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Office of the Auditor General the Republic of Uganda OFFICE OF THE AUDITOR GENERAL THE REPUBLIC OF UGANDA REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF NWOYA DISTRICT LOCAL GOVERNMENT FOR THE YEAR ENDED 30TH JUNE 2017 OFFICE OF THE AUDITOR GENERAL UGANDA TABLE OF CONTENTS List of Acronyms ..................................................................................................................................... 2 Basis for Opinion ..................................................................................................................................... 3 Key Audit Matters ................................................................................................................................... 3 Medicines and Health Supplies ..................................................................................................... 4 Medicines and Health Supplies Accountability. .......................................................................... 4 Stock outs ........................................................................................................................................ 5 Expired Medicines ........................................................................................................................... 5 Understaffing ................................................................................................................................... 5 Other Matter ............................................................................................................................................ 6 Failure to Implement Budget as approved by Parliament ........................................................ 6 Lack of Storage Facilities for medicine and Health Supplies .................................................... 7 Management’s Responsibility for the Financial Statements ............................................................. 7 Auditor’s Responsibilities for the Audit of the Financial Statements ............................................... 7 Appendix I: Un-accounted for medicines and health supplies at Anaka Hospital ....................... 10 Appendix II: Drug stock outs at Anaka Hospital .............................................................................. 10 Appendix III: Expired Medicines at Anaka Hospital ........................................................................ 11 Appendix IV: Inadequate Staffing at Anaka Hospital ...................................................................... 12 Appendix V Budget Performance ........................................................................................................ 14 1 List of Acronyms Acronym Meaning DLG District Local Government DMO District Medical Officer EMHS Essential Medicines Health Service HC IV Health Center Four ICT Information Communication Technology ISSAI International Standards of Supreme Audit Institution LGFAM Local Governments Financial and Accounting Manual 2007 LGFAR Local Governments Financial and Accounting Regulations 2007 MoESTS Ministry of Education Science and Technology and Sports MoFPED Ministry of Finance Planning and Economic Development NMS National Medical Stores OPD Out Patients Department PFMA Public Finance Management Act 2015 PPDA Public Procurement and Disposal of Assets RDT Rapid Diagnostic Test UGX Uganda Shillings URA Uganda Revenue Authority VAT Value Added Tax WHT Withholding Tax MMHSA Management of Medicines and Health Supplies Manual YLP Youth Livelihood Programme UWEP Uganda Women Empowerment Programme NUSAF Northern Uganda support Action Fund 2 REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF NWOYA DISTRICT LOCAL GOVERNMENT FOR THE YEAR ENDED 30TH JUNE, 2017 THE RT. HON. SPEAKER OF PARLIAMENT Opinion I have audited the financial statements of Nwoya 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 Nwoya 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 Nwoya District Local Government 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. Key Audit Matters Key audit matters are those matters that, in my professional judgment, were of most significance in my audit of the financial statements of the current period. These matters were addressed in the context of my audit of the financial statements as a whole, and in forming my opinion thereon, and I do not provide a separate opinion on these matters. I 3 have determined the matters described below as key audit matters to be communicated in my report; Medicines and Health Supplies The Management of Medicines and Medical 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 the District’s financial statements, I considered the utilization 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 Health Supplies, and developing data collection tools. Selecting medicines and Health 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. I considered a preselected sample involving Anaka District Hospital and made the following observations at the health facilities; Medicines and Health Supplies Accountability. Medicines and Health Supplies worth UGX.161,676,689 from Anaka Hospital stores were not accounted for as stock cards balances did not tally with the physical count figures contrary to the Management of Medicines and Health Supplies Manual (MMHSM) as shown in Appendix I. The Accounting Officer acknowledged the observation and undertook to review the stores establishment and make regular updates of the stock cards and registers. 4 I advised the Accounting Officer to expedite the implementation of the necessary improvements. Stock outs I observed that 3 (three) items out of the 11 (eleven) selected indicator EMHS experienced stock outs within the audit period. Noticeably mama kits were out of stock for 262 days and Determine for 44 days as shown in Appendix II. The stock out may be a result of failure by NMS to supply drugs in the quantities ordered by Health centers and lack of reliable information on drugs usage and stocking positions. The stock outs; erodes patient confidence in the health sector which leads patients to explore alternative and inappropriate and expensive alternative health care. The Accounting Officer attributed the stock outs to the delay by National Medical Stores (NMS) to deliver ordered stocks. The Accounting Officer is advised to liaise with NMS to ensure continuous optimum stock of medicines and supplies. Expired Medicines I observed that a number of medicines had expired and stayed for over six months without destruction as shown in Appendix III. 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. The Accounting Officer explained that arrangements were underway to recruit a pharmacist to manage the stores and ensure that drug stocking was done at an appropriate level. The entity is advised to liaise with NMS to ensure that expired or damaged stock is destroyed in accordance with the regulations. Understaffing I obtained the approved structure and compared it with the list of existing staff. It was observed that out of 190 approved positions at Anaka Hospital; only 94 (%) posts were filled, leaving 96 (%) positions vacant as shown in Appendix
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