However, there was no approved master plan for the Town Council. This exposes the Town Council to a risk of unplanned developments. The Accounting Officer attributed the failure to put in place a master urban development plan to lack of funds.

I advised the Accounting Officer to ensure that a master urban development plan is developed.

2 Lack of Information Communication Technology (ICT) Policy

Regulation 110(1) of the LGFAR, 2007 requires the Chief Executive to designate an officer who should ensure that adequate Information and Communication Technology (ICT) policies are established and are applied to enable adequate security and protection over computers and of data held on computers or information systems operated by the Council. It was observed that the Town Council had neither designated an officer to be in charge of ICT management nor put in place an ICT policy to guide staff in use of IT equipment and information. The Accounting Officer explained that the Town Council staff structure does not include ICT personnel.

I advised the Accounting Officer to designate an officer to develop an ICT Policy.

6.9 SOROTI BRANCH 6.9.1 ABIM DLG

1 Irregular Payment of Hard to Reach Allowances Paragraph 8 of the Public Service Standing Orders (E-a) 2010 requires Accounting Officers to ensure that payment of allowances is done in a very transparent, fair and equitable manner following the laid down procedures.

However, UGX 17,820,287 was irregularly paid in respect of hard to reach allowances to ineligible staff who were teaching in Abim Town Council schools.

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The Accounting Officer promised to recovery of the funds before close of financial year 2016/2017.

The promised action of the Accounting Officer is awaited.

2 Failure to Dispose off Assets Paragraph 2.3.1.5 of the Local Governments Financial and Accounting Manual 2007 requires the council to dispose of assets after getting recommendations from the Board of Survey report to realise some revenue which may contribute to the cost of acquiring new assets.

However, the district did not dispose off assets that were recommended for board off at the end of financial year 2014/15.

Delayed disposal of assets may lead to loss of value due to physical deterioration and obsolescence.

The Accounting Officer explained that the District is facing a challenge to have a Government valuer to value the assets but promised to continue reminding the line Ministry to send the Government valuer.

I urged the Accounting Officer to ensure that the process of disposing off the assets is expedited.

6.9.2 AMUDAT DLG

1 Payment for no Work Done 1.1 Construction of the District Council Chamber

The District contracted a local firm to construct the District Council Chamber Hall at a contract price of UGX 224,849,100. The contract start and end dates were 31/03/2015 and 15/10/2015 respectively. By the time of this audit in September 2016, UGX 213,606,645 (95% of the contract price) had been paid leaving a balance of UGX 11,242,455 as retention.

However, audit inspection revealed that civil works valued at UGX 91,525,000 as per bills of quantities had not been done yet payments had been effected as shown in the table below. 281

S/No. Item Amount (UGX) Remarks 1 Doors and windows 12,496,500 Not fixed 2 Internal finishes 51,526,800 Not done 3 External finishes 21,881,700 Not done 4 Electrical installation 5,270,000 No installation done 5 Engravement 350,000 No engravement done Total 91,525,000

Refer to Photos below;

External and internal sections of the council hall that has not been worked on.

Payment for no work done denies services to the community.

The Accounting Officer attributed it to change in specification of the roof upon which on payment affected the continuation with the rest of the work. However, no evidence of approval of the design alteration was provided.

The mater require urgent attention.

1.2 Shoddy Routine mechanized maintainance of Amudat-Katabok road During the financial year 2015/16, the district planned to do Routine mechanized maintenance of Amudat-Katabok road (18km) at a cost of UGX 240,000,000 under PRDP. By the time of this audit in September 2016, UGX 253,505,000 (105.6%) had been spent in respect of fuel, hire of road equipment, materials and labour.

However, a review of the accounting records and field inspections revealed the following:

 Payment for hire of road equipment amounting to UGX 76,600,000 was not supported with daily worksheets.  UGX. 13,505,000 (5.6%) had been overspent above the planned cost.  Fuel supplies worth UGX 76,400,000 were not supported with fuel consumption statements and fuel orders.

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 Field inspections revealed that some sections of the road were not well compacted and out of the 12 culverts that were supplied, only 4 culverts were installed leaving 8 culverts lying alongside the road. The Accounting Officer promised to ensure that all the works in the road are completed.

The matter require urgent attention.

1.3 Maintenance of Akorikeya-Nakipom Road Regulation 9 (2b) of the Local Government Finance and Accounting Regulations, 2007 state the duties of the Accounting officer among which is to ensure that the public moneys, property and resources for which he or she is responsible are properly managed, safeguarded. During the financial year under review, the District paid for works totalling to UGX 37,565,900 without evidence of any work done.

The Accounting Officer explained that contractors had been given notices to complete the works.

I advised the Accounting Officer to follow up the matter and ensure that the works are completed.

2 Delayed Civil Works Regulation 9 (2b) of the Local Government Finance and Accounting Regulations, 2007 state the duties of the Accounting Officer among which is to ensure that the public moneys, property and resources for which he or she is responsible are properly managed, safeguarded and value for money obtained.

However, civil works worth UGX 124,160,795 had remained uncompleted beyond the scheduled dates.

The delays to complete the Civil works may lead to extra administrative costs.

This was attributed to late procurement processes and engaging incompetent contractors without sufficient working capital to execute the works within the contract periods.

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The matter require urgent attention.

3 Non-Remittance of Taxes According to Section 123(1) of Income Tax Act 1997, a withholding agent should effect the requisite payment to Uganda Revenue Authority of taxes withheld within 15 days after the end of the month in which the taxes were withheld.

However, there was no evidence to show that 6% WHT totalling to UGX 40,006,487 was withheld from contractors and suppliers was remitted to the Authority as required by the Income Tax Act.

Failure to pay taxes may attract fines and penalties from the Tax Authority.

I advised the Accounting Officer to ensure that the withheld taxes are always remitted to the Tax Authority in a timely manner.

4 Diversion of Funds Regulation 37(2) of the Local Governments Financial and Accounting Regulations 2007 requires that conditional grants from Central Government are planned for, recorded and accounted for in accordance with the grant conditions and guidelines. A review of the accounting records revealed that a total of UGX 46,000,000 in respect of Local Government Management Service Delivery (LGMSD) was diverted to general fund account and spent on activities not prescribed in the guidelines of the grant without council approval as shown in the table below;

Amount Account Date Vr. No. Payee Description UGX. 14/09/2015 3/9 General Fund A/c Internal borrowing 4,000,000 LGMSD 14/09/2015 5/9 General Fund A/C Internal borrowing 3,000,000 LGMSD 14/09/2015 6/9 General Fund A/C Internal borrowing 4,000,000 LGMSD 22/12/2015 10/12 General Fund A/C Internal borrowing 35,000,000 LGMSD TOTAL 46,000,000

However, only UGX 33,271,423 was refunded leaving a balance of UGX 12,728,577 un refunded.

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The Accounting Officer was advised to ensure that the funds are recovered and be utilised for the intended purpose.

5 Lack of Books of Accounts at the UPE Schools

Regulation 64 of the Local Government Financial and Accounting Regulations (LGFARs) 2007 requires the Head Teacher to maintain a cash book for recording receipts and payments of the school transactions and prepare monthly financial statements for submission to the sub-county chiefs.

However, the Head teachers of the following primary schools did not maintain cash books for the financial year 2015/16 neither did they submit financial statements for their academic terms to the respective sub-county chiefs as shown below;

N0. School name Enrolment Total release(q1+2+4) UGX. 1 kalas girls p/s 471 3,949,410 2 kalas boys p/s 566 4,473,715 3 katabok p/s 186 2,376,495 4 cheptapoyo p/s 538 4,319,183 5 loroo p/s 496 4,087,385 6 nabokotom p/s 238 2,663,483 7 karita p/s 578 4,539,943 8 katikit p/s 357 3,320,244 9 alakas p/s 593 4,622,728 4,550 39,961,024

The Head teachers explained that they lacked technical knowledge in basic book keeping and accounting.

The Accounting Officer promised to organise for refresher trainings for Head Teachers to enhance their financial and accounting skills in quarter three of financial year 2016/2017.

The Accounting Officer was advised to arrange the training programmes.

6 Failure to maintain a Fixed Assets Register Regulations 85-88 of the LGFARs of 2007, requires management of Local Governments to maintain a proper up to date assets registers.

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The district did not maintain an assets register. This weakens controls over the fixed assets.

The shortcoming was attributed to the responsible officer’s failure to maintain and regularly update the assets register

I advised the Accounting Officer to establish a fixed assets register.

6.9.3 AMUDAT TC

1 Delayed completion of Civil Works

Regulation 9 (2b) of the Local Government Finance and Accounting Regulations, 2007 states the duties of the Accounting Officer among which is to ensure that the public moneys, property and resources for which he or she is responsible as Accounting Officer are properly managed, safeguarded and value for money obtained.

The Council awarded a contract to a local firm to construct an OPD block at Amudat Health Centre II at a contract price of UGX 64,804,000. The estimated completion date was 30th June 2016. By the time of audit in September 2016, the contractor had been paid UGX.41,178,190 (63%) of the contract price.

However, the audit inspection revealed that the civil works were behind schedule by 3 months. The delays in completion of the civil works may lead to extra administrative costs.

The matter requires urgent attention.

6.9.4 AMURIA DLG

1 Nugatory Expenditure Regulation 9 (2) of the Local Governments Financial and Accounting Regulations, 2007 requires the Accounting Officer to reduce cases of apparent waste, extravagant administration or failure to achieve value for monies.

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However, the district paid legal fees and court fines totalling to UGX 42,919,000 to various persons which was not budgeted for and considered avoidable.

The expenditure resulted from the District Service Commission faulty recruitment procedures, compensation for wrongful interdiction of water officer and delay in payment of contractors like Pool Investments.

The Accounting officer attributed the expenditure to unavoidable circumstances.

The Accounting Officer was advised to ensure that due care is exercised to avoid nugatory expenditure.

2 Unrecorded Stores Section 83(2) of the Local Government finance and accounting regulation, 2007 requires that the stores control officer shall ensure that all accounts and procedures in respect of the stores in his or her charge are operating efficiently and effectively.

However, procurements worth UGX 54,557,000 were not charged to stores. This made it difficult to verify the deliveries and utilisation.

The Accounting Officer was advised to ensure that all inventory supplies are charged to stores and be properly accounted for.

3 Direct Procurements Regulation 40 (1&2) of the LG-PPDA Regulations, 2006, states when direct procurement method can be used.

The District used the direct procurement method in procurements worth UGX. 50,767,200 without justification.

Direct procurements limit competition and may result in failure to realise value for money spent.

The Accounting Officer admitted the shortcoming and promised to forward future procurements for approval by contracts committee.

The Accounting Officer was advised to always adhere to LG-PPDA procurement regulations.

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4 Uncompleted Civil Works Regulation 18 (3) LGFAR, states that the budget estimates shall be based on the objectives to be achieved for the financial year and efforts shall be made to achieve the agreed objectives or targets, as programmed by the District.

It was observed that, projects worth UGX. 1,303,448,630 remained incomplete while others had defects by the time of audit in July 2016.

Incomplete and defective works denies the communities the much needed services.

The Accounting Officer was advised to ensure that all civil works are completed timely.

5 Lack of Contracts Register Regulation 121 of the Local Governments Public Procurement and Disposal of Public Assets (LGPPDA) regulations, 2006 requires the procurement and disposal unit (PDU) to keep records of all contracts placed in a contract register for effective monitoring.

However, the district did not maintain a contract register. This weakens control over contract monitoring.

The Accounting Officer was advised to establish a contract register.

6 Failure to conduct Revenue Assessment Regulation 4.3 of the Local Governments Financial and Accounting Manual, 2007 requires the District to carry out proper assessment of the Council’s revenue and record all the sources of income.

However, no revenue assessment was conducted for the year under review. Failure to properly assess revenue can lead to under collection of revenue.

The Accounting Officer promised to put in place a Revenue Task Force that will come up with strategies to improve on revenue performance.

The Accounting Officer was advised to ensure that revenue assessment is undertaken as required by the regulations.

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6.9.5 BUKEDEA DLG

1 Procurement Anomalies

1.1 Casting and Installation of 7 Bore Holes The district signed a contract with a local firm to cast and install 7 bore holes at different sites in the district at a cost of UGX.43,652,700 financed under Poverty Action Fund and Poverty Reduction and Development program funds. By the time of audit, UGX.18,339,560 (42%) had been paid.

However, the following shortcomings were identified:

 This was a direct procurement contrary to section 40(3) of the LG-PPDA Regulations 2006 which requires use of direct method where exceptional circumstances prevent the use of competition. This limited competition for better quality and cheaper cost.

 Some of the boreholes were supposed to have trees planted around them and soak pits at a cost of UGX. 1,800,000 but these were no trees planted at Kamuge Manga.

 Boreholes at Kamuge Manga and Kokulutum had not been fenced by the water user committees as required by PRDP guidelines.

The Accounting Officer promised to take action to ensure that the works are completed.

The promised action of the Accounting Officer is awaited.

1.2 Construction of a Classroom block with an Office at Abitbit P /School The district paid a local firm UGX.15,608,670 to construct a classroom block at Abitibit Primary School. The contract start and end dates were on 13th October 2014 and 12th April 2015 respectively. Documentation review and field inspections revealed the following shortcomings:

 Retention amounting to UGX. UGX.3,586,317 had been paid before the defect liability period ended making it difficult to compel the contractor to rectify.

 The veranda had started cracking as shown in the photos below

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Cracked Veranda with no marble plaque fitted.

This was attributed to poor supervision.

The Accounting Officer promised to strengthen supervision of contracts of Civil works.

I advised the Accounting Officer to compel the contractor to correct the defects.

1.3 Construction of a 4 Classrooms and Office at Kokolotum Pri School The district signed a contract with a local firm for the construction a 2 Classrooms and an office block at Kokolotum Primary School at a contract price of UGX.64,192,000 funded under School Facilitation Grant funds. By the time of audit in June 2016, UGX. 53,838,993 (84% of the total contract sum) had been paid to the contractor.

However, the following shortcomings were identified:

 There is no evidence to show that the procurement method and bid documents had been approved by the contracts committee contrary to section 17(1d) of the LG-PPDA regulations 2006 which requires the contracts committee to approve all contract documents and amendments.  Direct procurement method was used without justification contrary to section 40(3) of the LG-PPDA Regulations 2006 which requires use of sole source procurement method where exceptional circumstances prevent the use of competition.

 The structure had not been handed over to the users at the time of audit.

I advised the Accounting Officer to comply with the LGPPDA regulations and to ensure that the defects are corrected and the facilities are handed over to the users.

2 Failure to meet the set minimum standards Section 2.1.2 of Minimum National Standards of Service Delivery of the Local Government Management and Service Delivery (LGMSD) Program Operational Manual requires that primary schools must conform with the following ratios:

 Classroom Pupil ratio 1:55  Teacher accommodation of 1:4 However, audit inspection revealed poor performance as shown in the table below;

School Enrollme No of No of No of Pupil per Teacher nt Teachers Permanen Permanen Classroom per t t ratio house ratio 290

Classroom Teachers s Houses

Kakere- Gagama P/ S 516 12 2 0 258 N/A Kamutur P/ S. 615 13 4 6 154 2 Abitibit P/ S 412 11 2 0 206 N/A Jalwin P/ S 557 9 2 0 279 N/A Kagoloto P/ S 260 9 2 0 130 N/A Okungoro P/ S 575 11 6 2 96 6

Below are the photos showing the poor state of accommodation for the teachers and poor classroom structures;

Name of Issue Photos School

Kakere- Grass thatched Gagama classroom Primary School structures and dilapidated teachers accommodation that are risky to the users.

Kamutur Poor teachers Primary School. accommodation Structures

Pupils having their Abitibit Primary lessons under School trees in the compound due to lack of classroom structures.

Jalwin Primary Poor teachers School accommodation Structures

Kagoloto Poor Primary School accommodation and classroom structure

Okungoro Poor Parents School accommodation and Classroom Structure. 291

Students were having classes under trees.

The Accounting Officer attributed the challenges to limited funds disbursed by the Central Government.

I advised the Accounting Officer to liaise with relevant authorities to ensure that resources are allocated to improve the school facilities.

6.9.6 BUKEDEA TC

1 Late Submission of Financial Statements. The Public Finance Management Act 2015 section 51(1) states that an Accounting Officer shall within two months after the end of each financial year prepare and submit to the Auditor General the accounts and relevant information.

It is a requirement that Council should submit the financial statements to the Auditor General by 31st August of each year for audit. However, the accounts were submitted late on 22nd December 2016. Consequently, I was unable to audit the accounts and report by 31st December 2016.

I advised the Accounting Officer to comply with the law.

2 Non Compliance with the Statutory Obligations

2.1 Non Deduction of PAYE Section 116 (1) of The Income Tax Act requires that every employer shall withhold tax from a payment of employment income to an employee as prescribed by regulations.

A total of UGX. 14,682,000 was paid to several employees of the Town Council without

deducting PAYE totalling to UGX. 4,493,300 as shown in appendix ii.

Failure to with hold taxes may attract fines and penalities from the Tax Authority.

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2.2 Non-Remittance of 6% WHT Section 124 (1) of The Income Tax Act states that a withholding agent who fails to withhold tax in accordance with this Act is personally liable to pay to the Commissioner the amount of tax which has not been withheld and recover this amount from the payee.

There was no evidence to show that 6%WHT totaling to UGX. 1,471,488 recovered from a sum of UGX. 24,524,800 was remitted to URA. See Appendix iii.

Failure to with hold taxes may attract fines and penalities from the Tax Authority

The Accounting Officer was advised to comply with the tax law.

6.9.7 KABERAMAIDO DLG

1 Direct Cash Procurements Regulation 40(1&2) of the LG-PPDA Regulations, 2006, states when direct procurement method can be used. The District used the direct procurement method in procurements worth UGX. 26,484,580 without justification as shown in the table below;

V/no. Date Payee Description Amount

362/06 06/01/2016 SC Hardware Connection of Water 5,300,000 Purchase of Medical 448/06 30/6/2016 Rima (EA) Limited Equipment. 10,918,000 Power Consults Connection of 449/06 30/6/2016 Engineering Services Electricity 10,266,580

TOTAL 26,484,580

Direct procurements limit competition and may result in failure to realise value for money spent.

The Accounting Officer acknowledged the anomaly but attributed it to force account procurements.

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6.9.8 KABERAMAIDO TC

1 Lack of Revenue Register.

Section 33(1) of the LGFAGs, 2007, states that In respect of the various forms of revenue, including taxes, rates, fees, rents and other income, prescribe revenue registers shall be used to show details of revenue due, revenue collected and all arrears, including a record of steps taken to collect all arrears.

However, the Town Council did not maintain a revenue register contrary to the regulations. This weakens controls over local revenue collection.

The Accounting Officer admitted the shortcoming and attributed this to inadequate technical knowledge and promised to provide a budget line for training of accounts staff.

I advised the Accounting Officer to establish a revenue register.

6.9.9 KABOONG DLG 1 Doubtful Expenditure

Paragraph 9 (b) of the Local Governments Finance and Accounting Regulations (LGFAR),2007 states the duties of the accounting officer among which is to ensure that the public moneys, property and resources for which he or she is responsible as accounting officer are properly managed and safeguarded. The district paid UGX. 97,439,000 for no work done as shown in the table below;

S/no Project Amount UGX Details Inspection Remarks by September 2016 1 Grading Nawokosiyai- 54,839,000 Grading of no bills of quantities, work Kachikol road 13km Nawokosiyai-Kachikol sheets and work schedules road of 13 km under detailing works done for the force account . grader operators and allowances for manual workers making it difficult to verify payments. 2 Rehabilitation of 20,600,000 Emergency No evidence that work had Kotome drift. been done on the drift. rehabilitation of

Kotome drift along

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Lopedo Junction- Morulem road 3 Re-alignment of Lolelia- 22,000,000 realignment of black No work sheets and work Lowakuju-Karenga black spots on Lolelia- schedules detailing works spot 7.2km Lowakuju-Karenga done by the grader road operators & fuel usage making it difficult to verify the payments made. Total 97,439,000

The Accounting Officer attributed the delay to complete the works to heavy rains and promised to execute the works in the next financial year 2016-17.

The outcome of the promised action of the Accounting Officer is awaited.

2. Works Sector

2.0.1 Incomplete and Shoddy works

Nine contracts for civil works worth UGX.63,140,000 had shoddy and incomplete works.

Failure to complete work in time was due to lack of capacity and inadequate supervision by management.

The Accounting Officer promised to engage the contractors to complete the works and to rectify the defects.

The matter requires urgent attention.

2.0.2 Caked Cement

Kaabong district contracted a Local firm to supply 500 bags of cement valued at UGX 21,000,000 for road works during the financial year 2015-2016.

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During audit inspection, it was observed that 232 bags of cement valued at UGX 9,744,000 had caked in the district store.

This was attributed to delays in implementation of the road works and the poor storage conditions.

The Accounting Officer explained that the cement was procured for construction of Kiteelore drift but the district failed to procure local materials required for the works and drift construction was suspended leading to caking of the cement.

I advised the Accounting Officer to ensure proper planning to avoid wastage.

2.1 Inadequate Budgeting for the Wage Bill for the Year 2015/16

The Output Budgeting Tool (OBT) requires a district to plan for their staff by capturing all the necessary data for effective management of the payroll and the Accounting Officer is required to participate in the exercise.

During the year under review, it was noted that the district planning department did not capture all the staff data as required by the OBT tool and as a result, the final wage bill calculated and released was much less than the amount that was required to pay salary for all the staff. Indeed, most of the district staff in June 2016 did not receive their salaries by the end of that month. Refer to table below;

Table showing Misstatement of payroll expense Initial budgeted Actual figure for Variance - figure for employee employee costs - UGX UGX costs - UGX 6,560,142,000 6,811,310,509 251,168,509 The Accounting Officer explained that this was an oversight at the time of planning at the beginning of the previous year, and stated that attempts were being made to get a supplementary release for both the previous and the current year 2016/17.

I advised the Accounting Officer to ensure that realistic budgets are compiled based on actual data from user departments.

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2.2 Non- Remittance of 6% withholding tax

Section 124 of the Income Tax Act, 1997 requires withholding agents to deduct and remit taxes to URA by the 15th of the following month. Deductions totaling to UGX 7,862,452 was not remitted to URA.

Failure to remit taxes may attract fines and penalties from the Tax Authority.

I advised the Accounting Officer to comply with the Tax law.

2.3 Healthy Sector

Regulation 9(2b) of the Local Governments Financial and Accounting Regulation (LGFAR) 2007 the Accounting Officer to ensure that the Public Monies, property and resources for which he or she is responsible as Accounting officer are properly managed and safeguarded. However, inspection of Kaabong Hospital revealed the following shortcomings;

3.0 Non Operating Equipment

Item Remark /Observation X-ray Machine - Lack of power supply - Lack of protection aprons Scanner - Obsolete - Lack printing paper Solar Fridges - Faulty solar batteries ID printing - Idle in store machine

The shortcomings were majorly attributed to absence of reliable power supply to the hospital and failure to maintain the medical equipment’s leading to equipment failures that affects service delivery.

The matter requires urgent attention.

4. Lack of Adequate Stores Space

Section 83 (1) LGFAR,2007, states that, there shall be a stores section for every District and Urban Council and every District and Urban Council shall employ a suitably qualified and experienced officer to be the stores control officer and Head of that

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section. It was noted that despite having a stores control officer, the district store is too small to accommodate all inventories leading to congestion and difficulty in monitoring of inventory. See photos below

Congested stores Dusty stores at district

The Accounting Officer promised to construct a drug store in the financial year 2017/2018.

The matter requires urgent attention.

6.9.10 KATAKWI DLG

1 Diversion of Rural transport Infrastructure (RTI) Funds Regulation 38 (1) of the Local Government Financial and Accounting Regulation, 2007 requires Local Government to spend conditional grants on specific objectives and activities.

During the year under review, the district received UGX,511,996,729 for the Rural transport Infrastructure(RTI) project. It was observed that UGX.102,424,997 meant for low cost sealing of Katakwi - Toroma road was diverted to maintenance of equipment. The Accounting Officer explained that management decided to borrow the RTI funds to repair the grader to enable other road works to continue otherwise the District would risk returning both the RTI and URF funds.

I advised the Accounting Officer to ensure that the funds are recovered and utilized for the intended purpose.

5 Incomplete Projects and Shoddy Works Section 18(3) Local Governments Financial and Accounting Regulation (LGFAR), 2007 states that the budget estimates shall be based on the objectives to be achieved for

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the financial year and efforts shall be made to achieve the agreed objectives or targets, as programmed by the district.

However, various projects planned and undertaken during the financial year and expected to have been completed before the closure of the year were still on going at different stages or abandoned and with some elements of substandard works noted as shown in the table below:

Project Start End Contract Amount Payment Inspection Remarks Procurement date date to date details KATA522/WRKS/14- -not furnished 15/00006 -inadequate power supply by the solar Construction of system(one panel & one Maternity Ward at 11/5/15 5/8/15 79,639,100 74,472,686 batery) Omodoi HC II -not yet handed over

BY: M/s Babone Bigere Company Ltd ROADS Reshaping Odoot- NO. BOQ 17,777,043 -Only grading done, Ngariam Rd -Poor works on drainage with deep potholes Force on account developing

Grading Adacar- NO. BOQ 28,433,900 -Works ongoing, Out of Arengecora rd 16km planed 2km was covered Force on account Construction of Started Not n/a No specified The project was under administration block during provide Northern Uganda for Ongongoja sub 2011 d. Support programme and county was abandoned in the bush, no value for the money spent on the project.

Incomplete works deny the communities the intended services. The Accounting Officer promised to have all the projects completed.

I advised the Accounting Officer to compel the contractors to complete the projects or rectify all defects in the projects.

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6.9.11 KOTIDO DLG 1 Education Sector

1.1 Incomplete Classroom block at Mary of God Primary School Paragraph 9(2)(b) of the Local Government Finance and Accounting Regulation, 2007 state the duties of the accounting officer among which is to ensure that the public moneys, property and resources for which he or she is responsible are properly managed and safeguarded.

During FY 2014/15, the District contracted a local firm to construct a 4 classroom blocks at Mary Mother of God P/S at a contract sum of UGX. 121,248,400. The contract was to start on 17/02/2015 and end on 30/05/2015 but later on rolled over to 2015/16 financial year.

At the time of inspection in July 2016, the contractor had been paid UGX.96,430,000 (79.5%). However, it was observed that works amounting to UGX 65,283,700 as per bills of quantities were incomplete yet payments had been made as shown in the table below.

S/No. Item Amount (UGX) Remarks 1 Painting and wall 18,876,000 Not done finishies 2 Floor finishes 7,296,000 Not done 3 Roofing 21,881,700 Poorly made and not suitable for use. 4 Lightening conductor. 6,840,000 Not fitted correctly. 5 Windows and door 10,390,000 Not properly fitted and has glasses defects Total 65,283,700

Payment of un-finished works denies services to the community.

The Accounting Officer promised to terminate the contract due to incompetence.

I advised the Accounting Officer to ensure that the work is completed and to ensure proper supervision of contracts.

1.2 Education Sector

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1.2.1 Un delivered beds to Panyangara Secondary School The contract for supply of double decker beds to Panyangara Secondary School was awarded to a local firm at a cost of UGX 19,520,000.

However, audit revealed the following shortcomings:

 The contract was signed without reference to the specific number of beds to be supplied.  The contractor supplied 50 double decker beds contrary to Local Purchase Order dated 15/06/2015 requiring 100 double decker beds.  The full contract sum of UGX 19,520,000 was paid for the 50 double decker beds instead of 100 beds.  Out of the beds supplied, several beds had already broken down. The Accounting Officer explained that the bill of quantities (BOQ) indicated 100 beds and this was erroneously written but should have been “50 double decker beds”, which is synonymous with 100 beds.

The matter requires urgent attention.

1.2.2 Irregular Supply of Furniture to Mary Mother of God primary school The contract for supply of school furniture (86-three seater desks, 4 tables & 4 chairs) to Mary Mother of God Primary School was awarded to a local firm at contract sum of UGX 21,500,000.

The following shortfall were identified

 The deliveries were made to Kacheri Secondary School instead of Mary Mother of God Primary School.  In a related development, (86 desks, 4 tables & 4 chairs of used furniture) were transferred from Kacheri SS as a replacement to Mary Mother of God primary school of which only 12 desks were in good condition and the balance of 74 desks, 4 tables and 4 chairs were broken and rejected by the school .

The Accounting Officer explained that the diversion was as result of delivery of a wrong size of desks for a primary school.

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I advised the Accounting Officer to ensure the contractor delivers the right size of desks or recover the funds.

2 Water Sector 2.1 Drilling of 15 hand boreholes The contract for drilling, casting and installation of 6 production boreholes was awarded using admeasurement contracts to two local firms at a contract sum of UGX 27,000,000 and UGX 290,030,000 for drilling & installation of the 6 boreholes respectively. The contract start and end dates were 05/02/2016 and 30/06/2016 respectively.

However, the following anomalies were observed during audit inspection in July 2016;

 Only 7 (46%) boreholes were successfully drilled and 8 (54%) boreholes were dry wells.  UGX 49,627,558 was paid for seven successful boreholes in excess of contract price by UGX 19,335,000.  The contractor charged 18% VAT twice as shown in table below: Detail One borehole 16 boreholes Preliminaries & General 945,000 15,120,000 Borehole construction 9,594,000 153,504,000 Platform casting and pump installation 3,525,000 56,400,000 Add 18% VAT 2,532,000 40,512,000 Total for one bore hole 16,596,000 263,258,466 Added extra 18% VAT 2,987,280 47,386,524 Total contract price 19,583,280 310,555,000

The Accounting Officer explained that changes in estimated depth, length and hard rock led to contract variations and paying for dry wells. The Accounting Officer also promised to recover the erroneously paid VAT from the contractor.

The matter requires urgent attention.

6.9.12 KOTIDO TC

1 Improper Maintenance of Roads Section 4.4 of Force Account guidelines, 2013 requires that Town Councils employ one road worker to maintain 2km of gravel roads.

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However, it was observed that the district employed nine workers to maintain 16.1 kms of the urban roads.

 The Audit also revealed that the roads were not properly maintained leading to silted and blocked drains, eroded road slopes and un weeded shoulders despite payments of UGX.8.500,000 for the purpose as shown below

Senior Quarter lane-with Senior quarters road- Uncleaned road drainage blocked drainage culverts heads not covered causing blockage to one of the roads in town council

This was attributed to lack of proper supervision of the civil works. The Accounting Officer promised to improve on the supervision of roads next financial year. The matter requires urgent attention.

6.9.13 KUMI TC

1 Unauthorized Excess Expenditure Regulation 18(7) of the Public Finance and Management Regulations (PFMA), 2015 states that any expenditure which is in excess of the appropriated budget of a vote and which is not in accordance with this section shall be treated as loss of public funds as provided for under section 79 (1) of the Act.

However, the Council incurred excess expenditure of UGX 61,849,741 on various activities without approval by Council.

The Accounting Officer explained that the excess expenditure was due to elevation of the town council to municipal status hence increasing operational costs. I advised the Accounting Officer to ensure that all expenditures are duly approved and authorized by the designated Authority before they are incurred.

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6.9.14 MOROTO DLG

1 Payment for shoddy works at Acherer Primary school. Regulation 14 of the PPDA regulations 2006 require an Accounting Officer to have the overall responsibility of the successful execution of the procurement, disposal and contract management processes and ensure that implementation of the contract as per the agreed terms.

The District contracted Kolir youth Development group for construction and completion of a 5 stance VIP latrine at Acherer Primary school at a contract sum of UGX.15,238,020. The contract start and end dates were 11/09/2015 and 11/02/2016 respectively. By the time of audit, July 2016 the contractor had been fully paid. However, the following defects were identified as shown in the table below;

S/No Items Amount 1 The walls are developing cracks 4,717,000 2 Shoddy painting 194,000 3 Delapidating walls 1,820,000 4 Poor finishing 1,955,900 5 2 doors were not properly fitted 771,250 Total 9,458,150

This was due to lack of close supervision and monitoring of the works.

The Accounting Officer promised to follow up with the contractor to rectify the defects.

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

6.9.15 MOROTO MC

1 Delayed completion of Out-Patients Department Block at DMO’s Clinic Paragraph 9(b) of the Local Governments (Financial and Accounting)Regulations, 2007 requires the Chief Executive Officer to ensure that the public moneys, property and resources for which he or she is responsible as accounting officer are properly managed and safeguarded.

Council signed a contract with a local firm to construct an Out-Patients Department Block at DMO’s Clinic at a contract price of UGX.195,352,245 funded under PRDP funds. The contracts start and end dates were 15th January 2016 and 6th May 2016

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respectively. By the time of audit in August 2016, UGX. 91,629,065 (47%) had been paid, however, the contractor failed to complete the civil works in the stipulated time.

The delays deny services to the community.

I advised the Accounting Officer to ensure that the civil works are completed promptly.

6.9.16 NAKAPIRIPIRIT DLG

1 Failure to carry out routine road maintenance of district roads

Section.2.1 of the Ministry of Works and Transport guidelines 2012, requires routine maintenance activities on roads to be conducted on annual basis, sometimes several times a year and even weekly depending on physical, environmental or climatic conditions.

A review of the annual work plan for road maintenance submitted to Uganda Road Fund revealed that the District planned to execute routine road maintenance of 59 km with a total budget of UGX 51,016,000.

However, the following shortcomings identified;

 Only UGX 3,074,000 (51% of the budgeted allocation of UGX 6,000,000) was utilized for routine maintenance of Nakapiripirit-Tokora road (8km). In addition, only UGX 2,476,000 (25% of the total budgeted allocation of UGX 10,000,000) was utilised for routine maintenance of Nakapiripirit-Kakomongole road (16km).  No routine maintenance works were executed on four roads of Namalu-Nabulenger rd (8km), Namalu-Loreng road (15km), Namalu-Kaiku rd (2km) and Amudat-Lemusui road (10km).  The roads were bushy and most of the culverts had silted and not cleaned  The funds for routine road maintenance totaling to UGX 30,412,850 was spent on unplanned mechanical repairs. The District Engineer explained that the excess expenditure on mechanical repairs was due to frequent breakdown of road equipment.

I advised the Accounting Officer to ensure that the Uganda road funds are utilised according to the approved budgets and work plans.

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2 Delays in Completion of Civil Works Regulation 9 (2b) of the Local Governments Finance and Accounting Regulations, 2007 states the duties of the accounting officer among which is to ensure that the public moneys, property and resources for which he or she is responsible as accounting officer are properly managed, safeguarded and value for money obtained.

However, it was observed that civil works totalling UGX.544,279,098 were not on schedule.

The delays in completion of the civil works may lead to extra administrative costs.

The Accounting Officer attributed the delays to mainly procurement process and promised to expedite the procurement process during the next financial year 2016/17.

The matter requires urgent attention.

3. Excess Expenditure on Technical and Operational Budget under PRDP road funds

Section 7.2 of the Peace Recovery and Development Plan (PRDP 2) Grant guidelines for Local Governments 2012 requires that only 5% is used to cater for technical supervision of infrastructure projects and operational expenses.

During the financial year 2015/16, UGX 634,255,000 was released to the district as PRDP funding of which UGX. 31,712,750 (5% of 634,255,000 ) was to be spent on technical supervision and monitoring. However, an amount of UGX 152,090,130 was spent on operational expenses resulting in excess expenditure of UGX 120,377,380.

This was irregular.

The excess expenditure was attributed to frequent breakdown of road equipment and blacking out of the solar power system at the works department that required immediate repairs and replacement of solar batteries.

The Accounting Officer was advised to ensure that funds are utilised in accordance with the operational guidelines.

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4. Irregular Payment of Hardship Allowance to ineligible Staff Circular standing instruction number 2 of 2010, paragraph 5 from Ministry of Public Service requires payment of 30% of basic monthly salary to staff living and working in hard to reach areas.

During the audit, it was explained by the Ag. Principal Human Resource Officer that with the exception of Nakapiripirit District Headquarters and Town Council staff, all the other district employees are entitled to hard to reach allowance.

Examination of the district payroll revealed that staff at the district headquarters and town Council were paid UGX.16,886,676 in respect of hard to reach allowances.

This was also attributed to absence of proper verification of the payrolls before payments are effected.

The Accounting Officer acknowledged this matter and promised to recover the funds.

I await the outcome of the commitment by the Accounting Officer in regard to recovery of the amount in question.

6.9.17 NAKAPIRIPIRIT TC

1 Unauthorised Expenditure Regulation 28(1) of the Local Governments Financial and Accounting Regulations 2007 states that if new or additional funds are required over and above the approved budgetary provisions, which cannot be met by virement re-allocation, the vote controllers concerned shall apply to the Chief Executive for a Supplementary provision.

Contrary to the above section, it was noted that UGX.30,713,887 was incurred in excess of the budgeted amounts on various votes.

The Accounting Officer attributed excess spending to limited staff capacity gaps.

I advised the Accounting Officer to ensure that no excess expenditure is incurred without the necessary approval.

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6.9.18 SOROTI DLG

1 Failure to Dispose off Assets.

Section of 2.3.1.5 of the LGFAM, 2007 requires assets not in use to be disposed off in accordance with the procedures in the LGPPDA, 2006 regulations.

However, it was observed that vehicles that had been recommended for disposal by the board of survey report of 2012/2013 were still grounded at the district works yard.

The Accounting Officer explained that the vehicles will be considered for board off in the financial year 2017/2018.

I advised the Accounting Officer to expedite the process of disposing off the assets.

6.9.19 SOROTI MC

1 Irregular Direct Procurements

Regulation 40 (3) of the LG - PPDA, 2006 prescribes circumstances under which direct procurement should be undertaken. These include emergency circumstances, where supplies are available from one provider or where on advantages would be obtained by further competition etc.

However, UGX. 24,928,000 was spent on direct procurement of stationary, catering, machine services and construction works without justification.

The Direct Procurements were therefore irregular.

The Accounting Officer promised to follow the PPDA regulations in future.

I advised the Accounting Officer to always adhere to LG - PPDA Regulations.

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6.9.20 NAPAK DLG

1 Unauthorized Excess Expenditure Regulation 25 of the Local Government Financial and Accounting Regulations (LGFAR), 2007 states that expenditures for which there is insufficient provision in the approved estimates are not allowed.

However, the District spent an excess expenditure of UGX.728,774,262 on administration, production, health and Education above the budgeted without approval by the Council.

Excess expenditure is irregular.

I advised the Accounting officer to ensure that all excess expenditures is always approved by the Council as required by the regulations.

2 Failure to Monitor Universal Primary Education (UPE) Funds Section 23 (d) and (e) of the Public Finance Management Act 2015 requires entities to report on amounts of financing received as grants and the financial and physical performance of the grants.

A follow up on capitation grants of UGX.22,108,250 received by a sample of eight (8) primary schools revealed the following shortcomings:-

 Failure to submit annual work plans to the Ministry.  Failure to display the amounts received and spent to the Public.  Lack of accounting skills by the staff who manage the funds.  Failure to prepare budgets  Lack of basic books of account like cash book and receipt books  Lack of segregation of duties, head teacher handles all the accounting work  Delays in release of Grants by the Ministry.

These shortcomings were majorly attributed to capacity gaps.

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The Accounting Officer admitted the shortcomings and indicated that Council has planned capacity building training for the head teacher and their deputies on planning and financial management in the financial year 2016/17.

The outcome of the promised action of the Accounting Officer is awaited.

3 Lack of an up-to-date Fixed Assets Register The Local Government Financial and Accounting Manual, 2007 paragraph 2.3.1.4(2) requires the Fixed Assets Register to be maintained.

However, a number of assets like vehicles, motorcycles, furniture, IT equipment etc. acquired during the financial year under audit were not recorded in the Fixed Assets Register.

This was attributable to capacity gaps.

In the absence of an up-to-date Fixed Assets Register, the verification of the Fixed Assets was rendered difficult. I advised the Accounting Officer to ensure that the Fixed Assets Register is regularly updated.

6.9.21 NGORA DLG

1 Health Service

1.1 Incomplete Construction of General Paediatric Ward at Ngora H C IV

The District signed a contract with a local firm for the construction of General Paediatric Ward at Ngora Health Centre IV at contract price of UGX.137,771,602 funded under PRDP. The contract start and end dates were 14th March 2016 and 14th June 2016 respectively. By the time of audit in August 2016, UGX. 137,469,401 had been paid representing 100% of the total contract sum.

However, the following shortcomings were identified.

 An additional works valued at UGX.13,771,048 (9%) had been paid for without approval by contracts committee.

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 Works totalling to UGX. 29,188,000 was paid for with no work done as shown in the table below:- BOQ Item No Item Amount (UGX) Remarks 7 Internal doors 3,390,500 Not fixed 8 fixtures and fittings 6,344,000 Not fixed 6 supply and fixing of windows 10,268,500 Not fixed 10 electrical installation and fixing of 9,185,000 Not installed lightening protection Total 29,188,000

Delay in completion of the theatre affects service delivery.

The Accounting Officer explained that the incomplete items were rolled over to the financial year 2017/2018.

I urged the Accounting Officer to ensure that the works are completed.

1.2 Idle equipment at Ngora Health Centre IV

Theatre Equipment including an operating bed, Autoclave Machine and Anaesthetic Machine supplied to Ngora Health Centre IV in February 2015 by a local firm at a cost of UGX.34,670,000. However, audit inspection revealed that the equipment had not

yet been put to use 18 months after delivery.

The Accounting Officers attributed the failure to utilize the equipment to lack of power connection to the theatre.

I advised the Accounting Officer to follow up the matter and ensure that the power is connected to the theatre.

2 Non Compliance with Statutory Obligations.

Section 116 (1) of The Income Tax Act requires that every employer shall withhold tax from a payment of employment income to an employee as prescribed by regulations.

Similarly the Income Tax Act states that a withholding agent who fails to withhold tax in accordance with this Act is personally liable to pay to the Commissioner the amount of tax which has not been withheld and recover this amount from the payee.

It was observed that, the district deducted PAYE totalling to UGX. 3,145,807 which was not remitted to URA.

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This was attributed to management’s failure to adhere to statutory regulations. Failure to remit taxes may attract fines and penalties from the Tax Authority

I advised the Accounting Officer to comply with the tax law.

6.9.22 SERERE DLG

1 Failure to meet minimum Health standard at Serere Health centre IV Section 2.1.1 (D) of the Local Governments Management Service Delivery Program Operational Manual 2011 sets minimum national standards to be met by a Health Centre IV.

However, audit inspection of Serere Health Centre IV revealed the following:

Standard Minimum Service Observations Maternity Ward  Inadequate space to accommodate all patients.

 Dilapidated structure that require renovation.  Open electric wires not insulated.  Brocken window glasses Operating Theatre  Boylese athetic machine (admisnisters drugs during operation) is not functional

 Oxygen concetration machine not working also X-Ray Department  There is no X-ray machine, all cases that require x-ray are reffered to Soroti Medical Waste pit  Non functional incinerator which stopped working about 20 years back.  The incinerator was abandoned in bush.  Open disposal of wastes which so dangerous to people around the hospital. Stance pit latrines  Dilapidated non-usable toilets with in the hospital compound. Hospital Mortuary  No access road to the motuary  It is in a bushy enviroment  No refrigration in the mortuary

Staff Houses  Staff residing in condemned houses Drug Store  Congested drug store and drugs still parked in the boxes

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Running water and electricity  There is no utilities such as power and water

The Accounting Officer attributed the poor standards to limited financial resources and promised to embark on improving the standards next financial year.

I advised the Accounting officer to engage the relevant authorities and ensure that the challenges are addressed.

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