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Office of the Auditor General OFFICE OF THE AUDITOR GENERAL THE REPUBLIC OF UGANDA REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF MPIGI DISTRICT LOCAL GOVERNMENT FOR THE YEAR ENDED 30TH JUNE 2017 OFFICE OF THE AUDITOR GENERAL UGANDA TABLE OF CONTENTS LIST OF ACRONYMS ........................................................................................................ iii Key Audit Matters ............................................................................................................. 5 Utilization of Medicines and Medical Supplies...................................................... 5 Unaccounted for Medicines and Health Supplies ................................................. 6 Expired drugs ............................................................................................................. 6 Failure to Implement Budget as approved by Parliament .................................. 6 Low Recovery of Youth Livelihood Program funds .............................................. 7 Under Staffing ............................................................................................................ 8 Failure to meet the minimum standards in Primary Schools .............................. 8 Management’s Responsibility for the Financial Statements ....................................... 9 Auditor’s Responsibilities for the Audit of the Financial Statements ........................ 9 Appendices....................................................................................................................... 12 Appendix 1 Medicines not Accounted For .................................................................. 12 Appendix 2: Budget Performance (Financial) .......................................................... 12 Appendix 3 Mpigi DLG Youth Livelihood program un-unrecovered funds ............ 14 Appendix 4 Under Staffing ........................................................................................... 18 ii LIST OF ACRONYMS DLG District Local Government DMO District Medical Officer HC Health Centre 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 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 PFMA Public Finance Management Act 2015 PPDA Public Procurement and Disposal of Assets UGX Uganda Shillings USE Universal Secondary Education YLP Youth Livelihood Programme iii REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF MPIGI DISTRICT LOCAL GOVERNMENT FOR THE YEAR ENDED 30TH JUNE 2017 THE RT. HON. SPEAKER OF PARLIAMENT Opinion I have audited the financial statements of Mpigi 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 Mpigi 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 of 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. 4 Key Audit Matters Key audit matters are those matters that, in my professional judgment, were of most significance in my audit of the financial statements of the current period. These matters were addressed in the context of my audit of the financial statements as a whole, and in forming my opinion thereon, and I do not provide a separate opinion on these matters. I have determined the 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 Mpigi 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 Mpigi HC IV and made the following observations; 5 Unaccounted for Medicines and Health Supplies There was a variance between closing stock card balance and physical count of worth UGX.20,889,923 as shown in appendix 1. This shortcoming may be a result of poor record keeping or mismanagement of medicines and health supplies. This may lead to rampant medicine stock outs which hamper service delivery and occasion widespread public outcry. The Accounting Officer admitted the shortcoming and promised to improve stores management and regular update of records to enable proper tracking of drugs. The Accounting Officer should ensure that all the necessary records for the Items are properly maintained monitored and any variances investigated to ensure that the optimum amount of medicines and supplies are available at health facilities at all time. 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. Based on the procedures performed, I observed that a consignment of expired medicines were delivered to Mpigi Health Centre IV by the Lower Health Centre and by the time of audit in September 2017 the Medicines were still at the district store. The Accounting officer explained that drugs expire at health facilities due to supply in excess of slow moving drugs and drugs supplied by NMS, with short shelf life among others. The Cost of destruction of expired drugs is high and there is a risk of expired drugs getting redistributed back to the market. The District should liaise with NMS to ensure that expired or damaged stock is destroyed in accordance with the regulations. Other Matter I consider it necessary to communicate the following matters other than those presented or disclosed in the financial statements: Failure to Implement Budget as approved by Parliament Section 45 (3) of the Public Finance Management Act, 2015 states that “ An Accounting Officer shall enter into an annual budget performance contract with the Secretary to the 6 Treasury which shall bind the Accounting Officer to deliver on the activities in the work plan of the vote for a Financial year, submitted under section 13 (15)” of the said Act. I observed that out of the budgeted revenue of UGX.22,961,167,490; the district received UGX.20,967,224,784 (91%) resulting into a shortfall of UGX.1,993,942,706 (9%). The most greatly affected outputs included the construction of 1 ICT Laboratory and 1 Library block as shown in Appendix 2. Failure to implement activities denies service to the beneficiary communities and defeats the purpose for which budgeting and budgetary controls are instituted. The failure to implement all the planned activities may have been a result of inadequate releases or may be an indication of inefficiency. According to the Accounting Officer; by the close of the financial year no construction works had taken place. However, it was reported that the procurement process was initiated and construction of the laboratory had started. The Accounting Officer should engage the relevant authorities and ensure that budget deficiencies are addressed and that all the allocated funds are released and all activities
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