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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 MITYANA DISTRICT LOCAL GOVERNMENT FOR THE YEAR ENDED 30TH JUNE 2017 OFFICE OF THE AUDITOR GENERAL UGANDA i TABLE OF CONTENTS list of Acronyms .................................................................................................. iii Opinion ............................................................................................................... 1 Basis for Opinion .................................................................................................. 1 Key Audit Matters ................................................................................................ 2 Utilization of Medicines and Health Supplies .................................................... 2 Medicines and health supplies accountability ................................................... 2 Stock outs of Medicines and Health Supplies ................................................... 3 Understaffing at the health facilities ............................................................... 3 Outstanding Domestic Arrears ........................................................................ 4 Other Matter ........................................................................................................ 5 Failure to Implement Budget as approved by Parliament ................................. 5 Understaffing ................................................................................................ 5 Low recovery of YLP funds ............................................................................. 6 Lack of Land Titles ........................................................................................ 6 Management’s Responsibility for the Financial Statements ...................................... 6 Auditor’s Responsibilities for the Audit of the Financial Statements .......................... 7 Appendix 1: Drugs not accounted for .................................................................. 10 Appendix 2: Staffing Levels at the Health Facilities ............................................... 12 Appendix 3: Planned Activities not implemented .................................................. 18 Appendix 4: Understaffing .................................................................................. 20 Appendix 5: Unrecovered YLP Funds ................................................................... 24 ii LIST OF ACRONYMS BOQ Bills of Quantities C/U Church of Uganda CAO Chief Administrative Officer DEO District Education Officer DLG District Local Government EMHS Essential Medicines and Health Supplies FY Financial Year GOU Government of Uganda HC Health Centre IFMS Integrated Financial Management System ISSAI International Standards of Supreme Audit Institution KCCA Kampala Capital City Authority KMs Kilometers LGFAM Local Governments Financial and Accounting Manual 2007 LGFAR Local Governments Financial and Accounting Regulations 2007 LGMSD Local Government Management and Service Delivery MMHS Management of Medicines and Heath Supplies MoFPED Ministry of Finance Planning and Economic Development MoH Ministry of Health NFA National Forestry Authority NMS National Medical Stores P/S Primary School PFMA Public Finance Management Act 2015 PPDA Public Procurement and Disposal of Assets UGX Uganda Shillings URF Uganda Road Fund UWEP Uganda Women Enterprise Project YLP Youth Livelihood Programme iii REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF MITYANA DISTRICT LOCAL GOVERNMENT FOR THE YEAR ENDED 30TH JUNE 2017 THE RT. HON. SPEAKER OF PARLIAMENT Opinion I have audited the financial statements of Mityana 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 notesto the financial statements, including a summary of significant accounting policies. In my opinion, the financial statements of Mityana 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’sResponsibilities for the Audit of the Financial Statements section of my report. I am independent of the 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. 1 | P a g e 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 matters described below as key audit matters to be communicated in my report; Utilization of Medicines and Health 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 Mityana District 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 health 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 Health Supplies Manual. I obtained the approved structure and compared it with the list of existing staff. I considered a preselected sample of Mityana Hospital and Mwera HC IV and made the following observations; Medicines and health supplies accountability I observed a variance between closing stock card balance and physical count of UGX.60,388,169 as shown in appendix 1. The shortcoming may be a result of mismanagement or poor record keeping. 2 | P a g e This may lead to rampant stock outs which hamper service delivery and occasions wide spread public outcry. The Accounting Officer promised that the stock cards will be updated regularly. The matter requires urgent attention. Stock outs of Medicines and Health Supplies I observed that 6 (six) items out of the 11 (eleven) selected tracer EMHS experienced stock outs ranging between 3 and 245 days. The stock outs may be a result of failure by NMS to supply drugs in the quantities ordered by health centres and lack of reliable information on drugs and stocking positions. According to the Accounting Officer, Health facilities make bi-monthly procurement plans with NMS at the beginning of each Financial Year; however, it is hard for facilities to keep stock for five months. Stock outs erode patients’ confidence in the health sector which leads them to resort to inappropriate and expensive alternatives of health care. The Accounting Officer is advised to liaise with NMS to ensure continuous optimum stock of medicines and supplies. Understaffing at the health facilities Out of 246 approved positions at the hospital and 53 approved positions for each of the 3 (three) Health Centres; only 282 (70%) positions were filled, leaving 123 (30%) positions vacant as shown in appendix 2. Understaffing overstretches the available staff beyond their capacity, creates job-related stress to the few staff and negatively affects the level of health service delivery to the community. Management explained that an attempt to recruit special doctors failed because they did not attract any. The Accounting Officer is advised to continue engaging the Ministry of Public Service, Ministry of Local Government and Ministry of Finance, Planning and Economic Development to address the challenge. 3 | P a g e Outstanding Domestic Arrears Domestic arrears refer to the total value of unpaid bills for goods and services rendered to a government entity, including wages and pension that remain outstanding at the closure of a financial year. There has been persistent accumulation of domestic arrears to unmanageable levels which has led to settlement
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