OFFICE OF THE AUDITOR GENERAL

THE REPUBLIC OF

REPORT OF THE AUDITOR GENERAL

ON THE FINANCIAL STATEMENTS OF LOCAL GOVERNMENT

FOR THE YEAR ENDED 30TH JUNE 2017

OFFICE OF THE AUDITOR GENERAL UGANDA

TABLE OF CONTENTS

LIST OF ACRONYMS ...... 2 Key Audit Matters ...... 2  Utilization of Medicines and Medical Supplies ...... 2  Stock out ...... 3  Expired drugs ...... 3  Key Vacant Positions ...... 4 Other Matter ...... 4  Low Recovery of Youth Livelihood Program funds...... 4  Encroachment on Forest Reserves ...... 5  Unoperational Theatre at HC IV ...... 5  Understaffing ...... 6 Management’s Responsibility for the Financial Statements ...... 6 Appendices...... 10

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LIST OF ACRONYMS

DLG District Local Government

GOU Government of Uganda

HC Health Centre

ISSAI International Standards of Supreme Audit Institution

LGFAM Local Governments Financial and Accounting Manual 2007

LGFAR Local Governments Financial and Accounting Regulations 2007

LGMSD Local Government Management and Service Delivery

MoESTS Ministry of Education Science and Technology and Sports

MoFPED Ministry of Finance Planning and Economic Development

NMS National Medical Stores

NMS National Medical Stores

PFMA Public Finance Management Act 2015

PPDA Public Procurement and Disposal of Assets

UGX Uganda Shillings

YLP Youth Livelihood Program

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

THE RT. HON. SPEAKER OF PARLIAMENT

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

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

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

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

 Utilization of Medicines and Medical Supplies

The Management of Medicines and health Supplies Manual indicates that Medicines and health supplies form the second biggest expenditure in the health sector after human resources. The security of medicines must be ensured at all levels to prevent theft, abuse, misuse and wastage.

Consequently in the course of auditing Gomba District’s Financial Statements, I considered the utilisation of medicines and medical supplies as an area of focus. The audit focused on the procedures, processes, tools and documentation used to manage medicines and medical supplies which included;  Involving external expertise in identifying the sample of tracer medicines and medical supplies, and developing data collection tools.  Selecting medicines and medical supplies to trace their utilization in the hospital.  Analysing the delivery cycles, balances on stock cards and order levels to ascertain stock outs.  Obtaining and checking the records relating to the expired medicines and also inspecting the storage practices.  Establishing the availability of key human resource personnel to ensure that medicines and medical supplies are not wasted as explained in the Management of Medicines and medical Supplies Manual. I obtained the approved structure and compared it with the list of existing staff. The audit involved the assessment of management of Medicines and Health supplies at Maddu Health Center (HC) IV and made the following observations;

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 Stock out

Part 3 of the MMHS manual requires that management establishes policies, procedures and techniques to maintain an optimum amount of stock of each item at all Health Facilities to minimize stock outs and expiry. I analyzed the delivery cycles and balances on stock cards at Maddu Health Centre IV. I observed that 4(four) items out of the 11 (eleven) indicator EMHS experienced stock outs within the audit period. Noticeably Oxytocin for 107 days, Mama kits for 86 days and determine test kit for 55 days as shown in Appendix 1

The stock out may be a result of failure by NMS to supply drugs in the quantities ordered by the Health centre and lack of reliable information on drugs usage and stocking positions. The stock outs; erodes patient confidence in the health sector which leads patients to explore alternative and inappropriate and expensive systems of health care.

The Accounting Officer explained that some of the essential medicines are usually moved from the store to the Ward because they are needed for 24 hours.

The Accounting Officer should liaise with NMS to ensure continuous optimum stock of medicines and supplies.

 Expired drugs Part 9 – of the MMHS manual requires that Expired items should be properly recorded, placed in designated area and destroyed in accordance with the local regulations. I obtained and checked the records relating to the expired medicines and also inspected how they are stored.

I observed that various essential medicines expired and stayed at Maddu HCIV for a period of more than four months without destruction as shown in Appendix 2. The expiry of the drugs may be a result of excess stocking of slow moving drugs. The Cost of destruction of expired drugs is high and there is a risk of them getting redistributed back to the market.

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The Accounting Officer explained that NMS delivers drugs with short expiry date most of the time. However, some of the drugs highlighted are used only in emergencies so if the health centre does not get the emergency, the drugs are not consumed.

The facility should liaise with NMS to ensure that expired or damaged stock is destroyed in accordance with the regulations.  Key Vacant Positions I obtained the approved staff structure and compared it with the list of the existing staff. It was observed that out of 48 posts only 28 (58%) posts were filled leaving 20(42%) positions vacant. Among the key vacant positions is the critical position of a Dispenser which is crucial in medicine management as shown in Appendix 3.

Understaffing overstretches the available staff beyond their capacity, creates job- related stress to the fewer staff and negatively affects the level of public service delivery to the community.

The Accounting Officer explained that the District submitted a recruitment plan to the Ministry of Public Service and available wage bill provisions could not allow management to fill the key positions identified.

The Accounting Officer should liaise with the Ministry of Health, Ministry of Public Service, Ministry of Finance and Health Service Commission to ensure that key position is filled.

Other Matter I consider it necessary to communicate the following matters other than those presented or disclosed in the financial statements:  Low Recovery of Youth Livelihood Program funds. Section 6(1) of the Youth Livelihood Programme (YLP) document 2013 requires all Project Funds disbursed to each Youth Interest Groups to be treated as a Revolving Fund to be repaid in accordance with the Project Financing Agreement between the

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District Local Government and the beneficiary Youth Interest Group witnessed by the Area resident State Attorney. However, an analysis of recovery of the programme funds at the District revealed low recovery of UGX.68,963,000(20%). Out of UGX.351,009,022 due for recovery from various Youth Interest Groups in the district leaving a balance of UGX.294,046,022(80%) outstanding as shown in Appendix 4.

The Accounting Officer explained that recovery of funds had been enforced through sending demand notices to defaulting groups whose repayment period exceeds one (1) one year.

The Accounting Officer should ensure that all outstanding monies are recovered.  Encroachment on Forest Reserves Section 32 (1b) of the National Forest and Tree Planting Act, 2003 prohibits the clearing, usage and occupancy of any forest reserve for agricultural, recreational, commercial, residential, industrial or hunting purpose without a license. However, I observed that the forest reserves in the District have been encroached on as shown in Appendix 5 Depletion of forest reserves has a diverse effect on the environment.

The Accounting Officer explained that steps had been undertaken to address the challenge of encroachers by seeking advice from the Solicitor General as well as seeking intervention from the Resident District Commissioner.

I await the outcome of the follow up.

 Un operational Theatre at Maddu HC IV

Inspection of the health facility showed that the operating theatre was nonfunctional instead it was being used as a drug store.

Consequently, the emergencies that require operation, are referred to Gombe Hospital which is 60kms away. There is a risk of loss of lives because of the long distance between the two facilities.

The Accounting Officer explained that operationalizing the theatre is a priority of the district, but the facility had not been allocated funds from the Ministry of Health for 5

renovation of the theatre which has no running water, no air-conditioning (means dust can enter into the theatre) and no theatre staff.

The Accounting Officer should liaise with the Ministry of Health and the Ministry of Finance Economic Development and Planning to have the challenges addressed.

 Understaffing

The District has an approved staff structure of 131 positions. Out of the approved staff structure only 92 (70%) are filled leaving a staffing gap of 39 (29.8%) positions as shown in appendix 6. Understaffing overstretches the available staff beyond their capacity, creates job-related stress to the fewer staff and negatively affects the level of public service delivery to the community.

The Accounting Officer explained that the District submitted a recruitment plan for the financial year 2016/2017 to Ministry of Public Service. However, a response from Ministry of Public Service showed that there are no additional funds provided to facilitate recruitment in the financial year 2017/2018. A recruitment plan for financial year 2018/2019 was submitted to Ministry of Public Service in order to be considered for additional wage for vacant critical positions to be filled.

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

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

The Accounting Officer is also responsible for the preparation of financial statements in accordance with the requirements of the Local Governments Financial and Accounting Manual, 2007 and the public finance management act 2015 and for such internal

6 control as management determines necessary to enable the preparation of financial statements that are free from material misstatement whether due to fraud or error.

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

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

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

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

 Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.  Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the

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purpose of expressing an opinion on the effectiveness of the district’s internal control.  Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.  Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the district’s ability to deliver its mandate. If I conclude that a material uncertainty exists, I am required to draw attention in my auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of my auditor’s report. However, future events or conditions may cause the district to fail to deliver its mandate.  Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. I communicate with the Accounting Officer regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit.

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

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

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John F.S. Muwanga AUDITOR GENERAL

6th December, 2017

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Appendices

Appendix 1 - Stock out of Essential Medicines

Name of Drug Stock out Date Date Replenishment made. Stock out days Coarterm 6 pack 19/1/2017 06/02/2017 18 days Oxytocin 30/7/2016 12/8/2016 13 days Oxytocin 14/8/2016 30/9/2016 47 days Oxytocin 26/10/2016 02/10/2017 107 days Oxytocin 17/3/2017 04/08/2017 22 days Oxytocin 19/5/2017 06/06/2017 18 days Determine test kit 27/7/2016 20/9/2016 55 days Determine test kit 03/02/2017 06/02/2017 3 days Determine test kit 30/3/2017 07/04/2017 8 days Mama Kit 11/12/2016 06/02/2017 86 days Mama Kit 27/3/2017 07/04/2017 11 days

Appendix 2 - Expired Drugs at the Health Centre

Drug Date of Expiry Quantity Neviraphine syrup Mar-17 45 bottles VITA Jan-17 800 Cps Quinine tabs 01/04/2017 500 tabs Coartem of 12 pack Mar-17 9 strips RH Mar-17 19*24 RHE Mar-17 8*24 RHE Paed Mar-17 17*3*28 RHE Paed Mar-17 5*24 Insulinity Feb-15 30 AZT/Pead Sep-17 70 doses Silversulfadiaz Sep-17 1 tin Epinephrine Inj. 01-Sep 50 Amps Appendix 3- Key Vacant Positions Category Vacant post Senior Medical Officer 1 Public Health Nurse 1 Ophthalmic Clinical Officer 1 Dispenser 1 Assistant Entomological Officer (Medical) 1 Anaesthetic Officer 1 Theatre Assistant 2 Anaesthetic Assistant 2 Assistant Health Educator 1 Cold Chain Assistant 1 12

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APPENDIX 4

Unrecovered Youth Livelihood Programme funds UGX.294, 046,022

Amount Amount Project Name Sub County Balance due received recovered FY 2014/2015

Kanoni uplift youth piggery project TC 12,000,00 0 12,000,000

Wanjeyo youth cattle rearing project Kanoni TC 12,000,000 2,250,000 9,750,000

Wasinda youth coffee nursery project Kanoni TC 12,500,000 0 12,500,000

Kanoni vamutulo youth tailoring group Kanoni TC 11,840,000 500,000 11,340,000

Kasaka bamirembe youth piggery project Kanoni TC 11,460,000 0 11,460,000 Strong women hairdressing skills development 10,573,000 10,573,000 project -

Kireku kwewaayo youth cattle project Kabulasoke 8,554,000 4,500,000 4,054,000

Kwewayo youth cattle project Kabulasoke 8,200,000 6,000,000 2,200,000

Kakubansiri C/U youth poultry project Kabulasoke 10,998,000 6,400,000 4,598,000 Obumu kayunga youth beef cattle rearing Maddu 8,000,000 0 project 8,000,000

Kyamboobo youth goats rearing project Maddu 7,900,000 4,000,000 3,900,000

Kyamuyiisa youth lucky goat project Maddu 6,280,000 3,150,000 3,130,000

Kasambya youth cattle rearing project Maddu 8,375,000 2,000,000 6,375,000

Kigumba vision youth cow fattening project Maddu 8,880,000 2,000,000 6,880,000

Kigulu youth tailoring project Mpenja 12,500,000 0 12,500,000 Kakomomakaliro Akatono youth rice growers’ Mpenja 4,367,000 500,000 project 3,867,000

Kakomo youth coffee traders project Mpenja 7,500,000 3,400,000 4,100,000

Jumbi Smarteen youth catering services Mpenja 8,192,000 1,400,000 6,792,000

Kalimumwa youth piggery project Mpenja 11,570,000 0 11,570,000

Kiriri youth events management project Mpenja 8,900,000 900,000 8,000,000

Buyana youth livelihood cattle trade project Kyegonza 10,925,000 500,000 10,425,000

Kasasa Nezikokolima youth piggery project Kyegonza 9,410,000 2,000,000 7,410,000

Malwowe youth piggery project Kyegonza 6,020,000 1,350,000 4,670,000 Kisoga Tukoletutereke youth events Kyegonza 12,000,000 6,490,000 management project. 5,510,000 FY 2015/2016

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Kitwe youth piggery project Kanoni TC 8,280,000 1700000 6,580,000

Kabulasoke Youth poultry project Kabulasoke 12,500,000 1000000 11,500,000 Lwebajjo Zibula Atudde youth produce buying Kabulasoke 7,000,000 3000000 project 4,000,000

Lugaaga youth poultry project Kabulasoke 9,800,000 400,000 9,400,000

Zinda twezimbe youth poultry project Kabulasoke 10,725,000 2,000,000 8,725,000 Buyanja Rise and shine youth Cattle rearing Maddu 8,500,000 0 project 8,500,000

Kalyamawolu youth maize growing project Maddu 7,840,000 1,000,000 6,840,000

Ntalagi Youth piggery project Maddu 8,593,000 0 8,593,000

Nsololo beekeeping youth project Maddu 8,726,500 800,000 7,926,500

Maseruka Youth Piggery project Mpenja 10,500,000 150,000 10,350,000

Nakasozi youth poultry project Mpenja 11,695,000 600,000 11,095,000

Ssaali youth piggery project Kyegonza 10,000,000 400,000 9,600,000

Mamba youth piggery project Kyegonza 10,000,000 0 10,000,000

Malere youth piggery project Kyegonza 9,905,522 0 9,905,522

Total 351,009,022 68,963,000 294,046,022

Appendix 5- Encroachment on Forest Reserves

Forest reserve Location Management Category Area/hectares Status Kagongo Kyegonza Sub County Central Reserve Forest 127 Depleted Budugade Mpenja Sub County Central Reserve Forest 60 Degraded Jumbi Mpenja Sub County Central Reserve Forest 342 Degraded Kalombi Mpenja Sub County Central Reserve Forest 3846(Woodland) Encroached Kaswera Mpenja Sub County Local Reserve Forest 54 Encroached Makokolero Mpenja Sub County Central Reserve Forest 104 Degraded Nakalele Mpenja Sub County Central Reserve Forest 277 Degraded Nakaziba Mpenja Sub County Central Reserve Forest 142 Degraded Kasa South Mpenja Sub County Central Reserve Forest 238 Depleted Nanfuka Mpenja Sub County Central Reserve Forest 334 Degraded Nsowe Maddu Central Reserve Forest 5097(Woodland) Degraded Sembula Kyegonza Sub County Local Reserve Forest 44 Depleted Wabinyomo Mpenja Sub County Central Reserve Forest 246 Degraded Wabilago Kyegonza Sub County Local Reserve Forest 68 Degraded Buzimba Kyegonza Sub County Local Reserve Forest 21(Woodland) Depleted Kalo Kyegonza Sub County Local Reserve Forest 78 Depleted Kalombi Maddu Central Forest Reserve 3846(Woodland) Encroached

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Appendix 6 Under Staffing

Job tittle Approved staff Filled Vacant Principal Personnel Officer 1 0 1

Senior Assistant Secretary 1 0 1 Pool stenographer 1 0 1 Clerk to Council/Senior Assistant Secretary 1 0 1 Secretary District land board/ Senior Assistant Secretary 1 0 1 Chief Finance Officer 1 0 1 Senior Procurement Officer 1 0 1 District planner 1 0 1 Senior Planner 1 0 1 Office typist 1 0 1 District Engineer 1 0 1 Pool stenographer 1 0 1 Engineering Assistant /Electrical 1 0 1 Plant operator 2 0 2 Senior Education Officer 1 0 1 District Community Development Officer 1 0 1 District Natural resources officer 1 0 1 Land Valuer 1 0 1 Surveyor 1 0 1 Office Attendant 1 0 1 Forest guard 1 0 1 Driver 1 0 1 District Production Coordinator 1 0 1 Principal Fisheries officer 1 0 1 Principal Entomologist 1 0 1 Senior commercial officer 1 0 1 Senior Veterinary Officer 1 0 1 Senior Entomologist 1 0 1 Fisheries officer 1 0 1 Steno secretary 1 0 1 Stores assistant 1 0 1 District Health Officer 1 0 1 Assistant District Health Officer(Environmental Health) 1 0 1 Senior Environmental Health Officer 1 0 1 Senior Health Educator 1 0 1 Stenographer secretary 1 0 1 Cold chain Technician 1 0 1 Office attendant 1 0 1 Driver 1 0 1 1 0 1

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